Oil Company Tax Hikes Lead to Less Supply – Not More

Ever since Exon Mobil and the other major oil companies announced their most recent corporate earnings, Democrats, from Obama on down, have been drooling all over themselves at the prospect of hiking taxes on the country’s domestic hydrocarbon-based energy producers. They have even gone so far as to assert, stupidly, that raising oil company taxes would lead to reduced prices for gasoline at the pump. This despite the fact that no one seems able to explain how raising the cost of an item results in a greater supply and a lower price.

Over at his blog, Carpe Diem, economics professor Mark Perry notes a report from the UK demonstrating that Obama and the Democrats don’t know what they’re talking about, and that raising taxes on oil production companies only leads to reduced supply and higher prices.

North Sea oil production has slowed to its lowest level since records began 15 years ago following the Chancellor of the Exchequer’s recent tax raid on the industry. An update from the U.K. Department of Energy yesterday showed the biggest fall in oil production since quarterly records started in 1995. Gas production fell 17.6 per cent from a year ago.

The slowdown follows the Chancellor’s controversial Budget decision to increase the supplementary tax on North Sea Oil production to 32 per cent from 20 per cent to pay for a cut in petrol duty. The Chancellor’s decision drew an industry-wide outcry and claims that mature fields would be closed.

An Oil and Gas UK survey warned that a quarter of 240 potential projects in the North Sea were less likely to go ahead after the tax increase.

The British government has stated that production levels will increase, returning to pre-tax increase levels, however industry officials are denying the government’s misplaced optimism

Says Professor Perry:

Let this be a lesson to the Senate Democrats who are proposing to burden (punish?) America’s five biggest oil companies with $21 billion in additional income taxes over the next decade.

Increasing oil production costs by hiking taxes simply won’t lead to increased supply or lower prices, no matter what Obama and the Democrats say to the contrary.

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  • SigFan

    Of course, since Obama and the left’s objective is to raise fuel prices and choke off supply, then raising taxes on the oil companies is one tactic they haven’t tried yet.  Nearly every single thing he has done has resulted in the exact opposite of his stated intent – and that is the classic result of liberalism.  The amazing thing is that there is anyone remaining who believes a word he says.

  • robert108

    This fact is obvious from an understanding of the Law of Supply, Demand and Price, but the Dems think they can suspend that law for their own political purposes.  The real motive for raising taxes on “the rich” is simply to implement forced redistribution of wealth, the cornerstone of Marxism.  Dems don’t care that it will raise prices for consumers; for them, it’s just a matter of “basic fairness”.  We don’t really need a good supply of efficient energy, anyway; it’s “bad for the planet”.

  • SigFan

    Yastrow predicts that we are on the verge of another great depression.

    http://www.cnbc.com/id/43236764

    Looks as though Obama’s plans are progressing just the way he wants them to.

  • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

    This from Pox’s second largest share holder and funder of the Lower Manhattan Mosque

    We don’t want the West to go and find alternatives, because, clearly, the higher the price of oil goes, the more they have incentives to go and find alternatives,” said Talal, who is listed by Forbes as the 26th richest man in the world.

    Saudi Prince Al-Waleed bin Talal

    Interesting, no?

    • Bat One

      Not particularly, no!  What else would you expect him to say?  It certainly doesn’t justify hiking taxes on oil companies, nor does it lend credibility to the Democrats’ stupid notion that raising oil company taxes will increase supply and decrease the retail price of gasoline.

      • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

        Not that anyone would expect you to understand, BO, but it does mean that by developing alternatives to fossil fuel we can begin to cut the strangle hold of foreign oil.

        Jimmy was right.

        • Bat One

          So, you are acknowledging now that increasing taxes on oil companies would actually raise the cost of production and thus limit the available supply while increasing the retail cost f oil-based products, including gasoline?  Good for you!

          But then why would Obama suggest otherwise?

        • robert108

          If there were actual viable energy sources other than the ones we use so successfully, we would be using them, and no govt force would be necessary.  Carter made us more dependent on foreign oil, instead of using our domestic sources.  Because of him, we have lost trillions in income and billions of jobs.

          • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

            Big 180 McCain voter, no we didn’t and your head in the sand position is noted.

          • robert108

            Too bad you can’t do arithmetic, either, drama queen.  You know nothing of economics.
            All you can do is lie, deny, and personal attack.

      • ellinas1

        “the Democrats’ stupid notion that raising oil company taxes will
        increase supply and decrease the retail price of gasoline.”

        Where the hell you got this from?

        • Bat One

          Please pay attention.  You can start here (http://sayanythingblog.com/entry/obama-plans-to-increase-domestic-oil-production-with-lawyers-and-higher-taxes/).  The video should help.  If you need more sources, do let me know.

          • ellinas1

            I paid attention. The video did not help.
            I have not heard one copulating Democrat, liberal, progressive, socialist, marxist, communist and whatever other names you call us make the claim that: ” raising oil company taxes will
            increase supply and decrease the retail price of gasoline.”

            Simply put it ios my opinion that you felating gerbils made up the “quote”.

            I need not many sources, but just one where someone clearly claims/says: “raising oil company taxes will increase supply and decrease the retail price of gasoline.”

      • ellinas1

        “Not particularly, no!  What else would you expect him to say”

        I would expect him to say, that raising taxes on oil production companies only leads to reduced supply and higher prices.

        • Bat One

          As smart as Obama is supposed to be, I would have expected him to say much the same thing.  But he didn’t.  I guess that’s just one more lie we can chalk up to “Dear Leader.” huh?  Or does he really no know shit about economics and how markets work?

          • robert108

            He doesn’t care about the consequences of his insane economic policies on the American people; his guiding principle is “basic fairness”, as defined by Karl Marx.

          • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

            Noted Marl Marx efficianados:

            Our public interest depends on private character, on civic duty and family bonds and basic fairness, on uncounted, unhonored acts of decency which give direction to our freedom.

            To me our country is a living, breathing presence, unimpressed by what others say is impossible, proud of its own success, generous, yes and naive, sometimes wrong, never mean and always impatient to provide a better life for its people in a framework of a basic fairness and freedom.

          • Neiman

            I will regret replying to such a loathsome character as you, so this is for others here not you.

            It is not what people say or even how well they say it, it is what they do in reality that counts. No one but a most hardened Leftist would say that the result of Marxist thought was ever, in any way good for people or ever advanced personal liberty.

            I said it elsewhere, but I repeat the example here: The best sermon I ever heard on the Holy Spirit was by a Mormon Bishop, it was nearly perfect, very beautiful in its construction, incredibly faithful to the Bible; and yet, they serve another Christ, a false Christ that is the brother of Lucifer, conceived by a God that has sexual relations with female gods to reproduce and on and on I can document that it is a wholly false religion. Cloaked inside the wonderful, glorious rhetoric is a terrible lie, a lie that deceives and garners souls for hell fire.

            In a similar way, Lord Obama has given many speeches that I felt at the time were nearly perfect in expressing my own beliefs and those of the Founding Father’s, faithful in so many ways to conservatism, they were beautiful, well constructed, lofty, uplifting; but in reality, he is a Marxist who does not believe nor act according to one word he speaks, as his actions every day, in every way betray those words. Further, he is like the arch enemy of our souls – a beguiler, offering sweet words to cover over smaller, fewer words that are lies. The anti-Christ will speak in such a way, deceiving the whole world, even the elect if that were possible.

            So, my point is this: Whether it is Marx, Hitler, Satan or Obama, in my many decades I have learned that the sweeter, the grander, the more beautiful and uplifting the rhetoric, the more lovely the words and philosophy appear, the greater the danger to us all, as the truth does not need such flowery garments. The Apostle Paul, Moses and so many great saints bragged about their weakness in speech, their inability to speak grand words that the power of God would be displayed in their weakness.

          • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

            So Old Pal, you think President Obama and Satan are equally evil?

          • Neiman

            I said nothing like that, but you don’t want an answer or your would not curse me with “old pal.”

          • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

            Old Pal, these are your words:

            ” Whether it is Marx, Hitler, Satan or Obama, in my many decades I have learned that the sweeter, the grander, the more beautiful and uplifting the rhetoric, the more lovely the words and philosophy appear,
            the greater the danger to us all..”

            Do you think President Obama and Satan are equally evil?

          • robert108

            Cherry-picking to deceive, as usual for you.

          • Neiman

            He did not just cherry pick, he deliberately twisted the words to make them appear to mean something they did not mean in reality. It is one of his idiot tactics, he makes asinine, juvenile, idiotic remarks, knowing they are untrue to play the game of ridicule, when he is too stupid to understand he is only making a fool of himself.

            I learned a long time ago he does not want answers, he hopes that through silence and name calling he can delude himself into thinking he has won an argument. He calls me his pal knowing I am not his pal and will not play his damnable games.

          • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

            I’m sorry your own words condemn you, Old Pal.
            In the future, perhaps you should stop writing them.

          • Neiman

            It is official you are the stupidest man/woman, whatever you are – alive. You want a direct answer? No! You would rather call me names!

          • robert108

            Is a tiny lump of manure equally repulsive as the entire pile?  What a silly question!

          • robert108

            When Marxists like you and obama use the term “basic fairness”, you mean income redistribution, just like Karl Marx espoused.  Real “basic fairness” is a different thing entirely.
            Cherry-picking out of context to deceive, as usual.

          • ellinas1

            As smart as Bat One is supposed to be, I would have expected him to follow the flow of the debate.
            So let’s recap, for the mentally challenged:

            realitybasedbob quoted Saudi Prince Al-Waleed bin Talal:
             “We don’t want the West to go and find alternatives, because, clearly, the higher the price of oil goes, the more they have incentives to go
            and find alternatives,”
            then rbb asks: Interesting, no?

            To which Bat One replied:
            “Not particularly, no!”
            “What else would you expect him to say”

            Then I, ellinas1 replied: “I would expect him to say, that raising taxes on oil production companies only leads to reduced supply and higher prices.”

            Not hard to follow is it? An oil producer is concerned because higher prices may push the consumers to find alternate energy sources.

            The oil producers you quote, responded to the threat of higher taxation, with a thinly veiled threat  limiting output and driving the prices higher.

          • robert108

            Your buttbuddy the drama queen fails to mention the real solution: drill, baby, drill, for our own crude; that’s what your muslim buddies fear the most.  It solves our energy problems, our economic problems and our employment problems.  Of course, I don’t expect you to be able to know that.
            Nobody is “threatening”; it’s the reality of the Law of Supply, Demand and Price.  Study up, so you can stop making a fool of yourself.
            There are no viable sources of energy that don’t require massive subsidies forever. It’s a pipe dream.

          • mikemc1970

            Obama knows as much about economics as any law professor who has never worked in the private sector.

        • robert108

          Because it’s true.  Since you are ignorant of basic economics, it seems arbitrary to you.  Most of us know better.

  • http://www.bikebubba.blogspot.com bikebubba

    Lessee….does a supply curve trend upwards with price, or downwards……….an epic question, the answer to which evades all liberals, it seems.

  • Guest

    The Saudis are raising the price of oil to fund… gasp… social programs.  So are the other countries in the ME following the cute series of ‘revolutions’ or, astro-turf-olutions.

    • robert108

      No matter how you twist and spin, little sparkie, it’s time to change the decisions of the past that created this problem in the first place, and drill, baby, drill!

  • mikemc1970

    Liberals believe that raising tax rates actually raises the amount of tax revenue collected. There are still people who believe the earth is flat. What are you going to do, besides point and laugh?

    • robert108

      Typical Dem “solution”: the people have less money, and the price of gas skyrockets.

      • mikemc1970

        Democrats believe the world cannot operate without the infinite wisdom of government bureaucrats telling them how, when, and why.

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