Yes, I know that Obama’s $10-per-barrel tax proposal is DOA in Congress. What irritates me is that it is a thoughtless proposal, more about instigating division than about practical benefit. It is as if important policy issues have been entrusted to children, or worse, Internet trolls.
A few years back, I had a colleague who was good at identifying oil prospects, not so good at evaluating them. He’d say,”My prospect could hold 250,000 barrels of oil. That’s $25 million worth!” While that statement is superficially true, it’s also intellectually lazy because it fails to take into account the myriad costs and risks of an oil-drilling venture. (God made petroleum engineers to keep geologists honest.)
Perhaps more tellingly, he only made the statements when oil was near $100 a barrel. It’s easy to do that calculation in your head. When Oil costs $142, or $32.57, you might have to put a pencil to paper to do the hard work of ciphering.
In a similar vein, President Obama’s budget proposal of a phased-in, $10-per-barrel tax on oil shrieks of intellectual laziness.
In 2014, the US produced 3.2 billion barrels of oil. How much tax revenue will Obama’s proposal generate? $32 billion. Easy-peasy.
Math is like kryptonite to anti-capitalist policy makers. We’ll explore why this is dumb in the next installment.