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Fox News Misses Point On Oil Price Investigation

Reported by Judy - May 25, 2006

Fox News spend some time debunking a proposal by Sen. Hillary Clinton to impose a windfall profits tax on oil companies because of the huge profits they are currently making as world demand for the increasingly scarce commodity forces up prices. John Kasich, guest on "Dayside," pooh-poohed the concept of taxing oil companies, but said an investigation into oil company collusion on pricing would be OK. But he's missing the point.

Appearing on "Dayside," on Wednesday (May 24, 2006), Kasich said the nation doesn't need to spend money on researching alternative fuels and should just give tax credits to people to buy alternatives. Yeah, it doesn't make any sense (how can people buy alternatives if none have been developed?), but we're talking Fox News logic here.

Then he said, "It's proper that they’re investigating to see if there was any collusion among the oil companies. We’ve been doing this for years. I don’t think we’re going to find that there is any."

He may be right that an investigation will not find any collusion among oil companies to fix prices. That's not how they operate. What they have done is forestall any alternatives to oil as their supplies of it get smaller and smaller, knowing that the price will go up. Oil company executives know fully well that if alternatives are developed and subsidized by government, the demand for their oil will fall, and so will the price they can demand for it. Their game is to keep the nation hooked on oil until every drop they own has been sold at the highest possible price.

So when Kasich says oil companies aren't colluding on prices, he is technically correct, but they do have a role in keeping oil prices high by blocking every conceivable alternative.

In beating up on the idea of windfall profits, Kasich also claimed, "If we start saying we’re going to tax windfall profits on oil companies, the next thing it’s pharmaceutical companies and the next thing they want to do is tax the windfall profits on Fox News."

And he sees a problem with that?

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