Beating Up On Oil Companies

Assembly Committee Passes Penalty for "Windfall" Profits

The Assembly Committee on Revenue and Taxation passed AB 673 (Klehs) by a vote of 4-3 yesterday. AB 673 will impose a "windfall profits" penalty equal to 2.5% of the so-called "windfall profits" earned by a petroleum producer or petroleum refiner based in California. Voting for the bill was author and committee Chairman Johan Klehs (D-San Leandro) joined by Assemblymembers Judy Chu (D-Montery Park), Dave Jones (D-Sacramento) and Sally Lieber (D-Mountain View); voting against the bill were committee Vice-Chair Mimi Walters (R-Laguna Niguel) and Chuck DeVore (R-Irvine) who were joined by Democrat Joe Canciamilla (Pittsburg).

I could fully explore the impact of a California-specific "windfall profits" tax and the negative impact on oil production and refining in the Golden State - which is a good reason to vote against AB 673. But, the issues surrounding price controls transcend our local economy (or at least they should). As such, I commend to your attention the Econ 101 post on voluntary exchange which addressed the efficacy of price controls in the marketplace.

Walter Williams wrote, "Economic ignorance is to politicians what idle hands are to the devil. Both provide the workshop for the creation of evil." He is right. Should I email the voluntary exchange post to Assemblyman Klehs (pictured above with his key economic advisor)? Do any of you think it would matter?