Oil Profits Tax off the table for now - Mercedes-Benz Forum

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post #1 of 13 (permalink) Old 12-03-2008, 08:01 PM Thread Starter
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Oil Profits Tax off the table for now

This is really a reason to celebrate. Obama's change on this is gratifying because, 1) there never were "windfall" (one-time, extraordinary) profits, and 2) since corporations don't pay income tax (they just collect it like any expense to be covered by revenue), this will keep the per gallon price down, spurring some economic activity.



Obama shelves oil company tax after price fall: aide
Tue Dec 2, 2008 9:20pm EST Email | Print | Share| Reprints | Single Page | Recommend (45) [-] Text [+] By Jeff Mason and Tom Doggett

CHICAGO/WASHINGTON (Reuters) - President-elect Barack Obama is not planning to implement a windfall profit tax on oil companies because prices have dropped below $80 a barrel, an aide said on Tuesday.

"President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel," an aide on Obama's transition team said. "They are currently below that now and expected to stay below that." Oil prices have fallen from a record $147 a barrel in July to under $50 this week.

Obama, who signaled early in his campaign for the White House that he would take an active approach to oil markets as president, had planned to use the revenue from a windfall profits tax to fund a tax rebate for low- and middle-income families struggling with high energy prices. But the aide said Obama's presidential campaign had already taken the price drop into account six weeks ago. When Obama laid out his economic plan for the middle class in mid-October, revenue from a windfall profit tax was not included because of the price change, he said. Oil companies steadfastly opposed a tax, saying it would stifle exploration and innovation.

The switch drew applause from industry.

"The judgment to withdraw the concept of a windfall profits tax is an important recognition that developing America's oil and natural gas would be seriously damaged by such a tax policy," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, which represents independent oil and gas producers.

"A windfall profits tax is bad policy at any price," said Thomas Pyle, president of the Institute for Energy Research, calling the move "a heartening development -- both for consumers and an economy struggling to claw its way out of recession." Many energy experts warned that imposing a windfall profits tax would discourage energy companies from drilling for oil in the United States, which would exacerbate U.S. reliance on foreign suppliers.

But environmentalists support a tax and want oil companies to invest more in renewable fuels.

Obama has made revamping U.S. energy policy a key priority of his upcoming presidency, promising to increase production of renewable energy sources and start a carbon trading system to reduce greenhouse gas emissions. He said recently that the fall in gasoline prices was not an excuse to put off tackling U.S. dependence on foreign oil.

Oil Tycoon T. Boone Pickens, who met with Obama during the campaign to discuss energy policy, said he was against a windfall profits tax but did not believe the decision not to implement one would affect domestic oil production. "The windfall profits tax won't have anything to do with killing any oil projects," Pickens told reporters in Washington.

(Reporting by Jeff Mason and Tom Doggett; Editing by Gary Hill)

© Thomson

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post #2 of 13 (permalink) Old 12-03-2008, 08:16 PM
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Maybe the oil companies should be the ones bailing out the auto manufacturers.
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post #3 of 13 (permalink) Old 12-03-2008, 09:03 PM
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Drew, you're a genius.
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post #4 of 13 (permalink) Old 12-03-2008, 09:03 PM
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Great time for a gasoline tax hike btw
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post #5 of 13 (permalink) Old 12-03-2008, 09:18 PM Thread Starter
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Great time for a gasoline tax hike btw
Depends on one's point of view. What is yours?

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post #6 of 13 (permalink) Old 12-03-2008, 09:23 PM
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Actually I meant to ask, is gasoline at or near historical lows just now? I paid $1.51 per gallon today.

CPI Inflation Calculator says that $1.51 is the same as 24c in 1968 for example. I think gasoline was 28 or 29 cents/gallon back then?

Separately, I was amazed to learn recently how stable prices were in the 19th century and for much of the 20th. With few exceptions, there was no inflation. I guess the Fed did the inflation thing huh.
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post #7 of 13 (permalink) Old 12-03-2008, 09:57 PM Thread Starter
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That's my recollection on price at that time. What a hoot--filling up the tank on the old VW Beetle!

I've read that the threat of deflation is that because of declining prices, the availability of goods and services diminishes which sets us up for serious inflation as the dollars chase those goods and services.

The problem with adding to the price of gasoline with a new tax is that the cost increase goes throughout the economy like no other, which is a squelcher, for sure.

Obama seems to be getting the message: This is no time to raise any tax rates.

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post #8 of 13 (permalink) Old 12-03-2008, 11:06 PM
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i know that i am going to ruin your day j'scrack by pointing out the obvious but here goes it anyway. there is no switching by bo going on here actually. he said 'if the prices staid high'. are the prices high? or are you? seriously man. wtfruon?



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post #9 of 13 (permalink) Old 12-03-2008, 11:26 PM
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Drew, you're a genius.
actually, it is but if that happens we'll all be driving 10l v12s.. if/when not on a bicycle. lol



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post #10 of 13 (permalink) Old 12-16-2008, 05:08 PM
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Okay, today it was $1.33 a gallon. Equivalent to 22¢ in 1968.

I think this is the cheapest gasoline in history. Anyone who needs to make extra money should really be playing the futures on this by now...

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