Hospitals & Asylums
Oil Price Adjustment HA-7-11-05
Department of Energy Home Heating Bill Increases
Northeast 31.6% natural gas, 29.9% Heating Oil
South 56.2% natural gas, 33.2% Heating oil
West 33.6% natural gas, 37.0% heating oil
Oil company profits
Combined net incomes of the three largest publicly traded
2003 1sr quarter $10 billion, 2Q $7 billion, 3Q $7 billion, 4Q $9 billion,
2004 1Q $9 billion, 2Q $12 billion, 3Q $11 billion, 4Q $14 billion,
2005 1Q $13 billion, 2Q $14 billion, 3Q $17
billion.
The oil industry has
chosen to burden consumers in the USA by doubling gas prices from under $2 to
$3 per gallon. Congress must convince
big oil companies to reduce gas prices to before Hurricane Katrina rates. The increase in the price of gas is totally
artificial. The corporations express no
real need for this price increase. Insurance
companies covered the explosion in Texas and whatever was lost to this
Hurricane Season. Oil companies have
made it quite clear that they are not happy with the military coup in response
to Hurricane Katrina. The people make it
quite clear that they do not want to pay higher energy prices. To avoid harming the people let us come to an
agreement investing illict profits in US oil and returning gas prices to $1.50
per gallon and oil to $40 per barrel. The USA has a long tradition of taxing fuel
lightly and it would benefit no one to begin burdening the people with higher
rates of taxation in this time that has not yet recovered from two wars. We must make peace with the Oil companies by ratifying
the Kyoto Protocol,
planning to reduce emissions by 10% and impeaching Dick Cheney, Donald
Rumsfield, Michael Chertoff and Thad Allen.
Oil companies must not fight with US consumers but with the war
criminals, in power, who waste our tax
dollars, and lie about how rich they are.
Oil companies should reduce their rates to pre Katrina prices, there is
nothing to fear, from the people, nor from the economy, only from the laws of
the United States of America that do not necessarily smile upon revolutions
that harm the people.
By JEFFREY BALL
in Dallas, JOHN J. FIALKA in Washington and RUSSELL GOLD in Austin
Staff Reporter of THE WALL STREET JOURNAL
November 4, 2005; Page A4
The chief
executives of the nation's largest oil companies are expected to face tough
questions when they appear next week before two Senate committees, and even
some Senate Republicans are beginning to utter the "t" word long
forbidden in their party -- a new tax on the companies' outsize profits. But
don't shed any tears for the industry just yet.
The energy
industry -- which in the past two weeks has reported big third-quarter profits
from rising prices for crude oil, natural gas, gasoline and heating oil -- is
ramping up a lobbying and public-relations campaign to beat back the attacks.
And while a populist political penalty may clear the Senate, there's no sign
such measures are gaining in the more pro-business House of Representatives.
President Bush also remains opposed to any punitive action.
Indeed, for all
the political rhetoric attacking oil companies, the White House and
congressional leaders are still more likely to respond to high prices with
carrots long desired by the industry rather than sticks. The Senate yesterday
backed drilling in the Arctic National Wildlife Refuge. Another provision
moving through Congress would lift a 24-year moratorium on offshore drilling
around much of the U.S. Incentives for new oil refineries also have support on
the Hill.
The
administration's preferred response to high energy prices is to "encourage
the market processes to have an appropriate response, and not get in the way of
an appropriate market response," Treasury Secretary John Snow said in an
interview with The Wall Street Journal last week. He rejected the idea of a
profits tax, calling it "counterproductive -- I don't think it produces an
effective set of results."
To be sure, the
chief executives of Exxon Mobil Corp., Chevron Corp. and ConocoPhillips -- who
will appear Wednesday before a joint session of the Senate energy and commerce
committees -- will face a change in political rhetoric that's striking,
especially coming from a Republican-led legislature that has by and large been
loath to beat up on big business. It's no surprise that the minority Democrats
have spawned at least a half-dozen windfall profits tax proposals. But these
plans are luring some interest from Republican moderates in New England and the
upper Midwest, where a cold winter could push home heating bills between 47%
and 71% higher than last year, according to U.S. Department of Energy
projections.
Senate Budget
Committee Chairman Judd Gregg of New Hampshire announced last week that he is
taking a "serious look" at a measure that would tax oil-company
profits and give the revenue to a federal program helping low income families
pay heating bills. He said it was "infuriating that one part of the
economic sector is reporting record-breaking profits" while "the
public and our national economy are suffering under the huge burden of costs of
oil and gas."
Maine Republican
Sen. Susan Collins said in an interview this week she is also in favor of
tapping oil profits, or curbing oil tax benefits, to help the low-income
heating program. "I go home every weekend and this is absolutely the No. 1
issue in my state," she says. Senate Finance Chairman Charles Grassley of
Iowa, while rejecting calls for a tax, advised oil companies to damp the
political attacks by voluntarily contributing 10% of their profits to
low-income heating programs.
The oil companies
argue that surging prices are the result of growing world-wide demand, which
has strained the world's ability to pump and refine quickly enough, as well as
supply disruptions from the recent Gulf hurricanes. "Let's take a deep
breath here, folks. Let's look at the economics," said Kenneth Cohen,
Exxon's vice president for public affairs.
The
windfall-profit chatter is just one warning that Republican congressional
leaders, and energy companies, may be losing support on energy policy. Three
weeks ago, House Democrats came within two votes of defeating a House bill that
gave oil companies tax incentives if they invested in refinery capacity. House
leaders had to stage an unusual overtime, holding the vote count open for 48
minutes until enough laggard Republicans were rounded up to win.
This is the first
serious talk of a windfall-profits tax since the last one was repealed in 1988
at the request of President Reagan. The tax had originally been passed in the
waning days of the Carter administration as part of a compromise to end
Nixon-era price controls on oil.
One reason
legislators have been cool to the idea is that, despite the political appeal,
it didn't work so well the last time. A 1990 report by the nonpartisan
Congressional Research Service said the tax, which applied to domestically
produced oil, was a disappointment. It was expected to raise $393 billion, but
only generated $79 billion. It was expensive to administer. It lowered other
federal tax revenue from oil companies and, ultimately, made the U.S. more
reliant on imported oil, the study concluded.
"Our
reliance on imported oil is now approaching 60%, and we don't want to have an
excise tax that further aggravates that problem," warns the author of the
study, Salvatore Lazzari, an expert on energy tax law.
One version being
proposed now would impose a 50% excise tax on the sale of oil at prices above
$40 a barrel unless major, integrated oil companies invest the profit in expanding
refinery capacity or in exploration to find new domestic oil and gas supplies.
The tax revenues would be sent back to taxpayers in the form of a rebate check.
Mr. Lazzari says it would be better to impose a tax pegged to profits -- as
opposed to oil prices, the way it was done last time -- arguing that would do
less to discourage production.
Oil companies are
opposed to any windfall tax, and their lobbyists and publicists are now
shifting into high gear. Last week, when Exxon announced record third-quarter
net income of $9.92 billion, the company ran an ad in newspapers, including The
Wall Street Journal, headlined, "Oil and Apples," arguing that the
oil industry's profits "are not out of step with other major
industries." On Capitol Hill, Exxon lobbyists are holding meetings showing
slides arguing that the oil market is "competitive" and that the
company "prices gasoline responsibly at all levels."
The Exxon slide
presentation argues that the best way for the government to address the energy
crunch would be to allow drilling in new domestic areas and to cut red tape to
allow faster expansion of refineries. Many in Congress agree. The House is
expected to vote next week on a budget bill including a provision that would
end the federal offshore drilling moratorium, letting states decide whether to
allow drilling off their coasts. States, for the first time, would get a split
of royalty revenue from such drilling. The bill's language also would open the
Arctic National Wildlife Reserve to drilling, similar to the provision that
passed the Senate yesterday.
The 50% excise
tax on the sale of oil at prices above $40 a barrel unless major, integrated
oil companies invest the profit in expanding refinery capacity or in
exploration to find new domestic oil and gas supplies seems like the most
enforceable leverage the US Government can exercise against the explosively
renegade oil industry. The tax revenues would be sent back to taxpayers,
preferrably the poorest, in the form of a rebate check. It would be better to impose a tax pegged to
profits -- as opposed to oil prices, the way it was done last time -- arguing
that would do less to discourage production.
This is the first
serious talk of a windfall-profits tax since the last one was repealed in 1988
at the request of President Reagan. The tax had originally been passed in the
waning days of the Carter administration as part of a compromise to end
Nixon-era price controls on oil. The 1990
report by the nonpartisan Congressional Research Service said the tax, which
applied to domestically produced oil, was a disappointment. It was expected to
raise $393 billion, but only generated $79 billion. It was expensive to
administer. It lowered other federal tax revenue from oil companies and,
ultimately, made the U.S. more reliant on imported oil, the study concluded.
"Our
reliance on imported oil is now approaching 60%, and we don't want to have an
excise tax that further aggravates that problem," warns the author of the
study, Salvatore Lazzari, an expert on energy tax law.
The oil industry has
chosen to burden consumers in the USA by doubling gas prices from under $2 to
$3 per gallon. Congress must convince
big oil companies to reduce gas prices to before Hurricane Katrina rates. The increase in the price of gas is totally
artificial. The corporations express no
real need for this price increase. Insurance
companies covered the explosion in Texas and whatever was lost to this
Hurricane Season. Oil companies have
made it quite clear that they are not happy with the military coup in response
to Hurricane Katrina. The people make it
quite clear that they do not want to pay higher energy prices. To avoid harming the people let us come to an
agreement investing illict profits in US oil and returning gas prices to $1.50
per gallon and oil to $40 per barrel. The USA has a long tradition of taxing fuel
lightly and it would benefit no one to begin burdening the people with higher
rates of taxation in this time that has not yet recovered from two wars. We must make peace with the Oil companies by ratifying
the Kyoto Protocol and
impeaching Dick Cheney, Donald Rumsfield, Michael Chertoff and Thad Allen. Oil companies must not fight with US
consumers but with the war criminals, in power, who waste our tax dollars, and lie about how
rich they are. Oil companies should
reduce their rates to pre Katrina prices, there is nothing to fear, from the
people, nor from the economy, only from god who does not necessarily smile upon
revolutions that harm the people.
Write to Jeffrey Ball at jeffrey.ball@wsj.com, John J. Fialka at john.fialka@wsj.com and Russell Gold at russell.gold@wsj.com