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If government had its way, oil prices would be regulated and “excessive” profits taxed. The majority of Americans support higher taxes on the oil companies because of short-term self-interest. This is why many of the people who are protesting the healthcare bill are really protesting the possibility that their present government healthcare benefits will be cut. The majority of Americans like government subsidies—everything from public education to government subsidized and backed loans—when they benefit from them. They don’t like subsidies for others, and they don’t like corporations making so much money. High prices mean high profits, and high profits lead to inovation and ultimately lower prices, and that includes high oil profits. I read the following in the New York Times article “Oil Industry Sets a Brisk Pace of New Discoveries”:
The oil industry has been on a hot streak this year, thanks to a series of major discoveries that have rekindled a sense of excitement across the petroleum sector, despite falling prices and a tough economy.
These discoveries, spanning five continents, are the result of hefty investments that began earlier in the decade when oil prices rose, and of new technologies that allow explorers to drill at greater depths and break tougher rocks.
“That’s the wonderful thing about price signals in a free market—it puts people in a better position to take more exploration risk,” said James T. Hackett, chairman and chief executive of Anadarko Petroleum.
More than 200 discoveries have been reported so far this year in dozens of countries, including northern Iraq’s Kurdish region, Australia, Israel, Iran, Brazil, Norway, Ghana and Russia. They have been made by international giants, like Exxon Mobil, but also by industry minnows, like Tullow Oil.
The next time you read about “excessive” oil profits, remember where the profits are going.
“Keep Gitmo Open for Congress.”