t’s obvious that a $10-a-barrel tax on oil would translate into higher prices for gasoline at the pump. But how much higher?
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The White House on Thursday said President Barack Obama will propose a $10-a-barrel taxon each barrel of oil to pay for clean transportation projects. The tax, which will be part of the budget request Obama sends to Capitol Hill next week, would be paid by oil companies and gradually phased in over five years. The measure, however, isn’t expected to go far.
But if it were to be enacted, it probably wouldn’t be the oil companies that feel the most pain.
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“This proposal would trickle down and be a $10 per barrel tax on motorists—or 20 to 25 cents per gallon on refined fuels,” said Patrick DeHaan, senior petroleum analyst at GasBuddy.com. “To me it’s clear: this is not something oil companies are going to absorb.”
And the impact of the tax would grow over time. DeHaan created a chart to show just how big a toll he expects the tax would take on gasoline consumers through 2023, if it were passed.
“As with almost every tax increase on fossil fuels, whether at the state or federal level, it will likely be completely passed to consumers in the years ahead,” he said.
And it won’t just impact gasoline prices, but also diesel, jet fuel, heating oil and others, DeHaan said. “It could stifle production to some degree, though to a lesser degree as long as the tax applies to imported oil as well.”
The proposal comes at the worst time for the oil market, which has already seen prices drop by more than 70% from their highs above $106 in June of 2014. On Friday, West Texas Intermediate crude settled at $30.89 a barrel.
A global glut of crude supplies cratered prices in the last year and a half, and global production has yet to show any significant declines as major oil producers play a game of “you cut first” with output amid a battle to retain market share.
It’s a “time of fierce competition in the global oil market and heavy job losses in the industry,” said Brian Milne, energy editor and product manager at Schneider Electric.
Earlier this month, BP PLC said it would cut another 3,000 jobs by the end of 2017 after reporting a full-year loss of $5.2 billion. Royal Dutch Shell this week reported its worst profits in over a decade.
For an industry that has already lost 60% of its gross income, it doesn’t make sense to “slap a tax on it that would take another 10% of their gross income,” said Charles Perry, chief executive officer of energy-consulting firm Perry Management.
That will eventually result in a “mass plugging of the many already marginal wells,” as well as the “need to expand the network of bankruptcy courts,” he said.
So why bring up the prospect of an oil tax right now?
Obama is adamant about the advantages the tax will create. “We’ll look back and say that was a smart investment. It’s right to do it now, when gas prices are really low,” he said Friday.
Milne said Obama may think he can “slip the tax through…without many realizing that they’re paying the government more to fuel their vehicles and warm their houses” because oil and gasoline prices are low right now.
On Friday afternoon, the average price for regular gasoline at pump stood at $1.747 a gallon, according to GasBuddy. That’s down 40.5 cents from last year’s average of $2.152. Gasoline futures also dropped below $1 a gallon on Friday for the first time since late 2008.
Obama cares sooooo much about the working poor that he can't wait to sock them with more taxes. One of the biggest impediments to the working poor is the cost of fuel for their cars to get to their jobs. Carry on Mr. Obama.
Around here people have to drive for their jobs. Sometimes 30+miles one way. And, most people need some type of AWD drive car which doesn't get great gas mileage. So, to use 4 gallons of gas to get to a minimum wage job when gas prices are high becomes nonsensical.
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
Dumb comment. Adding a tax to oil is NOT raising the value of that barrel. It would not affect the world supply glut.
They already HEAVILY tax gasoline.
Plus, what happens when oil goes back to $100 a barrel--would they then remove the tax because oil is now too high?
If a politician is going to float an increase in gas/oil taxes they wait until prices dip. It is disgusting how stupid they think the American public is. Just another example of O thinking he is smarter than us.
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Sometimes you're the windshield, and sometimes you're the bug.
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
Dona, you really need to separate production cost from tax cost in your head. taxes are not impacted by supply/demand or Saudi oppression of prices. Europeans pay 3X what we do for gas. They do so because of all the social programs they have, the VAT does not bring in enough to cover the expense so the gas tax triples the cost of gas for them.
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Sometimes you're the windshield, and sometimes you're the bug.
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
Dona, you really need to separate production cost from tax cost in your head. taxes are not impacted by supply/demand or Saudi oppression of prices. Europeans pay 3X what we do for gas. They do so because of all the social programs they have, the VAT does not bring in enough to cover the expense so the gas tax triples the cost of gas for them.
Oh, I know, but it is just funny to me.
"The price of gas is too low!!! It is horrible, awful, no good, going to destroy the economy!!!"
And nowwww
"The price of gas may go up!! It is horrible, awful, no good, going to destroy the economy! !!"
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
OK? WHO was 'whining"? I think low gas prices are GREAT for America. For commerce, business and the working poor that all you Libs PRETEND to actually care about.
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
Dona, you really need to separate production cost from tax cost in your head. taxes are not impacted by supply/demand or Saudi oppression of prices. Europeans pay 3X what we do for gas. They do so because of all the social programs they have, the VAT does not bring in enough to cover the expense so the gas tax triples the cost of gas for them.
Oh, I know, but it is just funny to me.
"The price of gas is too low!!! It is horrible, awful, no good, going to destroy the economy!!!"
And nowwww
"The price of gas may go up!! It is horrible, awful, no good, going to destroy the economy! !!"
WHO said that? SHOW ME? What baloney. Low gas prices are GOOD.
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
Dona, you really need to separate production cost from tax cost in your head. taxes are not impacted by supply/demand or Saudi oppression of prices. Europeans pay 3X what we do for gas. They do so because of all the social programs they have, the VAT does not bring in enough to cover the expense so the gas tax triples the cost of gas for them.
Oh, I know, but it is just funny to me.
"The price of gas is too low!!! It is horrible, awful, no good, going to destroy the economy!!!"
And nowwww
"The price of gas may go up!! It is horrible, awful, no good, going to destroy the economy! !!"
Because you don't understand the relationship of oil prices to other sectors of the economy and to the security of our country. You merely see low prices on one commodity.
__________________
Sometimes you're the windshield, and sometimes you're the bug.
Lol. A few weeks ago all anyone was whining about was that the prices were too low. But, carry on.
Dona, you really need to separate production cost from tax cost in your head. taxes are not impacted by supply/demand or Saudi oppression of prices. Europeans pay 3X what we do for gas. They do so because of all the social programs they have, the VAT does not bring in enough to cover the expense so the gas tax triples the cost of gas for them.
Oh, I know, but it is just funny to me.
"The price of gas is too low!!! It is horrible, awful, no good, going to destroy the economy!!!"
And nowwww
"The price of gas may go up!! It is horrible, awful, no good, going to destroy the economy! !!"
WHO said that? SHOW ME? What baloney. Low gas prices are GOOD.
Only when in balance to other sectors of the economy and when not due to OPEC trying to squeeze everyone else out of the market.
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Sometimes you're the windshield, and sometimes you're the bug.
Low gas prices are certainly not good for us. About 50,000 people have lost their jobs in the energy sector just this year alone..
Folks are committing suicide.
It's one thing to look at the price at the gas pumps and go "Yay!", but you have to look at the big picture.
The oil glut has been disastrous for the Canadian economy.
Low gas prices are certainly not good for us. About 50,000 people have lost their jobs in the energy sector just this year alone.. Folks are committing suicide. It's one thing to look at the price at the gas pumps and go "Yay!", but you have to look at the big picture. The oil glut has been disastrous for the Canadian economy.
That is absolutely true. What is good for sectors of the economy such as transportation and retail--it is bad for other sectors such as energy production.
Most of the tar sands and fracking oil extraction depends on oil at $60 plus price levels to make it profitable.
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I'm not arguing, I'm just explaining why I'm right.
Well, I could agree with you--but then we'd both be wrong.
You prove it. Show the stats of the multitude of people that have committed suicide because the lost their jobs...
Even if true, that proves that Canada isnt the utopia you like to believe it is....
-- Edited by Ohfour on Sunday 7th of February 2016 05:02:46 PM
I never once claimed Canada is a utopia. If I did, show me.
You remind of Lily sho claimed all my posts were pro-Muslim, AND I NEVER SAID ANY SUCH THING. Speaking of which....how's that search coming along, lily?
You prove it. Show the stats of the multitude of people that have committed suicide because the lost their jobs...
Even if true, that proves that Canada isnt the utopia you like to believe it is....
-- Edited by Ohfour on Sunday 7th of February 2016 05:02:46 PM
It affects the U.S., too. North Dakota, Wyoming, Alaska, and Montana, in particular depend heavily on energy extraction.
Actually husker and welts are right. I know others are going to say I'm wrong but it does highly affect the energy sector. I know a 58 year old man who was laid off from the oil fields a little over a year ago. Shortly after he was laid off he hung himself by the rafters in his basement.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou
You prove it. Show the stats of the multitude of people that have committed suicide because the lost their jobs...
Even if true, that proves that Canada isnt the utopia you like to believe it is....
-- Edited by Ohfour on Sunday 7th of February 2016 05:02:46 PM
It affects the U.S., too. North Dakota, Wyoming, Alaska, and Montana, in particular depend heavily on energy extraction.
Actually husker and welts are right. I know others are going to say I'm wrong but it does highly affect the energy sector. I know a 58 year old man who was laid off from the oil fields a little over a year ago. Shortly after he was laid off he hung himself by the rafters in his basement.
"Not true! Not true! Prove it! And even if you send a copy of his death certificate, you're lying!"
Really. You can't argue with that kind of stellar logic.
Yes. I know. I've already been called a liar about it. I don't have documentation to prove it. He was a friend of ours. Not sure how to prove that.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou
You prove it. Show the stats of the multitude of people that have committed suicide because the lost their jobs...
Even if true, that proves that Canada isnt the utopia you like to believe it is....
-- Edited by Ohfour on Sunday 7th of February 2016 05:02:46 PM
It affects the U.S., too. North Dakota, Wyoming, Alaska, and Montana, in particular depend heavily on energy extraction.
Actually husker and welts are right. I know others are going to say I'm wrong but it does highly affect the energy sector. I know a 58 year old man who was laid off from the oil fields a little over a year ago. Shortly after he was laid off he hung himself by the rafters in his basement.
"Not true! Not true! Prove it! And even if you send a copy of his death certificate, you're lying!"
Really. You can't argue with that kind of stellar logic.
Then he had bigger issues than being laid off...
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America guarantees equal opportunity, not equal outcome...
When you are 58 and you are laid off work and you know there is not going to be any work in the near future you face a couple choices. Going back to school or some kind of training and hope you can get done with it without going into a whole life worth of debt to just be able to make it to retirement. Or you can pray to god that you can make it through the rough patch until work picks up. For this guy he knew that the younger guys would get the job. He had grown kids and had just been through a divorce. His life looked pretty bleak to him. I'm sure you'll have something to say about what a screw up he was though.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou
When you are 58 and you are laid off work and you know there is not going to be any work in the near future you face a couple choices. Going back to school or some kind of training and hope you can get done with it without going into a whole life worth of debt to just be able to make it to retirement. Or you can pray to god that you can make it through the rough patch until work picks up. For this guy he knew that the younger guys would get the job. He had grown kids and had just been through a divorce. His life looked pretty bleak to him. I'm sure you'll have something to say about what a screw up he was though.
G will be 66 in May. His business is closing down.
Hes starting a new venture. Your point?
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America guarantees equal opportunity, not equal outcome...
Yup. Gives people a chance. Entrepeneurs a chance. Low income people a chance. I know that in your world Welts, that Govt must control all because you don't believe in People. Well, I do.
As IKWTDS said there's a difference between prices going up because the economy is picking up and prices going up because someone wants to tax us more. The first one is good the second one is not.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou
If the difference in the price of a tank of gas is life altering to you then you need to stay home and eat Ramen noodles.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou
You can sniff your nose all you want. But if people are spending the cost of a couple gallons of gas EVERY day to drive to a minimum wage job, then it becomes very difficult. But, i guess your really don't care as much as you pretend to do you?
If the difference in the price of a tank of gas is life altering to you then you need to stay home and eat Ramen noodles.
Can you loan me 68 cents?
flan
Sure. I'll send $1.68 so you can get some Ramen noodles too.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou
When gas was $4 plus a gallon it made little sense for my son to work a minimum wage job Out of town. But, fi you want to scoff and mock, then go ahead.
You can sniff your nose all you want. But if people are spending the cost of a couple gallons of gas EVERY day to drive to a minimum wage job, then it becomes very difficult. But, i guess your really don't care as much as you pretend to do you?
Maybe they should get a better job. Not my fault they did nothing with their life.
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“You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I'll rise!” ― Maya Angelou