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Let’s Try The Free Market!

John Cole has a revolutionary idea — let’s let the free market take care of things. His brilliant idea? Make the oil companies responsible for the total clean up cost of their oil spills. If they can’t pay, they go bankrupt. That might make them a bit more safety conscious.

After the Exxon Valdez disaster, Congress made oil companies responsible for cleaning up after spills, but capped their responsibility at 75 million dollars. After the current spill, Congress has introduced bills raising the cap. But why have a cap in the first place? Isn’t that corporate welfare?

I believe in (real) free markets. If drilling for oil has risks, that should be part of the equation that determines whether that business is profitable. Monetizing that risk is the job of insurance companies. If the risk of oil spills causes the cost of gas to go up, then that will just reflect the actual cost of our addiction to oil, and will encourage investment in alternative fuels.

Exxon had billions in profits last year, and didn’t pay a penny in US taxes. So why should the US government pay anything to clean up their mess?

If it were up to me, the government would stop subsidizing the actual costs of industry. The oil companies make money, and we pay for the wars to keep oil flowing, pay the health costs of all the pollution generated by burning oil, and — in addition to the costs of cleaning up oil spills — the economic costs to fishermen, tourism, and other industries. That’s not a free market, that is corporate socialism!

UPDATE: The bill raising the cap in oil spill liability was defeated by Lisa Murkowski, the Republican Senator from Alaska. Looks like once again corporate welfare is more important than reducing government spending.



  1. ebdoug wrote:

    Let’s not forget those of us who get huge dividends from Exxon Mobile and pay no tax on them. “Let the tax cuts to the rich expire” at the end of 2010. Contact your congress people. When I did my last year of taxes this spring, I’d point out to my clients that if the tax cuts to the rich expire, they will be paying tax on the dividends they get. Each shrugged shoulders and said as if to say “That is fine.” They couldn’t figure out why they weren’t paying taxes on the money

    Friday, May 7, 2010 at 4:43 am | Permalink
  2. russell wrote:

    I TOTALLY agree with the blog post, the real price of oil should be paid at the pump.

    But EBDoug you lost me. Dividends (from any corporation) are ordinary income, taxed along with everything else, at least on my returns.

    Friday, May 7, 2010 at 2:05 pm | Permalink
  3. Iron Knee wrote:

    I think EBDoug was referring to capital gains, which are not taxed as ordinary income.

    Friday, May 7, 2010 at 9:14 pm | Permalink
  4. Jack Vermicelli wrote:

    “That might make them a bit more safety conscience.”

    I think you meant “safety conscious.” A conscience is a noun. “Conscious” is a verb.

    Agreed with the article, by the way.

    Saturday, May 8, 2010 at 2:52 pm | Permalink
  5. ebdoug wrote:

    Russell: Stock held over a year produces “qualified” dividends which are not taxed. On the 1099-Div next to your dividend is a line that says “Qualified dividend” Almost impossible to figure without a tax program that does it for you. If you are “playing the market”, your dividends usually are not from stock held over a year. Those are taxed as “ordinary income” Example: My client works four hour shifts and earns $12,000. She pays tax. I stayed home receiving dividends on my 2008 return with 20K taxable income and paid no taxes. That was before I added the capital gain which still caused me not to pay taxes. State was a different matter. Tell me about the tax cuts to the rich. I realize 20k is not a lot of income, but I still didn’t pay tax where the person going to work did. I felt it was very unfair. No one cares. I’ve been lobbying ever since. If the tax cuts to the rich are allowed to expire, I will pay more taxes. The IRS will collect 120 billion more a year from those dividends and capital gains and go a long way to correct what is wrong with this Nation.

    Saturday, May 8, 2010 at 3:36 pm | Permalink
  6. Iron Knee wrote:

    Jack, thanks. That’s what I get for trying to post stories while on vacation. My iPad does not have a built-in dictionary.

    Saturday, May 8, 2010 at 5:49 pm | Permalink