Conservative columnist Charles Krauthammer argues in this column that investigations into oil companies’ profits will reveal nothing more than this: Supply is up and demand is down.
Michael Kinsley points out in this column that searching for “misdeeds” or wrongdoing by oil companies misses the point. He writes:
“Taxes are not a form of punishment. And you don’t need to find wrongdoing to justify a special tax on their profits. You only need a pocket calculator — to figure out how much they owe.”
Posted by Melissa Cooley
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50 Comments
No matter the numbers that I believe can be manipulated by anyone who wants to use them.
I will always believe that Cheney’s Energy task force is behind the higher prices. If it isn’t true, then release the notes from the meeting. If not the notes at least release the list of who attended. The fact that Scalia finds it is prouded moment that he kept this information from becoming public just reinforces my belief.
Now they are saying that oil will go above $100 a barrel and we can expect to see these prices and more for three years.
Alaska has an interesting idea to pay cyclists each month to ride their bikes. Of course in Alaska there are roads for bikes to travel on.
Charles Krauthammer is a G-d Zionist-Jew { not good-Jew } who knows why his beloved Zionist Israel is the reason for 3 dollar Jew-gas.
Yeah, right, you Palestinian murdering creep, you, Bush, Neocons, PNAC all have your greedy “rule the worlders” crap driving-up the price by threatening to use nuclear weapons on the world’s oil supply and are afraid Iran will nuke you back to hell where you belong.
Oil companies furnish gasoline, Zionism furnishes trouble, threatens the supply, drive-up the price and creates havoc, not gasoline just trouble, and that is costing American families their jobs, cars, houses, and the American dream, not the “Zionist dream” the American dream.
Cut Zionist Israel loose forever.
They’re on their way to Hell, let’s not join them. Let them go by themselves.
We need to make peace with the Arabs, not threaten them so Israel can steal more land, murder more Arabs, or pay for more “settlements” on Palestinians land.
“Even today I am willing to volunteer to do the dirty work for Israel, to kill as many Arabs as necessary, to deport them, to expel and burn them, to have everyone hate us, to pull the rug from underneath the feet of the Diaspora Jews, so that they will be forced to run to us crying. Even if it means blowing up one or two synagogues here and there, I don’t care. And I don’t mind if after the job is done you put me in front of a Nuremberg Trial and then jail me for life. Hang me if you want, as a war criminal… What you lot don’t understand is that the dirty work of Zionism is not finished yet, far from it.”Ariel Sharon, 1982
PS: Stay safe Ed, I hear that the beaners will be causing a ruckus down ther in big D today!
Viva La Raza Blanco!!!
They’re not the problem, they’re not crazy, they’re not threatening to use Atomic bombs on the World’s oil supply.
They’re not a country full of homicidal maniacs.
Olmert, the world’s new Adolph Hitler is the new psychopathic murdering Prime Minster of Zionist Israel.
Zionist Israel has a new megalomaniac to start the slaughtering, and the destroying of the American way of life.
And start milking the US Treasury to finance all his buddies.
The politicans know the truth about gas prices. They just think the American people are stupid, and so, play on their ignorance for political gain.
Maybe I’m missing something here, buy has Krauthammer invented a new economics? Shouldn’t it read that “supply is DOWN, and that demand is UP”? How does one make record profits if the item one is selling is readily available, and yet people aren’t buying it like they used to?
Dearest Melissa,
Does a fat baby fart? Does the Pope eat bratwurst? Is the liberal solution to any problem a new tax?
Of course you’re missing the point on gas prices! You have no idea how the free market works!
Any tax used to ‘punish’ Big Oil will immediately be reflected in the price of gas at the pump.
http://www.townhall.com/opinion/columns/walterwilliams/2005/12/07/178043.html
Supply of crude is up, because the Zionist Israel is threatening to bomb that supply and that will create a shortage.
From the time oil is shipped to a refinery and distilled into gasoline take some time, so the prices are based of future supplies.
You can buy oil futures right now and contract to hold them until the due date. Do you want to pay a low price right now, while the G-d Zionists are threatening to use Atomic bombs on your supply? You’d better plan on it costing a lot more, when it is short supply. That is why Oil Traders are not willing to gamble the crazy Zionists or Bush will not do something real stupid and nuke the supply.
If we take the Atomic bombs away from Zionist Israel and remove Bush from office, the price will come down as the threat is removed.
The flaw in your thinking is that the supply will remain the same after the G-d Zionists and Bush get through with it.
The Middle East will be on fire.
Plus, any tax-revenue will be lost forever in the bureaucracy of big government.
Here is the solution: Cut Israel loose { minus our Atomic Bombs which they stole from us in the 1950s }. Make peace with the Arabs.
If you look at the Krauthammer article, Ms Cooley misquoted him. It should be wordeed as i said.
Dear Brian,
Read Krauthammer’s column, Melissa screwed it up.
Hank
Our posts passed each othe in the either.
Has anyone stopped to think that the repeal of another tax, the capital gains tax, is prominently at work here?
Those record profits for Exxon and the other big oils means big untaxed capital gains for the investor class.You know, the folks who BENEFIT from high gas prices alot more than they are hurt by them? A lot of what big oil gets from gouging would have lost before to taxes. Now they get to keep it.So much for Hanks arguement that taxes just get passed down. With a windfall profits tax that would be partially true.
Repeal the capital gains tax. When they have to pony up a big chunk of those record profits to taxes, they will have less reason to play games with the price of gas.
I received the following as an email and this seems the best place to share here. It’s been awhile since I’ve taken economics but this makes sense to me.
A man eats two eggs each morning for breakfast. When he goes to the grocery store he pays 60 cents a dozen. Since a dozen eggs won’t last all week he normally buys two dozen at a time.One day while buying eggs he notices that the price has risen to 72 cents.The next time he buys groceries, eggs are .76 cents a dozen. When asked to explain the price of eggs the store owner says, “the price has gone up and I have to raise my price accordingly”.This store buys 100 dozen eggs a day. I checked around for a better price and all the distributors have raised their prices. The distributors have begun to buy from the huge egg farms. The small egg farms have been driven out of business.He checked out the huge egg farms and found they were selling 100,000 dozen eggs to the distributors daily. Nothing had changed but the price of eggs.This pattern continues until the price of eggs is $2.00 a dozen. The man says, “there must be something we can do about the price of eggs”.He starts talking to all the people in his town and they decide to stop buying eggs. This didn’t work because everyone needed eggs. Finally, the man suggested only buying what you need.He ate 2 eggs a day. On the way home from work he would stop at the grocery and buy two eggs. Everyone in town started buying 2 or 3 eggs a day.The grocery store owner began complaining that he had too many eggs in his cooler. He told the distributor that he didn’t need any eggs. Maybe wouldn’t need any all week.The distributor had eggs piling up at his warehouse. He told the huge egg farms that he didn’t have any room for eggs would not need any for at least two weeks.At the egg farm, the chickens just kept on laying eggs.The distributor told the grocery store owner that he would lower the price of the eggs if the store would start buying again. The grocery store owner said, “I don’t have room for more eggs. The customers are only buy 2 or 3 eggs at a time”.”Now if you were to drop the price of eggs back down to the original price,the customers would start buying by the dozen again”.Finally, the egg farmers lowered the price of their eggs. But only a few cents.The customers still bought 2 or 3 eggs at a time. They said, “when the price of eggs gets down to where it was before, we will start buying by the dozen”.Slowly the price of eggs started dropping. The distributors had to slash their prices to make room for the eggs coming from the egg farmers. The egg farmers cut their prices because the distributors wouldn’t buy at a higher price than they could sell eggs for.Anyway, they had full warehouses and wouldn’t need eggs for quite a while. And the chickens kept on laying eggs.Eventually, the egg farmers cut their prices because they were throwing away eggs they couldn’t sell.. The distributors started buying again because the eggs were priced to where the stores could afford to sell them at a lower price.And the customers starting buying by the dozen again.
Now, transpose this analogy to the gasoline industry.What if everyone only bought $10 worth of gas each time they pulled to the pump. The dealers tanks would stay partially full all the time. The dealers wouldn’t have room for the gas coming from the huge tank farms. The tank farms wouldn’t have room for the gas coming from the refining plants. And the refining plants wouldn’t have room for the oil being off loaded from the huge tankers coming from the Middle East.
Just $10 each time you buy gas. Don’t fill it up! You may have to stop for gas twice a week but, the price should eventually come down.
Think about it.
As an added note..When I buy $10 worth of gas,that leaves my tank a little under half full. The way prices are jumping around, you can buy gas for $2.65 a gallon and then the next morning it can be $2.15. If you have your tank full of $2.65 gas you don’t have room for the $2.15 gas. You might not understand the economics of only buying two eggs at a time but, you can’t buy cheaper gas if your tank is full of the high priced stuff.
Julie: I prefer Father Guido Sarducci’s Five Minute University. (an old SNL character) At FMU they would teach you only what you would actually remember of a subject five years after you graduated. On economics, I think it was “supply and demand”.
“investigations into oil companies’ profits will reveal nothing more than this: Supply is up and demand is down.”
For her backwards Krauthamer quote, I hereby sentence Melissa Cooley to a remedial course at FMU.
Julie I don’t think you see a 50c drop in a day. Many experts say gas prices are rocket-and-feather: they can go UP REAL FAST, but then DROP MORE SLOWLY. (I don’t know if they GO UP 50c in one day, except perhaps the afternoon of 9/11, but I think the rocket-and-feather phenomenon is plausible, although I haven’t formally charted prices.)
Are we missing the point on gas prices? maybe.
But for DAMN sure we are missing the point on iraq today.
Doesnt anyone remember that this is the two year anniversary of Commander Codpiece’s announcement of Mission Accomplished?
http://mediamatters.org/items/200604270005
Mission accomplished? What points are we missing in the war on iraq?
May 1st: This Day in History…Between 34 and 39,000 Iraqi civilians killed so far…2,377 American soldiers killed, more than 17,381 wounded…100,000 families have fled the violence. Cost of war: $277,187,977,102.
And do we remember the preznit saying this?
“There are some who, uh, feel like that, you know, the conditions are such that they can attack us there. My answer is: “Bring ‘em on”. We got the force necessary to deal with the security situation.“
And notice the MSM is ignoring this little funny bit from the preznit at the press dinner….
“This, by the way, is the same Washington event where Bush previously charmed many (and horrified others) by pretending to have trouble finding Weapons of Mass Destruction (after we’d started to realize they weren’t in Iraq), and wandered the room looking under tables. Really cute, huh? They should send videos of that to the families of soldiers killed. “
But hey, when the news of the day is focused on the bright and shiney objects of immigration and gas prices, we dont really have to think about that pesky little botched war.
With all respect to JR, I don’t see how the capital gains tax will capture the “excess” profits being earned at the moment. Capital gains occur only when someone sells an asset, say a share of oil company stock. Without selling, there is no realization of gains, therefore no tax is due.
Anyway, last summer ExxonMobile was trading at around $60. Today it’s about $64. So there’s not a lot of gain in the last year to tax.
We may also want to pause and consider just who are these people who own the oil companies. It is, by and large, the same people who own the rest of corporate America: pension plans and individuals saving for their retirement.
Regarding windfall profits tax or other measures proposed to punish the oil companies: Some believe that the large oil companies have colluded in order to keep gasoline prices high. The Federal Trade Commission has looked into this for a long time, and they haven’t found any such evidence. Last year (before Katrina, but I don’t think the FTC would change anything based on that) they issued a large report detailing their findings.
Large profits are a signal that there is money to be made in an industry, and that attracts the type of competition that some are complaining the oil industry lacks. If we tax away that profit, there too disappears the incentive for new entrants in the industry.
Heartlander is on to something with the “rocket & feather” theory. It is not known if it actually exists or not. Here is a 2003 article describing the theory (in it they complain about $2.27 per gallon gas – that’s laughable, now).
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/03/16/BU143458.DTL
Another issue about the burden of gas prices on the middle class – gas spending is a relatively non-elastic expense. I could easily resort to buying two eggs, but it takes a little more time to move closer to my workplace, re-tool with a hybrid car, etc, etc, – hopefully you get the point.
I recall reading that when gas prices reach $2 per gallon, consumption is cut into significantly enough that it was not in the interests of oil companies to have the price that high. That little bit of wisdom, if it was ever true, is not true now.
But if you bought oil futures, you could have made a LOT of money.
Gee, If you tax gasoline, that makes it cost more money. Wow, what a plan. Why don’t you Zionists put Charles Krauthammer in as the head of the department of gasoline.
He has a calculator and no brain. Just what you need { and he’s aready a Zionist }.
The Zionists nuked the egg farm.
Julie, with regard to your story, if the man still eats two eggs a day (and everyone else does, too), the demand for eggs is unchanged. What has changed is that customers buy eggs every day instead of once a week. That raises transaction costs for buyers and sellers of eggs.
There may be some period of declining demand as people change their habits from buying weekly to buying daily. But when people resume buying weekly, there will be a corresponding short period of increased demand.
Even if this scheme did work, once people resumed buying eggs a dozen or two at a time, aren’t the same factors still in place as before?
Or if schemes like this do work, shouldn’t we try it again, thereby lowering the costs of eggs even more?
Same thing with gasoline. As long as everyone buys the same number of gallons, overall gasoline demand is unchanged. But everyone has to go to the filling station more frequently. For people who value their time, this has a cost.
Julie, I already buy gas in $10 increments. I don’t do a lot of driving and try to keep it as much to the minimum as possible. I did fill my tank once, sometime last month, and nearly passed out at the total, so I’m back to the $10-at-a-time ritual. Like you, that gets me just under a half tank. It’s definitely doable.
I’d also love to boycott ExxonMobile, but I’m not sure where places like QuikTrip get their gas. Anyone know?
High oil prices are not ALL bad. Daniel Yergen recently stated in the WSJ that SEC reports’ “proven reserve” data is oil that can be produced at a current profit-making level, which is to say, when prices go up, more geologically proven reserves will be reported. This includes shale oil in Colorado and Wyoming, deep offshore oil in the Gulf of Mexico, and tar-sand oil in Canada.
High oil prices also can make wind and solar energy production cost-effective.
High oil prices can also encourage more of us to carpool. Heck, we can have more sociable interactions on our daily commutes.
High oil prices can encourage more of us to ride our bikes to work to save money. It will reduce healthcare costs. It will not FATIGUE people, it will GIVE THEM MORE PERSONAL ENERGY.
You could redesign Central Avenue to single-lane car traffic in each direction, and convert the right-hand lanes to 10-foot-wide bike lanes. With the completion of the Kellogg expressway, people who want to drive to work should take that route. (We could build a bike trail and bridge connecting Central over the Arkansas River.)
We can have more bus service. Running on Kansas-produced natural gas. We can build a light-rail system. Smart societies figure out how to ADAPT to changing circumstances.
You won’t need to worry about going to work because you won’t have a job.
A Mexican will have it, if it still exists, for one tenth of what you were making.
And you get to learn what it’s like to be homeless and poor.
If we cut the Zionists loose, the price will immedeatly fall to normal.
$10 each time you buy gas? Wow, that’ll work! That means if you get half a tank your tank is only 7 gallons. I call BS.
$10 will get my motor home 27 miles, 18 if I’m pulling my horse trailor. $10 will get my pickup 50 miles, 38 if I’m pulling my horse trailor.
By not filling up you are in the station three or four times as much. How much gas does that waste?
What a bunch of nimrods.
Hank
Actually, Hank, I think that Julie is one of YOUR nimrods. But you’re right, it won’t work–people will just buy less gas more frequently.
What will work is that since gas prices have gone up and stayed up, people will drive less, car-pool more, walk or bike more, and eventually buy more fuel efficient cars.
You don’t need to buy a hybrid to get good mileage–just get a small anything. We’ve got a Honda Accord with the 6 cylinder engine and that thing is a rocket. It nearly DOUBLED the mileage we got from our Ford Exploder.
Plus it looks like I’ll be car-pooling to work soon. Share a ride, and you’ve doubled your gas mileage right there.
Just re-read your post. You’ve got a motor home.
Ouch . . .
Dear LeftHook,
I’m not complaining about gasolene prices. I own E/M. $1.37 a share quarterly profits.
My complaint is corrupt politicians and stupid constituents.
Hank
PS The analogy will work as soon as the environmentalist put so many restrictions on egg producers that we have to import 60% of our eggs at the same time preventing new chicken farms and buying more chicks.
Dear LeftHook,
I’ll take Allie, you get JR.
Hank
Dear LeftHook,
Can you rocket pull a 6500lb horse trailor?
Hank
Environmentalists aren’t your enemies. Colorado and Washington state are into environmentalism. Their economies are doing a lot better than Kansas’s. Name one pro-environmental state whose economy is worse than Kansas’s.
Wichita was named by the EPA in 2001 as having high levels of toxic pollutants in its air. Wichita has really high lead levels in its water. Now chart Wichita’s per household income relative to the national average in 1970 vs. today. Some of you apparently think pollution is good, because it correlates with falling income levels. If that’s what you want, you’ll get what you want.
California, Massachussetts, Florida
Heartlander. Only specific pockets of Colorado, most notably Denver metro and ski resort towns, is going well and the same goes for Washington state.
Hank, I’ve been to California, Massachusetts and Florida in the last year (+). They’re doing better than this part of Kansas. Disagree? Travel to those states, and see. I’m serious. I went to Florida last April, Massachusetts last June, and California last August.
I get out of Kansas a lot. I need to get out and about, in order to maintain a larger-than-Kansas perspective and reality check. At the end of this month, I’m going to Utah, Nevada and Oregon. I was going to the Arkansas Ozarks, and canoe the Buffalo River, but some friends are going west, and they convinced me join them. Then in June, I’m going to New England to attend my son’s college graduation.
I went to Southwestern Colorado last June and traveled to a lot of places in Washington state last July. Get out and about. Get a personal reality check. That’s what I do.
I’m not entirely convinced collusion is occurring in the oil industry, but I do believe they are ratcheting the price up until they find that point in which the price begins to affect demand. While this is not strictly unethical, it can severely hurt our economy and alter the balance of power in international politics. While the bureaucrats endlessly debate how to deal with this situation or send us rebate checks to make us think they are actually doing something, we can immediately drive down demand. Tomorrow, sell our Hummers and buy a Honda. Start walking to lunch instead of driving. Arrange a carpool with your buddies at work. Stop bending over and taking it from the oil companies and start doing something about this situation.
I would hate to be a victim of trolling, but Ed, you can’t possibly be serious about Israel, right? World War III would start the moment the US stopped backing Israel. I guess demand would drop, though, as no one would be left on Earth to buy gas.
“While this is not strictly unethical, it can severely hurt our economy and alter the balance of power in international politics.”
Anyone else as relieved as me that the price hikes on gasoline are not “strictly unethical”?
I know those corporations just hate it when there is even an appearance of ethical problems.
And if Shocker’s predictions on the effect of the prices hold true, aren’t you glad that no one in this administration will be willing to do anything about it. “Free enterprise” don’t ya know.
DD, the “strictly unethical” part was merely a little jab at my good buddy KCL.
To me, the price hikes are unethical but I also recognize the right the oil companies have to charge what the market will bear. The sticky situation is that what the market will bear will undoubtedly harm our economy and our influence on foreign governments. In this situation, I do believe the government is justified in exerting some form of artificial downward pressure on gas prices.
To further clarify, I agree with you that they’re not going to do it. We’re on our own, I’m afraid, to figure out how to exert our own artificial downward pressure.
There may not be any collusion between oil producers (shouldn’t they be called extractors?), but there is a very immoral ripping off of the American people going on. The cost of oil rising does not make the cost of extracting or processing it increase. As such, shouldn’t the government put a ceiling on profits made by the oil companies? They are advertising record profits, and for what? They’re not putting the money back in exploration, or in building new refineries. These obscene profits are buying them a lot of Washington face time and a lot more Senators and Representatives. We already know they own the White House.
An example of how screwed up the oil company line of thinking is: The Indian nation has oil wells on their land. They are supposed to get royalties from the oil taken from their land by the oil companies. When they looked at the books, they found out that little or no money was coming in from the oil companies. (actually, I think it is the BIA that is supposed to pay out the royalties). What the Indians did was shut off the pumps. It took less than 24 hours for the oil companies to freak out and start screaming at the Indians for violating the so-called agreement they were supposed to have with the oil companies. Where was the money going? Guess.
So what can we do about it?
NO MORE INCUMBANTS!!!
well said walker