The Emporia Gazette

May 27, 2012

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IT’S TRITE, yet true, that those who forget the lessons of history are doomed to repeat them. Just look at the recent Congressional vote to raise taxes and control prices on America’s energy industry. Both actions have a long history, but not an impressive one.

Take price controls. Two economists catalogued failures from ancient Egypt, revolutions and world war, and concluded that this policy was so ineffective that they subtitled their study ‘How Not to Fight Inflation.’

Why? Because, as presidents Nixon, Ford and Carter found, they drive up consumer demand while cutting production incentives. That’s why we had long gas lines in the 1970s and why price controls today would result in shortages. When the controls are lifted to ease the shortages, prices shoot back up.

Of course, high prices come from tax increases on America’s energy industries. The U.S. House wants to extract an additional $16 billion from these businesses. These firms recoup losses from American consumers, meaning higher prices for gas and higher utility bills.

Higher taxes also result in less exploration for environmentally-sensitive ways of generating energy and fewer jobs for U.S. workers in these industries. That’s exactly what happened when Congress imposed a windfall profits tax on oil in the 1980s.

When Congress last imposed price controls and higher taxes on U.S. energy, Americans imported more energy from overseas, lost jobs to workers overseas, and became reliant on foreign energy. The lesson of history is clear: higher taxes and price controls achieve the opposite of what’s intended.

  Gregory L. Schneider, Ph.D.

Associate Professor of History

Emporia State University