They might want to remember what happened last time we imposed a windfall profits tax.

Interesting findings from a 2006 Congressional Research Service Report (quoted here). Full PDF here.

This is the most interesting part:

Reinstating the windfall profit tax would reduce recent oil industry windfalls due to high crude and petroleum prices but could have several adverse economic effects. If imposed as an excise tax, the WPT would increase marginal production costs and be expected to reduce domestic oil production and increase the level of oil imports, which today is at nearly 60% of demand. Crude prices would not tend to increase. Some have proposed an excise tax on both domestically produced and imported oil as a way of mitigating the negative effects on petroleum import dependence. Such a broad-based WPT would tend to reduce import dependence, but it would lead to higher crude oil prices and likely to oil industry profits, potentially undermining its original goals.

Because the pure corporate profits tax is relatively neutral in the short run — few, if any, price and output effects occur because marginal production costs are unchanged in the short run — a possible option would be a corporate income surtax on the upstream operations of crude oil producers. Such a tax that would recoup any recent windfalls with less adverse economic effects; imports would not increase because domestic production would remain unchanged. In the long run, such a tax is a tax on capital; it reduces the rate of return, thus reducing the supply of capital to the oil industry.

So US oil companies would have reduced profits if a windfall profits tax was ever enacted, but according to this study, production costs would go up and the level of imports would also increase.  In other words, it would cost more to produce domestic oil, and we would end up importing even more oil than we do now.  Great solution.

If we tax both our own oil production as well as the imports, it might level the playing field (and by that, I mean punishing everyone equally).  It also could lead to higher crude oil prices and keep those oil company profits high.  These aren’t the best solutions to high gas prices.  Congress needs to figure out that high taxes discourage production, and if they really want to increase domestic oil production,  they should allow domestic drilling and let the oil companies build more refineries.

The Democrats are just saying what they think people want to hear.  That’s common enough for politicians.  What annoys me more than anything is that I don’t see much fight in Republicans to challenge the Democrats on any of their stupid proposals.