BIG OIL, BIG GOVERNMENT, BIG INCONSISTENCY

4/29/11

Today’s (Friday, 4/29’s, page A4) Wall Street Journal reports on “bipartisan” efforts to reduce tax breaks for big oil in the face of $112 oil and a $10.7 billion first quarter profit for Exxon Mobil.

“Tax breaks” for “big oil” are neither more nor less meritorious than tax breaks for anyone else. One man’s tax breaks are another man’s “incentives” to do whatever the politicians deem desirable. An efficient and optimal tax code would be simple and flat with no latitude for politicians to reward their friends and benefactors. But since we are dealing with this lifetime, we have to deal with the issue of various tax breaks that politicians dole out to those who bankroll their flights of self-aggrandizement; hence the effort by pols to rescind tax breaks when the heat is on that the same gutless pols passed when the climate was more temperate, but I digress.

One portion of the Journal article caught my eye:

Oil executives and some Republicans countered that the Democratic proposals amount to new taxes on energy that would be passed on to consumers.Hmm…

Whenever the subject of high oil and gasoline prices comes up, oil company executives and their toadies in Congress immediately rush to the microphone to tell us that the oil companies have little or no influence on the price of oil, that they are what the microeconomists call “price takers.” Exxon-Mobil was once again making that argument yesterday when its gargantuan first quarter haul was reported.

If the oil companies indeed are price takers, how can they pass along any new taxes to consumers?