|
|||||
Channeling NixonThe Chosen One has taken to talking about imposing a “windfall” profit tax on certain companies for the crime of having made record profits. Your correspondent, superannuated though he may be, is just barely old enough to remember the last time that national leadership sought to impose a windfall tax – that is to say, a tax above and beyond the normal level of taxation – upon successful corporations in time of general economic unease. I recall that – and this is a shocka – government intervention in the market had less than salubrious effects:
Something comes to mind about history, tragedies and farces, but I’m quite certain that It’ll Be Different This Time. Oh, and that the check is in the mail. And yes, it is only a cold sore. Why do you ask? If history is not to be our guide – and why should it, as we press forward with a Bold Strategy For Change? – then perhaps the present can be placed in context:
Look at the bright side, though: By placing a windfall tax on earnings, at least government can prevent the oil industry from investing in the kinds of R&D, refinement capacity and developing new sources that might drive prices at the pump back down. Wait… 20 comments to Channeling Nixon |
 |
||||
|
Copyright © 2009 Neptunus Lex - All Rights Reserved |
|||||
The Gubmint takes a much bigger piece of each dollar we pay for gas than do the oil companies…
As my dad (a former oil geologist) says, “Nancy Pelosi and Harry Reed are the independent oilman’s best friend.”
By restricting exploration, the guys who already have wells are practically printing money.
FWIW, Oklahoma (where I currently am) has about 200 drilling rigs in use now, about double what it was a year ago.
I have worked for one of the automakers for over 8 years now. In that time period, we have not had a profit margin like that. In fact, ours are usually to the negative anymore. We can’t pass along increased costs to the consumer (example: the price of cold rolled steel doubled Dec2007-May2008; did the price of your new car? No.) because the market is so saturated with products.
Now, a presidental candidate proposes doing the same to the companies whose stocks fund some of the largest pension plans in the country?
Pandering is all it is…especially in Lansing.
Lex … I love it that you’re quoting from this excellent article. I read it this morning and it’s so clear and well-written that even a fool could understand it. They don’t, of course. Pelosi is determined not to allow an energy bill to come to the floor, because if it did, it would of course pass, in spite of the Democratic majority. There are, of course, enough sensible Democrats who would join Republicans with their votes to pass it.
I love the Republican rebellion of Friday afternoon — and today as well. I think that the Republicans went in today equipped with the latest in cellphones and Blackberries and digital cameras to record the activities. Maybe Fox News and the Wall Street Journal and whatever centrist media there are left in this country will take notice.
And maybe I’ll get younger and better looking.
Marianne
And here I thought that they had quit blaming the Oil Company Boogeyman in favor of the Commodities Speculator Boogeyman.
Of course never will they admit what really did it. It started with the Nixon era policies you mentioned that squashed profits and caused something like 50% of the US drilling rigs to be retired. That was followed up by environmental regulations that have made it very difficult to develop anywhere in the US.
It’s funny how when you make it difficult and unprofitable to develop domestic energy sources, then all your energy comes from overseas.
I remember those times well. In a bipartisan way they were just trying to help ala F.D.R. , but everything they did just made things worse, from price controls to bailouts to the 55 MPH speed limit. I can still picture that knucklehead Carter giving a speech in a sweater…You’d think we’d learn from history of bad decisions made less than 35 years ago….
re Profit: You can even be more specific than industry. Microsoft and Google have profits above 20% annually. Obscene, eh? I want a rebate from that Geek Gates!
B.O.H. is a European style socialist in Populist clothing..If these are his ideas for America imagine what his policy goals will be? He makes Billary policy seem like big time libertarian capitalism…
There was a great cartoon on the back of the Washington Times commentary section Sunday (no link yet) on the Obamanation. Set to the music of the 5th Dimension’s “Up, Up and Away”, it was called “Hope, Hype and Away”.
b2
Hummm. With the upcoming Olympics in that heart of freedom and liberty, an excess gold medals tax would even the playing fields doncha think?
Seriously, as an American I’m glad Exxon/Mobile made so much money and is so strong and so damn good at the oil busness.
I don’t understand these people.
Got a question for you experts: how big does a profit have to be in order to be designated a “windfall” profit? How does it differ from an “acceptable” profit? We need some basic definitions here — and gosh knows, the Democrats won’t ask these questions. Don’t see how we can have any kind of discussion without defining these things…
Marianne
What’s amazing is that Wall Street was not impressed at all by the size of Exxon’s profits. They felt that they should be bigger and that they were not is a reflection of how producing oil is getting more difficult.
Just like this this guy told us it would.
That said, I’d be a little happier if the oil companies had to pay for some of the cost of defending their right to drill for oil. Maybe not in taxes but there has to be a way to incentivize them to do the right thing with the money……….
Skippy,
You are cryptic. How should a company defend its “right” to drill? Surely that is not a right? Perhaps you meant to say that the state has the right to forbid the act of drilling but in a democracy the state must back up its refusal to permit the expansion of the oil/gas supply and somehow justify that refusal to drill to the electorate? And how has the Congress justified that refusal? …oh, yeah, the party in the majority just refused to consider it and went on vacation.
Not for nothing, but roughly 75% of ExxonMobil’s earnings come from outside the US. Although I’m sure the dems will want a piece of the entire “windfall”. To wit, between 2003-07, XOM paid $64.7 Billion in US taxes (all forms), against US earnings of $46 Billion.
Additionally, XOM made capital investments of $21 Billion (on R&D, exploration, increasing refinery capacity, and improving environmental impact) in 2007, and plan to invests about $25 Billion a year over the next 5 years. Sure would be nice if a good chunk of that money could be spent on US exploration and development.
Who’d of thunk that processing and selling a product with massive and ever increasing demand would generate healthy profits. Amazing how that works.
What, one wonders, might be the profit margin of some professions like:
Community organizer
Tort lawyers
Entertainers
Professional athletes
That presumes of course that they actually have a real product that they produce and deliver, and possibly one neccessary for the existence of our civilization.
I bet they were all smart enought to not settle for the measly percentages one might make in grubby, environment-destroying work making real products.
And, finally, can we figure a profit margin for elected officials, or even a cost-benefit analysis. Now there is some seriously undeserved compensation that should be forcibly extracted from wallets– of the elected, not the taxpayers!
What do you mean, “do the right thing with their money”? Last I heard, the money belonged to their shareholders, that is until BHO expropriates it.
I’m a believer in Peak Oil theory, so I also believe its all down hill from here in terms of available oil supply.
There is no right answer, I just always find it interesting the veracity with which a lot of people who have to work hard for their money defend the right of companies to become filthy rich is all. Plus it pisses me off that I am not seeing any of that bounty translated into higher share prices in my mutual funds-of which Exxon stock is usually a part.
( Exxon is a stock held by a lot of pension funds et al). Or in the broader stock indices at all.
Plus it pisses me off that I am not seeing any of that bounty translated into higher share prices in my mutual funds-of which Exxon stock is usually a part.
I remain unclear as to how exactly confiscatory gov’t taxation policies would rectify that.
Skippy-san –
“Peak oil” as a theory has been around, in one form or another, since the first oil crisis of 1973. I remember well, as a kid in school, watching documentaries about alternative energies, with bearded, wizened experts proclaiming in solemn tones that we would surely exhaust world reserves of recoverable oil by 1990, or the year 2000 at the latest. Oil will not last forever, at least, not super-cheap easily recoverable oil, but as the price goes up, new sources become economically viable at the higher price, and the pool of recoverable reserves increases. If we had a sane energy policy, we could be recovering oil from all kinds of sources that could substantially increase the world’s total proven reserves, and achieve a new steady state price for several decades, probably somewhere around the $60 dollar a barrel level. The idea that we are on a tipping point, that supply will irrevocably decline and prices spiral ever higher, is based largely on rumor, innuendo, and unfounded pessimism. It fails to take into account the ingenuity and innovation that tends to confound “experts” and make a lie of their expansive “theories.”
The price has spiked largely due to psychological reasons, and due to an oversensitivity of world markets towards US energy policy. Even hints toward a change in that policy have driven the price downwards, dramatically. I paid $1.87 a gallon for gas in Corpus Christi, TX, on November 27, 2005. Demand has not so suddenly exploded over the last 3 years, nor supply shrunk, to drive the price to its present levels – it is inane energy policy, and the bleating of doomsayers that play into speculator’s ability to drive the price ever higher.
Why you are just an old fart, ain’t ya?
Old Age and Treachery will always overcome Youth and Skill, though.
Carry on, Grandfather Lex. Keep that cane handy. Have a nice day.
Subsunk
A guy that once worked for Nixon has a view in line with the adage commodities that rise in price, eventually fall:
http://www.freerepublic.com/focus/f-news/2056847/posts
There you go Skippy.
When it falls I don’t want to stop the process to recover our own “earl” offshore and on land from shale, etc. I’d rather pay our own greedy capitalist oil companies instead of that bullet-headed dude from Venezuela, old beady-eyes and that hook-nosed consortium from the Gulf States….
Our money will stay in house if we do. My fear is if the commodity drops in price common folks may forget about this recent spike like they have about 9-11. I say it’s a national security and collective, national mental health issue that we use our own energy resources!
b2
Seems to be this is a question of context. Exxon-Mobile is one of the largest corporations in the world, therefore, their profits will be huge as well. Their margin seems to be less than quite a few others out there. Take Starbucks for example, what’s their margin on a cup ‘o joe? 50%? Or Rush Limbaugh, didn’t he just sign a huge deal worth $38Million per year with a $100Million in signing bonus? Seems to me what we need is a Windbag Profit Tax, on Congress.
I denfend their right to become “filthy rich” as you put it because that’s what keeps people employed. If they’re not making money, they can’t afford to employ people and the economy gets worse.
Jim C