The geniuses that we the people continue to elect are busy coming up with ways to show the American public they are doing something to combat high consumer prices. It doesn’t matter that these are the same people who created the high prices to start with, they must do something even if it results in driving prices higher.
Senator Elizabeth Warren, the Pocahontas who wasn’t, has come up with an ingenious bill to tax the profits of oil and gas companies to then redistribute via tax rebates to certain people who fall below a specified income level. Most politicians, including Senator Warren, have never held jobs outside of the Bizarro World of academics and government so let’s take a look at her proposed solution in the land of real.
First and most obvious, Senator Warren, along with the Democratic party as a whole, would like to eliminate fossil fuels altogether which has been reflected in many of Biden’s early decisions regarding energy policies. Somehow, these Einsteins can’t figure out that oil and gas companies aren’t investing in new projects because of these policies and the push toward green energy (which isn’t really green at all) which limits supply increasing prices.
Second, prices for oil, gas, and other commodities are actually set by an open market, not the producers. At the moment, producers are benefitting from high prices, but they also suffer when prices are low. Doesn’t it make sense for them to maximize profits when the opportunity presents itself to provide a cushion when profits are low, or even negative, like they were for many years during the shale revolution?
Third, increasing taxes on these companies will only serve to further increase prices as these costs will be factored in and passed on to consumers. The more onerous the taxes and regulations, the higher the cost and the lower the supply.
Fourth, how does putting more dollars in the hands of consumers increase the supply of gas at the pump? Answer: it doesn’t. With this solution, more dollars will be chasing a limited supply of gas pushing prices even higher.
If taxing windfall profits is such a great idea, where is the tax for Pfizer and other Big Pharma companies that have benefitted enormously at the expense of the taxpayers?
The sad fact is that the people making policy are either economically illiterate, or know exactly what they are doing; I don’t know which is scarier. Either way, unless by sheer dumb luck or happenstance, these Bizarro World solutions will not have the intended effects being presented to the public.
I would encourage you to watch this video by Dr. Chris Martenson at Peak Prosperity. He does an excellent job of breaking down a potential energy catastrophe unfolding before our very eyes and why not all oil is created equal.