Wednesday, April 26, 2006

Oil Company Profiteering

I have very mixed feelings about the subject of price-gouging on the part of oil companies. On the one hand, I'm sympathetic to those who are outraged that these companies are making record profits off of the misery of consumers who are paying $3.00 per gallon. But on the other hand, it seems to me that high gasoline prices are actually the quickest way to get Americans to curtail their dependence on oil and to encourage them to look for alternatives. So there is a part of me that is glad the prices are so high.

On the other hand, both Democrats (Nancy Pelosi, Chuck Schumer) and Republicans (President Bush, in particular) have given "I feel your pain" speeches about gas prices and have promised to do something. The Democrats want to make price-gouging illegal, and force the oil companies to lower their prices. The Republicans want to lower prices by (1) weakening environmental regulations, (2) opening up ANWR for oil drilling, (3) cut back on our contributions to the strategic oil reserves. Bad ideas all, in my opinion.

I'm not sure what is the right policy. Perhaps let the oil companies whatever they like, and then slap a huge windfall profits tax on them, the proceeds going to energy independence efforts?


Blogger Kyle McCullough said...

The windfall profits tax is a pretty good way to go, but I have to disagree with you on the stratigic reserve. There is some reason to believe that these high prices are temporary--not that they'll be lower a few years from now, but they are likely to be lower a few months from now. In that case, it makes sense to sell off some of the reserve now, and replace it when prices are lower.

11:24 PM  

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