There are over 200,000 people working in the fossil fuel industry in the United States. They are your neighbors, family and friends. They have been providing a reliable supply of low cost energy to Americans for over a century. They have contributed to the success of our Nation, suffered hardship and reaped rewards. They are not Big Oil because there is no Big Oil in the United States. There is a Big Oil and it is OPEC. When OPEC and other countries actually started price gouging, it was American oil, gas, coal, nuclear and hydro that came to the rescue even though these industries were vilified by the media and reptilian legislators. During the Arab embargoes of the 1970s, the American oil companies turned on every drop they could produce to provide a continuous supply of oil and gas to every US household. The artificial worldwide shortage caused the value, hence the price of crude oil to increase. The US was not immune to the increase in the cost of crude oil from overseas. It was part of the feedstock that was being processed by US refineries, so the price of US gasoline increased. Unscrupulous legislators shouted “price gouging” and the Windfall Profits Tax was the result. There are still unscrupulous legislators, and many are indeed, reptilian.
Democrats are ramping up their efforts to tax the profits of energy companies, part of a larger strategy to blame high gas prices on oil companies for alleged gouging after Russia’s invasion of Ukraine. It is a classic misdirection play that isn’t going to work this time. Not in the American Heartland anyway.
Senator Bernie Sanders (I-Vt.) seems to think there is an “unprecedented level of corporate greed.” He says, “To a significant degree, pathetically, large corporations are using the war in Ukraine and the pandemic as an excuse to raise prices significantly to make record-breaking profits.” Sanders’ bill, the “Ending Corporate Greed Act,” would place a 95 percent tax on excess profits of corporations with more than $500 million in yearly revenue. It would apply to companies across the economy, but Sanders has stressed its potential impact on oil companies would add billions of tax dollars to the Federal government. What an idiot. He should go honeymoon in Russia again. I wonder if the tax applies to Amazon? Seems like Bezo’s stock went up during the Pandemic. Was that windfall profits?
Other Democrats have proposed a separate bill specific to the oil and gas industry — the “Big Oil Windfall Profits Tax Act.” That legislation, introduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.), would put a 50-percent-per-barrel tax on the difference between crude oil prices and the average between 2015 and 2019, with revenues returned to consumers as a rebate. Ahh, rebates. Never seem to show up, do they?
According to Whitehouse “The result of the Russian invasion of Ukraine has been a lot of speculation and cartel behavior that has dramatically raised oil and gas prices. Note that the cost did not change” Not only is Whitehouse a double idiot, he is a fascist and should resign. Here is why he is an idiot. The development lead time for petroleum and natural gas exploration and production is five to ten years even without government regulatory interference. So, oil prices go up based on supply and demand. When the supply time line is longer than the demand curve, the price must go up. When there is pent-up demand, a scarcity is created and the value of the commodity goes up even more. That is basic economics, not price gouging. But Whitehouse is actually a fascist. See my Substack newsletter called The Four Horsemen of the Green Apocalypse to see why I say that. Subscribe for free and you can read that post.
The idea of taxing oil windfall profits is not a new one. A version of it was the federal law from 1980 to 1988 that was discussed at the beginning of this article. And, misguided lawmakers continue to introduce bills to reinstate the tax nearly every year. It was a bad idea in 1980 and a worse idea today. Remember “stagflation?” Combine a windfall profit tax with Environmental Social Governance or ESG and get ready for $20 a gallon gasoline. It doesn’t have to be that way. VOTEdemsout2022