Why doesn't the U.S. Government seize the oil companies under eminent domain?

Great Debates
41

[QUOTE=friedo]
In any case, what prevents the government from doing this, is:

  1. Nobody who matters thinks it’s necessary,
  2. There is enormous cultural antipathy (for good reason, IMHO) against nationalizing private industry in the United States,
  3. It would take an Act of Congress (see Youngstown vs. Sawyer),
  4. The Fifth Amendment to the US Constitution requires that “just compensation” be paid for private property taken for public use. How much tax revenue would the government have to collect to properly compensate the tens of millions of shareholders in all American oil companies for their loss?
  5. Foreign shareholders would be under no particular obligation to have their shares forcibly taken, compensation or no.
    [/QUOTE]
    I think #5 is wrong - IIRC, it’s where the property’s located, not where the owner resides.

But that’s a nitpick - #1-4 are all true, and that’s about triple the firepower needed to shoot down this particular idea.

I’ll just stick with #1 - I simply don’t see what a US government takeover of ExxonMobil, etc. would accomplish. The world oil price is where it is because there’s an increasing number of would-be consumers chasing a nearly static supply of oil. And as Little Nemo pointed out, ExxonMobil doesn’t own that much oil in the first place.

From there to gasoline, kerosene, etc., you’ve got refinery costs, transport, and profit margins for refiners, retailers, oil tankers, etc. Where’s it going to help that the Feds own the oil companies?

I just don’t see any advantage here.

42

[QUOTE=IAmNotSpartacus]
Intel is a much better comparison, as unlike Microsoft Intel has significant capital costs. Tooling up a line of machinery to manufacture computer chips is not cheap. Yet Intel’s industry is one of boom and bust. The same cannot be said for oil.
[/QUOTE]

Oil has not seen boom and bust periods? That is one of the most ignorant statements I’ve seen posted about economics on this MB.

43

[QUOTE=John Mace]
Oil has not seen boom and bust periods? That is one of the most ignorant statements I’ve seen posted about economics on this MB.
[/QUOTE]

Yet those companies were still profitable during alleged “bust” periods. cite That was the lowest point for oil’s prices on the chart you listed since 73. If Exxon managed to make $6 billion in profit, I am not sure what you define as boom and bust. Can you point to the last time a major oil company actually lost money in a year? The only other major depression in oil prices was in the 70s. Are you suggesting the period between these “busts” is really 25 years?

Boom and bust, to those who actually invest money, is more akin to companies like AMD, Ford, KB Home and other companies that actually lose money when there’s a “bust”. Oil companies made a profit at $15 a barrel.

Also, what was the last major oil company to go bankrupt?

44

[QUOTE=28Lundy]
Wouldn’t you consider the fact that the price of gas increases daily for the last several moths as “evidence”?
[/QUOTE]
I wouldn’t, nor would any sensible economist. It’s evidence of rising prices (duh!), but not evidence of price gouging. Surely you understand the difference.

45

[QUOTE=IAmNotSpartacus]
Yet those companies were still profitable during alleged “bust” periods. cite That was the lowest point for oil’s prices on the chart you listed since 73. If Exxon managed to make $6 billion in profit, I am not sure what you define as boom and bust.
[/quote]

Well, now you’re just moving the goal posts. When was the last time Intel reported a loss-- a company you said was more prone to boom and busts than oil companies?

46

[QUOTE=The Tao’s Revenge]

Now the proper way to do what you want is to threaten Exxon and it’s fellow robber barons with massive taxes and penalties to help the people these high prices are running into the ground, unless gas prices get lower.
[/QUOTE]

Hey, that’s a great idea, let’s massively tax oil companies, that’s sure to make the cost of gas go down. :rolleyes:

47

[QUOTE=Weirddave]
Hey, that’s a great idea, let’s massively tax oil companies, that’s sure to make the cost of gas go down. :rolleyes:
[/QUOTE]

The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick.

48

[QUOTE=The Tao’s Revenge]
The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick.
[/QUOTE]

Why is it that people think this kind of silliness is a good idea?

-XT

49

[QUOTE=The Tao’s Revenge]
The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick.
[/QUOTE]

“Say, Mr. Board of Directors Guy, our profits are so high that we’re going to have to pay that special Profits-Are-Too-Damn-High Tax.”

“Oh, my, Percival, whatever shall we do?”

“Increase shareholder dividends by three tenths of a percent?”

“Why, Percival, as luck would have it, I’m a shareholder. Get right on it!”

50

[QUOTE=xtisme]
Why is it that people think this kind of silliness is a good idea?

-XT
[/QUOTE]

oh boy you called it silly. I guess that proves it bad. :rolleyes:

The kink the in the supply is refining capacity. One “unplanned outage” and prices shoot up. Oil execs who never had to suffer a day without food in their life are whining like stuck pigs cause Bush talked about ethanol. Meanwhile families and individuals struggle to make ends meet and buy food. You can argue people who are poor are incompetent, which was the general attitude I got last time this topic came up. One person suggested I kill my cat, like it was just a cable bill or some frivolous expense. The kitty that does nothing but love me and randomly attack me. That cheers me up when I’m feeling down. The cold bloodedness of it made my blood boil enough I left the forum cause it was distracting me from my school work.

Well you know what there’s a lot of reasons someone could be stuck in poverty, from kids, to bad luck, to yes not having a good business sense. But poor people are people too. Being a good person is about alot more then money. Some people I know would give you the shirt off their back even though they could barely afford the shirt in the first place.

Oil companies want to dick around with refining capacities and people’s lives, but why can’t they help with the trouble it causes?

51

[QUOTE=friedo]
“Say, Mr. Board of Directors Guy, our profits are so high that we’re going to have to pay that special Profits-Are-Too-Damn-High Tax.”

“Oh, my, Percival, whatever shall we do?”

“Increase shareholder dividends by three tenths of a percent?”

“Why, Percival, as luck would have it, I’m a shareholder. Get right on it!”
[/QUOTE]

“congress amended the law today, share holder dividends are now considered profit”

52

[QUOTE=The Tao’s Revenge]
“congress amended the law today, share holder dividends are now considered profit”
[/QUOTE]

Er, no. It doesn’t work that way. Shareholder dividends are distributed after net profits. Unless your plan is to fundamentally redefine the nature of corporations in order to implement your special oilcos-are-bad tax, you are going to fail.

In any case, that’s hardly necessary when it’s much easier (both from a legal and practical standpoint) to simply implement price controls. It would be equally disastrous for the oil market and the government, but stupid is stupid.

53

[QUOTE=The Tao’s Revenge]
oh boy you called it silly. I guess that proves it bad.
[/QUOTE]

Oh…you wanted PROOF it was silly. I really didn’t think proof was necessary, but if you insist.

[QUOTE=The Tao’s Revenge]
The idea is you tax profits if prices are over x amount. This is incentive to get it below x amount. Some times you give the mule a carrot sometimes you give it a stick
[/QUOTE]

So, you tax the profits if the price exceeds…what? How do you determine what is the ‘right’ price for a commodity (since we are talking about oil)? How do you institute a fixed price ceiling on something with some many variables that define what the final price is?

Do you simply pull a price out of your ass or decide by fiat? Seems likely considering what you are advocating, so lets run with that. Let’s say, for example, that we decide that a ‘fair’ price for gas is $2.50/gallon. Why $2.50/gallon? Gods know…my guess is you don’t (nor would the government flunkies who would be trying to determine what a ‘fair’ price for gas is…they would probably use such high tech methods as a blindfold and a dart board).

But ok, We™ decide that this is ‘fair’. So…what happens? Does this cut into the profits of the Evil Executives™? Doubtful. What actually happens of course is we’ve set the price too low (oops) and so companies would have to sell their refined fuels at a loss (because OIL is running at $138.00/barrel atm). What would they do? Probably not sell gas anymore, or perhaps figure out ways to cut corners (perhaps lay off a bunch of people, perhaps cut corners on things like safety or refining or quality control…who knows?).

But wait (I can hear you say)! What about all those company profits?!? Well, refinery companies and the transport and distribution companies only make a few cents per gallon in profit (IIRC something like less than $.20/gallon but this is from memory)…so, if you decide to fix prices (which is essentially what you are advocating by putting in repressive price controls) you will pretty much put refining and distribution companies out of business over night.

Unless…you simply tax them higher once they pass the magic number (whatever number you decided was ‘fair’). In this case can you guess what will happen? It’s pretty easy as this is what already happens with gasoline…the companies will simply pass the price on to the consumer (which will, you know, raise the prices even more).

So, either you institute price control (by not allowing companies to increase the price on gas beyond some fixed ‘fair’ price) or you simply tax more, in which case the companies will pass on the price hike to the consumer (a.k.a. us, the folks who buy gas).

You starting to see why this is a Bad Idea?

[QUOTE=The Tao’s Revenge]
The kink the in the supply is refining capacity.
[/QUOTE]

Let’s assume for a moment that you are correct here (you aren’t…there is no one ‘kink’). What would you propose exactly? Force companies to build more refineries? Build government refineries to ensure we have more capacity than we need, just in case?

[QUOTE=The Tao’s Revenge]
One “unplanned outage” and prices shoot up.
[/QUOTE]

You mean like one of the hurricane thingies? To be sure…it can certainly have a short term effect on prices. How would you solve this ‘problem’?
The rest of your post is the standard anti-oil/anti-business rant so I won’t address that. You wouldn’t be convinced anyway.

-XT

54

[QUOTE=xtisme]
Oh…you wanted PROOF it was silly. I really didn’t think proof was necessary, but if you insist.

[/quote]

Yep that swarminess sure proved your point. You realize this isn’t a dick measuring contest right? You don’t need to wave it around.

That’s beside the point. To the issue.

Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn’t enough oil on the market no point punishing anyone. It can’t be helped. Not as arbitrary as you expected for your screed? Too bad.:stuck_out_tongue:

However when refining capacity is tight enough an outage makes prices jump then it’s refining capacity.

Although now that I think about it requiring a certain amount of extra capacity be available should it be needed would do the same thing. So why not do that on pain of taxes instead?

See assumptions. The old cliche of “when you assume you make an ass of u and me” has alot of truth to it.

My answer to the first part pretty much invalidated your whole chain of assumptions. Here’s a good assumption to make next. Don’t assume I’m a cardboard cut of some stereotype in your head, because you will be wrong.

Now if you want to assume I want to discuss the problems that these fuel prices are causing, and how they can be eased then you would be correct.:slight_smile:

Both of those, I’d rather keep the government out of it as it isn’t equipped by it’s nature to handle it efficiently. Still getting refining capacity is top priority.

Btw your assertion that US refining capacity is adequate is wrong. Why else would we import approximately a million barrels of refined gasoline a day? When things are that tight one refinory losing capacity sends ripples of supply and demand all over jacking up prices. http://tonto.eia.doe.gov/dnav/pet/hist/wgtimus2w.htm

:rolleyes:

Increased capacity.
Surely you’re not so ignorant of the issues you don’t know other things like equipment failure, fires, and other problems can also take down refinery capacity would you? You wouldn’t be intentionally leaving out information just to make a point would you? Surely if you right you don’t need to resort to that.

I got told to kill my kitty over big oil profits. What about families with kids? Infanticide? Tell me. Should parents struggling to put food on the table have their kids put to sleep? What are the poor supposed to do? Explain to me. Keep in mind moving is not an option for many for a variety of reasons, investing in stocks requires money to start, and is long term if you want predictable results. Not a stop gap measure for current hardships.

And answer me this. Have you ever went a day where you didn’t have food to eat?

55

[QUOTE=John Mace]
Well, now you’re just moving the goal posts. When was the last time Intel reported a loss-- a company you said was more prone to boom and busts than oil companies?
[/QUOTE]

No loss, but from 2000 to 2001 INTC saw a 90% drop in net profits. Even to this day they’ve not matched the results from 1998-2000. The reference to Intel had more to do with its industry, semiconductors, which is notoriously volatile. Sorry if that was unclear.

56

[QUOTE=whatami]
It’s difficult to answer your question as it is not even really valid.
Please provide evidence of overcharging and/or price gouging. Part of the reason for the large increase in the cost of a bbl of oil is due to the weakness of the Dollar right now.
[/QUOTE]

Anyone with the ability to read the insane billions of dollars in profits in every quarter would know we are being price gauged. The last time this happened the government collected “windfall profit taxes” from the oil companies, it is time to do it again, past time.

57

[QUOTE=The Tao’s Revenge]
Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn’t enough oil on the market no point punishing anyone. It can’t be helped.
[/QUOTE]
Again with the terrible understanding of economics!

Demand isn’t some independent measure of what’s going on in the world, like taking the temperature or measuring the humidity. Demand is changed by a number of factors, and price is on the short list of the most important factors. High prices limit demand so there are not shortages. If you seriously expect refining output – and you’re talking about output, not capacity – to keep up with demand, then what you’re essentially suggesting is that gas should be at a price that is just slightly greater than free.

The cheaper gas is, the more uses people will find for it – driving inefficient cars, idling for long periods of time, driving everywhere instead of walking, running generators instead of using “expensive” public utilities, you name it. And everyone will be really happy with cheap gas until one of two things happen: 1) they see how much tax revenues are going to have to increase to subsidize the largest corporations on earth, or 2) high demand, short supply, and low prices result in shortages.

58

They don’t pay for these people to be elected so they can stop the gravy train.

59

[QUOTE=The Tao’s Revenge]
Simple, calculate what the price would be if refinery capacity could keep up with demand. If there simply isn’t enough oil on the market no point punishing anyone. It can’t be helped. Not as arbitrary as you expected for your screed? Too bad.:stuck_out_tongue:
[/QUOTE]

No…it’s exactly what I expected. As with most ‘simple’ things it’s dead wrong. As Ravenman ‘demand’ isn’t a fixed quality but changes constantly. If the price of gas drops demand rises…if the price of gas rises demand drops.

That ‘simple’ enough for you?

[QUOTE=The Tao’s Revenge]
However when refining capacity is tight enough an outage makes prices jump then it’s refining capacity.
[/QUOTE]

I suppose it never occurred to you to wonder WHY refining capacity is what it is here in the US. You just want to ‘fix’ the ‘problem’, ehe?

[QUOTE=The Tao’s Revenge]
Although now that I think about it requiring a certain amount of extra capacity be available should it be needed would do the same thing. So why not do that on pain of taxes instead?
[/QUOTE]

So, force companies to build new refineries so that we have extra capacity available just in case? And do this by increasing taxes on those evil corporations who refuse? How were you planning to ensure that these evil corporations you are forcing to build new refineries won’t simply pass those taxes on to the consumers?

[QUOTE=The Tao’s Revenge]
See assumptions. The old cliche of “when you assume you make an ass of u and me” has alot of truth to it.
[/QUOTE]

Since there are only so many ways to do what you were proposing in the post I was responding to, and since you didn’t deign to go into any more details, I figured I’d simply talk about the only two reasonable ways to do what you were describing…and why they would be a bad thing. I don’t want to make a further assumption here, but from your post can I take it you don’t intend to actually address your own point in further detail as to how you think it could be done and what effect it would have…my own poor examples falling short and all?

[QUOTE=The Tao’s Revenge]
Both of those, I’d rather keep the government out of it as it isn’t equipped by it’s nature to handle it efficiently. Still getting refining capacity is top priority.
[/QUOTE]

Well, so as not to make any assumptions why don’t you detail what YOU think the effect of this will be on the price of gas, ehe?

[QUOTE=The Tao’s Revenge]
Btw your assertion that US refining capacity is adequate is wrong. Why else would we import approximately a million barrels of refined gasoline a day? When things are that tight one refinory losing capacity sends ripples of supply and demand all over jacking up prices. http://tonto.eia.doe.gov/dnav/pet/hist/wgtimus2w.htm
[/QUOTE]

And your counter assertion proves nothing. US refining capacity is what it is. New refineries haven’t been built in the US in 30 years. Why? There are a lot of factors, but I don’t want to assume you need them. So you tell me…why have no new refineries been built lately? And how would you fix this problem?

[QUOTE=The Tao’s Revenge]
Increased capacity.
[/QUOTE]

No, you want over-capacity in case something happens. Again, why haven’t US refinery companies put in new plants in 30 years? What would you do about it?

[QUOTE=The Tao’s Revenge]
Surely you’re not so ignorant of the issues you don’t know other things like equipment failure, fires, and other problems can also take down refinery capacity would you? You wouldn’t be intentionally leaving out information just to make a point would you? Surely if you right you don’t need to resort to that.
[/QUOTE]

Surely you don’t think you are the only person in the universe who has thought of these things? Surely not. If having more refining capacity would help why exactly haven’t refining companies done so? I mean, if they lose output capacity due to hurricanes, equipment failure, fires, etc then they stand to lose a lot of money…no? So, why haven’t they over built capacity for such an eventuality.
I’ll continue to leave your kitty rant to others to deal with (if they so choose). You are a hostile enough poster without going into that can of worms. I’ll answer your last question however just for kicks:

[QUOTE=The Tao’s Revenge]
And answer me this. Have you ever went a day where you didn’t have food to eat?
[/QUOTE]

Not that it’s really any of your business, but my guess is I’ve gone a lot more days without food than you ever have gringo. What’s your point exactly?

-XT

60

[QUOTE=Ravenman]
Again with the terrible understanding of economics!

[/quote]

And you lack reading comprehension. As this:

Had nothing to do without what I said.

Refinery capacity is a different value then actual oil on the market. The oil has to be converted to gasoline or diesel, unless you’re claiming people can run their cars directly off crude? :dubious: Because that’s the only way what you said logically relates to what I said.

American refinery capacity is really tight right now. Combined with the need for gas being fairly inelastic over the short term means a loss of capacity (something breaking in a refinery for example, or it being shut down for whatever reason) can cause gas prices to shoot up, and taking food directly out of the mouths of the poor to fund Exxon’s next oil spill disaster.
To put a different way. You want Popsicles, it’s a hot day out. You buy fruit juice or koolaid or something and use your freezer to refine them into popsicles. it don’t matter how much juice is on the market, if your freezer just has room to refine one popsicle then that’s all you’re getting You could have a barrel of juice but you’ll only be able to make one popsicle, unless you buy popsicles from somewhere else. Problem is importing popsicles is expensive, more expensive then importing juice and making them yourself.

Btw what is with all the hate in this forum? You’re acting like I’m insulting your god or something, just because I don’t think the poor should have to suffer as much as as they are right now just because the incompotant republican controlled government and the free market failed hard over oil in the years leading up to this.