Politics for Any and All !

This posting displays at best incredible economic ignorance and at worst outright demagoguery! Exxon's recent profits as a percentage of sales are only slightly above- average, and I don't recall any sympathy back during the early 90's when oil was $20 a barrel and Exxon's profits very depressed. It never ceases to amaze me how some people can convince themselves that a higher tax on oil companies will lower gas prices. Normally, when you tax something, you get less of it, but Mr. Obama seems to think he can repeal the laws of economics. We tried this windfall profits scheme in 1980. It backfired. The Congressional Research Service found in a 1990 analysis that the tax reduced domestic oil production by 3% to 6% and increased oil imports from OPEC by 8% to 16%. Mr. Obama nonetheless pledges to lessen our dependence on foreign oil, which he says "costs America $800 million a day." Someone should tell him that oil imports would soar if his tax plan becomes law. The biggest beneficiaries would be OPEC oil ministers.

There's another policy contradiction here. Exxon is now under attack for buying back $2 billion of its own stock rather than adding to the more than $21 billion it is likely to invest in energy research and exploration this year. But hold on. If oil companies believe their earnings from exploring for new oil will be expropriated by government – and an excise tax on profits is pure expropriation – they will surely invest less, not more. A profits tax is a sure formula to keep the future price of gas higher.

Exxon's profits are soaring with the recent oil price spike, but the energy industry's earnings aren't as outsized as the politicians seem to think. Thomson Financial calculates that profits from the oil and natural gas industry over the past year were 8.3% of investment, while the all-industry average is 7.8%. And this was a boom year for oil. An analysis by the Cato Institute's Jerry Taylor finds that between 1970 and 2003 (which includes peak and valley years for earnings) the oil and gas business was "less profitable than the rest of the U.S. economy." These are hardly robber barons.

This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don't want more production to increase supply. They want oil "independence" but they've declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?

Late this week, a group of Senate Republicans led by Pete Domenici of New Mexico introduced the "American Energy Production Act of 2008" to expand oil production off the U.S. coasts and in Alaska. It has the potential to increase domestic production enough to keep America running for five years with no foreign imports. With the world price of oil at $116 a barrel, if not now, when? No word yet if Senators Clinton and Obama will take time off from denouncing oil profits to vote for that.

From all that I can see around me, this great country was built by the capitalist system and the great corporations that invented, marketed and delivered the goods and services that make our lives better. It's the only system that has worked in the world so far. I can understand your frustration with EXXON and other oil companies but how do you expect the USA will be able to survive in this world of ever shrinking energy reserves without full cooperaton? Would you like to socialize the industry, like Mexico did, so we can become a great bastion of western life just like our neighbors to the south. Nobody can afford a car but gas is cheap.

OK you own a business and work hard to make your business grow. Why?
How much profit is enough? You should stop making money at what point.?
Run a business make some money and profit then come back and discuss this horrible profit.
I don't want to hear from people who have failed in business.

I wish people would actually see what business is about and who gets the money when big oil gets a profit. The money they recieve goes to the shareholders, who are they? Everyone with a IRA, 401K, pension plan or who has mutual funds. The money is divided between millions of people. The actual profits are a little less then 8% (7.8%), not exactly a windfall, is it?

Exxon actually makes about 4 cents a gallon at retail level, they make the rest from their own oil pumping operations and refining. So if they took 0 profits on the retail gasoline it would allow the price to drop about 4 cents. Since Obama said dropping the price 18 cents a gallon is meaningless, what do you call 4 cents?

Right now Valero, one of the bigger refiners, is slowing down their refining because the current price of gas does not allow them to make a profit - this is adding to the shortage, but the current gas prices do not reflect the 120 dollars per barrel, since there is still a lot of cheaper US produced oil in the mix.

If the purpose of the democrats is to drive down the price of Exxon stock at the expense of the stockholders (a large number of which are retirees who depend on the income - most don't even know that since a lot of it their stock is owned by mutual funds and pension funds), the result will be that Exxon will become a bargain to some foreign company like Shell or BP. So not only will you have screwed stockholders, but the profits would now be going to a foreign entity. Way to go dems.

BTW Please post a link for the article you posted attributed to S. W. Anderson (2/1/06). I cannot find such an article.