Prices, Profits, & Ownership

An energy tax increase, such as the one that Congress wisely rejected in early 2008, is not just an “industry problem.” Consumers will be the ultimate bearers of this burden, as taxes on commodities are inevitably found in the form of higher prices down the line. That means higher prices at the pump, for products that are shipped across the country to retail outlets, and on utility bills. Artificially increasing the cost of doing business not only doesn’t lower energy prices, it works directly to increase them.

America Is Invested in Energy

Source: SONECON, The Distribution of Ownership of U.S. Oil and Natural Gas Companies, September 2007

Also bearing the burden of new energy taxes would be shareholders and pensioners who are invested in energy company stocks. Because they are viewed as a solid investment with a high rate of return, many mutual funds, 401(k) plans and public employee pension funds are heavily invested in energy stocks. Policies that target “Big Oil” for economic pain will inevitably drag down stock prices, negatively impacting everyday investors who own shares in these companies.

Congress is targeting American industry by singling out domestic energy companies to shoulder a heavier tax burden. Boosting taxes on U.S. companies will ensure:

* Less investment in exploration;

* Less money to spend on researching new technologies; and

* Money drained by taxes cannot be put into refining improvements that will help to meet more of our present and future energy needs with domestic supplies.

It is said that those who cannot remember the past are condemned to repeat it. Punitive energy taxes are nothing more than a failed policy of the past. The Carter-era “Windfall Profit Tax” on oil resulted in reduced domestic oil production and increased imports. In addition, the tax failed miserably in raising revenue, bringing in only 20 percent of initial estimates. Rather than repeating policy mistakes, Congress ought to focus on solving the energy problems of the future with a sound, fair energy policy.

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Taxpayer Group Applauds Bush Plan to Expand Domestic Energy Production, Lower Costs for American Consumers