Tax on oil company windfall profits is a shortsighted idea
Senators called the chiefs of five major oil companies to the carpet Wednesday, demanding explanations for the combined $25 billion in profits they reported in the third quarter when gasoline prices soared to more than $3 per gallon at the pump.
Senators made a lot of noise about the possibility of imposing a tax on windfall oil industry profits, but that would be a bad idea.
Such a tax would likely prompt the oil companies to reduce investment in research and development of alternative fuels as well as exploration, production and infrastructure.
Also, taking profits from private industry and placing them in the pockets of Congress would do nothing to relieve the hardship consumers face. And there is little historical evidence to indicate that Congress, once it had collected its tax, would spend the funds appropriately.
If lawmakers are serious about holding the oil companies accountable and encouraging them to be good corporate citizens, they should look at the 1,724-page energy law they adopted this summer, which provides $14.5 billion in tax breaks to energy companies.
If Congress really believes it needs a hammer to hold over the heads of the Big Oil companies, the new energy law provides one.
More likely, however, is the possibility lawmakers will do nothing. Wednesday's dog-and-pony show was more about congressional rhetoric and face-saving than about a real concern for the everyday difficulties of average Americans.