GregNews

Foreign Policy magazine (which is not a conservative tilted medium) has a list of Barack Obama’s ten worst ideas. (McCain’s 10 worst are here).

FP put this one at #8 but I’d say it should be ranked even higher.

Taxing Oil Companies Extra

What he said: “I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills.” —Speech in Raleigh, N.C., June 9, 2008

Why it’s a bad idea: He’s attacking the symptom, not the disease. It’s certainly hard to defend oil companies making record profits while consumers are struggling to fill their tanks, but Big Oil has very little control over day-to-day gas prices, which are set by global supply and demand and, of course, OPEC. By discouraging oil companies from making big profits, such a tax could potentially discourage them from making investments in new refineries and finding new oil sources, resulting in fewer jobs and even higher prices at the pump. Jimmy Carter tried this in 1980, and it only increased U.S. dependence on foreign oil. Singling out one particular industry for punishment because it is politically unpopular doesn’t make much economic sense, either.

What’s particularly dumb about this idea is that the American oil companies, what Obama and Democrats love to call “Big Oil,” are just a infant amongst massive state-owned oil conglomerates who dictate the price of fuel, an affect the American economy far more than do American companies, because we import so much of our oil.

The Democrats favorite punching bag, Exxon-Mobile, is only the 14th largest oil company globally (courtesy PLB).

John Hinderaker explained once, “With 94% of the world’s oil supply locked up by foreign governments, most of which are hostile to the United States, the relatively puny American oil companies do not have access to enough crude oil to significantly affect the market and help bring prices down. Thus, Exxon Mobil, a small oil company, buys 90% of the crude oil that it refines for the U.S. market from the big players, i.e, mostly-hostile foreign governments. The price at the U.S. pump is rising because the price the big oil companies charge Exxon Mobil and the other small American companies for crude oil is going up.”

Or, if you rather, The Economist said about the same a couple years ago.

And, according to other rankings, 14th is best case scenario. PetroStrategies, Inc., lists Exxon-Mobile at the 17th largest oil company.

Here’s the top 16 (from 2006):