Bill O'Reilly Is A Big Fat Idiot!

I just need to get this off my chest: the supposedly conservative Bill O’Reilly is nothing but a loud-mouthed, self-important windbag. He’s also more of a Socialist than a conservative.
Yes, I know, I shouldn’t be listening to talk radio, but his show happened to be on and I was caught up in a debate he was having over the high price of gas at the pump. He was complaining that oil companies were raping the world’s users of their product by making an obscene profit of nine percent of sales. He suggested that oil companies’ profits should be limited to three percent, a number he just happened to pull out of thin air.

This isn’t to say that raping by the oil companies isn’t going on and affecting all of our pocketbooks, but O’Reilly’s solution is naïve, moronic and far too simplistic. I am sure he shed few tears when a barrel of oil was $12 back in the 1980s and oil company executives’ largest use of gas cans was to torch their own homes because they couldn’t afford to live in them anymore. There have been, of course, cycles in the oil industry and there will be another downturn coming.

O'Reilly said he supports Hillary Clinton’s position on a “windfall profits” tax. For those who remember, we got a windfall profits tax in the 1970s and it was tacked on to the price we consumers pay at the pump and is still there to this day. Another tax will not affect the profits of the oil companies, it will just be passed along and add more cost to consumers and be a profit center, if one can look at government as an appropriate place for a profit center, to the federal slush fund.

Think about it, the largest windfall to the increase in gas prices is at all levels of government, not the oil companies. First, there is a state sales tax on fuel of about 8 percent. When gas was at $2.00 per gallon, the state of California took in about $.16 per gallon. At $4, the intake is doubled. This does not include the 18 percent excise tax charged by the state and all the taxes that California used to charge the refineries in California, only they don’t charge the refineries anymore because refiners left the state due to over-regulation and higher costs. The price you pay at the pump also does not include an additional 18.3 percent federal excise tax. All added up, you are paying various governments 44.3 percent of the price of each gallon of gas you purchase. In the last two years, this means revenue to the state and federal government has doubled.

If government cared more about consumers paying high prices at the pump, why don’t our elected officials suggest cutting the cost of taxes in half and cuttings their windfall? Why wouldn’t that be fair as they are getting twice the revenue? Government does not take any of the risk in brining gas to your car. They don’t drill for it, they don’t build and maintain the pipelines for it, they don’t refine it, they don’t ship it, they don’t insure it, and they don’t truck it to the filling station. They just sit back and let the cash roll in and then have the unmitigated arrogance to suggest, like O’Reilly does, that oil companies are making too much money.

O’Reilly further showed his ignorance by saying the price of gas is only set by commodity brokers speculating on oil futures and has nothing to do with supply and demand. Absolute rubbish. Oil prices have everything to do with supply and demand. Emerging economies in India and China are more than doubling the demand for oil, which necessarily means there is a bidding war for a finite amount of oil. Further, unrest in the Middle East – caused by our government’s actions, not the actions of the oil companies – has damaged supply as has unrest in oil producing countries like Nigeria, Angola and many places in Latin America.

Policy established by the Fed, and supported by our government, lowering interest rates to such a degree is also having a real impact on the cost of fuel and all other products. The decision by the Fed to keep interests low and hope to inflate our way out of economic stagnation is, to borrow a line from our favorite reverend, like having our chickens coming home to roost. We shouldn’t be shocked when their plan is working, we should simply just ask, “What the hell are you doing to us?”

Finally, all those enviros who want us in a Prius must share in the responsibility of the high cost of fuel. There is ample oil deposits off the Gulf Coast, the coast of California and in the Alaska wilderness to have the U.S. be a net exporter of oil, not the largest importer. All attempts to drill in these areas have been halted by various governments to appease environmentalists. Yes, I know , this is a sensitive subject as we must maintain the delicate balance as stewards of nature, but why don’t we hear any howls of complaints when the drilling is done in the Iranian desert? Could our problem with drilling for oil be more about “not-in-my-backyard” than protecting the global environment? What about nuclear power? The beloved Europeans use it extensively as a means to light up the grid that powers the continent’s homes and businesses. Why not fire up a few nuke plants here? Add to the supply and the cost will go down.

This is all simple Adam Smith economics. Perhaps O’Reilly could pick up a copy of Wealth of Nations and read a chapter or two and, as 441 loves to say, then he can pop off.