?repealing the federal excise tax will give oil companies an
additional incentive to raise prices. If skyrocketing oil prices are
due to supply and demand factors, as oil companies argue, a reduction
of the tax will increase demand on a product already in short supply.
The increased demand will contribute to higher pump prices.? What
mistake has the author of this argument made? |
Request for Question Clarification by
pafalafa-ga
on
21 Mar 2005 19:31 PST
Two errors that I can see:
--gasoline is not in short supply, in any meaningful sense
--even if companies raise prices, as predicted, there's no reason to
suppose the increase would be as large as the current excise taxes.
So pump prices may well decrease if the excise tax goes away, even if
companies raise prices.
Is that the sort of feedback you're looking for? What else can we do
for you to make for a complete answer to your question?
pafalafa-ga
|
Clarification of Question by
lanceair_wanna_b-ga
on
22 Mar 2005 06:50 PST
--gasoline is not in short supply, in any meaningful sense
-----> How can this be when Valero Energy (leading independent refiner
in the US with capacity of approximately 2.5 million barrels per day)
operates at 90%+ capacity; which is not atypical for the industry?
Moreover, EPA environmental laws make it impossible, form an
investment standpoint and the delays from an approval standpoint to
bring on any new meaningful capacity, I don't buy this argument.
--even if companies raise prices, as predicted, there's no reason to
suppose the increase would be as large as the current excise taxes. So
pump prices may well decrease if the excise tax goes away, even if
companies raise prices.
-----> The core issue is that the price of oil drives the price, not
the supply and demand of the refined product.
|
Request for Question Clarification by
pafalafa-ga
on
22 Mar 2005 06:54 PST
You seem to have already made quite an in-depth study of this issue.
What additional information or insight would you like from the
researchers here? How can we best help you?
paf
|
Clarification of Question by
lanceair_wanna_b-ga
on
22 Mar 2005 20:25 PST
I was hoping that an angle that I hadn't thought of would be exposed and expounded.
|
