Taxes, Taxes and More Taxes on Oil
There's nothing like repeating a mistake to give an entertaining show of stupidity. Or at least a demonstration of being a slow learner. Does Obama qualify for Special Ed when it comes to economics, especially when the subject is the economics of oil? Yes. He needs help. A lot of help.
Like most Americans, he's oblivious to the fact that Exxon paid $106 billion in taxes in 2007. That huge figure was taken from the $404 billion Exxon collected from its global base of customers buying its products. Out of that $106 billion in taxes, $30 billion went to the US government. Its profits of $40 billion were reinvested in the business and returned to investors as dividends. Those dividends were collected by everyone with a pension account and millions of others who invest in oil stocks.
It's hard to understand how nailing Exxon with punitive taxes will increase oil supplies or reduce gasoline prices. It's hard to understand because hitting Exxon with punitive taxes will lead to a reduction of oil supplies and an increase in gasoline prices, which will probably cause Obama to raise rates further as he attempts to choke to life out of economic reality. Clearly Obama has already lost his mind. Actually, he is performing for the choir. His audience is simply demanding that he follow their script, no matter how economically damaging it becomes. If high taxes on oil companies cause more misery at the pumps, then they'll claim it will take even higher rates to discipline the bastards.
Jimmy Carter learned that threats of harrassing oil companies with Windfall Profits Taxes is a good way to lose an election. Of course "talking" with Iranian screwballs is another way to lose an election.
Obama says he would impose oil windfall profits tax
Mon Jun 9, 2008
RALEIGH, North Carolina (Reuters) - Democratic presidential candidate Barack Obama said on Monday he would impose a windfall profits tax on U.S. oil companies as he sought political gain from Americans' pain over high gasoline prices.
Launching a two-week focus on the economy after clinching the Democratic presidential nomination, Obama drew a sharp contrast between his economic policies and those of John McCain, his Republican rival in the November election.
"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois senator said.
Like most Americans, he's oblivious to the fact that Exxon paid $106 billion in taxes in 2007. That huge figure was taken from the $404 billion Exxon collected from its global base of customers buying its products. Out of that $106 billion in taxes, $30 billion went to the US government. Its profits of $40 billion were reinvested in the business and returned to investors as dividends. Those dividends were collected by everyone with a pension account and millions of others who invest in oil stocks.
It's hard to understand how nailing Exxon with punitive taxes will increase oil supplies or reduce gasoline prices. It's hard to understand because hitting Exxon with punitive taxes will lead to a reduction of oil supplies and an increase in gasoline prices, which will probably cause Obama to raise rates further as he attempts to choke to life out of economic reality. Clearly Obama has already lost his mind. Actually, he is performing for the choir. His audience is simply demanding that he follow their script, no matter how economically damaging it becomes. If high taxes on oil companies cause more misery at the pumps, then they'll claim it will take even higher rates to discipline the bastards.
Jimmy Carter learned that threats of harrassing oil companies with Windfall Profits Taxes is a good way to lose an election. Of course "talking" with Iranian screwballs is another way to lose an election.
Obama says he would impose oil windfall profits tax
Mon Jun 9, 2008
RALEIGH, North Carolina (Reuters) - Democratic presidential candidate Barack Obama said on Monday he would impose a windfall profits tax on U.S. oil companies as he sought political gain from Americans' pain over high gasoline prices.
Launching a two-week focus on the economy after clinching the Democratic presidential nomination, Obama drew a sharp contrast between his economic policies and those of John McCain, his Republican rival in the November election.
"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois senator said.
posted by no_slappz at 10:59 PM
4 Comments:
A little history lesson, the idea of windfall profit tax was first constructed in the 70's as part of a bargain with big oil companies. Gas prices were deregulated--no more price control--however, oil companies agreed to open themselves up to windfall profit tax. There are no innocent victims here.
The administration of such taxes proved difficult, but that is not to say the original idea was unsound. Let's get this straight; it is not a punitive tax. "Punitive" infers punishment for wrongdoing or malice. The goal is to level the playing field.
You wrote--"It's hard to understand because hitting Exxon with punitive taxes will lead to a reduction of oil supplies and an increase in gasoline prices, which will probably cause Obama to raise rates further as he attempts to choke to life out of economic reality." There is no logical nexus btwn windfall taxes and higher gas prices--actually, it is quite the opposite, as windfall taxes would increase as well.
If employed once again, windfall taxes will go directly to the government--and hopefully to the war, or stem-cell research if you'd like.
shine, you have confused price controls on Natural Gas -- the stuff that flows into the kitchen stove or heats the house -- with Gasoline.
Natural Gas was deregulated in 1978. Even though deregulation was the right thing to do, it caused huge problems that lasted about 15 years.
Oil prices and gasoline prices have NEVER been regulated. Never.
However, the US has rationed gasoline at various times -- during WWII, 1973 and 1979.
Your entire story about deregulation is complete fiction. Moreover, your understanding of taxation and its market impact is close to zero.
Where did you hear this crazy story that you seem to believe?
Wow. I guess that I gave you more credit than you deserve. I really hope that your reader(s?) are smart enough to do their own research.
Directly from WTRG Economics: Oil Price History and Economics--http://www.wtrg.com/prices.htm
"Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.
The U.S. petroleum industry's price has been heavily regulated through production or price controls throughout much of the twentieth century. In the post World War II era U.S. oil prices at the wellhead averaged $24.98 per barrel adjusted for inflation to 2007 dollars. In the absence of price controls the U.S. price would have tracked the world price averaging $27.00. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19.04 in 2007 prices. That means that only fifty percent of the time from 1947to 2007 have oil prices exceeded $19.04 per barrel. (See note in box on right.)
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity OPEC abandoned its price band in 2005 and was powerless to stem a surge in oil prices which was reminiscent of the late 1970s."
or this--at inflation data--http://www.inflationdata.com/Inflation/Inflation_Articles/2000_vs_1970s.asp
"In the 70's we had Oil coming out of an era where the US controlled the supply and the price and entering an era where OPEC was in control.
In the 70’s, war in the Middle-East had a drastic effect on the price of oil. Syria and Egypt attacked Israel in 1973 resulting in a backlash of support from the US and other Western countries. In retaliation several Arab Oil exporters imposed the “Arab Oil Embargo”. This resulted in a drastic increase in the price of oil and showed the Arabs the power they now had. By the end of 1974 the price of oil had quadrupled.
In response to foreign price increases the US instituted price controls on domestically produced oil. This ill advised price control policy caused U.S. producers to receive less than the world price for oil. So naturally they cut back on costs like exploration etc."
or this
http://cr.middlebury.edu/es/altenergylife/70's.htm
or this
http://www.eia.doe.gov/emeu/cabs/AOMC/7079.html
and FINALLY
a piece from Joseph Thorndike from the Tax History Project on NPR
http://www.npr.org/templates/story/story.php?storyId=90142714
shine, again, the US government has NEVER regulated oil prices. But during WWII, and during oil shortages gasoline was rationed.
It seems you are misreading these silly reports.
If you want to argue that OPEC has influenced prices, that's one thing.
You copied:
""Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply. "
You own documentation clearly states the impact of the free market on oil prices.
You copied:
"The U.S. petroleum industry's PRICE has been "heavily regulated" through production or price controls throughout much of the twentieth century."
The PRICE has not been regulated anywhere. But OPEC has ALWAYS set production quotas. OPEC set quotas to maximize revenue. Of course the quotas influence price.
Do you understand the US is not a member of OPEC?
Moreover, US oil companies are not agencies of the government. Their goal is to produce oil at maximum profit -- which is NOT obtained by cutting production. However, for many years it was easy for oil production to exceed demand.
Today we are in a period when production is closely matched to demand because global demand has risen faster than global production.
But anyone who asserts that oil prices have been "controlled" in the US is simply wrong.
There is one exception -- in 1972, when Wage and Price controls were put in effect, for about 6 months. That happened because the federal government believed inflation was too high. Inflation in 1972 was about 6%.
Once gain, the ONLY energy prices in the US that were government controlled, were prices for Natural Gas.
Your claims are merely examples of the reality that crude oil traded in various price ranges over various historical periods. Take notice of the fact that nowhere in your documentation is there any statement about the US government fixing oil prices at any level.
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