June 19, 2008

The People's Republic Of The United States Debates Nationalization Of Oil Refineries

Some nutjobs in Congress, and some policy proponents, have floated the idea of nationalizing oil refineries. The linked video clip is from FOX News and the interviewer (Neil Cavuto) is far from neutral in his questioning:

But then again, I wonder if this idea merits a neutral examination. It's so obviously a poor idea, so obviously would result in there being less gas, and the gas costing even more than it does now, and much higher taxes in other areas of life to "subsidize" the price of gas, that it's quite obviously a non-starter.

To be sure, highly socialized oil-producing countries like Saudi Arabia and Venezuela have ridiculously low prices for gas at the pump. But would you accept a hike in your income tax rate to 60% of your annual income in exchange for dollar-a-gallon gas back? Allow me to submit the proposal that if you are making more than $20,000 a year, you would be worse off under such a system than you are now, even if you have to pay $4.50 a gallon.

If someone took to the airwaves and seriously suggested, "Babies. You know, for the food shortage. We should get people in third-world nations to eat their own babies. They're rich in protein!" you wouldn't really expect the interviewer to provide a fair and balanced evaluation of the pros and cons of that suggestion. This isn't quite that far over the top, but it is over the top. So I give Cavuto a pass for his sneering, incredulous tone, because that's the natural reaction of a sane, rational person to the idea that the United States government should nationalize oil refineries. The only critique I have of Cavuto here is that he seems to go out of his way to identify the wide-eyed nationalization advocate as an "Obama supporter." Barack Obama has not, to my knowledge, indicated any embrace or even friendliness to this half-baked idea.

By the way, I don't think the advocates have thought through one thing about their nationalization proposal -- the Fifth Amendment would require the government to pay the oil companies that currently own those refineries the "market value" for them if they were to nationalize the industry. Seeing as those refineries produce a critical commodity, represent some of the most advanced chemistry technology on Earth, occupy tens if not hundreds of acres of land, and as business propositions are at the highest level of profitability in the 150-year economic history of the petroleum industry, that would represent a payment on the order of tens of billions -- no, who am I kidding, hundreds of billions of taxpayer dollars directly to the oil industry. All so the government could run a formerly profitable business at a loss.

I've yet to come across a proposal more worthy of the "Really Bad Ideas" tag than this one.

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