December 8, 2008 - Months after acknowledging that it would have to shelve its plan to impose a "windfall profits tax" on major oil companies because of plummeting oil prices, the incoming Obama administration has dropped all mention of the controversial tax from its transition web site.
The move was not unexpected. A top Obama campaign aide told Platts two months ago that then-presidential candidate Barack Obama would suspend his plan for the windfall profits tax because of the sharp drop in oil prices.
Obama, while campaigning, made the windfall profits tax a major component of his short-term energy policy during a period when oil prices were well above $100/barrel.
But the aide told Platts in October that the tax would not be implemented if oil prices fell below $80/b. The week ended December 5, oil was trading for between $40 and $50 in New York.
The Obama transition office did not respond to inquiries the week ended December 5 on its decision to remove all reference to the tax from its web site, www.change.gov.
But the American Small Business League, a Petaluma, California-based advocacy group that supported the tax, said it was disappointed that Obama had gone back on one of his chief "campaign promises."
"The fact that he removed it with no explanation is of concern," said Lloyd Chapman, the group's president. "It's inconsistent with his image of change. It's actually a pretty stereotypical image of a politician."
Chapman also denounced Obama for scrubbing mention from his web site of his promise to ensure more government contracts go to small businesses, and not large Fortune-500 corporations.
"I feel cheated," Chapman said. He added that he "went out on a limb" to endorse Obama, because many of his group's member-companies are led by Republicans.
Chapman also argued that oil and gas companies should be even more heavily regulated, and that there should be a retroactive windfall profits tax levied on them so that they will have to disgorge some of the record profits that they made when oil was selling for more than $100/b.
Chapman also blamed the oil and gas industry for inflating fuel prices, which he said has harmed every corner of the economy, including the auto industry.
"No industry should be able to damage the economy to that degree," he said.
According to the Obama team, the non-suspended windfall profits tax would have generated $65 billion over five years, which would have been added to $50 billion in government spending to provide a rebate to consumers.
The rebate would have given $500 to every individual and $1,000 to every married couple.
The rebate proposal is still on Obama's web site.
Two months ago, an Obama aide told Platts that the rebate would funded entirely through government spending.
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