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Letter: Maybe it’s time to tax oil companies’ excess profits

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Posted: Thursday, May 15, 2014 12:00 am

I read in the Sunday Record how the United States has an over abundance of oil in this country, and how most economists think we should export a lot of it to stimulate our economy. They say we have 20 billion barrels of oil in North Dakota alone, and that we have only taken 1 billion barrels out of the ground — each barrel equals 55 gallons of oil. So my question? Why am I now paying over $4 per gallon for gas when it was only $3.50 per gallon just three months ago?

It seems like the oil companies are never satisfied no matter how exorbitant their profits are. Even though they have this glut of oil in the United States, they are still pushing for a pipeline to bring even more oil in from Canada. This is in addition to the pipelines we already have from Canada. I am not opposed to the pipeline because I think we should have it for the future, but just recently there was a postponement in its approval and that is when the price of gasoline began to skyrocket.

And even after the pipeline is approved, they will probably continue to raise the price of gas using the excuse that they have to pay to install the pipeline. The oil companies have been holding this country hostage for far too long and at some point this needs to stop.

During the Carter administration, when Congress had the fortitude to do something to help the middle class, they passed an “excess profits tax” on the oil companies that brought gas prices down almost immediately. I think it is time to put that tax back on and stop the oil companies from gouging the American people.

Karl M. Welsbacher Jr.


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  • Eric Barrow posted at 7:56 am on Mon, May 19, 2014.

    Eric Barrow Posts: 1604

    Nothing? That's how we pay for the roads you drive on. It actually seems quite fair those who use the roads the most pay the most, have any better ideas on how to pay for road construction and maintenance?

  • Jerome Kinderman posted at 10:07 am on Sat, May 17, 2014.

    Jerome R Kinderman Posts: 2370

    So, what do oil companies actually do for those "excessive profits?" They find the oil; they get it out of the ground (or the ocean bed); they get it to the refinery; they refine it; they store it; they get it to the various stations; they make it available to the consumer.

    What does the government actually do for those "excessive taxes" applied at the pump? Nothing.

  • Brian Dockter posted at 7:00 pm on Fri, May 16, 2014.

    Brian Dockter Posts: 2866


    Exxon is a huge company. What part of "there's a lot of money being generated by the sale of oil" don't you understand?

  • Brian Dockter posted at 6:57 pm on Fri, May 16, 2014.

    Brian Dockter Posts: 2866

    -Jien Kaur,

    We're talking profit margins. Sorry you're so up in arms about a meager 6.1%.

    Here’s What the Oil Industry’s Profit Margins Are Telling Us

    Read more: http://wallstcheatsheet.com/stocks/heres-what-the-oil-industrys-profit-margins-are-telling-us.html/#ixzz31vxD7hVv

    A clip:

    All of which brings us to a recent post by the brilliant host of the Carpe Diem blog, Professor Mark Perry. In analyzing the profits of ExxonMobil (NYSE:XOM), profits thought by many in Washington to be “excessive”, Perry made the essential point that “The 6.1% average profit margin for Exxon’s industry “Major Integrated Oil and Gas” ranks #112 among all industries for the most recent quarter”. In short, for all the media and political hype about price-gouging oil (NYSE:USO) companies enjoying gargantuan profits, the actual truth is that the industry’s margins are rather pedestrian.

  • Ed Walters posted at 2:23 pm on Fri, May 16, 2014.

    the old dog Posts: 637

    These posts seem to center around Government subsidies along with tax breaks. One of the biggest tax breaks and subsidies will be Moonbeans train to nowhere. At a predicted cost of $68 billion dollars, to believe passenger fees will pay for the cost, no way, thats where the US government will subsidies the ridership fees, just as it does for Amtrack. The airlines are not subsidies. Most if not all oil companies are owned by the 99%, and look forward each month to a nice dividend check, and one reason people invest in the oil companies to begin with. I have a suggestion for all people who hate oil companies, go green and plug in.

  • Jien Kaur posted at 11:11 am on Fri, May 16, 2014.

    Jien Kaur Posts: 372

    Seems Mr. Welsbacher has done his research contrary to the comments made by an individual who hasn't done his own homework.

    And we are talking profits here, not gross income - in other words, just the gravy.


  • Eric Barrow posted at 10:45 am on Fri, May 16, 2014.

    Eric Barrow Posts: 1604

    Profit margins may be slim but the top producers did net 90 billion last year I hope they don't feel the pinch to bad. Another way to look at it is that there profits were down from previous years so we could say that their profits were reduced by almost thirty percent in 2013 that's a loss of 30 billion dollars how will they ever survive? Maybe if we could find it in our hearts to give them more tax breaks and subsidies they will find a way to survive on ten or twenty billion a year.

  • Kevin Paglia posted at 10:42 am on Fri, May 16, 2014.

    Kevin Paglia Posts: 2106

    I believe that ANY company that is getting Government subsidies, tax breaks or other tax payer funded incentives AND still paying out HUGE bonuses to the CEO's and such should lose the amount in bonuses paid in the next round of tax payer hand outs.

    So if they get $10billion in subsidies and tax breaks, and pay out 5 billion in bonuses then next year they only get $5 billion from tax payers.

  • Brian Dockter posted at 7:52 am on Fri, May 16, 2014.

    Brian Dockter Posts: 2866

    Karl M. Welsbacher Jr.,

    Oil companies make a lot of money. But when all is said and done, their profit margins are very slim. I f you had actually done some research you would have found this out. But then you couldn't have honestly said the contrary. It seems to me the sole purpose of your letter is to demonize oil companies.

  • Christina Welch posted at 9:42 pm on Thu, May 15, 2014.

    Christina Welch Posts: 460

    As a commuter, I am definitely feeling the pinch of high gas prices and I agree that something needs to be done. I don't know that an excess profits tax is the way to go, as the one enacted under Carter created some negative consequences that we deal with to this day, such as growing our dependence on foreign oil. It is a complicated issue and one with uncontrollable factors as global supply and demand, but it is an issue that I definitely hope to see our leaders address soon before we're looking at $5 a gallon!


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