Big Oil Big Profits
Big Oil means big profits for big government.
I am writing about this today because shortly Congress will again be talking to Big Oil and some in Congress will be blaming big oil for making their drive to work more expensive, and making record profits when the rest of the nation is in recession. These accusations are absurd and dishonest and need to be vetted.
Even though these companies are bringing in a lot of money, this fact alone does not necessarily mean they are reaping giant profits. Especially when the government is already draining them like overzealous vampires. In fact, in the past quarter century governments have profited more from Big Oil that its shareholders according to a Tax Foundation study.
Congress shouldn’t ever look down upon someone who is making a profit, and it definitely shouldn’t when they are the ones making the largest profit.
Undoubtedly some Congressman will introduce a windfall profits tax in the next several months. Usually I would think that this display of bad economics and horrible public policy would fall to the Democratic side of aisle. Their side of the aisle likes antagonizing industry of any kind and supporting those that drain society of its resources. However, in recent years this assumption has only been partially correct. Recently, one of the strongest advocates of a windfall profits tax is not only a member of the Republican party but a senior member of the Senate on a the committee of jurisdiction.
As Congress talks about these high prices please remember your supply and demand curves from Economics 101. The idea of a supply and demand graph is that if demand increases and supply stays the same then price only has one place to go. Up. So, lots of people want oil, the supply is stable, so prices will continue to increase.
Maybe Government should tax big oil less if they care about windfall profits?
Representative Emanuel Cleaver | The Political Bear:
[...] taken the time to step back from the issue for even a second and look at the numbers objectively. A few posts ago, I wrote about a Tax Foundation study that shows that government has profited from Big Oil more [...]
Posted on April 2nd, 2008 at 7:58 am