Punishing Big Oil Won't Cut Prices

IBD Editorials ^ | May 5, 2011 | Staff

[Kaslin]

Taxes: Do Democrats have any ideas that don't involve raising taxes? It doesn't seem that way, given their latest push to boost oil industry taxes in the face of record-high gasoline prices.

House Democrats hoped to force a vote Thursday on a bill that would boost taxes for Big Oil by stripping its access to a tax deduction provided to all industries under the American Jobs Creation Act of 2004 — a law designed to encourage domestic production and create jobs that got widespread bipartisan support.

The goal for Democrats is to embarrass the GOP by making them side with the industry at a time of high gas prices and big industry profits.

As Rep. Ed Markey, D-Mass., put it, "Republicans want to give tax breaks for the oil companies and then just say it's a tough break for consumers at the pump."

But what's to be embarrassed about?

The oil industry isn't to blame for high gasoline prices. If anything, blame rests with the Democrats' decades-long intransigence toward boosting domestic oil production.

And no economist — at least not any living in the real world — would argue that raising taxes on the oil industry will somehow lower the price of gasoline at the pump.

Indeed, trying to punish the oil industry with higher taxes will in the end only wind up punishing consumers — particularly those at the lower end of the economic spectrum.

Nor should the GOP be embarrassed about opposing efforts to cut off the oil industry's access to tax deductions available to every other industry, even if Democrats do try to dress it all up as eliminating "subsidies."

[Attention Surplus Disorder]

It’s not about lowering prices.

The administration LIKES higher oil prices and higher oil profits. Because higher oil prices and profits lead to more taxes paid. It’s hard to see any argument to this simple notion.

But the vote-getting that can occur from bashing big oil, getting the enviros into it, getting the envious folks into it, getting the anti-transnational-corporation crowd into it, and finally getting the “gimme mine” crowd into it, now THAT’S what they’re interested in: stitching together the various malcontent groups. And it works remarkably well.

Obama gets gas prices back down to $3 and he’s in for four more years, kids. Fire away.

[Kaslin]

I don’t think $3 will do it. $2 max might. $1.25 definitely will

[SaxxonWoods]

Beat me to it. They aren’t interested in lower prices, they are interested in higher taxes.

[bert]

big oil cannot be hurt. The goal is to hurt republicans who won’t tax the profits of big oil

[5by5]

They might talk about hurting Big Oil but they will hurt small oil and medium oil a lot more. The smaller companies work onshore domestic for almost 100 % of their revenue. These companies have a lot of good jobs and are responsible for the sort of innovation and new plays that are helping reverse the decline in domestic production.

[who_would_fardels_bear]

They are also interested in making sure there are no cuts in spending.

And by the same logic as equating removal of a tax deduction to a raise in taxes, they equate a cut in the rate of increase in spending to an actual cut in spending.

Euphemisms cut both ways.

[G-Man 1]

Oil is traded in US dollars. The dollar is being trashed. It just takes more worthless dollars to pay for a barrel of oil. It is that simple.

[FBD]

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