Wednesday, May 16, 2007

How About a Windfall Ignorance Tax?

(from hat tip Cox&Forkum)

I just heard YET ANOTHER "conservative" begin her call on the Limbaugh show with "I'm conservative, but..... greed.....big oil.....screwing me......"

You've heard it all before. Just a couple days ago I posted this comment on this idiocy, and here is another investigation from 2005 and another one from 2006 that draws the same conclusion: It was demand moving upward at a faster rate than supply. I'll * be * damned.

Here are some things that you have to remember when discussing the price of a gallon of gas.

  • Since gasoline is the byproduct of the refinement of oil, the fascists who lord over considerable portions of the world's oil supply threaten the flow of that supply to the free world. Every time the Iranian Mullah's start jabbering about wiping Israel off the map, the market responds - not rich white guys sitting in a boardroom fearing for their boat payments. It is simply because the market begins to fear that supply will be cut off from that nation, or severely curtailed. Lets pretend (God Forbid) that Iran did in fact strike Israel with a nuclear weapon. Naturally, several nations including Israel and most likely (never thought I'd say that) the US would respond. And of course, a disruption of the amount of oil available to the world market would diminish. So when you hear some Islamist in an oil rich nation make threatening statements, the world oil price fluctuates because of fears of such a scenario.

  • The best antidotes to this are 1) find alternative fuels that can replace (act as a substitute) the function of oil, or 2) access our own sources of oil and naturally drive the prices down. The previous is a function that ONLY the free market can create. And eventually, the free market will create engines that will provide all of the needs that a gasoline engine currently does. Not there yet. The latter is next to impossible thanks to the constant curtailing of oil exploration on the Left. Don't bitch about the price of gas if you are being obstinent about Anwar drilling or off-shore drilling.

  • As we continually remind people here at JG&AH, the oil companies profits average about 10 cents on the dollar. Other such industries average much more than that. When I worked in Automotive retail, a manager that I came up under would always say to me "Jeff, we need to make 20% profit on everything, just to turn the lights on." Profit is the necessity and motif of EVERYONE who is in business. As the above links demonstrate FTC investigation has already demonstrated that there is no corporate price gouging. The Gouging is from the government tax at all levels - more than twice the Big Oil Profit. Where's the outrage over that?

  • How many people have money in mutual funds or their 401Ks tied up in Oil Company Stock? Further, how many do and don't even realize it while they gripe about oil profits? Sad fact of the matter is, a windfall profits tax that the Populists and their leaching power whore buddies in office seem to threaten will do nothing but further hamper supply and damage many average citizen's investment portfolios. Way to stick it to yourself.

Mad about gas prices? First, write your congressmen and tell them to shut up about Big Oil Profit until they repeal/suspend gasoline taxes. Then they'll be believable in their bloviations about "feeling your pain at the pump." Second, remind those congressmen that supply has to increase before the price will come down, so ask what they are doing to ensure there is a better domestic supply of oil. Lastly, in the age of "doing your part to _______", do your part in controlling the price of gas by watching your own consumption. Ride a bike more. Walk when you can rather than drive. Make a ten dollar gas purchase last you the whole week. You don't want to curtail your consumption? That's your choice, and you have every right not to. Just stop bitching about gas prices. The market will accommodate your demand, or lack thereof. Now, what is the difference between this suggestion and the suggestion of the "Gas Outters" from yesterday? Everyone making a choice to use less gas because they can't afford it is the natural cycle of the pricing system. A bunch of arrogant, ignorant Populists doing it to "stick it to Big Oil" is just stupidity.

I propose a Windfall Ignorance Tax for people who don't understand these points. I'll call Hastert now.
**** BRAVO - Cox and Forkum (pasted from their site):

From the Ayn Rand Institute: Who Is Gouging Whom? by David Holcberg:

"Because sellers must gain the voluntary consent of buyers, and because the market allows freedom of competition, oil and gasoline prices are set, not by the whim of companies, but by economic factors such as supply and demand. If oil companies could set prices at will, surely they would have charged higher prices in the 1990s, when gasoline was under one dollar a gallon!" A*M*E*N