Well, Hillary Clinton has her plan for fixing the gas price problem. And from what I can tell, her idea of "fixing" the situation closely resembles what a lot of us thought she should have done to her husband a long, long time ago.
She thinks that the federal government should be in charge of deciding just what is an appropriate level of profits for the oil companies, and taking away anything above and beyond that amount. This is the same federal government that (insert your favorite government idiocy/mismanagement/spending fiasco/monumental screwup here).
On the surface, Clinton's notions have some appeal. ExxonMobil pulled in about $40 billion in profits last year, and that is enough to get anyone's blood boiling when they're forking over $50 at the pumps. (Count me among them.) But that number doesn't tell the whole story.
From what I understand, though, ExxonMobil paid about $100 billion in taxes last year. And I've also read that the oil industry pays half again that much ($150 billion) in tax-related expenses -- accountants and the like. If the CEO of ExxonMobil had enough cojones (translation: death wish), he'd go up to Capitol Hill, put those numbers up on a big piece of paper, and ask Congress "here's a quarter of a TRILLION dollars you're already costing us. How much more do you want?"
Hillary's idea -- a windfall profits tax on oil companies -- has the advantage of having been tried before. As this guy noted, the consequence of Jimmy Carter's bold initiative was to gut domestic oil production, increase the amount of foreign oil we imported, and ended up garnering 1/8 of the money originally projected.
The real atrocity here is that Clinton HAS to know her plan will be a disaster, and is pushing it anyway. I suspect this is so she can point at it and say "see, I'm trying to do something!" and whip up resentment and anger at Big Oil.
Because that's the important thing here: to look like she's doing something, and to harness people's anger and other emotional responses over simple reason. The consequences of her policy won't be obvious until after she's elected, though, so that's OK.
That's the same kind of short-sighted thinking that her husband (who still needs to be "fixed") evinced when he argued against developing the oil in the Arctic National Wildlife Refuge, saying that it wouldn't provide any real benefits for at least ten years.
He said that in the mid-90s, a little over a decade ago.
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Comments (6)
ExxonMobil made $40 Billion... (Below threshold)1. Posted by Stephen Macklin | May 5, 2008 7:18 AM | Score: 2 (2 votes cast)
ExxonMobil made $40 Billion in profit on $220 Billion in sales. The only reason your blood should be boiling is if you own stock and expected a better rate of return.
1. Posted by Stephen Macklin | May 5, 2008 7:18 AM |
Score: 2 (2 votes cast)
Posted on May 5, 2008 07:18
2. Posted by Bob | May 5, 2008 7:20 AM | Score: 3 (3 votes cast)
Anybody - including any of the three Presidential candidates - who doesn't think increasing taxes on oil companies will decrease domestic oil supply should go back to Econ 101. Oil company stocks are owned in large part by employee 401K and other pension plans. Who will a drop in profits and stock prices really hurt? Probably NOT the oil company CEOs. If you want more of something, REDUCE the taxes on it; if you want less of something, tax it MORE. This is true across the board. "Windfall" profits mean more gas supply. If you think high prices are bad, wait until you find your local station is out of product and there are lines around the block at the only stations that have any supply.
2. Posted by Bob | May 5, 2008 7:20 AM |
Score: 3 (3 votes cast)
Posted on May 5, 2008 07:20
3. Posted by hermie | May 5, 2008 7:57 AM | Score: 3 (3 votes cast)
"Windfall" profits taxes also have the effect of forcing smaller companies out of the market, as only the larger companies can afford to support a smaller profit margin.
The oil companies have become the bad guys primarily because of the dollar size of their income, but if you made a comparison of their financials to other businesses, they aren't that much different profit-wise than most other organizations in the US.
3. Posted by hermie | May 5, 2008 7:57 AM |
Score: 3 (3 votes cast)
Posted on May 5, 2008 07:57
4. Posted by Les Nessman | May 5, 2008 10:22 AM | Score: 1 (1 votes cast)
"ExxonMobil pulled in about $40 billion in profits last year, and that is enough to get anyone's blood boiling when they're forking over $50 at the pumps. (Count me among them.)"
Only those who fall for the populist and/or Marxist form of politics would have their blood boiling at Big Oil.
I know $40 bil is a big, bad scawwy number, but considering that oil is the lifeblood of human activity and civilization would collapse without it at this moment; it's not too far out of line.
Exxon made $40 bil? How much did the gov't make from Exxon? You should be much, much more angry at the gov't.
4. Posted by Les Nessman | May 5, 2008 10:22 AM |
Score: 1 (1 votes cast)
Posted on May 5, 2008 10:22
5. Posted by Jamie | May 5, 2008 11:18 AM | Score: 3 (3 votes cast)
Another attempt to demonstrate the evils of capitalism. When supply costs go up, successful businesses increase their sales price, to maintain the same profit margin. This ain't rocket science, folks!
We need the oil companies to have even more profit in order for them to develop a more secure (and less costly) supply chain. Why not let them be 100% free from paying taxes on monies spent towards that goal? Free up as much capital as possible for them to build new refineries, locate and drill for oil, and develop more efficient techniques to do both.
Oh, I forget. Any solution that gets government LESS involved is automatically off the table.
5. Posted by Jamie | May 5, 2008 11:18 AM |
Score: 3 (3 votes cast)
Posted on May 5, 2008 11:18
6. Posted by JLawson | May 5, 2008 4:37 PM | Score: 1 (1 votes cast)
What I would like is for someone to ask Her Highness just HOW taxing the oil companies is going to increase the supply of oil.
It shouldn't be hard to answer, I would think. After all, she's smarter than economists.
6. Posted by JLawson | May 5, 2008 4:37 PM |
Score: 1 (1 votes cast)
Posted on May 5, 2008 16:37