Hey Congress - Hands Off Private Industry
What do the following American industries have in common: cigarettes, pharmaceuticals, brokerage, asset management, and now oil? In short, they make money, and this makes them susceptible to government intervention. Now normally we associate an anti-business and an increased regulatory environment with democrats. However republicans have also jumped into the fray, complaining about excessive profits in the oil industry and what they should do about it. Unfortunately, this is where republicans usually get into trouble - when they start acting like democrats.
As Caroline Baum points out, the problem with this is that increased regulation would likely increase the price of oil further. In addition, who's do decide what is "excessive," especially since oil companies have barely beated the S&P during the past 12 years? If congress really wants to do something about oil prices, they should be increasing the number of refineries, but we know that can't happen as democrats recently struck that proposal down. (not in my backyard syndrome)
As I see it, the real problem is that a lot of America's best companies are bound to become less competitive on a global scale if congress keeps jumping in and telling them what to do. Companies like Walmart, Microsoft, Philip Morris, Lilly, and Exxon are routinely being beaten up in the press and are constantly under the threat of increased government regulation. The US, with it's 40% corporate tax rate (35% fed, 5% state) is already one of the highest in the developed world. Compare this with Ireland or the fastest growing Eastern European countries which are in the mid-teens % tax rate. This is already hurting US competitiveness.
If congress really wants to help the American people with their oil bills, allow oil companies to do more exploration and to build a few more refineries. Otherwise, supply and demand are not in balance and economics 101 dicatates a higher oil price. C'mon congress - leave your socialists policies in Europe - we don't want any.
As Caroline Baum points out, the problem with this is that increased regulation would likely increase the price of oil further. In addition, who's do decide what is "excessive," especially since oil companies have barely beated the S&P during the past 12 years? If congress really wants to do something about oil prices, they should be increasing the number of refineries, but we know that can't happen as democrats recently struck that proposal down. (not in my backyard syndrome)
As I see it, the real problem is that a lot of America's best companies are bound to become less competitive on a global scale if congress keeps jumping in and telling them what to do. Companies like Walmart, Microsoft, Philip Morris, Lilly, and Exxon are routinely being beaten up in the press and are constantly under the threat of increased government regulation. The US, with it's 40% corporate tax rate (35% fed, 5% state) is already one of the highest in the developed world. Compare this with Ireland or the fastest growing Eastern European countries which are in the mid-teens % tax rate. This is already hurting US competitiveness.
If congress really wants to help the American people with their oil bills, allow oil companies to do more exploration and to build a few more refineries. Otherwise, supply and demand are not in balance and economics 101 dicatates a higher oil price. C'mon congress - leave your socialists policies in Europe - we don't want any.
posted by pistolpete | 11:22 AM
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