Tuesday, April 1, 2008


Much to do has been made over the profits of Big Oil -- a phrase that is spoken in a way to highlight the apparent Eeeevilll inherent in the engine of our prosperity and our Liberty.

You see, to Liberals, Big Oil (or Big Medical, Big Pharmaceutical, or Big Food) is, without a doubt, the truly besetting Evil of the Modern World. Ossama bin Ladin and Hugo Chavez may be pesky, but it is the world of Big Business (again spoken in ominous tones) that is truly the threat to Life, Liberty, Truth, and the American Way -- provided you define "American Way" as Liberalism run amok.

This week sees executives of the the largest oil producing corporations being interrogated by people in Congress. These Congressmen, given the current majority of the Democrats, have no real knowledge of business nor of the oil industry.

Ah! But they look at the current oil prices, the fact that, as Rep. Eward Markey (D. Ma) says "With gas prices at $3.29 per gallon, the poorest 20 percent of American households are spending nearly 10 percent of their income just on gasoline.'' He also belabors the record profits of Big Oil and the relative little they invest in "alternative energy sources": "Your companies and the Bush administration must support, not oppose, legislation that will unleash the renewable revolution we need to become energy independent and cut global-warming emissions.''

So what is the reality? Gas prices are very high. Oil profits are correspondingly high. Liberals are calling for a "windfall profits tax" to punish oil companies for being successful. It all sounds good, doesn't it?

Reality check: no business, whether a multinational oil company or a Mom-n-Pop corner grocery, pays taxes. I know, I know! They have to fill out all sorts of tax forms, they have to hire all sorts of tax accountants and attorneys to satisfy the bloodless, demented gods of the IRS bureaucracies, and they have to send in checks, amounting to billions of dollars to the government.

But the fact remains: these businesses aren't paying the taxes at all. You, the consumer of the goods and services provided by these businesses, are paying those taxes.

How can that be? Consider what the price of a product includes: the cost of producing it, the cost of materials, the cost of transportation, the cost of labor, and the cost of the taxes levied upon the business that produced that product.

You can't get around it, folks! If you call for a "windfall profits tax", all you're going to get is even higher prices at the pump.

So, then, why don't we forbid Big Oil from passing along the costs of those higher taxes? This way, we'll cut those profits and we won't have to pay the tax!

Sure, we can do that. But can we force any business to remain open if they don't get as much profit as they'd hope for? What if we confiscate all of Big Oil's profits? Where would we get the oil and fuel for our cars, our homes, our economy?

Fine, you might say. Well what about alternative, renewable resources? Why aren't we demanding that Big Oil do something about that?

Let's see... Big Oil is in the business of selling oil. Let's get Big Oil to fund the research that, if successful (which is highly questionable. See It's the Energy, Stupid!) would remove the very reason Big Oil is in business for in the first place.

I'm sorry, but does that really make sense to anyone who isn't an all-out Marxist?

Like it or not, the energy we need to continue as an economic powerhouse is oil. Of course, we could look to some alternatives, but the ones that make the most sense (wind and nuclear, for instance) are fought tooth and nail by the Left. Nuclear power has been libeled by the Left for decades, to the point that we'll build nuclear plants in North Korea (thanks, Bill Clinton, Jimmy Carter and Madeleine Albright!) but no new plants have been built in America since the 1970's.

And don't get me started on Ted "Chappaquiddick" Kennedy and his opposition to wind farms off the coast of Nantucket, where they would make the most sense.

Also, we have the Liberals' steadfast opposition to searching for and acquiring our own oil reserves here in the United States. Unless, of course, we're talking about Occidental Oil, founded by infamous Stalinist and Friend of Al Gore, Armand Hammar. As long as Al Gore still gets his cut of new oil sources and profits that only Occidental can extract on American soil, he'll be free to make sure we all live in a 19th Century lifestyle to prevent Global Warming.

The fact is, we are sitting on untold oil reserves here in the United States. The only reason we need to import foreign oil is the Democratic Party and its ideological masters in the radical environmental movement. As a result, only Occidental can drill for oil in the Gulf of Mexico. China, in partnership with Cuba and Venezuela, can drill off the coast of Florida, while we can't. And it's been more than three decades since a new refinery has been built in the United States.

And the Democrats, who created these problems in the first place, want to blame Big Oil?

There are two reasons why the price of gasoline and heating oil have risen so high. Neither of them have anything to do with the War in Iraq or Big Oil.

The first reason is simply supply and demand. In the last decade, we suddenly have two extremely populous nations -- India and China -- that are modernizing. They are coming out of their (relatively speaking) primitive stages and are becoming fully industrialized nations, with all the energy demands that inevitably ensue.

Meanwhile, here in the US, we are always demanding more energy, both for transportation and for our infrastructure. This is as it should be, for if we do not expand our energy sources and our consumption, we will descend into squalor.

Or, as Al Gore would prefer to phrase it, we will have achieved a sustainable economy.

In any economic system, increase demand must be met with increased prices. Couple that with the Left's refusal to back sensible alternatives -- wind and nuclear -- or to expand our own domestic supplies of oil, we naturally get hit at the pump.

But then, there's the other reason, the most pernicious reason, for our massively high gasoline prices. We hear daily harangues about Big Oil and their "obscene" profits. But almost no one mentions an organization that reaps far more profit, about twice as much as Big Oil. And this organization drills for no oil, buys and sells no oil, refines no oil. And it makes about twice as much on a gallon of gasoline as Big Oil.

This organization is none other than Big Government. According to The TaxProf Blog we find the following datum:

"[F]ederal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments
collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period."

Let’s try a little thought experiment. Let’s say you ran a lemon ice stand. But I, whether through legitimate taxation or strong arm tactics (but I repeat myself!) force you to give me twice as much of the money generated by sales than you get to keep in profit. Wouldn’t you be a bit upset? Wouldn’t you be forced to pass that added cost of my larceny onto your customers? Why is this any different than taxing Big Oil at confiscatory rates?

Only Liberal can find a way around these simple facts. And his “solutions” would only make matters far worse than they already are. The demand for oil and energy is at historic levels. Never before have so many people wanted so much energy, which translates into higher prices due to the demand.

But even worse, Big Government (please note the ominous tones as I write those words) – which produces absolutely no oil, which refines absolutely no oil products, which transports absolutely no oil, which sells absolutely no oil, which impedes and prevents the development of domestic oil supplies – extracts twice the “profit” from a gallon of gasoline as all of Big Oil combined!

Friends, regardless of what the Legacy Media and the Democratic Party tell you, Big Oil is not the enemy. They are truly our friends and they are being slandered by our leaders for the sake of political advantage and economic power.

The real enemy, the 500-pound gorilla in the living room, is Big Government!

Copyright April 1st, 2008

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