- Record Oil Profits by munificent
19 y
2,605 9 Messages Shown
Blog: Leadership
The Windfall Profit Tax
Published: November 9, 2005
Some members of Congress appeared to be shocked to learn that oil companies would have record-setting profits this year, some $100 billion, collectively, for Exxon Mobil, BP Amoco, Royal Dutch Shell and ChevronTexaco. Soon they began thinking aloud about a windfall profit tax, with Senator Judd Gregg, Republican of New Hampshire, saying that the oil companies had "taken advantage of the trust of the American people."
A windfall tax is a good idea. But justifying it by demonizing the oil companies only perpetuates Americans' false belief that high energy prices are primarily the fault of Big (Bad) Oil. They're mainly due to supply and demand, so consumers' insatiable oil thirst plays a major role. The oil companies are indeed reaping profits from hurricanes and other events, and a strong case can be made for taxing those windfalls. But outsized consumer demand made those external events so profitable.
To be effective, a windfall tax should be part of a strategy to reduce oil dependence. Such a strategy would depend on reducing consumption.
Top executives of the world's biggest oil companies will appear today at a Senate hearing. Lawmakers would be wise to stress why a windfall tax is both fair and necessary. In brief, for consumers, oil price increases are like a tax with no public benefit. Americans have deep national interests in reducing oil demand, but oil companies have little incentive to invest their windfall profits in ways that would advance those interests.
Properly structured, a windfall tax would generate money for mass transit and alternative fuels, for helping carmakers move from sport utility vehicles to energy-efficient models, and for other ways to cut demand. It would bring in so much money - more than $24 billion this year, if it was set at 50 percent of the profits on oil sales above $40 a barrel in 2005 - that some could also be used to help consumers cope with the current high prices, including providing a few billion dollars for home heating aid for the poor.
But using all of the revenue to provide consumer rebates - as some lawmakers propose - would be counterproductive because that would foster only more consumption.
The windfall tax would also make it easier for Congress to take the more difficult but necessary step of raising the federal gasoline tax. Money from the windfall tax could pay for the initial investments encouraging conservation. Then, as higher gasoline taxes took effect, some consumers would have alternatives to long commutes in gas guzzlers. When the windfall taxes dried up, the gasoline tax money would be available to continue investments in an oil-independent future.
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munificent
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- I don't fully agree by SqueakyClean
19 y
1,467
The oil people were selling the oil at market prices. Prices worldwide went up. Why didn't the government just tell the oil companies that the prices were "too high" and force them to lower the prices, during the price escalation. It's called free market. If the prices go up, if demand goes up, if supplies are reduced... that's the way it is, folks! Should the companies have just pretended nothing was different? Don't be upset if some people made a lot of money while it happened!
What about people making money in the real estate boom? What about companies like coca-cola making big bucks off of sugar water? How about WALMART? They have like $100 billion dollars, give away charitable money in large amounts (although relatively nothing - what is $1 million dollars out of $100 billion? NOTHING) which makes them "look good" except for the fact that Walmart still has obscene amounts of money, and yet the employees have sucky jobs with insultingly low wages and not enough benefits. How about the government go after Walmart and start reducing the Walton's take-home billions? Impose a huge tax on their profits! And tell the public to stop going there for fun and making impulse purchases. They can cut back on buying the DVDs, towels, t-shirts, candy, toys, and other junk they didn't need. That will save them money so that they can pay more for the stuff they do need (and we can reduce buying from China).
That oil thing has too many ramifications that should be applied to other industries.
I do agree that if a windfall tax is imposed, it should go toward reducing petroleum dependency and developing alternates, etc.
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SqueakyClean
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- Squeaky- In the midst of natural disaters, political strife, war and yad... by 9thbody
19 y
1,610
| But the largest recorded profits-This is out of the ordinary given the circumstances. But I'm happy to hear all points of view- and certainly in America Profits have to be HUGE, to have congress impose "windfall" profit tax- we are a coutry of excess-Imagine the excess to impose a tax called windfall?
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9thbody
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- I'm not surprised by SqueakyClean
19 y
1,460
I'm not surprised that they made record profits.
But that's their benefit. Everyone else shouldn't get mad that they profited so much. Either take them to COURT and convict them as GUILTY of a heinous CRIME or leave them alone. Don't "tax" them. That is like the games I used to invent as a child. Rules varied, the general idea was that no matter what happened, I always won.
War, Natural Disaster, whatever. That's their money. Nobody, including the government, deserves any more than the normal tax on that money.
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SqueakyClean
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