If we got rid of the government subsidies paid to oil companies, would consumers have a better idea of how much oil costs? That way the sticker shock could work it's magic, and we could invest in some alternative energy sources? My understanding is a free market is one that operates independent of government control...and supply and demand control the prices. So, shouldn't the consumer make their decision based on a TRUE market price, not one subsidized by tax dollars?
2007-04-02 04:22:43 · 6 answers · asked by hichefheidi 6 in Politics & Government ➔ Politics
most conservatives agree that when a tax is imposed on a company, it is passed on to the consumer. The same argument is made to me when I suggest getting rid of subsidies. if it TRULY works properly, the increase will be passedon to the consumer, but taxes would go down...since we wouldn't pay for it with tax dollars. I realize that we don't currently have any conservatives working in government, but if we did, that would be ideal.
2007-04-02 04:28:49 · update #1
oil is a commodity, and subsidies are paid
2007-04-02 04:30:11 · update #2
The US does not directly subsidize US oil producers. It does so indirectly to some extent by generous tax treatment for depletion of their oil wells, by some gov't expenditures for the US Geological survey & environmental research. But the main indirect subsidy is our massive defense costs which for the past 30+ years or so have been deployed almost exclusively to protect US & world oil supplies from interruption. It is not easy to factor out what the costs of our actual defense needs would be as oppoosed to the deployment costs -- tho' Iraq, a half trillion & running is an easy example. My guess is that if we gave up being the world's guarantor of stable oil supplies & prices, we'd be paying more for fuel but saving it on income taxes.
2007-04-02 04:43:40 · answer #1 · answered by Anonymous · 2⤊ 1⤋
Interesting question, in that you assume that the withdrawal of tax deductions (I don't know that actual subsidies are paid) would be passed on to the consumer.
In other words, government policy is distorting the market.
I would be interested to know what, if any, deductions are available for, say, nuclear power plants and R&D into alternative energy sources.
I also note that some politicians have advocated RAISING taxes on fuel (at the pump) to raise the price - skewing the market in another direction.
It might throw the economy into a tailspin, and a lot of people out of work. I would also be interested in who owns the companies - pension funds might have a lot of shares.
It could cause a lot of short-term pain, but then be good in the long run. Kind of like Reagan's measures to tame inflation and high interest rates in the early 1980s. People forget how controversial those measures were, and how UNpopular Reagan was at the time.
But it's an HONEST and LOGICAL suggestion, agree or disagree - something politicians avoid!
PS Glad to see your rightful status was restored.
PPS Thanks for additional info. I'll do more research. Or maybe ask a question about it! :)
2007-04-02 04:25:50 · answer #2 · answered by American citizen and taxpayer 7 · 1⤊ 1⤋
If the taxes were removed from gasoline, gas would cost a lot less. I'm not sure what subsidies, other than the usual corporate tax breaks and deductions, the oil companies actually get. "Sticker shock" has no magic. There are no real alternatives to gasoline in the short run. It will take years to build up the kind of fuel delivery system for any alternative, not to mention time and money to ramp up production of alternatives.
If we stick with ethanol, you'll be paying a lot more for all the corn-based food products, including animals fed on corn byproducts and sodas with their high fructose corn syrup.
Will you be happy with the sticker shock on candy, cereal, fruit drink products, pork, chicken, etc.?
2007-04-02 04:32:16 · answer #3 · answered by thylawyer 7 · 2⤊ 1⤋
A true free market also doesn't have any hindrances to investment. If you really want to see what the true free market price for oil would be you should not forget to lift the bans the environmentalists have put in place to prevent the industry from harvesting the oil in ANWR.
There are two sides to every coin.
2007-04-02 04:31:05 · answer #4 · answered by C B 6 · 2⤊ 2⤋
Sounds a bit like a bunch of liberal, anti-capitalist rhetoric to me.
The US government subsidizes our oil companies only so we can continue to find our own natural resources to become independent from other oil-rich countries. How long do you want to be dependent on Saudi Arabia and Venezuela for our oil?
2007-04-02 04:26:50 · answer #5 · answered by Anonymous · 1⤊ 3⤋
sounds appropriate to me :)
2007-04-02 04:25:50 · answer #6 · answered by pip 7 · 1⤊ 1⤋