OT: Price fixing by the oil refineries?

Spoke too soon...

But the Democrats? preferred remedies are even less effective. They propose stripping oil firms of various tax breaks?something that could not possibly lower the price of petrol, but might make angry motorists feel better nonetheless. Happily, the changes they have in mind are too inconsequential to deter much investment either, given the high price of oil, although they could dent spending on natural gas. Mr Obama, meanwhile, has set his sights on speculators, a habitual if elusive scapegoat, creating a special new task-force to hunt them down.

The reason for taxing the oil companies has more do with raising revenue than with lowering pump prices.

Personally, I see absolutely no reason whatsoever why oil companies ( especially the multi-nationals ) who exploit US offshore energy resources and sell to the global market should be exempt from taxation.

As far as the "high price of oil", one needs to realize that increasing the global supply merely results in reduced production rates by OPEC members.

Which results in less income for them . And I'm all for that . Especially if the difference can be made up from domestic resources . -- Snag Learning keeps you young !

Looks like we have located the money required to implement at least a few demonstration coal to petroleum conversion plants. This technology will provide a back-up to imported petroleum for petrochemical feed stocks and emergency supplies of liquid fuels such as gasoline, diesel, and JP4. This is off-the-shelf and well proven technology.

see IIUC -- Most any organic material, such as agricultural and animal processing wastes (animal fats and feathers), and garbage/trash, can be converted.

Coal liquefaction becomes economically viable when petroleum prices are above about 60$US/BBL, and the US has enormous coal reserves, thus we have the potential to significantly reduce our balance of payments deficit *AND* stimulate domestic high value added activity.

FWIW -- it appears the GOP has done their duty, and managed to kill any move to revoke the oil-company tax subsidies.

-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).

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Well, the senate blocked revoking those tax breaks today...

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I'm not at all surprised.

The bigger issue as far as I'm concerned is that while "subsidies" might have their place, they don't make anyting "cheaper" up front...

--and all too often they just shift the cost of an item or service onto other parties instead--usually onto parties who had no want or need for the item or service in the first place.

No, it's pure politics of envy. It has nothing to do with revenue or prices; it's the liberals' way of punishing the oil companies for having "too much money."

Hope This Helps! Rich

========= You touch on one of the most critical aspects of the current tax system. While anyone can see what the pump/point-of-sale price for gasoline is, [most likely] the total price including oil company tax breaks, local and state tax abatements on refineries, costs to clean up the messes made, and subsidies (which the other tax payers must make up for,) not to mention a few hot wars and mideast foreign aid, would curl your hair.

This distortion of up front costs largely negates the assumption of the efficient free market in that no one can tell what many things cost IN TOTAL, so are unable to prioritize/rationalize their purchases. This includes food, housing, automobiles, consumer electronics, etc, to name a few.

FWIW -- it appears the only way to flush out the hidden subsidies and tax breaks is to refuse to increase the national debt limit.

-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).

I get sick of hearing billions of dollars in profits w/o hearing the rest of it.

A business man would tell you x amount of profit on sales of y, a politute will use half that information to inflame those than vote on the basis of envy.

Wes

Or he'll tell you x amount of profit on investment (ROI). If he's in a high-sales-volume business and he's trying to impress stockholders, he'll talk ROI. If he's in that same business and he's crying about taxes, he'll talk return on sales.

The health care insurance industry is even worse than the oil industry in playing this game. They talk about return on "sales." But they don't really have sales. Their "volume" is a pass-along -- the money they take from the insured and pass on directly to doctors, hospitals, and pharmaceutical companies. The profit figure that results actually looks quite low.

But they're trying to compare themselves to a manufacturing business, or a service business that actually *does* something for that money, like making a product or actually providing a service.

They don't. Their service is in managing the pass-through machine. It's a small fraction of all of the money that runs through their hands. So their actual return on the service they provide can be very large, and typically is. Their ROI can be extraordinary.

But ROI often has little meaning, because of the characteristic of industries that keep funding new projects with new equity investments. The accounting here gets very sticky, and the problem in actually measuring profitability of these companies is a much darker art than most of us realize -- something that economists have only recently gotten serious about:

You can be sure that these issues have been turned into a smoke-and-mirrors game in the political equations related to the oil industry tax breaks. Whenever we hear someone talk about "profit on sales," we know that one of two things is going on: Either they're involved in a comparative business analysis, making a point about how well-run one company in an industry is versus another, or they're engaging in some kind of special pleading and they're trying to pull the wool over our eyes. Guess which one the oil companies are doing. d8-)

How do you expect that is going to work?

Do you think that they will suddenly transport the US troops home and discharge them and cancel defense contracts

or

Do you think they will stop issuing Social Security and medicare checks

The national debt limit is another issue entirely

Granted, it is a huge and really scary amount of money......

-But there is no reason to arbitrarily set it to some certain and inelastic amount--rather, it should be PEGGED to some quantifiable economic indicator such as percentage of GDP and perhaps modified by a few other indices like perhaps trade imbalances and current fed interest rates and so forth.

Otherwise, it'snot meaningful and it's even likely to be destructive to long term growth and prosperity when you consider that the global currency supply is constantly expanding...

(IOW, today it's pretty easy to make the payments on a $55,000.00 home that was bought in 1992 using 30 year paper )

Well, I don't envy the rich at all.

--it's just that I despise anyone who always weasels out instead of carrying his weight when it come tax time.

The only thing that really matters regarding the national debt is whether buying your paper serves the interests of the people doing the buying. US Treasury paper serves several needs for both domestic and foreign investors, and nothing else does.

Of course, you can reach a point where servicing the debt becomes onerous. But it's not at the moment.

Okay but my point about setting an arbitrary limit based mostly on paranoia and fear still stands.

Sure. What's Japan's national debt now, 200% of GDP? They have their problems, but national debt is not a big one.

So if interest rates double, would that be a problem?

Wes

If rates for TREASURIES double, that would increase costs by around $250 billion. That's about 7% of the budget. Is that a problem? It depends on what you do with two wars and a defense budget that could eat Ohio.

Are you predicting a doubling of the interest rate on Treasuries? And, if so, why?