Monday, November 03, 2008

One More Political Post for the Road.

You know that I am no economics expert, but I had this thought the other day and I ran it by Toby. As we were driving into town, I was thinking how nice it is that gas prices are going down. Here in OK, they are about $2.09. Now I am thrilled like everyone else, but then again, it is cause for worry. While oil prices have been up, things in this area have been booming. Halliburton has been hiring as well as other oil production companies in the area. Toby’s nephew, who lives in Bridgeport, TX, has been doing great working for an oil field construction company. Sam, a young friend of ours with four children, has been able to do very well for his family while living in Ft. Worth and working for a company similar to Halliburton. Sam does not have any special skills or education, yet he is a hard worker and the oil field has been perfect for him. Before his oilfield job, Sam’s family had to rely on welfare and other government handouts to make ends meet. That is kind of the way it is around here. With prices up, there has been lots of new production and re-opening of wells and such. People are working. When prices drop, so will jobs.

So, if the oil/gas prices go down, will production continue? I can remember Toby’s brother-in-law explaining years ago, that some wells were not worth pumping when oil prices dropped. Some are just shut down or capped. But when prices are up, it is worth the time, effort and money to go back in and start pumping these wells. When prices are up, it is worth the effort to do new drilling. But when oil prices are down, the cost of pumping and production is just not worth it. As prices drop, so will production, so will exploration, so will the job opportunities, etc. When I mentioned this thought to Toby, he added that the Democrats want to reinstate the windfall profit tax – add extra taxes on those who make money – tax the wealthy. I did go to Wiki and read up on windfall profit tax and found it very interesting. And you know that Obama and the Dems are just itching to pass this tax on oil companies and "spread the wealth." So, I don’t understand how the Dems can be for more domestic oil production and yet want to impede oil companies. What is their incentive to keep up production and look for new production? If an oil company or other oil production related companies are hiring and spending money and making money and paying taxes, why does Obama want to penalize them or cripple them with higher taxes? Aren’t these companies already spreading the wealth?

I guess, I just don't get it. I just don't understand how someone could want to take someone else's money other than because of greed and covetousness.


inpassing said...

You have my vote!

Just sign me "JOE-sephine the Homemaker".

Buck said...

I'm with ya, Lou. The WSJ has a good editorial today that sez, in part:

His promise to abrogate the North American Free Trade Agreement, if Canada and Mexico refuse to bargain, is a more breathtaking case of U.S. "unilateralism" than anything Mr. Bush has done.

Apropos of something... I hear ya about life in the oil patch. I got caught up in the oil collapse of '84 and took an $8,000.00 check to closing when I SOLD my house in '85. I felt relieved (not to mention fortunate) to sell it, actually, coz it was on the market for a full year. Needless to say, I lost my down payment, ALL my equity and then some. But... better than bankruptcy, I suppose. And I did manage to recover, but it took me a few years.

GUYK said...

The windfall profit taxes are self defeating.

My biggest woory about the falling crude prices are that the public will once again get complacent with the importing of foreign oil and will quit pressing congress to allow drilling in order to become energy independent.

Although there is an abundant oil supply on earth right now it is not an infinite supply and we do need to develop alternative energy sources. But in the meantime we need oil..lots of it and at a price that does not cripple our economy and that of the rest of the industrial world.

Becky said...

You have grasped what Dems don't seem to understand at all--basic knowledge of how an economy works. They don't seem to understand that creating jobs does so much more to spread the wealth than confiscating what one person has worked so hard for and giving it to someone who doesn't feel the need to work. This is why tax breaks for corporations--you know, the ones who hire people and create products--does more to strengthen the economy than forced redistribution of income.

I read in my Patriot Post newsletter that one of the oil companies reported $14 billion in profit. Sounds like a lot, doesn't it? But after the already existing taxes got through with them, they were left with $3 profit. That's right. The government confiscated $11 billion of their profit in the form of taxes. Imagine raising taxes even further. Now, tell me, where is their incentive to increase production and create jobs?

Oops. sorry. I got on a roll. My dad was an economics major, so I know more about the subject than I ever really wanted to.

Fire Fox said...

Thanks Lou... I did some reading on the subject, and I've got a better understanding of the WPT. I'm amazed that those that suggested we do it again don't remember the fiasco it created back in the 80's. Where the heck are these people's brains?

Anonymous said...

Now will you PLEASE be quiet?

Becky said...

What a cowardly thing to do, posting anonymously.

Lou, please DON'T be quiet. What you are saying needs to be said, and those who would bury their heads in the sand about the reality of things need to hear it as well. Even if they don't want to.

bag blog said...

Lou, please DON'T be quiet.