From the Wall Street Journal, which notes that Congress has requested some 30 studies into alleged market manipulation by oil companies over the years, with the findings never justifying charges of “price gouging.”

If Congress wants to locate genuine gas price villains, it should look in the mirror. Domestic refining capacity is stretched in part because environmental laws discourage the building of new refineries. Meanwhile, new mandates for ethanol and other “boutique” gasoline blends make it harder for the industry to meet refining shortfalls. The Lundberg Survey estimates that the ethanol mandate alone adds 10 cents to each gallon, and that 36 refinery snafus this year have cut U.S. gas supplies by about 8%. Refiners are also currently switching to mandated summer gasoline blends–another contributor to the current price spike….

If Congress wants really high prices, it should keep this up. After Hurricane Katrina, several states including Virginia strictly enforced price gouging laws, and many service stations simply ran out of gas altogether. Gas wasn’t available at any price. Last year’s FTC report pointedly advised Congress that “federal gasoline price gouging laws that have the effect of controlling prices likely will do consumers more harm than good.” It added that, “Competitive market forces should be allowed to determine the price of gasoline drivers pay at the pump.” Such a lesson in supply and demand seems beyond Congressional understanding.

UPDATE 6:15 p.m.: Cripes. Now governors are getting into the mock outrage business.

Gov. M. Jodi Rell, taking a page from “The Little Engine That Could,” Monday led a band of 22 governors in a battery-ram attack on the halls of Congress over stratospheric gas prices.

“We are demanding answers on the gas price spikes that are hurting the consumers and the economies of our states,” Rell said in a letter delivered to congressional leaders on Capitol Hill and co-signed by the governors. It was Rell’s third appeal that Congress probe gas prices.

Demanding answers about price spikes? OK, here are the answers. There’s the FTC report from 2006: “Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline Price Increases.” And here’s congressional testimony from the API’s chief economist, John Felmy, explaining current market forces determining fuel prices, and API’s Red Caveny’s testimony on oil company mergers and refinery capacity. And here’s some useful background.

There, all answered.

“Formula For Worry” is the headline out of Milwaukee and it’s highly appropriate.

Milwaukee Journal Sentinel reporter Rick Barrett has read our recent report on chemical costs and the disappearing US chemicals infrastructure and found that it really resonates with Wisconsin manufacturers. His subtitle catches the thrust of our new report: high prices could send work offshore.

Our report is based on a recent survey of manufactures that finds that the majority use chemicals in their manufacturing operations and are pessimistic about the rising costs and shrinking availability. Most see it getting worse in the near future and many see their only option is to move their production offshore too. US chemical manufacturers are literally being forced out of the United States by governments’ lack of attention to a sensible natural energy policy.

High paying jobs in a wide cross section of industries are at stake. Why not more of an outcry over this and why aren’t US leaders shaping something to forestall this trend? Enabling greater supplies of natural gas would bring US natural gas pricing back to mid-1990s levels when US natural gas pricing was a competitive international advantage for US producers. No more. Failure to permit new supplies to come on line while demand has risen, has created an unhealthy environment.

Barrett talked with a number of Wisconsin manufacturers and found that this is already cascading down on them. Here’s a few to ponder:

It takes a lot of petroleum to make synthetic rubber, added John Valek, president and chief operating officer of RB Royal Industries, a Fond du Lac company that makes hose and tube assemblies for a variety of uses.
“Many of the chemical cost increases are directly related to oil and gas prices,” Valek said.

Even companies that don’t use a lot of chemicals, such as metal fabricators, are worried about the costs of welding gases, solvents, lubricants and hazardous material shipping charges.”You have to watch those costs or you will get eaten for lunch,” said Eric Isbister, chief executive officer of General MetalWorks Corp., in Mequon.

Wisconsin is a major manufacturing state and there is good reason for concern there. Rick Barrett captured it well:

In Wisconsin, thousands of factories use chemicals to make everything from baby diapers to building materials. Sometimes the dependence on chemicals is extreme, as in the case of polyethylene used for plastic products.

The plastics industry is an integral part of Wisconsin’s economy. The state ranks 10th in the nation for employment in plastics manufacturing and 12th for plastic shipments, which total more than $10 billion a year, according to industry sources.

If I were an elected official, I’d sure make a sensible natural gas policy my first priority and not just take the manufacturing economy for granted.

Today Americans will gather to honor the servicemen and women who have lost their lives in defense of our nation, with topical attention paid to Iraq, Afghanistan and the war on terror. We join in paying respectful and grateful tribute, and in recalling all those who fought and died for America’s freedom.

In remembrance, we bring you from the wonderful Prelinger Archives a 15-minute silent-film report on Memorial Day events in the Hudson River town of Cornwall, N.Y., 57 years ago. A local historian, Janet Dempsey, highlights the newspaper coverage of the day:

The event was fully covered by the Cornwall Press, beginning with a special edition on May 27th, its cover printed on glossy paper bordered by a red and blue stripe, the mast-head flanked by American and French flags. The headline “Significant Event Staged for Memorial Day in Cornwall” was followed by the details: “Captain Pierre Lecomtedu Nouy, a distinguished citizen of France – an embattled soldier of the Great World War — representing the French Government will present to the people of Cornwall, in the name of his country, a seventy-seven milimetre cannon, captured from the Germans in combat, “taken” when the German army made its final fatal drive against Paris.. .it is the only captured cannon of the great World War ever presented to an American community.” This great honor, the article continued, was due to the efforts of Dr. Ernest G. Stillman…

On page two of the paper was listed “The Veteran Dead of Cornwall,” a total of one hundred and seven, buried in ten town and neighboring cemeteries.

Captain du Noüy was a remarkable man, a world-renowned biologist, evolutionist, mathematician and philosopher who served as an officer in the Great War. (His 1947 Time obituary is here.)

And the connection to Memorial Day 1920 and modern manufacturing in the United States? Liberty, earned with great sacrifice, that allows our country to prosper. For which we honor the fallen of Cornwall and all America.

Former Vice President Al Gore bemoaning the state of public discourse as he sells copies of his latest book, “The Assault on Reason” in New York City:

“What is it about our collective decision-making process that has led us to this state of affairs where we spend much more time in the public forum talking about — or receiving information about — Britney Spears shaving her head or Paris Hilton going to jail?” Gore asked.

He lamented what he described as the “destruction of the boundary between news and entertainment” and said the United States was “vulnerable as a democracy to mass and continuing distraction.”

This from a man who is using rock concerts to try to influence public policy on climate change. A man who is giving cultural debasers and convicted felons like Snoop Dogg the “Live Earth” platform to spread their ugliness while at the same time reviling American capitalism.

Does Gore not see the contradiction?

The constant attention that manufacturers — and the NAM — call to the lack of skilled workers really does seem to be paying off. Every week you’ll see a major newspaper article or local TV on classrooms devoted to developing technical skills, manufacturers working in cooperation with local educators to provide training opportunities, or some other novel approach toward addressing the skills gap. That’s the important thing, that with attention comes action.

The Milwaukee Journal-Sentinel reports on the progress today with a package headlined, “Renewing allure of nuts & bolts — Manufacturing, while down, is far from out, students learn.”

The comes across as too negative, really. Manufacturing employment has fallen since 2000, true, but productivity and absolute volume of manufactured goods are higher than ever before.

In any case, the story highlights local Wisconsin efforts to help young people recognize the potential careers in manufacturing and to gain the skills necessary to succeed there.

At Milwaukee’s Audubon Middle School last week, Charles Harris’ eighth-grade students were hot-gluing Popsicle sticks, shaping cardboard and mounting plastic wheels as part of their assignment to design and build Rube Goldberg contraptions. Two-by-two, the teenagers created 12 separate devices – equipped with levers, inclines, screws, wheels, wedges and pulleys – that had to fit together to form one over-elaborate machine.

The work is part of Project Lead the Way, a national pre-engineering program that teaches schoolchildren applied math and science through hands-on work. The assignment last week teaches not only the mechanics of motion, Harris said, but also communication and teamwork.

One student, Timothy Grant, says he wants to be an engineering technician and work in the auto industry.

“It interests me,” said Timothy, 14. He likes to work on cars and relates it to the Rube Goldberg project. “It’s kind of like this. You need one thing to hook up to the next in order to make it work.”

Audubon Middle School, a charter school with a technical emphasis, looks like an exciting place. The Journal-Sentinel features Harris’ class at work in this video, and the school’s website highlights its online technology showcase here.

Reporter Joel Dresang does a credible job of addressing the many issues involved in the skills shortage and, in the end, gives us good reasons for optimism: There’s attention AND action.

Manufacturers come in all sizes, from small companies with one or two employees to large companies that are household words. Their experiences as people who make things for the world to use are as diverse as the companies themselves.

That’s why it is always interesting to read interviews with successful managers at manufacturing companies. The insights are always a pleasant surprise. So it was recently when a Wall Street Journal reporter interviewed George David, CEO of United Technologies Corp, maker of helicopters, jet engines, air conditioners, elevators and other sophisticated products that most people just take for granted.

During his 15-year tenure as the top executive, UTC’s market capitalization has leaped from $6 billion to $66 billion. With that impressive record, the WSJ asked him about his succession plans and other aspects of the business. It’s an interview worth reading.

What I found most thought-provoking were his comments about energy efficiency and the room there is to dramatically cut energy use in the United States through innovation. He says energy efficiency is a better immediate solution to our energy concerns than alternative energy. He said:

we cool things, heat things, fly things, elevate things, send people to the moon. The common denominator is to convert energy to useful work…..In our internal operations, we dropped the energy consumption at UTC by 19 percent over a decade at the same time the company doubled its size. All of America can drop its energy consumption by 20 percent in a decade easily….

Mr. David notes they are even working with the World Business Council for Sustainable Development to devise a building that uses zero net energy. That’s today’s innovative manufacturing at work.

I hope you all enjoy Memorial Day and pause to thank the men and women in the armed forces who have for generations guaranteed our freedoms. Monday is a day to remember and honor them first and foremost.

From Bob Novak’s weekend column.

WASHINGTON — Nancy Pelosi staved off the biggest intraparty challenge during her brief tenure as speaker of the House Monday, standing her ground in support of two free-trade treaties during an uproarious meeting of the House Democratic Caucus behind closed doors.

Pelosi backed deals on Peru and Panama treaties negotiated by House Ways and Means Committee Chairman Charles Rangel despite fierce protests by rank-and-file Democrats. The caucus was to consider Iraq, immigration and the trade treaties, but the debate over trade was so extended that it took up all the time.

A footnote: There is no agreement on key Korean and Colombian trade treaties coming up later this year.

NAM President John Engler participated in a conference call with small- and medium-sized manufacturers on Tuesday, May 22, and had this to say about the trade framework Novak is writing about:

Charlie Rangel did a lot of heavy lifting on this, but so did the Administration and Congressman McCreary. It means now that Peru, and Panama and I imagine the Colombia Free Trade Agreements should be in pretty good position. Those are cases where in all cases we get the win because our country is open to products and goods coming, but their tariffs will come down.

Oh yeah? Give us just one example of trade agreements helping the U.S. economy.

Again, Engler from the conference call:

We saw with CAFTA, which was very controversial a year ago, only passed by a couple of votes in the Congress. We’ve already seen a substantial improvement just in the four Caribbean nations, happen to be pretty small in size, we’ve gone from a trade deficit of a billion dollars to a trade surplus. So U.S. companies have been able to open up some markets, they’ve increased their sales, and it’s because they have basically a more favorable environment.

That’s right. As Secretary of Commerce Carlos Gutierrez noted recently, U.S. exports in 2006 to the four countries that had implemented CAFTA — El Salvador, Guatemala, Honduras and Nicaragua — jumped 18.1 percent in 2006 over the previous year, turning a $1 billion deficit to a $1.2 billion surplus.

A $2 billion-plus turnaround in a single year, powerful evidence on behalf of free trade agreements. By working toward the framework allowing Congress to enact more such agreements, Speaker Pelosi sided with jobs and economic growth — resisting the stagnation that comes from protectionism.

P.S. The USTR has a factsheet on the trade-agreement framework worked out between Congress and the Administration. It’s a .pdf file available here.

The Oklahoma Legislature has adjourned for the year, having failed to enact Governor Brad Henry’s signature tort-reform initiative. Despite broad, bipartisan support, the reforms — which Henry proposed in 2004 — could not overcome the opposition of ….Governor Brad Henry.

On April 28, the governor vetoed SB 507, a comprehensive package of proposals to bring a measure of balance to Oklahoma’s civil justice system. (A state Chamber of Commerce fact sheet on SB 507 is here in .pdf format.) Henry cited the objections of the state’s attorney general and former trial lawyer, Drew Edmonson, in blocking the measure.

That reform is needed is hardly in question. The Pacific Research Institute’s 2006 Tort Liability Index ranked Oklahoma 38th in the nation, the same ranking it received in the Institute for Legal Reform’s lawsuit-climate survey.

In vetoing the bill (at the very last moment available to him), Henry said he hoped to still be able to work out a compromise measure during the 2007 legislative session. Accordingly, tort-reform supporters offered a compromise measure last week. The Oklahoman reported:

House Speaker Lance Cargill, R-Harrah, and Senate President Co-Pro Tem Glenn Coffee, R-Oklahoma City, had urged Henry to back the plan, which was put together by business and medical groups.

“This bill represents a true compromise, but also achieves reform,” Cargill said. “Oklahoma desperately needs lawsuit reform if our state is going to move forward.”

No go.

Oklahoma’s voters will ultimately decide whether Henry’s support for tort-reform was feigned, a political ploy that he never expected to be held accountable on. Kind of looks that way.

But in the meantime, businesses making siting decisions between Oklahoma and Texas will see at least one great disincentive for choosing Oklahoma. Last year, the Pacific Research Institute gave Texas its No. 1 ranking in the Tort Liability Index, in great part because Texas’ lawmakers and governor had successfully reformed the state’s civil justice system.

Compared to Oklahoma …

Earlier this week, blogger Carter Wood reported directly from Indiana on the roll out there of the southeast Indiana Dream It Do It campaign that will ensure a steady stream of skilled workers for that region’s manufacturers. (Here and here.) It’s so important for the future that Governor Mitch Daniels participated in the launch.

The Manufacturing Institute and the National Association of Manufacturers are not alone in having a concern about the lack of a skilled workforce. Companies around the country are seeking ways to make sure this dire forecast does not come true. An AP story earlier this week focused on the aerospace industry and how they are tackling it. Not long ago, I was on a panel with a Lockheed Martin speaker and he said the average age of their top engineers was about 50, many having early retirement in sight. According to the article one in four aerospace workers will be eligible to retire in 2008. How to replace so many talented employees?

Boeing and other companies in the Aerospace Industries Association are supplementing traditional recruiting with a greater use of the Internet. One prospective MIT engineering student was attracted to an Boeing ad on Facebook.com. Last year, Boeing sponsored a contest on Facebook and young people who listened to a short promotional and clever quiz were eligible to win an iPod Nano or iTunes giftcard. Boeing tied this contest to their overall recruitment efforts. Lockheed Martin started a chat room earlier this year on its Web site so potential employees can instant message with recruiters to get their questions answered.

To read the article, which appeared in the Miami Herald and other papers around the country, click here.

A new, bipartisan bill to promote private-sector research and development has just been introduced in the Congress. Passing this new and strengthened R&D tax credit — H.R. 2138 — is one of the most important things our lawmakers can do this year for the U.S. economy.

This credit encourages companies to invest in research, right here in the United States. More than 75 percent of the credit dollars go to support wages of employees engaged in R&D. Manufacturers, not surprisingly, are the largest, most effective users of this tax incentive.

And the credit does more than just create jobs. R&D spreads innovation through the whole economy, producing a higher standard of living for all Americans.

Right now, the R&D tax credit is due to expire at the end of 2007, expiring for the 13th time.
This on-again, off-again credit is no way to encourage U.S. investment, especially when other countries are aggressively promoting their own tax incentives. So this bill makes the R&D tax credit permanent, it makes it stronger, and it makes it more effective.

This bipartisan R&D tax credit bill is a major piece of pro-growth legislation. We applaud its sponsors, Reps. Sander Levin, D-MI, and Dave Camp, R-MI, and the NAM looks forward to working with them to see this bill passed into law and signed by the President.