Oil can make money but wreck a planet
Three politicos take a stand on oil profits
| There are a few US politicians talking solutions to oil profits, oil shortages, and global climate change. A couple of bills now before Congress would tone down the subsidies for big oil, and one presidential candidate suggests an oil dividend. These are steps toward geonomics, the policy that rewards people for efficient use of Mother Earth. |
by Jeffery J. Smith
May, 2007
Exxon Mobil kicked off 2007 with a 10% rise in profits, its best-ever first quarter; the world's largest publicly traded oil company earned $9.3 billion in the January-March period. That gain beat Wall Street expectations, since the market price for crude oil was down more than $5 a barrel in the first quarter versus a year ago, and the price for natural gas also was lower. Sen. Bob Casey (D-PA) introduced legislation to curtail rising gas prices; it would impose a windfall profits tax and close certain tax loopholes for big oil companies -– the wealthiest phenomena in human history. (AP, April 26)
On our own site, we posted highlights from the World Bank Group report. In 2005, public institutions such as the World Bank and U.S. agencies such as the Export-Import Bank provided more than $3 billion to the international oil and gas industry; over the past year, lending for oil projects in poor countries increased more than 75%. Instead of alleviating poverty, most oil and gas projects have exacerbated corruption, worsened economic inequality, increased local conflict, and intensified global climate change. Hence Congressman Maurice Hinchey (D-NY) on April 17, 2007 introduced a bill to help end international subsidies to Big Oil.
Then on April Fool’s Day while being interviewed on ABC’s This Week, Republican candidate, former Health and Human Services Secretary, and former four-term governor of Wisconsin, Tommy Thompson, a senior partner in a law firm, said Iraqi oil revenues should be dealt with like the state of Alaska: one-third should go to the federal government, one-third to the territorial governments, and the remaining third split "to every man, woman and child. If the self-described “reliable conservative” can call for an oil dividend for Iraq, then everyone should be able to call for a dividend for all humanity from all natural resources, you think?
Ending subsidies and paying dividends are half of a sound energy policy. The other half is ending taxes upon our efforts while recovering the values of land and resources. Both halves together -– totaling the geonomic shift of taxes and subsidies -– would speed the transition to sources of energy that are alternatives to oil and other fossil fuels.
Government could quit subsidizing oil companies and instead subsidize no energy firm, not even solar. Like Thoreau said, the best thing government can do for business is get out of it. Likewise, quit taxing earned profit; those taxes hamper investment in technological development. And quit taxing wages; those taxes create a disadvantage for labor-intensive businesses, and most energy alternatives use more labor per dollar than do the petrol firms; e.g., going back and insulating older buildings takes more workers than does drilling for oil.
What government could do with its power to tax is to charge for pollution, and for monopoly claims on resources. Having to pay for the resources they take and the pollutants they emit, companies would likely raise their prices to cover these charges. A number of their customers would cut back and find alternatives like solar and fuel cells.
Oil companies would realize less profit -- and less political clout in Congress and legislatures. Might that mean fewer wars for oil? One can only hope.
When government targets the value of nature, something that society in general generates, it could look beyond oil and resources and recover the value of surface land, too. In metro regions, that would spur owners, especially owners of prime downtown sites, to quit speculating and procrastinating and get busy and turn their vacant lots and parking lots into sites bearing beautiful buildings. That’s what happened wherever a city has shifted its property tax off buildings, onto land. Cities get in-filled, which both shortens trips and makes it convenient for some to switch from driving to riding buses and bikes – even walking. Any way you get people out of the car, you save fuel, curb emissions, and improve health.
On this level playing field of zero subsidies and zero taxes on what you make, just taxes on what you take, then the relative advantages of each energy source will show up in price. You, the consumer would pay more for polluting power sources like fossil fuels, and less for clean ones like wind. In a few years, both types of energy sources will switch market shares and the energy crisis will be over, letting the planet breathe a sigh of relief. In April of 2007, two Congressmen and one candidate headed us further along this sensible geonomic path.
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Jeffery J. Smith runs the Forum on Geonomics.
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Also see: Petroleum Corporations Are Too Powerful and Out of Touch
Drilling Taxpayers for Money
Oil Refineries: Rigging the Profits |
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