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(AP)   Bush says increasing supply is the solution to high gas prices, mentions nothing of decreasing demand. Omission Accomplished   (hosted.ap.org) divider line 200
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559 clicks; posted to Politics » on 05 May 2008 at 5:01 PM (6 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2008-05-05 05:45:10 PM
Oh, also it's what that idiot should have said right after 9-11.

He could have had the entire county willing to do whatever it took. Instead? "Go shoppin 'merica"
 
2008-05-05 05:45:55 PM
Moridion: Can someone please explain how a windfall profit tax will lower prices at the pump?

It would be used to subsidize energy costs for poor people. So no, you probably won't get yours.
 
2008-05-05 05:46:04 PM
chapman: Demand is down in the United States by about 1.4% which is remarkable. Too bad that it is such an underreported event.

But the oil companies just cut refinery production so the price stays high. The whole article is pointless if we are going to allow the oil companies to manipulate the market. I say fark em. If they can not be good corporate citizens hang them out to dry.
 
2008-05-05 05:46:12 PM
Eric_PDX: DRILL ALASKA

Problem solved.

/ fark the baby seals, etc

// I take public transit and do not own a vehicle.

/// That makes me a hypocrite, I suppose.


I don't know about a hypocrite, but drilling in Alaska is short-sighted and irresponsible.
 
2008-05-05 05:48:05 PM
Moridion: Can someone please explain how a windfall profit tax will lower prices at the pump? Obama and Clinton love this idea because it coincides with their a lot bases' semi-socialist mentality, but I have not heard how this will actually help me. Are they planning some sort of tax rebate with the tax?

Obama is using the tax to pay for alternative energy R&D. Hillary is using it to pay for this moronic tax holiday while promising that the windfall revenue will pay for alternative energy as well. McCain isn't paying for his holiday with anything whatsoever.
 
2008-05-05 05:48:29 PM
Moridion: Can someone please explain how a windfall profit tax will lower prices at the pump? Obama and Clinton love this idea because it coincides with their a lot bases' semi-socialist mentality, but I have not heard how this will actually help me. Are they planning some sort of tax rebate with the tax?

If we use this money to speed the development of new alternatives like plugins powered from nuclear plants and the infrastructure that will be needed to carry the extra demand, eventually it will help you. If you are looking for a short term return you are SOL.
 
2008-05-05 05:49:40 PM
Moridion: Can someone please explain how a windfall profit tax will lower prices at the pump? Obama and Clinton love this idea because it coincides with their a lot bases' semi-socialist mentality, but I have not heard how this will actually help me. Are they planning some sort of tax rebate with the tax?

Apparently it won't work because of something called tax incidence theory which says that the oil companies would simply increase the price of gas and pass the cost of the "wind-fall tax" onto the consumer.

Also, what in the hell equals a "wind-fall" profit?
 
2008-05-05 05:50:26 PM
DaSwankOne: But the oil companies just cut refinery production so the price stays high. The whole article is pointless if we are going to allow the oil companies to manipulate the market. I say fark em. If they can not be good corporate citizens hang them out to dry.

Please tell me the basis for your determination as to when oil refineries are cutting rate. I would be interested to hear it. There is one element of truth to the claim though, many refineries wait until the demand decreases to cut rate to perform needed repairs and special projects that they don't want to do while demand and prices are high (ie they are actually keeping rate up during periods of high demand as much as possible, keeping the prices from rising even higher.)
 
2008-05-05 05:50:47 PM
www.oilcrash.com

Whatever, subby. Why don't you shoot unicorns out of your ass, and then we'll talk about decreasing demand. What is it that people don't get about this?
 
2008-05-05 05:50:48 PM
most Economists that deal in Oil do not see overall Oil supply as the problem. They see commodity speculation as the problem, the same as why food prices are sky rocketing.

Investors see that oil (and food) prices going up and see the equity marketing staying put or going down and the dollar falling, so they are putting thier money where they speculate it is growing.

At this point you could drill ANWAR or cut gaoline taxes and all it would do is make the make suppliers richer, and consumers poorer, if speculators keep driving up the price.

If the Equity market started to boom again or the dollar start to rise (which is unlikely if the US trade deficit doesn't decrease, at least according to PPP theory) you would see invetors dump Oil futures (and food) in a heart beat and thus gas prices (but as some one else pointed out, this would be by much becuase the market has seen what it can bare).

So if you want to do your part to lower Gas prices stop buying gas and invest that money into equities.
 
2008-05-05 05:52:55 PM
Galen_Rasputin: There is one short term solution, conservation. If everyone would slow down and drive 45 on the highway and 25 in the city . . . they should go further then that and require a speed governer on all new cars that limited them to those speeds.

farm1.static.flickr.com
 
2008-05-05 05:52:59 PM
Diogenes: To be fair, he did toss that tidbit in.

To be fair, he's been tossing that tidbit into his speeches for five years now, and has yet to effect any policy change that would actually cause the nation's energy needs to be diversified away from oil.
 
2008-05-05 05:53:02 PM
brainiac-dumdum: Also, what in the hell equals a "wind-fall" profit?

It is a profit derived from geopolitical factors caused by the government that unfairly provide an advantage to a particular industry. It usually has to do with internationally traded commodities; but the idea is that it is an unforeseen profit (i.e., the company had not planned for it or worked any harder for it) and therefore would not suffer from an increased taxation rate.
 
2008-05-05 05:55:50 PM
Shaggy_C: brainiac-dumdum: Also, what in the hell equals a "wind-fall" profit?

It is a profit derived from geopolitical factors caused by the government that unfairly provide an advantage to a particular industry. It usually has to do with internationally traded commodities; but the idea is that it is an unforeseen profit (i.e., the company had not planned for it or worked any harder for it) and therefore would not suffer from an increased taxation rate.


It was more of a rhetorical question.

It would be very hard to say what, exactly, constitutes unforeseen profit.

Also, see my above post about tax incidence theory.
 
2008-05-05 05:56:10 PM
All2morrowsparTs: dollar start to rise

Good news on the horizon. Take it with a grain of salt, though - the dollar fell again today. (new window)
 
2008-05-05 05:57:34 PM
All2morrowsparTs: "Most Economists that deal in Oil do not see overall Oil supply as the problem."

Maybe you should ask the geologists first.
 
2008-05-05 05:59:13 PM
Shaggy_C: brainiac-dumdum: Also, what in the hell equals a "wind-fall" profit?

It is a profit derived from geopolitical factors caused by the government that unfairly provide an advantage to a particular industry. It usually has to do with internationally traded commodities; but the idea is that it is an unforeseen profit (i.e., the company had not planned for it or worked any harder for it) and therefore would not suffer from an increased taxation rate.


I don't see how the current oil industry profits count as "unforeseen".

Not that it really matters- "excess" profit taxes are inane, counter-productive nonsense designed to be touted as a solution to the ignorant masses that know absolutely nothing about economics. Even worse is that the candidates themselves are apparently ignorant enough to believe their own bile. Which really goes to the heart of the matter- the absurdity of trying to "run" an economy by democratic vote.
 
2008-05-05 05:59:33 PM
chapman: Please tell me the basis for your determination as to when oil refineries are cutting rate. I would be interested to hear it. There is one element of truth to the claim though, many refineries wait until the demand decreases to cut rate to perform needed repairs and special projects that they don't want to do while demand and prices are high (ie they are actually keeping rate up during periods of high demand as much as possible, keeping the prices from rising even higher.)

Link (new window)
 
2008-05-05 06:01:11 PM
brainiac-dumdum: Also, see my above post about tax incidence theory.

That misses the issue; there is a difference between cost tax and profit tax in financial accounting. Tax expense goes into everything the company buys - think labor taxes (payroll), sales tax on products, property tax, etc. - these are the taxes that go on to the consumer in the form of higher prices. When you're talking tax on profits, can you not see that every company is a 'profit maximizer', meaning that they have no real incentive to raise prices more based on the tax rate? The only way they could get away with it is with inelastic demand and high barriers to entry, which essentially would create a monopoly requiring government intervention.
 
2008-05-05 06:01:49 PM
Shaggy

It's a business. Some times things go your way. The oil companies profits are due in large part to the amount of time and effort they put into creating the infrastructure needed for the oil business as well as the inherent speculation risk. As a small business owner myself, I find the idea of "windfall" profits a little ridiculous and somewhat disturbing.
 
2008-05-05 06:02:14 PM
canyoneer: All2morrowsparTs: "Most Economists that deal in Oil do not see overall Oil supply as the problem."

Maybe you should ask the geologists first.


What do Geologists know about commodity prices and the oil markets?

There may be future supply problems but currently it is short term speculators that are the problem.

The Oil companies are not complaining about supply.
 
2008-05-05 06:03:03 PM
Shaggy_C: inelastic demand and high barriers to entry

Does that not describe the oil industry?

Shaggy_C: which essentially would create a monopoly requiring government intervention

Or better yet, simply undo the government interventions that are adding to, if not in large part creating, the inelastic demand and high entry barriers.
 
2008-05-05 06:03:13 PM
brainiac-dumdum: Moridion: Can someone please explain how a windfall profit tax will lower prices at the pump? Obama and Clinton love this idea because it coincides with their a lot bases' semi-socialist mentality, but I have not heard how this will actually help me. Are they planning some sort of tax rebate with the tax?

Apparently it won't work because of something called tax incidence theory which says that the oil companies would simply increase the price of gas and pass the cost of the "wind-fall tax" onto the consumer.

Also, what in the hell equals a "wind-fall" profit?


Except we are seeing that it doesn't work that way. The cost of oil, the unrefined resource that they sell, double. Yet, during that time the refined product did not double. Profits that could have been realized by higher gas prices took a hit. It didn't get passed down to the consumer.

Consumers will change their behavior if gas prices rise and stay above around $4/gallon. They will cut into their own profit in the short term to keep consumers from making changes in their behavior. I'm sure that someone has a name for this theory. You might even know its name.
 
2008-05-05 06:03:40 PM
I'll provide an example of how we can't win no matter what we do, using a regulated resource, water.

Last summer, we had a major drought. The local government went to category III restrictions and brought demand down by 20%.

This spring, guess what? The water utility lost too much money due to the decline in demand, so they're raising the rates by 20%.
 
2008-05-05 06:04:12 PM
Churchill2004: I don't see how the current oil industry profits count as "unforeseen".

That's just the argument. I prefer to think the profits are primarily caused by our meddling in Middle Eastern affairs and we should not be funneling billions of dollars into the pockets of corporations as a result. Exxon would never have posted such gains if it were not for our invasion and occupation of Iraq combined with sabre rattling toward Iran. Not to mention the futures market and rampant speculation that has popped up due to a complete lack of oversight.
 
2008-05-05 06:04:41 PM
Oh, I see...The rebate is meant to buy GAS.


THANKS!
 
2008-05-05 06:05:04 PM
Moridion: It's a business. Some times things go your way. The oil companies profits are due in large part to the amount of time and effort they put into creating the infrastructure needed for the oil business as well as the inherent speculation risk. As a small business owner myself, I find the idea of "windfall" profits a little ridiculous and somewhat disturbing.

It cost about $40 to pull a barrel of oil out of the ground. This includes the cost of dry wells and infastructure to deliver it to the refinery. I am all for profit, but 300% is a little much. Especially when they are making a profit on the downstream side of the business as well.
 
2008-05-05 06:05:38 PM
Shaggy_C: brainiac-dumdum: Also, see my above post about tax incidence theory.

That misses the issue; there is a difference between cost tax and profit tax in financial accounting. Tax expense goes into everything the company buys - think labor taxes (payroll), sales tax on products, property tax, etc. - these are the taxes that go on to the consumer in the form of higher prices. When you're talking tax on profits, can you not see that every company is a 'profit maximizer', meaning that they have no real incentive to raise prices more based on the tax rate? The only way they could get away with it is with inelastic demand and high barriers to entry, which essentially would create a monopoly requiring government intervention.


Wow, you almost sound like you know what your talking about.

Too bad you don't.

Don't worry though, your mom still thinks your cool.
 
2008-05-05 06:05:53 PM
Moridion: It's a business. Some times things go your way. The oil companies profits are due in large part to the amount of time and effort they put into creating the infrastructure needed for the oil business as well as the inherent speculation risk

So you don't think any of it had to do with US government policy? It was all good old fashioned 'right place at the right time'?
 
2008-05-05 06:07:12 PM
DaSwankOne: Link (new window)

Any from a more reputable news source? All I see is a bald assertion that the reason why rate was cut was to increase demand/prices. This by a news reporter from an alternative press sites where he also covers the UFO desk. Link (new window)

P.S. April/May rate cuts are frequently associated with prep for summer blends of gasoline, something mandated by law.
 
2008-05-05 06:08:06 PM
brainiac-dumdum: Wow, you almost sound like you know what your talking about.

Too bad you don't.

Don't worry though, your mom still thinks your cool.


What a well thought-out response! Geez, you sure told me off. I'm wowed by your intellectual rigor! *rolls eyes* What company have you ever heard of that measures after-tax profit margin on each unit sold?
 
2008-05-05 06:08:20 PM
brainiac-dumdum: Shaggy_C: brainiac-dumdum: Also, see my above post about tax incidence theory.

That misses the issue; there is a difference between cost tax and profit tax in financial accounting. Tax expense goes into everything the company buys - think labor taxes (payroll), sales tax on products, property tax, etc. - these are the taxes that go on to the consumer in the form of higher prices. When you're talking tax on profits, can you not see that every company is a 'profit maximizer', meaning that they have no real incentive to raise prices more based on the tax rate? The only way they could get away with it is with inelastic demand and high barriers to entry, which essentially would create a monopoly requiring government intervention.

Wow, you almost sound like you know what your talking about.

Too bad you don't.

Don't worry though, your mom still thinks your cool.


You just waded out past your ability to hang in the conversation, didn't you?

Its okay, your mom still thinks your cool.
 
2008-05-05 06:09:45 PM
Shaggy_C: That's just the argument. I prefer to think the profits are primarily caused by our meddling in Middle Eastern affairs and we should not be funneling billions of dollars into the pockets of corporations as a result. Exxon would never have posted such gains if it were not for our invasion and occupation of Iraq combined with sabre rattling toward Iran.

That's certainly a large part of it. Increased demand in China and India have a lot to do with it, too. While it's debatable whether or not the oil companies are behind the current Middle East policy, even if they were our primary concern needs to be that on the fact that the government is that corrupt, not that third parties predictably took advantage of that fact.

Shaggy_C: Not to mention the futures market and rampant speculation that has popped up due to a complete lack of oversight

Overextension of credit by the Federal Reserve had a lot more to do with the current mess than any lack of "oversight". After all, the loans in question were being officially encouraged at the time as part of Bush's home ownership push. I don't see what more bureaucrats would have done to help.
 
2008-05-05 06:10:13 PM
chapman: Any from a more reputable news source? All I see is a bald assertion that the reason why rate was cut was to increase demand/prices. This by a news reporter from an alternative press sites where he also covers the UFO desk. Link (new window)

P.S. April/May rate cuts are frequently associated with prep for summer blends of gasoline, something mandated by law.


Look if you want to remain blissfully ignorant that is cool. The original article ran in the business section of the Houston Chronicle and was a link on Fark. I don't have time to vet news sources.
 
2008-05-05 06:10:36 PM
bartink: brainiac-dumdum: Moridion: Can someone please explain how a windfall profit tax will lower prices at the pump? Obama and Clinton love this idea because it coincides with their a lot bases' semi-socialist mentality, but I have not heard how this will actually help me. Are they planning some sort of tax rebate with the tax?

Apparently it won't work because of something called tax incidence theory which says that the oil companies would simply increase the price of gas and pass the cost of the "wind-fall tax" onto the consumer.

Also, what in the hell equals a "wind-fall" profit?

Except we are seeing that it doesn't work that way. The cost of oil, the unrefined resource that they sell, double. Yet, during that time the refined product did not double. Profits that could have been realized by higher gas prices took a hit. It didn't get passed down to the consumer.

Consumers will change their behavior if gas prices rise and stay above around $4/gallon. They will cut into their own profit in the short term to keep consumers from making changes in their behavior. I'm sure that someone has a name for this theory. You might even know its name.


Your right. Oil companies will use a supply-demand formula to keep gas prices at the sweet spot.

In the long run, as far as I understood from the non-stop droning in my economics class last quarter, the only thing that will reliably reduce gas prices is a decrease in demand.

No wonder economics is called the "dismal science."
 
2008-05-05 06:10:56 PM
DaSwankOne: I am all for profit, but 300% is a little much

Where the hell did you get that figure?
 
2008-05-05 06:11:16 PM
Churchill2004: Or better yet, simply undo the government interventions that are adding to, if not in large part creating, the inelastic demand and high entry barriers.

I know in your perfect world Jed Clampett goes out back, strikes oil, builds a refinery, and then starts a gasoline company that blows away Shell due to his awesome business savvy, but that's sadly not the case. It's about as easy to pull off as starting your own airline. It's the kind of barriers to entry that prevent a newcomer from seeing a profit for DECADES.
 
2008-05-05 06:11:45 PM
Churchill2004: Where the hell did you get that figure?

Cost to produce a barrel of oil - $40
Price on oil on commodity market $120

120 / 40 = 3
 
2008-05-05 06:11:52 PM
 
2008-05-05 06:11:56 PM
Shaggy

Of course there are problems with government policy. I assume you are talking about tax breaks, subsidies etc. to help out the oil companies, which I think are bs and should end for all industries. But many people think that profits come from nowhere with no effort on the part of the company producing the good. It's this attitude that I take issue with.
 
2008-05-05 06:12:10 PM
Relatively Obscure: Eric_PDX: DRILL ALASKA

Problem solved.

Fail.


This. Even if we could pull every drop of oil they think exists in Anwar right now, it would cover only 5% of our daily consumption (stretched out over 30 years and based on current rates of consumption and accepting the highest estimation of how much oil is there.) So okay, 5% is better than nothing but if you think that is going to make a bit of difference to you at the pump, I have a really good deal involving the Prince of Nigeria that I'd like you to invest in.
 
2008-05-05 06:12:16 PM
Shaggy_C: brainiac-dumdum: Wow, you almost sound like you know what your talking about.

Too bad you don't.

Don't worry though, your mom still thinks your cool.

What a well thought-out response! Geez, you sure told me off. I'm wowed by your intellectual rigor! *rolls eyes* What company have you ever heard of that measures after-tax profit margin on each unit sold?


AWWWW, did I hurt your feelings?

I bet your mom will give you kiss and make it better.
 
2008-05-05 06:12:22 PM
brainiac-dumdum:

In the long run, ...


As Keyens once said, "In the long run we all will be dead".
 
2008-05-05 06:13:11 PM
Well, our King/Dictator did say America is addicted to oil, like a drug. How does this work in the drug world...increasing supply...in relation to street level pricing?

I mean if oil is not following supply and demand, then it might be sold on the market like an illegal substance.
 
2008-05-05 06:14:38 PM
DaSwankOne: Cost to produce a barrel of oil - $40
Price on oil on commodity market $120


wow, dude
 
2008-05-05 06:14:54 PM
All2morrowsparTs: brainiac-dumdum:

In the long run, ...


As Keyens once said, "In the long run we all will be dead".


I think you mean "Keynes."

As in John Maynard Keynes.
 
2008-05-05 06:15:34 PM
Churchill2004: Overextension of credit by the Federal Reserve had a lot more to do with the current mess than any lack of "oversight". After all, the loans in question were being officially encouraged at the time as part of Bush's home ownership push.

What do you think 'overextension of credit' means? It wasn't the Federal Reserve that created the housing bubble - it was speculators driving up price, creating value where there was none previously. Banks found themselves with more cash on hand (in the form of papers) and then could lend out more money. It was a game of musical chairs that is inherently part of a fractional reserve banking system. No one was making sure the credit ratings people were doing their job correctly, and when the music stopped, it turns out once again that the people were the ones left standing. It happened with the S&Ls, it happened with the .Coms, and it happened again with the housing market. 'Oil hedge funds' are just another ploy for big banking interests to get ownership of a commodity that they can rebrand as a AAA risk bond and use to pump out more credit. All they need is $10 to create $100. They're hungry for it, and if no one is there to stop them, this is the mess we get into.
 
2008-05-05 06:15:58 PM
Yeah, hey, who cares that he tortures people.

Don't be farking with our gas, though. That will get you booted out lickity-split.
 
2008-05-05 06:16:57 PM
Corpus Delecti: I haven't exactly noticed a decrease in the number of douchebags in SUVs and Hummers.

Truck sales hemorrhage; car sales get stronger (new window)

By RICHARD TRUETT, AUTOMOTIVE NEWS

It could be a long, hot summer for any automaker selling big pickups and SUVs.

Faced with record high fuel prices and a tight credit market, Americans said no thanks in a big way to expensive pickup trucks and sport/utility vehicles in April, inflicting pain on every automaker and their dealers who sell them, even Toyota Motor Corp.
 
2008-05-05 06:18:02 PM
brainiac-dumdum: AWWWW, did I hurt your feelings?

No, you're just making yourself look like an idiot. I find it kind of amusing. Perhaps I used too many big words in my post; or perhaps you really don't understand finance, economics, or accounting. If you were smart you'd shut up and learn something.
 
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