Venezuela president-for-life and dissociative identity disorder diagnosed Hugo Chavez will raise a new tax on excess oil profits for crude found and refined in his "republic".
According to The Wall Street Journal "The levy kicks in when the price of benchmark Brent crude sits above $70 a barrel. If oil prices are above that threshold for one month, the state will take 50% of the difference between this average and the final sale price of every barrel."
The news is good only for the citizens of the South American country. For the balance of the world, it is one more reason for the price of crude to move North from its current record high of $113. It also sets a precedent for other countries anxious to make money off the rising price of oil.
While it is hard to imagine Canada placing a tax on the price of oil, it is not as difficult to picture such a move from Russia, Nigeria, or even Mexico. High oil yields bring producing nations revenue which they would not have otherwise, but the temptation to "double down" may simply be too great for countries which have trade deficits or high national debt.
The greed surrounding oil profits has begun to draw the locusts of opportunism. It began with speculators who make money gambling that crude prices will move higher. But, there is no reason to think that it will end there.
Levying excess profits taxes will not stop with Venezuela. The action is too good a move for too many countries.
Douglas A. McIntyre
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