Letters to the Editor
logicalresponse
Published Letters: 162 Editor's Choice: 19
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Never trust an oil company
[Read the article: A paltry $11 billion profit for Exxon]
[Read more letters about this article: Here]I wonder if there is a way to really know if Exxon is unable to increase production or doesn't really want to. If the future price of oil were expected to decline, then there is an incentive to sell as much now as possible, but if the long term expectation is an increase in real price, then there is incentive to hold back current production. Holding back production both saves more to sell at the higher price and can also cause the price to rise faster. I suspect intentional holding back is easy to hide.
The argument that I like best for developing alternative sources of energy is the sort of auto-regulatory effect it has on current energy costs. But just like everything else, there is a bad side effect, and it is not just that cheaper prices reduce the incentive for alternative development. It is that if you do not timely find effective alternatives, the day of real oil shortages comes sooner.
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@Alan Bennett
[Read the article: A paltry $11 billion profit for Exxon]
[Read more letters about this article: Here]You said:
Showing gross profits without context is misleading. You are taking a shot at Exxon which is held by many pension funds and investment houses. If you find your pension fund holding Exxon shares what would you do? Divest?
This is actually an argument that circulated around the conservative internet email blasts a few weeks back. The subject line (my aunt in Oaklahoma sent it to me) said something like "Pelosi wants to tax your pension funds -- what is this woman thinking?" The email says she wants to tax pension funds, as if she had proposed to do it directly. It never mentions oil. The full story was that Pelosi wants a windfall profits tax and an Exxon spokesman argued that because Exxon is in pension funds, that this is really a tax on the funds.
It is a bad argument, though, because the price of oil effects the earnings of nearly every other company negatively and those companies are also in pension funds. Windfall profits taxes are appropriate when the profit is ...well... a windfall (not earned).
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Clinton's plan
[Read the article: Clinton responds to gas tax attacks]
[Read more letters about this article: Here]Clinton's plan does specifically address the question of whether the tax relief is passed on. Her plan says: Hillary will ensure that this relief is passed along to consumers by charging the Federal Trade Commission with conducting aggressive oversight.
As for the savings: Recent testimony before the House of Representatives by the American Trucking Association indicates that even small changes in price can have big impacts. Just a one-penny decrease in the price of diesel annualized over an entire year would save the trucking industry $391 million a year.
Her entire plan, which Obama's ad does not mention is outlined as follows:
Imposing a windfall profits tax on oil companies and using the money to suspend the gas tax for the peak summer months;
Closing $7.5 billion in oil and gas loopholes and using the funds to provide assistance for lower-income families to pay their energy and grocery bills;
Cracking down on speculation by energy traders and market manipulation in oil and gas markets that are driving up the price of oil by at least $20 a barrel;
Pressuring OPEC to increase oil production, including by filing a WTO complaint against OPEC countries
Stopping new additions to the Strategic Petroleum Reserve and standing ready to release oil to counter market spikes and reduce volatility.
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About these economists
[Read the article: Hillary Clinton throws economists off the bus]
[Read more letters about this article: Here]Maybe a gas tax holiday is a bad idea, but I really am having trouble figuring out exactly what the economists don't like about it. For example there is an article in thestreet.com that lists some arguments. One is that the tax abatement will not get passed on to the consumer (or at least not enough of it to make a difference). The next is that the lower price will dangerously drive up the demand. It seems to me those can't both be on the same list. Neither, however, addresses the specifics of Clinton's proposal, which has the pass on enforced by the FTC and includes both a windfall tax and long term energy policy.
I would love to see someone detail the criticisms of Clinton's proposal all in one well reasoned article so that I can figure out whether they are really good arguments. How about it Mr. Leonard?
Granted I have been a Clinton supporter, (I like Obama and he is probably getting the nomination anyway), but it just seems to me that a three month reduction of ten to fifteen cents a gallon is not going to have a big effect on world oil supply (for which there are as many variables as some physicists think there are parallel worlds it seems). It could have some good effects for the economy in terms of trucking and air freight costs, etc.
If I were proposing something I would probably collect the gas tax, add a windfall tax, and rebate the windfall tax (not the gas tax) in some way to be determined. But what do I know!
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Out of fairness
[Read the article: Clinton, Obama trade ads on gas tax]
[Read more letters about this article: Here]I am not writing to take a position on the gas tax, but quoting a report from 2000 that the savings aren't passed on does not address the mechanism Clinton proposes to make sure it does. She wants to have the FTC enforce the pass on. If that's a bad/unworkable/etc idea then fine, someone criticize it. But ignoring it is so MSM, don't-cha' think?