Claptrap and gobbledygook about oil
By Chuck Doud
The Madera Tribune
A lot of politicians are making noises about the price of oil and what they intend to do about it, but all that noise is mostly what my grandmother would have called claptrap — absurd or nonsensical talk or ideas.
This claptrap falls into several categories: (1) We’ve got to stop the oil companies from making what seem like big profits, (2) We’ve got to stop the market speculators from speculating and (3) We need to start drilling for new oil right now to bring down prices.
Wrong on all three counts.
On the first count, punitively taxing oil company profits, as Sen. Barack Obama wants to do, amounts to Marxist gobbledygook. By the same logic, we might as well tax Obama for raising all that campaign money on the Internet. How about a third of it? The treasury could use the money.
Oil companies plow their profits, in the billions, back into new explorations, and would use profits to build new refineries if they could get them approved. Taxing profits would put off expansion and punish investors who risked their money when times weren’t so good.
On the second count, market speculators have very little to do with the current cash price of oil. They deal in future prices (thus the term “futures”), which often are influenced by current cash prices, but hardly ever is it the other way around. Activities of futures traders are carefully regulated in the United States.
Oil prices are where they are today largely because capitalism has worked — formerly poor nations now practicing capitalism need energy, and are entering the market. It’s called supply and demand. Get used to it.
On the third count, yes, it would be good to increase drilling for domestic oil, be- cause we will need it in the future. But if we started drilling today, it would be years before the benefits would be felt.
