Oil , Profit and Politics

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norway401's picture
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Joined: 2007-10-16

On a Friday afternoon and pondering the Great Debate that is happening in both Canada and the United States regarding the review of Oil Company Profits. Putting our personal political associations aside ( Republican/Democrat ) in the U.S. or ( Conservative/Liberal ) in Canada is this me or is there something slightly crazy going on?
The politicans are making great political hay with the moaning , groaning and crazy statements...to win the votes of the electorate. In Canada , the Liberal Leader ( in opposition ) has just yesterday announced his plan if/when they win power.....the GREEN SHIFT. This plan is a revenue neutral tax to PUNISH users of energy , he claims that they will tax ie. 12cents a litre to the Oil Company ( and they are not going to pass this on to the consumer??? ) and in return they will give Canadians a whopping reduction of one ( 1 ) percent on their income tax. Manufacturers will also be charged the GREEN SHIFT and of course they are going to absorb the cost?
In the U.S. , the two aspiring candidates have also come up with ways to punish those mean , overbloated and profitable Oil Companies.
My question/s :
1) Who or what Government Department is going to come up with the formula to decide what is TOO MUCH Profit.
2) Who or what Government Department is going to decide what WHAT INDUSTRY is making TOO MUCH Profit. As I recall many sectors ie. Financials , Technology etc. have all had periods of extremely profitable times.
3)In Canada the Federal and Provincial Goverments collect between 28-30% in taxes per litre of gas. I suspect the U.S. situation is similar. I have yet to hear any government suggest that they should REDUCE their taxation levels.
Not being an accountant , I am quite sure that the multinationals are more than capable of creative accounting to move numbers from here to there. I have some concerns, whenever I hear any Government say they have a plan that is Revenue Neutral and even more concern when I hear that politicans and bureaucrats are somehow going to determine what excessive profits are to any industry.
I wonder how many of these same people are going to suggest that mortgage rates are too high ( so we will force the banks to reduce the rates ) , Technology firms are making too much money ( we will force them to reduce their prices ) and the list goes on.
In conclusion , it appears that the thought process is to punish the Company , punish the Shareholders , punish the Employees BUT never punish the Government and their ability to increase their taxation levels.
Any thoughts?????

River_King's picture
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Joined: 2008-05-26

I don't like any of it myself. My thought is if the oil companies charge too much then people will find an alternative. There will be a growing pains, and people that were living outside of their means will hurt. At the end of the day though the oil companies will lose their big profits because the demand for the product won't be there and people will adjust and begin to live within their means.

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