Gas Tax! My Unbiased thoughts!
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Folks, I just wanted to share my unbiased thoughts on this matter. Oil prices have been rising and what is going to happen to these prices? Will they continue to rise the way they have? Can something be done to stop this? One of the candidates said that we needed this gas tax and that the gas companies needed to pay for the gas out of their profits!
Personally, I look at one simple formula to try and figure out where I personally stand on this issue:
Profit = Price of Good (minus) Cost of making good
If a tax is imposed on companies, what can a company do have the above formula for profit?
1. Price can be lifted up more to cover the tax
2. They can find a ways to produce gas at a cheaper cost.
1. If the price goes up then we are just shooting ourselves in the foot! Oil companies can retaliate against a tax imposed by raising taxes to keep their profit margins. The only problem is that this tax would be short term! What happens when the gas tax withers away? Wont gas prices shoot through the roof? I’m certain that some huge company like Exxon won’t just sit there and take on the extra tax and loose out just because its great for America!
2. I heard one of the candidates say that we need this gas tax so that we can make these oil companies pay for it out of their profits. So, if the price does go up but the incurred cost then they will need to push hard in finding ways to produce at a cheaper cost of production. What does that mean? Lost jobs, perhaps use of more advanced technology in order to lower cost.
Another issue we haven’t though of is that if the dollar has a temporary rally, that oil prices will continue to go up. If we impose this tax at a time where the dollar is coming back in looks to stay that way, then these oil companies are going to take a very very hard hit. Oil prices will go down, cost will go up and on both sides of the equation they get screwed. How will they retaliate then?
Respectfully,
Tony Tovar
P.S. Your opinion is greatly appreciated!
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May 13th, 2008 at 11:33 pm
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May 15th, 2008 at 5:45 pm
I concur. I thought this was a stupid idea myself. Personally I would like to see the gas taxed raised. The government should take this extra revenue and give it back to the poorest people in the form of rebate checks. Then everyone will have an incentive to drive less.
It is pretty much simple supply and demand. Just raise the prices and demand will go down. Of course it is easy for me to say, cause I drive so little, but its just a thought.
Thanks for commenting on my blog Tony, I like your site design, very professional. Are you a programmer or did you get this template from somewhere. Either way, I like it.
May 15th, 2008 at 6:45 pm
David, actually if we were to receive those taxes from companies as rebate checks, would that not fuel consumption of gas? Meaning, that if you people now had an incentive to get more gas because they know they will be getting a nice chunk of that back, would they not then drive more? If anything perhaps the govt’ could use that extra money to fight the Deficit.
Fueling the economy with more rebate checks would actually move Demand out and create higher prices in general.
May 15th, 2008 at 6:47 pm
Sorry, submitted to soon. I do however see how if people were taxed how that might influence many to stop or lessen their consumption of gas, therefore dropping the prices of gas down due to lower demand for it.
May 22nd, 2008 at 8:23 am
This is a global problem that isn’t going to get any better with oil reserves continuing to decline.
Here in the UK we are paying well over £1/litre. Some stations have been charging as much as £1.30/litre for diesel. I think the US has a long way to go before you’re paying anything in that range though.