The Wall Street Journal’s editorial, “Oil Refinements,” pokes fun at and holes in the logic behind yesterday’s House hearing on gas prices. We’ll paraphrase: House Member A: Gas prices are too high! Outrage! House Member B: We need to discourage oil consumption through market mechanisms!
Or is that also House Member A?
A few facts, summarized by the Journal:
About 70% of the price of gasoline is determined by the global price of crude, which is rising because of world-wide demand and volatility in the commodities markets, not to mention the Federal Reserve’s easy-money policy. Congress might also look to its gas mandates and the corset it has laced around domestic production.
It’s true that industry profits are at a record high, but oil is a classic boom-and-bust business, which is why billions in capital investments are folded back into exploration and production. Besides, the industry’s effective tax rates are in the neighborhood of 40% to 44%. Over the past five years, Exxon Mobil’s total U.S. tax bill exceeded its U.S. revenues by some $19 billion.
Other coverage and commentary:
Latest posts by NAM (see all)
- Manufacturers Win Several Website Design Awards - June 15, 2011
- China Makes Commitments on Trade, Intellectual Property - December 16, 2010
- ITC Details Widespread Theft of Intellectual Property in China - December 14, 2010