Oil subsidies? It's all about fairness | Nealz Nuze | www.boortz.com

Oil subsidies? It's all about fairness | Nealz Nuze 

Oil subsidies? It's all about fairness

By Neal Boortz

Every now and then, a quote comes along that is so asinine, you would think that I was making it up to prove a point.  This is one of those occasions. 

Do you know why the Obama administration wants to get rid of subsides to the evil oil companies?  “Fairness.”  I kid you not.  There’s Obama’s favorite focus group word again.  After all … everyone wants to be “fair,” right? This from CNS News …

Interior Secretary Ken Salazar and Heather Zichal, deputy assistant to the president for energy and climate change, addressed reporters during the daily press briefing, as a recent poll finds almost two-thirds of Americans disapprove of the way Obama is handling gas prices …

One reporter asked if taking the subsidies away would do anything to lower the price of gas, or if it was about fairness.

“From our perspective, it’s a fairness issue,” Zichal said.

That’s the same argument Obama used when explaining his desire to increase capital gains taxes.  Charlie Gibson explained to Obama that history shows that when you raise the taxes on capital gains the government actually experiences a decrease in revenue.  Obama admitted that this is true, but said it is really about “fairness.” How do you argue with that kind of “logic”?  These officials just acknowledged that getting rid of oil subsidies – the vast majority of which are enjoyed by all industries – will not lower gas prices.  Yet they still want to do it.  Why?  Because “it’s an issue of fairness.”

This “fairness” thing, though amazingly obtuse, certainly is not surprising from an administration ruled by a Marxist who despises capitalism. 

Let’s talk about this issue of “record profits” for a minute.  This is Obama playing on – or taking advantage of --- the ignorance of the American people.   This is where government education really comes in handy.  You make sure that Americans don’t get enough of an education in economics to understand the difference between profit and profit margin … and then you exploit that ignorance for political gain.  I’ve never seen a survey on this, but my guess is that not 20% of Americans could explain that difference.

Very quickly … profit is the amount of money you have made.  Profit margin is the amount of money your company or business has earned as a percentage of total revenue.

Oh man … I hate getting into this.  But let’s try to come up with an example.  You have a company that has $10 million dollars of revenue in one year.  That company spent $9,448,000 on supplies, materials, taxes, personnel and other expenses in order to generate that $10 million in revenue.  Simply put, the company has earned $552,000 in profits.  The profit margin is 5.5% 

The profit margin for the oil and gas industry is around 6.2%.  The actual profits are in the billions of dollars … but that’s because sales are in the billions of dollars.  Is the 6.2% profit margin for oil and gas high?  Hardly!  The profit margin for cigarettes is 19.8%.  Cigarettes kill tens of thousands a year.  Why not attach the tax breaks for the tobacco companies?  People need houses, don’t they?  To build houses you need lumber.  The profit margin for lumber companies is 17.7%.  Couldn’t Obama make political points by attacking the obscene profits of lumber companies?   You want more stats?  Take a look at all of the other industries (113 to be precise) that earn a higher profit margin than the evil oil companies.  The trouble is you don’t make huge political gains among economically uninformed Americans by attacking lumber companies, and you might upset your political base if you attack tobacco companies.  After all, Obama is/was a smoker! 

Another thing .. just who ends up benefitting when these oil companies make a profit?  American investors!  No, I’m not just talking CEOs flying around in their private jets.  Most oil company private jets are full of engineers and middle management types when they’re in the air.  The people who are benefitting from the oil company profits are average workers with retirement accounts, pensions, mutual funds, IRAs and individual investors.  These are the owners of 98.5% of those evil oil companies!  The oil company executives that Obama so loves to deride own a total of about 1.5% of the stock in these companies.

This is just pure demagoguery.  Nothing less.