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This isn't a tax on oil companies it is a tax on everyone.

• refurb 11y ago
  Exactly. The oil companies will just pass that tax right along.
  • Dylan16807 11y ago
    For the sake of comparison, do you feel that oil companies pass along the current tax breaks they get?
    • adventured 11y ago
      Oil companies pay extremely high tax rates compared to the small tax breaks they get. And in fact, most of the tax breaks they get are made up of routine corporate deductions that all corporations qualify for and aren't special to the industry: https://www.aei.org/publication/the-truth-about-all-those-subsidies-for-big-oil/ https://www.aei.org/publication/the-truth-about-all-those-su... Exxon and Chevron, as two examples, have been paying essentially the highest corporate tax rates on earth for a long time.
  • megablast 11y ago
    Good. As they are supposed to. How do you imagine this is supposed to work, if not making gas more expensive?
  • eggy 11y ago
    The price of the oil drums costs more than the price of oil per drum, although they are reused. A tax on oil will certainly be passed on to the consumer. If the end game is to discourage oil use, not to keep the planet clean, it still will not work. Look at the high price of tobacco even in the face of the risk to health issues. People will continue to use oil in the same quantities unless the price goes up by an order of magnitude. The government wins both ways: higher tax revenue, or they can claim they saved the planet.
    • ams6110 11y ago
      You do realize that wholesale oil is not literally packaged in individual drums? "Barrel" is a unit of measure.
    • jedrek 11y ago
      Except that smoking rates have dropped to one third of their 1965 levels. If this tax gets those kinds of results, I think the pro alternative energy community would be ecstatic
• jbooth 11y ago
  1) That's half-true. Or 60% or 40% true. Econ 101 says some % comes out of profits, some % comes out as higher prices. 2) Externalities. Also Econ 101. We've got a basket of reasons, from environmentalism to national security, to limit our dependence on oil. Kicking in taxes while the prices are low can prevent markets from forgetting all the things they started to build in during $120/barrel oil, continuing to limit our future dependence, with the bonus that we now have a relief valve we can ease up on if things get really tough with oil prices. It's actually the most market-based way to attack the myriad problems the oil economy creates for us.
  • randyrand 11y ago
    In a perfectly competitive market corporate profits are zero and it all comes out of the consumer. Now oil is not perfectly competitive and you are right. But it is rather close. So you can still expect the majority to come from the consumer.
    • gohrt 11y ago
      If oil is close to perfectly competitive, how does OPEC control prices by adjusting supply?
    • morgante 11y ago
      > In a perfectly competitive market corporate profits are zero and it all comes out of the consumer. No, the determinant of tax incidence is price elasticity, which is orthogonal to competitiveness of a market. [1] Oil is interesting because it is somewhat price inelastic both for demand and supply. People's ability to stop driving is limited in the medium term, but also many suppliers of oil aren't capable of completely exiting the oil business. In practice, I suspect the incidence is in fact roughly 50/50 if applied in a huge country like the United States (the incidence would be much on consumers in smaller markets). [1] https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence
      • jessriedel 11y ago
        No, you're missing the part where corporate profits are zero in a perfectly competitive market. https://en.wikipedia.org/wiki/Perfect_competition#Profit https://en.wikipedia.org/wiki/Perfect_competition#Profit If corporations always operate at revenues=expenditures, then the entire tax must fall on the buyer in the long run. The price inelasticities you're talking about are only in the short run.
• matwood 11y ago
  But it sounds better as a tax on those evil corporations.
• donatj 11y ago
  Yep, economy is finally getting back on track because the gas price is becoming reasonable again, and now they want to do this. The price of gas affects everything. The more expensive it is to ship things, the more expensive everything is. Simple economics.
• stepanhruda 11y ago
  It's a tax based on the elasticity of the demand and supply. The demand for oil is hardly inelastic (people definitely buy less gas if it's more expensive). https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence
• dlg 11y ago
  In the economics world, tax incidence is a matter of serious study. There has been a decent amount of work on who actually pays oil taxes. Hal Varian (who later became Chief Economist at Google) wrote a good piece[1] summarizing the basics in 2000 for the New York Times. The summary: "A gasoline tax in a small country falls mostly on the residents of that country. The world price of oil is essentially independent of the taxing policies of most countries, since most countries consume only a small fraction of the amount of oil sold. "But the United States consumes a lot of oil -- almost a quarter of the world's production. That means it has considerable market power: its tax policies have a major impact on the world price of oil, and economic analysis suggests that in the long run, a significant part of a gasoline tax increase would end up being paid by the producers of oil, not the consumers." [1] http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2000-10-19.html http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2...
• rokhayakebe 11y ago
  Every single tax is ultimately a tax on workers and consumers.