Gov. Jim Doyle's plan to levy a tax on big oil without passing on the cost to consumers seems to smell of political pandering, but we feel it is justifiable to explore a tax on oil companies that funds roads and schools.
Hefty profits for large oil companies in the last few months have attracted a fair share of media attention. Exxon Mobil alone posted net gains of nearly $40 billion in 2006, which holds steady with many other large corporations—including Disney and Wal-Mart—with a profit margin of approximately 10 percent. But oil companies do not pump out kid's movies or cheaper Doritos, they produce something no one can live without: the energy our society needs to function.
Doyle's measure includes harsh penalties for oil companies if they are caught passing costs on to consumers, and the issue will undoubtedly be fought out in court. Many states are currently experimenting with similar ideas including a recently defeated proposition in California, which would have taxed oil companies to fund renewable energy research.
A successful measure in Puerto Rico, one Doyle has cited throughout the current debate, went all the way to the Supreme Court in 1988 when the court found that the absence of federal regulation of oil did not preclude state action in establishing regulation.
The tax revenue is slated to fund projects under the Department of Transportation for highway construction and the 2.5 percent per barrel tax is projected to collect almost $300 million over the next two years. Though Doyle ended the annual gas tax increase, which formally ended in April 2006, Wisconsin still boasts one of the highest gas taxes in the country.
Exemptions for biodiesel and ethanol fuels will hopefully push Wisconsin toward greater energy independence as part of Doyle's commitment to produce 25 percent of Wisconsin's energy and transportation fuels from renewable resources by 2025.
But we have to consider: Is it fair to tax big oil? We feel placing tax incentives on renewable energy sources is probably a better start in weaning ourselves from the petroleum bottle, but action at the state and local levels is essential.
It is hard to determine whether this tax will be passed onto consumers and, if come summertime gas prices rise significantly, the public will most likely lay the blame on Doyle. Only by developing new energy technologies can we begin to exercise any real control over big oil.
