Six House Dems Would Confiscate Oil Company Profits
by Steve Maley
Six House Democrats, led by Rep. Dennis Kucinich (D’OH), have filed a bill aimed at controlling gasoline prices. Styled the “Gas Price Spike Act”, H.R. 3784 would establish a “Reasonable Profits Board” which would have the power to confiscate 100% of oil company profits above a level that they deem to be “reasonable”.
I know: “You had me at ‘Kucinich’.”
Kucinich is either a naive fool, a craven panderer to his electorate, or a throwback to Soviet-style central planning. That he could find five other elected nitwits (Reps. Woolsey, Langevin, Conyers, Fudge and Filyers) to put their names on such an anti-capitalist, unconstitutional fantasy is an indication that the Far Left Wing of the Democratic Party has left the ranch.
Consider, too, what it says about “Republican” presidential candidate Rep. Ron Paul (R-TX), who recently declared that he would consider Kucinich for a cabinet post in a Paul Administration.
Paul said his libertarian political philosophy helps him connect with some on the far left — including Kucinich, who shares Paul’s general anti-war stance.
The Gas Price Spike Act, H.R. 3784, would apply a windfall tax on the sale of oil and [natural] gas that ranges from 50 percent to 100 percent on all surplus earnings exceeding “a reasonable profit.” It would set up a Reasonable Profits Board made up of three presidential nominees that will serve three-year terms. Unlike other bills setting up advisory boards, the Reasonable Profits Board would not be made up of any nominees from Congress.
The bill would also seem to exclude industry representatives from the board, as it says members “shall have no financial interests in any of the businesses for which reasonable profits are determined by the Board.”
Oil companies would only be able to make less than a reasonable profit without penalty. Anything over 105% of reasonable would be taxed at 100%. Proceeds of the confiscation would be dedicated to tax credits for high-milage vehicle purchase and mass transit subsidies for the poor.
Peeling back the layers of stupidity in H.R. 3784 would be akin to peeling an artichoke. In the interest of time, I will cut to my central point.
Implicit in the very suggestion that a Windfall Profit Tax is called for is the notion that somehow the oil companies are able to manipulate the price of oil, and hence, gasoline.
Gasoline prices are at historically high prices. Despite the spike above $4.00 per gallon in 2008, you actually paid 10% more at the pump in 2011.
When we refer to the industry as “oil and gas”, we mean “oil and natural gas”, not oil and gasoline. All oil companies make a substantial fraction of their revenue — many more than half — from natural gas.
The price of natural gas has plunged to 10 year lows recently as a result of warm winter temperatures, slack industrial demand and burgeoning supplies.
Natural gas prices have fallen to levels that make it difficult to justify drilling for more. Many of the new supplies of gas that come on will be incidental to the successful search for oil.
I challenge anyone who believes that oil companies control the price of oil and gasoline to explain how they do it, and why they seemingly have no control of natural gas.