Pumping Up Prices

Senate Democrats want a 400% tax hike on offshore oil production. Is this their way of punishing an entire industry for an isolated accident? If it is, they missed their mark. The Senate proposal — increasing the duty that subsidizes an oil spill liability fund — would move the tax from 8 cents to 41 cents a barrel on oil produced offshore. A less-punitive plan, hiking it to 34 cents a barrel, was passed last month in the House. Democrats might think a punitive tax on oil companies will score them points with the voters. And no doubt some will be pleased with the get-tough policy on an industry that has been endlessly demonized for providing products that fueled economies and boosted wealth and living standards worldwide. But a lot of Americans know that it is they who will end up paying the extra tax. It will be passed on to them at the retail level, as will the costs of the inevitable stricter regulations, which could boost the price of each barrel of deep-water crude by 10% to 15%, according to an analyst at Credit Suisse...more