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OIL TAX - good idea or not?

Discussion in 'Uncategorized Threads' started by sgb.1100, Oct 17, 2008.

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  1. sgb.1100

    sgb.1100 TS Member

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    If, as GWB says, America is addicted to imported oil;


    If USA is at mercy of paying for imported oil at world price set by OPEC production quotas;



    If high oil prices give windfall cash to fund hostile/mischievous oil states eg. Iran, Saudi, Russia, Venezuela which hurt USA interests;



    If USA reduces its demand for oil with conservation and innovation - which is a proven capability as shown by its response to sustained OPEC oil PRICE shocks in the 1970’s;



    If reduced USA demand (now at 25% of world) results in lowering world oil price;



    if lower world oil prices reduce oil income to screw the budgets and upsets political stability of Iran, Saudi and Russia to benefit national and world security;



    THEN is anyone in favor of a LONG TERM federal oil tax to induce the above result - BUT IF AND ONLY IF - all of the such oil tax is annually re-paid in EQUAL SHARES to every USA resident citizen.



    The ONLY job of the tax is to curb oil consumption to foster energy independence - which job is done by its collection - and after that the cash cannot be used by the Government and must be returned to the people for their use.



    This is the toughest audience I can find. Criticism and discussion please.
     
  2. sgb.1100

    sgb.1100 TS Member

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    FlaLagarto,


    thanks for your question.

    Demand from developing countries given their growth rate may well pick up that demand but USA can’t control what China may do.


    Keep in mind, sustaining a high price for oil in USA does two things at once:



    1. Conservation as you note frees up oil for China, but in the process USA becomes less and less reliant on oil and the less dependent then the less it will matter if other countries "pick up" that oil.



    2. As USA conserves, the higher price will concurrently motivate USA to develop and exploit alternate renewable energy technology it can export (for PROFIT!) to other countries that are oil addicts (think of IT revolution) and when those countries start using it (and why wouldn't they? They are copy cats) world oil price will still fall and probably sink even faster.
     
  3. KEYBEAR

    KEYBEAR Active Member

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    Any tax put on oil will be paid by us . Do it any way you would like but it all comes back to you and me .
     
  4. sgb.1100

    sgb.1100 TS Member

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    An added bonus to an equal share forreturn of the tax is an incentive to reward those citizens that use less oil than the average. The rich minority will pay the most tax since they use more oil than average for multiple cars, boats, more trips, air travel, bigger and multiple houses (if oil is used to heat home) etc. So the average citizen should get more in refund than they actually pay in oil tax.



    For business, they can only really pass on to the consumer, in the free market, the average cost increase of the oil tax for their industry. So if a business takes the effort (and they will) to find ways to conserve oil and pay less tax better than their competitors they will make more money. For all consumers its a virtuous race to the bottom to see who can use the least oil.
     
  5. JBrooks

    JBrooks TS Member

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    "So the average citizen should get more in refund than they actually pay in oil tax."

    You would make a great Marxist. Your plan is called a re-distribution of wealth.

    The negative impact of comsumption taxes are alway borne disproportionately by those who are less able to pay but must consume regardless.

    A rich person doesn't care what the price of gas is. A working mom commuter does.

    Plus your new "Oil Tax Re-distridution Agency" of the federal government would burn at least 25% of the tax in overhead.
     
  6. pendennis

    pendennis Well-Known Member

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    Oil prices, now near the $70/bbl range, are starting to cause problems for the Venezuelans and Russians. They are now complaining that oil should be around $95/bbl for them to be profitable.

    JBrooks has it right, these so-called solutions are nothing but wealth redistribution. I don't want Donald Trump, Bill Gates, or Warren Buffett to pay one cent more than I do for energy of any type.

    Oil production has to be geared to a growing economy, and there is NO REASONABLE substitute available in the foreseeable future. Oil not only fuels the vehicle, it's also the basis for most every type of plastic, and lubrication in manufacturing.

    Dennis
     
  7. sgb.1100

    sgb.1100 TS Member

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    JBrooks,


    you miss the point (as usual) of the tax which is to promote conservation. If the tax is a flow through, that is you get back what you pay, how does that deter consumption?

    For those that want to consume huge amounts of oil, they can pay for it. If your usage is the average, it's likely neutral. Days of cheap oil are over anyway, and its better to pay an inflated price, to force the price down and keep the money in USA than send it to MidEast and Russia.

    Ast for consumption taxes you can control your usage. Ride a bike if you can. If you have to haul stuff get organized and plan your trips in batches. You'll save money, maybe make a little (not the point really) and it'll be a patriotic act.

    Heck, talk about opportunities lost. After 9/11 everyone in USA wanted to know what they could do for their country. If GBW had said USA gotta get off oil so we don't fund terrorists in MidEast and if he had implemented a GAS Patriot tax, price of oil after 8 years gas would be a lot less and USA would have some leverage to negotiate with IRAN. They're cocky cause they're rich, and when rich they subsidize their people. Make em poor, no subsidies and they'll probably feel heat from their people.

    As to cost your hero Sarah Palin (assume Couric hasn't changed your mind) pays an annual dividend of Alaska pipeline revenue to every resident in Alaska - seems to be cost-effective there. If you pay people money as opposed to asking for it, they tend to cooperate.
     
  8. perga1

    perga1 Active Member

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    What about the poor salesman with a route that must be serviced? What about the Gypsy taxi-cab owner or truck driver? These people use a disproportionate amount of fuel and therefore would pay a dispropportinate part of the tax. Re-distribution of wealth is not the American way and should be stopped at every level. JRM
     
  9. sgb.1100

    sgb.1100 TS Member

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    Pendennis,

    I respectfully disagree about making the rich pay more, but that's another issue.


    The purpose of the tax isn't redistribution of wealth. If that were the case, the government should keep it and spend it in general revenue for whatever they want. The oil tax is to deter consumption and if you use oil you should pay and pay more if you use a lot.



    A price hike works to conserve oil when it causes pain.


    A bit of History - The conservation efforts that started with the '73 oil price shock by 1985 were so effective, that Sheik Yamani the oil minister for Saudi and head of OPEC at the time was worried enough that the West would successfully conserve enough to become independent of MidEast oil. Yamani had to purposely flood the oil market to lower price and derail the need for more conservation. He eventually lost his job and is now an oil consultant in UK.

    It took OPEC years to recover with cutting production and help of growing demand from developing nations and now OPEC is in control again. They are like drug pushers adjusting the price of oil to maximize their profit from addicted users. They will keep the price cheap and unpredictable enough to scare of investment in alternate energy (unless you are T. Boone Pickens). That's why a Tax is needed, to send a clear and long price signal to the USA market so OPEC can't pull the rug out from you when you start getting independant.
     
  10. Jeff P

    Jeff P Well-Known Member

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    sgb 1100....

    I can't even begin to express how stupid your idea is. That's your criticsm.

    Dennis and Jbrooks are spot on. You're so far out I can't even see you from where I stand.

    And I have no idea what you're driving at with the Alaska Permanant Fund distribution reference. Anyone who's been on the board more than a week knows I live in Anchorage. So here's the deal on the PFD: In the heyday, the revenue from the pipeline was more than government could spend - lord knows, the dems up here tried. The fiscal conservatives in the state insisted on a permanent fund...something that, once funded, could not be tapped without a super majority of approval - something that they'll likely never get. The funds are invested in real estate, bonds, stocks, gold, you name it. Few weeks ago, we had over $40B in assets. i'm sure the market has been hard on that total lately, LOL. Anyway, the money in question is collected from the oil companies and distributed to the people - socialism at its finest.

    And you should see the people waste it. God, it's incredible. It's been reported that something like 15% of the hourly workers in the state DON"T go to work the day after the dividend is paid. Why work? They just got plenty of money. And if McDonalds fires them, Burger King is firing someone else that day for not showing up and they can just get a new fry cook job.

    Anyway....socialism is taking money from companies and distributing it to the people. STUPIDITY is taking money from the people and...giving it back to them? WTF? Man, you're wasting valuable oxygen someplace.
     
  11. pendennis

    pendennis Well-Known Member

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    OPEC is not in charge of the world price. Price is being controlled in the middle-marketers on the commodity markets.

    OPEC producers have inflexible labor and transportation costs. Therefore, their only recourse is to tweak the supply, of which they are not extremely successful. Someone always cheats, and tries to make more money on increased volume.

    This summer's high oil costs, at roughly $145/bbl, were an anomaly. There was no world-wide shortage to cause the price to be at that level. The commodity had risen far past its equilibrium price, which should be at about $75/bbl. It is now dropping because of softness in demand.

    What you are proposing is a progressive oil tax. Progressive oil taxes, like progressive income taxes, do not work. You simply can't save your way to prosperity, and a progressive oil tax will wreck economic growth. Capitalism can't survive on a no-growth level.

    There is absolutely no evidence that the world is running out of oil, T. Boone Pickens folksy commercials notwithstanding. The Russians have already found proven reserves at depths of 40k feet, beneath depleted oil wells. No one really knows how great oil reserves really are, but estimates of how long it will be before the world running out of oil keep getting pushed further into the future.

    Dennis
     
  12. sgb.1100

    sgb.1100 TS Member

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    Perga,

    the salesman, Gypsy taxi-cab owner or truck driver, they can all pass the tax on to their end customer. The refund isn't paid to companies or businesses as they can pass the tax cost to the ultimate user, the tax payer who will get the refund.

    This tax creates a capitalist market incentive to conserve.

    The truck driver at some point will have to get a new truck in the next few years maybe. At decision time, cause he knows the tax isn't going away, he knows OPEC can't play the price game and lower its price, so truck driver has a clear and long price signal to invest in a fuel efficient truck. If he gets good at saving fuel, becomes better at organizing his trips, has an efficient truck, better than his competitors , he saves money, beats competitors and country uses less oil, price of oil will trend downward, fuel efficient technology is rewarded.


    Consumer will pick products for best price, without knowing or caring how it gets to market and again reward the fuel efficient companies. If consumer buys exotic imported fruit then he or she must pay the extra oil tax for that luxury and refund check won't compensate for that luxury. If consumer in laissez fair market buys cheaper local produce, pays less oil tax, again good for country, use less oil.

    As Waterhouselake said price is best method, as it lets marketplace and consumers make billions of little cumulative decisions to save the best way for themselves.
     
  13. JBrooks

    JBrooks TS Member

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    "you miss the point (as usual)"

    No, I understand not only your point but the fallacious premise on which it is built. Under your method, a homeless person, having used no petroleum products, would receive a payment from funds paid by working people who did. That is just a re-distribution of wealth.

    "pays an annual dividend of Alaska pipeline revenue to every resident in Alaska"

    This is a statement based on the ignorance of two facts and is inapplicable to the discussion in hand.

    1. All oil and gas rights in Alaska are owned by the People of Alaska. What Palin did was negotiate a higher extraction percentage for her owners, the People. The dividend increase was just the People getting a fairer share of the overall value of their oil and gas. As such, it was not a "tax" on the oil companies, they just had to pay a higher price to the owners of the oil.

    2. Gas prices in Alaska are among the highest in the nation because there is little refining capacity. There is no relationship between gas prices and the re-negotiated price to the oil companies.
     
  14. pendennis

    pendennis Well-Known Member

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    These taxes all work very well in a closed market. But what happens when the person can sell a product cheaper, as a result of no- or low taxation policies in a foreign company? The very tax proposed as a conservation method will be the difference in prices charged for various products. Your higher price gets you shut out in the market.

    Dennis
     
  15. sgb.1100

    sgb.1100 TS Member

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    Jeff P,


    My reference to Alaska was only to show it's not hard to distribute a refund to every resident in a juridiction - a logistical objection raised by JBrooks.


    You have no argument from me that payments to citizens that aren't earned can destroy the will to work in a society. It's even got a name.

    Search wikipedia for Dutch Disease which says it's : "an economic concept that tries to explain the apparent relationship between the exploitation of natural resources and a decline in the manufacturing sector combined with moral fallout."


    For comparison you should check out how well SOCIALIST Norway has handled their North Sea oil wealth. Check out the Government of Norway Pension Fund (about 400 Billion USD) and compare to yours - you will weep.
     
  16. perazzitms

    perazzitms TS Member

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    No. Not a good idea.

    You forget. OPEC is a cartel. As you reduce your need for oil, they reduce the amount of oil pumped. They don't play by your rules. Did you miss the day they talked about supply/demand and demand/supply when you got your economics degree?

    Your idea penalizes people who can't afford to reduce their oil consumption.

    "Oh, reduce your oil usage -- that 6yr old car that's paid for that only gets 22mpg - trade it, get a new hybrid and a new car payment. Oh, BTW, it will take you 6 years to break even with the hybrid - and we don't know how long the batteries will last so better have a extra $3K laying around in about 4 years or so. That oil burning furnace in your house? Junk it. Go electric and get a windmill. What, you don't get a constant 8mph wind to turn it 24/7? Tough. You drive how far to work? Oh shit. Sell your house - buy one closer to work."

    Get the idea? Pay your oil tax or go $50,000 in debt trying to reduce your oil consumption. People will just be stuck paying your tax and won't be able to do anything about it.

    Want to reduce dependence on foregin oil? Drill here. Sink 100 new wells and now you have the ability to tell OPEC to go take a flying leap. Make what OPEC says insignificant - cut all you want, we'll pump more. BTW, we got oil and wheat - you only got oil -- what you going to eat next week?
     
  17. tj303

    tj303 Member

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    An 'oil tax' is a good way to curb consumption and make alternative energy sources more economically viable, but....the true purpose of taxes is to generate revenue to fund government spending. Taxes should not be used to create/direct social policy i.e. "sin taxes".
     
  18. GARMASTERS

    GARMASTERS TS Member

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    " and after that the cash cannot be used by the Government and must be returned to the people for their use."

    Just like Social Security money? I want some of what you're smokin'.
     
  19. JBrooks

    JBrooks TS Member

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    1. Build 100 new nuclear power plants.

    2. Build electric cars.

    3. Plug them in.
     
  20. sgb.1100

    sgb.1100 TS Member

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    JBrook,


    Your first response is because it’s a consumer tax it’s regressive and hurts the poor people. Then when you see it also has redistributive component, then oh no, now it’s a progressive and socialist tax so it’s still bad. Heads I win and tails you lose. Or, like advice of the unscrupulous real estate agent’ advice – buy because prices are falling, but then if prices are rising you better buy too before it’s too high.


    Have to conclude you just don’t like taxes period. That’s OK, you’re entitled to your opinion. With an ideological aversion to axes, it’s too easy to say it’s a tax, so I don’t like it and no good and that’s end of argument.



    I just noticed your recent post on nuclear, electric and plug in. Hey we actually that oil addiction is bad and we agree, well 2 out of 3 of your proposals. I’m not so sure nuclear is the way to go and it’s not because of tree hugging environmental concerns. No venture capital has gone into into nuclear reactor although lots of investment plays on uranium in the past. That tells me they are not that great an investment and I don’t like government blowing big resources on losers. But cheap and clean electron, OK I'm with you.
     
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