What would the effects of a "windfall profits" tax on oil companies be?

Question

What would the effects be on the compaines? Consumers? Gas prices, and supply? The investors in these companies?

How much revenue would it generate? And for what would the tax revenues be used?

I have not stated my thoughts on the issue. I'm just trying to get information. Thanks.

Answer 1

I would not even begin to guess what kinds of plans Obama or any political leader has in these things. One must be wary of proposals made in the heat of campaigning. Such proposals have a very poor track record when it comes to their actually being implemented, no matter which party is mouthing them.

But apart from that, I have no sympathy for corporate America, the land of golden parachutes and stolen pensions, and if the oil companies get penalized I really don't care. In fact I would welcome that. Of course they would pass the cost along to consumers... and then maybe the consumers would stop being so damned lazy and shortsighted and effectively boycott the industries in question.

One can dream. And my dream is of a corporate class that is chastised, and in some cases, fully indicted.

Answer 2

The gas companies would raise the price at the pump to offset the tax.  Now, the pro-profits tax crowd wants the revenue to be used for alternative fuel research, but I highly doubt 10% would even make it that far.

Answer 3

The effect would be multiple law suits against the government.  There is no such thing as a windfall profit.  Democrats are doing their usual, pandering to their ignorant voters, to buy votes.

Answer 4

Companies: Less investment and exploration

Consumers: Higher energy prices for most, with a few select groups receiving energy subsidies from the government.

Gas prices: Higher

Investors: Shares of oil companies would drop significantly. Politicians would suggest that this is OK, as only fat cat investors are profiting anyway. However, an analysis by Robert J. Shapiro, Bill Clinton's undersecretary of commerce for economic affairs, suggests that the middle class investors would be the hardest hit. He says: "The data show that ownership of industry shares is broadly middle class, with the majority of industry shares held by institutional investors, often on behalf of millions of Americans through mutual funds, pension funds and individual retirement accounts."

http://www.energytomorrow.org/media_cent...

Regarding revenue, the 70's windfall tax experiment would indicate that revenues will be FAR lower than expected.

Answer 5

If democrats make consumers pay more for gasoline, maybe they will use less, and drive down demand. Or, if sales go down and oil company revenues go down with sales, oil companies will just sell their oil to other countries who have a higher demand.

So really, it's not going to do much except cost consumers more. This is how democrats help the consumer, the little guy, by raising the price of something already expensive, to better ourselves. The money will go to museums where we can visit on foot, a museum about post modern travel in America, when people used to drive. They will use the taxes to build one in every major city.

Answer 6

I think it might generate some revenue for the gov. But for us it would mean even higher prices. Is there anyone who believes the companies wouldnt pass it on to the consumer?

Answer 7

The effect of any tax increases are never felt on the companies because taxes are considered an expense of doing business and as such the cost is passed on to the consumer.  What this means is this tax will also be passed on to the consumer.  That is you and me.  Gas prices will rise.  I don't know what this will do to the supply.  The only thing I think the democrats will do with the money is waste it on another give-away program.

Answer 8

1) The oil companies would have to raise the price at the pump to stay in business.

2) Once the "windfall profits" tax is applied to oil companies it will be applied to other U.S. companies that make a profit, like Microsoft.