Are these people insane? With oil prices as high as they are and food prices shooting up because of transportation costs, they want to raise prices even more by taxing oil companies? Do they actually think that the oil companies won't just pass that cost on to the consumer?
With gasoline prices topping $4 a gallon, Senate Democrats want the government to grab some of the billions of dollars in profits being taken in by the major oil companies.How the heck does Durbin think taxing the profits of the oil company is going to rein in energy prices? How does it do anything but raise prices by giving the government a cut of the profits? When will these people learn from history?Senators were to vote Tuesday on whether to consider a windfall profits tax against the five largest U.S. oil companies and rescind $17 billion in tax breaks the companies expect to enjoy over the next decade.
"The oil companies need to know that there is a limit on how much profit they can take in this economy," said Sen. Richard Durbin of Illinois, the Senate's No. 2 Democrat, warning that if energy prices are not reined in "we're going to find ourselves in a deep recession."
The American Petroleum Institute, which represents the major oil companies, has been reminding lawmakers that in the early 1980s, when the government imposed windfall profits taxes on oil companies domestic oil production dropped and imports increased.If it weren't for the Democrats, we wouldn't be in this mess right now. If they had not fought drilling in ANWR and offshore, we would have a supply of domestic oil and the price would be much lower.
And then there's this bit of silliness:
Authorize the Justice Department to bring charges of price fixing against countries that belong to the OPEC oil cartel.What law are they violating? In what court of law will they bring these charges? How are our laws binding on them? Talk about imperialism! So, all you BushHitler people, what do you say about this bit of overreach?
But they actually have an excellent idea in the bill that would probably end some of the speculation:
Require traders to put up more collateral in the energy futures markets to curb speculation.Too bad it's part of this mess of a bill that won't get to a vote.
An interpretation of this post from the Reformed perspective:
It would be nice if our leaders were wise, wouldn't it? Who understood how the economy worked and wouldn't try to over correct when there is a downturn. They usually wind up doing more harm than good.
How is this thought Reformed? I believe that wisdom has been undervalued by not only the secular community but the Christian community as well. Christians believe that if we are to do something, then we need biblical proof to do it. But the Bible doesn't give us detailed instructions for anything. Take worship, how are we to worship the Lord Sunday morning? How about baptism? Where does it give us detailed instructions on who to baptize and how to do it?
Wisdom, not proof texts is the way that we should be governing our lives. How do we gain this wisdom? Through the study of the general principles of the Bible and then living our lives in the knowledge of those principles. That's how God expected Israel to live in the promised land. He gave them some examples of civil law but he didn't cover every situation, that's why they had judges to help interpret the law that fit the dispute before them.
But what does any of this have to do with the Senate? Well, a Christian guided by wisdom should understand when their Senators are lacking wisdom and should bring it to their attention. Ignoring how the economy works, ignoring history, ignoring the consequences of their actions is not very wise and will lead to real hardship felt by those who can least afford higher prices, the poor. I can afford gas at this price (just barely) but there are many who cannot. Love for our neighbor alone should cause us to demand that Congress open up drilling in any area that they can find so that we can drive down the futures market to a more reasonable price and not burden the oil company with taxes that they will just pass on to those who can least afford to pay them.
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Scientists prove Politicians Stupid
Recent studies of the human brain have discovered many distinct features. Scientists have realized that inside our brain is a reptilian brain. Reptiles having among the least amount of intelligence in the animal kingdom. This area of the brain is responsible for the dominance hierarchy behavior in animals. Meaning it’s function is basic survival and climbing the status ladder so to speak. So invariably people always trying to rise to the top of the social/economic ladder are using the least intelligent area of their brain. Thus politicians being among the highest positions in our society are the epitome of this.
www.truenewspaper.blogspot.com
Anonymous, where exactly are oil companies supposed to "turn those profits into greater oil production." Congress has made it explicitly clear that oil production is not going to be increasing within the U.S.; and American companies have little say in the way OPEC or Russia conduct their business.
"... those who backed the Iraq War promised that we would end up paying cheaper gas prices as a result."
yeah, i'm reminded of that every time i fill the tank. apparently iraq was supposed to be our 51st state? gee, where could they have gone wrong? thankfully i only fill my tank about once a month (better than the once per week that i used to do).
as for mccain on the issue, i do give him credit for his acceptance of global warming and of voting against drilling in anwr. but then he claims that we can achieve independence from foreign oil in just 5 years but earlier he voted NO on reducing oil usage by 40% by 2025. he clearly has no idea what he's talking about, because 5 years is a pretty impossible goal and moreover, his voting record shows that his heart's not in it. he has flip-flop-flipped on the benefits of ethanol (and on the kyoto treaty). he's pushing nuclear power as the only solution to our energy and environment problems while he neglects the national security risks involved and neglects to address the nuclear waste issue.
"Anonymous, where exactly are oil companies supposed to "turn those profits into greater oil production." Congress has made it explicitly clear that oil production is not going to be increasing within the U.S.; and American companies have little say in the way OPEC or Russia conduct their business."
i didn't say that oil companies were supposed to "turn those profits into greater oil production."
considering that the u.s. most likely passed its peak oil production sometime in the 70s, it's going to be tough going, right? the easy oil is dwindling so they need to start going after heavy oil, extra-heavy oil, or bitumen. the problem with those is that getting refined oil from those creates even more greenhouse gas emissions than the standard processes of "producing" easy crude and such processes were banned by congress (the energy independence and security act). so, what can they do? they can invest their profits to expand refineries or into the development of alternative energies.
Tax Breaks for Oil Companies
The Chicago Sun Times is not happy about welfare payments to oil companies:
Now's a curious time to be dishing out oil welfare, Editorial, Chicago Sun Times: The U.S. government over the next five years will give a windfall of $7 billion to oil companies -- yes, the same oil companies that reported record profits last year. But wait, it gets worse: If one oil company that is suing the government succeeds, that windfall could hit nearly $35 billion. Oh, and one more thing: There appears to be little anyone can do about it. Think about that the next time you pay a small fortune to fill your tank.
There is nothing illegal about the program... In fact, some folks might argue its goals were laudable 10 years ago, when the federal government with bipartisan support tried to encourage oil companies to drill in the deep waters of the Gulf of Mexico by promising to forgo the normal 12 percent or 16 percent royalty payments on leases there. Oil and gas prices were relatively low at the time, and it was deemed too financially risky for oil companies to invest in deep water drilling without the incentive. But isn't taking risks in hopes of gaining future profits what the market is all about? This was a bad idea from the start. ...
Many companies stopped claiming relief when oil and gas prices rose above certain trigger points built into the leases -- about $35 per barrel for oil. But those price triggers were waived in leases signed in 1998 and 1999 because companies still weren't investing ... and those leases will account for most of the $7 billion windfall. And several companies are challenging whether the Interior Department had the authority to include those price triggers in the first place. ...
While some lawmakers said they will try to undo the terms of leases that are in some cases 10 years old, they will probably fail. ... While we don't favor a new tax on the oil companies' record profits, those firms aren't doing themselves any favors by refusing to pay royalties while they're rolling in the dough. They might find it hard to win incentives the next time their industry is in a slump. We can hope so. The oil industry can make plenty of money without the benefit of corporate welfare.
I don't know much about the challenges to the price triggers, but on the $7 billion I am not quite as shrill. This isn't what I think of as welfare, this was an attempt to use incentives to encourage more investment by oil companies. The debate on whether incentives should be offered in the first place aside, if profits are dangled in front of firms as an incentive to encourage investment or other behavior, then it undermines the policy the next time you try to use it if you take the profits away from the firms that act on the incentive because they are excessive by some definition. If excess profits are a worry, then write the policy to cap or limit profits up front (or in this case leave them in place) so that firms know the true reward for investment, don't take the profits away or use the profits as political weapons after the fact.
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