Tuesday, May 06, 2008

Windfall Profits

Both Clinton and Obama have stated publicly they intend to tax the oil companies for their windfall profits they are reaping. They intend to use these windfall profits tax to subsidize alternative energy sources. While they are at it maybe they need to look at some other commodities that are also reaping some huge windfalls because of government policies.

Our elected representatives passed legislation that provides a huge subsidy to ethanol production. They are exempt from the gasoline tax of 51 cents per gallon. In addition the construction cost of an ethanol plan also reap huge tax credits from both federal, state and local taxing authorities.

Ethanol production now is consuming over 25% of our corn crop. Keep in mind there used to be only 87 million acres devoted to corn now there is over 105 million acres. This increase in corn cultivation did not come about because more land is being cultivated, but because rice production has dropped 2 million acres and, wheat and soy bens have dropped some16 million acres

So with all this tax subsidization of ethanol we now have our food supply being used for fuel. This had resulted in corn going from $2 in spring of 2006 to $6.17 a bushel. Wheat has gone from $4.50 to a high of $12.90 a bushel Soy beans now cost $13.25 versus $5 a bushel in 2006. Most corn is used for feed stock (chickens, beef, pigs). Wheat of course is used to make bread, cakes, donuts and noodles. We have all seen the amount we spend on groceries go through the roof and the reason is obvious, ETHANOL. Our representatives without putting any thought into what they were doing have created this mess.

If these presidential candidates think oil companies are making excessive profits, then they should also look at others who are making huge profits as well. Here are some more;

Since November 2006
35% Aluminum
128% Brent crude
93% Corn
60% Coffee
141% Crude oil
92% Cocoa
51% CRB Commodities Index
29% Feeder cattle
71% Gold
65% Copper
125% Heating oil
20% Live cattle
53% Lean hogs
107% Natural gas
126% Unleaded gasoline
84% Cotton
90% Orange juice
86% Palladium
66% Pork bellies
114% Platinum
145% Soybeans
81% Silver
20% Sugar
208% Wheat

Oh, and let’s not leave out doctors, dentists, professional athletes who continue to see record incomes.

Seriously it is not these record profits that are the problem, it is government itself. Government did this because they got into areas they have no expertise in and exceeded the authority of the United States Constitution. We let them do this to us. The good news is we can correct this error by voting every last one out and send them home this November.


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