The concept of the windfall gas tax is laughable. Out there, somewhere, is an evil oil company with evil executives reaping untold amounts of cash at the common man's expense. Yes, gas profits go to pay the oil executives and the oil workforce, but the vast majority of that money goes to shareholders. And who are those shareholders? They are the average man's mutual fund or pension who owns a few shares of ExxonMobil stock. S&P classifies ExxonMobil as a growth stock, so growth funds have ExxonMobil. But then again, a number of value funds consider ExxonMobil a value stock, so they buy it too. So in reality, just about everyone probably owns a little piece of those windfall profits, and if they don't, then they can easily purchase some ExxonMobil stock and get in on the profits.
Additionally, just because the price of oil has increased doesn't mean that the oil companies are price gouging. If it were up to the oil executives, I'm sure they would much rather keep prices low and volume high because it would only make it more difficult for alternative energies to overtake gasoline. The price gouging and "windfall profits" are a myth. The oil industry is simply more concentrated because of the huge costs of finding, extracting, and distributing the oil.
Finally, I think it's important to acknowledge that oil companies are selling oil, and we should no more expect them to advocate alternative energy than we expect Phillip Morris to create effective anti-smoking advertisements. In fact, we may need to acknowledge that oil may even work to counter renewable energy by buying new technologies. That is reality, and by acknowledging it rather than ignoring it, we can be more proactive about buying those new technologies first. The oil companies will continue to lobby for government subsidization of oil prices, and government will continue to give it to the oil companies - not because of the lobbying, but because Joe American likes his gas prices low.
So all-in-all, the concept of the windfall gas tax - the punishing of evil oil - is laughable.
What I'm hoping (in my idealistic bubble), is that the big idea behind it was the first real attempt to get the United States off of its oil dependence. I realize that the more effective way to do that would be to tax gas directly, but I don't think that the U.S. government has the will of the American people to do that. The 2008 Elections roll around, and the Republicans start advertising that the Democrats were responsible for the raise in oil prices and suddenly the Republicans sweep Congress again. Taxing gas directly has been a non-starter.
I am hoping that the real Democratic party thought process was: we can't tax gas directly because it would be unpopular, but if we make the oil companies seem like villains, we just may be able to tax them, forcing them to raise prices and further lower U.S. dependence on oil.
Those hopes, though, are obviously misplaced. In reality, the Democrats were focusing on lowering gas prices. The Democrats believed that oil prices were entering the speculation bubble where people start buying because they believe the price will continue to go up rather than because the value of gas is increasing.
From Bloomberg:
``The American people are furious about what's going on and they understand that nothing is happening here that justifies the price,'' said Senator Byron Dorgan, a North Dakota Democrat.
Dorgan and other lawmakers have blamed investment banks, speculators, and hedge funds for buying commodities and driving up the prices. More scrutiny of their trades and stiffer margin limits could bring the price of oil down by 30 percent, Dorgan said at a press conference today.
My dreams for European-sized gas taxes will have to wait for another day. In the meantime, let's grow up and stop pretending like the oil companies are the bad guys for their profits (which go to shareholders/the common man) and good guys for supplying us oil at low prices (which further drive global warming). It's all backwards.
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