Friday, August 01, 2008

Energy Subsidies

And other economic silliness from Senator Obama.

So, Obama’s solution to energy costs is to:

a) discourage production by penalizing oil companies and their shareholders
b) encourage energy use by subsidizing consumption
c) promising a massive public works program to further waste the taxpayer’s money
d) all of the above

Of course, it’s all of the above.

On the Exxon Mobil “windfall profits” front, keep in mind that for all of the wailing about a quarterly profit of $11.7 billion, that’s on sales of $138 billion. And a pretty anemic $2.22 per share.

Just to simplify, that’s only 8.4 cents of after tax profit per dollar of sales.

Google, on the other hand, made only $1.25 billion on revenue of $5.37 billion in sales. That’s a return of 23.3 cents on each dollar of sales. If you look at just Google’s after revenue split with advertisers, the return jumps to 32.1.

We anxiously await word of the Lightworker’s proposed internet advertising windfall profits tax.

So, we’re going to get busy and hamper energy production. That will help prices. Go up. But Sen. Obama is already on record as supporting higher gas prices, assuming that that position hasn’t passed its ‘sell by’ date.

Providing energy price subsidies can only be a bad thing. Among others it encourages waste. People who have to pay for the full price of gasoline are more likely to conserve it that people who have the government using tax money to pay for some of their consumption.

Another is that it encourages further dependence on government. But in the progressive world, that’s a feature, not a bug.

Still no word on what the Senator might condescend to do to encourage energy production. Apparently looking for more oil or building additional nuclear plants are out of the question. About the only thing he’s suggested is throwing tax dollars at politically connected solar and wind power companies. And increasing your taxes, but that’s another story