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Lloyd Chapman: Still No Windfall Profits Tax From Obama After Oil Tops $80 Per Barrel

January 6th, 2010, 04:01 am admin Leave a comment Go to comments

In the two years running up to the 2008 presidential election, President Barack Obama routinely promised to enact a windfall profits tax on the oil and gas industry to fund a $1000 per household energy rebate. Shortly after being elected, President Obama quietly dropped the promise from his agenda. An anonymous transition team staffer tried to justify the decision by stating, “President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel. They are currently below that now and expected to stay below that.” http://www.reuters.com/article/idUSTRE4B206W20081203

On Monday, the price of crude oil topped $80 per barrel, reaching $81.39, according to a Bloomberg energy report. Many experts are predicting that oil could top more than $100 per barrel in the first half of 2010. http://www.bloomberg.com/energy/

“I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills,” President Obama said in a statement released in June of 2008. http://www.reuters.com/article/idUSWAT00963020080609

Prior to the 2008 presidential election, President Obama’s promise to implement the tax was displayed prominently at the top of the “Economy” section of the Obama-Biden campaign website. On November 6, President-elect Obama rolled out his transition website, Change.gov, which also displayed the promise. However, within 48 hours of being elected the campaign promise was quietly removed without explanation. (Pre-change, http://www.asbl.com/documents/Economy_Change.pdf ; Post-change, http://change.gov/agenda/economy_agenda/)

Proponents of the tax maintain that the oil and gas industry has gouged the public at the pump to reap excessive profits for nearly a decade, even with barrel prices in the $20 range. In 2003, when the average price of a barrel of oil was $30.06, big oil companies reaped record profits. http://www.eia.doe.gov/emeu/international/crude2.html In January of 2004 the Associated Press (AP) reported that Exxon-Mobil earned $21.51 billion in profits during fiscal year (FY) 2003. At the time the mark nearly doubled the company’s profit during FY 2002. http://www.washingtonpost.com/wp-dyn/articles/A60862-2004Jan29_2.html

Responding to the abrupt and unexplained disappearance of President Obama’s campaign promise, in a December 2008 blog, columnist David Sirota wrote, “If oil prices are down and oil industry profits are truly down, what’s the harm in passing a windfall profits tax?” http://www.ourfuture.org/blog-entry/2008124903/mandate-watch-obama-backs-promise-pass-windfall-profits-tax-big-oil

Implementing a windfall profits tax on the oil and gas industry is a reasonable, efficient and effective means of keeping energy costs down and helping American businesses and families. Now that oil has topped $80 per barrel, it will be interesting to see what President Obama’s new excuse is going to be for not honoring his campaign promise.

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