The Washington Post spelled out the reason why increased demonization of “Big Oil” by calling for a windfall profits taxes are wrong:

Making Exxon surrender money that is now falling into its lap would not necessarily affect its longer-term plans or incentives. Indeed, some of Big Oil’s “windfall” already will go to the government: The more profit the companies earn, the more corporate income tax they pay. But to add a five-year tax increase on top of that to pay for a one-year gift to voters would, indeed, increase the cost of doing business. That cost would be passed along in forgone investment in new production, lower dividends for pension funds and other shareholders, and higher prices at the pump — thus socking it to the consumers whom the plan is supposed to help. If oil prices fall, there might be no windfall profits to tax. Then the Obama rebate would have to be paid for through spending cuts, taxes on something else or borrowing.

The Post does a wonderful job of telling its readers why increasing taxes on oil companies will backfire on everyone. Dems continued use of “Big Oil” as a demonizing mantra is archaic. The Post editorial writers seemed to even mock its use.

So the Dems are attempting to demonize their way out of this with a an outdated populist message that is falling on more deaf ears all the time. Speaker Pelosi’s line in the sand on drilling continues to be a drag on Dem credibility on energy as Republican’s in Congress stayed in Washington to grandstand in a way thats kept the issue burning. They’ve lost a reliable ally in the Post, too.

Big Oil. The populist mantra won’t work as it once did, but Dems used it in their efforts to demonize McCain on energy. A Google query of McCain taking money from oil had 325000 hits, most over the past two days. While Hess oil execs did decide to donate money to the McCain campaign after he announced his support for drillings, the Dem talking points don’t tell the entire story. Factcheck.org adds more:

Obama released a TV spot saying McCain’s campaign got $2 million from “Big Oil” while McCain proposed “another $4 billion in tax breaks” for the industry.

The truth is that McCain’s campaign has received $1.33 million from individuals employed in the oil and gas industry, not $2 million. Obama himself has received nearly $400,000, according to the most authoritative figures available. We find the $2 million figure is based on a mistaken calculation.

Furthermore, McCain is not proposing new tax breaks specifically targeted to the oil industry. He’s proposing a general reduction in the corporate income tax rate, which Democrats figure would benefit the five largest oil and gas companies by $3.8 billion.

Actually its tax relief that is passed on to the consumer at the pump. As I pointed out yesterday, in a four year period, Exxon paid $64.7 billion in federal taxes. American oil companies operate at a profit margin around 10%.

Factcheck has more on Dem assertions that McCain is in Big Oil’s pocket:

It bears repeating, as we’ve reminded readers before, that oil companies themselves don’t make donations. It’s illegal under federal law for corporations to donate directly to candidates and has been since 1918. The ad refers to donations from executives and employees of oil companies, given either directly or through company-sponsored political action committees, or PACs.

Both candidates accept donations from individual employees of oil companies. In fact, when Obama claimed in an ad last March that “I don’t take money from oil companies,” we criticized him for being a little too slick. The CRP puts Obama’s total from oil and gas donors at $394,465.

Based on CRP’s figures, McCain’s oil and gas donations account for just 0.9 cents out of every $100 he’s raised. Obama’s oil and gas total comes to 0.1 cents per $100. That’s a significant difference between the two candidates, and it’s clear that the industry is favoring McCain with its donations. Whether that puts him “in the pocket” of the industry is a judgment we’ll leave to our readers.

Also, Factcheck pointed out that McCain proposed tax cuts for all corporation and not just oil companies.

Still the current talking points indicate the Dems are going to attempt to deny the growing opinion of voters for more domestic drilling. Its seems that if voters understand that supply needs to be increased as well as a more immediate commitment to gaining independence from foreign oil, demonization of McCain and oil companies won’t work.

Dems are also using two other mantras. One is that we can’t drill our way out of this. Second is that we have only 3% of the world’s oil reserves, enough to last just 4.5 years. The first is misleading, the second is an inaccurate fact.

The assertion that we cannot drill out of this is misleading in that just the president’s announcement to end the presidential moritorium on drilling caused the cost of a barrell to drop. And it dropped again today. Some areas are already seeing the drop at the pump. Increasing oil supply will continue to lower costs at the pump even more.

A recent US Geological Survey Study has found that our own reserves are now 10 times more that they were when the 2004 figure of 3% came out.

America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost America’s Oil reserves by an incredible 10 times, giving western economies the trump card against OPEC’s short squeeze on oil supply and making Iranian and Venezuelan threats of disrupted supply irrelevant.

In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951. The USGS did an initial study back in 1999 that estimated 400 billion recoverable barrels were present but with prices bottoming out at $10 a barrel back then the report was dismissed because of the higher cost of horizontal drilling techniques that would be needed, estimated at $20-$40 a barrel.

This is just what is available in North Dakota. This WaPo story from 2006 indicates how much is available in the Gulf of Mexico. Dem talking point numbers are both outdated and misleading.

The Wall Street Journal has a take down of Barack Obama’s call on Friday for a tax on “windfall profits” to pay for additional stimulus checks. Dem use of the “windfall profits” mantra is fast and loose with ecomomic realities. For businesses, profit margains is the accurate way to measure any business’ success.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any “windfall” tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we’re missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon’s profits don’t seem so large. Exxon’s profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

So, oil companies make about a 10% profit on its investment. As Obama and Durbin want to tax Exxon again on top of being taxed already. With the average oil company profit being at less than 9%, the only way that oil companies can sustain vaibility would be to raise its prices at the pump. Anyhow, how do oil companies compare to othier industries in profit margains: The WSJ tells us:

If that’s what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery — both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau’s industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

Obama’s increasingly bizzare statements about the issue continues to impress. What he refers to as our “addiction” to oil he says can be dealt with by simply making sure you have enough air in your tires. His proposal at additional taxes on oil companies will only result in increased cost at the pump - a cost whose burden will be felt greatest by working families.

The WSJ goes further in its overview and closes with the following:

The point is that what constitutes an abnormal profit is entirely arbitrary. It is in the eye of the political beholder, who is usually looking to soak some unpopular business. In other words, a windfall is nothing more than a profit earned by a business that some politician dislikes. And a tax on that profit is merely a form of politically motivated expropriation.

It’s what politicians do in Venezuela, not in a free country.

So what is Obama’s and Durbin’s motivation? Is floating the windfall profits tax a trial balloon for voters? As both men know implementation of additional taxes on the oil industry will result in higher costs at the pump one can only wonder what their motivations might be.