Here is Hillary speaking about the big bad oil companies recently. She tells us that she wants to confiscate the profits of the oil company and put it towards greener energy sources. Nothing Communist about confiscating profits right?
Here is the messiah on the same subject:
Democratic presidential hopeful Barack Obama called for a windfall tax on oil company profits Friday, as pump prices in the United States hit a new record high.
“For the well-off in this country, high gas prices are mostly an annoyance. But to most Americans, they’re a huge problem, bordering on a crisis,” he told reporters at a gas station in Indiana, where he is campaigning.
According to the automobile association AAA, the average price of a gallon (3.78 liters) of gas reached a record 3.58 dollars Friday.
Obama proposes oil companies be taxed on windfall profits from oil sold at or above 80 dollars a barrel, and the revenue be used to help relieve the burden of rising prices on working people, according to his campaign.
But lets look at those profits….those evil profits in this capitalist society. Ed Morrissey:
The industry did make $150 billion in profit, but that came from more than $1.7 trillion in sales. Their profit margin came to a whopping 8.3%, which underperformed the entire manufacturing sector as a whole. For investors in the oil industry, and 8.3% return on investment doesn’t exactly equate to screamingly fabulous growth, especially when looking at pharmaceuticals (18.4%) and beverage makers (19.1%).
An 8.3% profit margin is something to scream about? Are you kidding me?
But it sounds good to the nutroots, it gets the enviro nuts hopping mad and out to the street to drum up signatures….its all politics.
Investors Business Daily did a editorial the other day that tackled the Socialist twins ideas:
Congress seems almost constantly at war with the oil companies — slapping them with taxes and pillorying their CEOs while ignoring the fact that higher profits lead to more exploration, drilling and development.
If anyone is to blame for our current energy mess, it’s Congress. At least 20 billion barrels of oil sit untapped in Alaska and another 30 billion lie offshore. Such sources that could help satisfy U.S. demand for years to come. Yet, Congress has put them out of bounds.
Instead, Congress scapegoats oil profits. In reality, according to Ernst & Young, from 1992 to 2006 the U.S. oil industry spent $1.25 trillion on long-term investment vs. profits of $900 billion.
Truth is, oil industry profits are in line with the rest of American industry. In 2007, a record year, they earned 8.3 cents per dollar of sales. Beverage companies and cigarette makers, by contrast, earned 19.1 cents. Drug makers, 18.4 cents. Indeed, all manufacturers, 8.9 cents on average, made more than “Big Oil.”
Besides, we’ve tried windfall profits taxes before, in the early 1980s, and they were an utter failure. As the Congressional Research Service found, revenues produced for the government were nearly 75% below what was expected. Meanwhile, domestic oil output fell 8%, while oil imports surged 16%.
That’s just poor policy, and even worse economics.
Remember: Oil companies don’t really pay “windfall profit” taxes, anyway. You do.
Basic economics. A business doesn’t stay afloat without profits and if their profits are taxed even more they will pass that on to the consumer to ensure they make a reasonable profit. 8.3% is more then reasonable….except to the nutroots.
At least we know one guy who isn’t buying into the Communism:
Republican candidate John McCain, an Arizona senator, has no plan to raise oil and gas industry taxes, said his economic adviser, Douglas Holtz-Eakin.
Oil companies would still have ample reason to “continue to pursue production, while at the same time providing relief to consumers,” Grumet said.