We need a Windfall Profits Tax on the Oil Industry

I'm right on with DocVijay on this one. Oil is a luxury, plain and simple. The suburbs exist because of cheap oil. It may seem like a necessity, but society deems it as such.

If oil was expensive, housing would be dense, the military wouldn't even think of giving out a housing allowance; they would give the doctors housing on base and put the enlisted guy in a tent.

The poor will benefit the most when oil gets really expensive, because public transportation will become ubiquitous (sp?), and renters don't suffer from the devaluation of the property they occupy. Sure, it hurts the poor right NOW, but in the long run the middle class will be hurt the most by rising oil prices.

You can live life without a car. You'll probably be healthier for it!

Nate

 

<div class='quotetop'>QUOTE(DocVijay @ Apr 29 2006, 10:27 PM) [snapback]247379[/snapback]</div>

First of all, is this a response to my last post, or you didn't have a single argument against it?
You know, you just decided to sidetrack because of lack of arguments.
And you finding some of my quotes from other posts out of context shows a smearing tactic.
How about going back to the topic and not sidetracking?
You haven't presented a single argument showing that oil is a luxury item for those who can’t afford it for heating. Again, you are living your American Dream, but what about those who are trying to live it but can’t? American Dream is not only taking advantage of others and making insane profits but also thinking about the rest of the society at large. Obviously, it's too much for you to comprehend. I would like to see any respectable political scientist who states that living an American Dream means making insane profits but not taking care of those who are not well off for whatever reason.
Go back to heating oil issue and address my points instead of sidetracking about people flocking to the wealth in the United States. Desperately poor people flock all over the world to locations where there is wealth.
.


<div class='quotetop'>QUOTE(naterprius @ Apr 29 2006, 10:52 PM) [snapback]247393[/snapback]</div>

I agree with your analysis. What I don't agree with is with DocVijay not giving a thought about heating oil in his initial posts, presenting it as an irrelevant issue, stating that nobody has to purchase oil and nobody is endangered.

There has to be some measure on a part of a responsible society to make sure that people don’t die and freeze from not being able to heat their houses. That shouldn’t be only governmental responsibility but also a corporate responsibility. It’s not like those who are making a killing profits from oil cannot afford it.

 

The "record profits" you read about are not high in terms of a percentage of sales. They are "high" because of the mergers in the oil industry. After Exxon and Mobil merged, "record profits" were reported because of the combined dollar value of their formerly separate profits. The same is happening this year with Chevron after their acquisition of Union 76.

The press is playing you guys.

First, the press only prints these stories on the non-business pages of the paper when the quarterly profits are "high" or "record". They don't print the headlines when profit falls, except buried back with the stock ticker pages. Retail gas prices tend to follow the price of crude oil, yet there's a lag between the purchase of crude and the refined product we put in our cars. The base price of the crude oil is typically from the LAST quarter. But on the retail side, the price rises and, yes, falls, with the current price of crude. Crude goes up to $75 a barrel and gasoline goes up to $3.00. But the cost of that gasoline in the tanks is really based on $60 a barrel crude. As crude's price goes down, so does the cost of the gasoline. So one quarter may show a large increase in profit, only to see that large increase eaten away in the next quarter when crude goes down. Sometimes the gasoline in the pipeline actually costs more to produce and refine than the retailer is charging for it. Overall, when the year is done, oil companies produce a respectible return on investment for a investor ... from 5 to 9%. Not "record" or "obscene" by any means, but about in the middle of businesses.

Secondly, the press plays up the total dollar amount of the profits, not the percentage of sales. The percentage of sales is buried way back in the stories, always after the page break. And the highest I've seen is just under 10%. That's lower than Google, Yahoo and Apple's gross profit. "But they aren't necessities!" OK, someone mentioned "food" ... ConAgra's gross profit as a percentage of sales on packaged food products for the 13 weeks ended 2/26/06 is 25%. That's two and a half times the "record profits" of the oil companies. Quick someone ... propose a "windfall profits" tax Hungry Man Frozen Food Dinners!

Third, the press keeps mentioning the lack of refining capacity, and people think a windfall profits tax would create incentives for oil companies to invest in more refineries. There is no lack of interest in building refineries ... but we won't let them. The last thing you and I want is a refinery in our town. So in order to build more refineries, we have to reduce our environmental regulations, despoil our air more, and "uglify" our landscape. Any takers on this?

Fourth, no one mentions that we REQUIRE public corporations to do everything within their power that is legal to maximize profit for the shareholders. Anyone in a public corporation going through Sarbanes-Oxley audits right now knows this (and its one reason I'm very glad my company was sold to a privately held company that is not subject to Sarbanes-Oxley).

Anyone can look up a companies "10K" report each quarter on Yahoo and see exactly what their sales and costs are. Anyone who doesn't do that research for themselves, and strive to learn to understand it, is simply speaking out of anger, self interest or political agenda without a concern for the truth.

 

fshagan -- WELL SAID!!!

Let's add some more food for thought for those that want to create windfall profit taxes. Let's say you buy a home for $200K and in a hot realestate market you are then able to sell it for $400K - should you pay a windfall profit tax? You are only selling at what the market is willing to pay. If you want to tax the oil companies based on their cost then shouldn't you be forced to sell your house for say $220K since it only cost you $200K? Business is business, if you don't like it perhaps you should move to France

 

<div class='quotetop'>QUOTE(paprius4030 @ Apr 28 2006, 12:56 PM) [snapback]246807[/snapback]</div>

Rather than adding another tax, how about cutting the oil industry subsidies?

 

<div class='quotetop'>QUOTE(Begreen @ Apr 30 2006, 12:21 PM) [snapback]247636[/snapback]</div>

I'll agree with this. As long as the subsidies you speak of are not simply deductions against income for the purposes of calculating taxes, that is. Any dollar not paid in tax is a good thing. Any dollar going from the government treasury to an individual or corporation is a bad thing.