Record Windfall Obscene Profits

A lot of people are really up in arms about the oil companies, and I gotta say I’m not exactly pleased as punch myself. But all this talk about how unfair it is for these companies to make all this money while Americans are paying so much for gasoline and how they should be taxed extra and so on and so on defies belief.

As far as I can tell, oil companies made about 73.8 gazillion dollars in profit last year. This, of course, is a lot of money. How did they make it? Mostly by buying, processing, transporting, and dispensing gasoline and related products, of course.

As far as I can tell, Americans bought approximately 189.3 braziiliongillion gallons of gasoline and related products last year. This works out to a profit of x cents per gallon, and a profit margin of n.

So are we saying that every business whose profit margin equals or exceeds n must pay extra taxes to make up for its obscene record windfall?

If not, why not?

We also get silliness about how the Dems have a record of voting against energy policy because they want to cut the lifeline on oil and encourage alternative sources of energy.

This, apparently, means things like nuclear electrical plants, oil from coal, and wind farms off Cape Cod.

Good to know that the Dems have been championing these programs while the Republicans line up to line Dick Cheney’s pockets. Why doesn’t someone just wave the magic wand and convert all of our cars to run off of good intentions?

Most of the alternative energy options only make sense when oil prices are high, anyway. Wave that magic wand to get oil back to $75 a barrel and the R&D will dry up real quick.

I’m in favor of alternative energy. Give me a plug-in electric car with sufficient range, performance, and options powered by nuclear plants and we have ourselves a deal. Want to use solar or wind instead of nukes? Make it pay and we have a deal.

Don’t like the price of gas? Stop buying so damn much of it.

Want to impose punitive taxes? That’s smart. Adding two cents tax per gallon surely won’t raise the price of gas by two cents per gallon, will it?

I love it when all sorts of people know how to manage things better than supply and demand.

So are we agreed that windfall taxation for all companies earning profit margins equal to or exceeding Big Oil’s profit margin are in order?

UPDATE: Upon reflection I guess I want to add that I’m necessarily claiming that any particular commenters on this site are the ones I disagree strongly with. There’s no doubt that I disagree with at least some of what some commenters are saying, but I will be the first to say that most MO commenters generally are fairly knowledgeable about the topic at hand and have a fair number of facts backing up what they say. End suck-up.

I still want to know if all businesses with oil’s profit margins are gouging the American people.

Comments

  1. I think you’ve hit on the biggest farce ever, which is the windfall profits tax. It didn’t work the last time around. It won’t work this time. It’s just a way for the Democrats to seem like they’re doing something, when they’re not doing anything. Even if the oil companies did end up paying any more taxes because of this, so what? It doesn’t solve any problems. It doesn’t develop domestic energy sources, conventional or alternative sources. It doesn’t give us an energy policy. It doesn’t encourage research and development. It’s completely useless. Of course, so is doing nothing, which is what the Republicans seem to prefer. Let’s face it, no one is going to invest in either increasing domestic production of oil or alternative energy as long as we don’t have an energy policy. People don’t invest money to lose it, and that’s all they’d be doing as long as OPEC controls the price. If we find, for instance, that the time has come for electric cars and start developing the vehicles in new or retooled factories and OPEC cuts the price of oil in half, what’s going to happen to that investment? I’ll tell you what will happen, it will all go down the toilet. We’ve been down this road before. Regan encouraged oil companies to increase domestic oil production, but as soon as he was out of the way OPEC cut prices and neither a Republican president nor a Democrat controlled Congress lifted a finger to prevent that from wiping out much of our domestic production capability. Texas (George Bush’s home state) was devistated. Politicans might forget that lesson. They might try to get the American voter might forget that lesson. People who invest money, however, do not forget. People don’t make money by being stupid.

  2. Not to mention taking away the ‘good times’ profit for these companies eliminates their incentive for greater research and exploration. Why would Chevron or Exon have any reason to expand refining capacity or increase pumping capacity if they are just going to have their returns taxed away for their trouble? There is also the fact that oil companies control a very very small percentage of the actual production of crude, and so can do very little to change its price. Most is in the hands of foreign governments and their national corporations. For the last thirty years this country has been run by the Not In Our Back Yard crowd and the results were obvious even then. We want cheap oil, but we don’t want to drill in our precious wilderness or oceans. Thats for the other counties to do with THEIR land. And no nuclear power, they are scary and we don’t want them near us. Also, coal is dirty and we don’t like it so it should be discouraged and attacked where possible. Refineries look ugly and smell bad, we can’t allow any more to be built. In the meantime, we really love our SUVs and V8 trucks when we drop our kids off at school, then pick them up every day while school busing becomes a thing of the past. Every last bit of this mess is the fault of the general public that continually voted for politicians that made these things policy. Now that the obvious results have come home to roost, no one is looking at themselves, they are blaming the oil companies. Those greedy bastards! When as you said, the only thing that will ever bring about the changes in energy consumption that so many people say they really want is high petrol costs. The logic of some people drives me nuts.

  3. Unlike any liberal I’ve talked to, I have actually read and understand Exxon’s annual report. Pre-Tax, Exxon earned $70.5 billion on $242 billion in assets – 29% – very good but not outrageous. Along the way, they paid $40 billion in duties and tariffs (an operating expense passed on to you at the pump because we can’t drill domestic). Of the $70 bill profit – they paid Uncle Sam $30 billion in income tax. 42% Corporate Income tax! I’m amazed they haven’t moved the corporation offshore already. Then they paid dividends to their shareholders – who then paid more income tax. Only a liberal could have the nerve to think they should pay more in taxes.

  4. Like a lot of ‘progressive’ arguments this is an emotional one, not a rational one. It’s basically just anger directed at the most obvious target. Kind of like all the hatred of Mr. Bush.

  5. Where are the progressives who complained when gas was cheap and wanted the price to rise to force Americans to give up our auto-centric lifestyle in favor of public transportation? I would think the Huffpo crowd would welcome the higher prices. And they really do. On one hand it is forcing more people to drive less, fly less and rely on public transportation. On the other hand, by acting outraged at the higher prices and threatening to tax Exxon, they are wooing the working class voter. In regards to the higher prices, what do you think is the leading cause; increase demand, dollar devaluation, over speculation, the Iraq War, the threatened Iran War or a combo thereof. Remember oil was about $25 per barrel before the invasion. If part or most of the rise is attributable to the Iraq War that really blows the doors off its cost.

  6. The argument for a windfall profit tax assumes 1)that the current price spike is an aberration so short term tax will prevent price inflation. 2) Assumes that the oil companies will not pass the tax on to consumers. 3) The funds raised by the taxes will go to fund ‘worthwhile’ investiments. 1) The current price hike is not an aberration – its a reflection of about 2 billion chinese and Indian’s using gas like they are Americans. 2) Every tax is passed on to consumers in some form or another. Companies exist to make profits, not to get mugged by vote hungry politians. 3) As a general rule money given to the government is a loser investment and while it chaps my hide to see CEO’s live high on the hog – its still a matter to truth that private sector money promotes the greater good.

  7. Many good points made. This problem has been a long time developing, for several of the reasons already posted. The apathy of the GP as long as gas prices were cheap. The anti any type of energy crowd (except windmills and solar panels of course), the conivance and manipulation of the liberal socialist elite who’d like to establish a paradise where THEY decide what’s good for us, and how to distribute resources (public and yours), umpteen silly gas formulas to be blended part time depending on location and time of year, dwindling refinery capacity, to many politicians on both sides tied into the oil companies (domestic and foreign), far too many of us driving honking big vehicles, oil futures speculators, more and more competitors for the oil…………..a less stable middle east with an emboldened Iran and China (thanks George!)and on and on. Sure looks like a long hard slog by most of us to get out of this mess with even a modicum of the future this country had even 20 years ago.

  8. I think the biggest energy mistake we made was not taking advantage of nuclear power. It is a very clean source of energy, it doesn’t use up huge tracts of land like wind and solar, it doesn’t kill birds like wind turbines. It turns out that radioactive decay is what keeps the core of the Earth molten. It is what protects us from the killing radiation of space and the sun by generating the Earth’s magnetic field, but if we use it to generate power it will kill us all.

  9. Dfens – I have to disagree. Our biggest energy mistake was electing assholes. The Democrat assholes hate capitalism and want to destroy our economy to the point where socialism becomes an attractive option. To this end, their energy policies are succeeding. The Republican assholes are just plain stupid. McCain is a dottering old fool who actually believes the global warming BS and has equated ANWR to the Grand Canyon. He and other RINO’s actually believe that helping destroy the American economy will get them elected. They are supposed to be the party of reason and business – they have abandoned both. As the Wall Street Journal pointed out on the opinion page today, this is not how a serious country acts. We are no longer a serious nation.

  10. I don’t believe for a minute that Alaska is a hell hole. It amazes me how quickly either the Dems or Repubs will turn on a place if they think it’s politically expedient (ie there are no votes for them there). The middle of America is nothing but fly-over country too. Let’s face it, if the oil companies wanted to drill in Alaska, they’d be drilling in Alaska. They’re making record profits not drilling in Alaska. They’re not going to f that up. They’re not in business to make you or me happy. They’re in business to make money. Period. If you don’t like the way they make money, change the rules so they make more money doing what you want them to do than they make doing what you don’t want them to do. It’s that simple. Hell, its the same thing with the defense companies. It’s really not that hard to figure this stuff out, you’ve just got to look at it with your own eyes instead of taking what the media offers up as being anything close to factual. Honestly, I don’t think there’s a dime’s worth of difference between the two major parties. The Dems talk like socialists, but would kiss their own asses to get another dollar from their rich buddies, and from what we’ve seen lately the Republicans would kiss thiers twice for the same dollar. I’ve got to agree with that statement by the WSJ, though. This is not how a serious country acts.

  11. I would not insinuate that the entire state is a dump – I hope to visit parts of Alaska some day. But the north coast of ANWR is exactly what we used to call ‘wasteland.’