Senate Democrats fell just a few votes short this week of repeating one of the great acts stupidity of modern times. In an apparent homage to Jimmy Carter and the1970s, Democrat leader Harry Reid attempted to shove through a “windfall” profits tax designed to seize 25% of any American oil company profits that the Democrats see as “excessive,” “obscene,” or just shiny and ripe for the taking by Big Government.
At the root of things, oil prices are so high right now because oil in short supply relative to years of rapidly growing global demand. The only way this can be solved, short of sabotaging the world economy to reduce demand, is to increase supply. In other words, some group must find new oil (and this may shock you) then actually drill for it once it is found. There are oil reserves in Alaska and offshore (on our own continental shelf) that, if they were brought online, could cut the price of oil back down to $40 per barrel.
But these known supplies have been kept offline by the Federal government.
This means that oil has to be found somewhere else inside America that Congress or the President has not yet declared a reserve, a sanctuary, a refuge, a park, a monument, a preserve, a landmark, a historic site, a memorial, or just too close to somebody’s mansion. Finding and extracting oil from such diminishing possibilities requires money — and it’s exactly the sort of thing that evil American capitalist petro-pigs would do with their so-called “profits,” if these are not seized by the porkers in Congress first. Every oilfield on Earth runs dry eventually and must be replaced with a new one, and the American oil companies have been doing this for decades using the exactly the funds that Democrats label “windfall profits.”
Companies don’t spend as much money to develop new supplies when oil prices are low, because that would be stupid — only government strives to operate at a loss. However, when prices are high, risky and expensive undertakings like developing whole new oilfields become realistic and rewarding.
Congress proposes to seize money from the oil companies whenever prices are high. This is a formula to keep supplies tight and prices high. Essentially, Congress, having made oil prices higher, wants to punish oil companies for those prices being so high, a move which will keep prices high… and inspire Congress to punish oil companies even more later.
Of course, Congress cannot seize the profits of foreign oil companies, so their exploration and drilling will continue unfazed by the proposed windfall profit tax. Only American oil drilling will be slowed — increasing our dependency on foreign oil even further (which has been the primary result of declaring whole swaths of our own country off-limits to ourselves).
In fact, to make dependence on foreign oil even worse, Congress (which consists largely of lawyers by the way) added a proposal to the bill that would allow people to sue OPEC’s foreign oil producers to make them produce more oil for us. Put aside the fact that foreign countries are sovereign entities that don’t have to drill even one hole in their own land if they don’t want to, and consider why, exactly, they should have to drill for their oil when we won’t drill for ours? It’s likely that Congress has kept more oil off the market than OPEC. Can we sue Congress?
The only area of the world in which America can demand drilling is America. If we don’t supply our own needs, then we just have to hope that someone else will do it for us — and pay whatever price that involves.
Yet all Democrats propose to do is hobble the American oil companies with a seizure of profits that reflect only the reality of Congress’s past successes in banning new supplies of energy.
Banned if you do, taxed so you won’t — that’s the Democrats’ policy toward American energy exploration.
Sign up to the Human Events newsletter