Guest essay by Eric Worrall
President Obama has proposed a $10 per barrel carbon tax to fund renewable energy, and to “encourage” people to stop using oil.
From the Whitehouse Statement;
For too long, bipartisan support for innovative and expansive transportation investment has not been accompanied by a long-term plan for paying for it. We need a sustainable funding solution that takes into account the integrated, interdependent nature of our transportation system. Travelers choose between walking, biking, driving, flying, and taking the train; and companies choose between trucks, barges, airplanes and rail lines. So to meet our needs in the future, we have to make significant investments across all modes of transportation. And our transportation system is heavily dependent on oil. That is why we are proposing to fund these investments through a new $10 per barrel fee on oil paid by oil companies, which would be gradually phased in over five years. The fee raises the funding necessary to make these new investments, while also providing for the long-term solvency of the Highway Trust Fund to ensure we maintain the infrastructure we have. By placing a fee on oil, the President’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future.
Why does the green version of “encouragement” always seem to involve beating ordinary people with price hikes until they comply?
If the President really wants to encourage green energy, why doesn’t he announce a tax holiday for profits made from green innovations? I doubt there would be any worthwhile innovations; making renewables affordable is an intractable problem. But at least a tax holiday wouldn’t hurt anyone. A tax holiday would stimulate interest and investment, while allowing ordinary people to continue to enjoy low oil prices.
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why doesn’t he announce a tax holiday for profits made from green innovations?
Maybe because it’s all about punishing the big bad oil companies.
But it is not the oil companies who will be punished. It is the end consumer who will be so punished. That is always the case.
We know that but they continue to blame oil companies and try to pretend that it will hurt them and the sad fact is a lot of brain dead people will buy into it.
Obama’s lies come through loud and clear again. You know what’s true when he complains about something. Whatever he asserts as true, especially when he uses the term “let me be clear”, is an absolute falsehood.
But it is not the oil companies who will be punished. It is the end consumer who will be so punished. That is always the case.
That is never the case. Both the producer and the consumer will be punished. Margin of profit on oil is less than 10%. It takes 14 years from startup before you even break even. What do you think a massive percentage increase in price does for demand?
If a 10$/barrel increase on a barrel of oil didn’t adversely affect the oil companies — and badly–why don’t you think they charge that much more and rake in the profits? Because they’d lose profits, that’s why. They already charge as much as the market can bear for maximum profit.
This skit is highly applicable:
H/T Peter S. on Judith Curry’s blog
@Evan Jones
You make a good point, but in the end I believe the larger cost is to the consumer. Oil demand is somewhat fungible; we can decide this summer not to visit the in-laws in Montana, or fly there and the kids can Skype with grandma and grandpa. On the other hand, I have to get to work and it’s 30 miles one way. That is non-fungible. Whether I take the train or a car, oil will be consumed, so either my ticket price or gas receipt is going to reflect that additional tax.
It’s a tax on oil at the well head of domestic production, which will squeeze domestic production out of the marketplace, and cost hundreds of thousands jobs in the US.
“let me be clear”, is an absolute falsehood.
=====================
I want to make one thing perfectly clear … I am not a crook (3:42)
http://www.wepsite.de/Big%20Game,Rich%20Little.mp3
evanjones, what you are forgetting is that competition keeps prices down. However a tax on all producers doesn’t affect competition. Since everyone’s costs go up by the same amount, everyone’s prices will go up by the same amount.
Companies don’t pay taxes — they collect them. It’s the end consumer that pays all the taxes.
Joking aside, this is a MUCH bigger issue than people are making it out to be.
Half of the world has already been working at taking the standard trade of oil off of the U.S.D. This would give them every reason and the ability to do just that with China more than willing to build the refineries to import all the oil they can buy (a lot).
Take oil trade off of the U.S.D. and our economic advantage in buying oil disappears over night. This would essentially destroy the U.S. economy and the world’s right along with it. Presto, the green agenda gets a big win.
A $10 per barrel tax on a $30 per barrel price is a 33% increase in price at the pumps
Bryan A,
Look on the bright side. Next time oil prices go to $100/bbl, Obama would only be responsible for 10% of the pump price increase, while the free market will own 233% of it.
The don’t report any profits because they are all losers w/o a government subsidy and they thy go bankrupt after burning through subsidies and “loans”.
So I have to ask do you charge all production around the world that you import from???? 😒
Venezuela and Arab nations will be exempt from paying this tax, so only those nasty ultra rich US citizens would be affected by it. This is also the only group that Pres. B.O. can have a direct effect on
Or punishing Pennsylvanian Coal Miners
Don’t you have to actually have profits, before a tax holiday would do any good?
It is about giving money to green companies who will then ‘donate’ it back to the Democrat party, cf. Solyndra. Obama couldn’t care less about global warming, CO2, big oil, reducing consumption, etc. It is all about money and power.
You’ve pinned the tail on the DONKEY OR IS IT THE JACKASS???
All green incentives involve pain. Seems that way to me anyway.
This should be question #1 at upcoming campaign debates. I’m getting the corn popper ready,.
That’s what I thought. Way to hand some ammunition to the GOP …
Oh the GOP will roll over and give this to that creature on a gold platter!
It is not about discouraging the use of oil. It is simply a tax to garner revenue for a bankrupt country. More on the way.
It is also a regressive tax, but I doubt Dem. voters could comprehend that.
RIGHT ON POINT ! CAN’T BEAT THAT COMMENT.THANKS
Kokda & Derek – <b a new $10 per barrel fee on oil paid by oil companies
Even worse is his pushing the increase to their hated ‘Big Oil’. Oil companies are not payers, just collectors.
Is he really just angry that the one promise of “rates skyrocketing” that was coming true is now not because his masters in Saudi are flooding the market?
…that’s true. To them, everything has to be “progressive”!
Heck, I am a progressive. I like actual progress. But to these chuckleheaded chickenheads, it isn’t progressive unless it’s regressive.
How about abolishing all “extra” tax on oil? Now, that would be progressive. Something real progressives like JFK and LBJ would have understood. But not these neo-phoney-balognas.
Obama doesn’t care about garnering revenue for a bankrupt country. He plans to spend every bit of it and then some to help Democrat cronies and unions get rich off of green subsidies and government handouts. He did the same thing with the stimulus. He claimed he was going to spend the money to rebuild roads and bridges. Then, when running for re-election, he took credit for having done a wonderful job of rebuilding the nation’s infrastructure. But right after his re-election he asked Congress to give him another stimulus so he could spend it on rebuilding our aging and failing infrastructure. Union built roads and bridges sure don’t last as long as they used to. Nobody in the media seemed to notice the contradiction.
First they actually have to build them. You can go up to Harlem and look at entire square miles of effective progressive accomplishment. That which benefited everyone and converted massive, horrible slums to decent housing and dragged entire neighborhoods out of crime and poverty, benefiting rich, poor, and in between.
But what did we get out of the “stimulus”? A whole bunch of nothing and the upward of a trillion beans added to the national debt — which costs everyone. Well they did produce a a bunch of signage “brought to you by the stimulus”, at around 10 Gs a pop. (Not counting the cost to cost to remove it.)
These self-righteous knucleheads aren’t about shovel-ready. They are about increasing the tax on shovels.
Those so-called liberals wouldn’t know actual liberalism if it bit them in the ass — which it has.
What unions? In manufacturing, nearly all unions are dead as we shipped our jobs to China. And both GOP and DNC people did this to us with ‘free trade’.
No, it was the greedy unions who destroyed the companies who employed them.
Free trade brings better products at lower prices. However those who believe that are entitled to life time sinecure’s at the wage of their choosing, would prefer that consumers not have a choice.
Lithium supply is one of the issues involved in moving the U.S. auto manufacturing to other countries.
Wrong. Sure, it’s a revenue-raiser, but it is on the back of oil. It punishes oil, in favor of Big Green. And it will hurt our economy.
Perhaps somebody should point out that this tax will damage the economy and lead to reduced tax income elsewhere but then that might be something too complex for him to understand. I am always amazed by all the UK politicians who did PPE (Politics-Philosophy-Economics) at university and then totally fail to understand economics such as how taxation distorts the market – as does reverse taxation ie subsidies – and the ‘unexpected’ effects it can have. The Blue Labour chancellor hit properties over £1.5m with a hike in sales tax because they must obviously be rich people (note- in many areas of London and SE that is not an uncommon value) and then, surprise, sales dropped off. So tax receipts dropped as people withdrew from selling and now there is a growth in such properties being rented out.
One of the left wing mantras is that people don’t change their behavior because of taxes. That’s why we can raise taxes as high as we want and it won’t affect the economy.
Then in their next breath they tell us they have to raise taxes on cigarettes and oil so that people will use less of those products.
Gerry, MarkW
Thanks.
Agree.
Totally.
I looked in one of London’s free papers this morning – and one bedroom flats, out in the suburbs – say 40-65 minutes in on the Tube – are stating from £360K – some start from £475K.
And, if you want a bed-sit – “Studio Flat” in, admittedly a nice development @ur momisugly #1 Blackfriars – stats at over a million.
Are London property prices utterly stupid?
Too carping right. Squared.
Auto – within the M25 – and unable to afford my own house . . . . .
Mods – shows the value [?!?!?] of twenty years in one house. I think.
For awhile this old UK citizen looked to the ‘New World’ to ensure homo sapiens would contrive to improve the well being of the whole.
I now find the ‘New World’ is controlled by a homo superbus, so backward we will all go. Once it is accepted somebody knows it all there can be no development.
How much chance does this have getting past a GOP Congress? Why $10/barrel? What’s the significance? Why not 30% or does that have too much of a “tax” connotation? Phased in over 5 years. I guess the Dems are looking at a long term commitment, but I more fancy the idea that there is a significant source of funding coming back to the Dems from this “fee”.
Maybe if he calls it a “royalty” it might pass.
Only if it was not used to build more windmills or solar farms.
Yes regressive tax, like poll tax proposed by Margaret Thacher way back.
“For too long, bipartisan cooperation in Congress has been nonexistent. I am therefore issuing an Executive Order…”
/sarc
It has every chance. People have already fully accepted that theft is the government’s legitimate tool for modifying your behaviour. You are not objecting to it. That means you will submit to it. Your behaviour needs to be modified and your government says so and you haggle a bit over it and then submit.
Why 10$? It’s just to cater to your feelings- you will feel so powerful when you cheerfully settle for only 5 inches – and you will have negotiated it- so it’s not an imposition – you will be fully engaged in the dickering.
The ‘phasing in’ bit is also for your feelings – they’re saying they will be gentle and put it in slowly.
People won’t struggle so much when it’s gentle cuz then it looks like luv and caring. You want to believe.
Bottom line – government is not your biatch. That’s got the roles swapped.
It has no chance whatsoever of passing through a Congress the Republicans control. As a tax bill, it has no chance of being passed even if the Republicans control the House only.
That’s the point. Obama doesn’t expect this to pass. It’s merely a game to blame the Republicans and Congress as to why the US can’t do anything about global warming.
Obama expects to make this an executive order. No, No No.
Wrong. Executive orders cannot create taxes. This has to appear in Congress first.
He’ll call it a fine and have the EPA implement it.
It doesn’t have to pass Congress. Executive orders are his specialty.
“All executive orders issued by Obama are hereby withdrawn.”
Signed President D.T.
P.S. Go get real jobs you bums.
Obama does not understand that because after all he is having the oil companies pay for it and not the consumers. Isn’t that better? Sarc
Unfortunately for him that is the operative reality. He would not recognize the sarcasm in your statement. Obviously when you tax business only the business is hurt (in the left’s worldview people don’t pay for it when they buy the product or when they can no longer find a product because the evil people who provided it are no longer in business!)
No one is taxing anything. The chance of this becoming legislation is zero. This is about partisan politics and blaming Congress for lack of action on global warming.
CORRECT 1 1 🙂
Except for the fact that there is already a 48.68 cent/gallon tax on gasoline and a 54.40 cent/gallon tax on diesel…..
I haven’t grown tomatoes in my area for three years because the weather hasn’t been warm enough recently to produce a decent crop, and I blame “global warming”. That should give this clueless administration something to think about.
Obama does not understand that because after all he is having the oil companies pay for it and not the consumers. Isn’t that better? Sarc
You said it, brother. I have never seen a president this invested in not understanding, well, much of anything. Or this sanctimonious. And I am including Carter.
Tax holiday? I don’t think any of the green renewable types pay any taxes now. Even mighty GE, which made $7 billion profit in the U.S. a year or two back, didn’t have to pay any U.S. federal tax. Supposedly, they filed a 50,000 page tax return.
This is just another money grab. $10/bbl comes close to 45 cents/gal of gasoline, or more than double the current tax. Which is supposed to be spent on roads and bridges. And usually isn’t.
Does anyone really think the oil companies won’t just pass this tax on to the consumer in the form of higher prices? Still, the timing is good. With oil prices down, easier to get support for a scheme to pour more $$$ into the Federal maw.
Check your arithmetic Engineer. There’s 42 gallons/bbl + a little for the gains from hydrogen injection. Works out to about 23 cents/gallon
42 gallons of oil in a barrel. That will produce around 30 gallons of gas and diesel.
The devil is in the details but this looks like a 33 cent/gallon tax to me.
No the 23 cents is correct there is little loss and the other outputs will also have the tax as they should.
The issue for me is the lack of tax on coal and even more interestingly imported solar cells from China are very heavy in coal energy input during manufacture no tax there also.
So a tax on a so called CO2 problem in reality is a witch hunt against a perceived lobby.
If you believe the the CO2 hypothesis then act consistently and with integrity.
3.7 litre s us gal 4.3 can gal stupid pres and small gal and we have a bigger dumbass but so is our gal 😉
I don’t like GE, but I’m tired of the GE myth. GE lost billions during the recession. You are allowed to roll forward losses. People do it all the time with capital gains losses. What did GE pay last year?
We British pay a substantial road tax every year, & for tonks the people believed, & some probably still do, that it was to go into the road infrastructure system. It was nothing of the kind & simply a means of raising taxes!
Tonks?
I figured from the context that this is the British word for “years”, but all Google could come up with was Nymphadora.
Chris
Yeah – for tonks and tonks, tonks meant – by context – years, or twonkers [Not Nice Intellectually] or shed-loads.
Or, probably, elsewhere – at least twenty-two other things.
Sorry – English is a living language, and bits of it live: – some fly – webinar – and some die – hand phone.
Auto
Obama voters are ignorant enough to think the tax is being paid by the evil oil companies. Greens really believe that the only thing standing between themselves and nirvana is an evil conspiracy of companies involved in thoughtcrime.
It took a whole lot of time, trouble, and treasure to mal-educate them in that direction.
I’m having trouble pinning down exactly how many barrels of oil are used per day in the U.S., but I’m seeing somewhere around 18-20 million barrels per day. So a $10 per barrel ‘cahbon’ tax works out to $180-$200 million smackeroos of revenue per day.
Wow! That’s enough to fund U.S. government spending for… about 30 minutes.
Or if 100% of it is applied to retiring our $19 trillion national debt, it would only take 95,000 days (260 years) to pay it off. Of course, some are saying the debt will continue to climb until it hits $30 trillion, at which point it would take 150,000 days (411 years) to pay it off.
Some how I see this administration coming up with “better” things to do with that money, like buying more votes.
Santa Claus is 100% envious.
Smackeroos from suckeroos who wouldn’t know a supply-demand curve if it hit them in the cup.
ev
Ahhh . . . . . . . .
The universal franchise.
Auto. Mods – not a thought that this should even hat/tip to Sarc. ‘Snot.
It is Straight Up.
Maybe impossible to get a national cap-and-trade but a national carbon tax is doable. The individual states can do the cap-and-trades. So people will end up with both taxes imposed on them.
The carbon tax should be voluntary, If you want it, pay up.
Climatenexus, Sept.25, 2015
Emissions trading explained in this article.
http://www.climatenexus.org/learn/solutions-policy/emissions-trading
Fossil fuel distributors can be included in cap-and-trade. So you can end up with double taxation which is very regressive on the poor and an inflationary factor in the economy as these taxes will be passed through to customers.
Also known as demand side management. Demand side management has been used for centuries by dictators to control people.
Cap-and-trade will be brought into the states and provinces at the sub-national level. Carbon tax at the national level.
So far this is not widespread so most people don’t know anything about the cap-and-trade and direct carbon tax issues.
When you can no longer afford something you just have to do without it. Won’t have much effect on the affluent because they have plenty of disposable income.
It’s all about getting the “money” into the hands of those that know how it should be proportioned.
Even if they don’t realize it.
It’s all about getting the “money” into the hands of those that know how it should be proportioned. Even if they don’t realize it.
They’d get more gold out of the goose if they weren’t hell-bent on slaughtering it.
How about decreasing the tax on oils and jumping back right-quick before they get drowned in the extra revenue? These ninnies appear to be under the risible impression that if you raise taxes by 10% you get 10% more revenues.
Don’t believe I’ve ever seen the word “ninnies” used on internet, it brings back memories 🙂
ninnies
The nattering nabobs of negativism have gone down a notch.
“For too long, your money has not been under my control. In addition, you have been doing things I don’t want you to do. To address these two critical issues, I will now use the power of the state to take away your money and do what I want with it, and punish you for doing what I don’t want you to do.”
A little honesty in piracy is all I ask for. Sorry, I meant politics.
Foreign policy, race relations, now economics.
WHAT A STAR.
Falling star, I trust.
Not even. At least a falling star shines brightly for a short bit.
“The problem with socialism is that it eventually runs out of other people’s money.” – Margaret Thatcher
Broke means having no money. The US needs $19 trillion to get BACK to broke.
Which means we would need 19 years of $1 trillion budget surpluses not counting interest. I don’t even want to know how many more years the interest would add on to that scenario because I will be dead long before that. Thank god Apophis will kill us all in 2036 and end the misery.
One HUGH detail has been left out of the President’s proposal – that is the negative economic effect. long term, of such a tax. Right now, oil is the energy source of choice that enables the economy to be what it is. It is far and away the most efficient way to move product and people to market. The Law of Supply and Demand will exact a serious price for such an action. I have heard of NO discussion about how much this would hurt or depress the economy and therefore the low income populace (any color). Inhibiting the creation of wealth by any means is NEVER a desirable thing to do.
NW sage….maybe you missed all the ‘Trade Deals’ that weren’t about trade, but about social justice from the UN to purposely de-industrialize the U.S. Remember what C. Figures said about 1 year ago.
It is sad how people refuse to understand how Reagan broke the unions by encouraging ‘free trade’ and how both Bushes did this in spades along with Clinton number one. They ALL did this which is why China is the world’s biggest industrial power today and the US has killed its own goose.
I heard estimates made about a year ago, that claimed each 80 cent reduction in the price of a gallon of gasoline, would add one percent to the U.S. GDP
And any savings on gasoline prices go directly into the pockets of the most needy among us. A double benefit of low gasonline prices: stimulates the economy, and helps the poor (and all the other gasoline users, too).
Therefore, rasing gasoline prices, as President Obama proposes to do, harms the U.S. economy, and harms the poor.
Obama believes in fair redistribution of the misery, especially when HE causes it.
And he can’t even pull that one off.
It’s worse than a crime. It’s a blunder. — Louis Antoine, Duke of Enghien
“[i]…a new $10 per barrel fee on oil [b]paid by oil companies[/b],…[/i]”
You stupid stupid stupid stupid stupid americans who don’t think oil companies will pass on the cost to us consumers, I’ve got two words for you:
Jonathan Gruber.
That’s right, the architect of obamacare can be found in a number of videos saying the American people were stupid not to realize insurance companies would pass on their higher costs to us.
In shore, the DNC elite leveraged the collective stupidity of the American left-wing voter on obamacare.
“A tax holiday would stimulate interest and investment, ” Ummmmmm…..if the investments ( factorys,more workers,etc) goes up, the Dems would just up the taxes on them. You CANNOT win against cooked politicos,which every psychopathic one of them is, regardless of so called political stripe.
So with this ‘punishment tax’ in place, it would generate around $70 billion a year in revenue?
What makes these idiots think that the punishment won’t be carried over to the consumer?
“But it’s for green technologies!”
Oh so then I also get to look forward to a price hike in my energy bills as well as the potential for an energy crisis when this all goes south….
Bravo!
That’s “brava” — you sexist pigdog.
Perhaps what they ought to do is lower the barriers to entry in the oil industry to allow for more competition and to encourage smaller players, while at the same enforcing/holding high environmental standards around oil spills.
No, that might actually produce more wealth. Which is an exclusionary factor.
The only thing that will stop these guys’ schemes dead in their tracks is the vague possibility that they might actually work. Can’t have that, can we? Anything but that.
Are you a scientist or engineer, evan? What do you know about feasibility studies, or cost/benefit ratios when it comes to determining project merit?
I’m betting you hear something, it sounds good, and you jump on the bandwagon even though there’s no wheels and nothing to pull it. At least the noise of the band makes for a good time, right?
Wonder who did the cost-benefit analysis for Solyndra.
I am a game designer/developer and simulation modeler. But what do I know?
If you took a close look, you might be surprised at how many regional players there are in the oil industry, not including the mom&pop wildcatters. Compared to, say, the 3 or 4 companies that bake nearly all the bread you eat.
Don’t think for a second this money will be used for “clean transportation”. He’s going to get his climate reparation money to the UN one way or another. At $10 per barrel that’s over a 30% tax rate!!! So far the oil companies have been staying out of the AGW fray but stuff like this will energize them to flex their muscles….. or go out of business……and I doubt they will allow that to happen.
Don’t think for a second this money will be used for “clean transportation”. He’s going to get his climate reparation money to the UN one way or another.
In solar-powered planes, I’m sure.
Nothing Obama says bears any resemblance to reality.
He won’t get the tax just as certainly as climate models will be inaccurate. Doctors do not avoid treating diabetes appropriately so that they can amputate limbs to make more money, The police did not behave stupidly, Nobody got all we-weed up and Global Warming/ Thermogeddon/ Climate Change is not the worst problem facing humanity today.
OTOH, Obama does need to raise more money because he and his wife will undoubtedly want to take multi-million dollar vacations and stick the taxpayers with political fund raising that will costs. He will also likely cause billions to be spent to pay for his pen and his phone.
His last vacation to Hawaii cost tax payers $70 million. That’s as disgusting as it is expensive.
Bill and Hillary would have to give about 100 speeches to rake in that much money.
I’m confused … the Federal Government doesn’t spent a dime on solar panels or windmills … so what is Obama going to spend this money on ? hmmmm … at least when the Mafia shakes you down they at least give you something in return (protection, etc.) this guy just wants to take your money … maybe we could offer him a penny per barrel paid directly to him for as long as he lives to just shut up and go away …
They spend it on themselves.
Maybe this new tax is to pay for Obama’s $12 billion green federal loan guarantee programme.
http://wattsupwiththat.com/2015/08/26/obama-12-billion-new-federal-loan-guarantees-for-renewables/
The real crime is that the Administration can spend (waste) all the financial resources you want on Commercialization of alternative liquid fuels and the results will be minuscule because there is currently no viable option even after spending billions. Maybe some day down the road ( decades) someone will develop a battery that makes sense, but where is all the increased electricity supply coming from?. Numerous cellulosic green liquid fuel programs have been a bust, the list is long and private investors seem to have gotten the message that escapes the Administration. Even the current government funding for cellulosic fuels needs to be curtailed based on performance.
Does anyone think the government spending will produce any results (what has the DOE produced after 30 years?), while sucking $$ out of the economy will likely have disastrous results on the economy.
…..Well there’s……. nope….. how about……. nahhhh…. didn’t they….. no, that was Benny Hill… I give up. What have/i> they produced after 30 years?
What is weird is that the world economy is supposedly tanking but lower than ever energy prices don’t seem to be helping.
lower gas prices are helping in the usa. it is probably the main reason that the us economy is improving.
Lower gas prices ? That just means lower tax revenues for any government . Therefore this tax is to keep the money rolling in. Weren’t taxes supposed to be ” just a stop gap measure” 100 years ago to fund WWI and were supposed to be gone after we “Won” ? yeah right.
If the gas stations sell more gallons, the government will get more revenues since the “40” cent tax per gallon is for gallons sold. If it was 40 cents per gallon the government would still get “40” cents per gallon.
If it is $4.00 per gallon the gov. still gets “40” cents per gallon. So if there is more gas being sold the Gov gets more.
If the gas stations sell more gallons, the government will get more revenues since the “40” cent tax per gallon is for gallons sold. If it was 40 cents per gallon the government would still get “40” cents per gallon. If it is $4.00 per gallon the gov. still gets “40” cents per gallon. So if there is more gas being sold the Gov gets more.
Who taught you remedial economics .001? We’ve spent tens (hundreds, thousands?) of billions to prevent that. Such thinking is a direct failure of modern education.
@tobias
No, it doesn’t. Only if demand is reduced. The state and federal taxes are a fixed amount, not a percentage of the sell price. The current low price for oil is a result of overproduction, not a drop in demand so in the US at least gasoline tax revenues for governments remains the same.
@Evan Jones – I’m just using some common sense. I never had a class in remedial economics .001.
Federal and state taxes are 47.99 cents per gallon. If you sell more gallons because of very low prices, the government (State and Federal) gets more revenue.
http://www.api.org/oil-and-natural-gas-overview/industry-economics/fuel-taxes/gasoline-tax
I’m just assuming that more gallons are being sold at $2/gal than when it was close to $4/gal.
More about who earns more from selling gasoline at the pump Hint (the government):
“At the gas tank integrated oil companies make about 7 cents per gallon. Meanwhile, the government extracts more than 48 cents, on average, per gallon. That’s right: Uncle Sam takes nearly seven times more out of drivers’ wallets via taxation than “Big Oil.”
Ref: http://www.forbes.com/2011/05/10/oil-company-earnings.html
I’m just using some common sense.
It’s not so common, these days, I think. The only classes I ever had were dedicated to its suppression.
I never had a class in remedial economics .001.
Neither did a whole lot of these so-called economists. (Neither did I, for that matter. I was trained in demographics and futurology by Herman Kahn,)
I’m just saying that the more gallons sold will give the fed and state government more revenue. I’m just thinking (I don’t have the statistics) that $2 a gallon gas compared to $4 a gallon gas will result in more gallons sold. People will drive more and not be scared to make just one trip to the store, but maybe 2 or three. (because of low gas prices). Do you dispute that logic – evanmjones?
All of my formal academic training not only disputes it, but excoriates it.
(I don’t, of course.)
Exactly, it is a huge bonus. Low fuel costs are quite a freebie, that can vanish in a very short time. Then we will see how really weak the global economy is.
Nonsense. Everyone knows that if the corner drugstore (if any still exist) charges ten bucks for a candy bar, profits will just soar.
Lower gas prices are probably helping a bit in the short term – unfortunately, there is a ‘fire-sale’ quality to it as the industry itself is going bankrupt. There is also the fact of excessive micro-managing and regulation that is running up over-all business costs and creating stagnation. This environment kills off small business and only allows the short term survival of large corporations who have deep enough pockets to absorb additional costs – so instead of a healthy, diverse, flexible system, you have a rigid system, dominated by a few giants. And gigantism is the last step before extinction. Asteroids and ‘climate change’ aside, THAT’s what happened to the dinosaurs.