Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Some Common Sense on Gas Prices reported this AM on GMA
Old 04-30-2008, 08:38 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Some Common Sense on Gas Prices reported this AM on GMA

I was shocked this AM; GMA was doing their usual gas price 'news' (geez, you'd think we breathed this stuff), I was ready for the usual blab, and then...

Dan Harris comes on and covers two topics:

1) The Gas Tax Holiday - So Dan says he talked with a number of top economists and they ALL said this was the WRONG thing to do. First, fed tax is only (IIRC) 15 cents or so a gallon, so it isn't that big of a deal. But still, to the extent that you lower prices, you increase demand - so we will use more gas, just increasing the whole problem. He didn't even get into the fact that since we run a deficit, we just need to pay those taxes somewhere else, so...

2) Windfall Tax on 'Big Oil' - Again, he said the economists all pointed out that if you limit profits, this will reduce incentives to explore for more oil, to invest in refineries, etc - all leading to HIGHER gas prices.

Wow - some common sense on gas prices - shocking. Of course, Charlie Gibson really didn't have much to say - I guess this just doesn't make for 'good' TV. And now, the weather...

I can't find a link on their web site, sorry.

-ERD50
__________________

__________________
ERD50 is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-30-2008, 08:47 PM   #2
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Pine Island, Florida
Posts: 6,868
Send a message via AIM to Khan
Quote:
Originally Posted by ERD50 View Post
I was shocked this AM; GMA was doing their usual gas price 'news' (geez, you'd think we breathed this stuff), I was ready for the usual blab, and then...

Dan Harris comes on and covers two topics:

1) The Gas Tax Holiday - So Dan says he talked with a number of top economists and they ALL said this was the WRONG thing to do. First, fed tax is only (IIRC) 15 cents or so a gallon, so it isn't that big of a deal. But still, to the extent that you lower prices, you increase demand - so we will use more gas, just increasing the whole problem. He didn't even get into the fact that since we run a deficit, we just need to pay those taxes somewhere else, so...

2) Windfall Tax on 'Big Oil' - Again, he said the economists all pointed out that if you limit profits, this will reduce incentives to explore for more oil, to invest in refineries, etc - all leading to HIGHER gas prices.

Wow - some common sense on gas prices - shocking. Of course, Charlie Gibson really didn't have much to say - I guess this just doesn't make for 'good' TV. And now, the weather...

I can't find a link on their web site, sorry.

-ERD50
No windfall tax; but can we do away with the tax breaks?

With crude at $100 a barrel, Big Oil needs no tax breaks - Yahoo! News

It's difficult make that impossible to justify taxpayer subsidies for an industry whose top five companies made $123 billion in profits last year. Oil at $100 a barrel ought to be plenty of incentive to drill without extra encouragement from taxpayers.
__________________

__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Old 04-30-2008, 08:50 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Agree 100%. Tax subsidies/breaks for these established companies makes no sense.

Just another example of how far off the mark our politicos are.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 04-30-2008, 09:00 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,049
Quote:
Originally Posted by ERD50 View Post
2) Windfall Tax on 'Big Oil' - Again, he said the economists all pointed out that if you limit profits, this will reduce incentives to explore for more oil, to invest in refineries, etc - all leading to HIGHER gas prices.
I'm against a windfall tax but I also don't think taking 10% of $40 billion will deter Exxon's activities much.
__________________
eridanus is offline   Reply With Quote
Old 04-30-2008, 11:15 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by eridanus View Post
I'm against a windfall tax but I also don't think taking 10% of $40 billion will deter Exxon's activities much.
OK, are you offering to have your personal taxes raised 10%? It shouldn't affect you much.

And why single out the oil companies? There are plenty of other businesses making a higher profit margin.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 04-30-2008, 11:42 PM   #6
Recycles dryer sheets
whitestick's Avatar
 
Join Date: Apr 2005
Posts: 415
Quote:
Originally Posted by ERD50 View Post
2) Windfall Tax on 'Big Oil' - Again, he said the economists all pointed out that if you limit profits, this will reduce incentives to explore for more oil, to invest in refineries, etc - all leading to HIGHER gas prices.

-ERD50
If that were true, then why was the last refinery built about 30 years ago, domestically.
Don't remember the exact citation, but I believe I heard that a large part of our rising gas prices is due to limited refinery capacity, not the 20% of oil that we import. IF that is true, and I have no way to disprove it, then it would seem the oil companies are keeping their windfall profits, not building refineries, and expecting the next fire/service interruption/shut down to reformulate/ to generate even more profits and higher prices.
The free market actions only work when you have a free market, not one monopolized due to constraints - be it start-up costs for refineries, or limited licensing to procure and ship oil in this country. Seems a candidate for regulation, just done better then the usual government fiasco.
Gawd, now I'm sounding like a democrat......
Woe is me - Maybe I should vote for Ralph Nadar
__________________
Mens ability to see the future is limited by their horizons of today!
Unknown!
whitestick is offline   Reply With Quote
Old 04-30-2008, 11:50 PM   #7
Full time employment: Posting here.
RetiredGypsy's Avatar
 
Join Date: Mar 2008
Posts: 895
Vote Democrat, vote Republican, vote for Ralph Nader...you're still electing a politician.

The sad thing is I wouldn't mind seeing gas at $7-8, comparable with England. Less SUV soccer moms glued to their cell phones trying to run me over. Fewer idiots with trucks running around trying to run me over. Generally, just less people trying to run me over in general. And if they were still running around, it'd be putting a terrible dent in their wallet, and at least I'd have that going for me if I got ran over.
__________________
RetiredGypsy is offline   Reply With Quote
Old 05-01-2008, 12:06 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by RetiredGypsy View Post
Vote Democrat, vote Republican, vote for Ralph Nader...you're still electing a politician.

The sad thing is I wouldn't mind seeing gas at $7-8, comparable with England. Less SUV soccer moms glued to their cell phones trying to run me over. Fewer idiots with trucks running around trying to run me over. Generally, just less people trying to run me over in general. And if they were still running around, it'd be putting a terrible dent in their wallet, and at least I'd have that going for me if I got ran over.
I think you been ran over. To think a country of this size is comparable to Europe. Honk Honk.

Wait excuse me. You said tiny old England. Honk honk hooooonkkkk
__________________
Notmuchlonger is offline   Reply With Quote
Old 05-01-2008, 12:13 AM   #9
Full time employment: Posting here.
RetiredGypsy's Avatar
 
Join Date: Mar 2008
Posts: 895
Gas isn't $7-8 a gallon in England?
__________________
RetiredGypsy is offline   Reply With Quote
Old 05-01-2008, 12:21 AM   #10
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 899
Quote:
Originally Posted by whitestick View Post
If that were true, then why was the last refinery built about 30 years ago, domestically.
Don't remember the exact citation, but I believe I heard that a large part of our rising gas prices is due to limited refinery capacity, not the 20% of oil that we import. IF that is true, and I have no way to disprove it, then it would seem the oil companies are keeping their windfall profits, not building refineries, and expecting the next fire/service interruption/shut down to reformulate/ to generate even more profits and higher prices.
The free market actions only work when you have a free market, not one monopolized due to constraints - be it start-up costs for refineries, or limited licensing to procure and ship oil in this country. Seems a candidate for regulation, just done better then the usual government fiasco.
Gawd, now I'm sounding like a democrat......
Woe is me - Maybe I should vote for Ralph Nadar
(1) We import ~60% or our oil not 20%. Import 12.2 of 20.6 Mbarrel/day consumption. Source: Infoplease

(2) The cost of crude is responsible for $2.82 of a $3.90/gallon assuming $118/barrel. Refining is only 32 cents/gallon. Source: April 30, 2008 San Jose Mercury News

(3) Although new refineries have not been built, existing refineries have been expanded and I suspect that is probably the most economical way to increase refining capacity.

(4) The price of oil was in the toilet from 1982 until a few years ago giving less incentive to expand production during that time.

I'm not a fan of big oil, in fact I favor a big, big increase in the gas tax(currently only 35 cents/gallon according to the same Mecury News article cited above) and abolishing the tax breaks for exploration but I don't think that we should selectively punish businesses for acting like businesses and trying to maximize profits especially when many of the factors leading to those profits (e.g. the price of oil) are not under their control.

MB
__________________
mb is offline   Reply With Quote
Old 05-01-2008, 07:31 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by mb View Post
(1) We import ~60% or our oil not 20%. Import 12.2 of 20.6 Mbarrel/day consumption. Source: Infoplease

(2) The cost of crude is responsible for $2.82 of a $3.90/gallon assuming $118/barrel. Refining is only 32 cents/gallon. Source: April 30, 2008 San Jose Mercury News

(3) Although new refineries have not been built, existing refineries have been expanded and I suspect that is probably the most economical way to increase refining capacity.

(4) The price of oil was in the toilet from 1982 until a few years ago giving less incentive to expand production during that time.

I'm not a fan of big oil, in fact I favor a big, big increase in the gas tax(currently only 35 cents/gallon according to the same Mecury News article cited above) and abolishing the tax breaks for exploration but I don't think that we should selectively punish businesses for acting like businesses and trying to maximize profits especially when many of the factors leading to those profits (e.g. the price of oil) are not under their control.

MB
Nice post and I agree. I keep hearing all the big tax breaks for big oil. Now I don't doubt there are many/some but I am waiting for one of the wind turbines politician and/or the media to start listing the exact tax breaks big oil gets.

We provide an R&D tax credit for big pharma, big tech, and any other industry, I am not sure that providing an incentive for oil companies to look for oil in the US is such a bad thing. In fact it seem pretty comparable to the R&D tax credit.
__________________
clifp is offline   Reply With Quote
Old 05-01-2008, 07:40 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,284
I bet the farm subsidies are a lot more than the big oil tax breaks....

And we do not need them as they drive up prices....

A tax break is used to get them off the dime... they can just sit around soaking up their profits and paying dividends... and NOT do exploration...

The tax break is for something specific that might not get done..

However, I kind of agree that it is not needed at this time... but maybe was when passed (don't know... but possible)..
__________________
Texas Proud is online now   Reply With Quote
Old 05-01-2008, 07:40 AM   #13
Recycles dryer sheets
StJohnsWood's Avatar
 
Join Date: Jan 2008
Posts: 157
Well played ERD50 Well Played!

What are the oil companies profit margins. Would they make more by putting their cash in a savings account and bagging the oil bizness



Quote:
Originally Posted by ERD50 View Post
OK, are you offering to have your personal taxes raised 10%? It shouldn't affect you much.

And why single out the oil companies? There are plenty of other businesses making a higher profit margin.

-ERD50
__________________
StJohnsWood is offline   Reply With Quote
Old 05-01-2008, 07:45 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by ERD50 View Post
2) Windfall Tax on 'Big Oil' - Again, he said the economists all pointed out that if you limit profits, this will reduce incentives to explore for more oil, to invest in refineries, etc - all leading to HIGHER gas prices.

-ERD50
Quote:
Originally Posted by whitestick View Post
If that were true, then why was the last refinery built about 30 years ago, domestically.
Mostly because they can't get permits to build a new refinery. NIMBY. Maybe that is a good thing, but it is the reason, nonetheless. It is easier to expand an existing plant, as mb points out.

Quote:
The free market actions only work when you have a free market, not one monopolized due to constraints
If the oil companies are big bad monopolies, they sure are lousy at it.

I just looked up the top 10 companies in the S&P 500. Of those ten, two are oil companies (CVX XOM). Their profit margins are rank # 7 and 10 - out of 10. 11.2% and 9.0%, versus 21%-28% for the top three. So why 'pick' on oil companies - I do not get it?

Your other 'facts' have already been corrected by others.


-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 05-01-2008, 10:08 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,199
These high gas prices are too good to last. People should be celebrating. The best part is the rapid rise in prices. You couldn't design a better way to promote alternative fuel sources.

And this is from someone who spent $2,000 on gas last year, and paid over $4 per gallon yesterday.
__________________
Al
TromboneAl is offline   Reply With Quote
Old 05-01-2008, 11:15 AM   #16
Recycles dryer sheets
 
Join Date: Aug 2007
Posts: 401
Quote:
Originally Posted by RetiredGypsy View Post
Gas isn't $7-8 a gallon in England?
Gas averages about $8 per gallon across much of Europe according to the following article:

Why gas in the U.S. is so cheap: Financial News - Yahoo! Finance

It says that on a per capita basis, people in the US use 3 times more oil than Europeans....perhaps it's time we start weaning ourselve off oil a little. I really get tired of the argument that SUV drivers here in the US use to explain their use of those types of vehicles...that they're safer on the road. Perhaps thats true, but then don't turn around and complain about the high price of gasoline making it unaffordable (or painful) to drive your SUV. As the article says "We dug our own hole". Just as I'm pointing my finger towards SUV drivers, I need to look in the mirror to see what I can do to reduce my usage since there are many more ways that we in the US waste energy.
__________________
DallasGuy is offline   Reply With Quote
Old 05-01-2008, 11:28 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by ERD50 View Post
So why 'pick' on oil companies - I do not get it?
-ERD50
A)It's easy......
B)They provide a product EVERY ONE uses.
c)Even at "low margins", there's a lot of money to be made.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 05-01-2008, 11:40 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by DallasGuy View Post
I really get tired of the argument that SUV drivers here in the US use to explain their use of those types of vehicles...that they're safer on the road. Perhaps thats true,
Even that is not a reason...

The New York Times > Business > Safety Gap Grows Wider Between S.U.V.'s and Cars
Quote:
The gap in safety between sport utility vehicles and passenger cars last year was the widest yet recorded, according to new federal traffic data. People driving or riding in a sport utility vehicle in 2003 were nearly 11 percent more likely to die in an accident than people in cars, the figures show. The government began keeping detailed statistics on the safety of vehicle categories in 1994.
-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 05-01-2008, 11:41 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by FinanceDude View Post
A)It's easy......
B)They provide a product EVERY ONE uses.
c)Even at "low margins", there's a lot of money to be made.........
And people can't see past the end of their nose...


-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 05-01-2008, 12:16 PM   #20
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Quote:
Originally Posted by TromboneAl View Post
These high gas prices are too good to last. People should be celebrating. The best part is the rapid rise in prices. You couldn't design a better way to promote alternative fuel sources.

And this is from someone who spent $2,000 on gas last year, and paid over $4 per gallon yesterday.
I agree...maybe we should tax gas more
__________________

__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Gas prices.................................... Dawg52 FIRE and Money 65 09-23-2006 07:15 AM
What's Up with Gas Prices? Gonzo Other topics 48 08-30-2006 03:40 PM
Common Sense and Air Travel Honkie Other topics 21 02-24-2006 08:46 PM
Common Sense and SWRs hocus FIRE and Money 0 02-23-2005 10:19 AM

 

 
All times are GMT -6. The time now is 01:07 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.