Posts Tagged ‘big oil’

Obama’s Tax and Health Plans WILL Hurt Businesses – And Ultimately American Workers

October 9, 2008

There’s quite a bit of confusion about Obama’s tax plan and its effect on small business and American workers.

John McCain stated during Tuesday night’s debate that most small businesses would see their taxes increase due to Barack Obama’s tax plan.  Barack Obama corrected him and said that only a small percentage of small businesses would see their taxes go up.  Both men are wrong.  And both are right.

Obama may or may not be right when he says that only a small percentage of small business would see their taxes go up under his economic plan – as it is written now (in at least its fourth version).  He hasn’t specified whether he will tax on the basis of net or gross, whether inventory counts as total part of total income, and so on (because the media will NOT do its job and press a liberal on economic details).  But regardless of how the specifics pan out, don’t forget that Bill Clinton similarly campaigned on a tax relief for the middle class economic plan – and he immediately taxes on the middle class early in his first term.  Given the high likelihood of a Democrat-controlled Congress that is eager to have massive government social projects, another such “undeclared” tax hike on the middle class is actually quite likely.

John McCain may have been incorrect in how he phrased his objection during the debate, but he is still right enough to win the argument if the facts actually come out.  He was probably wrong in saying that most small businesses would see their taxes increase in terms of the total number of businesses.  If you earn a living mowing lawns, and have no employees, or you have a business out of your home, you probably won’t be paying any higher taxes.  But keep in mind that a small business can have as many as 500 employees (up to a 1,000 in some industries) and be classified as “small.”  And such businesses are the real engine of our economy.  If a small business even employs a handful of employees, it is likely its revenues easily exceed Obama’s $250,000 figure.  It is these businesses which hire the most workers, and it is these businesses that Obama will start taxing.  It is also these businesses which will suffer the most even from a modest increase in their operating costs.  Many are skating on pretty thin ice as it is.  They can’t just sell more stock.

If Barack Obama raises the taxes for these small business owners, there will be layoffs.  And as his plan is right now, he is promising to raise their taxes.  Realize that we are in a tough economy.  It is harder to obtain loans.  Fewer people will be buying.  Small businesses will be struggling to survive, and if Obama does what he promises to do – particularly when he is going to force businesses to start paying health care as well – you WILL see layoffs.

Meanwhile, Obama is decrying John McCain for wanting to give tax breaks to big oil.  John McCain does NOT want just to give tax breaks to big oil (actually it was OBAMA who voted with Bush for the last big energy bill giveaway to big oil); he wants to lower taxes for ALL corporations.  Most nations realize that lowering taxes for corporations has resulted in corporations creating more jobs and more tax revenues, and that more corporations will be attracted to their country.  But not the United States: we have the second highest corporate tax rate as it is.  Obama wants to be “#1.”

Is that good for our struggling economy?  Your vote on November 4 will be your answer that question.

Another thing Obama wants to do is impose requirements for businesses to provide comprehensive health care for their employees or pay into a government fund.  Small businesses would be ostensibly exempted from the requirement, and would get a 50 percent health-care tax credit to help ease their cost of employee coverage.  People with pre-existing conditions – which often impose the largest cost on the health care system – cannot be denied coverage.  Businesses who hire such people will be forced to grin and bare it.

I wonder how many older workers will be fired in order to hire new – and less expensive – younger workers?  Under Obama’s plan, I’d sure be looking at my older employees as “potential health care time bombs” just waiting to explode.

Do you think that businesses and corporations will begin to pay very close attention to the health of the employees they hire, or do you think they won’t care about how much a new workers’ mandatory health care will cost?

Between raising taxes, and mandating expensive new requirements, many businesses and corporations will experience a genuine double whammy.  Do you think American businesses are made of money, or do you think they are vulnerable?  You will be answering that question in your vote on November 4.

One thing is extremely important to understand: Obama’s health care plan is modeled on the Massachusetts plan.  How are things going there?  Well, in the three years of the program’s existence, the tiny state is now already facing cost overruns of over $400 million.  Does that sound like a rousing success?  Massachusetts is facing a projected 85% increase in its costs by 2009 – which should set up a serious red flag that such programs are MASSIVELY underfunded.

You need to understand something else that emerged from Tuesday night’s debate: is health care a basic right?  Obama answered “yes.”  What does that mean?  It means that you have a duty to provide me with health care.  You have a constitutional, government-imposed duty to give me health care – no matter what – even if it costs you and your family to do so.  Am I an alcoholic who needs a liver transplant?  You owe me a new liver.   Did I sustain a brain injury riding my motorcycle without a helmet because I like to feel the wind in my hair?  Doesn’t matter.  I have a fundamental constitutional right to that liver, or to that brain surgery and all the long months of incredibly expensive therapy.  If I have a right to health care in the sense that Barack Obama believes, nothing else matters.

Do you understand how expensive this can all get?

Do you understand that Barack Obama is essentially talking about socializing a quarter of our economy?  Do you trust your government’s track record?

Your vote will be your answer to that question.

Barack Obama’s health care plan is estimated to cost $1.6 trillion in 10 years.  But that doesn’t take into account the very sort of cost overruns and cost increases that are even now plaguing the very state that Obama is basing his own plan upon.  What is going to happen to our economy given the extremely real likelihood that Obama’s massive national plan runs into similar issues?  Do you believe our economy is strong enough to bear the brunt of these massive cost increases?

Your vote will be your answer to that question.

Let me also point out something else: if businesses and corporations are forced to absorb shocking new costs, do you believe they will just swallow their profitability, or do you think they will pass their new costs onto you through higher prices?  Barack Obama keeps talking about his “95% of Americans will get a tax break” (which means that 30-40% of Americans who don’t actually pay income taxes will get an IRS-subsidized welfare check).  Will that check compensate for the higher prices you are likely to pay across the board for virtually everything you buy?

Again, your vote on November 4 will answer that question.

Don’t be too suprised if you vote yourself right out of a job.

Messiah Obama Really IS The Second Coming… Of Jimmy Carter

August 12, 2008

There are a lot of striking parallels between Jimmy Carter and Barack Obama that people more astute than I have already contemplated:

– both were Democrats.

– both were young men.

– both had relatively little political experience prior to running for President.

– both had little in the sense of any meaningful accomplishment to point to.

– both began as outside of their Party’s inner circles.

– both built early excitement by winning early caucus primaries.

– both have run on a campaign featuring vague promises of change

– both had the eager embrace of the mainstream media.

– both were featured as having great intellects.

– both were/are foreign policy disasters just waiting to happen.

Israel Matzav noted:

The media discovered and promoted Carter. As Lawrence Shoup noted in his 1980 book The Carter Presidency and Beyond:

“What Carter had that his opponents did not was the acceptance and support of elite sectors of the mass communications media. It was their favorable coverage of Carter and his campaign that gave him an edge, propelling him rocket-like to the top of the opinion polls. This helped Carter win key primary election victories, enabling him to rise from an obscure public figure to President-elect in the short space of 9 months.”

Prior to his run, Jimmy Carter was such an unlikely presidential candidate that when he told his mother he was running for president, she asked, “Of what?”

Gerald Ford, rendered unpopular by being the president who dealt with the stench of Watergate, who pardoned Nixon, and who presided over an unfortunate period marked by our withdraw from Vietnam and the resulting damage to our prestige, found himself 30 points behind the new media darling – until his campaign hit on a strategy that nearly brought him all the way back: they focused on his His lack of experience, his lack of accomplishments and his lack of specificity on the issues. “The Ford forces pounded away at the experience question and painted Carter as a political illusion, an affable-seeming politician who was terrified of expressing his opinion on any controversial topic.” Had the campaign lasted just a week longer, many believe Ford could actually have pulled off the victory.

But that stuff – although interesting – is not what I wanted to focus on. Rather, I wanted to focus on their similarity on energy.

Namely:

1) both advocated a strategy of conservation.

2) both promised alternative energy over oil.

3) both called for a windfall profits tax on big oil companies.

Let us be frank: there is very little, if anything, that is signicantly different between Carter’s colossol failure of an energy policy and what Obama is pandering, I mean proposing.

Let me begin with 1) the strategy of conservation at the expense of increased production.

Jimmy Carter famously put on a cardigan and gave us high-minded exhortations to save on our heating bills by wearing sweaters. On a superficial level it was very true: by wearing sweators during the winter we could save oil.  It was good as public service announcement.

But as an energy policy it was laughable. And it was part of the reason he got clobbered when he ran for re-election.

When Barack Obama calls for every American to inflate their tires, it is absolutely 100% identical to Carter calling for every American to wear their sweaters.

We need more energy, not less. Our population is continuing to grow. Do you want to grow the economy as well? Do you want to create more jobs? Do you want more homes and businesses? Do you want more development, and a more modern, more mobile, and more powerful economy? Then you want more energy. And you need to vote for a president who will produce that energy.

Consider 2) the promise to develop alternative energy over oil. Barack Obama is promising to increase our “alternative energy” dependence from a little under 5% of our total energy consumption to 10% of our total energy consumption.

But he is literally concentrating on that 5% of energy by ignoring the nearly 90% that is based on oil, natural gas, and coal (by the way, natural gas is found in/near oil deposits; and harvesting the one naturally results in harvesting the other).

When we subsidize, we punish things that are doing well in order to reward something that is performing poorly. When government (during the Carter years, by the way) began to subsidize corn-based ethanol, it picked the wrong horse (as so often happens). We are now creating food shortages in order to force something that Agriculture Department studies show cost several times what it costs to produce a gallon of gasoline. And about 70% more energy is required to produce ethanol than the fuel itself actually produces, which means every time you produce a gallon of ethanol, there is a net energy loss of 54,000 BTU.

The decision to subsidize ethanol was based on naked political prostitution to special interest money. Do you really want these clowns – who couldn’t even run their own cafeteria without running massive deficits – making these decisions?

Meanwhile , the United States is the Saudi Arabia of coal. And yet the same liberals that forced ethanol upon us are refusing to allow us to use it again and again. There is a deliberate rejection of American energy in pursuit of biofuels that do nothing but disrupt our food markets and drive up the real costs of energy. Children are literally starving because of these policies.

I mean, fine. Let’s do better to develop alternative energy sources. But to literally do so at the expense of our actual primary sources of energy – which will remain our actual primary sources of energy for decades by ANY standard – is foolishness beyond belief.

When Jimmy Carter was president, foreign oil represented a little less than 1/3 of our consumption; today it is over 70%. You tell me, which way is the trend going? We need to reduce our dependence on foreign oil for both our international competitiveness and for our security. And the ONLY way to do that right now is to drill for our own domestic oil. We are consuming more energy, not less. And at the same time we need that 70% figure to go DOWN, not UP. And we can only bring it down with a comprehensive energy policy that features drilling for our own oil in addition to conservation and alternative energy production.

Now let us look at the crowning policy of both the Carter and the Obama energy policy: 3) windfall profits taxes on big oil.

The current call for a windfall profits tax has been going on since before the 2006 elections, in which Democrats promised that they had the better solutions for energy (and the price of gas has essentially doubled since Nancy Pelosi promised her “commonsense plan.”) Democrats have ever since been lining up to support a new federal windfall profits tax, with the aim of redistributing profits from “greedy” oil companies.

But, as Jonathon Williams, writing in The Los Angeles Times, pointed out:

lawmakers could benefit from a history lesson. The last time this country experimented with such a tax was the Crude Oil Windfall Profit Tax Act of 1980. According to a 1990 Congressional Research Service study, the tax depressed the domestic oil industry, increased foreign imports and raised only a tiny fraction of the revenue forecasted. It stunted domestic production of oil by 3% to 6% and created a surge in foreign imports, from 8% to 16%.

As for that “tiny fraction of the revenue forecasted” figure, the windfall profit tax returned only $40 billion of the $175 billion that had been projected.

Surprise, surprise. When you tax something, you get less of it, and you drive up the cost. It boggles the mind that Democrats are pathologically incapable of understanding what is the most blatently obvious principle of economics. But they can’t.

Many have defined insanity as doing the same thing and expecting different results. By that bar, Democrats should be sitting straightjacketed in rubber rooms.

Jimmy’s Carter’s failed energy policy was part of the reason for the 20% prime interest rate that consumed our economy like a cancer.

By taxing American oil companies, they produced less oil, reducing the supply and driving up the cost. At the same time, the reduction in domestic production created a corresponding increased dependence on foreign oil.

And, as Jonathon Williams also points out, the policy of windfall profits forced a major U.S. industry, and a major U.S. employer, into a depressed condition that it took years to overcome. You might hate big oil, but damaging the industry is tantamount to cutting off your own nose to spite your face.

The Jimmy Carter presidency was a catastrophic disaster in foreign policy, domestic policy, and energy policy. The last thing this country needs is the Second Coming of a failed presidency.

Pelosi, Reid, and Obama: The Three Stooges of American Energy Policy

July 18, 2008

Remember Nancy Pelosi’s “commonsense plan” to lower gas prices, back when gas prices were half what they are since she and her fellow Democrats assumed power in Congress?

“With record gas prices, record CEO pay packages, and record oil company profits, Speaker Hastert and the Majority Congress continue to give the American people empty rhetoric rather than join Democrats who are working to lower gas prices now.

“Democrats have a commonsense plan to help bring down skyrocketing gas prices by cracking down on price gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks and royalty relief given to big oil and gas companies, and increasing production of alternative fuels.”

Investors’ Business Daily came out with the following call for Nancy Pelosi:

Feckless To Reckless, Pelosi Should Resign

By INVESTOR’S BUSINESS DAILY | Monday, July 14, 2008

Leadership: With oil hitting $147, Nancy Pelosi finally admits energy is a problem. But instead of drilling for it, she’s cooked up a new drain-the-reserves scheme. It’s pure politics at a time of crisis. She ought to resign.

Any leader with an energy record as derelict as Speaker Pelosi’s ought to step down. Where she once was just incompetent and irresponsible, she has now — with her latest scheme to fix oil prices — become dangerous.

Despite polls showing Americans in favor of drilling more oil from America’s huge untapped supplies, Pelosi won’t allow it. She just wants to empty our Strategic Petroleum Reserve for a short-term fix to get through Election Day.

It’s an irresponsible suggestion, signaling not only an ignorance of how the economy works but also a willingness to place the nation at risk in the case of emergency.

Last Tuesday, Pelosi sent a letter to President Bush urging him to release a “small portion” of the nation’s 706 million barrels of strategic-reserve oil to bring down prices. Regardless of how one feels about whether reserves should be held at all, two big problems stand out with Pelosi’s tiny demand.

One, she’s proposing a misappropriation of the reserves. The U.S. oil stockpile is a 58-day cushion for emergencies that today are all possible. If Israel attacks Iran, for example, and prices double again. Or if Hugo Chavez cuts off his supplies, as he threatened to do as recently as Sunday.

The reserve is there to cushion the blow of a market disruption; it’s not an open-market mechanism to manipulate prices for political ends.

Two, Pelosi has finally admitted that supply matters, something that contrasts with her entire legislative record. We count 14 energy actions to suppress supply on her Web site just since 2005.

She has blocked efforts to open Alaska to drilling, denounced fossil fuels, blamed oil companies for high gasoline prices, voted for biotech boondoggles and condemned speculators.

“Our coasts need lasting protection from oil and gas drilling,” she declared Dec. 6, 2006, after Democrats won control of Congress. Missing are any moves against petrotyrant regimes who drive prices skyward, or even lip service to the idea of ensuring supply through drilling.

Pelosi downplays her proposal as modest because it’s a “small” portion of the reserves to spend. And look what happened in 2000, she says, when an SPR release authorized by President Clinton lowered gasoline prices nearly 20%.

But she’s not fooling anyone. Then, like now, an election was coming up.

With Congress’ public approval at a subterranean 9% and falling, the speaker must be starting to realize that November may not be the Democratic cakewalk that pundits predict.

President Bush, however, isn’t about to be suckered into releasing the reserves just long enough for pump prices to fall by Election Day, thereby saving Democrats’ skins so they can carry on their drill-nothingism for an additional two years.

The president needs to do two things with Pelosi’s proposal: First, tell her “no,” unless she comes up with a plan to open up more drilling. Second, expose it for what it is — a bid to paint Bush as the problem to distract from her own sorry record.

In playing politics with the Strategic Petroleum Reserve, the speaker has moved beyond the incompetence and irresponsibility that have characterized her leadership to date.

It borders on reckless, something we cannot tolerate in such dangerous times.

Democrat Senate Majority Leader Harry Reid ought to join her, given that he thinks that the very substance our culture needs to survive is evil:

“The one thing we fail to talk about is those costs that you don’t see on the bottom line. That is coal makes us sick, oil makes us sick; it’s global warming. It’s ruining our country, it’s ruining our world. We’ve got to stop using fossil fuel.”

Ohmigosh! The leaders of both the Democrat-controlled House and Senate are completely irresponsible – and completely useless – on energy, at a time when energy is becoming a genuine crisis!

Can we make it a trifecta? Do we have – dare I say it – THREE stooges?

Here’s what Barack Obama’s campaign says about President Bush’s lifting of the executive order prohibiting offshore oil drilling:

“If offshore drilling would provide short-term relief at the pump or a long-term strategy for energy independence, it would be worthy of our consideration, regardless of the risks. But most experts, even within the Bush administration, concede it would do neither. It would merely prolong the failed energy policies we have seen from Washington for 30 years. Senator Obama believes Americans need real short-term relief, which is why he has proposed a second round of stimulus with energy rebates for working families. And over the long-term, Senator Obama understands that our national security and the survivial of the planet demand a real strategy to break our dependence on foreign oil by developing clean, new sources of energy and by vastly improving the energey efficiency of our cars, trucks and our economy. He is ready to lead such a transformation.”

Yep. Three for three. We have the Three Stooges of energy. And I personally think Nancy Pelosi is the “Moe” of the bunch (I’ll leave it to others to decide which one is “Curly”).

What do we make of the Democrats’ proposals? How has House Speaker Nancy Pelosi’s “commonsense plan” performed since gas prices were a little over $2 a gallon when she took over?

Well, that’s clearly a rhetorical question; Pelosi, Reid, and their Democrat Congress haven’t done a single positive thing.

What do we make of Democrats’ excuses for refusing to allow drilling? Stop and thing about their answers: 1) there’s no point in drilling because it won’t produce a drop of oil for seven years; 2) we can’t drill our way out of the problem; 3) drilling simply represents the failed policy of the past; 4) we should open the strategic petroleum reserve to lower energy prices; 5) off-shore drilling will contaminate our environment and harm our tourism industries; 6) if we expand drilling we will contribute to global warming; 7) the oil companies have 68 million acres they can drill on; 8) the high price of gas is due to “price gouging” by big oil; 9) the high price of gas is due to speculators manipulating the market.

Think about it:
1) If there’s no point in drilling because it won’t immediately produce any oil, then by the same twisted idiot’s logic, there’s no point in investing in “alternative energy” – most of which is purely theoretical and which certainly won’t be producing real energy in seven years. This asanine point is simply breathtaking in its sheer brazen shortsightedness; better to have it in seven years than not have it at all! Particularly when, had Democrats allowed us to have this oil seven years ago, we wouldn’t be where we are now.

Democrats have been saying for 25 years that drilling won’t produce an immediate solution to our energy needs. Their current rhetoric merely reveals just how terribly wrong they were seven years ago! At some point we must hold them accountable for their criminal stupidity.

2) We may not be able to completely drill our way out of the problem (although many in the petroleum industry point to their studies and argue, ‘Yes we actually can!’). But there is absolutely no question that we can substantially increase our oil supplies – and have a massive impact on our energy problem – precisely by drilling.

Explain to me how hundreds of billions of barrels of domestic oil – immune from the whims of OPEC, and immune from the instability of the Middle East and Northern Africa – wouldn’t help us solve our problem?

3) If drilling – in Barack Obama’s words – would “merely prolong the failed energy policies we have seen” – than should we stop drilling? For one thing, for most of that time, the point is we haven’t drilled; drilling has been banned. So the actual “failed policy” would really be NOT drilling, wouldn’t it?

What is Obama’s and the Democrat’s meaningful alternative to drilling? When oil constitutes over 85% of our energy, just what do they propose to do to make up for that massive chunk of our requirement? The simple fact of the matter is that there is nothing out there that can begin to fill the void of oil – and by virtually all accounts we will continue to need oil for several decades to come.

It’s almost like saying that “eating would merely prolong the failed dietary policies of the past.” Even under the valid assumption that we’ve had a poor diet plan in the past, does that mean we should starve ourselves to death?

4) Opening our strategic reserve to reduce oil prices would lower gas prices. This is undoubtedly true, but what happens if we have a crisis? What happens if Israel – acting in its legitimate self interests – takes out some of Iran’s nuclear capability? That strategic reserve is there for emergencies, and we face some very real potential global crises today. What would we do if Iran shut down the Strait of Hormuz and we didn’t have any oil on reserve? what would we do if we had another Hurricane Katrina that damaged oil refineries?

But another problem with this line of argument is that it exposes the gaping hole of stupidity of the Democrat’s arguments against drilling. They’re claiming on the one hand that the millions of barrels of oil a day that domestic drilling would produce wouldn’t solve our problems, while simultaneously claiming that a much smaller contribution to the oil supply would be beneficial. Which is it?

The best way to increase our national oil supply is to move toward a solution that would actually increase our oil supply. That means drilling.

5) Will off-shore drilling harm our tourism industries?

Well, a big problem with that hypothesis is that tourism isn’t going to do very well as long as fuel is so expensive that nobody can afford to go anywhere. So there’s a clear counterproductive notion to protecting our pristine beaches (particularly given that the oil rigs would be located miles out to see beyond the horizon anyway).

Let’s all agree that ANWR is not a tourist hot spot.

Will drilling create massive footprints in pristine wilderness and offshore areas? Not nearly as much as the Democrats disingenuously claim it will. And the question is, would even a large footprint in some way-far-away place like ANWR really be worth destroying our national economy over? Let’s put it to a vote: should we abandon the American way of life, or drill? Right now, 70-75% of the American people are screaming, “Drill!” And as the crisis mounts, that percentage is going to get higher.

We have dramatically improved the environmental impact of our drilling operations. We can do it cleanly, and with a surprisingly small “footprint.”

6) Will drilling increase global warming? Please, PLEASE realize that the best measurable (as opposed to abstract computer models!) scientific evidence is that we have been having warming and cooling cycles for millennial, and that we are currently in a cooling cycle.

Furthermore, we have evidence of a tropical heat vent in our climate system – not considered in computer models – which provides a “natural thermostat” that all by itself renders much of the alarm over global warming moot.

Are we really prepared to dramatically reduce our lifestyle in order to fight a cyclical climate phenomena that we can do nothing to stop anyway, and which will not even be all that bad given the documented human history through previous warmings?

And if all that isn’t enough, then tell me how refusing to drill for our own oil, while at the same time begging OPEC countries to drill more of theirs, helps prevent global warming. If we drilled for our oil, we would actually be using techniques that are much more environment-friendly.

7) The oil companies have 68 million acres to drill on, so they don’t need any more.

I can’t help but wonder: are Democrats really this stupid, or do they have an ulterior agenda for wanting to prevent America from accessing its vast domestic oil reserves?

When it comes to drilling, one acre is most definitely NOT as good as another. You don’t just drill a hole in the ground, and oil comes out.

Oil companies lease all the land they can, and then they begin the lengthy phase of doing geological studies and drilling test wells. Most of the ground comes up empty. Other ground has oil, but not in enough quantities to produce profitably.

The areas that most definitely DO produce are off-limits because of Democrat’s actions. The off-shore areas – overwhelmingly off-limits to drilling because of Democrats in Congress – are KNOWN to be the most productive of all.

And even those leased areas that WOULD actually produce oil all-too frequently tend to become off-limits to oil companies because of the actions of liberal groups such as environmentalists. To cite merely one case among many, the sage grouse is definitely more important to liberals than the fact that your family will suffer over high oil prices. This is an area that most definitely produces oil, and which is located in such a way that it will prevent drilling throughout the region.

As one other fact that Democrats and their media lackeys tend to conveniently ignore, some of that “68 million acres” we keep hearing about are actually being worked by the oil companies. The term “production” applies to sites that are actually producing oil right now, irregardless of the fact that oil companies have invested millions there, and are working toward production.

8) The excessive profits and price gouging of oil companies is to blame for high oil prices.

Well, oil trades at a world price, not one set by American oil companies. The fact is that U.S. oil has lost considerable influence to both OPEC and to foreign government oil, and has little influence over the market price of a barrel of oil. The largest American oil company – Exxon Mobil – is only the 14th largest in the world today. Therefore, much of the criticism of American oil is literally just another one symptom of the “blame America first, blame America for everything” ideology of liberals.

Democrats also perform another bait and switch: when they talk about the “obscene profits,” they always talk about the gross profit in total dollars, and never about profit as a percentage of costs. But think about it: if you had a 10% profit with a commodity that sold for $100 a unit, and the cost per unit went up to $200, you’re profit in dollars would double – even though it remained the exact same percentage. Given that virtually every corporation focuses on profits as a percentage of its costs, the oil companies aren’t doing anything that other businesses don’t do and have been doing.

Oil companies make billions of dollars in profit because they have hundreds and hundreds of billions of dollars in assets and costs. But their profits are actually well within the normative range of corporations in other industries. Oil companies have to continue to make reasonable profits, or else stockholders will withdraw their money and invest in other, more profitable, industries.

The following chart is illustrative of oil company profits relative to other industries:

Do oil companies benefit from sweetheart tax deals, as Democrats constantly claim? Look at the facts and make your own determination:

A study reveals that just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers (65,000,000 people!). Moreover, the tax rate for the bottom 50% of taxpayers is only 3% of adjusted gross income ($27.4 billion in income / $922 billion paid in taxes), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).

So the oil companies – which in the 1990s actually suffered huge losses resulting in major layoffs (and no Democrats wailed about it or demanded hearings then) – are not “price gouging,” are not “making windfall profits,” and are certainly not “benefiting from sweetheart tax subsidies.”

9) Speculators’ have been driving up the price of oil.

The fact is that no one is able to prove that speculation is having ANY effect on oil at all. Maybe it is and maybe it isn’t, but it’s a purely theoretical argument. Most of the so-called “speculators” are companies with commercial fleets and airlines who need to buy oil at the best prices in order to keep their costs down. If they believe that oil is becoming more expensive, what do you think they will do? They will buy oil now to save money later. And that raises the price now. It’s a simple market phenomenon.

I heard a pertinent illustration to the speculation issue: Imagine that the city of Chicago announced a moratorium on any new building. No new building permits. No new construction. What do you think would happen to the price of real estate in Chicago? It would skyrocket. Now, imagine what would happen if you announced a major new construction program in Chicago: do you think that would raise or lower the price of real estate?

We saw something like this in the past two days: oil has dropped dramatically – $15 a barrel – in just two days. And what accompanies that decrease? President Bush lifted the executive ban on offshore drilling.

The mere lifting of the ban encouraged the market that more supplies could be on the way, and therefore lowered the price of oil today. When more is coming, you don’t have a scarce – and therefore more valuable – resource. When less is coming, the price increases. Everyone understands this except Democrats.

We have the Three Stooges of Nancy Pelosi, Harry Reid, and Barack Obama, who have announced that they are determined to pursue a policy that will keep the price of oil shockingly high and leave us vulnerable to foreign price manipulation.

If I were from a country that is hostile to the United States, I would be watching this current version of the Three Stooges and laughing my head off over their ridiculous antics. But I love my country. And I can only mourn the fact that two stooges are in power, and a third may be on the way.

Democrats Block US Energy Independence, Send Gas Prices Soaring

July 3, 2008

Democrat Senate Majority Leader Harry Reid recently said:

“The one thing we fail to talk about is those costs that you don’t see on the bottom line. That is coal makes us sick, oil makes us sick; it’s global warming. It’s ruining our country, it’s ruining our world. We’ve got to stop using fossil fuel.”

Watch it on Youtube if prefer seeing your idiots in living color.

Well, how about if YOU stop, Harry. And tell all your fellow liberals and Democrts to stop right along with you. The rest of us realize that we need the stuff, and that we will continue to need it for decades to come.

Let us not forget to point out that Barack Obama has the same stupid and self-defeating ideas about energy.

So it’s not coal and oil that we’re sick of, Harry. We’re sick of you and your irrational and self-defeating energy policies. Coal and oil is what made our country great; it’s what our economy has been – and continues to be – based upon. It’s what we will continue to need in order to continue to improve our way of life.

Stop and think about it: Route 66; the interstate system; distant communities interconnected by vast stretches of freeways and roads. Our entire way of life has been based upon the mobility that oil has provided. We can’t just get rid of oil and keep right on truckin’. The Democrat’s vision will create enormous adjustment and enormous pain for Americans.

At some point, we will clearly need to transition to another dominant source of energy. But there is simply no way that we will be ready to make that transition any time soon. To refuse to allow our vast domestic oil supplies to be utilized by citing theoretical alternatives is foolish beyond crazy.

While a few R.I.N.O. (Republican In Name Only) politicians (I like the term “Stockholm Syndrome Republicans”) have embraced global warming alarmism and environmentalist bans on drilling, the simple fact of the matter is that it was Bill Clinton who vetoed taking advantage of our oil reserves over a Republican effort to expand our supplies, and it has overwhelmingly been Democrats who have thwarted every effort both to increase oil drilling and oil refining every since.

The result is that we have been deliberately left completely vulnerable to just the kind of sky-high prices that we are seeing now.

Democrats argue that drilling is pointless because it won’t produce any results for 10 years. But that is insane. Number one, only a fool doesn’t plan for the future. Number two, had Bill Clinton allowed us to drill in the 90’s we wouldn’t be where we are now. And number three, oil drillers say that they could be getting substantial oil out of the ground within one year; and even the most technically difficult sites wouldn’t take longer than six years to harvest.

Democrats argue that they have provided oil companies with leases giving them access to millions of acres for exploration. But these leases weren’t granted on the basis of geologists’ studies (that these are the best locations for oil); but rather on the basis of “junk” land that doesn’t have any political (and likely not any energy) value. It’s the equivalent of the U.S. Government putting the Indians on the crappiest land in the country and then saying, “There: we’ve given you plenty of land.” The reality is that 92% of our offshore reserves and most of the state and federal lands are off limits to oil companies.The outer continental shelf – which contains the best known sources of oil – are completely off limits to the American oil companies, even as Chinese rigs are going up in those very same oil fields!!!

An Associated Press story titled, “Much of oil, gas off limits” says:

WASHINGTON — About half the oil and more than a quarter of the natural gas beneath 99 million acres of federal land is off-limits to drilling, the Bush administration says in a report that industry sought to highlight environmental and other hurdles to development.

Just 3 percent of the oil and 13 percent of the gas under federal land is accessible under standard lease terms that require only basic protections for the environment and cultural resources, according to the survey, which was ordered last year by Congress.

An additional 46 percent of the oil and 60 percent of the gas “may be developed subject to additional restrictions” such as bans to protect winter rangeland for foraging antelope, nesting areas for bald eagles and jagged slopes from erosion during parts of the year.

The revised inventory, released Tuesday by the Interior Department’s Bureau of Land Management, is starkly different from a study done three years ago. That version, which covered 59 million acres in the Rocky Mountains, estimated more than 80 percent of oil and gas was accessible, although in some cases subject to restrictions. Environmentalists often cited that figure in arguing that a wealth of energy resources is available for developing without going into pristine areas now off limits.

And, the actual fact of the matter is that the oil companies are routinely unable to drill even in those leased areas that the Democrats deceitfully claim that they have available to them. There are plenty of stories like this out there:

Billings, Mont. (AP) – Two conservation groups have asked the federal government to impose new restrictions on oil and gas development in the West to protect the greater sage grouse, a popular game bird on the decline.

Scientists contend sage grouse breeding areas are suffering in the face of accelerating oil and gas exploration in Wyoming, Montana, Colorado, Utah and other Western states.

West Nile virus, drought and residential development also have taken a toll on the bird, which is being considered for the endangered species list.

Federal rules now say oil and gas companies cannot drill within quarter of a mile of sage grouse breeding areas. Last week, Idaho-based North American Grouse Partnership and the Theodore Roosevelt Conservation Partnership of Washington, D.C., filed a legal petition asking for the rule be extended to two miles.

I don’t apologize for caring more about my family and friends than I do about some rare species of bird. Frankly, Democrats should be apologizing to the American people for caring more about a few birds than they do about them.

Again and again, Democrats, Democrat-controlled government bureaucracies, and their left-wing allies in the “environmentalist” and “litigation” communities have blocked oil companies from doing anything. The result is years of lawsuits and court proceedings, red tape, delay, and other excessive costs that make such projects unfeasible.

There’s an old joke about a modern-day Noah trying to build an ark in today’s liberal political environment. It certainly has the pro-bureaucracy, anti-business policies that characterize the Democratic Party in mind.

Democrats routinely use environmental groups’ minimized estimates as to how much oil is actually in a given field. The oil companies believe there is much more available in those fields; that’s why they want to spend the hundreds of millions of dollars necessary to start getting that oil out of the ground. Think about it: Democrats routinely say that there isn’t very much oil in places like ANWR, and that oil companies don’t want to drill anyway. If that were even remotely true, then why are the Democrats repeatedly preventing oil companies from drilling by force of law? If the Democrats are anything other than lying demagogues, allow the oil companies to drill where they believe the oil is without the massive bureaucratic hassles; and if they don’t drill and increase our oil suppolies, the Democrats could say, “See, we were right.”

Proven reserves” are resources that drilling has confirmed exist and can be produced with current technology and prices. By imposing bans on leasing, and encouraging environmentalists to challenge seismic and drilling permits on existing leases, politicians ensure that we will never increase our proven reserves. In fact, reserves will decrease, as we deplete existing deposits and don’t replace them. The rhetoric is clever – but disingenuous, fraudulent and harmful.

They have repeatedly argued that opening up ANWR would do virtually nothing to alleviate the price of gasoline. But Democratic Senators have called upon the Saudis to increase production by amounts that would be less – even according to ridiculously low liberal estimates – than the amount of daily oil flow that ANWR would generate.

The Geological Survey and Congressional Research Service say it’s 95% likely that there are 15.6 billion barrels of oil beneath ANWR. And we could add to that an estimated 169 billion barrels of oil in the Outer Continental Shelf, Rockies, Great Lakes, Southwest and ANWR – as well as natural gas, coal, uranium and hydroelectric resources that are currently off limits because of Democratic activism.

One of our best prospects is Alaska’s Arctic National Wildlife Refuge, which geologists say contains billions of barrels of recoverable oil. If President Clinton hadn’t bowed to Wilderness Society demands and vetoed 1995 legislation, we’d be producing a million barrels a day from ANWR right now. That’s equal to US imports from Saudi Arabia, at $50 billion annually.

Mexico has increased its oil production 64 percent since 1980. Canada’s production has increased 85 percent. If we’d increased production at the rate of our North American neighbors, we’d be producing 91 percent of our current consumption, noted National Review’s Noel Sheppard.

Democrats routinely demonize oil companies for their “excessive” and “windfall” profits. But – as usual – they merely prove what hypocrites and demogogues they truly are. Look at the revelations from The Hill:

Sen. John Kerry (D-MA), who calls for “windfall profit taxes on big oil,” has some $200,000 in oil holdings with Exxon and BP. Rep. Carolyn Maloney (D-NY), who publicly says that oil companies are guilty of “price fixing,” has some $350,000 in oil holdings with Exxon and BP. Rep. Lloyd Doggett (D-Tx) – who speaks of “unjustifiable tax breaks for big oil” has $350,000 in Exxon Mobil and Chevron holdings. Rep. Steve Cohen (D-TN) who claims oil companies are “gouging” has $200,000 in holdings with Chevron, Exxon Mobil, and Schlumberger. These Democrats are privately profiting from the very companies they publicly claim are so terrible. What hypocrites!

And they falsely demonize oil profits in the way of the classic demagogue. The reality is that the oil companies invest FAR more than they retain in profits; and the reality is that their profits are actually quite modest given the sheer massiveness of their operations.

Investor’s Business Daily says the following:

Yes, oil companies make money. But they spend more than they make on finding new sources of oil. A new Ernst & Young study shows the five major oil companies had $765 billion of new investment from 1992 to 2006 compared with net income of $662 billion.

Over the same stretch, the industry — which includes 57 of the largest U.S. oil and natural gas companies — had new investments of $1.25 trillion compared with a net income of $900 billion and a cash flow of $1.77 trillion.

This is an industry that has redefined innovation, reinvesting profits to find innovative ways to recover oil and gas wherever they find it. This includes fields once considered “dead,” vast tracts miles beneath the ocean surface, and sands or even shale in North Dakota.

Democrats talk about the need to conserve oil and use alternative energies instead. But do the American people truly want to drastically and dramatically change their way of life when the clear alternative of domestic oil production is readily available? Even the most radical environmentalist activists such as Al Gore clearly don’t want to make such a transition in their own personal lives: Gore has routinely been faulted for his own shockingly high rate of energy consumption. And as I see drivers routinely whiz by me on the freeway, I realize that few Americans are determined to make the kinds of painful sacrifices that Democratic strategies call upon them to make.

Furthermore, there is little evidence that such sacrifice will amount to anything. With China, India, and much of the rest of the developing world increasing its oil consumption, all the “global warming” hyperbole justifying the deliberate restriction of US energy consumption (and therefore economic production) will be “much ado, signifying nothing.” If China and India use the oil we would have used – which by all accounts is exactly what is happening and will continue to happen – then what is the net climate gain?

As a further point revealing the absurdity of Democrats’ claims that we must not drill for oil lest we contaminate the environment and increase global warming, just what do you think is going on in the Middle East? When they increase their production to meet our energy needs (at a massive profit), are they not contaminating the environment and increasing global warming even more than we would, given our higher level of technology and environmental regulations?

Democrats are currently hollering and screaming about speculators artificially driving up the price of gas. But let us consider this:

NEW YORK — Oil prices rose Monday on disappointment over Saudi Arabia’s modest production increase and concerns that output from Nigeria will decline. Retail gas prices, meanwhile, inched lower overnight, but appear unlikely to change much as long as oil prices stay in a trading range.

Saudi Arabia said Sunday at a meeting of oil producing and consuming nations that it would turn out more crude oil this year if the market needs it. The kingdom said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels.

But that pledge at the meeting held in the Saudi city of Jeddah fell far short of U.S. hopes for a larger increase. The United States and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East.

The fact that the price of oil goes UP when the supply goes DOWN ought to tell you something about what is truly driving the shocking price increases: supply and demand.

As we see the volatility of oil prices, and as we see that threats in the Middle East, or in unstable regimes such as Nigeria, send our prices through one roof after another, thinking, rational people must surely come to realize that there is an urgent, long-term strategic need for American to have it’s own stable domestic oil supply.

And one political party – the Democrats – are clearly standing in the way of that critical strategic goal. Our survival depends upon energy independence. But Democrats are literally STANDING on our ability to provide that independence.

Democrats Deceitful Pandering at Big Oil Hearings

May 22, 2008

Today we saw something we’ve seen four times now in something like 16 months: Democrats dragged big oil CEOs to a “hearing” in which pandering Democrats did all the talking and no “hearing” at all.

And while these eager little media-pigs sought airtime and headlines, absolutely nothing was done to actually solve our energy problems – yet again. Remember Nancy Pelosi promising that if Democrats were elected, they would reduce the price of gasoline back in April of 2006?

Vote demagogue. Vote Democrat.

Any honest hearing would have focused on the word “supply.” You see, economists talk about something that Democrats don’t seem to comprehend: the law (that’s right – LAW!) of supply and demand. If you don’t have enough supply of an item that is in demand, lo and behold the price goes up, and up, and up. What economists see as a routine market phenomenon, Democrats see as a mystery that somehow evokes a massive conspiracy.

But, no, the focus was on profits. Oil company profits, that is. The oil companies – according to Democrats – are doing something that no decent corporation should seek to do: they are earning money.

Contrary to the demagoguing of Democrats, the profits made by oil companies are really not excessive. For example, Exxon’s profit margins are only 10.7%. Profit margins at Microsoft, on the other hand, are 26%.

We routinely get “news” stories on massive oil company profits, but what we never seem to hear is the story of massive taxation upon the oil companies. The plain reality is that the federal goverment gets twice the “profit” from a gallon of gas as the oil companies, on average. And when you factor in ALL government taxes, government makes nearly FIVE TIMES as much as do the oil companies.

Dr. Mark J. Perry, an economist at the Univeristy of Michigan, notes that:

After crude oil costs, gasoline taxes are the second largest contributor to the price paid at the pump. Together Federal and State excise taxes on fuel account for an average cost of approximately 62 cents per gallon. That’s a combined tax of about 20% per gallon of gas.

The federal tax per gallon is 18.4 cents per gallon, see the history of federal gasoline taxes here, and the state tax per gallon varies by state, see the complete list of state gasoline taxes here.

Average profit per gallon of gas for oil companies: 10 cents according to the EIA.

Perry concludes by citing a question posed by Thomas Sowell, that if Democrats really consider oil companies’ profits unconscionable, what do they have to say about the taxes they impose, which add a far greater burden to the costs paid by American drivers than those “obscene” oil company profits?

A little more documentation:

An October, 2005 Tax Foundation analysis, “State and Federal Treasuries ‘Profit’ More from Gasoline Sales than U.S. Oil Industry,” reported: “Federal 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.”

A September Tax Foundation analysis, “Local, State and Federal Gas Taxes Consume 45.9 Cents Per Gallon on Average,” cited the 18.4 cents per gallon federal gas tax and provided a state-by-state “effective gasoline taxes per gallon” map. Notably, the most liberal states with the most demagogic politicians on the Big Oil profits topic, have the highest taxes. Federal and state taxes, for instance, top 60 cents per gallon in New York. The American Petroleum Institute has posted a PDF, “State Motor Fuel Excise Tax Rates,” with very detailed state-by-state data.

Let’s say a little more about the taxes that oil companies pay.

A study reveals that just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers (65,000,000 people!). Moreover, the tax rate for the bottom 50% of taxpayers is only 3% of adjusted gross income ($27.4 billion in income / $922 billion paid in taxes), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).

That’s right: the average tax rate of the largest oil companies such as Exxon is 41%. And over the last three years, Exxon Mobil has paid an average of $27 BILLION EVERY YEAR in taxes.

Do you start to get it? They are making huge profits in terms of absolute dollars because their operation is so incredibly massive. However, in terms of their profit margins, they are well within the norm. And they are also paying taxes hand over fist, which increases the cost of gasoline far more than does their reasonable profit.

If big oil’s profitability were artifically restricted, what do you think would happen to investment? Or let me put it to you this way: would you rather invest in a corporation that yielded a 10% profit, or a 5% profit?

This is an IQ test, but unfortunately, congressional Democrats demonstrate themselves to be very, very stupid people.

They seem to think that gutting big oil’s profitability would somehow be good for the energy industry. They seem to think that those investment dollars would just somehow continue to pour in. Apparently, they think investors are as idiotic as they are. But they aren’t. They live in the real world, and they invest their money where the highest profits are. As investment money shriveled up, so also would investment in future energy resources and technologies. And gas would become more expensive.

Democrats – including both Democratic presidential hopefuls – have been threatening to levy a “windfall profits” tax to punish oil companies (because, apparently 41% is just too darn little). These demagogues shrilly yell in outrage over the oil companies’ modest profit, but conveniently and hypocritically ignore the burden that THEY are imposing on drivers.

Is there any reason to think that this totally irrational sounding, counter-intuitive approach would work? History proves it’s every bit as stupid as it sounds.

According to the Congressional Research Service (CRS), is that the 1980s windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil.

As Jonathon Williams puts it, “This nation’s experiment with windfall profits taxes in the 1980s proved to be economically devastating. When it was last tried, the windfall profits tax failed to raise even a fraction of the revenue forecasted and crippled the production of the domestic oil industry. But as they say, those that fail to learn from history are doomed to repeat it.”

Having said all of this, I am not attempting to “defend” big oil companies. They are corporations, after all, and almost by definition engage in a rather amoral pursuit of profits by exploiting every avenue they can. Oil companies aren’t any better than any other corporation; and given their huge size, they are quite probably worse than average.

What I am saying is that the truly “unconscionable” figures in our energy mess are congressional Democrats, not oil companies that would do far more to solve our problems if only liberals would stop deceitfully imposing one costly burden after another upon them, and then blaming them for the resulting high cost of gas. And what I’m saying is that we need big oil far more than we need Democrats.

Unless you don’t mind riding your bike everywhere you go from now on, that is.