Obama to propose $10-a-barrel oil tax

Discussion in 'Business & Economics' started by Plazma Inferno!, Feb 5, 2016.

  1. Plazma Inferno! Ding Ding Ding Ding Administrator

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    Obama is about to unveil an ambitious plan of funding the "21st century clean transportation system" with a tax on oil.
    According to his aides, the president will propose more than $300 billion worth of investments over the next decade in mass transit, high-speed rail, self-driving cars, and other transportation approaches designed to reduce carbon emissions and congestion. To pay for it all, Obama will call for a 10 dollar "fee" on every barrel of oil, a surcharge that would be paid by oil companies but would presumably be passed along to consumers.

    http://www.politico.com/agenda/story/2016/02/obama-oil-tax-budget-000038
     
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  3. Edont Knoff Registered Senior Member

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    Interesting. I mean the label "ambitious". In germany there is about 65 (euro) cent of tax for one litre of gasoline and 47 cent per litre diesel. Still traffic is huge.
     
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  5. joepistole Deacon Blues Valued Senior Member

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    It's a great idea, but it will never get through a Republican controlled congress.
     
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  7. origin Heading towards oblivion Valued Senior Member

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    A agree it is a great idea that is unfortunately DOA. At least the idea will be floated now and maybe in a few years it can be done. I would love it if the US had a decent mass transit system.
     
  8. Russ_Watters Not a Trump supporter... Valued Senior Member

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    You are mixing unrelated things: the USA does also have gas taxes, but since the roads are mostly maintained by the states, they vary from state to state. In my state, Pennsylvania, they are the highest in the country at 51 cents per gallon. That's in addition to the current 18 cent federal tax. Yes, that's still a lot lower than in Europe, but in any other context a (currently) 35% tax on a commercial product would be considered insane.

    $10 a barrel equates to about another 23 cents a gallon.

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  9. billvon Valued Senior Member

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    If this fee was used to moderate the future price of oil (i.e. was reduced when oil prices climbed again) it could serve to damp fluctuations in the oil market. This would be a good time to initiate such a fee, since we have a historic oil glut right now.
     
  10. joepistole Deacon Blues Valued Senior Member

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    Actually, I don't see how Edont is confusing anything.


    The article describes a fee on every barrel of oil which is very different from the federal, state, and local excise taxes you have mentioned. I think you are the one who is a little confused here. A fee isn't an excise tax. Unlike gasoline excise taxes, oil purchasers and producers may or may not be able to pass the additional cost created by this fee onto consumers. The degree to which the cost can be passed on depends up the product and price elasticity of demand and that will vary by product. There are about ten different products that come out of a barrel of oil that are in turn used in host of other markets. So you cannot say that this fee will result in an increase of 23 cents per gallon on gasoline or any of the other products derived from a barrel of oil. It could be more; it could be less; it could be none at all. What the article described isn't an excise tax. You are confusing the “fee” described in the article with an excise tax, and it isn't. There is a very big difference. The "fee" is paid directly by producers and buyers of crude oil. It increases their cost of doing business. Excise taxes don't increase the producer's or the seller's cost of doing business (tax collection expenses exempted). Fees do.
     
    Last edited: Feb 6, 2016
  11. Russ_Watters Not a Trump supporter... Valued Senior Member

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    Edont brought up the excise taxes and implied that while they exist in Germany, they don't in the USA. I was filling in the blank for him.

    I am curious, however, as to where/how this "fee" will be attached and collected. In any case, regardless of whether a "fee" is charged to the producer or a "tax" is charged to the consumer, the consumer will be paying for it.
     
  12. Plazma Inferno! Ding Ding Ding Ding Administrator

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    Despite the lack of public support for Obama's plan, a large number of economists are convinced that taxes on fossil fuels in general are a pretty good idea. There have long been calls by economists for putting a tax on carbon in all of its forms — not just from burning oil or gasoline. The goal is to address, in economist speak, the “market failure” that occurs in this case because of the “negative externality” that is greenhouse gas emissions.

    https://www.washingtonpost.com/news...onomists-support-obamas-idea-of-a-tax-on-oil/
     
  13. joepistole Deacon Blues Valued Senior Member

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    Carbon taxes aren't new. Countries like Sweden, Canada, Ireland, Finland have had carbon taxes for a number of years and those programs have been successful and their economies have thrived. The degree to which carbon taxes can be passed onto consumers depends on how carbon taxes are implemented. A carbon tax doesn't need to increase the tax burden on consumers.

    http://www.carbontax.org/where-carbon-is-taxed/
     

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