Fmr. Obama Econ. Adviser Furman: We Have to Make it ‘Easier and More Predictable’ to Build U.S. Oil Capacity to Lower Prices

On Thursday’s “CNN Newsroom,” Professor of the Practice of Economic Policy at Harvard University and the Harvard Kennedy School Jason Furman, who served as Chairman of the Council of Economic Advisers under President Barack Obama and on the Council of Economic Advisers and the National Economic Council under President Bill Clinton argued that to decrease oil prices, “you need to make it easier and more predictable for oil companies, oil refiners to build capacity in this country.” And that the profits tax proposed by Democrats won’t do that and could make the problem worse.

Furman said, “I think you can look at individual industries, the White House has talked about meatpacking, shipping, and now it’s talking about oil, and you could debate in each one of those industries, was there gouging, what should be done about it? I think right now the main thing going on with oil is an increase in the global price of oil, that’s the main thing I see, it’s the — it’s President Putin, not the oil companies. But I don’t think the White House is arguing that greed as a whole is causing inflation. That’s why they’ve said they want the Fed, their number one policy recommendation is that the Fed needs to bring down inflation. It really is demand is very, very high, supply isn’t high enough. When that happens, prices rise. The only way to solve it is more supply or less demand.”

He added, “Look, at this point, if you want to bring oil prices down, you need to increase oil supply. If you want to increase oil supply, you need to make it easier and more predictable for oil companies, oil refiners to build capacity in this country. Don’t think an excess profits tax is the way to encourage more investment and more supply. So, I think it’s barking up the wrong tree.”

Co-host Poppy Harlow then said, “Not — it sounds like you’re saying not just barking up the wrong tree, but it actually could make it worse.”

Furman responded, “Depending on how it’s designed and what the details are, absolutely. If you punish companies every time that they’re in this situation, it will make them not want to expand capacity in the same type of way.”

Follow Ian Hanchett on Twitter @IanHanchett