History Doesn't Just Repeat; It Stutters

Thirty years ago today, President Jimmy Carter established the Department of Energy. Nice to see that 30 years later we're importing even more oil as a percentage of total consumption than we did back then.

Even though Carter had a background in nuclear propulsion as a member of the US Navy, nuclear is an evil word in the minds of the eco-left, who abhor any energy production type - whether it's coal, oil, natural gas, hydropower, geothermal, wind, or nuclear because they will trot out the old standbys that it might harm the local ecology or that the locals simply don't want it in their backyard. They stand in opposition to power plants that local groups want - including the Navajo Nation, which wants to build a clean-coal fired power plant on their reservation that would provide jobs, complete the electrification of the reservation where 15% of the population is without a power hookup, and would provide 1,500 mw of power to the surrounding region.

Thirty years later, Sen. Barack Obama is prepared to rehash Carter's prescription for the US energy policy: windfall profits taxes on oil companies.

I'm still not quite sure what you actually define as windfall profits. Is it anything over 5%? 8%? 10%?

Mr. Obama didn't bother to define "reasonable," and neither did Dick Durbin, the second-ranking Senate Democrat, when he recently declared that "The oil companies need to know that there is a limit on how much profit they can take in this economy." Really? This extraordinary redefinition of free-market success could use some parsing.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any "windfall" tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we're missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon's profits don't seem so large. Exxon's profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

Oil companies make incredible sums of money because it's a high volume business, not because it has high profit margins. Oil companies also pay tens of billions of dollars in taxes to federal, state, and local taxing jurisdictions, and yet this isn't enough. Obama's hoping to grab even more money to redistribute it, and those oil companies aren't going to simply give it up from their corporate bottom line.

They're going to increase the prices to pass it along to the consumer and they're going to cease doing business, which will further drive up the costs and reduce competition further.

Obama's energy policy is all about government mandates and increased bureaucratic costs, not energy production. Every new mandate is a cost that will be borne by taxpayers in higher costs and lower availability.

Conservation in and of itself is insufficient to solve the nation's energy crisis, but the solutions ginned by by the government are perhaps worse than the problem itself - consider the higher food costs resulting from the ethanol mandates, which farmers love, but everyone else has to pay higher prices for all basic food essentials. Top that off with the fact that any vehicle operating with an ethanol blend will actually receive lower gas mileage, and you're actually harming the environment more, not less.

Proper tire inflation alone will not solve the energy crisis. That's Obama's idea.

Hiding from voters because Nancy Pelosi cravenly and cowardly adjourned Congress for five weeks while the nation suffers from high energy prices will not solve the energy crisis. She knows that the national sentiment towards offshore drilling is there, and it would be approved by Congress in an overwhelming manner. Pelosi, Reid and the other eco-leftists refuse to take any steps that would lower the price of energy in the country because they hope to benefit from high energy prices by imposing still more governmental controls - increasing their own power to the detriment of everyone else.

The GOP is planning to exploit all these Democratic party failures, and will do so starting today. Remember, the eco-leftists in charge of the Democrats are laughing at you, the voters, because of the high energy prices and will not lift a finger to increase domestic production that would stabilize prices, create jobs, and provide a stable and secure energy source without relying on foreign sources in unstable parts of the world.

UPDATE:
Sen. Obama's latest energy speech is nothing more than what's appeared on his campaign website for months. He's again pushing for a windfall profits tax as the solution to all that ails the nation.

It is nothing short of the massive redistribution of wealth that doesn't create a single watt of new power or single gallon of gasoline. It is entrenched in the tired, worn, and discredited economic policies of the failed Carter presidency.

Giving taxpayers $1,000 out of the windfall profits revenues is an attempt to bribe people into voting for him. This is one of the most blatant and craven attempts at demagoguery in a long time and clearly shows that Obama doesn't have a clue about economics or what such policies will do to the average family.

UPDATE:
New York's Attorney General Andrew Cuomo is pushing the no-nukes plan in New York. He's been trying to shutter the Indian Point nuclear power plant in Buchanan, NY for more than a year and has been badgering the operator, Entergy, as the company attempts to get the plant relicensed by the NRC. Cuomo, like other Democrats, has no plan to provide new power, let alone what New Yorkers should do to make up the 18-36% of the region's daily power output the plant provides.

UPDATE:
Hot Air calls Obama's speech nothing more than a neo-Luddite non energy proposal since it doesn't actually address energy requirements for the future:

Even without the transfer of cars from gas to electrical power, how exactly does Obama plan on cutting electrical demand in the US? As the economy and the population grow, the need for electricity will continue to expand as well, in order to just maintain the current standard of living, let alone improve it. Perhaps we will hear more about the electrical equivalent of inflating tires, and Obama does plan to spend billions of dollars weatherizing homes — which Americans do when their energy bills increase anyway.

What happens when the demand doesn’t decrease by 15%? Where will Obama get the energy needed to power the economy? He doesn’t answer that question.

And why worry about electrical demand if Obama believes that we will have emission-free mass-production sources on line in the next 10 years? Electricity in and of itself is completely neutral to the global-warming debate; it’s the source that matters. If we have solar energy perfected, as an example, why worry about electrical demand?

Power and control.

UPDATE:
Among the other asinine suggestions Obama proffered today was that we should immediately use 70 million barrels of oil stored in the strategic petroleum reserve. At our current rate of usage, that's about four days worth of oil. Oh, and that's a flip and flop too:

Obama, who as recently as last month argued against tapping into the petroleum reserve located in caverns in Texas and Louisiana, proposed that the government sell 70 million barrels of oil from its stockpiles and said that releases from the reserve in the past have lowered gas prices within two weeks.

Explaining his thinking, campaign energy adviser Heather Zichal said that Obama ''recognizes that Americans are suffering.''

The reserve contains 707 million barrels in salt caverns in Texas and Louisiana. It was last tapped shortly after Hurricane Katrina in 2005.

So, apparently it's okay to tap the SPR for a few million barrels of oil per day, but it's not okay to tap the ANWR reserves that could provide a million barrels per day for years on end. Gotcha.

Meanwhile, President Bush is going to let the House GOP run with this issue and let the Democrats keep digging their hole. He's not going to call for a special session of Congress to deal with the issue, because that would only serve to provide an outlet and excuse for Pelosi's failures, which increase daily.