Michigan senator, Debbie Stabenow...

[Jay 02 TA ws6]

... is on a "crusade" to get our country to repeal subsidies and tax breaks for oil companies.

She is calling for a 5 BILLION dollar rollback in government contributions.

I realize that economics 101 is a difficult concepts for some democrats to understand, but this is a whole new level of stupid.

Let me stalize it for anyone who doesn't understand why this is so frickin mindless, it's incomprehensible.

Oil is an industry run by a cartel, with a nearly completely inelastic demand curve. A perfectly inelastic demand curve is one that does not respond to pricing - that is to say - no matter how much something costs, demand for it will not decline. Obviously, nothing is completely inelastic, but oil is one of the closest industries we can find to it. Now, add to the fact that OPEC is a cartel, and they have effectively monopolized the industry... while the consumer's demand for oil will stay the same regardless of price, a monopoly removes the only remaining check on prices - competition. With no competition, and no adverse response to pricing hikes... what recourse do the oil companies have to face if they raise prices? The answer is absolutely nothing.

So... I'll give you one guess what will happen if the government removes 5 BILLION from the bottom line on the oil companies' balance sheets. One guess who is ultimately going to end up paying for that... one guess what directions gas prices will go... any ideas?

Think hard. It's clear my senator isn't.

AAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!

[94 formula]

I agree with you that if the oil companies have to put up 5 billion we as the consumers will be paying for most of it. I do not agree that the demand curve is inelastic, atleast not as a long run demand curve. Yes it is inelastic in the shortrun but in the long run the demand curve isn't. If gas prices continue to go up or even stay around $3 people are going to begin to cut back by commuting, not just taking joy rides, ect. Also its not just that, if gas stays up other things are done less such as vacationing because they are not going to have as much disposable income. I was thinking about this while fishing today on a bass boat with only a 60hp motor, I spent over $20 to get to the lake and back in gas plus an additional $15 in gas for the boat, people are going to quit doing things like this. I fish atleats 3 times a week in the summer and at atleast $35 a trip its just not affordable. In one way or another gas can be linked to almost everything in daily life. People have the same income no matter what gas does (except those in the industry ). They are going to have to cut back to meet other expenses. You make a great point that the 5 billion increase will trickle down to the consumers, but I don't feel that the demand is going to remain inelastic it is too big a part of everyones life to not make a change. The oil companies are pushing to see how high they can go right now but they are going to keep the demand curve at the optimal level for them so that they have the best return and its going to have to drop, if it doesn't drop other things will. Gas prices suck right now and my wallet is hurting from it but I'm honestly not that worried about it something WILL give within the next few months (remeber I said that and you can ride my a#@ about it if that doesn't happen ).

[Jeff_in_Atl]

Oil companies don't drive the price of gasoline. The futures market does. The oil companies have a set profit margin. They multiply the price they pay for a barrel of crude oil by a profit margin of around 8%. That's what they charge. If the price of crude oil goes up, the price of gas goes up. Oil companies run the business just like any other company. The set a profit margin and their prices are structured around that.

If you took the price of gasoline in 1980 and inflated it at the inflation rate gas would cost a little over $3.00 a gallon today. The inflation of gas up until a couple of years ago has been less than the national average. It's just now catching up.

The reason why the oil companies profits are up is because they are selling more. If you sell 1 gallon at $1.00 with a profit margin of 8% you make $.08 cents. If you sell 2 gallons at $1.00 a gallon with a profit margin of 8% you make $.16 . Your profits doubled but your profit margin stayed the same. The population of the US is increasing. As it increases there are more people driving. As more people drive more gas is used. As more gas is used more is sold. The more gas that is sold means the oil companies profits go up.

Does anyone believe that trying to punish the oil companies for their profits with a tax like the "windfall profit tax" is going to do anything but raise the cost of gas? Any tax will be passed along to the customer because their company set profit margin will not change.

There are 2 ways to lower the cost of gasoline, increase the supply or decrease the demand. Liberals want to decrees the demand. Conservatives want to increase the supply. Libertarians and independents want to do both.

[Jay 02 TA ws6]

Does anyone believe that trying to punish the oil companies for their profits with a tax like the "windfall profit tax" is going to do anything but raise the cost of gas? Any tax will be passed along to the customer because their company set profit margin will not change.

This is exactly my point!!!!

[Jay 02 TA ws6]

I agree with you that if the oil companies have to put up 5 billion we as the consumers will be paying for most of it. I do not agree that the demand curve is inelastic, atleast not as a long run demand curve. Yes it is inelastic in the shortrun but in the long run the demand curve isn't. If gas prices continue to go up or even stay around $3 people are going to begin to cut back by commuting, not just taking joy rides, ect. Also its not just that, if gas stays up other things are done less such as vacationing because they are not going to have as much disposable income. I was thinking about this while fishing today on a bass boat with only a 60hp motor, I spent over $20 to get to the lake and back in gas plus an additional $15 in gas for the boat, people are going to quit doing things like this. I fish atleats 3 times a week in the summer and at atleast $35 a trip its just not affordable. In one way or another gas can be linked to almost everything in daily life. People have the same income no matter what gas does (except those in the industry ). They are going to have to cut back to meet other expenses. You make a great point that the 5 billion increase will trickle down to the consumers, but I don't feel that the demand is going to remain inelastic it is too big a part of everyones life to not make a change. The oil companies are pushing to see how high they can go right now but they are going to keep the demand curve at the optimal level for them so that they have the best return and its going to have to drop, if it doesn't drop other things will. Gas prices suck right now and my wallet is hurting from it but I'm honestly not that worried about it something WILL give within the next few months (remeber I said that and you can ride my a#@ about it if that doesn't happen ).

We're going to disagree on where that "optimum" price level is. Gas is twice as expensive in Europe as it is here... we have a long way to go before we change our driving, commuting, and car buying habits.

Personally, I don't feel the price of gas is too terrible at this point. So it's gone up $.50 recently... big deal. With the number of times I fill up, that's about an extra $25-30 per month. That shouldn't make or break anyone, unless they're really poor at managing their finances.

My point for this wasn't to complain about gas prices per se... it was to rant about our idiotic elected officials, who have such a backward understanding of how very basic economics work, that it's embarassing to me that we would put such a person in office.

If people in Michigan want to know why we're last in job creation, and continue to remain in a one-state recession... they need to only look at this as a perfect example of the backwards thinking that got us here.

[Jeff_in_Atl]

My point for this wasn't to complain about gas prices per se... it was to rant about our idiotic elected officials, who have such a backward understanding of how very basic economics work, that it's embarassing to me that we would put such a person in office.

If people in Michigan want to know why we're last in job creation, and continue to remain in a one-state recession... they need to only look at this as a perfect example of the backwards thinking that got us here.

Oh they know exactly what they are doing and how it works. They understand economics. They are playing politics. They are playing the ignorance of people against themselves. There are a lot of people who don't understand how business works. All they see is how much profits the oil companies make and how little money they have. The elected officials know they can use this to their advantage. The know that a lot of people will say "hey look at this guy. He is punishing these greedy people for taking my money. I will vote for him to keep him in power to keep punishing them." But they are too stupid to understand how this actually will make the prices go up and that he will have to pay more for goods and services.

[94 formula]

We're going to disagree on where that "optimum" price level is. Gas is twice as expensive in Europe as it is here... we have a long way to go before we change our driving, commuting, and car buying habits.

Personally, I don't feel the price of gas is too terrible at this point. So it's gone up $.50 recently... big deal. With the number of times I fill up, that's about an extra $25-30 per month. That shouldn't make or break anyone, unless they're really poor at managing their finances.

My point for this wasn't to complain about gas prices per se... it was to rant about our idiotic elected officials, who have such a backward understanding of how very basic economics work, that it's embarassing to me that we would put such a person in office.

If people in Michigan want to know why we're last in job creation, and continue to remain in a one-state recession... they need to only look at this as a perfect example of the backwards thinking that got us here.

Very good point!

[KnightFire]

Personally, I don't feel the price of gas is too terrible at this point. So it's gone up $.50 recently... big deal. With the number of times I fill up, that's about an extra $25-30 per month. That shouldn't make or break anyone, unless they're really poor at managing their finances.

Gotta disagree with a few things in this thread, first lets all stop stating how much more expensive gas is in other countries, wanna what it costs in Iraq (.05/gallon, due mostly in part to US gas subsidies, but that is what their paying)?! THE DIFFERENCE IS IN EACH COUNTRIES TAXING SYSTEM.

Second, if you live in a MAJOR metropolitan area where you simply CAN'T afford to live closer (as I do, the houses easily top 1M in the area I work) to your job and MUST commute EVERY DAY...what are they to do? Oh wait, buy a more fuel effecient car, right?! Hrmmm lets see you can get your run of the mill Econobox for what 18,000? How much gas would 18,000 buy? How much will maintenance cost on that new vehicle, how much more will you pay in insurance? When will you break even, let alone start saving money?

I have a 90mile round trip semi-daily commute to the DC Metro/Northern VA area, now I will be moving soon (hopefully closer to my source of income, but in all reality it will still be a long commute just due to housing costs in the area) I use 5-6 gallons of fuel per day to get to and from work, my DD is a Jeep Wrangler, yes I know not the greatest in the mpg category...however, I honestly don't see a need for ME to purchase another vehicle that gets better mpg, mostly due to the above stated reasons and mostly because when I buy another new vehicle it will be something I enjoy and want, not need.

Now for me personally the increase in fuel hasn't really impacted my accustomed life style and budgeting, but I consider myself extremely lucky in that regard. Your average Joe Smith isn't so fortunate and I can easily see the other side of the fence on this issue.

JMHO

[Jay 02 TA ws6]

Gotta disagree with a few things in this thread, first lets all stop stating how much more expensive gas is in other countries, wanna what it costs in Iraq (.05/gallon, due mostly in part to US gas subsidies, but that is what their paying)?! THE DIFFERENCE IS IN EACH COUNTRIES TAXING SYSTEM.

20% of our gas prices goes to taxes. And taxes aren't what's increasing in cost right now - it's the price of crude oil.

[KnightFire]

20% of our gas prices goes to taxes. And taxes aren't what's increasing in cost right now - it's the price of crude oil.

Correct, I never stated that the taxes were the only reason of our high cost of fuel, I was stating the reasons behind why different countries pay different amounts for their fuel at the pump and why trying to make such a comparison is flawed.