Surprise! Politicians Threaten to Tax Big Oil, Big Oil Threatens to Raise Prices
May 12, 2008 · Print This Article
The top 5 Big Oil companies pocketed a record $120 billion in 2007 alone, and they’re hissing and spitting at anyone who dares to come too close. Hillary Clinton and Barack Obama are pushing a windfall profits tax and House Democrats are threatening punitive measures if oil companies continue to amass evil overlord quantities of money at the expense of consumers.
CNN Money has it:
Oil industry: Hands off our cash. The industry, of course, doesn’t like the extra profit tax.
“If our profits are taxed, that means we’ll have less capital to invest in new production” and it could raise gas prices, John Hofmeister, president of Shell U.S., recently told CNNMoney.com.
Oil companies have been investing more in new production lately, but that argument is a little hard to swallow given the disparity between the huge amounts of money the big firms have been returning to shareholders versus the meager new oil discoveries.
Amy Myers Jaffe, a fellow in energy studies at the James A. Baker III Institute for Public Policy just finished a two-year study looking at oil companies and how they spend their money.
“These companies are spending a very small amount of their operating cash flow on exploration,” she said. “They are spending the majority of their funds buying back stock.”
Big surprise: politicians threaten taxes, and the oil companies threaten to raise prices. These guys are hoarding money like – well, like people who see that new technology is being developed that might push them to the sidelines. How dare we talk about taking away some of their precious profits. Their precioussssssss……
Link [CNN Money]
Photo credit: Flickr user Refracted Moments
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HIGHER OIL PRICES = BETTER FOR THE ENVIRONMENT
It seems that most environmentalists are upset about the recent rise in oil and gas prices over the last 5 years. But it is actually the best thing for the environment in decades. Prior to the oil price hike, people would drive more, use less fuel efficient cars and technology, and not care about the carbon footprint they brought on to the planet. Ever since oil has been going up, more and more people are using fuel efficient cars, driving less, taking public transport, and using politics to raise environmental awareness. In my neighborhood in manhatten, i’ve seen 3 green buildings go up in the past year. You never would have seen that 5 years ago.
But at the same time, higher oil prices brings on the incentive for oil companies to explore a lot more and dig up new findings, (ie rainforests and oceans)..
A tax hike for oil companies would only mean one thing, higher oil prices. If profits are less on the exploration of oil due to higher taxes, they have less incentive on exploring more and increasing the supply of oil, which drives up the price even more. But maybe thats not such a bad thing if you’re a true environmentalist…
@S Paul I love high gas prices. We realize that high prices will mean people will drive less and that it’s great for green tech. What I don’t like is the fact that oil companies get boatloads of government subsidies and tax breaks. They should not be allowed to make record profits in one hand while in the other taking my tax money in subsidies secured for them by their Washington puppets. It’s galling that they threatened to raise prices if we dare touch their profits just because they’ve gotten used to eating at the trough. Cut ‘em free and let them compete with green tech on an even playing field.
Or better yet, flip it around and give all of Big Oil’s subsidies to green tech for the next 50 years to even things out.
free market + high gas prices = innovation
I’ve been rooting for $10/gal for years now. Even if costs are increased for everything else, new infrastructure and logistics innovation will catch up quickly when it starts to actually matter.