The idea of a tax on oil profits is moronic
I was watching The Daily Show a while back (actually, when I was supposed to be cramming for my history exam), when I caught John Stewart making a complete fucking fool of himself. Worst of all, the Daily Show audience enthusiastically applauded his every misstep.
Essentially, Stewart (who to his credit, had an emergency replacement guest in the Wall Street Jounal's OK-ish-but-with-horrible-teeth correspondant instead of, as Tivo predicted, the excellent Thomas Friedman) kept trying to get the oil/economy expert to admit that it was outrageous how oil companies were making so much money off of high oil prices. At one point he said something like "Well yes, I know that the prices are high and so they have to sell them at that price, but doesn't it seem like they're taking too much advantage of the situation? Aren't they screwing us over? Shouldn't they take at least a bit of a cut and pass the savings onto us?"
Holy shit, is there anyone out there that does not see the collosal ignorance involved in that statement?
Just in case, lemme explain as I wanted to do to Stewart: oil companies sell a commodity they pull out of the ground. As it is a commodity, they have to sell it at the price dictated by the market, over which they have little control (much like the stock market). Oil companies are not the middle man. They don't get the oil at a high price and then have to turn it over to the consumer. They dig it out of the ground and sell it at whatever price the market dictates. They're essentially famers relying on wheat prices. When oil was at ten dollars a barrel, they lost enormous sums of money. Now that oil is at seventy dollars a barrel, they not only make money, but make it economically feasibly to explore oil in areas that were previously economically inefficient to mine. A tax on their profits would cut back on exploration and innovation and, in the future, only serve to raise oil prices.
Basically, oil companies have already purchased stock in oil. They have to sell it at the price the stock market dictates. Let's say they bought it at twenty. If the market's at twenty-two, they make a two dollar profit. It's a profit, but it's not great. If the market goes to thirty, they make a ten dollar profit. Again, good, but not outrageous. Now that it's at seventy-five, however, they're making a fifty-five dollar profit, and people are saying "Wait, why are YOU making so much money?". They don't really have a choice. And they're using their money to find more oil to sell it to you. Pointing out their large profits as an example of industry greed is just taking advantage of public ignorance. I fucking hate it, you stupid fucks. That policitians (sadly, largely Democrats) are proposing a "windfall tax" to punish oil companies for making large amounts of money is just pandering to public ignorance at the cost of an efficient economy. Makes me sick.
“It is a strange paradox that today’s central banks are generally staffed by economists, who by and large profess a belief in a theory which says that their jobs are, at the best, unnecessary, and more likely wealth-destroying. Needless to say, this is not a point widely discussed among respectable economists. Nevertheless, it is an issue worth pondering.”
George Cooper, The Origin of Economic Crises