Thanks for going to the trouble to build this.
Oh… are those profits? Thanks. We will take those.
Recession caused drops in demand caused oil prices to fall to $55/gallon today:
"It’s quite a fall," he said. "To be honest, I think we can go below $50. I think there is outside chance we can see $40."
Oh goodie! Cheap[er] gas again. I can now afford to drive places where tax increases await my arrival.
Good & Bad
The problem, however, is that at that price oil companies don’t want to invest in finding more oil. And if they don’t find more oil the price will skyrocket again when the economy comes back:
The agency warned on Wednesday that more than a trillion dollars in annual investments to find new fossil fuels will be needed for the next two decades to avoid an energy crisis that could choke the global economy.
But gosh… if I were an oil company, why would I invest profits when the rewards for investment are higher taxes on the return? The right use for oil company profits is to get them to shareholders _before_ tax increases. Higher taxes reduce return on investment. Reduced return on investments means…. reduced investment. Duh!
November 13th, 2008 at 7:59 pm
Serious oil companies don’t think that way. They expect oscillations in the world price and plan accordingly with their knowledge of the real supply and demand forces at work. An investment now will not pay back anything for several years in which the tax and price structure may have changed several times. Neither do they get all frothed up over taxes which are a price of doing business. Read some of the pronouncements of Lee Raymond, the former CEO of Exxon-Mobil.