Posted on 06/10/2008 10:35:00 AM PDT by newbie2008
At this moment, the Senate is debating a package of punitive measures against the major domestic oil companies, including a new windfall profits tax. We've been down this road before and to disastrous consequences.
Twenty eight years ago, President Jimmy Carter sign into law the Crude Oil Windfall Profit Tax Act (P.L. 96-223). According to a 2006 report by Congressional Research Service economist Salvatore Lazzari:
"The WPT had the effect of reducing the domestic supply of crude oil below what the supply would have been without the tax. This increased the demand for imported oil and made the United States more dependent upon foreign oil as compared with dependence without a WPT."
In the tables below, Lazzari estimates the impact of the Act on domestic oil production and the increased reliance on foreign oil.
"These estimates indicate that the windfall profit tax caused domestic oil production losses in every year but 1986, when crude prices declined below adjusted base prices resulting in zero WPT. Over the entire 1980-86 period, it is estimated that, depending on the assumed supply curve price elasticity, the WPT reduced domestic oil production from between 320 million barrels (1.2% of domestic production) and 1,268 million barrels (4.8% of domestic production). The effect of reducing domestic oil production was to increase the level of imported oil. Columns (3), (6) and (9) show the estimated production losses caused by the WPT, as a % of the actual level of imported oil, under the assumed three supply curve elasticities range from 3.2% of total imports to 12.7% of imports for this period, depending on price elasticity."
Gosh, it brings back so many memories to remember Jimmy Carter in the White House. Yep Jimmy liked that windfall profits tax back in the day.
Seriously folks, it’s good to study the history. We have the history of what happened then when a windfall profit tax was enacted. Does anybody really think the results today would be different?
Who cares about historical facts and logic? We just want to feel good..../sarc
This is solid evidence that BHO, while half honkey, all donkey, is just another Jimmy Cah-ta’
Study of history is irrelevant when the dims choose to ignore it or re-write it.
I believe that most of our politicians are in the pay of Saudi Arabia. There’s no other explanation that makes sense (except that they are communists who want to destroy the US, which is also plausible).
“Gosh, it brings back so many memories to remember Jimmy Carter in the White House.”
Isn’t that what the prediction is — choose BO and get JC all over again?
“half honkey, all donkey..”
Now THAT is funny!!!
While I agree that the windfall profits tax was terrible policy, you and others on this thread do not understand the liberal mindset. I was surprised recently when a Finance faculty repeated the liberal line that we would have developed alternative energy alternatives 30 years ago if not for repealing the windfall profits tax and subsidizing big oil. I told him that alternative energies were impossible 30 years ago without great harm to the economy. He remained unconvinced.
The left has a Utopian vision of life. To the left, there is never a problem that cannot be fixed by a big government solution. The left feels that our mistake was not imposing a huge government solution to the oil price spikes and shortages of 30 years ago. The left is determined not to make the same mistake now.
The left wants a windfall profits tax so that oil production declines. The left hates oil for many reasons: CO2, dirty, spills, not renewable, ... Oil is not part of the left's vision for our energy portfolio. The left wants to force big oil to reduce investment in oil production. The windfall profits tax is a great way to change the behavior of the oil industry.
What a wonderful world!
The second theory makes even more sense and is scarier than the first one.
Are we going to tax foreign oil as well? Some how I do not thing that this will keep the price down; only the supply!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.