Misguided
In this season of high gas prices and finger-pointing, the Tax Policy Blog notes that - since 1981 and the passage of the Windfall Profits Tax - government has made more off of oil than…well…oil companies. The cumulative total is: government - $1.65 trillion, oil companies - $1.12 trillion. Here’s a summary (graph at link):
…during most of that 25 year period, government tax collections were nearly twice industry profits in any given year. Indeed, in 2002, before the recent price spikes, the industry earned a collective $20.5 billion in profits. However, government collected more than $50 billion in combined income, property, severance, and excise taxes in the same year.
If Congress really wants to grill those which gain the most from oil profits, it need look no further than its own chambers.
Newsweek’s Robert Samuelson finds another problem with the scenario:
Members of Congress complain loudly about high oil profits ($40.6 billion for ExxonMobil last year) but frustrate those companies from using those profits to explore and produce in the United States.
Instead of demonizing oil companies even while reaping massive monetary benefit from their labor, wouldn’t we be better served encouraging them to re-invest in the things that will keep energy affordable?
I completely disagree with that last paragraph. first of all, exactly what labor have the oil companies done to warrant these profits? check this blog post: http://www.mnpact.org/sblog/blog.php?id=1085
Secondly, we have tried to encourage them to re-invest — $18 billion in tax breaks worth over the last 10 years — all they do is lobby for more places to drill; even though our oil supplies have been adequate. Even major shareholders are now trying to use their influence to force them to invest in alternative fuels. The Rockefeller family is doing just that at Exxon.
http://www.forbes.com/business/2008/04/30/rockefellers-exxonmobil-green-biz-energy-cx_af_0430rockefellers.html
“all they do is lobby for more places to drill”
And all we do is tell them they can’t. Green investment in the future is fine, but what about producing more domestic oil?
“exactly what labor have the oil companies done to warrant these profits?”
Exactly what labor has the government done to warrant its profits? Certainly a lot less than the oil companies.
You missed the point. They don’t need more places to drill — supplies are NOT the problem. The issue is speculative commodity pricing which is allowing the oil companies to reap a windfall. If they would take those profits and invest in alternative energy, then the profits might serve a pupose. Since they can continue to reap exorbitant profits on the same output, why would they want to? The government is the only entity that can fix this — otherwise we will be dependent on fossil fuels until there simply is no more to exploit.
I didn’t say supply was necessarily an issue. But creating more supply is a good thing if you are hoping to lower prices.
You are suggesting that the only investment we allow oil companies to do is in alternative energies. I would prefer they be allowed to invest in increased domestic production.
I don’t subscribe to peak oil theories and I certainly don’t believe government can “fix” much. The current state of ethanol and the food supply should testify to government’s inability to fix something without breaking another.
The last thing we should want, if cheap energy is the goal, is for the government to get more involved.