"The other day the oil companies recorded the highest profits in the history of the world. I want to take those profits"- Hillary Clinton
If this statement by Hillary Clinton doesn't scare you, I'm not sure what will.
Hillary Clinton's policy on oil not only undermines capitalism but seems to have come straight out of the Communist Manifesto. It is true that oil companies are seeing record profits, this is only to be expected due to current record demand. Hillary insists that the price of oil is soaring due to market manipulation and will launch investigations into OPEC for price gauging. People have been trying to proove price gauging/price fixing on OPEC for years and have come up with nothing. I don't think Hillary will find anything past administrations haven't.
It is just scary to think that a potential president of the U.S feels they have the power to "take profits" from certain companies they feel are doing too well. This idea certainly seems to have socialist components. The average net profit margin for the S&P Energy sector, according to figures from Thomson Baseline, is 9.7%. The average for the S&P 500 is 8.5%. Oil companies are not seeing profit margins far and beyond what other companies are making. Google, for example, reported a profit margin of 25% in its most recent quarter. Does Hillary want to implement an online search engine windfall profit tax?
Hillary needs to be taught how gas prices arrive at the pump. The price of gas is derived from the price of crude oil which is set on the crude oil futures market. These prices are affected by supply and demand due to the fact that oil is traded on a global market. It is a fact that much of our oil supply is relatively static but world demand continues to grow. If supply isn't changing, but demand is, the price will obviously rise.
It's a dangerous precedent to set by taking profits from companies that are making legal profits. OPEC is the only organization that has any effect on the price of oil, and there isn't any American politician that can change that. The only solution for breaking out of our independence on oil is to invest in other types of fuel (currently, there is little incentive to invest in this sector).
Instead of stealing oil companies profits, why not tell people there free to plunge their savings into these oil companies stocks, or even buy crude oil on the futures market. That is the joy of our financial markets which Hillary is attempting to undermine.
Monday, May 12, 2008
Subscribe to:
Post Comments (Atom)
2 comments:
I can only imagine that Clinton's tag line is nothing more of a sound bite with a big crunch. The crunch is satisfying to hear as the average American dealing with rising gas prices. It's using a form of rhetoric - simplification. How can anyone really incite rallying enthusiasm by stating complicated nuances of reality? One makes it simple and direct by clearly identifying an "us" and a "them." It's clearly only rhetorics. However, is this type of political rhetoric something to condone? It's up to everyone's opinion. However, I think it would be silly to take it for its face value. There isn't a single politician who doesn't employ virtuosic rhetoric - if there was, he or she isn't a successful politician. Therefore, I wouldn't take these sound bites too seriously in economic analysis. And by hyperbolic extrapolations, the readers are not educated but only entertained by arguments that are nothing more than hot air.
Putting that aside, I still believe that the kernel of thought that provoked this sound bite raises the important question of dealing with our domestic oil consumption. However, to imagine that the oil market is free is ridiculous. OPEC is a downright cartel - clearly and publicly. If they are a cartel, how can you make capitalists arguments for their doings in the oil market? I believe that it is necessary to try to keep the cartel in check in the only way that we can - by using political pressure. Clinton raises a good awareness; however, I don't know how realistic her plans are for applying the right pressures to keep OPEC from going overstepping their powers. And in this regards, I agree that we should work on decreasing our dependence on OPEC and oil in general. But, that's a lot harder to say.
Post a Comment