A top Democrat wants to kill tax breaks for overseas oil production. Gas costs $4.06 per gallon. Voters are pissed. The solution? Make oil companies dig here instead of there.
This is the legislative equivalent of rearranging deck chairs on the Titanic except the Titanic is also on fire and everyone's arguing about which deck had better chairs. The proposal assumes oil companies will respond to tax incentives like Pavlov's dogs instead of like multinational corporations with armies of lawyers who specialize in making tax codes look like Mad Libs.
Retail traders heard this news and immediately started panic-buying USO calls because they think Congressional proposals and actual policy outcomes exist in the same universe. They do not. One is a press release designed to make voters feel acknowledged. The other is a thing that happens. The Venn diagram is two circles in different time zones.
The midterms are in November. Gas is expensive now. The gap between those two dates is filled entirely with campaign ads featuring concerned candidates standing at gas pumps doing that thing where they shake their heads slowly like disappointed fathers. Not one of them will mention that oil is a globally traded commodity priced in dollars and influenced by OPEC production cuts, refinery capacity, seasonal demand fluctuations, and about forty other variables that have nothing to do with where Exxon gets its depreciation deduction.
But sure. Kill the overseas tax break. That'll fix it. By the time this bill gets through committee, gets amended seventeen times, dies in the Senate, gets resurrected as a compromise that does the opposite of what it originally proposed, and finally gets signed into law eighteen months from now, gas will cost $6.50 or $2.80 depending on whether we're in a recession or if someone sneezed near the Strait of Hormuz.
Your technical analysis of this headline is that politicians discovered voters can read gas station signs and panicked accordingly.
Photo by Georg Eiermann on Unsplash
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