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Originally Posted by Mavdog
the federal govenment is the steward of the public goods. it IS their job to ensure that the groups provided exclusive right to extract from those public properties pay a fair price for that right. if they are making an abnormal (some would say it's an obscene) profit from paying a ridiculously low amount for that right then it is reasonable to "tax the crap" out of them.
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Here is my issue as defining this as a government entitlement to the oil co. money. I'll describe the scenario as I understand and let you critique it so we have a common framework to talk from.
Oil companies pay for the right to explore for oil, build oil rigs, and pump crude.
Oil companies sell the oil on the NY Mercantile Exchange, as well as other outlets, including futures.
The price on the exchanges and driven by supply and demand, which includes external factors such as OPEC's decisions on how much oil to release to the market.
The difference between the cost that the oil companies are incurring to acquire the oil and the price the market is supporting for them to sell it is huge, resulting in massive profits.
Refineries are the major purchasers of the oil. They mark up the cost according to the cost of refinement.
Distributors purchase the refined oil, also adding their markup.
Retailers purchase the oil from the distributors adding a small markup.
Consumers purchase oil from retailers with state/federal taxes tacked onto the end price.
As I understand it, the govenment is wanting "their share" of the money generated during the sell of the crude oil by the oil company to the refineries.
My problem is this: the oil is now being taxed on yet another level keeping gasoline prices artificially high. The consumers are in fact paying for all of the taxes. (btw they always do). However, if we remove the taxes at the end of the chain, overall revenues could decrease depending on how much of the crude oil is purchased from overseas.
If the oil is going to taxed on the front end, then I would want that oil to be tracked and to not be taxed on the back end.