Oil Crisis Explained in 3 Minutes • Hacker News Board

Re: Oil Crisis Explained in 3 Minutes

#21

Post by ta75757 » Mon, Dec 22, 2014, 7:40 PM UTC

phil21 wrote: post #16

desdiv wrote: post #14

Earlier quoted context omitted.

Does anyone know why fuel taxes are calculated by volume instead of value ? That's the opposite of pretty much every other tax on goods in the country.

Because fuel taxes are supposed to be an approximation of how many miles you drive, aka how much wear and tear you put on the road infrastructure. You put the same wear and tear on the road at $1/gal vs. $4/gal. Trying to create budgets against a commodity that rapidly changes prices as much as gas/diesel does would be rather difficult. For example, in 2015 we'd be forecasting huge budget shortfalls for any planned r…

From what I've read ordinary passenger vehicles put just about no strain on modern roads. Only heavy vehicles like semis do.

Tax is tax, money is fungible.

Re: Oil Crisis Explained in 3 Minutes

#22

Post by superuser2 » Mon, Dec 22, 2014, 8:23 PM UTC

ta75757 wrote: post #21

phil21 wrote: post #16

Earlier quoted context omitted.

Because fuel taxes are supposed to be an approximation of how many miles you drive, aka how much wear and tear you put on the road infrastructure. You put the same wear and tear on the road at $1/gal vs. $4/gal. Trying to create budgets against a commodity that rapidly changes prices as much as gas/diesel does would be rather difficult. For example, in 2015 we'd be forecasting huge budget shortfalls for any planned r…

From what I've read ordinary passenger vehicles put just about no strain on modern roads. Only heavy vehicles like semis do. Tax is tax, money is fungible.

Even if this is true, the business owners' argument to Congress would be that the consumer will pay for it either way; businesses that depend on transportation would just raise prices to compensate.

Re: Oil Crisis Explained in 3 Minutes

#23

Post by tracker1 » Mon, Dec 22, 2014, 8:23 PM UTC

desdiv wrote: post #14

refurb wrote: post #8

Earlier quoted context omitted.

$100 to $60 is a 40% drop in the price of oil. The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2] So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff an…

Does anyone know why fuel taxes are calculated by volume instead of value ? That's the opposite of pretty much every other tax on goods in the country.

Depends on the commodity... cigarette taxes, for example, or other sin taxes...

Personally, I don't understand why we don't have more flexible tariffs in place to secure against this kind of influence.

Re: Oil Crisis Explained in 3 Minutes

#24

Post by tracker1 » Mon, Dec 22, 2014, 8:24 PM UTC

Why not just implement tariffs on foreign oil?

Re: Oil Crisis Explained in 3 Minutes

#25

Post by desdiv » Mon, Dec 22, 2014, 9:17 PM UTC

jaddison wrote: post #18

I'm admittedly naïve in this, but wouldn't it make financial sense to buy OPEC based oil stock in the coming few months? Based on whether this is true, of course - so... In theory naturally.

All the OPEC oil companies are state-owned. That's how the OPEC countries are able to control their production numbers.

Re: Oil Crisis Explained in 3 Minutes

#26

Post by _nullandnull_ » Mon, Dec 22, 2014, 9:34 PM UTC

Shucks, fracking is no longer profitable. I was really looking forward to more earth quakes and flammable tap water.

Re: Oil Crisis Explained in 3 Minutes

#27

Post by dawkins » Mon, Dec 22, 2014, 10:17 PM UTC

refurb wrote: post #8

fffrad wrote: post #5

Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.

$100 to $60 is a 40% drop in the price of oil. The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2] So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff an…

but when oil price goes up, even very little, gas price follows inmediately and proportionally. At least that is the impression I get here in Spain.

Re: Oil Crisis Explained in 3 Minutes

#28

Post by ta75757 » Mon, Dec 22, 2014, 10:36 PM UTC

superuser2 wrote: post #22

ta75757 wrote: post #21

Earlier quoted context omitted.

From what I've read ordinary passenger vehicles put just about no strain on modern roads. Only heavy vehicles like semis do. Tax is tax, money is fungible.

Even if this is true, the business owners' argument to Congress would be that the consumer will pay for it either way; businesses that depend on transportation would just raise prices to compensate.

I am not opposed to the tax, I simply think it's pointless to talk about what it's "for". That's what I meant to convey with the second line. It's a tax. If you don't pay this one, you'll pay another. And the government will spend the money where/how it sees fit.

Re: Oil Crisis Explained in 3 Minutes

#29

Post by refurb » Mon, Dec 22, 2014, 10:47 PM UTC

dawkins wrote: post #27

refurb wrote: post #8

Earlier quoted context omitted.

$100 to $60 is a 40% drop in the price of oil. The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2] So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff an…

but when oil price goes up, even very little, gas price follows inmediately and proportionally. At least that is the impression I get here in Spain.

Good article explaining the economics of gasoline prices...

http://www.salon.com/2014/12/12/like_low_gas_prices_so_does_...

Re: Oil Crisis Explained in 3 Minutes

#30

Post by civilian » Mon, Dec 22, 2014, 11:44 PM UTC

innguest wrote: post #12

Why does the author keep saying "If OPEC doesn't interfere"? Is the author in favor of price-fixing? I thought all sane human beings understand that a monopoly controlling the price of something is bad. That's why the author did not mention the reason that "OPEC doesn't interfere" is that the Saudis are waiting for this new price level to bankrupt the Shale enterprise in the US.

I also read an article talking about how the Saudi's wanted to ruin Iran. And another one about how they want to ruin Russia. I feel like any simple explanation like that is probably wrong.

They realize that OPEC doesn't have enough of a majority of the production to take true advantage of lowering prices. America isn't part of the cartel, so our shale companies would be making out with a lot of money, b/c they're not going to lower production.

http://www.economist.com/news/finance-and-economics/21635510...

However, yeah, it's definitely weird how some journalists are coming out in favor of cartels in this scenario. I assume it's from not having a well-rounded education.