McCain Memo on Energy

To: Interested Parties

From: Doug Holtz-Eakin, McCain 2008 Senior Policy Advisor

Date: June 23, 2008

Re: Words Matter: Barack Obama's Out-Of-Touch Energy Policy

Barack Obama is on record opposing almost every initiative to provide the American people with short-term and near-term relief from higher gas prices. Indeed, he has proposed an energy policy that offers the American people no relief from higher gas prices today or in the near-term. His energy policy is one that is more concerned with following the party line than it is with helping the American people with their current pain at the pump:

· Barack Obama opposes giving the American people gas tax relief in the short-term. Barack Obama forgets that he voted for a gas tax holiday while in the Illinois State Senate and even voiced support for extending the holiday. John McCain's proposed gas tax legislation explicitly guarantees full funding of the Highway Trust Fund.

· Barack Obama opposes developing our own energy resources if the states agree to offshore drilling. This is a common-sense proposal that even Senator Jim Webb (D-VA) supports. If we do not start today, we will never lower gas prices by developing our own energy sources.

· Barack Obama has not offered a plan to expand the use of nuclear power for our long-term energy security and has even said he is "not a nuclear energy proponent."

· Barack Obama opposes John McCain's incentive to develop a new battery for better electric cars.

· Barack Obama has proposed higher energy taxes that will only increase costs on the American people. Barack Obama has called for a tax on coal and natural gas – the two largest sources of electricity in our country.

· Barack Obama supports the Windfall Profits Tax that will only lead to higher gas prices. Barack Obama's windfall profits tax was last tried under Jimmy Carter and it resulted in making America more dependent upon foreign sources of oil and lead to higher prices at the pump.

Barack Obama's Do-Nothing Energy Policy Is Reflective Of His Overall Attitude Toward Higher Gas Prices:

On this issue, words matter and Barack Obama's statements reveal an alarming attitude that is out-of-touch with the energy concerns of every American. Earlier this month, Barack Obama told CNBC's John Harwood that his only problem with higher gas prices is that they went up too fast. This is a stunning statement and reflective of an attitude that believes higher gas prices are a good thing for our country. In the end, Barack Obama "would have preferred a gradual" increase in gas prices.

· Barack Obama: "I Think That I Would Have Preferred A Gradual Adjustment" To Higher Gas Prices. SEN. OBAMA: "Well, I think that we have been slow to move in a better direction when it comes to energy usage. And the president, frankly, hasn't had an energy policy. And as a consequence, we've been consuming energy as if it's infinite. We now know that our demand is badly outstripping supply with China and India growing as rapidly as they are. So..." CNBC'S JOHN HARWOOD: "So could these high prices help us?" SEN. OBAMA: "I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing. But if we take some steps right now to help people make the adjustment, first of all by putting more money into their pockets, but also by encouraging the market to adapt to these new circumstances more quickly, particularly US automakers." (CNBC's "Special Report," 6/10/08)

Just last week, Barack Obama said "the facts have not" changed regarding our current energy crisis. Actually, the facts have changed including $4 for a gallon of gas and this one fact alone demands that our leaders take the necessary steps to bring short-term and near-term relief to the American people. Barack Obama is willing to ignore this critical fact as he remains committed to the party line.

· Barack Obama: "The Politics May Have Changed, But The Facts Have Not." "Citing a 2007 report from the Department of Energy, he said drilling 'wouldn't do a thing to lower gas prices.' 'The politics may have changed, but the facts have not,' he said." (Charlie Patton, "Obama Blasts Offshore Oil Push," Florida Times-Union, 6/21/08)

Barack Obama's Energy Record Of Higher Taxes And Failed Policies:

Barack Obama has a record of voting to increase taxes on energy, including natural gas purchases in Illinois. In 2007, Barack Obama voted for an amendment to the CLEAN Energy Act of 2007 that would have added a $32 billion tax hike package. These tax increases would have hurt domestic oil and gas manufacturing and ultimately contributed to higher gasoline prices. Barack Obama has also voted three times to impose a temporary Windfall Profits Tax.

Barack Obama criticizes the current energy policy, but it is the energy policy that he voted for in 2005 that gave billions in tax breaks to the same oil companies he so often decries. Barack Obama forgets that he does have an energy policy and it's the Bush-Cheney energy policy from 2005. Barack Obama's words on energy are empty and actually contrary to his own public record.

In the Illinois State Senate, Barack Obama voted in 2003 to tax natural gas purchased from out of state. This tax was estimated to cost Illinois businesses $42 million annually and made natural gas more expensive for industrial buyers such as steel mills and other manufacturers.

The Facts On The Obama Campaign's Energy Attacks:

Fact: John McCain has always supported giving states the ability to decide on offshore drilling. Unlike Barack Obama, John McCain recognizes that the facts have changed on energy and that Americans are struggling with $4 gas. Unlike Barack Obama, John McCain has proposed real solutions for the near term.

Fact: Barack Obama proposes an economic stimulus to help with gas prices, but to pay for it, he has proposed the Windfall Profits Tax which will only lead to higher gas prices and a greater dependency on foreign oil. Also, by tying his economic stimulus to a Windfall Profits Tax, Barack Obama has guaranteed that his plan will never pass. Also, the tax will not raise enough revenue to pay for his $50 billion in refund checks.