27069792
The morning paper included an angry column by Steven Milloy, who publishes the conservative Web site JunkScience.com where he complains about the increasing calls for windfall profits taxes on oil companies.
In case you missed it, the third-quarter earnings for 2005 are out and they show Exxon-Mobil making the largest corporate profits ever, some $9.92 billion. Not far behind were $9.03 billion for Royal Dutch Shell and $6.53 billion for British Petroleum.
Sen. Hillary Rodham Clinton is leading the charge. In a series of speeches she cited the profits and declared, "If we don’t fight Big Oil, this country’s going down." Sen. Byron Dorgan of North Dakota would take 50 percent of the profits on barrels of oil sold for more than $40.
Sounded sensible to me, but Milloy called the idea of taxing oil company profits "nonsensical." He actually said this: "Allowing windfall profits … is vital to letting the market adapt to changing conditions, which is in the best long-term interests of consumers."
Milloy also hates the idea of high gasoline taxes, claiming they’ve stagnated European economies. Nonsense. High taxes will allow Europe to survive the coming oil peak in far better shape than the utterly car-dependent U.S.
Right now, federal and state taxes are 27 percent of what you pay at the pump, so at $2 a gallon they’d be just more than 50 cents. Not a huge cut. In Amsterdam, they pay $7 for a gallon of gasoline, despite the same basic price for a barrel of oil. Sixty percent of Europe’s gas price is tax. Stephen Glaister of London’s Imperial College points out to the Christian Science Monitor if fuel prices go up 10 percent, fuel consumption goes down seven. European per capita gasoline consumption is a fifth of the U.S.
Syndicated conservative columnist Charles Krauthammer notes high fuel costs had driven the average weight of American cars from 4,000 pounds in the mid-’70s to 3,202 pounds in 1981.
"Rational consumer reaction to high prices," he says, "had actually solved the energy crisis. We had OPEC on the run" – and oil prices dropped to $7 a barrel.
Krauthammer says we need a tax to "depress consumption, maintain consumer demand for fuel efficiency and, most important, direct much of the pump price into the U.S. economy." Well said.
Another approach I like, favored by environmentalists, is to provide tax benefits for cleaner cars, like hybrids, and tax the gas guzzlers. Connecticut is considering just such a precedent-setting law, known as Clean Cars 2, which would give a sales tax reduction of 1 to 3 percent of the purchase price to cleaner vehicles (hybrids are already exempt from tax) in every category, while simultaneously imposing a 1 to 3 percent additional tax on big SUVs and other gas guzzlers.
A law like that would put a lot more people into sensible vehicles like the Honda Accord Hybrid I’m driving this week. Here’s a vehicle with a 255-horsepower V-6 (offering more power than the standard V-6 Accord) and yet it gets 29 mpg in town and 37 on the highway. A year’s gas will cost $842. It would get better mileage if Honda was not emphasizing performance over economy.
The Accord is fun to drive, roomy, has all the options people like (including navigation on my $32,505 car) and a CD changer. You notice the engine shutting off at stoplights, but it’s a great feeling. All the cars around you are burning gas, while you’re not. With a few tweaks, including higher federal gas taxes, smart state laws and the continued contribution of rapacious oil companies, we’ll all be driving hybrids.
