Obama talked about a windfall profits tax as early as April. As crude oil prices topped $110 a barrel, Obama promised to "put a windfall profits tax on oil companies and use it to help ... families pay their heating and cooling bills and reduce energy costs." And in August, the Democratic nominee issued a campaign ad that promised "a windfall profits tax on big oil to give families a thousand dollar rebate." The windfall profits tax was a key point of contention between President-elect Obama and McCain in June, when McCain criticized Obama for the plan, calling it "dangerous".
ASBL president and founder Lloyd Chapman says he was "disappointed" and "surprised" that Obama dropped the windfall tax plan. He maintains that a reduction in the price of oil does not justify the policy shift. "There's not always a correlation between the price of a barrel of oil and what we're paying at the pump," Chapman said. "The oil and gas companies are clearly making excessive profits. They've taken advantage of the fact that there's no regulation of that industry and overcharged at the pump and hurt our economy. The excessive profits tax is based on the excessive profits they've made in the last eight years. The tax was to get some of that money back for the American people."
James Galbraith, an economist at the University of Texas and a frequent Mother Jones contributor, says that Obama's change of course "makes sense" given the dramatically reduced amount of money a windfall profits tax would bring in now. "You could still pass the tax but the revenue from it would be much less," Galbraith wrote in an email Tuesday.
Cathy Landry, a spokeswoman for the American Petroleum Institute, which lobbies for the oil and gas industry, says that her organization hadn't heard any details of the Obama team's change in plans, but that the oil and gas lobby was happy to hear about it. "[API] is pleased that President-elect Obama is reevaluating his position, particularly considering the economic situation," Landry said. "The oil and gas industry has been one of the bright spots in the economy, and this would be a bad time to snuff out bright spots in the economy."
By the way, on October 30, ExxonMobil reported its quarterly earnings. It netted $14.83 billion, setting a national record for quarterly profits. Bright spot, indeed.