Words of Wisdom from Green Bay

By April 10, 2007Energy

Smart editorial from the Green Bay Press Gazette questioning Wisconsin Governor Jim Doyle’s proposal to tax “Big Oil” while making it a crime for the companies to pass the increased costs onto consumers.

Of all of the new taxes and fees included in Gov. Jim Doyle’s 2005-07 budget plan, perhaps the most inexplicable is his 2.5 percent tax on oil company profits.

In a February meeting with the Press-Gazette editorial board, Doyle insisted the $272 million tax could be collected without passing the cost on to consumers in the form of higher gasoline prices. In fact, he said, his budget calls for hiring four auditors whose sole job would be to monitor gasoline prices and make sure the new tax is not included when companies figure how much to charge. That seems a quixotic task.

Quixotic is kind. Illegal, intrusive and anti-market are some other descriptions that come to mind.

We’ve been following the Wisconsin debate and a similer tussle in Pennsylvania because populist schemes like the governors’ tax plans tend to take on lives of their own and sometimes even find their way into law. But invariably their consequences discourage investment, hurt the consumer, and expand the role of government where the market works best. To wit, from the Press-Gazette:

“Oil companies won’t knowingly violate the law,” said Erin Roth, executive director of the Wisconsin Petroleum Council, but he also said the new tax would discourage oil companies from doing business in Wisconsin. And the losers would be independent marketers in rural areas who buy gasoline on the “spot” market.

It’s a popular political ploy to target “Big Oil,” but Dan Gunderson, a spokesman for the council, pointed out there are 3,300 retail gasoline outlets in Wisconsin, and not one of them is owned by a big oil company. Among the unintended consequences of the tax, he said, might be a reluctance to lower the price of gasoline — “because the minute you raise it back up, you invite scrutiny.”