Should the U.S. government compete in the oil business?
by Leigh Pomeroy
Steven Pearlstein has argued recently in The Washington Post that the U.S. should get into the oil business.
And why not? U.S. oil companies are making record profits courtesy of oil and gas consumers, corporations such as airline and trucking companies, and taxpayers in the form of giant tax breaks and subsidies.
Why don't we just cut to the chase and simplify formula? If all Americans owned a part of an oil company — or perhaps even all of the U.S. oil companies — then subsidies and tax breaks would not be necessary, the cost of fuel would presumably be lower, and all the profits would go to us. Perhaps this profit could offset unpopular taxes, such as property tax and corporate income tax.
Hmmm. Not a bad idea.
Federal, state and local governments are already involved in the ownership of businesses and institutions that compete with private enterprise. These include:
According to Petroleum World, over 80 percent of the world's oil is controlled by state-run oil companies. In the U.S., we citizens and taxpayers actually possess trillions of dollars worth of natural resources on government-owned properties, yet because we don't own processing facilities and distribution chains, we can't capitalize to the fullest extent on our own assets.
A frequent cry among conservative politicians is that "government should act more like business." Well, this would be a good way to do it: Let government, acting on behalf of its citizens qua stockholders, be in business. That should shake up some boardrooms and provide competition in the hyperinflated CEO market.
Oh, and while government is at it, why doesn't it take an ownership interest in all those companies (like major league sports franchises) that come begging at the public trough for money or tax incentives to build new facilities (like stadiums)? Seems to me that this would be another good business model that conservatives could embrace.
Pearlstein somewhat tongue-in-cheekly suggests the name "Standard Oil" for his hypothetical, taxpayer-owned oil company. I propose a better name: "Roosevelt Energy", in honor of President Teddy Roosevelt, who not only helped break up the large oil trusts at the beginning of the 20th century, but who also was key in starting the environmental movement in the U.S.
Roosevelt Energy would then be not just an oil company, but a responsible energy company, beholden not to corporate investors but to all the people of the United States.
Now tell me: What is more patriotic than that?
Steven Pearlstein has argued recently in The Washington Post that the U.S. should get into the oil business.
And why not? U.S. oil companies are making record profits courtesy of oil and gas consumers, corporations such as airline and trucking companies, and taxpayers in the form of giant tax breaks and subsidies.
Why don't we just cut to the chase and simplify formula? If all Americans owned a part of an oil company — or perhaps even all of the U.S. oil companies — then subsidies and tax breaks would not be necessary, the cost of fuel would presumably be lower, and all the profits would go to us. Perhaps this profit could offset unpopular taxes, such as property tax and corporate income tax.
Hmmm. Not a bad idea.
Federal, state and local governments are already involved in the ownership of businesses and institutions that compete with private enterprise. These include:
- Health care — hospitals and clinics
- Mail and package delivery — the USPS, Fedex, UPS, DHL, etc.
- Utilities
- Schools
- Public transportation
According to Petroleum World, over 80 percent of the world's oil is controlled by state-run oil companies. In the U.S., we citizens and taxpayers actually possess trillions of dollars worth of natural resources on government-owned properties, yet because we don't own processing facilities and distribution chains, we can't capitalize to the fullest extent on our own assets.
A frequent cry among conservative politicians is that "government should act more like business." Well, this would be a good way to do it: Let government, acting on behalf of its citizens qua stockholders, be in business. That should shake up some boardrooms and provide competition in the hyperinflated CEO market.
Oh, and while government is at it, why doesn't it take an ownership interest in all those companies (like major league sports franchises) that come begging at the public trough for money or tax incentives to build new facilities (like stadiums)? Seems to me that this would be another good business model that conservatives could embrace.
Pearlstein somewhat tongue-in-cheekly suggests the name "Standard Oil" for his hypothetical, taxpayer-owned oil company. I propose a better name: "Roosevelt Energy", in honor of President Teddy Roosevelt, who not only helped break up the large oil trusts at the beginning of the 20th century, but who also was key in starting the environmental movement in the U.S.
Roosevelt Energy would then be not just an oil company, but a responsible energy company, beholden not to corporate investors but to all the people of the United States.
Now tell me: What is more patriotic than that?
Labels: energy, environment, oil, profits
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1 Comments:
The problem with owning an Oil Company is that the Federal Government is poor managers.
Let’s consider what the Federal Government has done with oil.
The Federal Government leases oil rights to oil companies. Currently, the way it is supposed to work, the Federal government signs leases to let oil companies drill on Federal Property. Once the companies recoup their original investments, payments to the public, or royalties, kick in. A single oil lease can yield millions of dollars in royalty payments ... and as oil prices go up and up, so do the royalties. Except that some of the leases do not have clauses in them for government payments and some have caps so the oil companies do not have to pay premium prices (like today with oil over $65 a barrel.)
Benefiting from the oil royalty payments are specific states like Alaska where state residents receive a rebate from the state’s Permanent Fund. Dividend checks from the Alaska Permanent Fund (APF) paid $845.76 to every Alaska resident in 2005 … please note that Alaska does not have any state income tax nor state sales tax AND the citizens get a Dividend.
Last year with the political incentive to “do something” about America’s reliance on foreign oil, H.R. 4761 was approved by the House which would allow drilling for oil on Outer Continental Shelf (in other words, coastal areas such as Florida and California.) Louisiana was to get a better deal but the White House strongly opposed the bill’s revenue-sharing provisions because of their adverse long-term consequences on the Federal deficit . The Administration’s preliminary estimate is that the revenue-sharing provisions of H.R. 4761 would reduce Federal Receipts by several hundred billion dollars over 60 years.”
It’s another case of the Haves-vs-HavesNot.
Alaska is a big winner … while Louisiana is a loser.
The only good that could come out of the Federal Government owning a Oil Company would be they might invest in refineries … which would actually address the problem.
But then again, if Iraq cannot settle on an oil revenue distribution plan, what makes us think that the Republicans and Democrats could ?
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