Friday, April 27, 2007

"Excess" Profits?

Sen. Robert Casey (D-Pa.) is "proposing a tax on 'excess' profits to help poor people pay for gasoline." The tax would be "a 50 percent tax on major oil companies profits from crude oil priced at more than $50 per barrel, where it has been trading for most of the past two years." (emphasis added). "Under Casey’s bill, money from the windfall profits tax would be used for a new program to help the poor pay for transportation costs."

The article also notes:

"Exxon Mobil was the third major oil company to report earnings in as many days. BP PLC, Europe’s second-largest oil company, on Tuesday reported a 17 percent drop in first-quarter earnings on lower oil prices and declining production. On Wednesday, ConocoPhillips said its first-quarter profit rose 7.7 percent, but the result was propped up by assets sales as it also was hurt by lower commodity prices."

So, the basic idea is that someone or something is obtaining too much profit (money received after expenses, etc. are taken into account) from high gasoline prices and the government should, therefore, forcibly take that money and give it away to poor people in what will doubtless be an extremely efficient and well managed affair. (For another example of a well managed government program to help people with transportation, read this article (HT: American Thinker) on the program to subsidize federal employee's metro passes).

Now, even if the idea that the we should take away profits from an entity and redistribute them as we see fit due to the fact that the private party is making "excess profits", wouldn't it be logical to think that we should start with the party whose making the most excess profits? Well, if that's the case, the government should start taking its own money, since the federal government alone makes more profit per gallon than the oil companies (HT: CARPE DIEM) (not too mention the profit that states and other jurisdictions make), to say nothing of gap between what the government makes and what gasoline retailers do.

While we're at it, we should go one step further. Why restrict ourselves to taking our government's money. Why don't we take money from all of the other world governments that are profiting because of high prices at the pump? What do I mean by that? Well, of the 20 largest oil companies in the world, 16 are government owned. Also, when people (especially politicians) start turning their guns towards "Big Oil" (especially Exxon Mobil, since it is the largest) because of its "excess profits" presumably derived from manipulating the market, they should perhaps consider that Exxon Mobil does not control the world oil supply. In terms of remaining supply, Exxon Mobil is 14th. I'll give you two guesses as to whether the first 13 are all public or private companies - but, you're only going to need one.


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