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| Blumenthal |
“I believe in capitalism” – Blumenthal on the campaign stump
U.S. Senator Dick Blumenthal
is on the road again, this time making a pit stop at a Hartford gas station to unveil
his legislative assault on Big Oil.
The front page above the fold headline in a Hartford Paper read: “As gas prices in Connecticut hit $5 a gallon, Sen. Blumenthal targets oil companies’ billion-dollar profits.
“I’m angry,” Blumenthal
said, “just as every driver in the state is.” And “The big oil companies are profiteering.
They are making record profits causing consumers unprecedented pain.” And oil
company buybacks “…are benefiting shareholders, but not consumers.” And “Those
buybacks help the people who own the companies, but not consumers.”
In addition to
reaping obscene profits, the oil companies also are cutting back on job
production.
The solution to this
obscene profit taking is, Connecticut’s consumer protection senator has said, a
“Big Oil windfall profits tax,” fifty percent of which Blumenthal proposes to
return to consumers in the form of a rebate.
The thrust of
Blumenthal’s proposed legislation – which hasn’t a snowball’s chance of
surviving the fiery furnace in the U.S Capitol – differs not at all from
similar proposals made by extreme leftists in the Democrat Party such as Vermont's socialist Senator Bernie Sanders and President Joe Biden, whose chief ambition
it is to put an end to fossil fuel production, the sooner the better.
Towards this end,
Biden has shut down the Keystone XL pipeline running from Canada to Nebraska
and forbidden greedy, profit taking Big Oil CEOs from tapping into federal
lands rich in oil. Early in his campaign for president, Biden, attempting to
hustle votes from leftists within his party, roughly sketched his proposal to
drive Big Oil from energy production in the United States. In a still free
market economy supply constriction drives prices up. And inordinately high
prices, fossil fuel slayers hope, should drive fossil fuel production from the
energy market.
The price gas consumers
in Connecticut now see on gas pumps everywhere, hovering around $5 a gallon, is
testimony to the success of the Biden/Blumenthal assault on fossil fuel
production.
This is the way a
free market works: If the production of goods and services is constricted, prices
increase. They increase because a balance between the cost of production and
the price of goods and services must be preserved if the producers of goods and
services are to remain in business.
This is one of the
enduring lessons politicians in Connecticut should have drawn from the late –
one hopes – COVID pandemic. When politicians in Connecticut shut down businesses
and schools during the pandemic, students failed to learn and a good many
businesses went out of business.
Why so?
Answer: Businesses,
shut down during the pandemic -- some may argue unnecessarily – were not
permitted to answer a demand for products and services that had been severely
constricted, their profit lines disappeared, and the businesses consequently
disappeared. A profit is to a business what the heart’s blood is to bodily
survival.
Blumenthal’s Bernie
Sanders notion is a profit transferal scheme. Biden/Blumenthal are to decide
what a proper profit line should be -- a determination made in a free market
economy by purchases of goods and services – then, if the profit exceeds Biden/Blumenthal’s
permissible profit, federal price regulators will confiscate the excess and
transfer it to purchasers by means of a consumer rebate.
Put it this way: The
Biden/Blumenthal administration first constricts the production of goods and
services by means of dubious presidential executive orders; the producers of
goods and services then recover diminishing profits through price increases that
the Biden/Blumenthal administration deems excessive; the price regulators then
impose an additional tax on energy producers intending -- so they say -- to
return half of the collected tax to consumers.
But of course there
is are difficulties. In a free market, capitalist – e.g. non-Bernie Sanders – economy,
producers of goods and services are never
tax payers. They are, instead, tax collectors who pass along tax impositions to
consumers of goods and services. The Biden/Blumenthal obscene profits tax will
provide a 50% profit to the Biden/Blumenthal tax collectors to do with as they
choose. The 50% returned to consumers in the form of a rebate will soon be
spent by energy consumers in the form of product and services cost increases.
Qui Bono? Who then, in this intentionally confusing and complex transaction, are
the real winners and losers?
The Biden/Blumenthal
scheme imposes an additional “profit” tax on energy producers, which the energy
producer will recover by passing along an equivalent cost increase to energy
consumers. The Biden/Blumenthal scheme has therefore imposed upon the energy
consumer the whole profit tax, half
of which will be, so federal regulators say, remitted to the consumer in the
form of an energy rebate.
Would it not be
simpler and more efficient for all concerned to first increase fossil fuel supplies
by removing federal restrictions on production? As production increases, the price of gas at
the pump will be reduced, leaving in the pockets of taxpaying consumers of
goods and services money they might use to revive businesses in Connecticut
crippled by political COVID restrictions.
Reporters familiar
with how the private marketplace really works might consider advising
Blumenthal, sometime before voters go to the polls to reelect him to Congress,
that the price of fuel in his home state may be further reduced by a permanent reduction in Connecticut’s
double whammy taxes – Connecticut imposes state taxes twice on gas, once at the
port of delivery and again at the gas pump -- leaving more money in the pocketbooks
of mothers in Connecticut who no doubt will be paying increased prices for baby
formula, once the single factory in the U.S that had produced about 40% of all
baby formula consumed in the United States recovers from an unfortunate
shutdown imposed upon the company by federal consumption regulators oblivious
to predictable consequences.
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