Letters to the Editor
-
Seriously, how'd you get this job?
You get to post "articles" on the same website as Glenn Greenwald. Do you have any idea of the standard your're required to live up to to earn that slot? Don't bother to reply, this bit of boosterism is sufficient. Head on over to TNR, or the Weekly Standard, I hear they are looking for semi-erudite sycophants these days....
-
Poverty And Gas
The poorer you are, the more a gasoline tax cut helps, the wealthier you are the less a gasoline tax cut helps - just the kind of thing elitests are oblivious to.
Actually, the poorer you are, the less likely you are to own a car and therefore give a crap about gas tax.
Where was Hillary's concern for the poor when she and her husband were shipping millions of their jobs off to foreign sweatshops, and promoting the strong dollar policy which priced American exports out of many markets? Was she too busy dodging Bosnian snipers to notice?
-
A silly article based on a flawed premise
How long did Walsh troll for this ludicrous piece of pro-Hillary nonsense.
First, if fact the Illinois tax cut only marginally benefited consumers. Second it needs to be seen in a market where wholesale sources of gasoline cross borders with other states, and to a degree retail. The oil companies kept most of the tax change still.
In the context of the 18¢ Federal Gas tax cut, the effect of neighbouring competition would not exist -- the oil companies could simply jack wholesale prices by 18¢, and indeed that is what would happen.
The key issue here is that "demand limiting behaviour" starts to appear at a certain price level, say $3.90 -- that is to say taken as a group the public start doing things to use less gas, and so the "last gallon" remains unsold if the price goes above that. As far as the public is concerned, the gas price is a black box, they just see the pump price, not its components. This means that if the 18¢ tax is removed, the overall price will rise to the point that demand limiting behaviour arises.
When you take the example of a state tax, there is an additional demand limiting behaviour -- cross border buying, either by gas stations (wholesale) or by consumers (driving across the border.) The result is that when the state gas tax is cut, there is at least a way in which the market can discipline the oil companies into passing the tax cut through. That behaviour would not be present for a Federal tax cut.
-
Once again, fact-free idiocy from a Clinton crony
You kinda went fast on this line:
"
Gas retailers must post on each pump a statement that indicates that the state tax has been suspended and that this temporary elimination of the tax should be reflected in the price per gallon of gas
"
That's pretty darn crucial. I haven't heard Clinton state how she would ensure that ALL the savings from the tax holiday went directly to the consumer. She hasn't even indicated that she'd make that a condition of the tax holiday.
The major problem when a hidden tax is reduced, is that the temptation is simply too great for vendors to simply pocket most or all of the savings, and keep their prices pretty much as is. They might reduce their prices for the first few weeks, but then they'd simply raise them again.
That is precisely what happened upon the introduction of the GST in Canada to replace the old manufactured goods tax. The GST was significantly below the old tax, but prices did NOT go down as a result, because merchants and intermediaries simply pocketed the difference.
That's why the tax holiday, without a SERIOUS plan for enforcement, is nothing but a political pander.
-
The Author is a Joke
Frost clearly doesn't understand the issue or he's willing to lie about it just to make a point. That actually sounds a lot like McCain and Hillary Clinton on the gas tax issue. No surprise then, I guess.
However, Joan Walsh, if we are supposed to take the author seriously, I think it's important to have the facts straight. The reason why the federal gas tax holiday proposed by both McCain and Clinton won't work is that the oil companies pay it and there's no evidence that it will be passed to the consumer. I personally like Frost's gambit to pass laws making something illegal to do...when we know the oil companies already do it.
The basic reason why laws don't work to control prices is because you can't legislate profits. The oil companies literally have us over a barrel. Any attempt to force compliance will be costly and a losing proposition. All oil companies have to do is squeeze supply and watch as gas lines form. It's happened before.
Raising taxes on oil, OTOH, is fine with me. I expect that to be shifted onto the consumer, but this is a necessary evil. It WILL reduce consumption and create a fund to rebuild infrastructure and perhaps investment in other energy sources.
-
drobert@bfm.bm
Pretty much like Hillary's healthcare mandate - which also lacks any plan for enforcement.
-
Inventory
The writer overlooks the reason that inventories are high, and that is the key to determining where the elasticity in the equation is going to fall.
When prices are rising oil companies buy every drop that they can possibly store, every day. That way they have the cheapest possible product on hand at all times. That's why there is so much inventory on hand. There is no incentive for them to lower prices. The longer they keep the cheap gas (which they are going to sell eventually no matter what they charge) the more money they make because gas prices are based on the current price of oil, not the price on the day the oil was purchased.
That's how they make more and more money as prices rise but point to paper thin margins. They calculate their margins based on $120 a barrel oil when they are selling gas made from $105 a barrel oil.
The oil companies will raise prices and wait. We can't wait, so we have no elasticity.