Written by NCPA
June 10, 2008
NCPA Expert Says Failure to Adopt Windfall Profits Tax Will Keep U.S. Competitive
WASHINGTON - Failure of a Senate bill designed to tax the profits of the largest domestic oil producers and curb speculation in the oil futures market is a windfall for consumers and the economy, according to NCPA Senior Fellow H. Sterling Burnett.
"U.S. energy policy should focus on the supply of oil and gas, not raising prices for consumers as any windfall profits tax would have done," Burnett said. "The Senate considered this bill despite every government study and economic analysis, all of which prove that a windfall profits tax will only raise prices for consumers, make it more costly to develop and produce oil supplies and increase our dependence on foreign oil."
Burnett points out, for example, that a 1990 Congressional Research Service report estimated the windfall profits tax enacted in the 1980s reduced domestic oil production by 3 to 6 percent and increased oil imports between 8 and 16 percent. He also noted that a windfall profits tax would put U.S. oil and gas companies at a competitive disadvantage in the global energy marketplace.
"All this bill would have done is raise prices to consumers, reduce the value of investors' stock portfolios and retirement funds, and give government a slush fund to play with," Burnett said. "Profits siphoned off by government from domestic oil companies would not be available for investment in new production and refining capacity, but would be spent instead pet government projects that have nothing to do with providing affordable energy to U.S. consumers."
"In order to lower gasoline prices, U.S. energy policy should focus on increasing the supply of oil and gas to meet world demand," Burnett added.
Source: The National Center for Policy Analysis’ E-Team, is one of the largest collections of energy and environmental policy experts and scientists who believe in sound science and that economic prosperity and protecting the environment can go hand and hand.
The Team seeks to correct misinformation and promote sensible solutions to energy and environment problems.