
Obama wants to tax oil companies $10 a barrel to pay for clean transportation - prostoalex
http://qz.com/610494/obama-wants-to-tax-oil-companies-10-a-barrel-to-pay-for-investments-in-clean-transportation/
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paulsutter
Oil just dropped in price by more than $70 a barrel, a $10 tax isn't going to
cause economic trouble.

It's the perfect time to enact a carbon tax, even if it is limited to oil.
This will boost the ROI of new energy technology and open up more private
investment dollars.

One way to get bipartisan support may be to put the tax on imported (not
domestic) oil.

~~~
nostromo
Here's what we need to do to get support for a carbon tax: don't make it a
tax.

Add $x to each unit of carbon and put it in a fund that the federal government
has no access to. Then, at the end of each year, empty the fund completely by
sending checks to each citizen.

~~~
computator
How much to each citizen?

(1) According to income or need? Then it's just wealth redistribution.

(2) Exactly the same amount for each citizen? The farmer who needs his truck
pays a lot, and gets back $x. Stock broker who lives and works in Manhattan
and doesn't own a car pays little, but also gets back $x.

(3) Exactly in proportion to how much carbon each person used? This
accomplishes nothing except adding a layer of bureaucracy (you pay $n in
carbon tax and get back $n-20% after government processing).

~~~
nostromo
1) Same amount to each citizen.

2) The farmer would either pass the cost along to the customer, including the
stock broker, or would ideally switch to low carbon alternatives. Over time,
lower carbon emitting farmers would be more cost efficient and would gain
marketshare.

3) A carbon tax would be largely invisible to most people. It would be
collected from oil refineries and power plants, primarily.

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bkjelden
My biggest reservation with oil/gas taxes is that consumption taxes tend to be
very regressive. Car ownership is already a tremendous burden for the poor in
the US that isn't present in other countries - in all but a handful of US
cities a car is pretty much required to hold down a job.

So while I like the idea of raising money for clean energy, I would be more
supportive of a policy where the burden isn't disproportionately shouldered by
the poor.

~~~
mc32
So tax consumption at the pump progressively. Your first 10 galls are taxed
normally, then progressively add more tax every whole gallon above that.

Poor people will buy in 10- gallon instances, less poor people won't bother
and will just fill it up.

Or tax on displacement at the DMV. Anything from this year on above 1.3 liters
gets taxed progressively more so that gas gas-sippers pay relatively little
and gas guzzlers pay lots more at the DMV (registration).

[edit] fixed word usage.

~~~
nradov
Displacement taxes are a terrible idea and lead to unintended consequences.
Displacement has only a weak correlation with carbon emissions. Which is
worse: a 1.3l engine driven 30000km per year or a 5.0l engine driven 3000km
per year? And if the manufacturer adds a turbocharger to the 1.3l engine the
real-world fuel consumption will rise significantly even though displacement
remains unchanged.

~~~
mc32
But people aren't trading trips. People have to go where they need to go. It's
better to have the person travelling 30000 year do it in a less polluting
vehicle over the person driving 3000.

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danieltillett
What is point of Obama at this point proposing anything unless it can be
implement by executive order. Congress won't pass anything he suggests.

~~~
Raphael
I would guess that Biden wrote this bill and wanted to propose it one last
time.

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dmfdmf
This isn't a tax on oil companies it is a tax on everyone.

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refurb
Exactly. The oil companies will just pass that tax right along.

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eggy
The price of the oil drums costs more than the price of oil per drum, although
they are reused. A tax on oil will certainly be passed on to the consumer. If
the end game is to discourage oil use, not to keep the planet clean, it still
will not work. Look at the high price of tobacco even in the face of the risk
to health issues. People will continue to use oil in the same quantities
unless the price goes up by an order of magnitude. The government wins both
ways: higher tax revenue, or they can claim they saved the planet.

~~~
jedrek
Except that smoking rates have dropped to one third of their 1965 levels. If
this tax gets those kinds of results, I think the pro alternative energy
community would be ecstatic

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JoeAltmaier
This'll go over like a lead ballon - now oil companies are not only feeling
pressure from clean energy; they're being asked to actually pay for it?

~~~
nostrademons
It's a "fuck you" to the oil industry, but the oil industry isn't exactly
filled with Obama supporters anyway, and besides, he's never seeking election
again.

It'd be pretty hard to get it through Congress, but it could potentially work,
given that both the tech & financial industries have made some pretty big
investments in renewable energy and their power is rising while the oil
industry's power is declining.

~~~
adventured
It would in fact be impossible to get through the Republican Congress
presently. Not an exaggeration, it will not happen under any scenario so long
as the Senate and House are both Republican held. This is nothing but a
political stunt on the part of Obama, he gets to say that the effort was made
and it appeals to the base.

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AndyMcConachie
Gas should be more expensive in the USA. Sounds like a good idea.

~~~
donatj
The price of gas is linked to the price of everything through shipping and
transport. The lower the price of gas, the stronger your buying power. There's
no upside to a high price of gasoline.

~~~
tptacek
Except for decreased usage of gasoline and thus a decrease in the
externalities of using gasoline.

~~~
sosuke
No one stopped buying gas at $4 a gallon but they did stop spending money
elsewhere to make up for it.

~~~
raldi
That's not true! I specifically remember reading, back when gas broke $4 a
gallon, that we had finally discovered the price at which drivers change their
habits. Below $4, rising prices just made them complain. But above that price,
we started seeing statistically-significant changes in demand.

~~~
sosuke
I think you're right there is a tipping point. I do feel that there is a flex
point where drivers change recreational driving but they will still need to
get to work and the grocery store. They won't go on fun trips though.

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ghouse
Can we just institute a revenue-neutral carbon tax ($15-35/ton) and let the
market figure out the solutions?

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zardo
Try running for office on that platform.

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gnarbarian
holy shit. that's a 30% tax at current prices.

We have recently seen 110/barrel so consumers could easily deal with it. But
given the elasticity of demand for something like oil, this will negatively
affect the oil glut recovery by slowing demand.

Speaking as an Alaskan where our entire economy is driven by oil, our
government is running a HUGE multi billion dollar defecit due to revenue
shortfalls stemming from oil prices. We would like to see increased demand for
oil to burn through the supply glut quickly to get prices back to at least $70
per barrel. Regardless of Obama's plan it's going to take years and years to
get back there if ever.

The real issue is our state government can't afford to operate without levying
any new taxes on the general population. The cost of living here is already
astronomically high, plus we've been in a recession since 2012, and a tax like
this is not going to help our situation at all.

give it a few years and alaska may look like a ghost town. The fact that I am
a programmer who works on federal stuff, my position is not really in jeopardy
but the majority of my friends are engineers who depend on oil and gas. Worst
case scenario I can take a remote job and probably get a raise for doing so.
Maybe then I'll be able to afford a house up here haha.

Bottom line is the USA now produces as much oil as Saudi Arabia (albeit with
more than double the operating costs). We are much larger than they are and
far more diversified, so as a nation we are able to withstand this sort of
thing but if you examine places like Texas, Alaska, North Dakota, Oklahoma etc
this oil price situation is going to financially destroy hundreds of thousands
of people and dramatically affect millions of us. Gas prices also are somewhat
less elastic when sliding left on the supply demand graph. so even though
prices are 1/4 what they were, we're only seeing gas prices at 1/2 the rate
they were. This means there is not as much of a benefit to consumers as you
would think from these prices.

Worth it? who knows. No matter what alaska is in a world of shit.

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thrownaway2424
30% is not a "holy shit" level of fuel tax. The federal fuel tax in 1993 was
18.4c per gallon (and remains at that level), while crude oil that year cost
as little as $13/barrel. That's a 57% tax. Of course the real value of the
federal fuel tax has monotonically declined through inflation, since it
remains at a nominal 18.4c/gallon.

In civilized countries the fuel tax is generally well over 100%. In
Switzerland for example the tax is .75/liter, or about 120CHF (~$120) per
barrel.

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DrScump
<The federal fuel tax in 1993 was 18.4c per gallon (and remains at that
level), while crude oil that year cost as little as $13/barrel. That's a 57%
tax.>

Your math eludes me. National average gasoline price for 1993 was $1.10,
yielding less than 17% tax.

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thrownaway2424
This article is using the price of crude oil as the denominator. In 1993 Brent
Crude Oil varied between $13 and $20 per barrel.

~~~
DrScump
But the fuel tax figure you quoted was for gasoline, not crude. You were
comparing apples to Orangesicles.

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randyrand
At what point is our ROI on clean energy negative?

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tommoor
I wonder if you could just place a tax on premium gas, the type that fancy
cars take - so that it minimises any potential affect on low-income
households.

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Sanddancer
That would be counterproductive. A lot of the more efficient engines require
premium too because they use the higher compression to get decent performance
out of a smaller package. So it would end up discouraging people to get more
environmentally friendly engines.

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douche
Yep. Let's implement possibly the most regressive tax possible on working-
class people. Because every penny of that tax is going to come out of our
pockets at the pump or at the grocery store.

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randyrand
Isn't that a flat tax? And definitely not regressive if you assume rich people
buy more gas.

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SeoxyS
I think it's regressive because people with less income spend a larger
proportion of their income on gas.

I disagree with him; for the record. Just trying to see his viewpoint.
Personally—I think this tax is a great idea. I think the government has two
jobs: (1) to build and maintain effective infrastructure for the common good
(roads, firefighters, etc.), and (2) to apply pressure to rectify forces where
the tragedy of the commons would otherwise apply (global warming, etc.). This
is an example of the latter.

