A Rant about Conservatives and Free Market Capitalism

This is a discussion on A Rant about Conservatives and Free Market Capitalism within the Off Topic & Humor Discussion forums, part of the The Back Porch category; I have been seeing various surveys and comments in the news that show (in my view) a surprising number of conservatives who support measures such ...

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Thread: A Rant about Conservatives and Free Market Capitalism

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    JT [OP]
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    A Rant about Conservatives and Free Market Capitalism

    I have been seeing various surveys and comments in the news that show (in my view) a surprising number of conservatives who support measures such as price controls and wind fall profit taxes against oil companies. As the die-hard Capitalist that I am, I find this surprising. I am use to it coming from liberals, but not from my conservative brethren. Without getting too long winded, I am going to very briefly address these issues.

    Price Controls: They donít work. Do you want to put a cap on gas prices? Then be prepared to wait in lines the likes of which you have never seen. Itís simple supply and demand. Cap the prices, and supply suffers. Will gasoline stations sell gasoline for less than they pay for it? I donít think so. Will oil companies sell in the US where they are told they have to sell it at a lower price, or will they sell it to the oil hungry Chinese? President Nixon tried price and wage controls in the 70ís. It was a disaster. They donít work.

    Wind Fall Profit Tax on oil companies: These are increased taxes on the extra ďwind fallĒ profits that the oil companies are making. This was also tried before, in 1980. You can give it partial blame for the mess we are in today. Oil and gas exploration and development is a very expensive endeavor. When oil and gas companies have their profits taxed away, they do not have the money to find new wells, or to build new refineries. This hurts domestic production, and puts us even more dependent on foreign oil. As bad as the oil prices are right now, there is a plus side. The oil companies have more money for further domestic exploration and drilling. There are fields that could not be drilled before because they were not economically feasible. Now they are. After they are drilled, if the price goes down, they will stay in production. It costs relatively very little to keep a well in production, compared to the initial drilling. It comes down to this; the prices are high, so money is going to be made. Do you want the oil companies to keep it and be able to increase production, or do you want them to hand it over to Uncle Sam. I trust Exxon Mobil and BP to spend it wisely more than I do the Federal Government.

    In summary, if you are a Capitalist, you are because you know the system works. Do not support measures that go against the very free market principles that have made us the richest country in the world. Iím not talking about price gouging. That is a different issue. I am talking about letting the free market system work. Promote measures to increase economic growth and free market competitiveness, not government regulation and bureaucracy.
    Blessed be the Lord my rock who trains my hands for war and my fingers for battle. Psalm 144:1

    Si vis pacem, para bellum

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    XD9
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    Good points JT. I ranted about gas prices in another post and feel that some of the cost we are paying at the pump is price gouging.

    I would love to see the free market system work.

    When was the last time a new refinery was built? I will tell you. 30 years ago. That is a loooong time ago. And you can't tell me that a 30 year old refinery is going to be as efficient as a new one would be.

    What about drilling for oil? The US has great reserves of oil. There is the oil in Alaska and off the coast of California. But it is untouchable because of the Government. What about Oil Shale? We have a ton of it here in Utah. Up until recently it was to expensive to extract but that has changed with new technology.

    What I am trying to get at is that the Government has crippled us by over-regulating the oil industry. I think there is a rubber-band effect going on between the Oil companies and the government. It government is pulling them so far to one side that when they get the chance, they snap back and try and grab what profits they can. If both sides could come to the middle, everyone would win. The oil companies would make money, we would have more disposible income to buy things, thus generating more tax money, and the government would be able to fund what they need to using that new tax revenue. Also, lower gas prices mean lower cost of goods which means more bang for the buck. That's always a good thing.

    So... build some new refineries, drill and process new sources of domestic oil, tell OPEC to stick it their piehole, and continue to develop new sources of power. eg. nuclear and hydrogen.

    My $.02 and as always, I think someone owes me some change because this probably isn't even worth that.
    There are 2 sounds in the world that strike more fear than any others. A click when you should hear a bang and a bang when you should hear a click.

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    JT [OP]
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    Just to clarify on two points. One, this was not the result of anything I read here. It was the result of news reports about survey results and opinions I have read elsewhere. Two, to reiterate, I am not talking about price gouging. There is a difference between price controls and stopping price gauging.

    It is because of government that we are in a supply crunch. Because of government regulation there has not been enough domestic drilling, and certainly not enough building of refineries.

    As for profits, I think that for the most part the domestic oil companies are not doing anything wrong as far as profits are concerned (OPEC is another story). They are in business to make money, and they are charging what the market will pay. They market is willing to pay this because there is a supply shortage. Now that oil prices are higher it becomes economically feasible to drill in fields that were not profitable at lower prices. The investment in the new fields will increase supply, which will eventually lower costs (assuming demand does not increase as much). If government hadnít interfered in the first place we would not be in this supply crunch. To get us out of this supply crunch, some major cash is going to have to be invested in drilling and refineries.
    Blessed be the Lord my rock who trains my hands for war and my fingers for battle. Psalm 144:1

    Si vis pacem, para bellum

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    I certainly am concerned at lack of new refineries - this glut almost of very aged refineries is representing a vulnerability - and now that is coming home to roost to a degree.

    I also agree re an apparent lack of adequate exploration - reserves are way better than often suggested - instance Alaskan oil, still so far kept from aquisition because of where the fields are.

    Make sufficient capital investment available and over a few years things could be turned around quite well - at least way better than what we see now.

    I also hear that many TX fields are in fact significantly under utilized due to to early (poor) extraction methods.
    Chris - P95
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