Oh, those inflexible conservatives... they won't comprimise their strongly-held free-market principles even when opponents bring up nagging little issues like "public good" and "fairness." Take the idea of a windfall profits tax on oil company profits when the price of oil reaches a certain point. Here's the well-worn Heritage Foundation talking point:
Since the 1980s, the cost of oil exploration and drilling has increased. These projects cost billions of dollars and last for decades, over which time the price of oil will fluctuate. Indeed, the price of oil was well under $20 per barrel for most of the 1990s, reaching a low near $10 per barrel as recently as 1998. Needless to say, oil industry profits were quite modest at the time, and many oil wells were operating at a loss. If producers have to endure periods of low oil prices but must forfeit extra proceeds to the government in times of high prices, they will not undertake as much exploration and drilling. OPEC and foreign oil companies would again be given a comparative advantage relative to U.S.-based firms.
Leave the oil companies alone when they are making money because they won't always be due to the cyclical nature of the industry. Sure, profits seem big now, but they are much more reasonable when spread out over the lean years. That makes sense, so the logical flipside of this free-market doctrine would require oil companies be left alone during the lean years to live off their windfall profits.
Reliable Petro-Republican Rep. Richard Pombo (R-Calif.) didn't think the lean years should be quite so lean and was willing to give up oil on taxpayer-owned lands for far less than fair value:
"It was Congress's intent," Mr. Pombo said in an interview on Friday, "that if oil was at $10 a barrel, there should be royalty relief so companies could have some kind of incentive to invest capital. But at $70 a barrel, don't expect royalty relief."
Leave aside for a minute the fact that the law was so badly written that oil companies are still claiming the "relief" despite the high price of oil and thing about Pombo's statement. At $10 per barrel, why on earth do we need more investment? So oil can sink to $5 per barrel and Pombo's committee can dole out yet another few billion to their buddies?
Free market when it works for the guys who write the checks and welfare for when it doesn't. It sounds like "picking winners" for me.
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