There is a lot of attention being paid to the incredible quantity of money that is flowing from oil consumers to oil gathering and refining companies. Here are some examples of interesting viewpoints on the issue:
- Gregg says oil company profits should be taxed
- Off topic: Record oil company profits and gas prices
- Backlash spreads as oil companies’ profits surge
- Profits Likely Won’t Mean New Refineries
- As oil profits rise, so do tempers
- Windfall profits tax needed
- A Windfall Tax Is Bad Economics
Though the profits currently being made by oil companies are indeed obscene, the answer is not a windfall profits tax. The real need is a growing understanding of the importance of enabling strong competition in energy supply markets.
The Earth is endowed with tremendous energy resources, but atomic energy – our most abundant and strong potential competitor – has been tied down by efforts similar to those of the Lilliputians that used thousands of threads to bind Gulliver to the ground. Up until now, this effort has worked; the atomic Gulliver has been either sleeping, unaware of the efforts to bind him or he has been too polite in his fear of stepping on established energy sources.
If you dislike paying huge bills for gasoline, heating oil, natural gas, and electricity, you should be a fan of rules changes that begin removing some of the threads that are keeping atomic energy from reaching its potential as a supplier of power for applications as diverse as commercial ocean shipping, space heating, industrial process heat, electrical power production, and even aircraft propulsion.
Interestingly enough the analogy holds even if the rules do not change – Gulliver figured out that he was perfectly capable of simply standing up on his own. Established companies should remember what happened to the self-important Lilliputian leaders that did not get out of the way.
Vast new supplies will definitely help to alleviate the effect of windstorms providing billions of dollars worth of droppings into the coffers of major oil and gas companies.
(If you did not understand the above, go to your local library, check out Jonathan Swift’s Gulliver’s Travels and read the section on the Lilliputians.)