• September 21, 2019

ELAM: Oil hits 2019 high. What could go wrong? - Odessa American: Dennis Elam Column

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ELAM: Oil hits 2019 high. What could go wrong?

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Posted: Sunday, March 17, 2019 8:00 am

Oil prices were advancing to new highs. This supported new construction of some of the most elaborate and luxurious offices ever seen for Permian Basin Oil Workers. Residential housing was in short to no supply.

Articles about the red-hot Permian economy appeared frequently on the national news. RV parks were filled to capacity as there were few other options for living quarters. New vehicle registrations were at record numbers each month.

OK, what period of time is the previous paragraph describing? Today is not a bad guess but not the correct one either. This is a description of the Permian Basin as the new decade of the 1980s emerged. Claydesta Plaza, north of downtown Midland had just opened. Optimism ran so high that a Rolls Royce/Aston Martin dealership began.

And then the worst possible thing happened. Congress passed the Windfall Profits Tax (PL 96-2223). It was really an excise tax on the difference between the market prices and a 1979 quarterly adjusted base price.

Big Oil did not have much to say, but their actions spoke volumes. They simply started leaving the Permian Basin. Oil prices topped in 1980 staying above $20 until 1986. That year, Saudi finally tired of being the only OPEC country to ever cut production, and prices bumbled to $12.

I don’t see anyone else writing about this, could it happen again.

Firm Last Annual Income-Billions

  • Exxon Mobil, $21.421
  • Chevron Texaco, $14.860
  • Conoco Phillips, $6.305
  • Philips, $5.873

The Democrats are fielding multiple candidates with voracious spending plans. Senator Warren wants to break up tech, Senator Sanders wants to break up big banks, hmm, do you suppose Alexandria Cortez could find a reason for an excise tax on the $47 billion in profits shown above?

You better believe they could. In the run-up to $140 in 2008, nine bills initiating windfall profits tax were introduced.

Can you imagine this impassioned comment from California Senator Kamala Harris? Ala Enron, once again my constituents are being plundered by the Permian Basin Pirates. Oil production is at an all time high but consumer prices rise daily. What happened to the supply demand equation? It is time to claw back these windfall profits and rein in yet another wave of Texas greed.

Could this happen? Francis O’Rourke failed to beat Ted Cruz by three percentage points. On my campus I saw many BETO t-shirts but not a single Cruz shirt. Democrats are calling for voter registration down to age 16 as well as for convicted felons. Of the six major Texas cities, only two have republican mayors.

Remember you read it here first.

Odessa, TX

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