Obama's Plan To Raise Oil Tax

I've spent months complaining that Obama never talks about the issues. Oh, he can give a pretty TelePromted speech that would make Cyrano blush, but what does all this talk about "change" really mean when there's never any substance to explain what he means by "change." And we all understand that he is for the future, which apparently means that those who don't support him are against it, but what future is he striving to reach?

Of course, every once in a while Obama slips up and provides some insight into his political agenda. And every time he does we understand why he tends to avoid specifics since the details tend to make him look about as savvy as Wile E Coyote. Take, for example, his plan to tax oil. Now this plan makes about as much sense as anything else unpacked from an Acme box. According to Bloomberg.com

Democratic presidential candidate Barack Obama's proposal for a windfall profits tax on oil companies could cost $15 billion a year at last year's profit levels, a campaign adviser said. The plan would target profit from the biggest oil companies by taxing each barrel of oil costing more than $80.

And why should a president levy this particular tax?

"The profits right now are so remarkable that one could trim them 10 percent or
so, which would turn out to be somewhere in the $15 billion range,'' said Jason Grumet, an adviser to the Obama campaign.

Ah, yes, of course! It's the old liberal mantra. Because big oil is greedy. Because big oil is rich. Because big oil would react like any company and pass along the cost of the tax to employees, retirement plan investors and the consumers . . . oh, wait, Barack probably has thought that far ahead. But rest assured it would happen. And why would big oil pass along the cost? Because they're not as powerful or profitable as the liberal mantra would have you believe.

To understand the full picture, check out the post Obama, Big Oil and fun with charts on the Q and O Blog. I couldn't give the article full justice so I suggested you read it in its entirety (besides, there really are some pretty charts there). But just in case you're looking for some highlights in simply digestible bullet-point form, The Khaki Elephant as always, is here for you. These are some of the key observations from the charts:

• Only 11% of oil reserves are held by independent oil companies.
• The companies that Obama would like to see hit have a relatively small potion of the reserves (ExxonMobil 0.62%, Chevron 0.50% & ConocoPhillips 0.51%)
• As far as profits, Oil was not the big-boy on the block as they were outstripped by beverages, apparel, aerospace, pharmaceuticals, electronics/appliances, computers equipment, chemicals and machinery while finishing just above furniture (just wait, Maytag, Barack could be gunning for you and that slacker repairman next).
• The average breakdown of what a consumer pays at the pump for gas is 58% for the crude, 17% for refining, 15% for taxes, 10% for retailing with around 8.3% profit . . . less than most industries.

So "Big Oil" is not the profit slut that we've all been warned to avoid, but there is some profit. So when Obama attacks "big oil" who is he really attacking? Who is going to pay? Broken down by percentage, here's who owns these independent oil companies:

• 29% Mutual funds and other firms
• 27% Pension funds
• 23% Investors
• 14% IRAs
• 5% Institutional investors
• 1.5% Corporate insiders

So, it's not really a fat white guy with a fat black cigar who is going to pay for Obama's proposed tax on oil. It's fat (and skinny) folk of every color who have a retirement plan. It's fat (and skinny) folk of every color who curse and spit as they shove the gas pump nozzle into the tank as if it were Uncle Sam's arse. It's you and me, brothers and sisters. We're the ones Obama wants to tax.

UPDATE: Here's another post at the Pondering Penguin on the topic that is well worth the read:

Democrats Tax Success