From the Economic Report of the President’s energy chapter:

Prices on contracts for future deliveries of crude oil (called crude oil futures) indicate that market participants expect oil prices to remain elevated at or near current levels through at least the end of 2006.

…Having experienced past volatility in oil prices, oil companies report using a working assumption of $15-$30 per barrel for the future price of oil when making long-term investment planning decisions.

If the oil company executives want to put money on their “working assumption of $15-$30 per barrel,” then they should go short in the futures market. But if their goal is to maximize shareholder wealth, then they should make long-term investment planning decisions based on the futures price of about $60 a barrel. What the oil company executives are doing is equivalent to a mortage banker making a home loan for 5 percent based on a “working assumption” that rates are going to eventually head down to that level.

I don’t believe in a “windfall profits” tax for oil. But a “willful arrogance” tax might be in order.