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CNNs Serwer Hopes Senate Has Fortitude to Pass Oil Tax

     On the Nov. 16 American Morning, CNN business reporter Andy Serwer worried that Congress might not have the fortitude to go ahead with final passage of a new windfall profits tax on oil companies. The $5 billion tax measure passed the Senate Finance Committee yesterday and the House of Representatives is also considering similar legislation.

     Said Serwer: I think the political wrangling that's taking place right now shows that the Senate might have the fortitude to do this, because even Republicans seem to be up to the task. The question is, will it happen at the end of the day? And it's not at all clear that it will.

     Serwer is only the latest example of a mainstream reporter pushing a windfall profits tax. Earlier this month Business & Media Institute (BMI) detailed numerous examples of reporters pushing for a windfall profits tax as a fair response to record profits by the oil industry. But BMI noted that reporters never gave context to the story: many other industries have profit margins similar to the petroleum industry, and government for the past 22 years has raked in substantially more tax revenue than the companies have in profit (see chart).

     After Serwer relayed his worries about the political fortunes of the windfall tax, co-host Miles OBrien poked a hole in the windfall tax balloon, asking, where's that money going to go? Not back in our wallets, right? We're still going to end up paying the same amount at the pump, right?

     Conceding that was probably true, Serwer added that oil companies would say its going to reduce the amount of money they have to explore for oil, but cautioned dismissively, that is their perspective.

     But its not an opinion, its a time-tested economic reality. The Business & Media Institute reported a few weeks ago that a windfall tax from the 1980s was conclusively proven in a Congressional Research Service report to have decreased domestic oil production and increased reliance on foreign sources the opposite of widely accepted goals for U.S. energy policy.