Don't do it

The WSJ is reporting that the Obama administration is renewing the push to raise taxes on oil producers. The higher that oil goes, the more palatable this notion becomes. The problem is that the more you tax producers, the less incentive they have to find more oil.

"In recent years, surging crude prices have led to record profits for the major oil companies. A report by the Congressional Research Service last year said the top five major integrated companies -- Exxon Mobil Corp., Royal Dutch Shell PLC, BP PLC, Chevron and ConocoPhillips -- generated more than $100 billion in profits on nearly $1.5 trillion of revenue in 2007.

Last summer, when oil prices were near record highs, Democrats in Congress proposed slapping a windfall-profits tax on oil producers, rescinding various tax breaks for the industry and using the money raised to fund alternatives such as wind and solar power. The oil industry said the proposals would do nothing to bring down $4-a-gallon gas prices. The legislation died."

I might suggest raising the tax on consumers of oil but I guess that would be silly.

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Futures are up nicely this morning after that wacky up/down/up day yesterday.