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| Yes | 74% | 349 votes | Total: 473 votes | |
| No | 26% | 124 votes |
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Add to FavoritesNo simple response exists to address the complexity of Big Oil's profit margins - especially when the political nature of the oil crisis is factored into the equation. Implementing a windfall profits tax is a viable component to regulating oil prices, but it cannot stand by itself.
The problem of high oil prices is an issue of supply and demand. The high global demand and limited supply of oil raises the price per barrel, and the demand by stockholders stokes each company's drive to seek higher profit margins. Obviously, these two corporate goals remain in tension.
Economic theory suggests that in time, the markets will find an equilibrium that suits the consumer, the investor, and the environment. From the foundation of my economic training, I believe this to be true. Given enough time, the self-interest of the marketplace gives birth to a profitable reiteration of the Kantian Imperative. This begs the question, will it happen soon enough?
Most economists are fully aware that the markets act inefficiently (for example, companies leverage debt to signal expected profit), but they are convinced supply and demand is the most responsible system for consuming and distributing resources to effect their highest utility. I am convinced supply and demand adequately regulates non-renewable resources that we are willing to completely consume, but it often miscalculates the tipping point of renewable resource depletion.
Calculatin g the consumption of renewable resources requires market predictability. The United States' consumption of natural resources is excessive, but generally predictable. On the other hand, markets without government regulation tend to be more volatile (... think the Asian Tigers), and they are more bullish consumers of natural resources. If the US has a relatively stable market, why does it consume more resources per capita than any other single nation?
Oil prices are cheaper in the United States than they are in most countries overseas. However, we will not be appeased. We complain about volatile prices at the pump and demand our investment turn a profit. A windfall profit tax might help to regulate the market volatility felt at the pump, but the problem still remains that we incorrectly treat oil as a renewable resource and misappropriate its usage. If the government decides to implement a windfall profit tax, it should also give a larger tax break for research and development of alternative fuel sources. Then companies announcing higher profits would signal a long-term investment in American energy, instead of short-term, but unsustainable, profitability.
Oil companies should pay windfall profit taxes, but only in indirect proportion to their investment in alternative fuels.
Learn more about this author, Joseph South.
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No
Should oil companies pay a windfall profits tax?
Imagine a situation in which a company has year after year of record losses. They will eventually face the possibility of going out of business unless they turn it around and start earning a profit. Their employees face the possibility of losing their jobs which could be a serious threat to their standard of living. Where would the companies turn?
Oh wait a minute; this is happening now! How many companies are begging for our taxpayer money at the throne of our federal government? Many including banks, auto companies, and others are visiting our political leaders and pleading for money. GM says it will have a huge ripple effect on the industry and the country if it goes under:
http://www.msn bc.msn.com/id/280129 84/
And, guess what, now states and cities are lining up for their desired bailouts.
You see, up until a few months ago, I had the perfect article for this topic. My argument against it went like this: Sure, implement a windfall profits tax. No problem! However, if you are going to tax a company for making record profits, then be willing to help them out when they are having record losses. I thought I had the perfect argument in place. Wrong!
Now we see the government offering to help out these PRIVATE companies and what is happening? We are seeing more and more companies lining up at their Mother's tit to drink the taxpayer's milk. Also, just an aside thought, does it seem to you that the market has continued to go down since the bailouts?
Should we be bailing these companies out? No! Should we implement a windfall profits tax? No!
Why not Smith? I mean after all, they make money at our expense! Well, Duh! Every company makes money at your expense. McDonald's makes money, Burger King makes money, bowling alleys make money, Delta airlines makes money, and so the list goes.
The reason we should not be taxing them is answered by basic economics. The price of oil, and subsequently gasoline, will rise when the demand for it goes up and it will fall when the demand goes down. When do we normally see higher gas prices in America? The summer this last summer we had $4/gallon prices remember? Now here we are at the beginning of December and what has happened? Prices are way down. That is probably temporary. Why? Because the worldwide demand of oil is going up!
Let's take a quick tour of the world. China continues to grow and so does their demand for oil. Look at their factories and look at the increase of the number of cars on their roads. The same can be said for India. Whenever there is an increase in population or an increase in the number of cars on the roads, you will see a subsequent increase in the demand for oil and the price for gas will rise. When you have an increase in the demand for something you will see an increase in the cost to the consumer. Again, simple economics.
Why do you want the government to punish the oil companies by taxing them more? Can you not follow through to the logical conclusion? You honestly think that the government will be sticking it to them by raising their taxes, right? Don't you see that the oil companies will respond by raising the price of gas? Do you really think they will just pay more taxes and make less money? If so, you are either nave or stupid. Only you can answer that.
Think this concept through. Seriously apply some common sense and you should realize that this is nothing more than wealth envy. And envy is something that should be avoided.
Learn more about this author, B Smith.
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