Rethinking the Windfall Tax on Oil Companies

I have been an opponent of putting a windfall tax on oil companies, particularly in light of the fact that on profit per dollar basis, drug companies and banks make more than twice the profits of oil companies. However, in light of the current economic crisis, and the fact that they have risen diesel so much right before a bunch of new diesel cars come out, I have rethought my stance and think that we should put a windfall tax on them. This doesn’t mean I don’t think we shouldn’t put a windfall tax on the drug companies and banks as well, we should, but each of the three need to be separate bills. All three industries are taking advantage of average Americans, but the oil companies are the ones who probably need the biggest windfall tax of the three.
With gas at $3.60/gallon, diesel should be $3.71 (traditionally diesel has commanded a 2 to 3% premium in the United States over gas, though it is cheaper in most other countries), even if we say the new ultra low sulfur diesel costs a bit more to make then the old diesel (still cheaper than gas), we’ll allow it to be $3.78. Right now, with gas at $3.60, diesel is $4.35, a bit more than a 20% premium, not quite enough to offset diesel’s overall efficiency over gas, but almost. Clearly they are worried about the car companies coming out with diesel cars and are trying to scare average American’s away from diesel. After all, if people realized they can get better gas millage from a diesel than a hybrid, and have a lower CO2 emissions with that… then that spells thin days for the oil industry, especially since bio-diesel can be made so effectively and without sacrificing food crop space the way Ethanol traditionally does, and as a bonus, doesn’t need as much oil as Ethanol does.
Anyhow it isn’t just the diesel issue, it is the fact that gas prices are hurting the average American, and the oil companies, their investors and boards are making a killing by raping American’s wallets.