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[Mommy]

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[Billy]

Correct me if I'm wrong, but isn't the definition of windfall profits "unexpected profits"? If that is the case, I'm not sure how anyone with any business sense counts on these. I understand the nature of the oil industry is often times random as far as discoveries are concerned, or unexpected sizes of wells, but for the most part, the technology we have is pretty accurate in finding and estimating the amount of oil a well contains.

I think taxing windfall profits might be a risky move simply because the government will be unable to estimate how much revenue that tax will bring in. Though I am not saying they shouldn't do it. But taxing windfall profits will require another, more secure, tax if the government is trying to raise a specific amount of money.

[Hartmann]

Correct me if I'm wrong, but isn't the definition of windfall profits "unexpected profits"? If that is the case, I'm not sure how anyone with any business sense counts on these. I understand the nature of the oil industry is often times random as far as discoveries are concerned, or unexpected sizes of wells, but for the most part, the technology we have is pretty accurate in finding and estimating the amount of oil a well contains.

I think taxing windfall profits might be a risky move simply because the government will be unable to estimate how much revenue that tax will bring in. Though I am not saying they shouldn't do it. But taxing windfall profits will require another, more secure, tax if the government is trying to raise a specific amount of money.

My understanding is that it would have more to do with changes in market rather than exploration and production. So, OPEC cuts production, prices skyrocket, and the oil companies get "rich", the government gets its piece.

So they are counting on the American people paying more for their gas to fund the government spending, this is partially why the windfall profits tax didn't work the first time they tried it.

We can estimate how much is in a well but we still have trouble estimating how much of it we'll actually get, but we're getting better.

EDITED TO ADD: It does have a little to do with production but not our production, other people's. Basically, the tax punishes the oil companies for being in a volatile industry and succumbing to conditions that they cannot always control.