Windfall profits tax won’t ease your pain at the pump


A political discussion between Red State conservative Dave Simpson – a former reporter, editor, publisher and columnist – and Greg Bean, Blue Stater and executive editor of Greater Media Newspapers.

Dear Greg:

In your heart of Blue State hearts, I suspect all this talk about “windfall profits” in the oil business causes a little skepticism in a guy with your background.

You’re probably a little more reluctant than most liberal leaners to get on the current anti-oil bandwagon. That’s because you know too much about that business.

We should probably let our readers know that we both spent some time in Dick Cheney’s hometown of Casper, Wyo. In fact, Casper was your hometown, and you were raised there. I spent five of my more formative years in Casper, and I look back fondly on that time.

The folks should know that Casper is an oil town, through and through. An old boss of ours said you could tell the economic fortunes of Casper if you knew just one number: the price of a barrel of oil. He said if oil was selling for more than $40 a barrel, Casper was in high cotton. Below $40, and Casper was hurting.

Imagine what Casper must look like these days with oil selling for $135 a barrel.

You could tell folks better than I can about the boom and bust nature of Casper. I’m told there were bust times when you could buy a whole block of empty houses for what it would cost to buy one house during the boom times. In the busts, folks would just pack up their things and drop the key off at the bank.

One famous bumper sticker said, “Please Lord, give me just one more boom, and I promise not to (fritter) it away this time.”

I bought a house in Casper for $50,000 at the tail end of a boom, and sold it 10 years later for $45,000, near the end of a bust. That was after five years of absolutely no interest from buyers.

And we both know that exploring for oil and drilling for oil is no guarantee of hitting oil, and that far more folks have lost their shirts in that business than have hit it big. So, that Democratic malarkey about 64 million acres of oil leases that haven’t been developed sounds good for those who don’t know anything, but not for guys from Casper, like you.

So, knowing about all this, and even having had some relatives in that business, don’t you kind of bristle at this notion that the oil business is making way too much money, when back in the 1980s, oil was selling at $10 a barrel and idle rigs were stacked all over town? Given the lean times, does ExxonMobil really have to be punished for making an 8 to 10 percent profit now?

(By the way, Greg, I still own my Exxon stock, and I can honestly report that the windfall hasn’t gotten to my house yet. But, I keep checking the mailbox.)

What will a windfall profits tax do to domestic exploration and production? Last time, as you recall, it came right before another bust in Casper.

I suspect you know too much to be buying the Democratic company line on this windfall profits tax. But, it’s just a hunch.

What say you, Greg?

Your old pal, Red State Dave [email protected]

Dear Dave:

You’re right, I grew up in an oil family, where the words windfall profits tax were right up there with the big, nasty curses that could get your mouth washed out with soap.

You remember the Amoco refinery and tank farm in Casper? In the old days, they used to flare the natural gas that came out of the ground with the oil and burn it off because nobody had realized it was so valuable. On some cold winter nights, the vapors from those flares would blanket the town with a sulfurous cloud that smelled like a billion rotten eggs. I remember driving around one night and asking Mom how she could stand the stink.

“Smells like money!” she said, and that was that. In other words, you don’t bite the hand that feeds you.

The oil industry helped put bread on our table and a roof over our heads the entire time I was growing up, so I guess I do know more about it than the average Joe.

I also speak to people back there regularly, and this morning one of them told me how much they’re enjoying the current boom. This person and I both remember the bust days, when people were sporting that bumper sticker you mentioned and there were thousands of abandoned houses. I sold two houses in that bust for $1 each (one of ’em to a good friend of yours), and it took a couple of decades before we were really back on our feet after the loss.

So knowing what I know, I don’t think bringing back the windfall profits tax will do anything but make the politicians look like they’re doing something and allow them to stick their fingers in the eyes of the energy companies. It won’t help the average consumer one way or the other.

What I would like is for corporations like ExxonMobil to be better, and more responsible, citizens of our country. I don’t think they necessarily should pay windfall profits taxes, but I would like them to pay their fair share of taxes. I’d like them to pay the same percentage of their income as regular people like you and me, instead of spending a jillion dollars paying lawyers and accountants to figure out how they can avoid paying their fair share.

When they mess up and cause a problem, like the Exxon Valdez spill, I’d like for them to pay for the cleanup instead of tying the courts up for years arguing about how much they have to pay.

I don’t care if they make a profit – that’s the whole point of business – but I’d like them to avoid gouging us in markets like this one, even if they suffered during bust cycles in the past.

I also know enough about the oil business to suggest that it’s just possible that companies like ExxonMobil are taking unfair advantage of consumers like us right now. More than just possible, actually. I think it’s a near certainty.

If my Mom were still around, I imagine she’d rap my knuckles for saying that. She’d agree with you entirely, but her opinion of the windfall profits tax couldn’t be shared in a family newspaper. Maybe Tony Soprano could say that on Home Box Office, but I can’t print it here. Think a whole bunch of words that start with f.

Your friend, in boom or bust,

Blue State Greg [email protected]