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Saturday, February 04, 2006

Oil Profits Make for a Brighter, Cleaner Future: A Post by Dwayne

“Last summer, I joined Democrats in Washington and in other states and called on oil companies to share in our sacrifice and return some of their record-breaking excess profits.”
---Virginia Governor Tim Kaine's Democratic Response

Okay just a few thoughts/ questions about the economically erroneous statement above.

1) The SOLE purpose of a business is to make money! So oil companies did a good job making money last year. They were rewarded for their efforts. Big DEAL. They haven’t always been this fortunate. Think about how little gas cost 10 years ago. So instead of using their profits to invest in developing other products or hiring new employees, Kaine is saying oil companies need to give it to the government who knows how to spend money more efficiently as seen by the balanced budget and over-all financial health of the federal government.

2) When did the oil company cross over the line that made their profits excessive? Was it over 1 billion, 100 million? Who gets to determine what an excessive profit is? Also Gov. Kaine speaks like the government hasn’t received anything from oil companies, like they didn’t pay taxes last year. He's just saying, Dang we didn’t get enough!

3) If America is going to break the “addiction” to oil then there needs to be a change in values; for example, people need to start valuing money in their pockets rather than in their gas tank. So how will this happen? I suggest that if we sit back and let gas prices go UP, UP, UP then our consumption will go down, down, down. I think that when this happens entrepreneurs will market ways to provide people with means of transportation that is more affordable/efficient that will not involve oil. Also people will start to think twice about living far away from work or buying SUV’s (this is already happening). So for a better world let oil companies keep making the BIG bucks because necessity is the mother of invention!

Maybe I am wrong, what do you think?

P.S Don't read this an endorsement for the GOP or an indictment of the Democrats. It's neither.


Blogger Keith.Drury said...

Your third suggestion has been the route taken in Europe (howbeit via taxes more than oil profits, though it had the same gas-pump effect). I tend to agree with your #3 solution--higher prices will diminish consumption and increase conservation all my economics colleagues say. Though they also then quickly remind me that reduced consumption will then raise the supply and thus lower prices again reducing the incentive for conservation. I think I can even go with you on refusing to accept that there are “excessive profits” so long as there is a free market. Of course that is a question in this case also I suppose. Thanks for an intriguing on-the-street issue Dwayne.

2:17 PM  
Anonymous Anonymous said...

Finally something good coming out of California! Right on bro!!

5:26 PM  
Blogger ::athada:: said...

I was waiting for someone to say something sensical about this. Thank you.

I wouldn't even been terribly opposed to even more gasoline / coal tax. I'm normally opposed to industry-specific taxes due to special interests / politics, but being as pollution effects everyone, I'm ok with this one. Perhaps instead of heavily subsidizing (encouraging) specific industries (hydrogen cars, windmills), maybe we need only to tax (discourage) the culprits and let the market find the solutions. Well... I guess that wouldn't be very popular thought...

thinking aloud,

5:55 PM  
Blogger Nathan Crawford said...

I have lots of thoughts on this. Right now I am living in Chicago where it is literally freezing cold, gas prices are skyrocketing, people are literally freezing to death because they can't afford it, and oil companies to make more and more money. I struggle with what to do. However, I wonder where the morality of the profit is. Also, living in Chicago, I realize that the real way to get us off of oil is to actually build a strong public transportation system. I can go all over the city, never needing a car. I think this may be why Europe's prices are higher - they don't need it with such a strong public transportation system.

9:48 PM  
Anonymous Dwayne Taylor said...

A few thoughts to continue the discussion.

Keith: I thought about the idea that with reduced consumption the price will go down but the word on the street is that as China develops it's economy it will consume more oil, therefore demand will still be high and with it prices. Thus continuing the need for alternatives.

ANON: Thanks for the kudos but there are lots of GREAT things coming out of CA but they aren't as news worthy as car chases and Hollywood drama.

Adam: I am not much for central planning (choosing whom to tax more to meet government goals) So I still think that the market will meet our needs w/o such intervention. It will only be a matter of time.

Nathan: The first thing that I think is that there are always going to be people that are going to go without while others have plenty. Heat is no exception. While I don't think that this is good, I think that it illustrates a need that can be met by those that are moved to care for the poor. Oil companies are not moved in such a way.
Also the opposite is true in regards to the correlation of gas and prices. The things that are not scarce are not priced high. (EG soda, paper, light bulbs vs. diamonds, BMW's, and beach front property.)

10:30 PM  
Blogger Josh said...

Great thoughts Dwayne. I appreciate your perspective and admire your consistency.

Tin, thanks for the brief interruption. :)

12:15 AM  
Blogger pk said...

Thanks for giving me a reason to smile-->cheer-->holler-->honk my horn every time I see the price of gas go up!

5:37 PM  
Blogger Ryan Schmitz said...


I'm not sure how many people were watching the Democratic Response, but it is funny that us two Canadian boys were and your thoughts were similar to mine, especially about the fact that these companies already paid their taxes and not to mention given money voluntarily to other groups.


8:36 PM  
Blogger Dave & Lynnette Mason said...

Good to hear you rant about something Waynie. The Oil addiction may work out for Canada as it were. I saw on the CBC the other day that the reserves in Alberta are huge and the U.S. will soon be buying oil from the North instead of the East. This will give Canada leverage in the battle of the so-called "Free Trade" agreement. I hope this doesn't mean the Republicans will be invading Canada any time soon to "liberate" Quebec. he he

7:03 PM  
Blogger ap said...

very strange and evidence of the small denomination known as The Wesleyan Church: on your blog are posts by two guys who lived in the arnprior area--about 45 minutes from where i grew up who you meet in indiana. and, of course, i meet you in new brunswick. weird.

10:52 AM  

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