Monday, June 09, 2008

Oiling the Wealth Envy Engine

Sorry to burst bubbles, but Obama's oil profits tax is as bad an idea as McCain's Gas Tax Holiday.

Let's say we passed a really hefty tax and reamed it to the oil companies in a big way. The result of Obama's tax will be that American owned oil companies will shrink in relation to the nationalized oil concerns of China, Venezuela, Saudi Arabia and al.

America will be in a worse position after the collection of the taxes.

A hefty tax on private oil companies would only be valid if it was the privately held oil companies that caused the shortage in supply.

When I look at the world, it appears to me that privately owned firms have a direct control of a smaller portion of known reserves than at any time since the OPEC oil embargo of the Carter years.

It is government—not private enterprise—that is crimping supply.

In the US, environmentalists block access to known reserves. Abroad we find countries like Venezuela nationalizing the oil industry at a record pace.

The long term solution is to let energy companies make their profits. These profits are being re-invested in alternative energy.

The cause of the current energy crisis is that governments are restricting access to oil supplies. The energy crisis will resolve itself when private industry has the ability and economic resources to develop alternatives.

Once again Obama is pulling a page straight from Marx. He is using wealth disparities caused by government control of a market to spur wealth envy in an effort to demand even greater control of the market.


Anonymous said...

So your claim is that alternative energy hasn't been thoroughly developed because the oil companies "just don't have the money", right?

Heh. Right.

The real long term goal is getting off of our dependence on petroleum entirely, not band-aiding the issue by drilling in one of the last natural habitats protected in Alaska.

We've got to have bigger vision than this, it's what America has always been about.

y-intercept said...

The claim of the post is that the government controlled energy sector is systematically strangling the market.

Governments control access to supply, and they seem to be into a game where they flood the market to thin out competition, then tighten the market to ream it to consumers.

Taking the profits from the energy sector in boom times is part of the strangling process.

As for the question of oil profits. The oil industry is limited by supply. I would like to see the oil companies paying these profits to investors as dividends. The investors would invest the money in alternative energy.