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Author Topic: Help me understand this.  (Read 1587 times)
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the Nightbreeze
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« on: April 29, 2008, 06:52:53 PM »

During a phone call today, was on Hold when the President was addressing the press.

Among other things suggested was the desire to suspend collecting certain sales taxes on gasoline already figured into the price per gallon.

1) Why will the fill stations lower their prices if the tax is suspended?  Why wouldn't they just hold the price where it is and put the former taxes in their profits?

2) Don't these same taxes pay for infrastructure maintenance?  Did all the collapsing or crumbling bridges take some antibiotics and get better? In a time of less and less funding, do we want to spend less on roads?

Another notion that struck me as odd is this idea that President Bush Just can't get Congress to work with him, when his party controlled both houses of the Legislature for the first 6 years of his two term administration.  If Your team has More votes, why couldn't you lead your team?

And when did the Congress get the right to tell Oil companies when to start or stop building oil refineries?  All the Oil companies have to do is follow zoning, and buy real estate, and fund their projects, just like every other business.  When did that fall to Congress? 

I feel like someone slept through Civics class, and I just want to be sure it wasn't me.  A little help?
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Ironrod
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« Reply #1 on: April 29, 2008, 08:11:48 PM »

1. Competition. Unless you live in a very small town where the filling stations are in collusion, customers are going to flock to the stations that lower their prices by 18 cents.

2. Yes, the gas tax funds the interstate highway system. I don't think McCain has said how he would replace the estimated $18 billion in lost revenues. I don't know if Bush addressed that, either. Yesterday Hillary jumped on the tax-suspension bandwagon; she would pay for it with a windfall profits tax on the oil companies. That leaves only Obama opposed to it. Even though his is the most sensible position -- an 18-cent price cut saves consumers just a few bucks per fill-up while playing havoc with highway maintenance -- his failure to pander is going to reinforce his reputation as an uncaring elitist.

As far as telling the oil companies what to do...maybe Bush is asking, as one oil man to another, for some paybacks for the huge tax cuts Congress gave Big Oil? I don't know; I didn't hear his speech.

Liberal/environmental correctness says that high gasoline prices are a good thing because they encourage conservation and alternative energy investment. Artificially lowering the pump price is against our long-term interests. Not that voters are famous for thinking much beyond our next tank of ethyl.
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Doopri
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« Reply #2 on: April 30, 2008, 12:08:30 AM »

Quote
And when did the Congress get the right to tell Oil companies when to start or stop building oil refineries?  All the Oil companies have to do is follow zoning, and buy real estate, and fund their projects, just like every other business.  When did that fall to Congress?

theres a line of argument that congress has imposed far too onerous environmental and safety regulations on refinery construction, and that this prevents companies from building new ones.  i, personally have found it to be shortsighted at best (honesty do we REALLY want to lower either of those standards? in some cases they should be INCREASED) and a downright copout at worst (YOURE the reason we havent built them!!!)

theyd (oil / refining industry) be far better off citing low profits from the era prior to this one - theyd find more sympathy and be much more grounded in reality
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the Nightbreeze
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« Reply #3 on: April 30, 2008, 04:58:49 AM »

OK, yeah, I should have remembered Economic competition.  I did sleep through Economics.

Otherwise... Wow.  I'm not crazy.  Disappointed that I had things mostly right, but not crazy.
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Ironrod
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« Reply #4 on: April 30, 2008, 05:42:46 PM »

Just to correct my last post, the gas tax raises $10B per year, not $18B as I had thought.

Personally, I'm of the opinion that the tax is too low. It should be around 27 cents just to keep up with inflation since its last increase, in 1997.
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the Nightbreeze
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« Reply #5 on: April 30, 2008, 06:06:13 PM »

Another notion that strikes me...  If Clinton's proposal were to be implemented,  Where would funding for infrastructure come from if somehow the unlikely happens and oil posts greatly reduced or no profits?  You cannot always assume profitability. 

I mean Corporate Oil would not have any incentive to invest their profits back into their operations and therefore reduce their posted profits once you started taxing them on it heavily, right?  They wouldn't have rooms of people trying to figure out how to make their revenues look like they were meagerly profitable to avoid taxes, would they?

It doesn't sound sustainable to me, but I am often the first to say "Eh, what the hell do I know?"
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Doopri
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« Reply #6 on: May 01, 2008, 04:49:57 PM »

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I mean Corporate Oil would not have any incentive to invest their profits back into their operations and therefore reduce their posted profits once you started taxing them on it heavily, right?

it depends on how the tax were structured.  theyd still have to invest in anything required to meet regulation.  also - if the tax were bottom heavy in good times (tax a large percentage of a first "bloc" of profits, and then smaller percentages of of subsequent blocs) then youd still be giving them incentive to make more profits.  reverse this in bad times - so theyre allowed to keep a greater percentage of those initial blocs when profits are low.  it would stifle profit seeking if, say the tax were designed to scoop off every bit of profit past point A - but there are only a few times someone would want to write a corporate tax like that

Quote
They wouldn't have rooms of people trying to figure out how to make their revenues look like they were meagerly profitable to avoid taxes

theres a fine line between "creative accounting" and downright criminality.  perhaps with higher taxes, the industry would be more focused on what they do with their profits and stop "investing" in lobby efforts to keep this line blurry.  this is not the type of "industry investment" capitalism generally and profits specifically are supposed to produce.

in either case, as much as i realize it would help a lot of people  to see gas drop in price, cutting the gas tax is NOT the way to go.  tax cuts are often passed, the ways to remake that money... not so much.  this would destroy our highway system.  and its actually a pretty good tax - it keeps the highway maintenance proportionate to the number of miles driven and new cars on the road.  the last thing the us needs is more infrastructure underfunded
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Pyperkub
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« Reply #7 on: May 01, 2008, 08:01:05 PM »

The 'gas tax holiday' is pretty much a stupid stunt for political gain]=http://www.newsweek.com/id/134856/output/printgas tax holiday' is pretty much a stupid stunt for political gain:

Quote from: Newsweek
Hillary Clinton has now joined John McCain in proposing the most irresponsible policy idea of the year—an idea that actually could aid the terrorists. What's worse, both of them know that suspending the federal gas tax this summer is a terrible pander, and yet they're pushing it anyway for crass political advantage.

Clinton and McCain have learned a destructive lesson from the Bush era: as Bill Clinton said in 2002, it's better politically to be "strong and wrong" than thoughtful and right. The goal is to depict Barack Obama as an out-of-touch elitist. By any means necessary.

I could highlight a long debate among economists on suspending the gas tax, but there is no debate. Not one respectable economist—and not one environmentalist or foreign policy expert—supports the idea, unless they are official members of the Clinton or McCain campaigns (and even some of them privately oppose it). To relieve suffering at the pump, send another rebate check or provide tax credits or something else, but not this.

And another article:

Quote
The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Quote from: Ironrod on April 30, 2008, 05:42:46 PM

Just to correct my last post, the gas tax raises $10B per year, not $18B as I had thought.

Personally, I'm of the opinion that the tax is too low. It should be around 27 cents just to keep up with inflation since its last increase, in 1997.

Frankly if we want to reduce dependence on foreign oil and fossil fuels in general, the tax should be around $2/gallon, or more, with the money going to research, but even the step of tranferring some of our oil subsidies to solar and wind research has been stymied by the oil lobbyists (from the second article linked above):

Quote
But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Are you sitting down?

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.
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Ironrod
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« Reply #8 on: May 01, 2008, 08:42:25 PM »

Quote from: Pyperkub on May 01, 2008, 08:01:05 PM


Quote from: Ironrod on April 30, 2008, 05:42:46 PM

Just to correct my last post, the gas tax raises $10B per year, not $18B as I had thought.

Personally, I'm of the opinion that the tax is too low. It should be around 27 cents just to keep up with inflation since its last increase, in 1997.

Frankly if we want to reduce dependence on foreign oil and fossil fuels in general, the tax should be around $2/gallon, or more, with the money going to research,

If you want the price of gas to truly reflect the price of driving, you'd have to fold a substantial fraction of the military budget and some carbon/pollution cleanup costs in there, too. Five bucks a gallon should begin to cover it. Since I doubt that even Sen. Obama can deliver that particular socialist paradise, 27 cents would be a good start.
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Pyperkub
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« Reply #9 on: May 01, 2008, 09:08:22 PM »

Quote from: Ironrod on May 01, 2008, 08:42:25 PM

Quote from: Pyperkub on May 01, 2008, 08:01:05 PM


Quote from: Ironrod on April 30, 2008, 05:42:46 PM

Just to correct my last post, the gas tax raises $10B per year, not $18B as I had thought.

Personally, I'm of the opinion that the tax is too low. It should be around 27 cents just to keep up with inflation since its last increase, in 1997.

Frankly if we want to reduce dependence on foreign oil and fossil fuels in general, the tax should be around $2/gallon, or more, with the money going to research,

If you want the price of gas to truly reflect the price of driving, you'd have to fold a substantial fraction of the military budget and some carbon/pollution cleanup costs in there, too. Five bucks a gallon should begin to cover it. Since I doubt that even Sen. Obama can deliver that particular socialist paradise, 27 cents would be a good start.

I wouldn't characterize it as a socialist paradise - after all, we do it (raise taxes massively in order to change behavior) with cigarettes and alcohol.  The thing is, another 9 cents a gallon won't change behavior much (witness how little effect the doubling of gas prices over the past 4 or so years has had (link's graphing functions work best in IE)
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the Nightbreeze
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« Reply #10 on: May 03, 2008, 04:43:07 AM »

Thanks for the replies and articles.

I'm glad to learn, even if I am very disappointed in what I'm learning.  Yikes, this sort of shit can ruin a weekend.
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