Tuesday, May 02, 2006
Do you know Senator Bonehead? You should; you probably voted for him. It doesn’t matter in which state you reside, and it doesn’t even matter whether or not you voted. Senator Bonehead was elected by the voters of your state who voted for him, and he was elected by the voters of your state who didn’t vote against him.
If anybody is guilty of gasoline and diesel price fixing, it’s Senator Bonehead. In fact, the US Congress has been fixing the oil and gas industry for decades. Apparently, they're not familiar with the adage “If it ain’t broke, don’t fix it!” Senator Bonehead and his esteemed colleagues have been fixing it into its current bandaged and baling wired state. In fact, they've fixed it to the point that it can’t get much more broken. But since it’s still broken, somebody else must be doing something wrong.
So Senator Bonehead drives his SUV one block to posture in front of gas stations (and the assembled TV news cameras) to express his “outrage” at the price of gasoline, and to demand that “big oil” be broken up. Senator Bonehead insists that the “huge” profits made recently by the oil companies should be taxed in order to punish them for raising gasoline prices. Senator Bonehead claims that the oil companies make way more money than should be allowed. Senator Bonehead suggests that a generous government rebate of $100 will “help” the taxpayers. Senator Bonehead says it’s the other political party’s fault that the price of gasoline is so high today, and if only his party had gotten their legislative way, everything would be fine today. Senator Bonehead says our cars and trucks must be made more efficient. Senator Bonehead even says that the huge tax breaks passed for the oil companies last year are going to be rescinded this year.
I’m estimating that there are about 93 Senator Boneheads in the US Senate, although there may be more. It’s getting hard to tell, because they’re all beginning to sound alike to me. And they’re all making the case for term limits stronger each time they open their mouths, individually or collectively.
At least on the issue of oil and gas prices, most of them are showing a significant ignorance of market forces, and of the laws of unintended consequences. I wonder if Senator Bonehead ever considered what impact 12 million illegal immigrants have on the demand for gasoline, natural gas, heating oil, coal consumption, and electricity? If the oil and gas industry are examples of how Senator Bonehead fixes problems, please, sir, don’t fix the border problem!
One Senator who has never held a job in the private sector, or ever met a payroll, thinks that breaking up the oil companies will make them more efficient and reduce the price of gasoline. Does he really believe that more smaller companies with less capital will be able to compete with giant state-run companies of other nations when it comes to bidding on exploration and production rights? If there were more companies making smaller profits, how would that expand their ability to build more refineries?
Another Senator demands “windfall profits” taxes on oil company profits to punish “greed” and reduce the price we consumers will pay at the pump. Who does he think pays corporate taxes? Do you suppose he really believes that it comes out of the pockets of the corporate leaders?
And another Senator argues that the oil company profits are “just way too much,” claiming that oil companies “shouldn’t be allowed to make that much.” Shouldn’t be “allowed” to make that much? How much should they be allowed to make, Senator? Who should determine how much a company should be “allowed” to make in a free market economy? The same Senator won’t even discuss the comparison of profit per gallon to federal tax per gallon. Who’s really making “way too much” on gasoline sales?
A Senator who thinks that one and a half (or less) “free” tanks of fuel in a year’s time will help some consumers in any meaningful way is either criminally cynical or unacceptably naive. Any Senator who thinks the outcome of that legislation can’t be twisted by Senator Bonehead into an income redistribution scheme in favor of those who don’t pay taxes shouldn’t be in a leadership position in the Senate, or anywhere else.
Then there's a Senator who believes that they can impose yet one more government mandate for vehicle fuel efficiency. He probably hasn't considered whether it will finally kill off a nearly-dead US auto industry (and more US jobs that Americans are willing to do). Perhaps he ought to be pronounced brain-dead.
What did the esteemed Senators expect oil companies would likely do with huge tax breaks in the face of legislation and regulations that prohibited re-invesment in exploration, production, and refining domestically? The tax breaks for which Senator Bonehead voted were supposed to promote more off-shore exploration and production in the Gulf of Mexico and Alaska.
But then Senator Bonehead passed laws saying that they couldn’t do that. So instead of re-investing those profits, long-deferred dividends were finally paid to long-suffering investors. Then, of course, the oil corporate executives could justify huge golden parachutes for having created such savings for their investors. Unlike airline executives, they actually made money for their investors, and didn’t screw their employees out of their pensions when they moved on.
I haven’t heard Senator Bonehead say much about the fact that the federal gasoline excise tax is about twice as much as the oil company profit on each gallon we consumers buy. If that tax on gasoline was required to be equal to -- no more and no less -- the oil company profit per gallon, Senator Bonehead would probably be claiming that the oil companies were deliberately fixing prices low in order to deprive the government of much-needed revenue! After all, Senator Bonehead has sometimes complained that American consumers pay far less than Europeans for gas, without adding that almost all the additional cost to Europeans is TAX.
Every time Senator Bonehead gets together with his or her colleagues to pass legislation affecting the marketplace, it raises the cost to consumers. In the case of oil exploration and production, the cost of every one of those laws and regulations is paid for by either the consumer or the investor. The consumer pays for it at the pump. The investor pays for it in terms of a reduced return on investment in poor years, or a tax on dividend in good years.
But government always gets paid. Senator Bonehead has seen to that.
Whether those laws and regulations benefit workers, or protect the environment, or prohibit construction of refineries, or restrict the places where drilling operations occur, or regulate the content of the product sold, they all cost the companies who must comply with them.
When oil companies incur a regulatory cost, they have a decision to make: pass the cost on to the consumer, or not compete in that segment of the market. If Senator Bonehead makes selling gas to us unprofitable, the oil companies and their products will go elsewhere to find markets or close their doors.
When that happens, big foreign state-run oil companies will be happy to sell it to us -- at their price. After all, they can operate outside our borders. That makes them immune to the laws and regulations Senator Bonehead passed which are killing off our domestic energy production (not just oil, by the way).
And the price they charge may carry the additional cost of surrendering even more of, or perhaps the last remaining, freedoms we cherish.
In fact, while Senator Bonehead was passing laws prohibiting US oil companies from drilling in the Gulf, Mexico’s state-owned Pemex was making big plans to do just that. And China has just announced that it’s state-run company is combining with our friendly neighbor Cuba to drill for oil just seventy-five miles off the Florida coast.
I’m sure that Senator Bonehead had our environmental interests at heart when he handed the keys to Gulf oil drilling over to socialist and communist state-controlled companies whose international relationships with us are strained. I also expect that he never considered how Mexico, Venezuela, China, and now Cuba, might decide to use their oil leverage on other issues. And I’m certain he wasn’t thinking about how that might affect future gasoline prices that we’d end up paying at the pump.
I wonder if Senator Bonehead needs to be reminded that Chernobyl was a state-run energy operation?
Last year, somebody produced a T-shirt with the tongue-in-cheek message that since beer finally cost less than gasoline, we should buy more beer. Before the price of gas finally surpassed the price of beer, I never once heard Senator Bonehead demand investigations into price fixing by brewers.
But just the other day I bought a cup of coffee, and I realized that it cost me about $20.64 per gallon. That’s outrageous!!
Senator Bonehead, you need to intiate investigations into possible price fixing by those greedy coffee companies! They must be making obscene profits! At those prices, you can be sure that they’re making more money than should be allowed. You should tax the hell out of them! And if that doesn’t get the price lowered, you need to break up Big Coffee!!
If anybody is guilty of gasoline and diesel price fixing, it’s Senator Bonehead. In fact, the US Congress has been fixing the oil and gas industry for decades. Apparently, they're not familiar with the adage “If it ain’t broke, don’t fix it!” Senator Bonehead and his esteemed colleagues have been fixing it into its current bandaged and baling wired state. In fact, they've fixed it to the point that it can’t get much more broken. But since it’s still broken, somebody else must be doing something wrong.
So Senator Bonehead drives his SUV one block to posture in front of gas stations (and the assembled TV news cameras) to express his “outrage” at the price of gasoline, and to demand that “big oil” be broken up. Senator Bonehead insists that the “huge” profits made recently by the oil companies should be taxed in order to punish them for raising gasoline prices. Senator Bonehead claims that the oil companies make way more money than should be allowed. Senator Bonehead suggests that a generous government rebate of $100 will “help” the taxpayers. Senator Bonehead says it’s the other political party’s fault that the price of gasoline is so high today, and if only his party had gotten their legislative way, everything would be fine today. Senator Bonehead says our cars and trucks must be made more efficient. Senator Bonehead even says that the huge tax breaks passed for the oil companies last year are going to be rescinded this year.
I’m estimating that there are about 93 Senator Boneheads in the US Senate, although there may be more. It’s getting hard to tell, because they’re all beginning to sound alike to me. And they’re all making the case for term limits stronger each time they open their mouths, individually or collectively.
At least on the issue of oil and gas prices, most of them are showing a significant ignorance of market forces, and of the laws of unintended consequences. I wonder if Senator Bonehead ever considered what impact 12 million illegal immigrants have on the demand for gasoline, natural gas, heating oil, coal consumption, and electricity? If the oil and gas industry are examples of how Senator Bonehead fixes problems, please, sir, don’t fix the border problem!
One Senator who has never held a job in the private sector, or ever met a payroll, thinks that breaking up the oil companies will make them more efficient and reduce the price of gasoline. Does he really believe that more smaller companies with less capital will be able to compete with giant state-run companies of other nations when it comes to bidding on exploration and production rights? If there were more companies making smaller profits, how would that expand their ability to build more refineries?
Another Senator demands “windfall profits” taxes on oil company profits to punish “greed” and reduce the price we consumers will pay at the pump. Who does he think pays corporate taxes? Do you suppose he really believes that it comes out of the pockets of the corporate leaders?
And another Senator argues that the oil company profits are “just way too much,” claiming that oil companies “shouldn’t be allowed to make that much.” Shouldn’t be “allowed” to make that much? How much should they be allowed to make, Senator? Who should determine how much a company should be “allowed” to make in a free market economy? The same Senator won’t even discuss the comparison of profit per gallon to federal tax per gallon. Who’s really making “way too much” on gasoline sales?
A Senator who thinks that one and a half (or less) “free” tanks of fuel in a year’s time will help some consumers in any meaningful way is either criminally cynical or unacceptably naive. Any Senator who thinks the outcome of that legislation can’t be twisted by Senator Bonehead into an income redistribution scheme in favor of those who don’t pay taxes shouldn’t be in a leadership position in the Senate, or anywhere else.
Then there's a Senator who believes that they can impose yet one more government mandate for vehicle fuel efficiency. He probably hasn't considered whether it will finally kill off a nearly-dead US auto industry (and more US jobs that Americans are willing to do). Perhaps he ought to be pronounced brain-dead.
What did the esteemed Senators expect oil companies would likely do with huge tax breaks in the face of legislation and regulations that prohibited re-invesment in exploration, production, and refining domestically? The tax breaks for which Senator Bonehead voted were supposed to promote more off-shore exploration and production in the Gulf of Mexico and Alaska.
But then Senator Bonehead passed laws saying that they couldn’t do that. So instead of re-investing those profits, long-deferred dividends were finally paid to long-suffering investors. Then, of course, the oil corporate executives could justify huge golden parachutes for having created such savings for their investors. Unlike airline executives, they actually made money for their investors, and didn’t screw their employees out of their pensions when they moved on.
I haven’t heard Senator Bonehead say much about the fact that the federal gasoline excise tax is about twice as much as the oil company profit on each gallon we consumers buy. If that tax on gasoline was required to be equal to -- no more and no less -- the oil company profit per gallon, Senator Bonehead would probably be claiming that the oil companies were deliberately fixing prices low in order to deprive the government of much-needed revenue! After all, Senator Bonehead has sometimes complained that American consumers pay far less than Europeans for gas, without adding that almost all the additional cost to Europeans is TAX.
Every time Senator Bonehead gets together with his or her colleagues to pass legislation affecting the marketplace, it raises the cost to consumers. In the case of oil exploration and production, the cost of every one of those laws and regulations is paid for by either the consumer or the investor. The consumer pays for it at the pump. The investor pays for it in terms of a reduced return on investment in poor years, or a tax on dividend in good years.
But government always gets paid. Senator Bonehead has seen to that.
Whether those laws and regulations benefit workers, or protect the environment, or prohibit construction of refineries, or restrict the places where drilling operations occur, or regulate the content of the product sold, they all cost the companies who must comply with them.
When oil companies incur a regulatory cost, they have a decision to make: pass the cost on to the consumer, or not compete in that segment of the market. If Senator Bonehead makes selling gas to us unprofitable, the oil companies and their products will go elsewhere to find markets or close their doors.
When that happens, big foreign state-run oil companies will be happy to sell it to us -- at their price. After all, they can operate outside our borders. That makes them immune to the laws and regulations Senator Bonehead passed which are killing off our domestic energy production (not just oil, by the way).
And the price they charge may carry the additional cost of surrendering even more of, or perhaps the last remaining, freedoms we cherish.
In fact, while Senator Bonehead was passing laws prohibiting US oil companies from drilling in the Gulf, Mexico’s state-owned Pemex was making big plans to do just that. And China has just announced that it’s state-run company is combining with our friendly neighbor Cuba to drill for oil just seventy-five miles off the Florida coast.
I’m sure that Senator Bonehead had our environmental interests at heart when he handed the keys to Gulf oil drilling over to socialist and communist state-controlled companies whose international relationships with us are strained. I also expect that he never considered how Mexico, Venezuela, China, and now Cuba, might decide to use their oil leverage on other issues. And I’m certain he wasn’t thinking about how that might affect future gasoline prices that we’d end up paying at the pump.
I wonder if Senator Bonehead needs to be reminded that Chernobyl was a state-run energy operation?
Last year, somebody produced a T-shirt with the tongue-in-cheek message that since beer finally cost less than gasoline, we should buy more beer. Before the price of gas finally surpassed the price of beer, I never once heard Senator Bonehead demand investigations into price fixing by brewers.
But just the other day I bought a cup of coffee, and I realized that it cost me about $20.64 per gallon. That’s outrageous!!
Senator Bonehead, you need to intiate investigations into possible price fixing by those greedy coffee companies! They must be making obscene profits! At those prices, you can be sure that they’re making more money than should be allowed. You should tax the hell out of them! And if that doesn’t get the price lowered, you need to break up Big Coffee!!
