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April 27, 2006

No, Mr. Bush, nothing 'hidden' about this robbery


Gasoline price increases are like a hidden tax on the working people. -- President Bush, in a Tuesday speech on energy issues.

No, Mr. President, there's nothing "hidden" about this robbery. We working people can clearly see it occurring every time we drive by a gas station, and fall personally victim to it every time we drive in to fill 'er up -- or to buy whatever portion of a fill-up we can afford at $3 a gallon. Maybe enough to get us home, get the kids to school tomorrow and get to work; maybe not.

We also can clearly see who's wielding the weapon. All that's needed is to glance at the headlines about huge and mounting profits being posted by the oil companies. A new round of quarterly reports are coming out this week. So far, ExxonMobil is leading the pack, with a reported $8.92 billion in profits, up a billion-plus from the first quarter last year. Chevron's up $1.3 billion. The other biggies will be posting (or have posted by the time you read this) figures that are likely to be equally obscene.

The numbers make it pretty well impossible to swallow all the explanations about Mideast tensions, storm warnings, boutique fuels, chokepoints in the supply chain, and oil-company profit margins as compared to other sectors of the economy. For us working people, it's pretty clear-cut: The more we pay at the pump, the more profits the oil companies report.

Profits are good; we wish them on all businesses. But there are profits, and then there's gouging. We working people think "gouging" is the right word here.

Even the President, friend of the oil industry that he is, recognizes there's a problem. "Record oil prices and large cash flows also mean that Congress has got to understand that these energy companies don't need unnecessary tax breaks," he said in the speech.

But the follow-through -- it's always the follow-through. Mr. Bush said he's recommending that Congress cut back on those breaks, contained in an energy bill approved last year. "I'm looking forward to Congress to take about $2 billion of these tax breaks out of the budget over a 10-year period of time," he said.

Wooohooo. Two billion dollars over 10 years, or approximately 25 percent of the profit reported by ExxonMobil alone, in one quarter. Pretty hard-hitting stuff, that.

There's talk in Congress about a windfall-profits tax. Even Rep. Ray LaHood, R-Peoria, a main-street Republican no-new-taxes kind of guy, is talking about the need for hearings, though he's hoping that just the talk will convince the oil companies "to step up and be helpful here to consumers."

"I'm in favor of putting out there, as a marker, the idea that we pass, or at least hold hearings on, a windfall-profits tax on oil companies, and give the money back to the consumer at the gasoline pump. I mean, there's something wrong here."

Getting money back at the pump sounds good to me. But why not just take the next step: Hit the oil industry with the tax, and use the proceeds to further develop the ethanol/biomass production capabilities that are nearing the point where they can have a real impact on oil use.

That's a scenario that would give the Ayn Rand fan club fits, with some justification. Does seem, well, unseemly to suggest an industry ought to be taxed to finance a competitor -- but an exception for the oil companies is OK with me.

They've been price-gouging, monopolizing, cartel-building pirates since John D. Rockeller led the way about 130 years ago.

Posted by jcb at April 27, 2006 06:59 PM

Comments

Oil Company Profits = $ .09 per gallon.
Federal Taxes = $ .18.4 per gallon
State Taxes = $ .30 per gallon

Oil companies have overhead, risk and require a return on investment. Regardless of the hype, they are returning, as a whole, just over 10% on total sales. This is far less than the Federal Government and State Governments are making.

Why is none of our government officials offering reduced taxes as a solution?

I expect that many companies return mor ethan 10% on their sales.

The issue here is nothing more than we are allowing the 'supply' end of the equation to be dictated to us. If we want a villan, let's look to the environmentalists that have made drilling and production (refinery capacity) a 4-letter word for the US.

Are the oil companies deserving of tax breaks - certainly not. However, let us ask a few tough questions about why this is really upon us - or we will doom ourselves to be in this situation for a long time. Until we are able to control our own destiny with respect to oil, we will likely be locked into high gas prices (get ready for $4.00+).

Posted by: havinfun at April 27, 2006 08:31 PM

Over thirty years since the 70's gas crisis and we are still economically tied to the middle east countries that hate us and wish our destruction. Not ONE administartion, Republican or Democrat, has created a realistic program to rescue this country from the noose, held by radical Islamic nations, that resticts this countries future and holds this nation in fear.

Posted by: Anonymous at April 29, 2006 04:30 PM

Havingfun and Anon 4:30 both make very good comments. Congress is quick to yell about the oil company profits, but make no real effort at working on the root cause of high oil prices.

Also remember... several of the oil companies make profit every step along the supply chain; selling oil on the open market, refining, transportation, and distribution. Those humongus profits don't come exclusively from the American consumer. These are things that our "smart" members of Congress should realize.

I guess when I think of gas prices in many of the EU countries, our prices don't seem that high.

Posted by: Anonymous at April 30, 2006 01:05 PM