DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post

**Jeffery** · 01-23-2007, 07:17 PM

I don't know ??????

One of the problems is that we are discussing assumptions. We would need to know how much oil and gas prices would be effected to make a clear decision/argument. Unfortunately, the oil companies would sway info to their benefit.

I propose a simple idea, that whatever the true elasticity of demand is for oil/gas its something less then infinity. In other words if there is an increase in price there is some decrease in quantity demanded.

Because of this, not all increases in cost can be passed on to the consumer. I'll accept that the demand is inelastic even though it is not perfectly inelastic and the bulk of the cost may be passed on to the consumer. But as it is, through subsidizing the oil companies we ensure that all of the cost is passed on. Therefore simply looking at the scheme presented here, its bad for the taxpayer and good for the oil companies.

If the demand is in fact perfectly inelastic (everything could be passed on to the consumer/increases in price don't affect demand) then it wouldn't matter because there would be no impact on the habits of people by changing around whether they pay the tax for gas or with income tax.

01-23-2007, 07:17 PM	#36
Jeffery Join Date Oct 2005 Posts 432 Senior Member	I don't know ?????? One of the problems is that we are discussing assumptions. We would need to know how much oil and gas prices would be effected to make a clear decision/argument. Unfortunately, the oil companies would sway info to their benefit. I propose a simple idea, that whatever the true elasticity of demand is for oil/gas its something less then infinity. In other words if there is an increase in price there is some decrease in quantity demanded. Because of this, not all increases in cost can be passed on to the consumer. I'll accept that the demand is inelastic even though it is not perfectly inelastic and the bulk of the cost may be passed on to the consumer. But as it is, through subsidizing the oil companies we ensure that all of the cost is passed on. Therefore simply looking at the scheme presented here, its bad for the taxpayer and good for the oil companies. If the demand is in fact perfectly inelastic (everything could be passed on to the consumer/increases in price don't affect demand) then it wouldn't matter because there would be no impact on the habits of people by changing around whether they pay the tax for gas or with income tax.
	Quote