T. Boone Pickens, a Texas oilman who favors investing in wind power, said recently in a TV interview that “a fool with a plan beats a genius with no plan – every time.” The U.S. Congress has no plan to combat the oil crisis and seems dedicated to keeping it that way.
Congress’ response has been to recommend raising taxes on U.S. companies’ “windfall profits.” We’ve been there before, in 1980, when Congress passed a “windfall profits” tax. It was so disastrous it had to be repealed. That “windfall profits tax” increased the price of oil, increased our reliance on foreign oil and exported jobs overseas. Remember long lines at the gas pumps?
Oil prices have doubled in the last year and are severely damaging America’s economy. Yet, Congress has tied the hands of citizens and states to tap even temporary energy relief from our own land. The U.S. has more oil in the shale of the Rocky Mountains than there is in the Middle East, not counting bountiful oil supplies off our coasts and on federal lands. But it’s been illegal to touch it. Meanwhile, commuters are financially choking on gasoline costs to travel back and forth to work, airlines face bankruptcy and the trucking industry is in bad straits – all while $2 of every gallon of gas goes to foreign dictators hostile to America.
More than a quarter of a century ago, in 1981, when the ban on drilling offshore was enacted, gasoline was $1 per gallon. That ban is now obsolete. Congress repealed the ban on drilling in ANWR in 1995 but President Clinton vetoed the bill.
Advances in technology now make coastal exploration possible in ways that protect delicate coral reefs and drastically reduce any chance of oil spills. Yet the ban on exploration remains as if drilling today were no different than 25 years ago. Ironically, drilling is under way 60 miles off the coast of Florida – by China in cooperation with Cuba. Yet, it has been illegal for U.S. companies to drill within 200 miles of our coast. China can drill closer to Florida than we can.
Congressional fretting over Exxon-Mobil’s $10.9 billion profit last quarter fails to acknowledge that Exxon-Mobil paid more than $29 billion in taxes that same period. Congressional babble on “windfall profits” also fails to mention the enormous risks and sums necessary for an oil company to discover, extract and refine new supplies of petroleum. A single offshore drilling platform can cost as much as $1 billion.
Boston Globe writer Jeff Jacoby reports that the 27 largest U.S. energy companies “forked over $48 billion in income taxes in 2004, $67 billion in 2005 and more than $90 billion in 2006 – an 87 percent increase.” The Tax Foundation calculates that since 1981, the oil industry has earned a cumulative $1.12 trillion in profits – but paid a cumulative $1.65 trillion in taxes (not counting taxes to foreign governments).
A congressional-imposed 25 percent “windfall profits” tax on U.S. oil companies will not lower gas prices or increase supply. Neither will federal takeover of the oil industry, as proposed by a California congresswoman. Anti-corporation fever in the present Congress hurts consumers. Government interference and excessive taxation is where the light needs to shine.
Boosting domestic oil production and refining, while simultaneously pursuing a total portfolio of conventional and non-conventional energy sources, is not only necessary but is supported by American voters. Major new drilling in U.S. coastal and wilderness areas is supported by 57 percent of Americans in a recent Gallup poll.
While it is imperative to focus on alternative energy sources – nuclear, wind, coal to liquid, hydrogen, solar, etc. – it is necessary to seek economic relief right now with drilling, exploring and shale development. There is no justification for dependence on foreign fuels when that energy can be produced in our own country.
Drill domestically while developing long-term alternatives. There’s no reason for not doing both. Economic shallowness in jacking up oil industry taxes will not bring gasoline prices down or increase supply. Oil companies cannot explore and drill if you tax away their profits.