Gaseous bipartisan demagoguery from the Dems–and McCain
Credit: Red Planet Cartoons
Today on the Hill, lawmakers in both parties get a second chance to strut and tut-tut as they harangue oil company executives about high gas prices–and display their abject ignorance of, and hostility towards, basic economic principles of supply and demand.
John Hinderaker at Power Line has a good rundown of the back-and-forth between the businessmen who make a living creating wealth and the politicians who tax and take it away. A few key excerpts:
The industry lineup was formidable: Robert Malone, Chairman and President of BP America, Inc.; John Hofmeister, President, Shell Oil Company; Peter Robertson, Vice Chairman of the Board, Chevron Corporation; John Lowe, Executive Vice President, Conoco Philips Company; and Stephen Simon, Senior Vice President, Exxon Mobil Corporation. Not surprisingly, the petroleum executives stole the show, as they were far smarter, infinitely better informed, and much more public-spirited than the Senate Democrats.
One theme that emerged from the hearing was the surprisingly small role played by American oil companies in the global petroleum market. John Lowe pointed out:
I cannot overemphasize the access issue. Access to resources is severely restricted in the United States and abroad, and the American oil industry must compete with national oil companies who are often much larger and have the support of their governments.
We can only compete directly for 7 percent of the world’s available reserves while about 75 percent is completely controlled by national oil companies and is not accessible.
Another theme of the day’s testimony was that, if anyone is “gouging” consumers through the high price of gasoline, it is federal and state governments, not American oil companies. On the average, 15% percent of the cost of gasoline at the pump goes for taxes, while only 4% represents oil company profits. These figures were repeated several times, but, strangely, not a single Democratic Senator proposed relieving consumers’ anxieties about gas prices by reducing taxes.
The last theme that was sounded repeatedly was Congress’s responsibility for the fact that American companies have access to so little petroleum. Shell’s John Hofmeister explained, eloquently:
While all oil-importing nations buy oil at global prices, some, notably India and China, subsidize the cost of oil products to their nation’s consumers, feeding the demand for more oil despite record prices. They do this to speed economic growth and to ensure a competitive advantage relative to other nations.
Meanwhile, in the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people.
Senator Sessions, I agree, it is not a free market.
According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. We have an outer continental shelf moratorium on the Atlantic Ocean, an outer continental shelf moratorium on the Pacific Ocean, an outer continental shelf moratorium on the eastern Gulf of Mexico, congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska, and even a congressional ban on doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific and eastern Gulf of Mexico.
The Argonne National Laboratory did a report in 2004 that identified 40 specific federal policy areas that halt, limit, delay or restrict natural gas projects. I urge you to review it. It is a long list. If I may, I offer it today if you would like to include it in the record.
When many of these policies were implemented, oil was selling in the single digits, not the triple digits we see now. The cumulative effect of these policies has been to discourage U.S. investment and send U.S. companies outside the United States to produce new supplies.
As a result, U.S. production has declined so much that nearly 60 percent of daily consumption comes from foreign sources.
Unfortunately, it’s not just gaseous Democrats demonizing oil companies as evil profiteers and crusading for punitive measures like the Carter-era windfall profits tax that Ronald Reagan valiantly battled.
The RNC rightly took on Obama’s support for the tax.
But here’s GOP presidential candidate John McCain in Charlotte, NC:
Transcript:
MCCAIN: “Um, I don’t like obscene profits being made anywhere–and I’d be glad to look not just at the windfall profits tax–that’s not what bothers me–but we should look at any incentives that we are giving to people, that or industries or corporations that are distorting the market.”
I warned you of McCain’s class warrior rhetoric in January when he sneered at those who embrace the profit motive and bashed “greedy” corporations who engage in free enterprise.
Would Ronald Reagan ever stand up in front of the liberal media and Republican voters and inveigh against “obscene profits?”
Any pro-McCain trolls out there care to explain? 50 brownie “points” available now!
***
Background: IBD’s excellent overview of the windfall profits-taxing windbags here. The answer McCain should have given:
Our free-market economy is built on profit. Higher profits mean more jobs, higher incomes, more investment in equipment and people, higher standards of living. Yes, profits are the engine for all of this — and that includes the profits of “Big Oil.”
By signaling that supply is scarce, higher profits encourage more production. Except, that is, when Congress through its inept lawmaking stands in the way. And that’s the case now with the oil industry.
Congress seems almost constantly at war with the oil companies — slapping them with taxes and pillorying their CEOs while ignoring the fact that higher profits lead to more exploration, drilling and development.
If anyone is to blame for our current energy mess, it’s Congress. At least 20 billion barrels of oil sit untapped in Alaska and another 30 billion lie offshore. Such sources that could help satisfy U.S. demand for years to come. Yet, Congress has put them out of bounds.
Instead, Congress scapegoats oil profits. In reality, according to Ernst & Young, from 1992 to 2006 the U.S. oil industry spent $1.25 trillion on long-term investment vs. profits of $900 billion.
Truth is, oil industry profits are in line with the rest of American industry. In 2007, a record year, they earned 8.3 cents per dollar of sales. Beverage companies and cigarette makers, by contrast, earned 19.1 cents. Drug makers, 18.4 cents. Indeed, all manufacturers, 8.9 cents on average, made more than “Big Oil.”
Besides, we’ve tried windfall profits taxes before, in the early 1980s, and they were an utter failure. As the Congressional Research Service found, revenues produced for the government were nearly 75% below what was expected. Meanwhile, domestic oil output fell 8%, while oil imports surged 16%.
That’s just poor policy, and even worse economics.
Remember: Oil companies don’t really pay “windfall profit” taxes, anyway. You do. Some 50 million Americans today own oil company stock, either directly or through 401(k)s and mutual funds. Don’t be suckered: “Windfall profits” taxes come right out of your retirement account, not out of the oil industry’s business.
See also: Jonah Goldberg, The Windfall Profits Tax Slap.
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Trackbacks
- Demcorats Came to Give a Lecture, But Went to School Instead | The Sundries Shack
- The Radio Patriot
- It’s official. : Adam Lawson
- Oil Execs Vs. Congress « Tai-Chi Policy
- Root causes | Cold Fury
- Oil Company Derangement Syndrome | THE HOT JOINTS
- The DaleyGator » Blog Archive » Oh those economic morons in the Senate
- Bent Notes » Blog Archive » What should be obvious is screamingly obscure
- Ankle Biting Pundits » Blog Archive » Quick Hits
- Flashpoint » Blog Archive » Politicians have no ability to define what is reasonable
- Regarding gas prices, Democrats and McCain denying the obvious | The TIW Blog
- Gasoline, Who Profits The Most? : BigMouthFrog
- Why Does the Senate NOT Want Energy Solutions?
- Michelle Malkin » Planned Parenthood’s obscene profits
- Michelle Malkin » Harry Reid’s Jimmy Carter Memorial Act: Senate takes up windfall profits tax
- Michelle Malkin » Drill bits: The uphill battle to lift domestic restrictions
- Obscene Government Profits « Stupidtax
- Drill bits: The uphill battle to lift domestic restrictions : The Liberty Tree Lantern
- Michelle Malkin » McCain on offshore drilling: For it before he was against it before he was for it again
- Hot Air » Blog Archive » Rasmussen: Plurality of Democrats support … nationalizing America’s oil industry; Update: McCain rips Obama on windfall profits tax
- Born Again Oil Man: John “spud” McCain–Praise The Lord and Start Drilling « Pronk Palisades
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Categories: Barack Obama, Enviro-nitwits, John McCain
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Lines to fill up your tank?
Gas rationing?
Price Fixing?
Price Gouging?
International news regarding oil shortages in other countries?
Riots?
Seems to me like supply is keeping up pretty damn well with demand.
I love the enviornment so much that I moved to the sticks. Everyday I wake up and thank God that I live here. That doesnt mean I want to drive a horse and buggy. Something that the enviro nuts would love to see. Less then a mile from me is one of the largest resevoirs in the northeast. Yet because of big brother I have to tap a well which is undrinkable. Under my feet is a vast amount of natural gas which cannot be drilled. I think things will change soon. Wait until gas hits $5. There will be a backlash to equal the immigration fiasco.
Let me start out by saying that I absolutely agree with the assessment that Congress ought to keep its mouth shut when it comes to who’s getting more money here.
But in the spirit of objectivity, I noticed a couple of things. Which numbers are more accurate - the ones in the photoshop on top ($.09/gal for Big Oil and $.42 in taxes) or the ones in the Power Line article ($.05 for Big Oil and $.15 in taxes)? Not a gigantic difference when you crunch the numbers, but big enough when you factor in that Americans consume 20,687,000 barrels a day (x 42 gallons per barrel = 868,854,000 gallons/day).
(I also just noticed, if you look here, that our use of reformulated gas [ethanol] consists of a third of our oil consumption, and our total use of gas has been going up, not down, since 2002. Ethanol and hybrids have really made an impact, haven’t they?)
Now if you take those 20,687,000 barrels/day and multiply by 365, that equals 7,550,755,000 barrels/year, which means that if we drilled in Alaska (20 billion barrels, per the IBD article Michelle cites) and offshore (30 billion barrels) – 50 billion total barrels – that’s enough to last us for 6-1/2 years, approximately. Not enough to truly let us become energy-independent. But it would certainly make a dent. And that 50 billion is only a rough estimate. With more research, I’m sure we’d find more.
People also need to look back at their high school geography books. I remember seeing the map of Alaska overlaid on the map of the continental US. Alaska is huge. It’s the biggest state in the union, remember? It may not look like much when you look at it on a map, but if you actually drive that length yourself (oh, wait, use your bike instead), you’ll know what I mean. Environmentalists want you to think that drilling for oil would leave Alaska a total wasteland. Why do you think the U.S. bought the land from Russia in the first place? It wasn’t because we just liked the scenery. Have any of you hiked from the north end to the south end of Alaska lately? How many animals did you see in the northern half? Oh, right, it’s frozen. And where is Anwar? In the far northeastern corner. It’s mostly treeless and barren. It has a very short summer, and the animal life is not as prevalent as the tree-huggers would make you believe.
The area along the northernmost part of the ANWR coast (referred to as the “1002 area”), where the USGS found the 4-12 billion barrels in 1998, is a pretty darn small area of Alaska, what looks to be about 100 miles across as the crow flies. (I like the photos the USGS used to show the “typical” view of the land. What time of year were the photos taken? How did the land look a month before or after? A little more white, I suspect. I don’t see any trees there, either.) A key part in the 1998 USGS report, in my opinion:
They are already drilling in the area right next to the 1002 area in Prudhoe Bay.
Please don’t rely only on what environmentalists say for your data, and don’t rely on me, either. I’m no scientist. No one’s probably listening to me, anyway. But it took me about five minutes of research to find this info. Thanks for the Internet, Albert Arnold Gore, Jr.
Class dismissed.
I wonder if a firm commitment to utilze and develop our own resources would give the speculators pause?
Or maybe the government needs to look into the “windfall profits” in the commodities markets.
Whoops. My last post, if it made it on here, should refer to the picture at the top as a cartoon, not a photoshop. I also thought I had another point to make, but I got caught up in the ANWR thing, so I forgot. I’ve said enough, I guess.
Your understanding of it is exactly how he is trying to frame it. If Clinton didn’t veto it in 1995 we would have OVER a million barrels a day coming out of ANWR…for over 3 years. With that much additional oil, OPEC would have just a little less control over the price.
It’s still a viable solution. But no one will build them because of the uncertainty over carbon taxes. The GW BS strikes again.
I said something similar above about a terrorist export tariff. The problem is that people will yell that its inhumane. Of course you and I know that high gas prices can starve people just the same as high food prices. That’s one reason I don’t mind the ethanol fiasco (Thought it was a bad idea at first).
This was the exact same thing that the government did with tobacco. Nobody makes more money on tobacco than the government NOBODY! For them to sit back and chastise the tobacco companies for the profit they make for doing the WORK that they do to provide a LEGAL PRODUCT is absurd.
The government used to call tobacco the GOLDEN WEED because it brought in so much revenue to the government. They vilified it, but they make more money from tobacco AND gas than anyone. We’d be a much stronger country if we were more capitalist.
The federal tax is $1 per pack, and the NY City tobacco tax is $3.00 per pack. When I was a smoker near 10 years ago, the entire cost of a pack of cigarettes was $2.00.
So the government is complaining about ‘big bad tobacco’ while they charge DOUBLE what the entire cost of a pack of cigarettes was. The GOVERNMENT is the monopoly profiting off of kids smoking.
The Democrats have had their eye on our retirement accounts for a long time. I am old enough to remember how they, dismayed by the success of the IRA’s, limited our annual contribution to a miniscule $2000. Can’t have the people provide for themselves, can we? (plus let’s shed a few more crocodile’s tears for the IRA divide; them po folk need more of that for themselves)
My wife and I were putting nearly 20% of our income in IRA’s for just a year or two. And then, voila!, Sen Kennedy and friends say, “Screw you, savers”. And so we retired eventually with a pitance of what we could have had.
Wait’ll Obama smells the scent of 401K’s, IRA’s and Roth’s of the “wealthiest”. They’ll be back, just like the Terminator.
They realized if they vilified it…they could tax it more.
we buy into these politicans excuses and bulls*&%. No wonder they think we are stupid. Save a bear…kill a nation!
Here’s another way to look at it:
Oil is not high because of a supply shortage, it’s high because of a surplus of dollars.
Or, it’s high because the dollar is worth less. The people being paid in dollars (overseas) won’t go along with us debasing our own currency in an effort to short change them.
Just a cause and effect there flenser, but Thank God someone on here recognizes the actual problem here.
I’d love some hearings about the ridiculously high cost of a college education. Why don’t we ever see any of those?
Funny thing. I live in Southwest Houston and went to fill up my truck (had a little SLK but moved to Texas had to get a truck) and arrived at the gas station. Plastic bags are on each pump. I ask the clerk whats up?
My reply:
“Gas is too expensive, we don’t have any.”
So I go down the street and the same thing at another station. Finally 3rd station had gas. I’m too young to understand, but is this how that gas crisis started in the 70’s?
Um. Little scary when I can’t get gas in Houston.
Where are the modern day Nickola Tesla’s? I don’t mean that $100,000 2008 Tesla lithium ion battery vehicle , either.
All I see here is another stride “forward” to find a solution to fix the solution that was supposed to fix the solution that was supposed to fix the solution of the problem that Congress created in the first place. Where’s my Pepto-Bismol?
Yes Silkyinfamous - that’s how it was. They lowered the mile per hour rate, demanded cars with higher gas efficiency. This is why I find some of this amusing today - when you live long enough, nothing much is new and things really don’t change much. People certainly don’t.
Anyone notice that Ted Kennedy left the hospital yesterday in a Chevrolet Suburban? Isn’t he part of the problem we’re discussing here? He clearly isn’t looking to be part of the solution. Take your sorry butt home in a Prius you blowhard!
Silky #210:
Same thing happened to me a couple of weeks ago here in Hampton Roads, VA (before the prices got even worse). I asked the clerk at the third station I tried for gas (a successful experience) why there wasn’t any gas at the other 2 stations and he said: they must have not ordered enough.
Now I might not be up on my economics at the local level but when 2 out of 3 local gas stations don’t “order enough gas” then there’s a problem.
He couldn’t fit in anything smaller. Besides, it’s a loaner from Al Gore : )
Misscheryl and emjem24:
That’s Some Scary Stuff.
WE know MM, we know. Now what? Vote for H Obama? Or maybe the She Creature, if it somehow gets the Dem nomination. We know McCain is a jerk. We know. Stay home and show HIM maybe? All that would do is show US. Guess what? He ain’t changing one bit.
See, the kind of PC that has rendered tough guys like MM and Ingraham, and Hannity, and all the others incapable of calling B Hussein a racist-when he clearly is- has also created the McCains of our world. And any who dare face up to it are labeled whatever you want to insert here.
We know. Now what? What on earth is the point? If you are trying to hand the White House to a radical, racist, non-patriot, have at it I guess…
The gas crisis is coming. Just wait. And blame on the liberal policies of the last 30+ years.
Question for all environmentalists, do you not understand the law of supply and demand or is it your intent to drive America back to the middle 19th century.
There needs to be some hearings into the high costs of a college education. When are we going to see some of those?
hawkeye54 #216, good one, lol at that.
What rights does the common man have? Can I sue congress or the POTUS?
I think our federal govt. is criminally negligent. What recourse do I have?
What was the “obscene profit” on beer that enabled Mrs. McCain to accumulate (according to the AP) a $100 million fortune, part ownership of the Arizona Diamondbacks, homes in Scottsdale and Sedona, two condos on the California coast, a leased private jet (so much for global warming, eh, Senator McCain?), and other Arizona real estate holdings? Perhaps McCain or his wife will be the first in line to set a good example for those nasty ol’ “Big Oil” companies and voluntarily return all those “obscene profits” they happily accepted from the poor schlubs who patronized their beer distributorship. Perhaps McCain will also start traveling his campaign routes in a Prius to save the environment. No? If not, there is a term for those who decry in others what they themselves are doing: H y p o c r i t e!
The Senators make TOO MUCH MONEY.
DOCTORS - TOO MUCH MONEY.
ATTORNEYS- TOO MUCH MONEY.
Congress- all of them -TOO MUCH MONEY.
And those fools get to vote on their own PAY RAISES????
How much do all of those weenies (lobbyists, etc) running around the halls in DC make?- TOO MUCH MONEY.
GOOGLE at 25% PROFIT-TOO MUCH MONEY.
EBAY ( 15% of the products are unsecured and pirated crap)- TOO MUCH MONEY.
ATHLETES?
MOVIE STARS?
There are tens of thousands of people at ‘jobs’ that are NOT necessary for daily life that they could go after…but …but…
Leave capitalism alone, clamp down on the real conglomerates and monopolies.
i.e. Hospitals $8.00 for ONE aspirin?????
Insurance…look at their bottom line (include all the property, all of their holdings)
Most of all it’s the DAMN PORK in and around CONGRESS.
Ahh yes, another area where meddling with supply and demand by the government has caused prices to skyrocket.
There is one entity in this country that’s worthy of a windfall profits tax: government, especially the federal government.
Malkin,
You might have an ounce of credibility if it wasn’t so obvious how much you are looking to jump down McCain’s throat. You clearly loathe McCain. You have no ability to rationally analyze anything he says. Here again you jump on a quote about “market distortions”. Sounds pretty market friendly to me when you want to get rid of market distortions.
Flippin parses me off. Get a flippin clue Malkin. Take the blinders off. And try using your energy to dig on Democrats.
If you spent 1/10th the time analyzing Democrats as you do leeching off the NY Times and AP rag-a-Republican stories, the world would be a better place.
Once again that the hags in Congress are completely out of touch and unqualified to manage anything.
Grow up Michelle, quickly.
Our Representives have lived too long in that Washington bubble. Term limits!
How is this conversation helping Michelle’s kids?
McCain = DEMOCRAT.
Get it?
I just turned my thermostat down to 70. May as well while I sill can! Feels GREAT!!!
It’s worth noting that the average gas station makes very little profit on selling gas. They make the majority of their profit on the snacks they sell next to the cash register, snacks that are marked up 50 to 100%. Yet you don’t see any of these economically illiterate politicians castigating Coca-Cola nor laying siege to Frito-Lay. Gas is almost a loss leader for gas stations to draw customers in to make impulse purchases of comfort food.
Giving the power to control prices to politicians is like giving whiskey and car keys to teenage boys. It will be a disaster. These show trials are all about lefty numbskulls making war on their political enemies, the oil companies, with bogus charges of profiteering.
Apple Computer makes more than 50% profit on its iPods. You don’t see any congressional investigation into that. Gucci makes a 19% net profit. When will Senator Leahy grill handbag manufacturers for their bloated prices? Never.
For that matter, catering operations at fancy hotels generate 20% or more net profit. If the congressman want to rail against obscene profits, they need look no further than their hors d’oeuvres at the fund-raisers they hold at the hotels in Washington.
Did anyone hear what Maxine Waters had to say? We’re all dommed.
Hey #235…get a grip. He’s a politician…if you vote for him simply because he has an (R) in front of his name then your as lame as the nutsaks we roll our eyes at. The only thing worse than a politician these days is a child molester!
civiliantrooper,
you don’t know the first thing about me.
The idea of windfall profit taxes, is envy, the government says hey we want more of that profit for us. Screw the public, they will pay for it anyway.
FYI … the reason that consumption has gone up in vehicles is the fact they don’t want you to know …
Ethanol reduces the MPG in your vehicle and you have to fill up more often thus higher usage in terms of gallons pumped …
Tantor
Additions to your list …
Microsoft - 42%
Google - 50%
.
Maxine Waters must be totally insane for suggesting Nationalizing the oil industry. The Left won’t debate, they just shriek…
.
absurd thought -
God of the Universe thinks
the Right is always wrong
and the Left is always right
and facts don’t matter at all
.
absurd thought -
God of the Universe says
NO MORE oil for you
rarely may you drill for it
limit refining of it
.
absurd thought -
God of the Universe says
YOU’RE RIGHT WING
loving capitalism
and trusting the market
.
Philosophy of Liberty Cartoon
.
Help Halt Terrorism Now!
.
USpace
.
I anyone here thinks no one else reads these posts here is proof they do …
I just heard Kirby Wilbur from Seattle sitting in for Sean Hannity today make my exact recommendations posted in this thread (#110) for a temporary solution to the oil refining situation on the radio … of course … there was no reference to me or MM’s site or anything else … but the verbage was exactly what I said …
Read my lips: GET GOVERNMENT OUT OF THE ENERGY BUSINESS! END UNBRIDLED GREED OF GOVERNMENT! STOP OBSCENE PROFITS BEING MADE BY GOVERNMENT.
The government doesn’t produce anything but pain, oppression, hardship, poverty, and sleaze. SHUT IT DOWN NOW!!
I agree, but by the time the message gets through the liberal media meatgrinder, it will turn into: “do it for the children.”
Can’t stand the profits, John? Want to investigate?
Well, I can’t blame you after the release of Cindy’s tax return for ‘06. Six million bucks does seem excessive for a figurehead exec who inherited the family business. Some of my best customers own Busch distributorships and while they’re solid business people it don’t take no rocket scientist to receive, stack, store and deliver beer.
It’s mighty easy to make money when A-Busch does all the heavy advertising and you just deliver their packaged adult beverages as the exclusive provider in your marketing region. The Missus is certainly target numero uno in this category because Cindy’s company exploits the largest exclusive territory in America!
Competition is good for America. Go for it, Johnny!
C’mon, lgm!! Get in here and clean up after yourself (again)!