Perhaps nothing illustrates better how Democrats don’t understand economics than the effort now underway to punish the oil companies for the current increases in gasoline prices. First suggested by President Obama, the Senate tried but failed to pass a bill taking certain tax breaks away from specific large oil companies.
The measure was defeated procedurally and may yet pass. It specifically targets the five largest oil companies and, since the tax breaks apply to most businesses, not just oil companies, was a blatant attempt to punish these companies for changes in the market, some of which are beyond the oil companies’ control.
Did it never occur to the politicians that raising taxes on companies that produce gasoline can only cause gasoline prices to rise further? Such obvious logic appears lost on the Democrats, who function on the economically illiterate level of a janitors union member, always sure some faceless, corner-office executive is cheating them just because they’re mean.
The current cliche is that oil companies are making “record profits”. Trouble is, the dollar amount of profits is meaningless unless you also know the profit margin, which is the percentage of profit compared to gross revenues. Oil companies actually have razor-thin profit margins and the taxes received by Federal and state governments on each gallon of gasoline is often greater than the profit made by the oil companies.
So the president and the Senators who want to punish the oil companies because gas prices have risen are actually netting more money on each gallon than the oil companies are.
Can you say “H-Y-P-O-C-R-I-S-Y”?
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