Comments on: The Investment Cost Of Our Energy Price Roller Coaster http://wonkroom.thinkprogress.org/2009/06/25/energy-price-volatility/ Thu, 26 Nov 2009 16:42:01 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: lemuel pitkin http://wonkroom.thinkprogress.org/2009/06/25/energy-price-volatility/comment-page-1/#comment-154463 lemuel pitkin Thu, 25 Jun 2009 21:37:43 +0000 http://wonkroom.thinkprogress.org/?p=16609#comment-154463 <em>I’m still in favor of using the gas tax to smooth out the boom and bust cycle of prices</em> You need to think about the economics of this a bit more. Tax incidence depends on the relative elasticities of supply and demand. In the limit where supply is fixed, taxes do not affect prices to consumers at all, only the incomes of producers. Obviously the supply of gas is not perfectly fixed, but it is quite inelastic. This means most of the incidence is on producers, which in turn means that the main impact of your proposal would be to boost oil-company profits during periods of high prices. Not clear why that's a policy goal. I’m still in favor of using the gas tax to smooth out the boom and bust cycle of prices

You need to think about the economics of this a bit more. Tax incidence depends on the relative elasticities of supply and demand. In the limit where supply is fixed, taxes do not affect prices to consumers at all, only the incomes of producers. Obviously the supply of gas is not perfectly fixed, but it is quite inelastic. This means most of the incidence is on producers, which in turn means that the main impact of your proposal would be to boost oil-company profits during periods of high prices. Not clear why that’s a policy goal.

]]> By: ron http://wonkroom.thinkprogress.org/2009/06/25/energy-price-volatility/comment-page-1/#comment-154439 ron Thu, 25 Jun 2009 15:55:25 +0000 http://wonkroom.thinkprogress.org/?p=16609#comment-154439 You should be ashamed Pat, that you are so out of touch with reality. If you would just review the congressional hearings on the CFTC from last fall, you would see that manipulation of oil futures prices by Goldman-sachs and others is the root cause of the price swings. If you were a competent reporter, you would be asking why Obama doesn't order the CFTC (with its ex Goldman-Sachs head) to limit speculation in oil futures. But apparently that is above your pay grade. You should be ashamed Pat, that you are so out of touch with reality.
If you would just review the congressional hearings on the CFTC from last fall, you would see that manipulation of oil futures prices by Goldman-sachs and others is the root cause of the price swings.
If you were a competent reporter, you would be asking why Obama doesn’t order the CFTC (with its ex Goldman-Sachs head) to limit speculation in oil futures.
But apparently that is above your pay grade.

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