Gassholes
Michael Hampton has a roundup of the oil legislation making its way through Congress.
Now on the other side of the coin is S. 1809, the Recapture Excess Profits and Invest in Relief Act, which would impose a temporary “windfall profit tax” on oil companies and redistribute that money to victims of Hurricanes Katrina and Rita, H.R. 4203 and S. 1631, the Windfall Profits Rebate Act, which would also impose a “windfall profit tax” and redistribute that money directly to American taxpayers on their tax forms, and H.R. 3664, the Consumer Reasonable Energy Price Protection Act, which would impose a “windfall profit tax” and distribute that money into the Low Income Home Energy Assistance Program.
Now the really frightening part of all of those proposals is that they would all cause gas prices to go up.
IO Error: Are gas prices going up or down?
The stinging sensation in your eyes is called Communism. The pure unadulterated collectivism of the phrase “Recapture Excess Profits” boggles the mind. They’re not even trying anymore to hide the fact that they think that all wealth belongs to the government. What’s worse, it appears that this bill has bipartisan support, further proving that the only difference between a Democrat and a Republican is which way their head was turned as they slept through Economics 101.
Simply put, every penny of tax levied against oil companies will be paid by consumers. This particular tax will cause gas prices to go up by 20 to 30 cents per gallon, at a time when prices are actually dropping at record rates on their own. Great thinking. New name for the people pushing these taxes: gassholes.
Sadly, my Senator (Byron Dorgan) is behind some of this legislation. I’ve been going after him on it in a few posts over at my blog, but this reader-submitted post from one of ND’s state legislator’s is probably the best. He was also going to submit it to all of our state newspapers as an op/ed, but I’m not sure if any of them ran it. They’re all pretty protective of our federal delegation.
What’s even dumber about this (from a North Dakotan’s perspective) is that Dorgan is sponsoring legislation that would put a halt on our state’s oil industry renewal. Because of the recent high gas prices oil companies have renewed their efforts to exploit ND’s oil resources. The high prices means it’s worth it to invest in the technology it would take to get the oil out of the ground.
This new exploration has meant more jobs for our state (our state-wide unemployment rate is at 3%, unemployment rates in our four biggest cities averages out to just under 2%) and more money coming in, yet all that would come to a hault.
Apparently because Byron Dorgan is a socialist at heart.
Khaled ruminates on comic book publishing. Michael Hampton discusses the importance of the Online Freedom of Speech Act. Angsuman discovers the ten commandments for manufacturers of consumer electronics.Mark discusses his displeasure with a new proposal which could cause “every penny of tax levied against oil companies to be paid by consumers.” And, Tom finishes his RSS for non-Techies presentation and publicly publishes an MP3 and accompanying PDF of
[...] Mark discusses his displeasure with a new proposal which could cause “every penny of tax levied against oil companies to be paid by consumers.” [...]
What, no mention of JRB? For a while there I thought it was all JRB all the time…
I was on a kick. I’m thinking of making JRB (may she live forever) into a recurring character. You know, maybe work in a “JRB bless America!” every now and then.
[...] IO Error has a great post on legislation that will have significant impact on gas prices (via TXFX…): Now on the other side of the coin is S. 1809, the Recapture Excess Profits and Invest in Relief Act, which would impose a temporary “windfall profit tax” on oil companies and redistribute that money to victims of Hurricanes Katrina and Rita, H.R. 4203 and S. 1631, the Windfall Profits Rebate Act, which would also impose a “windfall profit tax” and redistribute that money directly to American taxpayers on their tax forms, and H.R. 3664, the Consumer Reasonable Energy Price Protection Act, which would impose a “windfall profit tax” and distribute that money into the Low Income Home Energy Assistance Program. [...]
IO Error has a great post on legislation that will have significant impact on gas prices (viaTXFX…): Now on the other side of the coin is S. 1809, the Recapture Excess Profits and Invest in Relief Act, which would impose a temporary “windfall profit tax” on oil companies and redistribute that money to victims of Hurricanes Katrina and Rita,
HAHA! No shame in fulfilling your JRB fix when you need it…..
Personally, I’m still waiting for JRB’s Paris-Hilton-style sex tape moment.
Hm.. Personal fantasy of yours Rob?
Yeah. So?
Apparently I was just giving the people what they want.
I thought of the title to your post when I saw this picture on Drudge with the headline, “Oil Company Execs Defend Huge Profits”:
Gassholes
I’ve decided that Mark Jaquith is a genius. After talking with my wife this evening regarding the new legislation titled “Recapture Excess Profits and Invest in Relief Act”, I presented the argument of Communism. Apparently, Mark thi…
1) From a guy who doesn’t understand the economics of poverty, mocking other group’s understanding of economics is rather ironic (we won’t even talk about how Libertarian understanding of the topic is regularly mocked, from which we can assume Libertarians attended just one class from Economics 101 and then ran with it).
2) They don’t HAVE to raise prices. See, that’s what “profit” means…making more money than is spent. They aren’t losing money because of the taxes, except from profits, so they wouldn’t need to raises prices to break even. They WILL raise prices, and SAY it’s because the taxes are causing a financial hardship, but that’s a wholly different issue.
Because, yeah, let’s defend the guys who needlessly jacked up gas prices to $3+ a gallon, and attack the people who are rightfully upset over this abuse of the public.
Not to mention, defending those who are causing winter heating bills to thus rise to insane levels (including mine…must be nice for you folks down in Florida not to have to worry about spending an extra $300 per month for heat in the winter).
As for communism…I know, it’s terrible! How dare we put people ahead of profits; those poor dollar bills and cuddly multi-million dollar salaried CEOs need someone to defend them from the eeeevil, hateful, greedy consumers and wicked, wicked government full of their representatives!
Oil companies make about 9 cents in profit from every gallon of gas sold (assuming $2.60 per gallon). The government makes from 18.4 to 62.4 cents per gallon (with 18.4 being the Federal tax, and anything above that being State and local taxes). It may just be my flawed capitalism-focused college economics education speaking here, but it seems to me that oil companies aren’t making that much profit here (~3.5%) and that a much greater pump price reduction could come from reducing the government’s take.
Your statement that oil companies don’t need to raise prices assumes that they don’t need to make a modest profit. They do. And if the government levies taxes that cause their profit to decrease, they’re going to raise their prices and try to regain that lost profit. They wouldn’t be serving the interests of their shareholders if they didn’t.
Your rhetoric is hollow, and without any basis in fact. It’s the USA Today “record profits” headline without any mention that the profit margin overall is only 10%, and is 3.5% for gasoline, and that much of the profit generated by Exxon was from investments they liquidated. It’s the tired old complaint that companies shouldn’t make profits when prices are high… that they should sacrifice their profits for the good of their comrades/customers. I get it. You don’t like capitalism. It doesn’t matter how low profits from gasoline are, you’re still going to complain because prices are high, and your only concern is for the “common good.”
Whereas you like to get all weepy over Big Business, because it is made up of people, who (unlike people anywhere else) can do no wrong.
Your “modest profit” rhetoric is transparent. We’re talking about companies that made record profits this year — r e c o r d — not companies that are suddenly being made to suffer financially by the big, bad government.
I don’t really care that they only make 9 cents profit per gallon. Cry me a river. They make record profits in a year where consumers are being reamed by the prices of a necessity (gasoline is no longer a commodity, given its centrality to the functioning of our society and economy) and the corporate shell-game is not going to save them.
Basic economics, Mark: when you run a business with multiple income sources, and one of your sources is struggling while another is making record profits, you use money from the second source to bolster the first source.
You do this particularly when that under-performing source is a necessity required by millions, and knowing that when the millions find out you’re rolling in record amounts of cash while they’re scraping for change to pay your (needlessly) exorbiant prices, you’ll be put on the sacrificial altar where apologetics won’t save you.
You also don’t spend billions of dollars fighting new energy initiatives so you can maintain a death-grip on the fuel economy and its income.
Sorry, but we all have to live here together, and if you’re a big link in the chain like this, and your greed (and slavish devotion to shareholders over everyone-and-everything else) impacts everyone on down the line from you, then everyone else has the right to take you to task for it. We sink or swim together, regardless of empty ideals about complete liberty.
(Note the economic downswing caused by rising energy costs as fewer small businesses can afford to stay in the black, retain employees, or expand.)
Yeah. THAT’S WHAT THEY DID!
No, that’s not what they did. If you read the entire article, rather than simply focusing on a few select points therein, you see that they might have done so, not that they did. And it even says so right in the text you quoted.
There are plenty of unanswered questions yet that a congressional investigation of the issue should hopefully bring to light to resolve the situation, and bring some sort of answers regarding the sudden, unwarranted price explosions, the profit margins, and the sudden and precipitious recent drop in those same prices.
Read again:
They had to pay more to get crude oil, but they didn’t pass the entire cost of that price increase on to consumers, and thus kept prices lower at the pump than they would have been had they passed on the entire price increase.
Hurricane comes, crippling production and transportation capacity. Supply down, demand up. Prices go up as a result.
Production gets back into full swing, and demand falls as people see how expensive gas has gotten. Supply up, demand down. Prices fall as a result.
The price explosions weren’t unwarranted… supply was down and demand was up! That’s two reasons for prices to go up. And once again, prices didn’t rise as much as they would have if the oil companies had passed on the full price increase to consumers.
Once again you are ignoring the fact that the scenario you quote is just opinion, not fact. It has not been proven to be the case; the quoted scenario is supposition, not what actually happened, as the quote itself indicates (”…that suggests…”). Just because you WANT it to be the truth of the matter does not mean it is and does not mean you can argue that it is.
As to the price increases and supply/demand, the problem with your scenario is twofold: first, the prices shot up before the hurricanes struck, since prices are based on futures, not current conditions. Second, the actual increases do not match increases that would have been reasonable for a supply/demand situation — with increases of over 50 cents a gallon overnight in some places before the effects could have been felt locally.
Bob Slaughter, President of the NPRA, argues this is because the market pricing system failed due to the extremes of the Katrina situation, and I’m willing to accept that possibility. However, the economic realities simply don’t match the supply/demand scenario you provide as an explanation.
[...] From Tempus Fugit: The stinging sensation in your eyes is called Communism. The pure unadulterated collectivism of the phrase “Recapture Excess Profits” boggles the mind. They’re not even trying anymore to hide the fact that they think that all wealth belongs to the government. What’s worse, it appears that this bill has bipartisan support, further proving that the only difference between a Democrat and a Republican is which way their head was turned as they slept through Economics 101. Filed under: Politics, QotD by Robin S. @ 12: 53 on [...]
Tempus Fugit
[...] Gassholes [ Tempus Fugit | TxFx.net ] Pingback on November 4, 2005 @ 8:52 pm [...]
[...] on their own. Great thinking. New name for the people pushing these taxes: gassholes. Comments: View CommentsComments: View Comments Author: Mark Category: tax Date Published: 11/5/2005 12:00:00 AM Read Full [...]