Saturday, May 03, 2008
WSJ Delivers Oil Smackdown On Obama And Hillary
Crude oil is not the only thing I think about. Really. Truth be told, I just had to fork over nearly a bill to fill my SUV and get gas for my lawnmower – so when I saw the WSJ’s Editorial Board take aim at Obama’s pseudo-oil plan, I took notice.
Trying to make sense of Obama’s plan to reduce gas prices is impossible. It’s like most of platform – long on hope and very short on specifics. Even the specifics defy the irrevocable laws of economics. Basically, Obama wants to implement a $40 Billion (yes billion) tax on the “excess profits” of Exxon Mobil. Here’s what the WSJ had to say about that idea:
You may also be wondering how a higher tax on energy will lower gas prices. Normally, when you tax something, you get less of it, but Mr. Obama seems to think he can repeal the laws of economics. We tried this windfall profits scheme in 1980. It backfired. The Congressional Research Service found in a 1990 analysis that the tax reduced domestic oil production by 3% to 6% and increased oil imports from OPEC by 8% to 16%. Mr. Obama nonetheless pledges to lessen our dependence on foreign oil, which he says "costs America $800 million a day." Someone should tell him that oil imports would soar if his tax plan becomes law. The biggest beneficiaries would be OPEC oil ministers.To paraphrase the fictional Chief Engineer of the USS Enterprise, Commander Montgomery Scott, “Ye canna change the laws of economics”. Never the less, left leaning politicians try all the time. One of the most recent examples of this was former California Governor Gray Doofus (colloquial pronunciation of “Davis”). He spearheaded the deregulation of California’s utility industry, capping rates but banning construction of new power plants. It took a few years, but rolling blackouts and soaring utility costs led to Doofus becoming one of only two or three state governors ever recalled and replaced. That’s how Aaaahhnoolllld became the Governator.
There's another policy contradiction here. Exxon is now under attack for buying back $2 billion of its own stock rather than adding to the more than $21 billion it is likely to invest in energy research and exploration this year. But hold on. If oil companies believe their earnings from exploring for new oil will be expropriated by government – and an excise tax on profits is pure expropriation – they will surely invest less, not more. A profits tax is a sure formula to keep the future price of gas higher. (Emphasis Added)
Presidents cannot be recalled. Spare me the lectures on impeachment. As far as I know, dangerous economic naïveté doesn’t rise to the pass constitutional muster as high crimes and misdemeanors. The only way to keep this kind of mindset out of the Oval Office is not to send it there in the first place.
Now if you’ll excuse me, I have to go expand my carbon footprint and do battle with my lawn.
Here endeth the lesson.