No s**t Sherlock: "Bush won't call the oil companies into his office"...

[Bush_Eats_Beef]

(CNN) -- Amid rising gas and oil prices, a leading Republican said on Sunday that the U.S. government should consider imposing a windfall tax on oil company profits. "I think it's something worth considering among a number of options," Pennsylvania Sen. Arlen Specter, chairman of the Judiciary Committee, told CNN's "Late Edition." He also criticized consolidation in the oil industry. "I believe that we have allowed too many companies to get together to reduce competition," he said, citing the combinations that created ExxonMobil and ConocoPhillips.

Gas prices have shot up nearly 25 cents per gallon over the past two weeks, to a national average of $2.91 for self-serve regular, a survey said Sunday. (Full storyexternal link)

In January, ExxonMobil Corp., the nation's largest oil company, reported U.S.-record profits for the quarter ($10.7 billion) and the year ($36.1 billion).

Sen. Carl Levin, a Michigan Democrat, told CNN's "Late Edition" on Sunday, "We need a windfall profits tax, because these profits have been absolutely obscene. If the president would call the oil companies into the Oval Office and tell them he's going to support a windfall profits tax ... I'll bet that the price of gasoline would come down within a matter of days," Levin said. "But the president will not call the oil companies into his office, because he's been too closely allied with those oil companies. And if he does, it's going to be a window-dressing conversation."

http://www.cnn.com/2006/POLITICS/04/23/congress.oil/index.html

[Captain Hilts]

1. The 'free' market works both ways:

Expensive gas as well as cheap crap at Wal-Mart.

[Chico Man]

2. Guess who ultimately pays corporate taxes

That's right, the consumer.

If there is a windfall tax imposed, watch gas prices climb even higher.

It is always interesting to see how some politicians take advantage of times like these. Proposing a windfall tax is not something that is going to help the consumer. Proposing a windfall tax is something politicians are going to do to get more votes.

[Bush_Eats_Beef]

4. I see it as Specter making an "election year gesture"...

...right after admitting he and his cronies made a mistake.

The public likes gestures. They rarely consider the cost or who's ultimately going to pay.

:patriot:

[Chico Man]

5. Spot on (nt)

[trotsky]

6. I don't think a windfall tax works like that.

If they raise prices to make up for the tax, then they get even more taken away by the tax.

[unblock]

7. uh, wrong.

in a normal, competitive industry, a tax on corporate profits MAY have an effect of increased prices, as some companies need to go to a higher price/lower volume structure to remain profitable. but at best, a tax on corporations is paid by some combination of the owners and the consumers and, sometimes, the workers.

however, in a windfall profits industry, where costs have not risen but retail prices have, the price is being set by supply and demand only, not by the need of corporations to maintain certain profit levels.

the most likely scenario is that prices remain the same, but a portion of profits are diverted to the taxing authority, although it is possible that companies might lower prices (since the net reduction in profits of a price drop is lessened by the lowered taxes) in order to increase market share and customer satisfaction.

[Chico Man]

14. We tried this before in 1980

What History Shows

What would such a tax accomplish? In this case, we have a history to go on. In 1980, President Carter signed into law the Crude Oil Windfall Profit Tax Act, enacted in concert with the gradual dismantling of domestic oil price controls that were in effect throughout the 1970s. The law, which was repealed in the late 1980s, established excise taxes as high as 70 percent on the difference between the selling price and a price set by law.

Economic theory suggests that such a measure would discourage exploration. Drilling for oil is very risky, and investors will take that risk only if they believe there is some chance they will make great profits. Take away the profits, and drilling will stop. It doesn't matter that the tax doesn't, as in the Dorgan bill, apply to new wells. Are oil companies really to believe that similar laws won't be passed again?

In 1990, the U.S. Congressional Research Service studied the effects of the 1980s tax, and found that it had exactly the predicted effect. U.S. production was reduced, and reliance on foreign oil increased sharply. Reinstating the tax would, Congress's research agency concluded, ``make the U.S. more dependent upon foreign oil.''

http://www.bloomberg.com/apps/news?pid=10000039&sid=aBGNUdjfCZVU&refer=columnist_hassett

State and local governments are still making more money from gasoline than oil companies.

I reaffirm: windfall taxes are almost entirely political in nature.

[unblock]

16. despite its name, the tax you cite from 1980 was not on windfall profits

the tax that carter signed in 1980 was actually more of a compromise phaseout of nixon's wage and price controls. as a matter of tax taxonomy, it was structured as an excise tax.

it didn't tax profits, it taxed the difference between the actual selling price and the government's fixed price. it didn't matter whether the company made money or not.


a true windfall profits tax is based on actual corporate profit. i don't believe we've had such a tax since the two world wars.

[Chico Man]

17. The real solution to the problem is to introduce more competition into

The fuel markets.

I hate to see politicians capitalize on an issue such as this by taking the easy road and mentioning taxing corporation every chance they get. They are taking advantage of the uneducated consumers who have no idea what the actual macro effects of a tax on windfall profits for the oil companies is. (Including myself).

Based on past history, general macroeconomic theory, and the fact that we still live in a capitalist society, I will hypothesize that the windfall tax will not have the effects most people assume it will, ie, the lowering of gas prices. Or, if it did lower prices, unemployment may rise, or our dependence of foreign sources may tighten.

I will further state that any politician that begins at this stage of the game to throw around the idea of a windfall profit tax is certainly not interested in the long term benefits of the american consumer when paying at the pump.

Furthermore, higher gas prices may have the unintened consequence of simulating innovation in alternative sources of fuel. Although it may cause pain for some people who have to pay higher at the pump, the overall increase in conservation, a gradual shift if lifestyle in this country to a more environmentally friendly style, and a stimulation of the american voter may be worth the temporary pain (that is, until wages adjust for the higher cost of living).

[trotsky]

3. It always works this way.

Liberals start telling people something, and 10-20 years later the conservatives finally come around.

"I believe that we have allowed too many companies to get together to reduce competition," (Specter) said.

No shit. Exactly what us whacked-out liberals were trying to tell you decades ago. We've been harping about developing alternative sources of energy for even longer than that - when do you suppose you want to do something about that and become an energy-independent country?

[C_U_L8R]

8. why should he? he's probably dancing

Did anyone (except gullible freeps) ever
think Bush would lower energy prices?

Ever penny increase means millions of
dollars for Bush's family and all his cronies.
He has absolutely NO motivation for
lower energy costs.... not when it's
a oilman's christmas out there.

And there's no reason for them to stop.

[AndyA]

9. The price of gasoline needs to be regulated

Gas is not a luxury. It is not an option. For many people today, it is a necessity. It should be regulated like electricity, natural gas, etc. Oil companies should certainly be allowed to make a reasonable profit, but not at the cost of consumers. Gas is a requirement for many to live today. It should be regulated just like other things. It's obvious the oil companies aren't going to be fair about it, they've already proven that.

And as for competition setting the market value, supply vs. demand, etc., the oil companies keep merging, which eliminates competition and allows them to manipulate the prices. And we've all seen how that works. There's a crisis, real or not, and prices go up. Then they fall off a bit. Relief. Then they go up, but not as high. Repeat.

[KansDem]

12. Perhaps it's time to nationalize...

Gas is not a luxury. It is not an option. For many people today, it is a necessity...

I say it's time to nationalize. Only the government has the best interests of its people at heart. Nationalize the oil industry, the power industry, and the health-care industry. As for capitalism: use it with junk food, entertainment, and toilet paper.

[Chico Man]

19. "Only the government has the best interests of its people at heart"

Not so sure about that =)

[KansDem]

20. Government OF, BY, and FOR the people...

Not the festering boil we have now in DC.

The government should represent the people, not the "haves and have mores."

We don't currently have a government, just a mob.

[leesa]

10. Threaten to put them under oath before Congress about the Energy Papers

It worked last time...gas prices dropped like a stone.

[meegbear]

11. The last time the oil companies where called in ...

they didn't have to be sworn in to testify under oath.

[driver8]

13. Bush won't bite the hands that feed him...

he is stupid, but not THAT stupid.

[spag68]

15. oil execs.

What makes you think that oilmen haven't been in and out of oval office? Nobody sees them as they obviously get in the back door.

[trof]

18. What? Call you boss into your office and tell him

gonna cut his pay?
:rofl: