Obama shelves oil company tax after price fall: aide

[babsbunny]

http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4B206W20081203

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.

[TheKentuckian]

1. I'd still like to pass something to act as a backstop

for any future "spikes". Something along those lines might still serve to stifle shenanigan. Maybe a sliding scale at $80+ a barrel.

[jody]

2. Are we observing maneuvering between government and oil companies to see how high their obscene

profits will be?

[liberalmuse]

3. Obama makes good sense.

After all, what is there to tax right now? OPEC is losing money.

[Maven]

4. OPEC is already talking about cutting production to push prices up.

And with production in global decline, I'll bet you $100+ oil will be back before you know it.

The idea that we don't need a windfall profits tax because prices are lower now is either incredibly short-sighted or designed to take advantage of short-sightedness to maintain the status quo.

[Occam Bandage]

8. So it is, rather, a "potential future windfall profits tax?"

Preemptive taxation is an idea that would deserve to get laughed out of Congress.

[Name removed]

5. Deleted message

Message removed by moderator. Click here to review the message board rules.

[mkultra]

6. it was the threat that matters and it worked

the big three understood what they faced in an Obama administration if they didn't stop price fixing. Low and behold, $2 gas.

[Occam Bandage]

7. I don't even know where to begin.

[mkultra]

9. i would suggest logical thoughts that then lead to non acrimoneous discussion

but hey, thats just me. take a shot.

[Occam Bandage]

10. All right, then I'll give "low and behold" a pass, and rather

mention that:

1. The Big Three manufacture cars, and not oil. I've never heard of anyone use "the Big Three" to refer to oil companies, unless you're referring to the ones in China, which I doubt you are.
2. Oil is a global and fungible commodity impacted as much by BRIC and Europe as by America.
3. Even if they could realistically do so, oil companies would not find halving the sell price of their product to be a reasonable tradeoff against paying slightly higher taxes, and certainly foreign oil companies would have no incentive to do so whatsoever.
4. The recent decline in prices is entirely due to lowered demand and investor fear of the demand in BRIC (especially China) collapsing with the economic downturn.

[mkultra]

11. ok

im heading to bed so ill respond to your next tomorrow.



1. Even though there are several refiners of petroleum in America, there are really Three majors thus my usage. Its these refiners that the windfall tax would be levied against.
2. Although oil is a commodity that ebbs and flows, the margins on gasoline do not need to, which is why the outrageous profits seen during high barrel prices where ridiculous.
3 & 4. The point of the threat was to add incentive to oil companies to either begin competing instead of price signaling or the U.S. Government would take the money from them. Although the price of oil has dropped by about $30 a barrel, the price of a gallon of end product has gone down by $2. since you can obtain 44 gallons of gasoline from a barrel, a discrepancy of cost vs retail is evident.

Essentially, the theory holds that the refiners intentionally limit production during high barrel prices to create a simulated drop in supply which is perceived as an increase in demand. During this period of high cost and high demand, margins always increase as do prices and profits. This is accomplished via price signaling. Under these conditions, a windfall tax threat is a surface level threat which communicates the idea that if the public is struggling and the refiner is making billions, we know something is up and we are going to fuck you if you don't stop.