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What’s a “Windfall” Profit, Anyway?

by Rush Limbaugh - May 19,2011

RUSH: My North Carolina mistress just sent me an e-mail. Aside from telling me that the me she knows from yesterday is true to form, she said, ‘Would you explain the difference between profit and windfall profit?’ I will do my best as a layperson not formally educated in classical economics. A windfall profit is a profit gained by a company for an activity in which they had no role in creating the activity. There was no investment. There was no work done. There was no involvement whatsoever, but something happened that caused that company to reap a windfall profit even though they had not made one investment in whatever the activity was. Therefore, it is not possible, it is impossible for it to be said oil companies are making windfall profits because the price of oil is going up, because that’s their job. They produce it. They invest in it. They have shareholders who are investing. They are the people, the one group of people trying to create oil and we’re trying to destroy ’em. The Democrats are trying to tax ’em out of business. It’s asinine and absurd. But it’s not possible for Big Oil to reap windfall profits in a business they are already engaged in. They are investing. They are drilling. They are researching. They’re exploring. When they find, they see if it makes sense to bring it up. If they bring it up, there are all kinds of costs associated with this.

If later on down the road the price of the product that they’re bringing out of the ground goes way, way up, well, that’s not a windfall profit. They were involved in bringing it up in the first place. They were involved in refining it. So there can be no such thing as a windfall profit for Big Oil. Now, let’s try to concoct something here off the top of my head. (interruption) That’s a good point, Mr. Snerdley. The true beneficiaries, the true agents of windfall profits would be your government. Mine, too. What do they do? Do they do one thing that has a direct result on gasoline being in your pump, oil coming out of the ground? No. They are obstacles. The people that do bring the oil out of the ground and do ship it around the world and do refine it have to work through governments all over the world. After all of this work is done and you drive up to the friendly Kwik Shop, to the self-serve pump, old Harry Reid and Dick Durbin and George Bush, they’re just sitting there, and the cash register goes ka-ching, ka-ching, ka-ching, ka-ching. They haven’t been involved in the production, distribution, creation, discovery of the product, and yet, they’re making gazillions. That is a windfall profit.