The Voice Of One Crying Out In Suburbia

The newest, most popular national pastime

I work in a fairly public place, so I hear lots of chatter from everyday folks and the number one thing I hear people complaining about is the rising price of gas. Everyone is angry about it, and no one has any idea what to do about it. So what is the American response? Go after the oil companies. Because everyone knows that if you tax the heck out of oil companies a) the money will go into Washington's coffers, never to be seen again and b) the oil companies will pass the costs on to the consumer. Prices don't exist in a vacuum. If it costs more to produce and distribute gas, oil companies don't shrug and say "Oh well, we will just take lower profits this year" No, they raise their price and recoup the loss. Same thing with fraudulent insurance claims. When some ambulance chaser sues an insurance company for a frivolous lawsuit, the insurance company pays up and passes on the cost in increased premiums for the rest of us. The only one benefiting is the lawyer. That is why minimum wage price hikes don't help, if we have to pay someone more to work at McDonald's, then McDonald's will increase the price of a Big Mac and the end result is that while minimum wage people have more money in their pockets, they can't buy more than before. They can afford the same stuff with a bigger price tag and no one's economic circumstances change. There is nothing wrong with working at a fast food place or Wal-Mart, but a cashier at Wal-Mart probably shouldn't make as much as the guy who programs their supply chain software. This is why basic economics should be a requirement for every student, because it might just stop leftists from employing class warfare tactics and raising taxes. Here is the truth:

Raising taxes on the rich and on corporations does not help the "little guy", it just makes Washington more powerful

That is it. That is why the war on poverty, going on four decades long and billions upon billions of dollars, hasn't made a dent in poverty. So before we go after the oil companies, remember this: they will pass the higher tax costs on to consumers and we will all suffer at the pump. This was a great comment and an important fact in a Wall Street Journal this weekend, Windfall Profits for Dummies. First, the facts about oil company profits:

Exxon's profits are soaring with the recent oil price spike, but the energy industry's earnings aren't as outsized as the politicians seem to think. Thomson Financial calculates that profits from the oil and natural gas industry over the past year were 8.3% of investment, while the all-industry average is 7.8%. And this was a boom year for oil. An analysis by the Cato Institute's Jerry Taylor finds that between 1970 and 2003 (which includes peak and valley years for earnings) the oil and gas business was "less profitable than the rest of the U.S. economy." These are hardly robber barons.

Second, the truth about how inane the idea of socking it oil companies is:

This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don't want more production to increase supply. They want oil "independence" but they've declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?

No one likes higher gas prices, but the other option is riding your bike to work. Someone needs to figure this out. Unless it becomes economical to make more fuel efficient cars or we decide to tap our own oil resources (like a certain refuge in Alaska that 99.9999% of Americans will never visit and couldn't find on a map), we will have this instability in oil prices. Corporations are not evil, they just exist to provide a product or service at a profit. Bureaucrats in Washington? They might be evil...