Posted: 04 May 2011 11:02 AM PDT

Obama doesn’t want to increase taxes on oil companies because it will bring down the price of gas. He wants to increase them because it will raise the price of gas.
This week the House will vote on whether to expand offshore drilling and eliminate red tape needed to get drilling permits approved. Democrats also hope to vote on whether to end billions of dollars in tax breaks to oil companies.
The media have been happy to do Obama’s bidding by referring to the tax breaks as “subsidies”—as though U.S. Treasury officials were riding around the country in an armored van handing out satchels of gold to Exxon Mobil, Chevron, and ConocoPhilips executives.
In fact, we’re talking about reducing the gargantuan taxes these companies pay for the sin of drilling for oil and making it widely available to a country that uses it in every daily setting and is dangerously dependent on Middle Eastern imports.
Since oil companies are likely to pass the cost of increased taxation on to consumers in the form of higher gas prices, the Democrats’ plan will, as usual, do nothing to solve the underlying problem, make things worse, and give greater influence to the federal government. Mission accomplished!
Ending tax breaks for oil companies is the closest Democrats can get to imposing an outright gasoline tax, which they know is politically impossible during a recession.
To be fair, oil companies might not pass the entire added cost on to consumers—they might cut back on hiring, reduce wages, or otherwise trim their workforces. Such actions will no doubt be wondrously helpful for the high unemployment rate. read more »