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Maybe a new $10/bbl oil tax

Discussion in 'Environmental Discussion' started by austingreen, Feb 5, 2016.

  1. austingreen

    austingreen Senior Member

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    FACT SHEET: President Obama’s 21st Century Clean Transportation System | whitehouse.gov
    It looks like half would pay for the infrastructure congress already approved but used slight of hand to not really pay for. The other half most of it may be a boondoggle or may improve public transportation.
    I think the ghg makes this environmental, but it may be fhop stuff.
     
  2. usnavystgc

    usnavystgc Die Hard DIYer and Ebike enthusiast.

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    I may sound crazy to many on here but, the first thing I thought about was, does it make sense to make the oil industry pay for technologies that are counter to their industry? The way I read this is, lets tax the oil companies and use that money to put them out of business or at the very least, decrease their business.

    It makes about as much sense as lets tax boxing $10 a round and use that money to promote MMA. Can someone help me understand the logic here?
     
  3. wjtracy

    wjtracy Senior Member

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    On the radio here they were saying the energy bill discussion was delayed due to Flint but I was wondering what energy bill? I guess this. What would be the equivalent per gallon tax to match the dollars? I'd do calc but preoccupied
     
  4. austingreen

    austingreen Senior Member

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    Part of the higher price is indeed to reduce consumption, which decreases oil company business and hopefully imported oil. I don't think most Americans or even oil company executives have a problem with that right now. We have gas taxes now that don't pay for infrastructure so that should be no conceptional problem either. The paying for public transpiration through oil taxes is a little problematic, especially as it takes taxes from one region and distributes it to another. I'm not sure that guy in kansas or texas wants to pay for the high speed rail and subway in LA.
    Well no, its more like taking some of the liquor taxes and funding programs that help alcoholics.

    My biggest problem is the number is probably too low to make a dent. Forbes thought something more of the order of $40/bbl might change consumption, and that money used not to build more things but to reduce other taxes. The tax will be about $0.25/gallon, not enough to even get to december prices in most of the country. That oil price is likely to encourage less efficient vehicles so that opec can blackmail us again in the future.

    At most this tax will slow the growth of ghg from lower oil prices.
     
    #4 austingreen, Feb 5, 2016
    Last edited: Feb 5, 2016
  5. usnavystgc

    usnavystgc Die Hard DIYer and Ebike enthusiast.

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    Its interesting to see the other viewpoint. When I look at this I object to it and it absolutely makes no sense to me to ask a maker/supplier of a useful product to pay to find an alternative that may ultimately put them out of business. The tax is also suppose to fund cleaner energy. While I fully support cleaner energy, I just can't fathom the idea of doing it this way. To me its the equivalent of Trump saying he's going to build a fence and make Mexico pay for it.
     
  6. RRxing

    RRxing Senior Member

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    The consumer ALWAYS pays in the end...
     
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  7. austingreen

    austingreen Senior Member

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    In 1993 the gas tax was raised to $0.183 if we adjust for inflation that would be $0.302. Instead of raising the tax the country has used the general fund to build roads, and cut maintenance that hurts the infrastructure. Yep bad congress. This tax raises it up to about $0.43, about half will pay for roads and bridges congress has already decided to build. I don't think the other 12 or 13 cents is trying to put oil companies out of business.

    None of the gas or the oil tax goes to reduce other taxes, but since it was artificially low the general fund ran a deficit for its spending, and spending was less efficient (people rushed bad projects that were funded, and couldn't plan to do better ones). None was used to pay for the carter doctrine oil wars. None to help pay for health problems associated with breathing fumes or car accidents. This is all FHOP stuff, but its important to talk Federal fuel taxes will go up to about 15% of what they are in germany. Pensylavia has the highest state tax of around $0.52/gallon, that brings the state over 30% the cost of germany. Somehow the oil industry in europe is fine but lots less gas is pumped.

    As a matter of economics how would you reduce dependence on foreign oil to reduce the chance of opec blackmailing the US again, once the wells are capped because of the cheap oil we are importing now.

    I can see how we could help the domestic drilling industry with a tariff to create an imported price floor. I don't think we need to help aramco (saudi national oil company) or then national persian oil company. refiners are fine with this tax they just pass it along. Gas stations may do worse as oil use may not increase as much with proper taxation.
     
  8. frodoz737

    frodoz737 Top Wrench

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    How many times does a gallon of fuel have to be taxed?
     
  9. austingreen

    austingreen Senior Member

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    Taxing a barrel of oil seems much simpler than a gallon of gas, as that can be done at the refinery.

    Currently we have a federal gas tax and a federal diesel tax and a federal fuel oil tax, all different none indexed to inflation or set to change if oil gets cheap or expensive. There also are loads of subsidies based on production and consumption of oil, diesel, and gasoline. The consumption taxes could be simplified to just an oil tax, which would be much cheaper and easier to collect as there are a lot fewer refiners than retailers.

    There also are separate gas, diesel, and fuel oil taxes in each state. Some states have additional excise taxes on top of this, again different for each type, and other taxes thrown into the mix. Heavy vehicles are also taxed by the mile and weight, on top of the fuel taxes.

    A single federal oil tax would simplify federal regulation and allow refiners to pick the best mix of product without regard to different taxation. Its also way past time to change people from fuel oil heating to natural gas or other methods of heating, the subsidies to stay on fuel oil need to end before the next oil price spike.
     
  10. frodoz737

    frodoz737 Top Wrench

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    What ever the "justification", we pay more and the Congress Critters will just waste it. They're already using credit cards to pay off credit card debt.
     
  11. sillylilwabbit

    sillylilwabbit Active Member

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    This is not a tax on a barrel of oil, this is a diffused tax on the general public who will actually paying for it.

    Deception.


    iPhone ?
     
  12. austingreen

    austingreen Senior Member

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    I don't think people are confusd about who will pay, it will get passed along. Its phased in 5 years, $2/year. THat ia it will raise a gallon of gassoiine $0.05/gallon, increasing until it is $0.25.

    Now the last time oil black mail happened prices went up in 1979 all prices went up 9% when the US gave pricing power to opec - aramco and persian national oil company.

    So yes I can understand how you want to help out OPEC. It must mean you don't understand how opec is manipulating consumption. I do agree though that new spending doesn't help. The extra tax money from artificial lowering of oil prices could be used to reduce other taxes instead. ONe thing is for sure, we should not assume they are doing this to help us, it is to shut down US production so they can spike the price again.
     
  13. wjtracy

    wjtracy Senior Member

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    There was an earlier thought that auto makers felt a tax was needed to help green car sales
     
  14. austingreen

    austingreen Senior Member

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    with low gas prices it is unlikely some automakers will reach cafe which gets tougher each year between now and 2025. They will then pay penalties and probably not be able to sell some profitable cars.

    CAFE really works to make efficient cars available, but without high gas prices people likely will buy the guzzlers and auto companies will end up paying heavy fines and probably will go through layoffs again like in the auto recession. There will be strong pressure from auto and uaw lobbiests to roll back cafe.

    So it is a ballancing act. you can keep oil taxes low which helps OPEC mainly, or you can raise them. Where I agree with the people arguing against rasising them, is perhaps these local transporation initiatives should mainly be with state money, not a federal tax that is used for pork barrel politics. If the money was used mainly to pay for the transportation bill already passed, and the rest reducing payroll taxes, I don't think there would be much objection. The president by adding new spending perhaps has picked a fight that he is hoping to lose. The amount of the tax increase is truely tiny. Cafe really needs at least $25/bbl to help dealers sell efficient cars.
     
  15. frodoz737

    frodoz737 Top Wrench

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    So in essence another sin tax. :rolleyes:
     
  16. austingreen

    austingreen Senior Member

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    Why no, not at all.
    It is a tax to reduce domestic use of a comodity that is controlled by a cartel that many americans belive does many things that hurt america. I don't think that there is any question that OPEC money has funded most of the terrorism in the last 40 years, or that it has used oil blackmail to change european foreign policy and cause recessions in the US. Oil is not a sustainable freemarket resource.

    Really I don't understand you guys that want to fall for opecs latest trick to have us import more of their oil. How many wars and recessions do we need until steps are taken.



    Are you arguing, opec lowered the price, so the US government should just let foreign oil addiction increase? If the drug lords lower the price of heroin to get more people adicted are they good guys and all of a sudden using more heroin is cool. No its not a sin tax it should be a tax to get people into more efficient vehicles which the government has regulated auto to produce.

    On the environmental side less oil use may result in fewer oil spills, less air and water pollution from using oil sands, less ghg from transportations.

    Somehow making sure we strengthen OPECs hand so they can blackmail us again seems good politics.
     
  17. frodoz737

    frodoz737 Top Wrench

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    So the drug dealer lowers the price and the government makes us pay a penalty (sin tax) to compensate their loss because the drug dealer should be charging more, or because another dealer hasn't yet come up with a better drug that cost more. What happens to the tax next time the drug dealer raises the price? The government drops the tax? I think not. Junkies don't toss their rig just because it cost more to fix. They know this and count on it.

    This is just the Government seeking another new revenue...which if approved...is already over spent. To be honest with you, I'm not so sure "our government" wants us off the middle east breast just yet...in the big picture.

    Respects as always Austin...but I don't agree with you on this one...and think I have history on my side.
     
  18. austingreen

    austingreen Senior Member

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    Well the idea of the drug dealer (saudi arabia/Persian national oil company/Opec) is to lower the price to kill off the competition (US oil production) and to increase addiction (get people to buy less efficient cars). Once this happens is takes about 2 years to get production going at full blast on north american fields.

    Opec manipulation in the past, along with bad foreign policy (Carter Doctrine) have gotten the US into expensive foreign wars (gulf war, second gulf war) that has cost a lot of blood and treasure. Opinions differ whether this was mainly to protect aramco, or for some other reasons. My guess is the less the US imports from aramco, the less it is prone to oil blackmail. You may wish to aid the drug dealer, or as many have said, they embrace opec who is giving us cheap oil, why not buy a truck or SUV now, forgetting that the price eventually with any monopolist with unstable geopolitics always acts counter to the good of the importer.

    Here I would agree with you. If they wanted us off they would have a larger tax, economists have stated that $40 is need, maybe brought in over 10 years instead of 5. The additional spending is troublesome to me also. Half of it was passed in congress with a fake way to pay for it, so looking at the deficits, congress will spend whether they tax or not, but this is a much better source than some others congress has done. This is about $70B/year, but should decrease out of a budget of $4000B and a deficit of $474B planned for 2016.

    History says the US encouraged OPEC during the 70s ceded power to it mainly with Nixon and Carter, and were burned by OPEC again in the 2000s, and by some the bad policies not retracted from the 70s. It is a bipartisan give away of soverty to people that helped fund the destruction of the twin towers. Yes history is on your side that politicians will not do what is in the best interest of reducing opecs power.

    For a slight period of time, the US was reducing opecs influence. We were pumping more oil from domestic sources, and reducing oil consumption. This sort of broke the back of opecs pricing power, and they aim to reverse it. We can do what the us has done for decades, not enough, or we can craft policy to reduce oil dependance. This motion does not go far enough, and is laden with some pork. We should not pretend oil subsidies and low oil taxes don't help opec and hurt america's economic security though.
     
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  19. bisco

    bisco cookie crumbler

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    reminds me of tobacco taxes. seems like it helped the tobacco companies diversify, which was a good thing in the long run.
     
  20. wjtracy

    wjtracy Senior Member

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    I calc that's approx. equivalent to a +48 cents/gal gaso tax (vs. today 18.4 Fed gaso tax )

    Yield of gasoline is about 50% so that's equiv. to $20/Barrel of gasoline tax whereas a barrel is 42 gals.
     
    #20 wjtracy, Feb 7, 2016
    Last edited: Feb 7, 2016