Gas Prices, Oil Companies and Windfall Taxes

While there have been some support for a windfall tax on excessive oil company profits, I have to disagree. While the oil companies have experienced record profits, a windfall tax would provide a perverse incentive for the future for oil companies to curtail, rather than expand production capacity, which in turn, would lead to higher oil and gas prices in the future than today. On the other hand, the Bush Administration's policy to reduce environmental restrictions on oil and gas production and opening the Arctic National Wildlife Reserve (ANWR) is also misguided. Neither will provide much benefit to end users of the products, restrain growing demand or provide incentives to reduce reliance on oil in favor of a renewable or less-environmentally damaging energy product. I have to agree with The Economist, who argue that it would be better to increase gas taxes, increase fuel efficiency of automobiles and impose a carbon tax. These strategies would reduce demand for oil and provide the government with a longer-term increase in revenues, part of which could be used to provide assistance to low-income Americans through gas credits and the Low Income Heating Energy Assistance Program (Liheap).