From the Boston Globe: “Legislators want windfall tax for oil companies”:
The government should consider a tax on oil companies if they make excessive profits amid rising gasoline prices, a leading Republican senator and several Democratic lawmakers said yesterday.Isn’t that special? Companies are expected to make profits and thereby provide employment while paying corporate taxes. But if it teeters on that tipping point of “excessive,” then watch out! But while Exxon made record total profits, its profits as a percentage of revenues was a modest 9.6% (25.3b profit / 264b revenues). The real excessive profiteer last year was Bank of America, pulling in an obscene 21.6% profit on 65.5b of revenue. They were tied with those pill-pushers at Pfizer who also hauled in an “excessive” profit rate of 21.6%.
This perennial vilification of the oil companies always falls into a predictable pattern: Americans feel helpless in the face of rising gas prices and refuse to accept the laws of supply and demand. Spineless politicians (from both sides of the aisle) fill the void with populist rhetoric until investigations are held. These investigations always conclude that it was stupid capitalism all along.
Extra – John Hawkins picks up on the theme with “In defense of Exxon.”
Follow-up – Well, this is just great: “Bush Orders Gas Gouging Probe Amid Lawmaker Fighting”
But – Maybe it’s working! “Oil falls $2, OPEC keeps output steady”