Angry in the Great White North

Robin Hood or not, this guy knows timing. On August 18, Senator Dorgan called on the Federal Trade Commission to begin the formal investigation of oil and gas prices that is required in the new energy bill just signed by President Bush:

Dorgan, who authored the provision that requires an investigation, said current oil and gasoline prices are not the product of an open and transparent market. There is plenty of room and opportunity for consumers to be gouged by oil companies wanting to cash in on OPEC price fixing, he said.

Dorgan said the provision he wrote requires the FTC to launch an investigation into possible price and supply manipulation within 90 days of enactment of the energy bill.

Katrina hits, oil prices spike 25%, and suddenly Senator Dorgan seems like a genius. But more than that, he's Robin Hood too:

Dorgan also said today he is going to introduce a windfall profits tax on the major integrated oil companies that are reaping an extra $7 billion in profits each month because of skyrocketing oil prices, which have jumped more than $30 per barrel since the beginning of 2004. These biggest oil companies stand to gain up to $80 billion in the next year in windfall profits.

Since oil prices spiked, U.S. consumers will pay nearly $200 billion a year more for oil and gasoline products, Dorgan said. About $120 billion of that goes to the foreign countries from whom the U.S. purchases oil, including Saudi Arabia and other Middle Eastern countries. An estimated $80 billion goes to the major U.S. oil companies to fatten their bank accounts—even though they have little or no additional expense in producing that oil, Dorgan said.

He said his proposal for a windfall profits tax would provide an exemption for companies who use their profits to directly invest in new oil and gas exploration and increase refining capacity. Revenue from the windfall profits tax would be used to provide rebates to consumers who are paying inflated prices for gas and oil products.

I'm always leery of these sorts of idea. Of course, Canada already tried something similar to what Senator Dorgan is proposing:

The National Energy Program (NEP) was an energy policy of the Government of Canada. It was enacted by the government of Prime Minister Pierre Trudeau in 1980, and administered by the Department of Energy, Mines and Resources (Canada).

The NEP was introduced in the wake of the energy crises of the 1970s, and was designed to promote oil self-sufficiency for Canada, maintain the oil supply, particularly for the industrial base in eastern Canada, promote Canadian ownership of the energy industry, promote lower prices, promote exploration for oil in Canada, promote alternative energy sources, and increase government revenues from oil sales through a variety of taxes and agreements.

The program was enormously unpopular in Western Canada, where most of Canada's oil is produced, and heightened distrust of the federal government, especially in Alberta, British Columbia and Saskatchewan. Albertans believed that the NEP was an unjustified intrusion of the federal government into an area of provincial jurisdiction and was designed to strip their province of its natural wealth.

The justification for the program died when oil prices fell in the early 1980s, leading to its abandonment by the new Progressive Conservative government of Brian Mulroney that campaigned against the policy in the 1984 election.

Whatever else the NEP might or might not have succeeded at doing, it certainly split this country apart. Those divisions are with us today, and might figure in the final disintegration of Canada. I hope Senator Dorgan has a plan to avoid having that happen.

Better yet, if the investigation concludes that there is no price-fixing, maybe just let the market do its work.