Friday, October 28, 2005

Hands Off The Windfall Oil Profits

It's heartening to see that Porkopolis is not the only one calling for some free market sanity ( see: Democratic Senator calls for Windfall Profit Tax and Economic Simpletons: The O'Reilly X-Factor ).

Republican Senate Majority Leader Frist should get back to explaining his seeing-eye dog trust transactions, stop the nonsense of calling for Senate hearings on oil profits and tell the likes of Senator Clinton to keep their Hands Off The Windfall:

HOUSTON - A record earnings season for the oil industry is stoking increased grumbling from politicians, citizens and activists who want the U.S. government to levy a windfall profits tax on companies that are enjoying their highest profits ever. This week, Exxon Mobil announced third-quarter net income of $9.9 billion, up 75%. Royal Dutch Shell posted $9.2 billion, up 68%. BP advanced 27% to $5.3 billion. It's even better at smaller operators like Marathon Oil, where earnings more than trebled to $770 million.

In a sense, America should be happy to see those profits; they imply that America's energy supply system is efficient. If Big Oil wasn't making money in a time of record energy prices, then we'd really have a problem.

Sen. Hillary Clinton (D, N.Y.) doesn't see it that way. She introduced a bill this week that would levy $20 billion in annual taxes on oil companies to help subsidize energy costs of low-income households. Though the bill stands no chance of passage, it illustrates the terrifying delusion that politicians think they know better than captains of industry how to maintain cheap energy supplies for America. If put into practice, a bill like Clinton's would cause more harm than good. Giving $20 billion in free energy to low-income families would cause a huge spike in demand for oil and natural gas supplies that are already stretched tenuously thin--pushing prices up even further, for everybody...
It would be refreshing to hear this from an inside the beltway politician, but don't hold your breath:
  • Oil Companies are big employers...profits allow them to stay in business and employee more people that pay payroll taxes.
  • Oil Companies provide a service and products in demand...they take multiple risks (political, capital (ever hear of a dry hole?), injury from working in harsh conditions, etc.) in delivering those products/services.
  • Oil Companies are us/U.S. (as in the United States)...investors in pensions, retirement funds, college funds, 401ks, etc. own the oil companies... those profits go directly back into the economy.

    At least 50% of Americans are stock holders and many of them invest directly or indirectly in energy/oil companies. Are those that advocate smaller profits also advocating a smaller pension for grandma?; A smaller college fund for Jimmy and Susie?


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