Obama's Energy policy

[Gaspar]

Ok, Mr. Obama is touting his "Windfall Profits Tax" on the oil industry again.

I know that some Americans are sheeple that will cheer for this, but for those of you who are not, or at least want to understand what this means, you need to understand who that tax will be levied on.

You can read this breakdown (by the way, this was the Clinton's Undersecretary of Energy and Commerce, not some Right Wing analysis):

http://www.energytomorrow.org/media_center/Shapiro_Pham_Study.pdf

To break it down for you:

Only 1.5% are owned by oil company executives.

Almost 43 percent of oil and natural gas company shares are owned by mutual funds and asset management companies that have mutual funds. Mutual funds manage accounts for 55 million U.S. households with a median income of $68,700.

Twenty seven percent of shares are owned by other institutional investors like pension funds. In 2004, more than 2,600 pension funds run by federal, state and local governments held almost $64 billion in shares of U.S. oil and natural gas companies. These funds represent the major retirement security for the nation's current and retired soldiers, teachers, and police and fire personnel at every level of government.

Fourteen percent of shares are held in IRA and other personal retirement accounts. Forty five million U.S. households have IRA and other personal retirement accounts, with an average account value of just over $22,000.

You see, "Big Oil" is you, and me.  

I know that some of you are going to say "I don't own any mutual funds with oil company stock!" or "I only invest in green energy funds," Well do you have a bank account or a credit card, or a home loan, or a car?  Do you work for the state, or a privately held company with a retirement plan?  Do you go to a school that is funded through public bonding?

There is simply not enough time to trace it all out for you, but in a nut shell, Mr. Obama is threatening to punish our economy because he knows you don't know any better.

He knows what he's saying, and who he's talking to. A "windfall profits tax" on an industry that is 98.5% publicly owned is simply a proposal for another inefficient redistribution program.  You see he wants to use the tax funds not burnt in the bureaucracy to help you pay for energy.  Just keeps prices high in an already over speculative industry.

Now do your own research.  You will be less susceptible to this type of pandering.

The good news is that he can't possibly be this stupid.  I think he understands that this type of promise will have to be gutted before he takes office.  He has no intension on tanking the US economy for the sake of growing government.  At least I hope.

The speculative profits in the oil industry are taken outside of the US by the Saudis, by the refineries in Venezuela, and by every other foreign country & company responsible for supplying us with our energy.  So he is offering to punish us rather than them!  . . . and you know what?  The American people are going to cheer!


It is a socialist idea that making profits is a vice; I consider the real vice is making losses. – Winston Churchill

[cannon_fodder]

Negatives:

- Instant reduction in pension funds, IRA's, 401Ks, and mutual funds

- Punish profitability

- Discourage further production

- Competitive disadvantage for American firms (benefits State oil Co of China, Saudi Arabia, Venezuela, Iran, etc.)

- Encourage large oil companies to move over seas

- Environmental damage (American oil is among the most environmentally regulated)

Positives:

- marginal increase in governmental revenues

- - -

How does this help solve the problem?  At best, they will take money from my investments and give a small percentage of that back to me.  I just don't get it.

If the oil companies are doing some sort of market manipulation that is illegal, nail them.  If they are just making lots of money off of us oil addicted fools, so what?

[waterboy]

I am surprised to hear so many other politicians also touting this punishment philosophy. Especially since it was useless during the last real crisis in the seventies. I agree, it can't be seriously considered and is offered as a threat at best. Its about as useful as thinking that opening drilling in protected areas will solve a problem that is apparently not supply/demand in nature.

Your argument Gassy, is specious at best. We're all invested in pharmaceuticals as well. Should we give these huge companies a break from scrutiny because they attracted widespread investment from the average American? What about tobacco? It was heavily supported by the public too. And if the real problem turns out to be greedy speculators is your argument any less applicable? Shouldn't they be given a break since they are just exercising the American dream of cornering and manipulating a market?

Might as well give carte blanche to all industry. Or...is that what you fantasize about anyway...

[bugo]

quote:Originally posted by Gaspar

Ok, Mr. Obama is touting his "Windfall Profits Tax" on the oil industry again.

I know that some Americans are sheeple that will cheer for this, but for those of you who are not, or at least want to understand what this means, you need to understand who that tax will be levied on.

So if anyone disagrees with you they're a "sheep."  Nice way to win others over to your side.

[Conan71]

The reason why politicians are touting this is due to the high price of gas.  Tell people if they vote for you that you will punish those responsible for the high gas prices.  Buying votes, one half-baked promise at a time.

More exploration would bolster supply, I don't see how this is flawed logic.  Cut consumption, increase supply, prices come down and reserves last for a longer period of time.

[Hometown]

It's past time for Democrats to stop demonizing the Oil Industry.  The party needs to build alliances with Oil.

[rwarn17588]

quote:Originally posted by Hometown

It's past time for Democrats to stop demonizing the Oil Industry.  The party needs to build alliances with Oil.

This issue's a non-starter when you've got even Bill O'Reilly ranting and raving about how the oil companies are ripping people off and there needs to be intervention.

Remember, there's an ongoing investigation about possible collusion by the oil companies. If true, those howls of "do something!" will grow louder.

[Gaspar]

quote:Originally posted by bugo

quote:Originally posted by Gaspar

Ok, Mr. Obama is touting his "Windfall Profits Tax" on the oil industry again.

I know that some Americans are sheeple that will cheer for this, but for those of you who are not, or at least want to understand what this means, you need to understand who that tax will be levied on.

So if anyone disagrees with you they're a "sheep."  Nice way to win others over to your side.

No Bugo, I am referring to people that don't understand economics.  If you disagree with me, then pose your argument.  It may have more merit than my own.  I am flawed in many ways, as are some of my arguments, but I base everything I stated here on fact.  If you have other facts than let us evaluate them.

This discussion forum is an opportunity for all of us to grow and understand, but I will not follow blindly or without logical examination.  Sheeple do that.

[Gaspar]

Oh I just know FOTD will chime in soon!

[FOTD]

Obama will seek $150 billion over 10 years to develop more clean energy. He'd double vehicle fuel standards in 18 years and encourage alternative energy sources from the tax collected.

Weep and whine. The oilies have had more than a windfall the last 8 years. Don't vote for him. Does it appear he needs your vote?

[Gaspar]

OK

[we vs us]

So yes, I agree on principle with most of what's being said here, re: taxes on a specific profit level. (Though it's only "punitive" if you're a Milton Friedman groupie; it is narrowly selective and not very fair, though, and that's the part I object to.)

But so what should be done?  Opening more land to drilling is all well and good, but that's oil that won't come online for years and years, and it's simply impossible that opening new lands now will alleviate near term pricing problems.  Conservation on a large scale is also a good ways off; we can't even get the Administration to support tightening CAFE standards, much less support larger scale efforts like mandating that all cars must have hybrid engines, or, god forbid, reinstating a national speed limit of 55mph . . . []

So where does the relief come from?  Or do we just suck it up and deal?  There aren't a lot of ways the American consumer can feasibly react to energy price increases. Make fewer trips, yes, but apart from buying a different car, moving closer to where you work, or similar dislocations and major expenses, there aren't many good options. And you still have to heat your home.  And you still have to eat food that was trucked in from somewhere else.

I'm just saying, of all the available short term options, I can see where this might be compelling to some folks.  I mean, really . . . if the windfall tax was at 15% the last quarter of 2007, Exxon Mobil would've paid out $1.755 billion on profits of $11.7 billion.  They still would've been in the black by $9.945 billion.

[Hometown]

Wow, I'm continually surprised by the gall of my cousins.  

FOTD is already telling people Mr. Obama doesn't need their votes.

Last night I heard an Obama sound bite where he references the end of his second term as president.

Obama talking head:  Clinton as vp would spoil Obama's brand.

God I'm glad I lived this long.  It's just incredible what comes down.

[cannon_fodder]

Wevus,

Given all the negatives I illustrated, where do the positives come in?  Exxon would still be in the black, yes.  But given all those negatives the Federal government gains less than one tenth of one percent of its needed revenue.  

The solution is primarily "deal with it" as you pointed out.  High energy prices are here to stay.  The windfall profit tax, even if we seized 100% of their profits, will do NOTHING to reduce energy prices.

We have spent 60 years now gearing our transportation system to cheap oil (moving to suburbs, buying big cars, building more lanes, killing trains and mass transit), 30 of those years knowing DAMN WELL that it was a mistake (1970's anyone?).  Now we pay the piper.

The long-term solution is to let the market dictate new and better technologies (GM shutting down truck plants, people actually driving the speed limit, distance to work a primary factor for realtors now).  Government can help by encouraging those technologies in research grants, inducement prizes (the government has the ability to guarantee HUGE orders), tax incentives, and policy (streamline nuclear regulation YESTERDAY).  I have outlined this in detail previously and would be happy to do so again.

BUT, given the choice between more drilling and taxing oil companies more, which realistically would have a positive impact on prices?   Clearly more drilling is not the long term solution and would not have a ground-breaking impact, but those are the two main proposals on the table of our two party system.  

/don't construe this as arguing against revocation of the tax breaks for oil companies.  I am not too familiar with them, but unless they are encouraging these companies to increase domestic supply or other items that make national sense... they don't need it.  Yet another fine example of abusing our current tax system it appears.

[guido911]

Are there honestly people out there so confident that Obama will win this election, which is still 5 MONTHS FROM NOW, that they are basically telling folks "Hey, I do not care if you agree with Obama or not, because Obama does not need your vote anyway!"