Do you remember, just those few short months ago, when we had people screaming for a windfall tax upon the oil companies? You know, people like those frothing lefties, Compass?
And there were a few people around who were pointing out (modesty doesn\’t permit identification) that this was an artefact of rising crude prices and the way that accounting was done for inventory? And that as and when crude price fell those same oil companies would report shocking losses on the same accounting basis? You do? Good:
The net loss was $2.81bn after an $8.47bn profit a year earlier, Shell said today. Excluding gains or losses from inventories and one-time items, profit was $3.89bn for the quarter, lower than the estimate of City analysts surveyed by Bloomberg.
See, net losses as a result of the treatment of inventories during a time of falling crude prices, just as the earlier profits were in part from the treatment of inventories at a time of rising crude prices.
However, if, logically, those "excess profits" should be windfall taxed away in the good times then those "excess losses" should be subsidised in the bad times, no? So why isn\’t Compass out there calling for a subsidy to Shell?
Two possible reasons I suppose. The first being that they\’re too dim to understand what is going on, the logic of their own position. The second is that there was no logic to their earlier demands for a windfall tax. That it was just a circle jerk for frothing lefties.
I have to admit that I can see truth in both explanations.