On Thu, 27 Apr 2006 00:33:40 -0400, PagCal <pagcal@runbox.com> wrote:

Cute story, but suppose we change it a little; You live in Harrisburg
and there is no food. Now, someone comes along and offers to sell you a
loaf of bread for $100. You pay.

But suppose there are only 5 majors in the bread business, and you can't
enter the bread business because they've setup barriers to entry, and
now lets suppose that these 5 same majors decide that bread should cost
$100 a loaf and just won't lower prices.

You can't live without bread.

They rip you off.

You pay and pay.

They make excess profits.

These 5 majors also say things like, well, after a while, competition
will increase supply and prices will equalize.

But, why would they?

You and I can't enter the bread business.

So, we're stuck.

Now, suppose the 5 majors decide to charge 120$ a loaf because, they
say, they may never be able to make any more bread in the future - so
they get to charge you more today. They give you some mumbo-jumbo about
a futures market, bla, bla, bla.

Make sense?

To them it does.

To you it doesn't. Why should you be paying for future risk today?

You shouldn't.

And, it's up to government to remove these speculation charges from the
price of bread.

One way is to penalize these 5 majors with a windfall profits tax.
Having to pay it will realize they shouldn't charge consumers for
speculation (as it's going to the government anyway).

Now, substitute oil for bread, and you can see what the these pigs at
the oil patch are doing to you.

What would you consider a fair profit margin? Last year Exxon made
$36.1 Billion on revenue of $371 billion that's a profit margin of
9.7%.

Too much? Should there be some kind of law that corporations be
limited to 5% profit and any excess be given to the government?

You seem to think that Exxon controls the world price of oil. Exxon is
small potatoes compared to ARAMCO and the State Oil Company Of Iran.

Captain Compassion wrote:

Windfall-profits tax would hurt economy
By WALTER WILLIAMS

Published Saturday, November 12, 2005
In the wake of high gasoline prices and high oil company profits,
House Speaker Dennis Hastert demands that oil companies explain why
they are making so much money and what they plan to do to bring down
the cost of gasoline. Sen. Byron Dorgan, D-N.D., has proposed a 50
percent windfall profit tax on every barrel of oil selling for more
than $40. Let’s talk about profits.

First, there’s normal profit, which is defined as the minimum amount
necessary to keep entrepreneurial resources in their current usage in
the long run. Normal profits reflect the opportunity cost of using
funds to finance an operation, and they must be equal to, or greater
than, the returns available elsewhere in the economy. Normal profits
are indeed a cost of business - the payment to equity owners.

Windfall or supernormal profits are any profits in excess of normal
profit and are above and beyond that necessary to keep entrepreneurial
resources in their current usage. However, windfall profits are a
vital component to a smoothly operating economy. Windfall profits
serve as a signal that there are unmet human wants. Let’s look at it
with a simple example.

Suppose there’s a disaster wiping out food resources in Harrisburg,
Pa., and I live in Philadelphia. Before the disaster, the price of
bread in both cities was $2 a loaf. I buy a truckload of bread, cart
it to Harrisburg and sell it for $20 a loaf, earning huge windfall
profits. When the word gets out that there are profits to be made,
what do you think happens? If you said other people will start carting
bread to Harrisburg, bakers will start working overtime to produce
more bread, people who formerly used their oven to bake cakes and pies
will switch to baking bread, there’ll be bread conservation in
Philadelphia and elsewhere, and eventually bread prices will start to
fall in Harrisburg and windfall profits would vanish, go to the head
of the class. While some might find people earning windfall profits
objectionable, the result of their actions, getting more bread to
Harrisburg, is precisely what’s desired.

What if politicians said, "People are profiting from the misery of
others, and we’re going to impose a bread windfall profits tax"? Say
they legislated a 100 percent tax, taking all of the $18 of windfall
profits. Would you expect to see people making all those efforts to
get bread to Harrisburg? Suppose there were huge startup costs for
companies to expand their operation or onerous regulations for people
to get into the bread business, would that be good news or bad news
for people in Harrisburg?

What prevents a robust supply response to changes in scarcity
conditions in the gasoline market? U.S. oil-refining capacity is now
less than it was in 1980, and since that time, there’s been a 25
percent increase in demand. Because of costly environmental
regulations, it’s been 30 years since a new refinery has been built.
According to the American Petroleum Institute, over the last 10 years,
it has cost the oil industry $47 billion to comply with costly and
sometimes useless environmental controls. There are restrictions on
exploiting the huge oil reserves in Alaska and the Gulf, Atlantic, and
Pacific coasts.

Speaker Hastert said, "These are extraordinary times that call for
extraordinary measures. We expect oil companies to do their part to
help ease the pain American families are feeling from high energy
prices." Instead of mouthing platitudes and beating up on oil
executives, Hastert should lead the effort to reduce restrictions on
drilling and refinery construction. Sen. Dorgan should review our
1970s experience with an oil windfall profits tax that reduced
American production and increased our dependence on foreign sources.

On Thu, 27 Apr 2006 00:33:40 -0400, PagCal <pagcal@runbox.com> wrote:

Cute story, but suppose we change it a little; You live in Harrisburg
and there is no food. Now, someone comes along and offers to sell you a
loaf of bread for $100. You pay.

But suppose there are only 5 majors in the bread business, and you can't
enter the bread business because they've setup barriers to entry, and
now lets suppose that these 5 same majors decide that bread should cost
$100 a loaf and just won't lower prices.

You can't live without bread.

They rip you off.

You pay and pay.

They make excess profits.

These 5 majors also say things like, well, after a while, competition
will increase supply and prices will equalize.

But, why would they?

You and I can't enter the bread business.

So, we're stuck.

Now, suppose the 5 majors decide to charge 120$ a loaf because, they
say, they may never be able to make any more bread in the future - so
they get to charge you more today. They give you some mumbo-jumbo about
a futures market, bla, bla, bla.

Make sense?

To them it does.

To you it doesn't. Why should you be paying for future risk today?

You shouldn't.

And, it's up to government to remove these speculation charges from the
price of bread.

One way is to penalize these 5 majors with a windfall profits tax.
Having to pay it will realize they shouldn't charge consumers for
speculation (as it's going to the government anyway).

Now, substitute oil for bread, and you can see what the these pigs at
the oil patch are doing to you.

What would you consider a fair profit margin? Last year Exxon made
$36.1 Billion on revenue of $371 billion that's a profit margin of
9.7%.

Too much? Should there be some kind of law that corporations be
limited to 5% profit and any excess be given to the government?

You seem to think that Exxon controls the world price of oil. Exxon is
small potatoes compared to ARAMCO and the State Oil Company Of Iran.

Captain Compassion wrote:

Windfall-profits tax would hurt economy
By WALTER WILLIAMS

Published Saturday, November 12, 2005
In the wake of high gasoline prices and high oil company profits,
House Speaker Dennis Hastert demands that oil companies explain why
they are making so much money and what they plan to do to bring down
the cost of gasoline. Sen. Byron Dorgan, D-N.D., has proposed a 50
percent windfall profit tax on every barrel of oil selling for more
than $40. Let’s talk about profits.

First, there’s normal profit, which is defined as the minimum amount
necessary to keep entrepreneurial resources in their current usage in
the long run. Normal profits reflect the opportunity cost of using
funds to finance an operation, and they must be equal to, or greater
than, the returns available elsewhere in the economy. Normal profits
are indeed a cost of business - the payment to equity owners.

Windfall or supernormal profits are any profits in excess of normal
profit and are above and beyond that necessary to keep entrepreneurial
resources in their current usage. However, windfall profits are a
vital component to a smoothly operating economy. Windfall profits
serve as a signal that there are unmet human wants. Let’s look at it
with a simple example.

Suppose there’s a disaster wiping out food resources in Harrisburg,
Pa., and I live in Philadelphia. Before the disaster, the price of
bread in both cities was $2 a loaf. I buy a truckload of bread, cart
it to Harrisburg and sell it for $20 a loaf, earning huge windfall
profits. When the word gets out that there are profits to be made,
what do you think happens? If you said other people will start carting
bread to Harrisburg, bakers will start working overtime to produce
more bread, people who formerly used their oven to bake cakes and pies
will switch to baking bread, there’ll be bread conservation in
Philadelphia and elsewhere, and eventually bread prices will start to
fall in Harrisburg and windfall profits would vanish, go to the head
of the class. While some might find people earning windfall profits
objectionable, the result of their actions, getting more bread to
Harrisburg, is precisely what’s desired.

What if politicians said, "People are profiting from the misery of
others, and we’re going to impose a bread windfall profits tax"? Say
they legislated a 100 percent tax, taking all of the $18 of windfall
profits. Would you expect to see people making all those efforts to
get bread to Harrisburg? Suppose there were huge startup costs for
companies to expand their operation or onerous regulations for people
to get into the bread business, would that be good news or bad news
for people in Harrisburg?

What prevents a robust supply response to changes in scarcity
conditions in the gasoline market? U.S. oil-refining capacity is now
less than it was in 1980, and since that time, there’s been a 25
percent increase in demand. Because of costly environmental
regulations, it’s been 30 years since a new refinery has been built.
According to the American Petroleum Institute, over the last 10 years,
it has cost the oil industry $47 billion to comply with costly and
sometimes useless environmental controls. There are restrictions on
exploiting the huge oil reserves in Alaska and the Gulf, Atlantic, and
Pacific coasts.

Speaker Hastert said, "These are extraordinary times that call for
extraordinary measures. We expect oil companies to do their part to
help ease the pain American families are feeling from high energy
prices." Instead of mouthing platitudes and beating up on oil
executives, Hastert should lead the effort to reduce restrictions on
drilling and refinery construction. Sen. Dorgan should review our
1970s experience with an oil windfall profits tax that reduced
American production and increased our dependence on foreign sources.

On Thu, 27 Apr 2006 00:33:40 -0400, PagCal <pagcal@runbox.com> wrote:

Cute story, but suppose we change it a little; You live in Harrisburg
and there is no food. Now, someone comes along and offers to sell you a
loaf of bread for $100. You pay.

But suppose there are only 5 majors in the bread business, and you can't
enter the bread business because they've setup barriers to entry, and
now lets suppose that these 5 same majors decide that bread should cost
$100 a loaf and just won't lower prices.

You can't live without bread.

They rip you off.

You pay and pay.

They make excess profits.

These 5 majors also say things like, well, after a while, competition
will increase supply and prices will equalize.

But, why would they?

You and I can't enter the bread business.

So, we're stuck.

Now, suppose the 5 majors decide to charge 120$ a loaf because, they
say, they may never be able to make any more bread in the future - so
they get to charge you more today. They give you some mumbo-jumbo about
a futures market, bla, bla, bla.

Make sense?

To them it does.

To you it doesn't. Why should you be paying for future risk today?

You shouldn't.

And, it's up to government to remove these speculation charges from the
price of bread.

One way is to penalize these 5 majors with a windfall profits tax.
Having to pay it will realize they shouldn't charge consumers for
speculation (as it's going to the government anyway).

Now, substitute oil for bread, and you can see what the these pigs at
the oil patch are doing to you.

What would you consider a fair profit margin? Last year Exxon made
$36.1 Billion on revenue of $371 billion that's a profit margin of
9.7%.

Too much? Should there be some kind of law that corporations be
limited to 5% profit and any excess be given to the government?

You seem to think that Exxon controls the world price of oil. Exxon is
small potatoes compared to ARAMCO and the State Oil Company Of Iran.

Captain Compassion wrote:

Windfall-profits tax would hurt economy
By WALTER WILLIAMS

Published Saturday, November 12, 2005
In the wake of high gasoline prices and high oil company profits,
House Speaker Dennis Hastert demands that oil companies explain why
they are making so much money and what they plan to do to bring down
the cost of gasoline. Sen. Byron Dorgan, D-N.D., has proposed a 50
percent windfall profit tax on every barrel of oil selling for more
than $40. Let’s talk about profits.

First, there’s normal profit, which is defined as the minimum amount
necessary to keep entrepreneurial resources in their current usage in
the long run. Normal profits reflect the opportunity cost of using
funds to finance an operation, and they must be equal to, or greater
than, the returns available elsewhere in the economy. Normal profits
are indeed a cost of business - the payment to equity owners.

Windfall or supernormal profits are any profits in excess of normal
profit and are above and beyond that necessary to keep entrepreneurial
resources in their current usage. However, windfall profits are a
vital component to a smoothly operating economy. Windfall profits
serve as a signal that there are unmet human wants. Let’s look at it
with a simple example.

Suppose there’s a disaster wiping out food resources in Harrisburg,
Pa., and I live in Philadelphia. Before the disaster, the price of
bread in both cities was $2 a loaf. I buy a truckload of bread, cart
it to Harrisburg and sell it for $20 a loaf, earning huge windfall
profits. When the word gets out that there are profits to be made,
what do you think happens? If you said other people will start carting
bread to Harrisburg, bakers will start working overtime to produce
more bread, people who formerly used their oven to bake cakes and pies
will switch to baking bread, there’ll be bread conservation in
Philadelphia and elsewhere, and eventually bread prices will start to
fall in Harrisburg and windfall profits would vanish, go to the head
of the class. While some might find people earning windfall profits
objectionable, the result of their actions, getting more bread to
Harrisburg, is precisely what’s desired.

What if politicians said, "People are profiting from the misery of
others, and we’re going to impose a bread windfall profits tax"? Say
they legislated a 100 percent tax, taking all of the $18 of windfall
profits. Would you expect to see people making all those efforts to
get bread to Harrisburg? Suppose there were huge startup costs for
companies to expand their operation or onerous regulations for people
to get into the bread business, would that be good news or bad news
for people in Harrisburg?

What prevents a robust supply response to changes in scarcity
conditions in the gasoline market? U.S. oil-refining capacity is now
less than it was in 1980, and since that time, there’s been a 25
percent increase in demand. Because of costly environmental
regulations, it’s been 30 years since a new refinery has been built.
According to the American Petroleum Institute, over the last 10 years,
it has cost the oil industry $47 billion to comply with costly and
sometimes useless environmental controls. There are restrictions on
exploiting the huge oil reserves in Alaska and the Gulf, Atlantic, and
Pacific coasts.

Speaker Hastert said, "These are extraordinary times that call for
extraordinary measures. We expect oil companies to do their part to
help ease the pain American families are feeling from high energy
prices." Instead of mouthing platitudes and beating up on oil
executives, Hastert should lead the effort to reduce restrictions on
drilling and refinery construction. Sen. Dorgan should review our
1970s experience with an oil windfall profits tax that reduced
American production and increased our dependence on foreign sources.