Friday, February 02, 2007

Hillary on Big Oil
Check out this short clip on YouTube and explain to me how this is not Marxism. On record oil profits, Hillary says, "I want to take those profits and I want to put them into a strategic energy fund that will begin to fund alternative, smart energy." Here's an idea: instead of demonizing oil companies for making about a dime a gallon when we fuel up, let's lower the tax on gasoline. The government takes an average of 45.9 cents on every gallon (18.4 cents federal, an average state and local tax of 27.5 cents). In the last 25 years, domestic oil companies have paid $3.3 trillion (inflation adjusted) in taxes, over three times the amount of their profits for the same period! This is like earning $50,000 a year and having to pay all but $12,500 in taxes. Only a Democrat would think that's not paying their "fair share." Which would more effectively lower gas prices for the consumer - eliminating profits for oil companies (and their incentive to find and produce as much oil as possible) with the maximum price drop of 10 cents, or lowering taxes, with the maximum price drop of 46 cents? A better question - which solution scores points for populist Democrats?

Let's take a stroll down memory lane, to a wonderful time in our nation's history - the presidency of Jimmy Carter. In response to growing energy prices, he signed the Crude Oil Windfall Profits Act into law in 1980. This tax took 70% of the difference in price between a base price the government determined and the market price received by the oil companies. The result? The tax netted only $40 billion extra for the government in the beginning, 1/8 the amount predicted by Carter, and soon dwindled to almost nothing. Domestic production was cut by 3-6%, increasing dependence on foreign oil. In short, it destroyed the oil companies ability to make a profit, period.

The oil business is highly cyclical. There are years when they make tons of money (like this past year). There are also years when they lose billions. Tax and spend politicians know they are lying to you when they blame oil company profits for high gas prices.

1 comment:

Anonymous said...

That is hilarious!!! How do you know all that stuff? Does anyone point out the taxes?