Will Excess Profits Tax Lower Gas Prices?

[irsGuru]

Fuel prices at the pump have caused a significant strain on individuals’ and businesses’ finances across the nation. So what can Congress do? Will excess profits tax lower gas prices?



Congress should be working to expand the domestic supply of energy. House Democratic leaders have rejected opportunities to increase that supply, which would result in a drop in prices at the pump.

For example, last August, 95 percent of House Democrats voted against a proposal that would have opened up the Outer Continental Shelf (OCS) and the Arctic National Wildlife Refuge (ANWR) to drilling for oil and natural gas. Only one-tenth of one percent of ANWR would be impacted. The area is frozen tundra — not exactly where the caribou roam.

There may be as many as 86 billion barrels of oil in the OCS and ANWR — enough oil to keep America going for five years with no foreign imports at all.

An “excess profits tax” on the oil companies has been proposed. While it is true that these companies have strong profits — profits are necessary for companies to expand, produce, and create more jobs.

To put those profits in perspective, last year oil and gas companies had a profit margin of 8.3 percent, lower than the 8.9 percent profit margin enjoyed by all manufacturing sectors, and significantly lower than the 13 percent profits enjoyed by computer companies or the 18 percent profits in pharmaceuticals.

An excess profits tax would only serve to discourage these companies from investing more in their exploration, production and refining capabilities. This is not the way to reduce the price of gas.

There’s an old cartoon in which the character, Pogo, says, “We have met the enemy and he is us.” It is Congress who needs to be held accountable for not supporting policies that would increase the supply of oil and reduce the price of gas.

There are no short-term fixes to this problem, but over the long-term Congress can help reduce the cost of gas at the pump by allowing oil companies to drill for more oil and build some refineries. Excess profits tax is not the answer, and not a solution.

[YiKeS]

Obama's plan:
"Take the excess profits of oil companies to help working families deal with energy costs with new $1,000 rebate checks and enact a $50 billion package to save 1 million jobs" [1]

Communist mantra:
"From each according to his abilities to each according to his need" [2]

Karl Marx would be proud of his protégé! (Obama. And the other Marxist Dems too...)

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[1] From Obama's web site: http://obama.3cdn.net/0035b25f3b7e0a7fe3_w0kdmvrq8.pdf
[2] K. Marx and F. Engels, Complete Works, vol. 19, p. 20 – per the Introduction to In Pursuit of the Absolute, by George Oritz. The George Ortiz Collection