Reich, divining no "intestinal fortitude" on the part of the Democrats
for a carbon tax, reckons that a windfall tax on oil company earnings is the
next best thing:
The Dems should propose a temporary windfall profits tax on oil companies
(temporary, that is, until the oil company’s current oil earnings boom
falls back to a normal range), the proceeds of which go into a fund to finance
R&D in non-fossil based fuels. Market fundamentalists who holler that
oil companies should be allowed to reinvest their profits in new oil exploration
aren’t paying attention to the environmental costs. But the windfall
tax should be designed so that, to the extent oil companies do wish to invest
in non-fossil based fuels, such profits are exempt.
It’s certainly politically much easier to soak Big Oil than it is to soak Small
Commuter – especially when commuters see their hard-earned dollars turning
into the largest annual corporate profit ($39 billion) the world has ever seen.
The Globe and Mail’s Shawn
McCarthy has a good story under the headline "Exxon’s ‘outlandish’
earnings spark furor":
Senator Hillary Clinton of New York, a leading candidate for the Democratic
presidential nomination in 2008, took direct aim yesterday at the oil companies’
gains.
"Instead of lining the pockets of big oil, we need a new direction in
energy policy that rewards innovation, creates jobs and reduces our dependence
on foreign oil," she said in a statement…
Democratic Congressman Ed Markey, a member of the House of Representatives
energy committee, called the record profits "outlandish," saying
they came "at the expense of the driving public."…
In its newspaper ads, the company says that between 1991 and 2005, it invested
more than it had earned in profits in order to find, develop and refine crude
oil and natural gas.
Over the past five years, it has invested $82-billion worldwide, nearly a
third of it in North America.
In 2006, however, Exxon spent more on buying its own shares on the open market
than it did on capital investment.
The company spent $25-billion on its share repurchase plan, which was designed
to boost its stock price, while it allocated $19.9-billion for capital investment
in 2006.
The Democrats seem keener on fiddling around with tax incentives for oil exploration
– which are a drop in the bucket compared to oil companies’ profits –
than they are on a windfall tax. Maybe a windfall tax makes it easy to accuse
them of "class warfare". But I kind of like the idea: Make the oil
companies pay for some of the cost of the war which is responsible for so much
of their profits.
Related: If I were an oil company, I might seriously consider selling off my
gas stations for PR reasons. With oil company names emblazoned across gas pumps,
it’s easy to blame the companies for high prices. So spin off the gas stations
as their own entity, a bit like Coca-Cola spun off its bottlers.
Why stop with a windfall profit tax? A carbon tax is the best option we have to reduce global warming emissions and our dependence of foreign oil. A carbon tax is politically feasible when combined with progressive tax-shifting; the carbon tax revenues should be used to reduce payroll taxes (if a federal carbon tax) or sales taxes (if a state carbon tax). Polls indicate that Americans are open to a carbon tax. For details, see our website at http://www.carbontax.org.
Your last suggestion is rather interesting. It would appear that BP has already done something to mitigate the price pinch of petrol to the consumer by selling themselves as “beyond petroleum” and featuring a stylized multi-colored sunflower head. One has to wonder what on earth a sunflower has to do with crude pumped from the North Slope or some other place on the North American continent, refined in the Gulf and tanked off to market. Come to think of it, maybe nobody wonders, and that’s why it works.
BP’s sunflower actually makes sense, since BP is one of the largest (second to Sharp, I think) suppliers of solar/electric panels to the US. Of course their solar business is dwarfed by their petroleum operations, but “beyond petroleum” is more than spin.