Democrat Theory of Politically Taxing U.S. Oil Companies to Reduce Deficit Increase Election Chances – Proven - Result Carteresque Backfire – Shortage

In 1979 President Jimmy Carter had a deficit problem, high unemployment, inflation on the rise, and a “misery index”. The solution: tax big oil with a “Windfall Profit Tax” on oil companies. It rang true with those few who felt Carter was, at the time, the best President since George Washington, however, the end result was a disaster for the general public. Although oil profits appeared obscene, the end result was, at the time, exploration and production. The “Windfall Profit Tax” resulted in – less production and long lines at the pump (See “Emergency Fuel Supplies Rushed to South Florida”, Sarasota Herald Tribune, June 30, 1980) The concept of gas lines from 1979 through the 1980’s was a direct result of the assault on U.S. oil companies by the Carter Administration and a like-minded Congress. Those Windfall profits for the U.S. Government put the U.S. household in a huge bind, as gas prices climbed, and those that could, turned to public transportation in areas where it existed. For those areas that did not have public transportation that was adequate, walking and taking ones bike to work, to the grocer, anywhere was the only option. It was, in a word, not just a tax on the oil companies by an administration that had depleted the nations coffers, but a hardship on the entire U.S. population.

They're at it again. The grilling of oil company executives is now taking place on Capitol Hill. An article from the Canadian Globe and Mail, hits it spot on - ”Big Oil Hearings Great Political Theatre”. However, the unintended consequences of those Democrats trying to pin the nation’s economic woes on Big Oil, in an attempt to, again, use any tax revenues gained to pay down the deficit, instead of cutting programs, will be less gas to get to where the average American is going – like work if they have a job. It isn’t necessarily the high price of gas, which includes a chunk of change in taxes at the pump for the Feds (which is incentive enough to not actually do much about the situation other than hold hearings and point fingers at Big Oil), it is the fact that without the ability of the U.S. Oil companies to compete on a global scale, and extract oil to refine, that will result, again, in a Carter flashback. Even the mention of a tax, or end of tax breaks in this case, (post Carter), could result in speculators betting on a reduction in oil supply, causing the prices to – rise.

There have been some changes in the nation and federal government since Carter’s days. Not for nothing, but the population has increased, more cars, even those that are fuel efficient, are on the road and the government is financially vested in auto dealers, and their union, the United Auto Workers – all of whom will suffer. Without available fuel, there is no need or even ability to drive one’s car, and no need to buy a new one,(even GE's plug in's such as Chevy's Volt (GM) priced at a "modest" $32,800 without frills, is not an option for most Americans) prices on food and staples also rise (in a period where food is now subject to inflation) – will surely leave the general public doing without even more.

There are, of course, solutions, but those solutions are not acceptable to certain groups – such as drilling offshore, or on shore for that matter – it doesn’t sit right with the current administrations ideology – better to find a scapegoat – look like one is doing something for the American People, and keep on campaigning without a clue.

Which is what Carter did and the end result was the “Reagan Revolution.” Although one may tend to disagree ideologically with the current administration, one must beg that someone hand the current resident of the White House a history book or even news clippings of the Carter era before it is too late for the lower and middle class Americans who are already suffering enough. Of course, the probable end result will be a new administration, (which, although some consider the President in a good position for reelection now, his approval rankings, do not add up to a second term, under any circumstances), a repeal of any taxes, additional incentives given to the oil companies, short term taxes on, you guessed it, the American public, and then a road to prosperity. A word to all who intend to vote in the next general election, insure that one’s choice of a candidate has at least a modicum of understanding even recent U.S. History and economics - what has worked and what has failed miserably.

Tuesday Tidbits

Oil



Hillary Clintons proposed gasoline tax holiday and her stance on Opec are being criticizedby those on both sides of the political spectrum. That said: to those of us paying at the pump, Ms. Clinton is making sense.

As oil prices continue to climb to $120 per barrel and oil companies are reaping what can only be viewed by those of us paying through the teeth for heating oil, at the pump, and the grocery store (where prices are being driven up due to high cost of trucking), as obscene. When one sees the headline: Chevron Profits first quarter, at 5.17 billion Yahoo Finance, the thoughts of a windfall profit tax on oil companies, as proposed by Hillary Clinton, makes a whole lot of sense. Although economists will argue that this type of corporate tax (a tax on the excess profits only), will cause shortages, and worse, the oil companies may not continue research, those of us in the real world might view the pain of a corporation giving up a percentage of 5 billion plus in profits, as just. Point of view, as a citizen of the State of Massachusetts, my payroll taxes on my meager salary are taxed at 30% (includes federal and state taxes, as well as Medicare and social security), is it not fair that as an American corporation, Chevron bear part of the burden as well?

Best line regarding Oil companies this past week: Hillary Clinton to Bill O’Reilly: “Well, they aren’t inventing anything new (paraphrased via memory).

It should be pointed out that John McCain and Hillary Clinton both support a gas tax holiday. Obama, does not.