Posted on 04/07/2008 4:34:19 AM PDT by Kaslin
I’m a Conservative Republican like you, Austin…”
The voice resonated through my headphones during the final minutes of my radio program, at AM 630 WMAL in Washington, D.C. The caller to the program - - we’ll call him “John” - - paused mid-sentence, and I sensed that there was a “big but” coming next.
“But,” he continued, “we’ve just gotta do something to reign in these excessive profits from the oil companies.” Oil industry executives had been questioned by members of Congress earlier in the day about why their profits, and prices, have been so high. The inquisition on Capitol Hill, which was quite a spectacle in itself, was still top-of-mind for many.
“What is excessive?” I asked.
“Oh, please, you don’t think they’re excessive?” he replied.
“I don’t understand what you’re saying. Commercially operated businesses are supposed to produce the greatest level of profit that they can; they are beholden to their stockholders to do that. What do you mean when you say ‘excessive?’”
“I mean over forty billion dollars in profits last year for the Exxon corporation is excessive.”
“Okay,” I said, “how much profit would be reasonable for Exxon to make?”
“Oh, I don’t know, that’s not my point” he replied. “I’m just saying that $3.29 a gallon for gasoline is outrageous, and we need to do something.”
“That’s a pricing issue” I said, “not a profits issue. Prices won’t decline until demand for gasoline decreases, or the supply of oil increases, or both. But forget the oil companies for a moment and let’s talk about you. How much profit did you make last year?”
“That doesn‘t concern you” he replied, sounding irritated.
“No, no, it concerns me a lot John. You’ve made it your concern to attempt to regulate the profits of oil companies - - ”
“Because gas prices are outrageous” he said interrupting me, “and they’re unfair.”
“Right, and you might have made more money last year than I did,” I replied, “and that would be unfair for me. We may very well need to regulate your excessive profits.”
“And you’re a pathetic hack for corporate America” he shouted at me. And then my conversation with John, and my evening radio show, ended.
It’s alarming to me how often I encounter people who are self-described “Conservatives” or “Conservative Republicans,” yet are quite comfortable with ideas and principles that are the antithesis of the “conservative,” “limited government” vision that has been the apex of the Republican Party for nearly all of my life.
More money taken away from private individuals in taxes. More governmental regulation of private affairs. More governmental intrusion into the lives of individual citizens. More of my “needs” being met by the government. At an increasing rate, ideas such as these are just fine for Republicans, so long as the expansion of government makes one feel better.
I understand John’s frustration with gasoline prices. But the U.S. Government that he seeks to harness so as to “reign in” oil company profits is the very same U.S. Government that has restricted or forbidden the development of many of our domestic oil supplies, and that requires oil companies to produce and sell both region-specific, and season-specific “blends” of gasoline, in varying parts of the country.
In short, the government that John believes can “save him” from the injustice of high gasoline prices has, by its own well-intended meddling, driven the price of gasoline upward.
And John is not alone in his questionable “conservatism.” During the Republican primary election process, the only presidential candidate to receive an endorsement from the ranks of social conservative leadership was a politician who raised taxes and opposed children’s educational choice initiatives while he was Governor of Arkansas - - Mike Huckabee.
Apparently “big government” politicians are just fine for some Republicans, as long as the candidate is sufficiently “pro family” and attends the right church.
In my home state of Arizona, the Republican-led legislature has ushered-in a whole new level of government “snooping” into the lives of private individuals, requiring all employers in the state to participate in the collection of personal background information of employees. The goal was to enable employers to verify the citizenship status of their workers, and to crack-down on the hiring of “illegals.”
Yet the collection of citizens’ personal background information - - facilitated through a federal government database - - forms the basis of a “national I.D. card,” an idea that Republicans found to be abhorrent only a few years ago.
No matter how uncertain or “unfair” the private sector economy may seem; no matter how comforting politicians’ promises of “free healthcare” may feel; no matter how “right” it may seem to vote for candidates who share common faith commitments; all Americans would do well to develop a healthy sense of skepticism about the government’s ability to “fix” our nation’s problems, and to reject politicians who promise such “fixes.”
And “Conservative Republicans” would do well to recall Ronald Reagan’s words of nearly 28 years ago: “In this present crisis, government is not the solution to our problems; government is the problem.”
Well, right now, $3.50 gas is all that is available. I guess other countries that pay twice that, would be buying something else if it were available.
I know it is low, like around 8%. However, if it were constant, why are the oil companies swimming in cash right now? If demand goes down, which it does when prices get this high, profits should go down as well, not break records. The point of my rant was that I personally could not in good conscience, make that kind of obscene profit at the expense of an entire economy.
So, let me get this straight, you are trying to tell me that the oil companies are testifying before congress because they are loosing money?
I meant it not as a slander sir. I agree with the capitalist system. My point is, unscrupulous types give it a bad name. Sort of like, our republic will only work with a moral populous.
As a matter of fact, I have reduced my driving significantly. I now work from home and our family switched cars with each other so the ones that drive farthest to work or school, get the best millage.
8% is a terrible profit margin. The companies are “swimming” in cash because the volume is so high.
The government makes far, far more on each gallon sold than the actual oil companies do. How does the government sleep at night with these embarassing riches?
For me, the height of this idiocy came last summer when one of my co-workers was complaining about the high fuel prices -- and said "the government better do something about it" . . . because it cost him a thousand bucks to fuel up his boat over Independence Day weekend.
I understand you consider making a 10% net profit as 'making a killing?'
What profit percentage would 'be fair' in you're opinion?
This testimony is nothing more than a political charade -- in which 535 of the most useless, unproductive people on the face of the earth actually have the b@lls to question the "profits" of an industry that is among the most efficient in the history of mankind.
Exxon/Mobil posted earnings of $40.6 billion on revenues of $404 billion in 2007 -- a return of about 10%. This was the largest annual profit in the history of capitalism, in a year when commodity prices were at historic highs . . . and this kind of profit generated all kinds of nonsensical calls from elected officials and political candidates here in the U.S. for massive taxes on these "obscene profits." You've got people and politicians in this country complaining about profits that represent a 10% return on investment in the best year of the industry's history. And these same people and politicians are complaining about "price gouging" in a retail industry where profit margins are razor-thin, and where the typical retail operation in many parts of this country is owned by a recent immigrant with a small staff working long hours at near-minimum wages.
You might want to do some research and see which industries in this country are actually the MOST profitable.
I don’t want the government to do anything but fund alternative energy research with grants and remove the barriers to nuclear energy. However, the oil companies need a new PR guy. Because they are doing plenty to get communists elected. When the average person reads about refineries cutting production to maintain the high price of the monopoly product, their blood starts to boil. Oil is a monopoly with inelastic demand, not a “free market” situation.
No. They are testifying because it is an election year and slime ball politicians want to demagogue an issue because they know with our economically illiterate population, they can get away with it.
You are an example that proves that the slimeball politicians are right.
I humbly stand corrected. I was under the impression that demand had been rising at or about historical averages and there was price gouging going on. It was not my intent to ruffle so many feathers with my rant. I fully understand how the costs of taxes and government regulation is passed on to the consumer and I deplore the fact that the government taxes fuel at such a ridiculous rate. I too, would find it a bad investment to only make about 10% return. So the answer is, we must find something cheaper to run our cars on, or pay the piper and like it, or do without.
Now secondly, you seem to think that you're the arbiter of what are or are not obscene profits. Please define "obscene" profits. More than you make? More than you think anyone should make?
I would say I am 99.999999 percent certain that the caller was not a Republican or conservative. They always give themselves away as soon as they the little three letter word “but” after they claim to be a Republican or a a conservative. They need to try a lot harder to convince me.
Several points:
1 - It is around 10%. That is an average profit margin. If a company turns in much less than that on a regular basis, investors will sell their stock - people invest based on expected rate of return, not ‘total profit’.
2 - Profits are up because demand it up, not down. Remember, demand is worldwide. China and India are using a lot more oit than they used to, and producers are not producing a whole lot more.
3 - 10% profit on $100/barrel is twice what 10% profit is on $50/barrel. So while total profits are up, percentage profits are not.
4 - If their percentage of profits go down, so will their investors. Why would an investor invest in an oil company making a 5% return if the average business is getting 10%? No investors, no cash to develop new supplies.
As many a fellow freeper has pointed out to me, gouging is not what is happening, as I was under the impression. In my opinion, yes, I am allowed to have one, A profit is obscene if it destroys the once vibrant economy of an entire nation.
....I'm really a liberal democrat shill.
Ah yes, the mating call of the ecnomically illiterate.
Well, you clearly don't understand the market...it would fundamentally change the current price of oil.
In other words their words of "social justice" roust them from their cover of "I'm A Conservative Republican, But......"
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