Thursday, June 12, 2008

Economics 101

I have written in the past about what government officials should be required to read. I would like to add to that list Economics 101. McCain and Obama both support a windfall tax on oil companies due to the profit margin.

Let us examine for a moment what happens when costs rise for a manufacture. If I am selling cookies and the price of sugar goes up, I have to charge more for my cookies in order to make the same profit. If oil companies are being taxed they are going to pass along that tax to the consumer.

Leave it to the government to create a bigger mess.

I may be in the minority but I don't fault oil companies for making a big profit. Companies in all markets charge the highest prices that the market will support. There is nothing wrong with that philosophy. In other market places a big company charges obscene amounts of money for a product or service until a new, smaller company comes in and undercuts the market. Prices go down and quality goes up. Markets are constantly balancing themselves out when left alone to do so.

In the gas wars that market balance is not possible due to the many, many environmental laws prohibiting the drilling of domestic oil.

If the candidates truly want to be part of the solution they would fight to allow Alaskan and offshore drilling. Tax incentives should be given to any domestic company willing to truly become an international player.

It is time that the United States becomes a producer again.

The government is not going to be the solution to this escalating issue. The private market holds the only solution and hope for our future economic independence from foreign oil.

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