EDITORIAL: Sanders’ tax proposal would reduce oil production

There are bad ideas, and then there are Sen. Bernie Sanders’ ideas.

Rising gasoline prices are hurting families around the country. Nevadans have had it worse than most. Drivers here are paying the second-highest prices in the country. In recent days, the average price per gallon in Nevada was $5.22. In 20 states, the average price is under $4 a gallon. Unsurprisingly, most of the places with cheap gas are red states.

The best way to bring down prices is to produce more oil and reduce the costs of refining it. That’s basic supply and demand. President Joe Biden’s decision to release 1 million barrels of oil a day from the strategic petroleum reserve reflects this reality. Putting more oil on the market will lower the price, at least temporarily. Mr. Biden plans daily releases for six months, which means the program will run past the November election.

Politically, that timing makes sense for Mr. Biden. High gasoline prices are hurting his approval ratings and Democrats’ chances of retaining power. But because most people plan on purchasing gasoline come December, it’s little more than a Band-Aid.

Mr. Biden has governed from the left, but at least he’s still willing to make overtures to increasing the supply of gasoline. Sen. Sanders, the self-avowed socialist from Vermont, is pushing a plan that would do the opposite.

Recently, Sen. Sanders introduced a plan to levy a 95 percent tax on large companies. Yes, you read that correctly. The “windfall profits” tax would apply to earnings that are above a company’s average profits in the five years before the coronavirus pandemic. It’s an old standby from the stagflation playbook of the 1970s.

“We cannot allow big oil companies and other large, profitable corporations to use Putin’s war, the COVID-19 pandemic, and the specter of inflation to price gouge Americans at the gas pump, the grocery store or any other sector of our economy,” a fact sheet from Sen. Sanders’ office reads.

While this idea would be utterly destructive throughout the economy, it would be especially damaging for oil and gas production. In a free market, profit isn’t evil. It’s the reward a company earns for providing a good or service at a price someone is willing to pay.

Gas and oil production isn’t easy or cheap or quick. It requires exploration, drilling and processing. It’s not guaranteed to be profitable either. If you remove the possibility of additional profit for additional production, companies will stop producing more. That might reduce their profits, but it will also lower supply.

That means the ironic result of Sen. Sanders’ idiotic plan would be higher gasoline prices.