Oil Companies and Windfall Tax

Parent Cafe
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<p>BCEagle91:</p>

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<p>How isn’t Vista innovative? Is it similar to older versions of Windows? Not really.</p>

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<p>What are you trying to say? Just because a company uses computers to operate doesn’t mean it is a technology company.</p>

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<p>All of their innovations merely result in more efficiency–which is good. </p>

<p>However, for the most part, ineffeciency is not what is driving up oil prices around the world; it’s the size of the present and future supply and demand.</p>

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<p>49% (ten char.)</p>

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<p>yup, it was the traffic controllers and a public not private. The point about one being legal and the other illegal seems irrelevant, because our government breaks the law continuously.</p>

<p>Both are situations creating havoc in the country on a large scale.
Reagan didn’t have to act, and the consequences of his actions aren’t good today. They seem like good analogies of a government acting on a large scale. I couldn’t think of another.</p>

<p>But the major point is our government is giving money to the oil companies, who surely don’t need it, and there are multiple reasons why oil is so high now, that the government can regulate legally.</p>

<p>Your two posts seemed to argue for and against the issue. My apologies if I misunderstood.</p>

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<p>The argument for a windfall profit tax is so absurdly weak. The integrated oil giants have margins of ~10%. Why is oil singled out for being so profitable, other companies are <em>far</em> more profitable. Microsoft, Google, Goldman Sachs. Can we slap them with some taxes as well?</p>

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<p>Oil companies have an obligation to their shareholders. They have to maximize their value to benefit shareholders. The government has no right to tax them on “windfall” profit. The government has the right to eliminate any subsidy it gives to the companies.</p>

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<p>If you are going to hit industries with windfall taxes when times are good doesn’t that mean that when times are tough the the gov’t should prop them up? </p>

<p>I don’t think the gov’t has any right to exercise additional taxes on any industry or company. All should be taxed fairly and equally. IMHO there shouldn’t be any corporate taxes at all but we know that would be way too good for the economy to make sense.</p>

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<p>“I prefer to look holistically at the numbers. In the 2nd quarter of this year, Exxon posted about $10 billion in profit. So that R&D figure for 12 months of last year is a drop in the bucket. Like I said, just enough to look like they’re doing something.”</p>

<p>Sorry, I don’t consider $1.5 billion a drop in the bucket.</p>

<p>“Shareholders could care less about the future of energy; they care about quarterly profits.”</p>

<p>Are you a shareholder? I have a banker friend and he spends two weeks each year in Hawaii windsurfing. He stays with a friend who has a place there. His friend was left a trust fund in the high-tens of millions of dollars and he lives off of the dividends from the companies in the trust funds. It all mostly in oil companies.</p>

<p>Warren Buffet buys the stock of blue chip companies and hangs onto them for long periods of times. Sometimes they get bought out like Anheuser Busch and Gillette. Sometimes not like Coke. And sometimes he just buys the whole company.</p>

<p>Perhaps you could say that traders don’t care that much. But there are those that don’t want to incur capital gains taxes on their wealth that hold on for the long haul.</p>

<p>“Shareholders only provide the incentive to do less drilling, less R&D and more manipulation of the market to ensure the highest profit the market will bear. Long-term shareholder value is secondary to current value (as in this year and next); when we are talking about the incentive for oil companies to invest in non-oil-related science, the long-term becomes very long indeed.”</p>

<p>Prices are set in the commodity markets; the companies don’t set them.
Perhaps you are used to short-term thinking. I assure you that not everyone else is.</p>

<p>“Sorry, but I’m not willing to place our country’s future welfare and economy in the hands of the current shareholders of Exxon/Chevron, etc… Using taxes to fund real R&D into clean, renewable, cheap/free energy is a government role if there ever was one.”</p>

<p>If you don’t like the current state of oil companies, start your own. There has never been a better time.</p>

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<p>“If you are going to hit industries with windfall taxes when times are good doesn’t that mean that when times are tough the the gov’t should prop them up?”</p>

<p>The energy industry had quite the bear market from the 1980s to about 2001. I don’t think that anyone was particularly interested in bailing the energy industry out like they are today with Fannie, Freddie and all of the banks that made terrible decisions. Or with homeowners that made terrible decisions too with their personal finances.</p>

<p>We all like what we buy to be cheap relative to our income. Well, many industries are cyclical. Commodities tend to follow a particular cycle and we’re in the expensive part of the cycle now.</p>

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<p>“How isn’t Vista innovative? Is it similar to older versions of Windows? Not really.”</p>

<p>I bought a new Vista system two weeks ago. It has crashed several times. Vista uses 1.4 GB of RAM - just for the operating system. Windows XP used about 250 MB of RAM. Vista requires far more hardware resources. There are compatibility issues with older hardware - particularly in drivers. Vista has been generally acknowledged to be a disaster.</p>

<p>“What are you trying to say? Just because a company uses computers to operate doesn’t mean it is a technology company.”</p>

<p>Do you understand what technology is? Do you understand WalMart’s innovative use of MIS technology to create a large technical advantage for itself? Technology and competitive advantage don’t just materialize out of thin air.</p>

<p>"All of their innovations merely result in more efficiency–which is good.</p>

<p>However, for the most part, ineffeciency is not what is driving up oil prices around the world; it’s the size of the present and future supply and demand."</p>

<p>So you’ve examined all of the patents of the oil companies and have determined that they only result in more efficiency? I’d say that learning how to do deep-sea drilling is no piece of cake.</p>

<p>If you don’t like the prices, use less. Fix the supply and demand problem from the demand side.</p>

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<p>BC, this is like trying to argue religion with a zealot. Facts and common sense don’t come into play. All that matters is what they want to believe is true.</p>

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<p>Many people believe that technology just magically comes from someplace. And that people using computers are doing anything related to technology.</p>

<p>In other threads, it has been very hard to explain what computer science is to those outside the field. Management Information Systems is a bit easier to explain to those with a business background. But many don’t understand that the use of technology can be a technology itself.</p>

<p>I’ve read annual reports from energy companies and some of these help you to appreciate what these companies do - what the men and women of the companies do - and it’s real work. In most cases, really hard work that most here wouldn’t do. Yet we demand that their work product be cheap. I guess I’d like car prices to be back to where they were in the 1980s too. But the people that make the cars would have a problem with that.</p>

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<p>Chevron is a leader in producing alternative energies.</p>

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<p>Just so you know, writing in a condescending tone doesn’t make you right. Grow up and learn how to have a discussion with someone who disagrees with you. As you should know by now, there is often more than one side to an issue.</p>

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<p>What in the world does this have to do with innovation? Just because you had a hard time with it it’s not innovative? Just because it takes up more RAM than XP means it’s not innovative? So I guess that means you think that XP isn’t innovative either since it takes up more RAM than Windows 98 does?</p>

<p>Look, Vista is innovative in that it is Microsoft’s latest major revision of Windows.</p>

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<p>Just because a company uses technology in its operations does not mean that it is in the tech sector.</p>

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<p>Why would look through all of the patents when I have inferencing skills to make use of?</p>

<p>Until the oil companies learn how to create oil, all of their innovations will be geared towards drilling/distributing/etc. more efficiently.</p>

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<p>Uhhh… Not sure if anyone disagrees with this.</p>

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<p>“Just so you know, writing in a condescending tone doesn’t make you right. Grow up and learn how to have a discussion with someone who disagrees with you. As you should know by now, there is often more than one side to an issue.”</p>

<p>It doesn’t make me wrong either.</p>

<p>“What in the world does this have to do with innovation? Just because you had a hard time with it it’s not innovative? Just because it takes up more RAM than XP means it’s not innovative? So I guess that means you think that XP isn’t innovative either since it takes up more RAM than Windows 98 does?”</p>

<p>As I said before, Vista is generally acknowledged as a failure. The innovation in Windows XP is that it’s a real operating system with roots from Digital Equipment Corporations VAX/VMS operating system. Bill Gates hired Dave Cutler and he “built” a real operating system for Microsoft. It would take considerable time to go over Vista issues but you could just do that with a little research on Google.</p>

<p>“Look, Vista is innovative in that it is Microsoft’s latest major revision of Windows.”</p>

<p>A ridiculous statement. If you want to see innovation, look at Leopard. Microsoft is just trying to play catchup with Apple.</p>

<p>“Just because a company uses technology in its operations does not mean that it is in the tech sector.”</p>

<p>Strawman argument. It is a technology company. All large and successful companies today have to make innovative use of technology. As I said, read about how WalMart uses technology.</p>

<p>“Why would look through all of the patents when I have inferencing skills to make use of?”</p>

<p>You made a forall proposition. The burden of proof rests on you to authenticate your premise.</p>

<p>“Until the oil companies learn how to create oil, all of their innovations will be geared towards drilling/distributing/etc. more efficiently.”</p>

<p>So Exxon-Mobil doesn’t hold a bunch of patents on lubrication?</p>

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<p>“Until the oil companies learn how to create oil, all of their innovations will be geared towards drilling/distributing/etc. more efficiently.”</p>

<p>Have you heard of Oil from sand and rocks(shale)?</p>

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<p>Suppose that an oil company doing Big Business in USA is foreign? Would that oil company US subsidiary enjoy what ever incentives and preferences afforded to US domestic companies?</p>

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<p>BC, please don’t tell me that energy companies don’t manipulate markets. I live in California and I remember eight years ago when energy companies colluded to manipulate the market, inflating electricity prices and causing blackouts throughout our state. The oil market is influenced by demand obviously and supply, which is manipulated by the oil companies (along with other factors such as weather, geopolitics, etc…). </p>

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<p>I don’t mind the current state of the oil companies, actually, because I believe in a free market and I respect the resources that they have provided us. However, government regulation of certain aspects of the free market is a good thing and government investment into freeing consumers from dirty, non-renewable, expensive energy is a great thing.</p>

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<p>The burden of that gov’t investment should be shared the same as every other facet of gov’t spending. If the gov’t wants to improve the highway system they place a tax on the end user of the system (fuel taxes, etc…) or takes it from the general fund. They don’t tax the asphalt producers to get the money. I don’t see the gov’t forcing microsoft to find the next best thing in software or Merck to work towards things that could potentially allow someone else to put them out of business. If a company finds a cure for cancer they will not be forced to give it away.</p>

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<p>“BC, please don’t tell me that energy companies don’t manipulate markets.”</p>

<p>Strawman. I said that energy prices are set in the commodity markets. If there is manipulation, it will eventually fail as increased prices result in reduced demand.</p>

<p>“I live in California and I remember eight years ago when energy companies colluded to manipulate the market, inflating electricity prices and causing blackouts throughout our state.”</p>

<p>Were these on public exchanges or private exchanges? I know about the Enron manipulations but don’t recall collusion between them and other companies. Do you have specifics on collusion?</p>

<p>“The oil market is influenced by demand obviously and supply, which is manipulated by the oil companies (along with other factors such as weather, geopolitics, etc…).”</p>

<p>Manipulated? How? Specifics please. Do you trade? There is manipulation in every market but overall price discovery works. If you withhold supply, you make less money as there is less volume. And there are other players that will fill that demand.</p>

<p>“I don’t mind the current state of the oil companies, actually, because I believe in a free market and I respect the resources that they have provided us. However, government regulation of certain aspects of the free market is a good thing and government investment into freeing consumers from dirty, non-renewable, expensive energy is a great thing.”</p>

<p>There already is government investment in a whole bunch of areas. Just go down to your local state university and check out the research work done there. But I don’t understand why some people want to tax the oil companies far more heavily than other companies - even as the margins on oil companies is far lower than most other categories of companies.</p>

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<p>For those interested: </p>

<p>[What</a> Is a ‘Windfall’ Profit? - WSJ.com](<a href=“http://online.wsj.com/article_print/SB121780636275808495.html]What”>http://online.wsj.com/article_print/SB121780636275808495.html)</p>

<p>[IBDeditorials.com:</a> Editorials, Political Cartoons, and Polls from Investor’s Business Daily – Profits Of Doom?](<a href=“http://www.ibdeditorials.com/IBDArticles.aspx?secid=1501&status=article&id=294534501962503&secure=1&show=1&rss=1]IBDeditorials.com:”>http://www.ibdeditorials.com/IBDArticles.aspx?secid=1501&status=article&id=294534501962503&secure=1&show=1&rss=1)</p>

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<p>Are his economic advisors aware of the Congressional Research Study study of the last windfall tax on oil companies? </p>

<p>I think this issue is polling well so he decided to push it.</p>

<p>This is an explanation of the study:
[The</a> Tax Foundation - Oil Company Profits and Tax Collections: Does the U.S. Need a New Windfall Profits Tax?](<a href=“http://www.taxfoundation.org/news/show/1168.html]The”>http://www.taxfoundation.org/news/show/1168.html)</p>