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So, I'm digging through the actual report, and it's creepy. Talk about history attempting to repeat itself (just shows the stupidity of Obama and Pelosi calling for the windfall profits tax). Here's some early highlights:
from Congressional debate on the Windfall Profits tax debate back when it was passed:
I believe Obama stated last week that the oil companies are profiting because of the situation, not because of any real novel management concepts."The revenues resulting from these higher prices, however, would provide income to oil producers far in excees of what most of them originally anticipated when they drilled their wells and in excess of what they might now be expected to invest in energy production.
Other motivations and factors underlying imposition of the windfall profits tax were that Domestic crude prices would rise to market levels that did not reflect compe ive market forces but the market power of OPEC; and,
further, OPEC’s prices were projected to increase in real terms at
very high rates, usually assumed to be 3% per year.Obama stated last week that he didn't have a problem with $4 gas, just that the price blew up so quickly.The market price of oil was believed to be in a sense “unanticipated,” unearned, and unneeded for the profitability of the oil industry. Society should share in the economic return to natural resource production.
And yeah, that last part about everyone sharing in the cost...
Yep, Obamism at its finest. They're making money! Tax them!! Oil is a natural resource whose long-run supply is fixed; it is not like other factors of production such as labor and capital. The stock of natural resources is fixed in the long run whereas the stock (or supply) of the other factors is variable. Since the stock of oil is fixed,some argued that high levels of industry income were not necessary to ensure adequate supplies. If low levels of income would ensure adequate oil supplies, then any industry income above that income earned from alternative use of industry resources could be deemed excessive (economic rents) and should be taxed away.
There's your tin foil hat theory for you, alive on the floor of Congress...! Some believed oil industry income was excessive to start with due to the concentrated structure of the domestic oil industry and due to the fact that domestic price of oil was not a compe ively determined price.
Again, the modern liberal dogma is that Bush, Cheney, and big oil are conspiring to make all this money off everyone...Additionally, it should be remembered that the WPT was enacted in the wake
of two oil shocks in the 1970s: (1) the 1973-1974 oil embargo, which raised oil prices fourfold and (2) the 1978-1979 Iranian revolution, which doubled oil prices, and created gasoline shortages (and long lines of motorists at the gasoline pumps).
Also there was a certain amount of public su ion of the oil industry; su ion that the energy crisis was not real but a contrivance of the industry in concert with OPEC for the purpose of profiteering.
Separate section:
Other highlights:Distributional Equity (“Fairness”)
Another rationale for the windfall profit tax was equity or “fairness.” It was
estimated that oil price decontrol would cause a large redistribution of income from energy consumers to energy producers. Policymakers concluded that it was unfair for the oil industry and landowners to experience such sharp increases in income when so many consumers — particularly low-income consumers — would see a sharp increase in their energy bills. They believed that society at large, through the federal government’s policies, should also share in some of the income gains.
The fairness rationale was strongly influenced by the impact of higher energy
prices on poorer consumers. Although all energy consumers would experience a higher absolute burden due to higher oil prices, including higher electricity prices, natural gas prices, and coal prices, poorer people would experience a higher relative burden.
That is, in relation to their income, poorer persons spend more money on
energy and other necessities than higher income persons. Therefore, energy costs represented a higher proportion of low income persons’ budgets than high-income persons’ budgets — the burden from decontrol would be greater for low-income persons than from high-income persons.
The windfall profit tax was intended to be the instrument for achieving a more equitable redistribution of the income which would result from oil price decontrol. Underlying this instrument was the belief that the oil companies were en led to a fair and reasonable return but not an “excessive” return, which was in any event determined by OPEC-set prices rather than compe ive prices.
* The projection was that $392 billion in tax revenue would be generated by the windfall profits tax. In actuality, only $80 billion was.
(AHF note: Obama is proposing a tax credit of $1000 per family just for fall 2008 paid for by a windfall profits tax. At $1000 per U.S. family, and an estimated 115 million families in the U.S., they would have to take in 115,000,000,000 in tax revenue to pay for Obama's vote buying, err, fall 2008 energy credit handout.
LMAO!
* Imports of foreign oil actually increased from 32% at the time to 38% in the twilight of the profits tax.
As of 2006, we imported 60% (!) of our oil (side note: hurray for no new domestic drilling, etc.).
Anyway, I've gotta call it a night, if anyone wants to read more gory details from the last time this stupidity was tried, here you go:
http://assets.opencrs.com/rpts/RL33305_20060309.pdf
Oh, and before you liberal dumb s trash this, keep in mind the Congressional Research Office is non-partisan, none of the above came from Fox News or WorldNetDaily (just a little reading, something I know can be hard for you Obamapologists).
Edit: sorry some of the formatting in the quotes sucks, I was copying out of a PDF and it comes across a little funky to the board.
Edit 2: sobered up this morning and realized my mistake.
