Can gas prices be capped?

Discussion in 'Politics, Religion, Social Issues' started by MacNut, May 17, 2007.

  1. MacNut macrumors Core

    MacNut

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    #1
    Ok since everyone is complaining about the high prices and they keep climbing ($3.16 here today), is it possible for the government to set a limit on how high prices can go.
     
  2. EricNau Moderator emeritus

    EricNau

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  3. miloblithe macrumors 68020

    miloblithe

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    #3
    Lemme try and think... that would cause either gas shortages or a general tax to subsidize oil companies, which would transfer money effectively from the general population to people who consume the most gas.
     
  4. mactastic macrumors 68040

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  5. Desertrat macrumors newbie

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    #5
    If you cap gas prices during a time of increasing scarcity and rising prices in all facets of production, you reduce the incentive to supply gas. Those selling crude oil will sell to those who are willing to pay the price to folks like the Saudis or Chavez or Ahmedbanijad. Think China and India, as well as our European friends.

    Refineries aren't gonna sell at a loss; they just stop refining. Nor will retailers, but they'll likely shut a lot of doors.

    So, as Hawaii found out, when you put an artificial cap on prices, you run short of supply.

    What will be interesting is the cumulative effect of Venezuela's and Iran's contracts with the Chinese, and a US pullout from Iraq. It's easy to envision an escalation of violence there. So, $100 to $150 oil, and $6.00 gasoline. Remember, the North Slope is in decline, as is Mexico. Economics 101 never quits.

    'Rat
     
  6. solvs macrumors 603

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    #6
    It'd be better if they regulated the oil companies the way they used to with any utilities so they stop raking in record profits, but yeah, not going to happen.
     
  7. mactastic macrumors 68040

    mactastic

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    #7
    Or stopped handing out the corporate welfare to an industry so bloated with profits they are on the verge of bursting.
     
  8. Swarmlord macrumors 6502a

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    #8
    They're raking in record profits because we are buying record volumes of fuel. How many cents per gallon profit is ok with you? The government takes the biggest share of the cost of a gallon of gas by far. I'd like to see the government's profits cut first.
     
  9. pdham macrumors member

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    #9
    Actually the biggest share of a cost of gallon of gas goes towards the crude; then the refining; then the government taxes. Link below has a chart and explanation.
    http://www.npr.org/templates/story/story.php?storyId=5367096
     
  10. Swarmlord macrumors 6502a

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    #10
    I meant to say profit. The amount the government takes is pure profit. The other amounts are costs.
     
  11. miloblithe macrumors 68020

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    #11
    Well, if you consider that US foreign policy centers around securing supply of oil, the idea that it's pure profit is pretty debateable.

    Wait. No. It's not debateable at all. The government can't "profit" in the same way that a business can. Taxes don't work that way. Governments have always taxed certain things and spent money on other things. That's the way governments work. Comparing government tax revenue with corporate profit is pretty irrellevant.
     
  12. takao macrumors 68040

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    #12
    really ? how much does road construction and uphold cost per year ?

    it's not like those taxes move into manager pockets

    also last time i checked the US didn't make profits with taxes either ;)

    ontopic: they could but they won't since the oil companies would get into trouble
    actually refineries make most money if oil prices rise fast since the fuel they sell got made with oil bought a month ago and they normally increase the price of gasoline of course immediately, the iraq war made literally billions of additional money

    also why should a government impose a max. cap on fuel... that would be like a price cap for cigarettes: they want people to use/consume less of it not handing out money for those who consume the most
     
  13. IJ Reilly macrumors P6

    IJ Reilly

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    #13
    Trying to label gasoline taxes as government "profit" is quite completely bizarre. These taxes don't come anywhere close to paying for building and maintaining all the roads we drive on (let alone, any transportation alternatives). If the true costs of roads alone were internalized to gasoline taxes, the price of fuel would probably double.

    As for fuel price controls, it's been tried. Remember red flags and green flags?
     
  14. Swarmlord macrumors 6502a

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    #14
    Well, don't discount wheel taxes, registration fees, license fees either. I'm not saying that gas shouldn't be taxed or that the taxes shouldn't be used for roads. My original comment was to address the so called profits that the oil companies take in for fuel. Some of the complainers act like gasoline was priced like Coca Cola or something where the margin over the cost is outrageous.

    Gasoline is still one of the best bargains out there considering it's a diminishing resource.
     
  15. IJ Reilly macrumors P6

    IJ Reilly

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    #15
    Outrage is a relative thing. Refiner's margins have increased dramatically recently, which in large part accounts for the industry's skyrocketing profits. Retail fuel prices are higher now than they were when oil was $10/barrel more expensive. You do the math.

    Still, I am aware that Americans are being ripped off because they don't seem to mind. I can hardly blame the oil companies for raising prices for fuel when the public seems to be perfectly willing to pay whatever the oil companies care to charge.
     
  16. Swarmlord macrumors 6502a

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    #16
    And that's really the crux of it, isn't it? That's the same argument that I get from the car manufacturers that have responded to my emails. Basically, the public isn't screaming for efficient, diesel powered vehicles, so they make them for Europe and the rest of the world while we get Cobras and Hemis with a couple of token "gym bags with wheels" to placate the few that want gas economy.

    It seems like gas has been too cheap for common sense to take over for either the public or our representatives.
     
  17. IJ Reilly macrumors P6

    IJ Reilly

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    #17
    Possibly, but I note that all efforts to increase prices though methods such as a carbon tax have been beaten back. The main reason why Europeans drive more fuel-efficient cars is because fuel has long been taxed at a much higher rate there, and that these higher taxes are used to provide more in the way of transportation alternatives. If we'd been doing that for the last 20 years, we'd probably be in a much better place now.
     
  18. trebblekicked macrumors 6502a

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    #18
    the increase of price has not held with supply and demand; it's exceeded it. the reason? speculation and unrest. a lot of the world's big production zones are a sneeze away from going off line (hurricanes, sabotage, terrorist attack, war), so there's a $20 nervousness tax on a barrel of crude, and that price works it's way up the chain.

    capping prices won't make that go away. only peace and local security will, and that's not likely to come to nigeria, let alone iraq, anytime soon.

    here's a fun graph that indirectly shows the effect certain foreign policy choices had on gas prices.

    [​IMG]
     
  19. Swarmlord macrumors 6502a

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    #19
    Trebble, your chart shows what I pointed out every nicely. Gas in today's dollars hasn't even risen to the point it was in 1918, during the depression and during the Oil Embargo of the 70's. Given that it's a diminishing resource, increased in importance and an increasing world population drawing on it, I would expect that line to ramp up at a steep angle.

    It's still too much a bargain and despite the whining, people still find it too affordable to radically change their lives.
     
  20. leekohler macrumors G5

    leekohler

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    #20
    I just don't own a car. Works great. :)
     
  21. IJ Reilly macrumors P6

    IJ Reilly

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    #21
    This is at least a little deceiving. In 1918, and even during the Depression, the economy wasn't nearly as dependent on refined petroleum products as it later became. The experience of the 1970s proved how disruptive to the economy as a whole rapid changes in oil prices could be. And not just high prices -- but rapidly increasing prices. Besides, nobody is talking about "radical" changes in lifestyle. Big result could be had if more people decided to buy a mini-van instead of an SUV, drove less, and at 65 MPH instead of 80.
     
  22. mactastic macrumors 68040

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    #22
    "the so called profits"? WTF? Those are real, actual profits they are raking in, not some imaginary item as you seem to suggest here.
     
  23. Swarmlord macrumors 6502a

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    #23
    I think you misunderstand what I'm saying. Coke and other companies are praised for selling 12oz of soda that costs them $0.25 to make for $1. The actual profit to the oil company after cost of crude, refining, and distribution is what, 10, 20, or maybe 30 cents a gallon? Coke makes profits of 300% and the shareholders (and customers for that matter) applaud. If the oil companies did the same thing, there'd be riots.

    What's funny is that oil companies have shareholders that want maximum profits just like the shareholders of Coke. I want to share in the profits, so I own energy stocks. It offsets the cost of the small amount of gas that I actually purchase.
     
  24. IJ Reilly macrumors P6

    IJ Reilly

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    #24
    It's a little weird to be comparing a consumer food products company to a commodity manufacturer. The economics of these companies are completely different. Keep in mind also that oil companies do not make money just on the sale of fuel. They also own a lot of oil still in the ground, and they make a lot more pumping it out of the ground for $70/barrel than they do at $40/barrel. So it really makes no sense to talk about profit margins on a gallon of gasoline alone -- though those are going up quickly, too. These days, the oil companies are making it big at both ends.
     
  25. AHDuke99 macrumors 68020

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    #25
    can they be capped? i guess .. but i dont want any government intervention with all of that. look waht good it did in europe: they pay $5 + a liter.
     

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