It's time to play "Guess Who Needs a Windfall Profits Tax?"
The rules are simple. Just peruse the following numbers and guess which set belongs to a rapacious oil company that should be forced by the kind and fair US gov to hand over more of its greedy earnings as Windfall Profits Tax.
E= Earnings, S= Sales, IT= Income Tax, A= Assets.
(Jeopardy Music, doo de doo doo doo de doo do dodo dododo). Have you picked out the magic Windfall Profits numbers that have so riled our democrat members of congress?
The answer is...
For those of you arithmetically challenged, Column 1, ExxonMobil is the Rapacious Oil Company that Doesn't Deserve It's Excessive Profits. On an Earnings to Assets of 4%, it is lower than Google but higher than Disney, Apple, and Walmart. So, Second "evilist" on a return on assets to "Most Evil" Google. On an Earnings as a Percent of Sales of 10%, it is a distant 4th "evilist" on the list, once again Google being "Most Evil", with Walmart being the only company less "evil" than ExxonMobil, ironically. When you compare Income Tax Paid to Earnings Ratio of 82%, ExxonMobil it pays far more taxes as a proportion of its income than any of its brethren, thus "less evil" than any of this Big Company control group, as well as paying 45% of its Income Tax to EBITDA ratio. Strangely, Google, a company with Al Gore as a member of its Board of Directors, is "Most Evil" on ALL metrics of profitability versus the vilified ExxonMobil.
This leaves me to speculate that those congress people that are whining are colluding with speculators to keep the price of oil high! You have to admit it is a brilliant strategy... discourage US companies from searching or producing domestic oil through BS tax and regulatory schemas. This is guaranteed to cause shortages, and thus, price increases... right? Or did I totally miss the point of Econ 101?
http://apnews.myway.com/article/20080610/D9176M8O0.html
Senator Dick Durbin of Illinois said that "The oil companies need to know that there is a limit on how much profit they can take in this economy". Apparently, the Learned Dick Durbin deems that an acceptable profit margin for US E&P to be even lower than the 1/2 the profit margin of other industries that it already is.
'The five largest oil companies earned $36 billion during the first quarter', the article further states, without any further clarifying analysis of profit margins, the info that I have been thoughtful enough to provide you that the reported decided was not germaine.
My favorite comment in the article is...
"The American Petroleum Institute, which represents the major oil companies, has been reminding lawmakers that in the early 1980s, when the government imposed windfall profits taxes on oil companies domestic oil production dropped and imports increased.
But Democrats reject the comparison.
The Senate proposal would impose a 25 percent tax on profits over what would be determined "reasonable" and would allow oil companies to avoid paying the tax if they invest the money in alternative energy projects or refinery expansion."
"But the Democrats reject the comparison"! What a statement!
How about an Open Choke Analogy? Say the Feds wanted you to save enough money to retire when you are 65. A laudible goal. Here is how these "advocates" would insist it be done. First, you could not work more than 30 hours a week. Second, you would be penalized for getting a better job... with any additional salary over your last job being taxed an additional 25%. You could deduct from that additional income any dollars you spent buying lottery tickets, lottery tickets being the socially just method to get a nest egg to retire.
This is apparently the Durban Energy Policy. Anything that we know works and can increase our US energy mix is to be fought to the end. Create tax and regulatory policies to restrict what is known and proven to create short to medium term capacity and insist that all investment be made in high risk and unproven technologies (ie lottery tickets). Like encouraging school teachers to go to Vegas as a "retirement plan".
Even more bizarrely, it is focuses on American companies trying to produce American energy, and NOT on foreign companies of sources of oil at all! American companies that control only maybe 15% of the world market!
As one brilliant Rep said on TV this last weekend, "This isn't about Supply and Demand, oil should be $50 and we are going to make sure it is. And don't worry about the shortages, we will make sure that gas is rationed fairly."
Yep. A real quote. At least this SMF recognized he would have to deal with scarcity, given that we have proved these truths over and over again in the last 100 years.
Although word hasn't reached the these folks on how Supply and Demand really work, it has reached the ex Soviet Union and Red China, who know first hand the power of free markets. The Chinese have to be absolutely gleeful that their primary energy trade adversary has majority support for petulantly saying "we are only going to pay 40% of the world market price, take it or leave it". Whaaa?
Imagine being at a grocery store that has plenty of customers and sells out of its produce every day, and telling the grocer you will only pay 40% of the list price, even if you are the biggest buyer? What do you think the grocer will say to you? I think you are gonna be in for a produce scarcity! That number two and three buyer are going to have a field day buying up produce at a price somewhere between the old price and your mandate price that no one will meet, except at gunpoint.
Then, you are going to blame the grocer for being unreasonable, and tell him "I'm going to show you! I'm going to (the reasonable thing would be say here would be "grow my own produce", but no...) invent a new way to turn my sewage into tasty tomatoes with a super ray gun"!
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