Congress Gives "Big Oil" a Taste of It's Own Medicine

AP reports:

WASHINGTON - Declaring a new direction in energy policy, the House on Saturday approved $16 billion in taxes on oil companies, while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts.

Republican opponents said the legislation ignored the need to produce more domestic oil, natural gas and coal. One GOP lawmaker bemoaned "the pure venom ... against the oil and gas industry."

The House passed the tax provisions by a vote of 221-189. Earlier it had approved, 241-172, a companion energy package aimed at boosting energy efficiency and expanding use of biofuels, wind power and other renewable energy sources.


Cato said...

All this does is further our dependence on the Middle East.

The price of goods are set by the market except in the case of monopolies.

Adding additional taxes make the profit margins even better the OPEC and the like, which can absorb them, and worse off for western oil companies who exist in a competitive marketplace.

Dumb dumb dumb.

Anonymous said...

The little stick man getting it stuck to him should properly be labeled "The American Motorist," since that's who will ultimately be paying those billions to the government.
The annonymous GOP lawmaker got it wrong: this isn't pure venom agains the oil and gas industry, its pure venom against the American consumer.
Ever ask yourself who really makes more money on a gallon of gas, the oil company or the government? I think you know the answer, and it makes this tax increase all the more reprehensible.

Big Stick Man said...

I may know the answer to who makes more but obviously you don't.
The WI gas tax is 30.9¢ per gallon
Federal is 18.4 cents/gallon.
That's about 14%. And don't come back and tell me about Oil Company production costs. Their profit margin
has got to be higher than the 14% that charged for taxes.

Anonymous said...

I just passed a gas station with unleaded selling for $2.89; that means the government is now making 17% per gallon! And no risk of investment!! What a great deal!
Is big oil making that kind of profit?
Consider back in early 2007, when gas was selling for $2.25 or so. Governement profit on each gallon (based on $.49 per gallon, which of course applies regardless of price) was 22%. An even better deal, with no risk of investment capital!!
But more to the point, with respect to gasoline prices, is that the current cost of raw materials is $70.00 per barrel (42 gallon barrel = $1.66 per gal. Refining that crude into gasoline requires various refining processes and the addition of various additives (per government regulation). As such, a $2.89 price does not seem that unreasonable.
Basic ecomomics (not the Marxist kind, but the free market kind) tells us that price is a function of supply and demand, and that vendors will try and undercut competitors to capture more market share. Any other outcome suggests collusion. And congressional investigation after investigation has never found such collusion amongst oil companies, so it looks like they are supplying the best product at the lowest possible price.
To get the market price lower, we would need more competition, such as we have with most other products. But the barriers to entry into this market are extrememly high, mostly due to environmentalist concerns with drilling in the Arctic and building new refineries in the States. Relaxing some of those rules would certainly bring more competitors into a market that promises grater than 14% profit, and would keep our gasoline prices even lower than they are today.

oil slicker said...

Funny thing about all that government profit, did it never crossed you mind that most of that "profit" goes to build roads that oil companies need to deliver their product?
I didn't think so!
You anti-government tax whiners have a one track mind.
Basic reason, not the Von Mises kind,
realizes that oil is a FINITE resource. At some point it's going to run out, then what. $400/gal? There's nothing "Marxist" about that.