As much as it pains me to ever agree with Karl Rove, he raised a point in the Wall Street Journal in an opinion piece on Thursday which I have raised in this blog several times having to do with oil company profits. He points out, as have I, that media of all types quotes that oil companies are making record profits without putting those profits into context, namely that they are the result of record sales, record volume of product, and record demand.
He also asks why a similar outcry is not being made against other industries which are much more profitable both in terms of percentage of profit and total amounts of profit. Rove lies a lot, of course, but we can assume that the numbers he cites are correct, since they are far too easy to check for him to be stepping into such an easy trap.
I’m not a very good graph maker, but graphs have a wonderful way of putting things into perspective. So if you will excuse my rather amateurish effort:Oil companies hardly look like any kind of giant, do they?
Politicians are off and running again with simple solutions to a problem which has causes that are complex and to some degree unknown. Tax the big bad oil companies. Drill for oil on the continental shelf and in the arctic. Starve the poor to turn foodstuff into fuel. None of those, of course, require that the people of this nation make major and uncomfortable changes of lifestyle.
If you want to reduce the consumption of a commodity, you must tax those who consume the commodity, not those who produce it.
To what degree has unregulated trading influenced the rise in prices of petroleum products? Those in power decry that thought with great glibness, but they can offer no documentation to that effect, and they said the same thing about housing prices a few years ago, about energy before that, and about dotcoms a few years before that. Are they telling the truth this time?
Of course our national policy seems to be, “Tax everybody except me.”