gas, the new car payment.Follow

Everyone knows that the windfall taxes would increase the cost of gas.

This is moronic. Think for two seconds about what you're actually arguing here. You're arguing that market could support higher gas prices and increased profits right now, but that oil companies are *intentionally passing up those increased profits* for no particular reason. If we taxed them though, then they'd HAVE TO END THEIR BENEVOLENT WAYS and take those higher profits they could have been earning all along.

Incidentally, I'm not for taxing specific cooperation based on their profit profiles. Unlike you, however, I have reasons for my position that have some foundation in economics.

No. I stated this very clearly already in this thread. Several times.


All companies will pursue a net profit ratio that they feel is "best" for the industry they are in. The exact ratio is going to depend on a number of factors, a major one of which is volatility of the market itself, specifically the operating costs of the business they are involved in. In an industry like oil, the oil companies have to maintain a sufficient profit ratio to cover dramatic changes in the cost of a barrel of oil. They have to. Otherwise, they may find themselves in a situation where they can't buy the next boatload of oil because they didn't make enough money off the last one.


All businesses do this. It's a basic and common business model Smash. The numbers change, but within an industry they tend to fall close to each other. That's because the individual businesses also have to compete with each other within the industry. Based on the structure of the industry itself, there's going to be a floor ratio, underwhich no individual business wants to go because they may lose money as a result of market volatility. But none of them are going to want to stray too far above that floor because that's where competition comes in.

If the safe "floor" of an industry is say 6% net profit, and CompanyA raises the cost on it's goods so that it's making 8%, but companyB sits at say 6.5%, CompanyB will make more money because more people will buy it's product (cause it's cheaper, everything else being equal).

That's why they don't increase the cost of gas on their own Smash. They still have to keep it as low as possible without going under the ratio floor. But, as I've explained repeatedly, all of them will act to stay at about the same net profit ratio that they currently have. It's part of their business model. Thus, anything that reduces their profits relative to their costs must be countered in some way. The most obvious (and really only likely one industry wide) is to increase the cost of the good itself to raise the gross profits sufficiently, so that after taxes and expenses, they're making their target net profit ratio.


That's how every business in the world operates Smash.


The response to an increase in taxes is doubly obvious since it's effectively industry-wide. All major oil suppliers are hit equally. Thus, unlike one company just deciding to raise it's price and finding itself losing market share, they can all raise their prices by the same amount without any one gaining any edge on anyone else.



If your argument was true, then why wasn't gasoline priced at $4/gallon 10 years ago Smash? Clearly, there's some market force preventing them from just raising the price of gas in order to increase their own profits. What changed? The cost of oil changed. That affects all of them equally, so they all raise their prices. Same deal with the taxes. It'll affect all of them equally, so they'll all raise their prices to match.


What part of this isn't inherently obvious Smash?

I doubt either party or candidate will do jack-all to gas prices in the short term. Positive or negative.

See? I didn't have a "real argument" on that point. I'm cool with that. I didn't need one to ask you about your stupid comments

Blatantly and obviously false.

OK. Please demonstrate this by showing a correlation between increased taxation on oil companies with an increased price of gasoline when measured against the cost of crude at the time.

You can easily find all of the relevant data online.

Ludicrous demand Smash.

That you support something with data?

I know. You visioned it, it must be this way, how could it not be?

Grow the **** up. You're a man now, you can support your positions with facts or you can have them ridiculed. You don't get points for creativity.

What do you want me to do Smash? Link to a thousand different papers and articles and educational sites that all say that raising taxes on oil companies will raise the cost of gas? How much proof is going to be enough for you?

It's like I'm saying that the earth revolves around the sun and you're demanding proof. What you're arguing is seriously that silly...

What do you want me to do Smash? Link to a thousand different papers and articles and educational sites that all say that raising taxes on oil companies will raise the cost of gas? How much proof is going to be enough for you?

One peer reviewed one would be fine. Or just the data supporting your argument. That would be fine, too.


It's like I'm saying that the earth revolves around the sun and you're demanding proof. What you're arguing is seriously that silly...

Actually, since your argument is wrong, it's like you're arguing that I'm demanding proof that the sun revolves around the Earth.

What's bizarre is that you see how taxing the end product will increase the cost of that end product, but seem to think that if we just increase the tax on the source product (crude oil in this case) there's some magic that will occur to prevent that from being passed on to the end price.

No one's arguing that we should increase taxes on crude oil.



Edited, Jun 11th 2008 10:13pm by Smasharoo

This is a "sales tax"

Of course it isn't.

Do you see why?

Oh. And for the record, Obama did propose to "increase tax on crude oil". Just in case you thought you'd somehow gotten away with that blatantly false denial... ;)