Policy Initiatives for Rising Gas Costs

[NorthSideSox72]

AHB wants to discuss this:

 

Ok, let's talk about Obama's plan to offer a $1000 stimulus package to Middle and lower class Americans by using a windfall profits tax on Oil profits. While McCain pushes a lame $30 gas tax holiday, Obama is pushing a $1000 check.

 

Discuss!!!

 

[Texsox]

so, I attack McCain... get attacked.

Promote Obama... get attacked.

 

WOW!

 

Ok, let's talk about Obama's plan to offer a $1000 stimulus package to Middle and lower class Americans by using a windfall profits tax on Oil profits. While McCain pushes a lame $30 gas tax holiday, Obama is pushing a $1000 check.

OK Let's talk about it!

 

With record annual deficits and a record federal deficit, shouldn't a windfall profits tax be used to pay down the national debt? Perhaps when we have paid off or at least paid down the debt we could look at politicians buying votes with "free money". It isn't free when we are simultaniously borrowing money to fund the government.

[NorthSideSox72]

To start with, neither of these plans do a damn thing for the long run needs of the country. They are political B.S. bandaids at best.

 

And what's worse is, both of them will actually demotivate people about alternative energy and conservation, which is also counterproductive!

 

So, basically, I call B.S. on both ideas.

 

[kapkomet]

And to counter this, windfall tax on profits is about as unamerican as you can get. It's a grab to redistribute wealth, and what about all the NOL's that XOM and others took in the early 90's for years on end?

 

You simply do not tax someone more because they are fortunate enough to be making money. You want in on the act? Buy their stock.

 

The $30 gas tax holiday, that's just a joke.

[Balta1701]

OK Let's talk about it!

 

With record annual deficits and a record federal deficit, shouldn't a windfall profits tax be used to pay down the national debt? Perhaps when we have paid off or at least paid down the debt we could look at politicians buying votes with "free money". It isn't free when we are simultaniously borrowing money to fund the government.

It's a lot more fun and it wins a lot more votes to give people checks! Woo-hoo!

 

To be honest, both sides have energy related proposals that are pretty darn bad. Cutting the gas tax is an awful idea, it robs the treasury of funds at a time when that same money is needed to rebuild the crumbling infrastructure (although, if enough bridges collapse, that is one way of cutting oil consumption). Meanwhile, that $1000 check/windfall tax plan is just as silly. Yes, people are hurting because of energy costs. But people are adapting. The simplest solution is to drive less. If you're going to take the questionable step of a windfall tax, then use it to fund something useful, like for example, build a crapload of solar energy plants or windmills.

 

There's only 1 case where distributing checks to low income people is a decent idea, and that's as part of what you do after setting up a legit carbon tax system. A part of that tax does hit the lowest of the low income workers especially hard, but if you take about 5-10% of the revenue generated by the carbon tax, you can use that to offset the tax paid by everyone with incomes around the poverty line. If you're giving people rebates in that case, that one I can live with because at the same time you're still taking a huge chunk out of our energy usage by increasing the cost of high carbon energy.

[Texsox]

Excellent point regarding taxing after the fact. To add, it basically is a tax on consumers because the oil companies will just pass it on, they always do. So we have yet another Robin Hood government program.

 

I also really, really, dislike the government running a deficit *and* paying Americans. It really reeks during an election year. Vote for me and I'll give you $1,000!! I'd feel better if it was his own money and not mine.

[lostfan]

Both of these are awful ideas. I think the gas tax holiday is worse though.

[Balta1701]

Excellent point regarding taxing after the fact. To add, it basically is a tax on consumers because the oil companies will just pass it on, they always do. So we have yet another Robin Hood government program.

Actually, I'm not sure this is how it would work. Hypothetically, if there is a certain amount of oil being produced in the world, then the price of oil should be such that the demand for oil responds to the supply.

 

In other words, if oil companies simply tried to raise their prices to recoup their income, then that should either drive demand down or it should drive business to whichever oil company doesn't choose to increase their prices. The only way that a windfall tax could be passed on in that measure is if all the oil companies get together and decide that they need to make that money back up so they all raise their prices dramatically in the hopes that their price increases will make the money back before demand responds. This of course is monopolistic and illegal.

 

If the market actually works, then the price of a gallon of gasoline should be set only by the amount of gasoline available and the demand for it. If the price is too high, then stockpiles will build up. If too low, then stockpiles will go down. You shouldn't simply be able to raise the price of an item like that because you feel like it. It's for this same reason that the gas tax holiday idea fails...if the price is being set by the balance of supply and demand, then the price will stay constant regardless of which side is taking the profits.

[Texsox]

If each company starts out with X costs, they must place profit on top. So increase costs across the board and you will increase retail prices. Look at taxes right now, areas of the country with higher taxes have higher pump prices. I don't see how they would not pass any new taxes on to the consumer.

[mr_genius]

OK Let's talk about it!

 

With record annual deficits and a record federal deficit, shouldn't a windfall profits tax be used to pay down the national debt? Perhaps when we have paid off or at least paid down the debt we could look at politicians buying votes with "free money". It isn't free when we are simultaniously borrowing money to fund the government.

 

i agree with tex, giving out another free check to everyone is a bad idea.

[EvilMonkey]

Both ideas suck. Solutions are more complicated and multi-faceted than just a check or a tax holiday.

[Balta1701]

If each company starts out with X costs, they must place profit on top. So increase costs across the board and you will increase retail prices. Look at taxes right now, areas of the country with higher taxes have higher pump prices. I don't see how they would not pass any new taxes on to the consumer.

So why is it that the oil companies get to decide then how much profit they will make? Where exactly is it determined that Exxon's profits are going to be $11.25 billion every quarter? And why have those profits been going up at such an incredible rate over the past 8 years? Why exactly is it that in 1999 Exxon's quarterly profits were on the order of $1.5 billion and now they're up by a factor of 7? If it's the case that each company starts with x costs and takes a constant amount of profit on top of that, then how have yearly profits gone up so much faster than the rate of inflation if they haven't increased the amount they earn per barrel of oil?

[Texsox]

So why is it that the oil companies get to decide then how much profit they will make? Where exactly is it determined that Exxon's profits are going to be $11.25 billion every quarter? And why have those profits been going up at such an incredible rate over the past 8 years? Why exactly is it that in 1999 Exxon's quarterly profits were on the order of $1.5 billion and now they're up by a factor of 7? If it's the case that each company starts with x costs and takes a constant amount of profit on top of that, then how have yearly profits gone up so much faster than the rate of inflation if they haven't increased the amount they earn per barrel of oil?

 

Look at the end result, how much fluctuation do you see at the pump? As crude rose, notice how the increases were in lock step with each other. As taxes rose, notice how pump prices rose across the board. What evidence do you have that this would not be treated like any other across the board increase in cost? When was the last time someone tried to increase market share in fuel by cutting prices?

 

My knowledge is not from the economic side, but from the sales and marketing side. If I was an oil company, I would know that I could pass this increase on, and, based on years of experience, my competitors will follow. In fact, I would call all the media representatives and announce that pump prices would be increasing a dime or whatever and make it really easy for them to know what to do

 

I wish we had someone with a knowledge of Obama's plan posting.

[HuskyCaucasian]

I have to find the exact details of this, but the "Gang of 10" Bi-partisan energy policy sounds relatively acceptable. I'm still not a fan of off-shore drilling, but if limited access can be opened to push new energy, I am for ok with that. When I can find an article will all the details, I"ll post it. Most articles seem to have bits and pieces of it.

 

EDIT: I took out the old article and replaced it with this. Much more detailed

Senate 'gang's' new energy plan

 

The New Era bill contains three main components:

• An intensive effort to transition vehicles to non-petroleum based fuels;

• a robust federal commitment to conservation and energy efficiency; and

• targeted, responsible domestic production of energy resources.

 

Converting Cars and Trucks to Non-Oil Fuel Sources to Regain Energy Independence

The New Era legislation funds a $20 billion "Apollo Project" like effort to support the goal of transitioning 85% of America's new motor vehicles to non- petroleum-based fuels within 20 years. To accelerate this transition, the legislation includes:

• $7.5 billion for R&D focused on the major technological barriers to alternative fuel vehicles, such as advanced batteries;

• $7.5 billion to help U.S. automakers and parts makers re-tool and re-equip to become the world leader in making alternative fuel vehicles;

• Consumer tax credits of up to $7,500 per vehicle to incentivize Americans to purchase advanced alternative fuel vehicles (those that run primarily on non-petroleum fuels) and up to $2,500 to retrofit existing vehicles with advanced alternative fuel engines.

 

Enhancing Conservation

To ease gas prices and protect our environment during the transition, the proposal includes a significant federal commitment to promoting conservation and efficiency. These include:

• Extending renewable energy, carbon mitigation and energy conservation and efficiency tax incentives, including the production tax credit, through 2012 to create greater certainty and spur greater investment;

 

New Energy Reform Act of 2008, Page 2

 

• New consumer tax credits of up to $2,500 to purchase highly fuel efficient vehicles, to help Americans reduce their annual gas costs and reduce oil imports;

• Extending and expanding the $2,500 tax credit for hybrid electric vehicles;

• $500 million for R&D into new materials and other innovations to improve vehicle fuel efficiency;

• $2.5 billion in R,D&D on next generation biofuels and infrastructure;

• Tax incentives for the installation of alternative fueling stations, pipelines and other infrastructure;

• Expanding transmission capacity for power from renewable sources;

• New dedicated funding for the weatherization assistance program.

 

Responsible, Targeted Domestic Energy Production

To help meet our energy needs until our economy transitions to advanced alternative fuel vehicles, the New Era bill increases domestic energy production in environmentally responsible ways. The legislation:

• Provides a CO2 sequestration credit for use in enhanced oil recovery to increase production from existing oil wells while reducing greenhouse gas emissions;

• Opens additional acreage in the Gulf of Mexico for leasing (in consultation with the Defense Department to ensure that drilling is done in a manner consistent with national security) and allows Virginia, North and South Carolina and Georgia to opt in to leasing off their shores. Retains an environmental buffer zone extending 50 miles offshore where new oil production will not be allowed. Requires all new production to be used domestically. Creates a commission to make recommendations to Congress on future areas that should be considered for leasing. Provides for appropriate revenue sharing for states that allow leasing off their shores;

• Provides grants and loan guarantees for the development of coal-to-liquid fuel plants with carbon capture capability. Plants must have lifecycle greenhouse gas emissions below those of the petroleum fuels they are replacing;

• Supports nuclear energy by increasing staff at the NRC, providing workforce training, accelerating depreciation for nuclear plants, and supporting R&D on spent fuel recycling to reduce nuclear waste.

 

I would say this is a nice middle ground IMO. I like that they open up some areas, but leave it to the states. This is different than Bush who just wants to lift the ban all together. I love the part about 85% nonpetroleum-based vehicles by 2028. Combine that with a push for wind, solar, and nuclear by the next president and I think it's a good start. I also like the requirement that all new oil must be used domestically.

 

I think you'll see both candidates embrace this. It gives McCain his off-shore drilling and it gives Obama his long term energy strategy.

Edited August 2, 2008 by Athomeboy_2000

[NorthSideSox72]

I have to find the exact details of this, but the "Gang of 10" Bi-partisan energy policy sounds relatively acceptable. I'm still not a fan of off-shore drilling, but if limited access can be opened to push new energy, I am for ok with that. When I can find an article will all the details, I"ll post it. Most articles seem to have bits and pieces of it.

 

EDIT: I took out the old article and replaced it with this. Much more detailed

Senate 'gang's' new energy plan

 

 

 

I would say this is a nice middle ground IMO. I like that they open up some areas, but leave it to the states. This is different than Bush who just wants to lift the ban all together. I love the part about 85% nonpetroleum-based vehicles by 2028. Combine that with a push for wind, solar, and nuclear by the next president and I think it's a good start. I also like the requirement that all new oil must be used domestically.

 

I think you'll see both candidates embrace this. It gives McCain his off-shore drilling and it gives Obama his long term energy strategy.

 

Looks overall good, but, you still never addressed the question in the thread - the financial proposals. Why is Obama's good and McCain's bad?

 

 

[Texsox]

I think you'll see both candidates embrace this.

 

Not before the election.

[HuskyCaucasian]

Not before the election.

Obama:

"If, in order to get that passed, we have to compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage _ I don't want to be so rigid that we can't get something done."

[HuskyCaucasian]

Ok, I have a few moments to type put a very general points as to why I'd rather see a $1000 rebate rather than a gas tax holiday.

 

Let's start with the very basic: $1000 > $30-50. That's the simple point. A gas tax holiday will gave you less than a tank of gas depending on the type of car you drive. Let's break it down a little more.

 

As had been pointed out many times, a gas tax holiday drains the highway fund. Want another bridge collapse? well, then I would think giving the fund LESS money is a very bad idea.

 

Yes, automobile gas is stinging families with moderate to low incomes. But, the problem is much broader. Electricity costs are rising. Natural gas prices are high. So, if we are going to lift the tax on auto gas, then lift it on electricity and natural gas. Even THEN it probably isnt much more a few hundred dollars (maybe more over the winter). Once again, $1000 > $30-50.

 

A $1000 refund will have a big impact on saving the economy than 10 cups of coffee at Starbucks.

[kapkomet]

Ok, I have a few moments to type put a very general points as to why I'd rather see a $1000 rebate rather than a gas tax holiday.

 

Let's start with the very basic: $1000 > $30-50. That's the simple point. A gas tax holiday will gave you less than a tank of gas depending on the type of car you drive. Let's break it down a little more.

 

As had been pointed out many times, a gas tax holiday drains the highway fund. Want another bridge collapse? well, then I would think giving the fund LESS money is a very bad idea.

 

Yes, automobile gas is stinging families with moderate to low incomes. But, the problem is much broader. Electricity costs are rising. Natural gas prices are high. So, if we are going to lift the tax on auto gas, then lift it on electricity and natural gas. Even THEN it probably isnt much more a few hundred dollars (maybe more over the winter). Once again, $1000 > $30-50.

 

A $1000 refund will have a big impact on saving the economy than 10 cups of coffee at Starbucks.

So what about punitive windfall taxes? Read: XOM, you make too much money, even though you don't set the market... so we're going to STEAL money from you and give it to someone else. That's against everything America stands for. By the way, ask XOM how much charitable contributions they have.

[EvilMonkey]

Ok, I have a few moments to type put a very general points as to why I'd rather see a $1000 rebate rather than a gas tax holiday.

 

Let's start with the very basic: $1000 > $30-50. That's the simple point. A gas tax holiday will gave you less than a tank of gas depending on the type of car you drive. Let's break it down a little more.

 

As had been pointed out many times, a gas tax holiday drains the highway fund. Want another bridge collapse? well, then I would think giving the fund LESS money is a very bad idea.

 

Yes, automobile gas is stinging families with moderate to low incomes. But, the problem is much broader. Electricity costs are rising. Natural gas prices are high. So, if we are going to lift the tax on auto gas, then lift it on electricity and natural gas. Even THEN it probably isnt much more a few hundred dollars (maybe more over the winter). Once again, $1000 > $30-50.

 

A $1000 refund will have a big impact on saving the economy than 10 cups of coffee at Starbucks.

Wouldn't a gas tax holiday help those that drive the most, the most? Why should everyone get a $1000 check? My wife works out of the house, should she get a check? I spent $400 on gas last month, I could save alot. How about the people who live in the city and take a bus or walk to work? They don't really need the gas 'releif', do they? Just asking.

Edited August 3, 2008 by Alpha Dog

[NorthSideSox72]

Wouldn't a gas tax holiday help those that drive the most, the most? Why should everyone get a $1000 check? My wife works out of the house, should she get a check? I spent $400 on gas last month, I could save alot. How about the people who live in the city and take a bus or walk to work? They don't really need the gas 'releif', do they? Just asking.

True. But, on the other hand, maybe you don't want to incentivize driving more. Maybe you want to promote driving less. Not that I think a $1000 check is a good way to do that (its not), but, I also don't think we should be doing anything to encourage more driving.

 

[Balta1701]

Wouldn't a gas tax holiday help those that drive the most, the most? Why should everyone get a $1000 check? My wife works out of the house, should she get a check? I spent $400 on gas last month, I could save alot. How about the people who live in the city and take a bus or walk to work? They don't really need the gas 'releif', do they? Just asking.

Assuming you spent $4 a gallon, that's 100 gallons of gas, which means that ending the federal tax would save you $18 a month, if 2 things happened. First, money would have to be found somewhere else to pay for the transportation work that is paid for by the gas tax, which presumably means more debt, which eventually someone is going to have to pay back. Secondly, that assumes that when the price of gasoline drops $.20 a gallon, that somehow supply and demand break down, and people don't decide that they can buy more gas, pushing demand upwards and forcing the price back upwards.

 

Just compared to another $1000 "thanks for voting for me" check, if you're buying 100 gallons of gas a month, it would take you nearly 5 years to recoup the amount in the Obama happy check. Not that it's a good idea, but that might give you some idea of how much profit the oil companies are raking in, if you could take enough money away from them to give those sorts of rebate checks.

 

To put it another way...last quarter, U.S. oil companies (not counting the biggies like Saudi Aramco) put forwards profits of $40 billion last quarter (not year, quarter). While they clearly don't sell just to the U.S., that's still a profitability of $100 a month for them for every person like you. The government took $20.

[EvilMonkey]

Assuming you spent $4 a gallon, that's 100 gallons of gas, which means that ending the federal tax would save you $18 a month, if 2 things happened. First, money would have to be found somewhere else to pay for the transportation work that is paid for by the gas tax, which presumably means more debt, which eventually someone is going to have to pay back. Secondly, that assumes that when the price of gasoline drops $.20 a gallon, that somehow supply and demand break down, and people don't decide that they can buy more gas, pushing demand upwards and forcing the price back upwards.

 

Just compared to another $1000 "thanks for voting for me" check, if you're buying 100 gallons of gas a month, it would take you nearly 5 years to recoup the amount in the Obama happy check. Not that it's a good idea, but that might give you some idea of how much profit the oil companies are raking in, if you could take enough money away from them to give those sorts of rebate checks.

Oh, trust me, I kow the implications to the government tax-wide of a tax holiday, I was just askin'. But what about the people who don't drive? Do they get a check too? Should they get a check too? And just my opinion, but I think that with the prices as high as they are now for as long as they have been have made a significant shift in the way people (in general) will drive now and in the future, even if gas drops $.20 per gallon. if it drops $1 a gallon, that may be another story.

[Texsox]

The only check I want from the government is a "we paid off the national debt and have a surplus" check. As long as we are running deficits, we would be borrowing that $1,000 from someone who will also wish to be repaid. Since I plan on living and working for at least another 15 years, that would mean I will be paying that back, with interest.

 

As Balta mentioned, notice these checks are always around an election. It's a publically fiunded bribe.

[southsider2k5]

I said it with the stimulus package and I will say it again, this is grandstanding and almost economically pointless. Also punative measures against any corporation, let alone the ones who control our infrastructure are shortsighted and functionally brain dead.