Tuesday, April 25, 2006

A windfall of a different kind

A friend of mine and I awhile back had been discussing the net profit tax. My friend worked for the Dept of Revenue back in the 70's and did the research on the gasline.

His research was used to brief members of Congress on the feasibility of a gasline.

I value what he had to say. About two months ago, he said "watch what the federal government does. They will implement a windfall tax."

Well the headlines...................................


Legislators want windfall tax for oil companies

Specter says the levy would bring relief to gas consumers
By Associated Press April 24, 2006

WASHINGTON -- The government should consider a tax on oil companies if they make excessive profits amid rising gasoline prices, a leading Republican senator and several Democratic lawmakers said yesterday.

Senator Arlen Specter of Pennsylvania, chairman of the Senate Judiciary Committee, said a windfall profits tax, along with measures to stem concentration of market power among a few select oil companies, could offer eventual relief to consumers at the gas pump.

''I believe that we have allowed too many companies to get together to reduce competition," Specter said.

''They get together, reduce the supply of oil, and that drives up prices," he said. ''In the short run, it's hard to deal with it for tomorrow. But I think windfall profits, eliminating the antitrust exemption, considering the excessive concentration of power are all items we ought to be addressing."

Specter is backing legislation that would strengthen antitrust laws on oil company mergers after his committee held a hearing last month examining the growing consolidation of the oil industry.

The nation's largest oil companies, including Exxon Mobil Corp., have denied their industry size has affected prices. The companies are scheduled to report quarterly profits this week.

Last week, crude oil prices hit record highs and average gasoline prices nationwide neared $3 a gallon.

Senator Carl Levin, Democrat of Michigan, said he believes gas prices ''would come down within a matter of days" if President Bush told oil companies he was going to support a windfall profits tax.

''But the president will not call the oil companies into his office because he's been too closely allied with those oil companies, and if he does it's going to be a window-dressing conversation," said Levin, who appeared with Specter on CNN's ''Late Edition."

Senator Edward M. Kennedy, Democrat of Massachusetts, said on NBC's ''Meet the Press" yesterday that he also favored imposing a windfall profits tax and returning the money to working families.

''This is not a time for greed, and that is what we have on this. And the administration . . . has failed to take action," he said.

In California over the weekend, Bush offered little hope of short-term price relief, but he called on Congress to pass his energy plan, which aims to boost federal research into batteries for hybrid and electric cars and renewable fuels.

''I understand the folks here, as well as in other parts of the country are paying high gas prices," Bush said in Sacramento. ''We're going to have a tough summer."

Bush spoke after touring the workshop of the California Fuel Cell Partnership, which promotes hydrogen fuel-cell technology for electric cars and trucks

In the Democrats' weekly radio address Saturday, Senator Bill Nelson of Florida warned of ''economic havoc" if a terrorist attack sinks a super-tanker or a hurricane shuts down oil refineries in the Gulf Coast. ''Whatever the cause, the crisis is coming," he said.

Nelson said the administration must stop being influenced by the powerful oil industry and start promoting production of synthetic fuel from coal, broader use of alternative sources such as ethanol, and a significant increase in the mileage standards for all passenger vehicles.

Representative Rahm Emanuel, Democrat of Illinois, chairman of House Democrats' campaign arm, criticized Bush and Congress GOP leadership for subsidies and tax breaks for oil companies. ''The Republican Congress can't stop taking oil money and can't stop sending billion-dollar giveaways to their friends in the oil industry," he said.

Crude oil prices climbed above $75 a barrel Friday.

Meanwhile in the U.K.


UK won't block Gazprom bid for Centrica - FT

LONDON (Reuters) - The government has ruled out blocking any takeover bid by Russian gas giant Gazprom for utility Centrica, the Financial Times reported on Wednesday.

Prime Minister Tony Blair has told allies that Britain should stick to its commitment to liberalise European markets rather than interfere, the paper said in an unsourced report.

Blair believes the country's competition authorities should deal with any bid for Centrica by state-controlled Gazprom, which supplies a quarter of Europe's gas, the FT said.

The possible deal has raised fears about the security of the gas supply to Britain, which has dwindling energy reserves.

Gazprom was at the centre of a political storm in January when it cut gas supplies to Ukraine over a price dispute, leading to shortfalls across Europe.

In February, the UK government said a Gazprom bid would face "robust scrutiny" after officials at the Russian firm were quoted as saying it was mulling an approach for the utility.

The government has not commented on a report in the Financial Times earlier this month which said a British trade minister had held eight meetings this year on how to block a potential takeover.

Citing government officials, the FT said government ministers were briefed that they would have to pass new laws to block any bid by Gazprom for Centrica.

A spokesman for Blair declined to comment.

First to the windfall tax by the federal government. That tax will be assessed and will be deducted from the net profits the oil companies make. What this means is less money for the State of Alaska. Our Legislature is rewriting the laws to go to a net profits tax.

The federal government will once again take revenue destined for the State of Alaska.

Next, to blame the oil companies is pure politics on the part of the Legislators.

What they do not want to do is take responsibility for their actions on shutting down ANWR, implementing environmental laws that are too restrictive and implementing federal fuel taxes.

If the Legislators in Washginton want to place blame on the crisis, they can and should look to their own actions.

They better concentrate on the nations that are manipulating the supply, that is where the problem is. As the U.K. will find out shortly.

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