Who Killed the Electric Car?

[Peskanov]

The automotive enthusiast in me almost giggles at the thought of what could be accomplished with an electric motor at each wheel controlled by sophisticated software. Hey, you could drive with a joystick. I'm not even sure you would need the front wheels to turn anymore. I'm looking forward to what comes up next.

Theorically, a car like that could parallel park by itself :D
BTW; I didn't know that EV, what a beast. 250 Km of automy, 180 km/h, and curiously, the whole body of the car seems empty. Motors are in the wheels, and batteries hide under the car itself. Really neat!

[Skeptic Ginger]

Maybe a better environmental solution would be to reduce the number of cars, rather than replace some of them with electric cars?
Right, then I can drive my son to work, drive back and go to my appointments then go back later and pick him back up.

If we had decent mass transit here, maybe we could use a few less cars. But in this area mass transit sucks. It takes 90 minutes to go downtown to the Seattle Center from here on the bus and 15 minutes by car. We took the bus to the baseball game and the return buses filled up. I had to take my son, then in grade school, by myself to the worst part of town, alone at 1130 at night to get a different bus. We stepped over vomit and watched a guy chase a man, catch him in the street and kick him in the head several times before walking off. It was a lovely family night out. :rolleyes:

We still take the bus to the games but we always leave before the end to be sure to get a seat on the bus.

[Mechbob]

I just remembered a story my uncle told me about Greenland during WW2. They had to keep most of their trucks and plows outside in minus 40 degree temps, so, they never shut them off! During the winter at Western New York's airports battery and engine block heaters are enough to keep engines warm enough to start easily. Electric cars will have to use the same trick. But, I'm glad to see that, so far, there is little discussion of conspiracy stories concerning electric cars. While it could happen, the public perception is one of high expectation. With the potential profits to be made by whoever makes the first really cheap and effcient battery, the electric car will soon be in our driveways.
I am also a rail buff, so I know all about the sheanigans of General Motors and the trolley car lines in America. They put out of biz some of the best lines in the country, providing free buses and taxies as a way to promote their cars. GM has a long history of it's lawyers and accountants spending more time on the golf links then in R&D, and not listening to the wants of the public.
I'm betting on Honda and Toyota becoming the big winners.

[Mechbob]

Putting a motor on each wheel is not a good idea. It increases the amount of sprung weight on each axle, which increases the need for heavier suspension. Having the motor(s) inboard encased in a transaxle unit is better, (think porshe and ferrari) leaving more room for bigger brakes. The inboard system is used by Eaton on the new UPS hybrid trucks, with my fav idea: reactive brakes! Rochester NY uses buses with reactive brakes and so far they work fine and save fuel and maintenance costs.
The European idea of mini cars works over there, but most Americans see them as coffins with wheels.
I stand corrected about the Avanti, Studabaker did produce the first, (in Arizona I think) but then when out of buisness. When Rambler and Nash merged I thought they took over Studibaker and continued production of only the Avanti and sold off everything else. According to a book I have, (Glamour Cars) The Avanti name continued as a private company and did not sell out. The book on "glamor" cars was printed in 1969 so I have no idea what really happened after that. (I gotta pay more attention to the copyright dates of my sources!)
,
Tha batteries on the Ford electric Ranger were installed using a transmission floor jack with special adapters. The batteries were in Packs of 6 or 8 and weighed several hundred pounds each. They were installed from underneath the truck. Two, large emergency batteries were more easily replaced.

[Jaggy Bunnet]

Right, then I can drive my son to work, drive back and go to my appointments then go back later and pick him back up.

If we had decent mass transit here, maybe we could use a few less cars. But in this area mass transit sucks. It takes 90 minutes to go downtown to the Seattle Center from here on the bus and 15 minutes by car. We took the bus to the baseball game and the return buses filled up. I had to take my son, then in grade school, by myself to the worst part of town, alone at 1130 at night to get a different bus. We stepped over vomit and watched a guy chase a man, catch him in the street and kick him in the head several times before walking off. It was a lovely family night out. :rolleyes:

We still take the bus to the games but we always leave before the end to be sure to get a seat on the bus.

Never said it was a simple matter or that it would not involve some degree of sacrifice (like living nearer to where you work, rather than in a bigger house out of town or spending longer travelling). The vast majority of people who I know that drive to work do not use it at all during the day - clearly if you need it to do your job that is a different matter.

Also, do you not think it is a self perpetuating problem? People have to drive cars because public transport is not good enough, so there is no demand for more public transport because people have cars?

Part of the problem is also that people want access to a car for journeys that are difficult to do on public transport (moving large amounts of stuff or going to somewhere outside the city where public transport is unlikely to ever offer a practical alternative). If they decide they need to own a car for those reasons, then it is virtually impossible to persuade them to use public transport for other journeys as the marginal cost of doing so will be higher than taking their car.

One solution used in a few cities in the UK is this:

http://www.citycarclub.co.uk/about.htm

A car available when you need it, but as it is pay by usage there is an incentive to use public transport when that makes sense.

Edited to add:

And of course the fact that they have reserved parking spaces, means they will spend a reasonable amount of time parked in the same spot, suggesting that at least part of the fleet could consist of electric cars with recharging facilities provided at each parking space. I suspect that most of the hires are for relatively short periods.

[jimlintott]

Putting a motor on each wheel is not a good idea. It increases the amount of sprung weight on each axle, which increases the need for heavier suspension. Having the motor(s) inboard encased in a transaxle unit is better, (think porshe and ferrari) leaving more room for bigger brakes. The inboard system is used by Eaton on the new UPS hybrid trucks, with my fav idea: reactive brakes! Rochester NY uses buses with reactive brakes and so far they work fine and save fuel and maintenance costs.

Agree and disagree. You're right about the sprung weight issue which is why I would say use four motors attached to the chassis driving the wheels via half shafts. I disagree with using a transaxle because now we got an old nasty mechanical differential involved again. With a software differential you could go from a regular diff to a limited slip to even a solid axle at the touch of a button.

Also the sprung weight issue is really a high performance issue. For everyday, low speed, city commuter cars it likely wouldn't matter much. My econo box has a live rear axle which isn't exactly high performance but works just fine.

[jimlintott]

Just a quick note that Mechbob confused me (I'm sure it wasn't on purpose). The weight on the wheels is unsprung weight. The chassis is the sprung weight. Doesn't change the points made. It is easy to mix them up if you don't stop and think a bit.

Sprung weight - the chassis and everything attached to it, like the body.

Unsprung weight - many of the suspension components like wheels and brakes.

[Peskanov]

To be fair, every IC engine regardless of fuel type requires high compression for high efficiency. Once low-sulphur diesel fuel is widely available here in the US, I would not be at all surprised to see a plug-in hybrid using a small, completely automated diesel for charging the battery. A small diesel designed to turn at essentially one particular rpm near its torque peak or shut off entirely could be pretty efficient. Currently, I believe they're actually more efficient than fuel cells. With lots of battery and a small engine, an engine block and catalytic converter pre-heater wouldn't be out of the question. There'll be a pretty good sized electrical motor to use to start it.

Like these ones:

http://www.powertechengines.com/Lombardini.htm

Lombardini is a company interested in mountingn their low powerhorse diesel engines into "serial hybrids".

The problem, I think, is that right now there is not much interest into weak urban cars. Hybrid car producers seems more interested in showing that the techonology can compete with normal ICEs in speed and hps, therefore most of the interest go to parallel hybrids with big motors.

[Mechbob]

Oops, I did reverse sprung weight with unsprung weight. As to transaxles, they can be designed as part of the chassis or bolted to it, so that only the wheels and brakes are suspended. I like transaxles, and have never thought of them as troublesome. I like the idea behind Mercedes's new multi-speed transmission with it's software encoding. I haven't heard of any problems, yet I haven't heard any raves about it either.

[Skeptic Ginger]

Never said it was a simple matter or that it would not involve some degree of sacrifice (like living nearer to where you work, rather than in a bigger house out of town or spending longer travelling). The vast majority of people who I know that drive to work do not use it at all during the day - clearly if you need it to do your job that is a different matter.

Also, do you not think it is a self perpetuating problem? People have to drive cars because public transport is not good enough, so there is no demand for more public transport because people have cars?
....You are confusing a few things here. An idle car parked while one works is a burden to the traffic getting to and fro and needs parking space. The car you drove to work that is idle during the day is not using fuel which is what we are talking about.

As to sacrifice and smaller house closer in, those are only flexible in certain situations. My job involves going to many different work sites and there is no alternative. The location of my home is actually quite ideal for my work since I only live 3 miles from downtown (Bellevue, not Seattle) and when I go out, traffic is pouring in, when I return, traffic is pouring out of Bellevue.

But my point isn't what my personal situation is. My point is there is no simple, one size fits all solution to fuel alternatives. Everyone can't live close in here since we have geography that is a problem in the way of lakes and mountains. There is only so much room for people in downtown Seattle. Seattle is mainly a port city and is where it is due to Puget Sound geography. The city is bordered by lakes and mountains so the urban spread is funneled in certain directions.

And with two income families, everyone in one household is not always going to have jobs in the same location.

As far as more transit users increasing transit service, I don't know. I think a few better planners and management might make for a good start. I think they have a crappy mass transit system here regardless of ridership.

[TjW]

Like these ones:

http://www.powertechengines.com/Lombardini.htm

Lombardini is a company interested in mountingn their low powerhorse diesel engines into "serial hybrids".

The problem, I think, is that right now there is not much interest into weak urban cars. Hybrid car producers seems more interested in showing that the techonology can compete with normal ICEs in speed and hps, therefore most of the interest go to parallel hybrids with big motors.

Those are probably in the appropriate power range. The diesel I was envisioning would be smaller displacement, turning higher rpm, and would probably be turbocharged, to get the effective compression ratio even higher, and of course extract power from the exhaust heat.

[Soapy Sam]

I want to know what happened to Flying cars.

I fully expected to have one before I was forty .
(And crash it three minutes later).

[ZirconBlue]

I want to know what happened to Flying cars.

I fully expected to have one before I was forty .
(And crash it three minutes later).

Flying cars, like personal jetpacks, were perfected many years ago, but The Big Three automakers are keeping them from the public.;)

[Jaggy Bunnet]

My point is there is no simple, one size fits all solution to fuel alternatives. Everyone can't live close in here since we have geography that is a problem in the way of lakes and mountains. There is only so much room for people in downtown Seattle. Seattle is mainly a port city and is where it is due to Puget Sound geography. The city is bordered by lakes and mountains so the urban spread is funneled in certain directions.

And with two income families, everyone in one household is not always going to have jobs in the same location.

And my point is that to have a genuine impact on the environment we need to be looking at far more radical changes than choosing an electric car instead of an ICE one for the second car in each household.

[Skeptic Ginger]

And my point is that to have a genuine impact on the environment we need to be looking at far more radical changes than choosing an electric car instead of an ICE one for the second car in each household.I'm all for big solutions, but a lot of little ones can add up as well.

It's important for people thinking of solutions to consider all the aspects. Implementing the solutions is as important as developing them. You can more easily increase auto efficiency and develop alternative fuels than you can get people to make major lifestyle changes.

In a sense, the Middle East crisis may be doing us one favor (not that there isn't a better way than a war to fix the energy crisis). The higher the gas prices the more attractive alternative fuels become. It's better those prices go up before we run out of oil rather than when we run out.

But we also need to collect a windfall tax from the oil companies. The money needs to be put into R&D. If the oil companies invest in fuel efficiency and/or alternative sources of energy, they can deduct that from the windfall tax.

[Jaggy Bunnet]

But we also need to collect a windfall tax from the oil companies. The money needs to be put into R&D. If the oil companies invest in fuel efficiency and/or alternative sources of energy, they can deduct that from the windfall tax.

Why should those who didn't take the risk of investing in oil company shares decide they are entitled to the benefits that belong to those who did take that risk?

Would the same principle apply to compensate investors who lose money because the company they invest in loses money due to changed economic conditions?

[Skeptic Ginger]

Why should those who didn't take the risk of investing in oil company shares decide they are entitled to the benefits that belong to those who did take that risk?

Would the same principle apply to compensate investors who lose money because the company they invest in loses money due to changed economic conditions?As even Bill Gates' father believes when he debated on the side of keeping the inheritance tax, people become billionaires because they start in a great country and environment in the first place. So when you make your billions, you do indeed owe some back to the society that enabled you to be a success in the first place.

People are sacrificing their lives in Iraq just so Exxon and Shell can make money selling gas. Some taxes are indeed reasonable including a tax to make us less dependent on oil and less likely to keep fighting wars for oil.

Also, the current corporate structure does not include the true costs of goods in the apparent manufacturing costs. For example, that gas you paid for didn't include the cost of global warming or cost of the war to keep oil supplies available or the cost of the pollution going into the air at the refinery or the cost of the fire protection service at the refinery or the cost of disposing of all the refinery byproducts and so on.

In other words, disposal costs, pollution costs, and the costs of international relations when resources are purchased from foreign countries by companies like oil companies are not included in the cost of the gasoline. Who else should pay those costs? Consumers and corporations alike pay those costs through taxes mostly. It took more than the investment in the refinery, oil wells, and shipping to get that gas to your car. We all invested to a certain extent, some more than others. I would love to charge the oil companies for the cost of the Iraq war.

The other issue here is utilities. We have to eat, drink, have electricity, transportation, sewer, garbage and so on. There are times when the free market has to be regulated somewhat. Otherwise corporations could charge so much for products we have to have that all the wealth would shift into a few hands. Supply and demand and a free market work most of the time. But not all the time. You can't price fuel so high that the poor can't heat their homes or get to work while you rake in record profits. Many a revolution have been the result of such economic systems.

[The Don]

As even Bill Gates' father believes when he debated on the side of keeping the inheritance tax, people become billionaires because they start in a great country and environment in the first place. So when you make your billions, you do indeed owe some back to the society that enabled you to be a success in the first place.
People also become billionaires because they are despots in African countries, because they stumble across incredible mineral wealth or because they are quite willing to exploit people by selling drugs.
People are sacrificing their lives in Iraq just so Exxon and Shell can make money selling gas. Some taxes are indeed reasonable including a tax to make us less dependent on oil and less likely to keep fighting wars for oil.
No, they are sacrificing their lives to (in a misguided attempt to) promote democracy in the middle east. To imply that Exxon and Shell are responsible in any way is difficult ot support in fact.

The problem about imposing taxes to effect social engineering change is that the results are difficult to predict. In an effort to promote energy efficiency, the Italian government imposed swingeing taxes on all cars with an engine larger than 2 litres.

The result was highly inefficient 1999cc engines tuned to within an inch of their lives.

If we put a tax in place to subsidise alternative energy, all that will happen is that alternatives will become even less affordable in real terms as people exploit the tax loophole to make more money. The first in line will be the oil companies who will see an opportunity to make even more money.
Also, the current corporate structure does not include the true costs of goods in the apparent manufacturing costs. For example, that gas you paid for didn't include the cost of global warming or cost of the war to keep oil supplies available or the cost of the pollution going into the air at the refinery or the cost of the fire protection service at the refinery or the cost of disposing of all the refinery byproducts and so on.
They are either current or future costs. Current costs are generated from taxes. All corporations are affected directly (by paying) or indirectly (lack of sales because consumers are paying) by taxes.

Future costs will be covered by future taxes
In other words, disposal costs, pollution costs, and the costs of international relations when resources are purchased from foreign countries by companies like oil companies are not included in the cost of the gasoline. Who else should pay those costs? Consumers and corporations alike pay those costs through taxes mostly. It took more than the investment in the refinery, oil wells, and shipping to get that gas to your car. We all invested to a certain extent, some more than others. I would love to charge the oil companies for the cost of the Iraq war.
They are already paying for it. Also, they didn't ask for it.

And guess what, all that would happen if they werd going to receive a windfall tax is that they'd "lose" their profits, it's surprisingly easy.
The other issue here is utilities. We have to eat, drink, have electricity, transportation, sewer, garbage and so on. There are times when the free market has to be regulated somewhat. Otherwise corporations could charge so much for products we have to have that all the wealth would shift into a few hands. Supply and demand and a free market work most of the time. But not all the time. You can't price fuel so high that the poor can't heat their homes or get to work while you rake in record profits. Many a revolution have been the result of such economic systems.

[Ripley Twenty-Nine]

*Drool*

Check this (http://gizmodo.com/gadgets/gadgets/tesla-roadster-electric-060-in-four-seconds-188565.php) out. The 'Tesla' prototype electric car.

From Gizmodo
0-60 in four seconds with a top speed of 130mph. Singing the body electric is a 182-kilowatt AC-induction motor, a rear-mounted power plant powered by 6800 lithium ion batteries. Even though that engine's barely audible, it's capable of rotating at an astonishing 13,500rpm before it even gets close to the redline.
Even though it's packed with lots of off-the-shelf components, we're hearing the vehicle might cost in the neighborhood of $100K. It takes 3.5 hours to charge up those thousands of batteries, and on a full charge it can keep on going and going, quick like a bunny, for 250 miles.

Emphasis mine.
:eek:

[rdaneel]

Wired (http://www.wired.com/news/wiredmag/0,71414-0.html?tw=wn_index_1) just put an article up on that, and here's (http://www.teslamotors.com/index.html) the website for it.

If you look in the comments section, someone posted a link (http://www.venturi.fr/us/index.php3)to another nice looking electric roadster.

[Skeptic Ginger]

People also become billionaires because they are despots in African countries, because they stumble across incredible mineral wealth or because they are quite willing to exploit people by selling drugs.So stolen resources absolves you from any payback? They may never pay any back but it isn't because they don't owe it. So corrupt people steal resources from other people. How does that make a rich American not responsible to pay some back in this country?

No, they are sacrificing their lives to (in a misguided attempt to) promote democracy in the middle east. To imply that Exxon and Shell are responsible in any way is difficult ot support in fact.Right, Don...go on thinking that, you'll sleep better. It's a mere coincidence Cheney and Bush are from oil company families and planned the Iraq invasion as soon as they took office. (Try Bob Woodward's 2 books, Richard Clarke's book, the Downing St memo, just to cite a fraction of the evidence. I'm not going to rehash it here but feel free to bump and link any thread of your choice where the discussion about the Iraq war motives has been explored.)

The problem about imposing taxes to effect social engineering change is that the results are difficult to predict. In an effort to promote energy efficiency, the Italian government imposed swingeing taxes on all cars with an engine larger than 2 litres.

The result was highly inefficient 1999cc engines tuned to within an inch of their lives.

If we put a tax in place to subsidise alternative energy, all that will happen is that alternatives will become even less affordable in real terms as people exploit the tax loophole to make more money. The first in line will be the oil companies who will see an opportunity to make even more money.We were talking about imposing a windfall profits tax to subsidize R&D in alternative energy sources, not "social engineering". If the oil companies wanted to invest in the R&D themselves, it would be tax deductible.

You've stretched your reply quite out of context with my post.

They are either current or future costs. Current costs are generated from taxes. All corporations are affected directly (by paying) or indirectly (lack of sales because consumers are paying) by taxes.

Future costs will be covered by future taxes

They are already paying for it. Also, they didn't ask for it.

And guess what, all that would happen if they werd going to receive a windfall tax is that they'd "lose" their profits, it's surprisingly easy.And guess what? The oil company profits are currently quite obscene. If you let people charge as much as the market will bear for certain commodities that people have to have for survival such as gas, when there is a shortage of those commodities where are the brakes on the costs? We know from history greed in humans can be immense. Are you suggesting oil companies should be unrestricted in pricing their products regardless of the effect on the rest of us?

[Peskanov]

Today Tesla Motors presented their sports EV; an state-of-the-art EV using Li-Ion batteries. A really impressive machine:

http://www.teslamotors.com/

I saw no comments about how many years the battery last...

[rockoon]

How does that make a rich American not responsible to pay some back in this country?

I believe you would be the one who has to show why a rich american SHOULD "pay some back" to the country.

..and before you go on about how the system made his wealth possible and that somehow, magically, that is why he or she should ... I'd like to point out that that would be pure opinion.


It's a mere coincidence Cheney and Bush are from oil company families and planned the Iraq invasion as soon as they took office. [SNIP]


Remember that Clinton ordered the bombing of Iraq, repeatedly. That Kept the country nice and soft and easy to take over.

Was Clinton also in the back pocket of the big oil conspiracy, or perhaps maybe that was just a coincidence as well?


We were talking about imposing a windfall profits tax to subsidize R&D in alternative energy sources, not "social engineering".


I'm lost here.. whats the key that keeps this from being social engineering? It sure as hell look like social engineering to me. Infact its got all the necessary pieces.


If the oil companies wanted to invest in the R&D themselves, it would be tax deductible.


If its tax deductable, then the american public will pay.

Why not cut out the middle-man?


And guess what? The oil company profits are currently quite obscene.
If you let people charge as much as the market will bear for certain commodities that people have to have for survival such as gas, when there is a shortage of those commodities where are the brakes on the costs?


You begin with an opinion, then make up a fact, and end with a theoretical question.

Think about it.


We know from history greed in humans can be immense.


We also know from history that selflessness in humans can also be immense.

You used your "fact" as a prefix to your next question, even though it has no bearing on it:


Are you suggesting oil companies should be unrestricted in pricing their products regardless of the effect on the rest of us?

Are you suggesting that the oil companies should be restricted in pricing their products, regardless of the effects that that may have on the rest of us?


I am reminded of a certain American State that tried to fix prices on energy and what a big mess that turned out to be. The govenor was eventualy booted out of office by the people and they elected a popular media figure as a replacement.


So to put this all in a nut-shell..

A) You hate rich people
B) You hate Bush even more so
C) You want to impose a "windfall tax" on oil companies
D) You want to force the American public to pay for research into an unspecified "alternative energy"
E) you want to fix the price of oil while imposing those taxes

And all of this.. without a clear goal..

[Jaggy Bunnet]

And guess what? The oil company profits are currently quite obscene. If you let people charge as much as the market will bear for certain commodities that people have to have for survival such as gas, when there is a shortage of those commodities where are the brakes on the costs? We know from history greed in humans can be immense. Are you suggesting oil companies should be unrestricted in pricing their products regardless of the effect on the rest of us?

Are you talking about pricing restrictions or a windfall tax? A windfall tax would do nothing to reduce prices.

If you are talking about pricing restrictions, how are these going to encourage people to develop alternative energy sources or alternative transport solutions? If the gas price is kept low due to government intervention, how does that help manufacturers of electric cars which become relatively more expensive?

[Old man]

As even Bill Gates' father believes ...


What The Don, rockoon and Jaggy Bunnet said.

[Ziggurat]

Check this (http://gizmodo.com/gadgets/gadgets/tesla-roadster-electric-060-in-four-seconds-188565.php) out. The 'Tesla' prototype electric car.


A few points to note: Li-ion batteries are expensive, as evidenced by the sticker price of almost $100,000. They've been around long enough that there's no reason to think this price can come down much within the next decade. Second, sports cars have inherently large engine (and battery) to passenger/luggage volumes and weight ratios. As you go to larger vehicles (even to a sedan), the quoted range will drop. In fact, the quoted range is likely unrealistic - turn on the AC and you could cut it in half, as happened with the EV1. And the charging time may also be inaccurate: the EV1 had a two-hour charge time with high enough power charging stations, but an eight hour charging time with the chargers that could be installed on residential power grids for the actual customers. And lastly, don't try this car in cold climates. Li-ion batteries become essentially inoperable, as an earlier post on this thread detailed. This is a really cool toy, but that's all it is: a toy.

[Ripley Twenty-Nine]

A few points to note: Li-ion batteries are expensive, as evidenced by the sticker price of almost $100,000. They've been around long enough that there's no reason to think this price can come down much within the next decade. Second, sports cars have inherently large engine (and battery) to passenger/luggage volumes and weight ratios. As you go to larger vehicles (even to a sedan), the quoted range will drop. In fact, the quoted range is likely unrealistic - turn on the AC and you could cut it in half, as happened with the EV1. And the charging time may also be inaccurate: the EV1 had a two-hour charge time with high enough power charging stations, but an eight hour charging time with the chargers that could be installed on residential power grids for the actual customers. And lastly, don't try this car in cold climates. Li-ion batteries become essentially inoperable, as an earlier post on this thread detailed. This is a really cool toy, but that's all it is: a toy.
No doubt. This certainly isn't the 'ICE killer' by any stretch of the imagination, but it definately has the cool factor.

[TjW]

This is a really cool toy, but that's all it is: a toy.

Well, no, Zig. When it comes to spending $100,000, it's no longer a toy, it's a hobby.

Also, I'd like to point out that for only a little more than this, you could buy an Antares electric airplane, for which the production line is actually running, and from which people have taken delivery of actual flying aircraft.

[Skeptic Ginger]

Are you talking about pricing restrictions or a windfall tax? A windfall tax would do nothing to reduce prices.

If you are talking about pricing restrictions, how are these going to encourage people to develop alternative energy sources or alternative transport solutions? If the gas price is kept low due to government intervention, how does that help manufacturers of electric cars which become relatively more expensive?If the prices stay high, alternative energy becomes more cost effective and the market will respond. So my preference is windfall tax.

Bush hasn't shown any propensity for a price freeze anyway.

One way or the other, without some intervention you get profit gluttony. I see no benefit to the energy market for massive oil company profits. If the prices soar and the profits don't go into alternative energy sources, you get the increasingly unbalanced richer rich/poorer poor equation.

I am a strong believer in capitalism. I've said it many times but knee jerk responses to regulating the marketplace seem to assume it's either all or none, capitalism or socialism.

If you or anyone in this thread are for the Libertarian position of let the market take care of everything, the government only messes things up, then I ask again, what stops the people with all the economic power from making that power absolute? What stops the Enrons from shutting down power stations to increase energy prices? What stops the greed from pricing the poor out of heat and transportation? Certainly human decency in the corporate boardroom isn't enough.

As far as how does it apply to the electric car, sometimes the government does have to intervene in the marketplace. If that means subsidizing alternative fuel sources until they are economically viable, why not? What do you think building highways does to subsidize gasoline? In Europe they built more railroad tracks.

But the thread wasn't on subsidizing electric cars, it was on manipulating the market for electric cars vs responding to the market.

-

[Skeptic Ginger]

What The Don, rockoon and Jaggy Bunnet said.
What I said. :D

[ponderingturtle]

I was wondering, would an electric car be even more planned obsolecense than internal combustion ones? It seems likely to me. HOw often are people going to want to put say $5000 on a 10 year old car for new batteries?

I know I purchased my car hopeing to get at least 10 years out of it.

It seems like batteries dieing would effectively total EV's most of the time and sooner than modern ICE vehicals

[Ziggurat]

If you or anyone in this thread are for the Libertarian position of let the market take care of everything, the government only messes things up, then I ask again, what stops the people with all the economic power from making that power absolute? What stops the Enrons from shutting down power stations to increase energy prices? What stops the greed from pricing the poor out of heat and transportation? Certainly human decency in the corporate boardroom isn't enough.

Electricity markets are NOT normal markets. They are very bizarre. And one of the main reasons they are bizarre is that electric power cannot really be stockpiled, but most other products (including oil and gas) can be. If the price on oil fluctuates significantly, then one can make money off of stockpiling oil with reserves. This does in fact happen. Not only do such stockpiles themselves dampen out these fluctuations, but because they will become more prevalent as fluctuations increase, the incentive to try to artificially force such fluctuations is dramatically reduced. It's very hard to make money off of it. Electricity, however, doesn't work that way. It cannot be stockpiled, it MUST be created on demand. That gives producers leverage that simply doesn't exist in ordinary markets. Couple that to government regulations which make market entry (ie, building a new power plant) in California prohibitive, and you get a situation ripe for abuse. And while I agree that government regulation can (if done well) help prevent such abuse, the idea that markets IN GENERAL are subject to such abuse doesn't actually have any basis.

As far as how does it apply to the electric car, sometimes the government does have to intervene in the marketplace. If that means subsidizing alternative fuel sources until they are economically viable, why not?

How long will that take? Nobody really knows. Are we even subsidizing the right alternatives? Nobody really knows, except in the case of alternatives that AREN'T viable. Government subsidies aren't free - they cost everyone. Is the benefit high enough to justify the benefit? Nobody really knows. Is it possible to subsidize such alternatives more than we should? Of course it is.

I'm all in favor of government grants for research. Government subsidies, however, tend to be just pork to buy the votes of certain constituents by transferring taxpayer wealth into the hands of a few. I would have thought you'd be against that sort of thing.

[Peskanov]

The Tesla roadster is toy (or a hobby, ok) but all sport cars are. The interesting thing about those products is the research and knowledge gained, for both the techonology and the real world implementation. For example, both the Tesla and the TZero use advanced battery management using microcontrollers, a technique which is fastly becoming an standard.
Alos, the way Tesla motors handles security concerns about Li-Ion batteries is something other companies will investigate, for sure.

Li-Ion batteries are expensive, but different sources say there is no technical reason for that. A reduced market imposes that price, but mass produced Li-Ion batteries could be cheaper, up to 1/10 of current cost.
And the technology still shows a lot of room for improvement; recent experiments reached 1000 Whr/Kg and something similar for NiMH.
So why criticise a techonological achievement like this one? It's a very positive happening.

About cold weather; the Tesla uses a similar system to ICE engines; direct from Tesla motors FAQ:

Will the Tesla Roadster work on a cold day?

Yes, the Energy Storage System (ESS) has a heater that will keep the batteries warm in a cold climate.

[Peskanov]

I was wondering, would an electric car be even more planned obsolecense than internal combustion ones? It seems likely to me. HOw often are people going to want to put say $5000 on a 10 year old car for new batteries?

I know I purchased my car hopeing to get at least 10 years out of it.

It seems like batteries dieing would effectively total EV's most of the time and sooner than modern ICE vehicals

In any EV, batteries must be replaced quite often (at least that's the case with most types of batteries). However, the rest of the electric system can be very reliable. AC electric motors are known for his efficiency and reliability, and have very long lifes. Also, EVs internals are quite simple compared with ICEs and engines.

The problem is the price of batteries; replacing lead-acid batteries is more-or-less ok, but NiMH or Li-Ion are still very expensive. Anyway, EVs will not be popular until those battery technologies mature become cheaper.

[ponderingturtle]

In any EV, batteries must be replaced quite often (at least that's the case with most types of batteries). However, the rest of the electric system can be very reliable. AC electric motors are known for his efficiency and reliability, and have very long lifes. Also, EVs internals are quite simple compared with ICEs and engines.

The problem is the price of batteries; replacing lead-acid batteries is more-or-less ok, but NiMH or Li-Ion are still very expensive. Anyway, EVs will not be popular until those battery technologies mature become cheaper.

Will that reduce depretiation enough though? It is not that you couldn't spend that much, but how much should the car be worth to put say $5000 into it?

I wouldn't put that much into a 10 year old car. Sure the motor and such might be OK, but if I have say 150,000 miles on a car, it is going to have wear on the interior as well as alot of the rest of the car. It has been parked outside for 10 years and so on.

With all of that, I just don't think for a comunter car costing say $20,000 with no heat and air conditioner, well it just does not seem very practical.

I also think that it would be unlikely that any likely EV would fit me, but that is not a common problem. I don't know of to many other people who try on cars to see if they fit, and have most not fit. They really don't make to many cars for tall stocky men with short legs, and it doesn't really matter how big the car is.

[Skeptic Ginger]

I believe you would be the one who has to show why a rich american SHOULD "pay some back" to the country.I did. And we do tax people in this country. That's how it works. So you are only arguing about how much and who, not if.

.and before you go on about how the system made his wealth possible and that somehow, magically, that is why he or she should ... I'd like to point out that that would be pure opinion.As is the opinion nothing is owed back. Again, it isn't 'if something is owed' it's who and how much.

[Re Bush and Cheney's ties to big oil] Remember that Clinton ordered the bombing of Iraq, repeatedly. That Kept the country nice and soft and easy to take over.

Was Clinton also in the back pocket of the big oil conspiracy, or perhaps maybe that was just a coincidence as well?Oh, like that compares in the least to the actions of this administration.

You are again trying to make this an all or none argument. Everyone in the Congress and the President are there with the assistance of big corporate donations. And there is payback for those donations. And there is a revolving door from corporate boardrooms to political appointments and back. And in an ideal world that wouldn't be so. But since we live in the real world and not the ideal world, it is so.

However, there are times when people in power cross the line and get so far into the corporate pocket it puts our system itself at risk. One doesn't have to be a socialist, or against capitalism to recognize when things are over the line. But that discussion belongs in another thread. Link to one of the many threads already covering this topic and I'll discuss that with you there.

I'm lost here.. whats the key that keeps this from being social engineering? It sure as hell look like social engineering to me. Infact its got all the necessary pieces.All or none, all or none......

This discussion is about a windfall oil profits tax, not outlawing gay marriage, passing laws to keep a brain dead woman alive with tube feeding and mandating abstinence only education in public schools.

There is all sorts of social engineering in this country. The question is how much and when.

If its tax deductable, then the american public will pay.

Why not cut out the middle-man?You aren't following the discussion here. Windfall tax -> pays for alternative energy research and development.

Oil company invests in alternative energy R&D -> deducted from windfall tax.

You begin with an opinion, [that oil company profits are obscene] then make up a fact, [If you let people charge as much as the market will bear for certain commodities that people have to have for survival such as gas....] and end with a theoretical question [when there is a shortage of those commodities where are the brakes on the costs?].Which you can't seem to answer.

You want me to justify current oil company profits are obscene? Even Congress thought so when they called the oil execs to explain their record profits amid record high gas prices (http://money.cnn.com/2005/11/09/news/economy/oil_hearing/index.htm). You think oil companies won't take advantage of the current situation? They already are. They not only passed on all the costs of oil to the pump price, they did it as a percentage rather than as a fixed amount. Very convenient then for them to claim their profit margin is unchanged, all the while they literally have all time record high profits.

We also know from history that selflessness in humans can also be immense.It has only been in small societies and recent times there wasn't a small powerful rich group and a large poverty stricken serf or peasant population in almost every country in the world. So what's your point?

You used your "fact" as a prefix to your next question, even though it has no bearing on it:Are you suggesting oil companies should be unrestricted in pricing their products regardless of the effect on the rest of us?Are you suggesting that the oil companies should be restricted in pricing their products, regardless of the effects that that may have on the rest of us?How does history not have a bearing on my question? The effects on the rest of us?

I can avoid answering your question too. It doesn't advance the discussion much however.

I am reminded of a certain American State that tried to fix prices on energy and what a big mess that turned out to be. The govenor was eventualy booted out of office by the people and they elected a popular media figure as a replacement.Funny, I am reminded of the Enron tapes (http://www.google.com/search?q=enron+tapes&start=0&ie=utf-8&oe=utf-8&client=firefox-a&rls=org.mozilla:en-US:official) on which employees were recorded talking about taking a power station off line, on purpose during high use of power in that state to manipulate prices by faking a shortage. The tapes were played at the civil trial where that state and others sued to recover and won a judgment for Enron's falsely elevated energy prices.

So to put this all in a nut-shell..

A) You hate rich people
B) You hate Bush even more so
C) You want to impose a "windfall tax" on oil companies
D) You want to force the American public to pay for research into an unspecified "alternative energy"
E) you want to fix the price of oil while imposing those taxes

And all of this.. without a clear goal..Well Rocko, you got 2 out of 5.

I do hate Bush. I'm not the only one who believes Bush will go down in history as the worst President to date. But that's for another thread.

Why would I hate rich people? That would contradict my example of the Gates now wouldn't it? And, I consider myself pretty rich on the scale of world income. I certainly don't hate myself. Nor did I say anything about the 'rich' paying so much back they become 'equal'. That's your incorrect assumption of all or none, socialism or capitalism, being added to my statements.

Just so I am not guilty of assuming the same all or none about your position, I await your answer to my questions about where do you regulate the marketplace? You haven't answered the questions I asked about how you would prevent some people taking so much profit other people suffer.

March 13, 2006; As Oil Company CEOs Prepare to Testify, Congress Should Pursue Windfall Profits Tax; Statement of Tyson Slocum, Acting Director of Public Citizen’s Critical Mass Energy Program (http://www.citizen.org/pressroom/release.cfm?ID=2151)

Actual Statement, pdf file (http://www.citizen.org/documents/senatetestimony06.pdf)

And now, back to the show, Who Killed the Electric Car.

[Old man]

If ...anyone in this thread (is) for the Libertarian position...-
That would be me.

What stops the greed from pricing the poor out of heat and transportation? Certainly human decency in the corporate boardroom isn't enough.
Why, greed itself. Dead (or starving, if you prefer) serfs have little value (outside of their fertilizer value, of course). All we want to do is squeeze 'em, for crying out loud, not kill 'em.

[Peskanov]

ponderingturtle,

Will that reduce depretiation enough though? It is not that you couldn't spend that much, but how much should the car be worth to put say $5000 into it?

I wouldn't put that much into a 10 year old car. Sure the motor and such might be OK, but if I have say 150,000 miles on a car, it is going to have wear on the interior as well as alot of the rest of the car. It has been parked outside for 10 years and so on.

Well, current custom EV using Lead-Acid batteries need around 1000-2000$ to get new batteries.
However, NiMH and Li-Ion are luxuries right now and we don't know how the price will evolve over years.
BTW, hybrid cars could be trojan horses here. Hybrids need big batteries, but not as big as EVs. If hybrids get popular, NiMH and Li-Ion batteries will improve and get cheaper.

With all of that, I just don't think for a comunter car costing say $20,000 with no heat and air conditioner, well it just does not seem very practical.

Do you mean the EV1? EV1 was estimated to cost $30000, and it have air conditioner. But the EV1 was a concept test, it does not reflect the real cost of a mass produced EV.

I also think that it would be unlikely that any likely EV would fit me, but that is not a common problem. I don't know of to many other people who try on cars to see if they fit, and have most not fit. They really don't make to many cars for tall stocky men with short legs, and it doesn't really matter how big the car is.

Well, that's another, totally different question! :D

[TjW]

ponderingturtle,
<snippage by TjW>
Do you mean the EV1? EV1 was estimated to cost $30000, and it have air conditioner. But the EV1 was a concept test, it does not reflect the real cost of a mass produced EV.



Do you have a pointer to this cost estimate? I never saw an estimated retail sales price in all the time the EV1 was being promoted.

[rockoon]

I did. And we do tax people in this country. That's how it works. So you are only arguing about how much and who, not if.


I wasnt arguing one way or the other, skeptigirl. I was just pointing out that your claims were rooted in opinion.

Yes, the American tax system is set up to target people. That is precisely why a flat tax will never be realized in America. Instituting a flat tax requires that the government relinquish the overwhelming power it currently has. Governments almost never do that willingly, and have never done so when dealing with such an overwhelming tool.

So we are left with assessing the targeted taxing on a case-by-case basis. Would it be moral in this case? Pure speculation. One thing is for sure however, and that is that a new (or increase in) tax targeted at rich people certainly increases the power of the government just the same as a tax targeted at poor people.

Will this increase in power be used for Good, for Evil, or somewhere in between? Is it worth it?

Since all we have to go on is that you feel that rich people should give something back, we cannot judge the overall effects. If you were instead to maintain that they should "give something for Li-Ion battery research" (rather than "alternative energy") then we would at least have something to chew on.

Might I point out however that the American government isnt usualy that specific about what it uses tax money for. The general fund and all that.


Oh, like that compares in the least to the actions of this administration.


It does.

Do you think its possible that someone entirely unconnected to the "oil conspiracy" would have felt that the time was right to invade Iraq?


You are again trying to make this an all or none argument. Everyone ....


Everyone?

Whos got this all-or-nothing thing down?



This discussion is about a windfall oil profits tax, not outlawing gay marriage, passing laws to keep a brain dead woman alive with tube feeding and mandating abstinence only education in public schools.


Actualy this discussion is about The Big Oil Conspiracy and your line of reasoning was about forcing The Big Oil Conspiracy to be more socialy responsible.

Not that there is any evidence for a conspiracy mind you.. but hey.. we can presume that it exists for the purposes of a theoretical discussion.


There is all sorts of social engineering in this country. The question is how much and when.


The questions begin with "Is" - Such as "Is there a problem that needs fixing?"

Then *maybe* it goes to "What" - Such as "What should we do about it?"

Moving on.. it goes to "Who" - Such as "Who should we make pay for this?"

And finally we get to your "how much" and "when" .. also "who" would again be a serious consideration - Such as "Who gets to make a profit on this?"

You've skipped half the process and have taken it for granted that there is a problem that needs fixing, presumed your own pet solution to that problem, and even chose for yourself who should pay for it.

Can you justify what you have taken for granted?


You aren't following the discussion here. Windfall tax -> pays for alternative energy research and development.


If alternative research is deductable, then the money comes out of the general fund. Money that would be there if it wasnt deductable.


You want me to justify current oil company profits are obscene?


Yes.

But first, can you explain what obscene actualy means in this context? Specifically, is it the raw profit margin that is obscene, or is it the total net profit?

I can point out a few industries that make much bigger margins as well as industries that net much bigger profits. I wouldnt even dare to imagine how the service industries could be factored into any precise definition of "obscene" that you could come up with.


You think oil companies won't take advantage of the current situation? They already are. They not only passed on all the costs of oil to the pump price, they did it as a percentage rather than as a fixed amount. Very convenient then for them to claim their profit margin is unchanged, all the while they literally have all time record high profits.


Of course I think a company would take advantage of any situation it finds itself in. It would be immoral for a publically traded company to do anything else. A company has a responsibility to its shareholders, and that generally means to maximize profits in a legal manner.

Are you suggesting that they are doing it illegally?


It has only been in small societies and recent times there wasn't a small powerful rich group and a large poverty stricken serf or peasant population in almost every country in the world. So what's your point?


My point it that you didnt have one.


How does history not have a bearing on my question? The effects on the rest of us?


Yes, the effects on the rest of us. You do realize that a "windfall tax" will have an effect on all the consumers of the product, don't you? Not to mention the longterm effects it will have on government spending, which effects each and every American.

I don't think that you are naive. I just think that you havent given the whole thing a full consideration and have neglected to consider what the full effects of a "windfall tax" are.


Why would I hate rich people? That would contradict my example of the Gates now wouldn't it? And, I consider myself pretty rich on the scale of world income. I certainly don't hate myself. Nor did I say anything about the 'rich' paying so much back they become 'equal'. That's your incorrect assumption of all or none, socialism or capitalism, being added to my statements.


I never made such an assumption. Infact I never said anything about equality, socialism, or capitalism.

You are imagining or manufacturing things about my post. I personally don't care which you are doing.. either way.. you are dead wrong about it. That at least is for sure an all or nothing proposition.


Just so I am not guilty of assuming the same all or none about your position, I await your answer to my questions about where do you regulate the marketplace? You haven't answered the questions I asked about how you would prevent some people taking so much profit other people suffer.


Your question presumes a need to regulate the marketplace in this case, as well as presumes that people are suffering over this issue, and finally that regulation would reduce the sum of suffering.

Life aint always fair..

..regulations might make things more fair, or they may transfer the unfairness to someone else, and they might actualy increase the unfairness.

One thing is for sure.. regulations increase the power of the government and that alone is reason to take your time and think things through.

You yourself have already stated that the oil companies simply transfer their overhead to the consumer, like almost every other industry that isnt subsidized by the government and its taxing authority.

[Peskanov]

TjW,
30000$ is the price I have seen in several pages, maybe this is one of the most credible ones:

http://www.theautochannel.com/news/date/19961017/news02258.html


Although all EV1s will carry a $33,995 price on the window label, the
capitalized cost on which the consumer's lease payments will be based
can be considerably reduced by available federal, state and/or local
financial credits. For example, a 10% ($3,400) federal tax credit can
reduce the capitalized lease cost to $30,595.]

[Jaggy Bunnet]

If the prices stay high, alternative energy becomes more cost effective and the market will respond. So my preference is windfall tax.

Bush hasn't shown any propensity for a price freeze anyway.

OK. Then why talk about prices becoming so high that people cannot afford the gas they need to survive?

Imposing a windfall tax will certainly not create downward pressure on prices.

One way or the other, without some intervention you get profit gluttony. I see no benefit to the energy market for massive oil company profits. If the prices soar and the profits don't go into alternative energy sources, you get the increasingly unbalanced richer rich/poorer poor equation.

Some people took a risk and invested in energy company shares. You want to remove part of their reward because they have made more than you think is reasonable.

Are you also willing to use government funds to compensate people who took a risk in investing in dotcoms and lost money? If not, why not? Surely if the government is entitled to share in the rewards from investments it should also share in the downside when things go wrong?

Also, why assume that the government will do a better job than the market in allocating funds to research into alternative energy? Any evidence for that?

[Jaggy Bunnet]

You want me to justify current oil company profits are obscene?

Yes please.

[TjW]

TjW,
30000$ is the price I have seen in several pages, maybe this is one of the most credible ones:

http://www.theautochannel.com/news/date/19961017/news02258.html
Yes, I probably did see that at the time. I suppose I was thinking of it primarily as a target cost for production. I'm reasonably certain that in quantity 800, the EV1s cost way more than that to build.

I suspect that what killed the electric car was that GM took a look at the response they got at that price (not how well certain people liked them, but how many people that said they wanted them actually put down cold hard cash), extrapolated that to a production rate and figured the production cost at that rate.
I'll bet the EV1 killed the electric car.

[ponderingturtle]

ponderingturtle,

Well, current custom EV using Lead-Acid batteries need around 1000-2000$ to get new batteries.
However, NiMH and Li-Ion are luxuries right now and we don't know how the price will evolve over years.
BTW, hybrid cars could be trojan horses here. Hybrids need big batteries, but not as big as EVs. If hybrids get popular, NiMH and Li-Ion batteries will improve and get cheaper.

I have heard earlier on this thread numbers of $7000 to replace a hybrids batteries after 7 years.

Do you mean the EV1? EV1 was estimated to cost $30000, and it have air conditioner. But the EV1 was a concept test, it does not reflect the real cost of a mass produced EV.


I was making up reasonable numbers, and an airconditioner(or heater) would really hurt endurance. And what did the cost of the EV1 have to do with reality? That was a cost based around what they thought people would pay for it, not what it cost.

I was thinking it would cost a bit more than a econobox type car so $20,000 is reasonable. As they would be second or third cars and they would not sell that many so they will not be realy big sellers. But planed obsolence because of the life of their batteries would change that.

It will only be practical to replace the batteries in a EV so many times, because eventualy because of depreciation the batteries will cost more than the vehical will be worth. What percentage of cars are gotten rid of because the motor will not run? So while the motor might last longer the rest would not last that much longer or depeciate slower so I don't see them lasting that long.

[Peskanov]

TjW,

Yes, I probably did see that at the time. I suppose I was thinking of it primarily as a target cost for production. I'm reasonably certain that in quantity 800, the EV1s cost way more than that to build.

I suspect that what killed the electric car was that GM took a look at the response they got at that price (not how well certain people liked them, but how many people that said they wanted them actually put down cold hard cash), extrapolated that to a production rate and figured the production cost at that rate.
I'll bet the EV1 killed the electric car.

Maybe...but there should be a big price difference from protoype cost to mass production cost. Especially when we talk about EVs. The electric & electronics industries are so incredibly big, you can mass produce any EV component for the price of peanuts. Even a custom built EV is quite cheap; here is the price list for Jerry's EV car, for example:

http://convert.jerryrig.com/step43.html

It's hard to believe the estimated sales price of the EV1 is 30.000$. At least, for the first version which used lead-acid batteries.
Advanced batteries like NiHM, the ones used in the second EV1 version, are a differente history though.

Anyway, I don't see any great mistery about why the EV1 died: there is no easy bussines there, it can only be profitable if it's strongly subsidized. In the moment that curious California law was dead, they let the thing fall. Also, it seems all the big bets are on hydrogen in the USA.

There is a very interesting question about the politics of USA car makers compared to Japanesse ones.
When GM was forced to invest in ZEV, they buyed battery tech from Ovonics and Ford simply buyed the European Th!nk; however it seems no one of the big USA car makers are interested in battery technology any longer. Am I wrong?

In the other hand, all the big Japanesse companies are heavily investing in NiMH and Li-Ion (specially Li-Ion) right now.

Even if they are not interested in EVs, both hybrids and fuel cell engines rely on good batteries. So this is a bit puzzling. Maybe USA car makers think alternative energy systems are too far away to invest now, even fuel cells?
I have read several very negative analisys and opinions about the "hydrogen economy" model.

[Peskanov]

ponderingturtle,

I have heard earlier on this thread numbers of $7000 to replace a hybrids batteries after 7 years

It seems changing Prius batteries cost around 3000$, from a previous 5000$ some years ago. These are quite exotic batteries, NiHM. I gave you the price of common, cheaper Lead-Acid batteries before as a reference.
The question is that price of mass produced batteries get cheap all time. We don't now how much NiHM or Li-Ion batteries will cost in a few years, because that depends on how much hybrids are being sold, or which ither industrial uses are made of these technologies.

I was making up reasonable numbers, and an airconditioner(or heater) would really hurt endurance. And what did the cost of the EV1 have to do with reality? That was a cost based around what they thought people would pay for it, not what it cost.

The price of the components and the price of production are different things. Producing 1000 cars (unlike anything you produced previously) is expensive. Producing 100.000 is much cheaper for each unit.

The only really expensive component of an EV is the battery pack, as far as I know.

I was thinking it would cost a bit more than a econobox type car so $20,000 is reasonable. As they would be second or third cars and they would not sell that many so they will not be realy big sellers. But planed obsolence because of the life of their batteries would change that.

You can try to calculate some numbers googling a bit...Some clues:
- Lead-Acid batteries are cheap but mus be changed in 25.000 miles.
- NiHM have a much larger life (8 years?), but are very expensive.
- Li-Ion currently have a short life, but can be used for 100.000 miles or something similar.
It's a bit difficult to compare because some technologies are sensible to time, others to numbers of recharges, and others to energy drain.
Also, the price change fast due to hybrid's success.

It will only be practical to replace the batteries in a EV so many times, because eventualy because of depreciation the batteries will cost more than the vehical will be worth. What percentage of cars are gotten rid of because the motor will not run? So while the motor might last longer the rest would not last that much longer or depeciate slower so I don't see them lasting that long.

It's a good point. But it also holds true for ICE cars, most of them break the motor in 10 years and are discarded.
Right now EV technology is not very cheap, but is affordable, an it's clean and eficient. How many persons care about that, is a question to ponder.

[ponderingturtle]

ponderingturtle,

It seems changing Prius batteries cost around 3000$, from a previous 5000$ some years ago. These are quite exotic batteries, NiHM. I gave you the price of common, cheaper Lead-Acid batteries before as a reference.
The question is that price of mass produced batteries get cheap all time. We don't now how much NiHM or Li-Ion batteries will cost in a few years, because that depends on how much hybrids are being sold, or which ither industrial uses are made of these technologies.

The price of the components and the price of production are different things. Producing 1000 cars (unlike anything you produced previously) is expensive. Producing 100.000 is much cheaper for each unit.

The only really expensive component of an EV is the battery pack, as far as I know.


I find that unlikley. The battery pack might be the only major addition in cost vs a ICE vehical, but you have all the frame, electronics, interior and so on just the same.

So you can only compair that to the motor and exaust system, and mabey a simplified transmision I guess. Most of the car is the same.

An other problem that EV have that no one mentioned is a safety hazard in accidents, mainly that if you need to be cut out of your car, there can be issues with accidentaly cutting the wires to the battery and so on, resulting in a dangerous electric discharge. This has happened with hybrids and any firefighter should know about it.


It's a good point. But it also holds true for ICE cars, most of them break the motor in 10 years and are discarded.
Right now EV technology is not very cheap, but is affordable, an it's clean and eficient. How many persons care about that, is a question to ponder.

How many cars have you gotten rid of because the motor would not run? I can not remember my family ever getting rid of a car for that reason. I remember accidents, failure of the transmision(this might count but it was only one car, and you are going to need some kind of transmision). But not having the engion turn over? After 10 years? Not that I can remember and likely not for 30 years.

[BobK]

Enviro friendly battery disposal costs would have to be considered in addition to replacement costs.

[Skeptic Ginger]

Rockoon, you have no right to change what people have said when quoting them. You have implied a completely different meaning to my statement by truncating the sentence.

You are again trying to make this an all or none argument. Everyone ....

Everyone?

Whos got this all-or-nothing thing down?I said. "Everyone in the Congress and the President are there with the assistance of big corporate donations." I can take your words out of context too, again, great for carrying on a reasonable discussion. Would you care to name one Congressperson not there with the assistance of big corporate donations?

[Skeptic Ginger]

Yes, the American tax system is set up to target people. That is precisely why a flat tax will never be realized in America. Instituting a flat tax requires that the government relinquish the overwhelming power it currently has. Governments almost never do that willingly, and have never done so when dealing with such an overwhelming tool.

So we are left with assessing the targeted taxing on a case-by-case basis. Would it be moral in this case? Pure speculation. One thing is for sure however, and that is that a new (or increase in) tax targeted at rich people certainly increases the power of the government just the same as a tax targeted at poor people.

Will this increase in power be used for Good, for Evil, or somewhere in between? Is it worth it?Increase in power? New tax? It's hardly either of those. First, taxes on the wealthiest members of the USA were lowered when Bush came into office and the windfall tax was used in the past under similar circumstances.

Your premise that increased taxes equals increased power is a stretch. I understand your reasoning but don't agree with it at all. The government takes more or less of my money. It may have a large or small impact on my life. It's the impact on my life that I measure the government's power by.

Since all we have to go on is that you feel that rich people should give something back, we cannot judge the overall effects. If you were instead to maintain that they should "give something for Li-Ion battery research" (rather than "alternative energy") then we would at least have something to chew on.

Might I point out however that the American government isnt usualy that specific about what it uses tax money for. The general fund and all that.I'm not going to argue the tax code with you here. I don't have the time or motivation. You are getting waaaay too far off topic.

Oh, like [Clinton continuing Bush SR's Iraqi no fly zone policies and sanctions] compares in the least to the actions of this administration [Bush and his ties to oil companies invading Iraq on false claims of imminent danger posed to the USA].It does.

Do you think its possible that someone entirely unconnected to the "oil conspiracy" would have felt that the time was right to invade Iraq?No. And if you read the history of the oil rich Mid East region from 1900 to present, there is nothing but oil companies partnered with the US and British government involvement and meddling in the area.


This discussion is about a windfall oil profits tax, not [social engineering]Actualy this discussion is about The Big Oil Conspiracy and your line of reasoning was about forcing The Big Oil Conspiracy to be more socialy responsible.

Not that there is any evidence for a conspiracy mind you.. but hey.. we can presume that it exists for the purposes of a theoretical discussion.You may or may not think the evidence for conspiracy is convincing, but the web site and movie the thread is about present the evidence for who killed the electric car. That's where the conspiracy suggstion came from.

I posted information on the LA Red Car Line which was bought and dismantled by Firestone Tire and Rubber which was then found liable for the action in civil court.

"Big Oil" companies are guilty of many things which can easily be found in the public record.[Link to new thread with citations pending] To suggest their actions do or do not amount to one or more conspiracies is merely to argue semantics.


There is all sorts of social engineering in this country. The question is how much and when.The questions begin with "Is" - Such as "Is there a problem that needs fixing?"

Then *maybe* it goes to "What" - Such as "What should we do about it?"

Moving on.. it goes to "Who" - Such as "Who should we make pay for this?"

And finally we get to your "how much" and "when" .. also "who" would again be a serious consideration - Such as "Who gets to make a profit on this?"

You've skipped half the process and have taken it for granted that there is a problem that needs fixing, presumed your own pet solution to that problem, and even chose for yourself who should pay for it.

Can you justify what you have taken for granted?I was responding to your statement that xyz amounted to social engineering. The implication was social engineering didn't currently occur. It obviously does. I am not going to discuss the pros and cons of all the social engineering goals of the tax code. Again, you are getting waaay off topic.


You aren't following the discussion here. Windfall tax -> pays for alternative energy research and development.If alternative research is deductable, then the money comes out of the general fund. Money that would be there if it wasnt deductable.It sounds like more semantical arguments. I haven't written the tax bill here I am merely discussing the principles.


You want me to justify current oil company profits are obscene?Yes.

But first, can you explain what obscene actualy means in this context? Specifically, is it the raw profit margin that is obscene, or is it the total net profit?

I can point out a few industries that make much bigger margins as well as industries that net much bigger profits. I wouldnt even dare to imagine how the service industries could be factored into any precise definition of "obscene" that you could come up with.You obviously ignored my link to the Congressional investigation into oil company record profits at a time when gas prices were reaching record highs.

I run my own business. When the costs of goods I sell increase, I pass on the cost, I don't pass on the cost plus an additional increase in my profits as a percentage of those costs; and then, on top of that, also claim I am merely passing on the cost of those goods to me. The oil companies not only passed on the increased costs, claimed they weren't charging more in profits when they were, and they also only talked about profits for refined petroleum and neglected to mention their huge increase in profits for their share of the unrefined product business.

You call it what you want, I call it obscene.


You think oil companies won't take advantage of the current situation? They already are. They not only passed on all the costs of oil to the pump price, they did it as a percentage rather than as a fixed amount. Very convenient then for them to claim their profit margin is unchanged, all the while they literally have all time record high profits.Of course I think a company would take advantage of any situation it finds itself in. It would be immoral for a publically traded company to do anything else. A company has a responsibility to its shareholders, and that generally means to maximize profits in a legal manner.

Are you suggesting that they are doing it illegally?If you want to discuss Libertarianism vs capitalism with some regulation start a new thread.

My point it that you didnt have one.Your example did not discredit my point. Perhaps you'd like to go back to the original post and try again.

Yes, the effects on the rest of us. You do realize that a "windfall tax" will have an effect on all the consumers of the product, don't you? Not to mention the longterm effects it will have on government spending, which effects each and every American.

I don't think that you are naive. I just think that you havent given the whole thing a full consideration and have neglected to consider what the full effects of a "windfall tax" are.So the excessive profits have a good effect and the tax on those excessive profits has a bad effect?


Why would I hate rich people? That would contradict my example of the Gates now wouldn't it? And, I consider myself pretty rich on the scale of world income. I certainly don't hate myself. Nor did I say anything about the 'rich' paying so much back they become 'equal'. That's your incorrect assumption of all or none, socialism or capitalism, being added to my statements.I never made such an assumption. Infact I never said anything about equality, socialism, or capitalism.

You are imagining or manufacturing things about my post. I personally don't care which you are doing.. either way.. you are dead wrong about it. That at least is for sure an all or nothing proposition.I can't respond to this because you contradict your own statements. Your position is that govenment assessing a windfall profits tax on oil is social engineering (your words), bad for everyone (your words) and you have stated no alternative. That would be a position of all or none, all capitalism, no socialism. If that isn't your position, then state where you think government can intervene in the oil market.

I said the government needs to regulate corporations to some extent. You said yourself corporate loyalty is to shareholders. I agree. That's why government has to regulate to some degree. Capitalism with some regulation. That is mostly capitalism with a little socialism. It isn't all socialism as you imply. Whether or not you used the term socialism, your criticisms are all along the lines of criticism of socialistic actions of the government.

I await your answer to my questions about where do you regulate the marketplace? You haven't answered the questions I asked about how you would prevent some people taking so much profit other people suffer.Your question presumes a need to regulate the marketplace in this case, as well as presumes that people are suffering over this issue, and finally that regulation would reduce the sum of suffering.

Life aint always fair..

..regulations might make things more fair, or they may transfer the unfairness to someone else, and they might actualy increase the unfairness.

One thing is for sure.. regulations increase the power of the government and that alone is reason to take your time and think things through.

You yourself have already stated that the oil companies simply transfer their overhead to the consumer, like almost every other industry that isnt subsidized by the government and its taxing authority.Since you haven't taken the time to read either the Congressional inquiry into oil company profits or the very detailed and referenced argument for the windfall profits tax that I linked to. I'm not going to spoon feed that information to you. Read the links then we can discuss this further.

[Skeptic Ginger]

OK. Then why talk about prices becoming so high that people cannot afford the gas they need to survive?

Imposing a windfall tax will certainly not create downward pressure on prices.Investing in alternative energy promotes a long term solution. High gas prices are still affordable for most people. Without alternative energy sources, the price of transportation will not remain affordable.

Some people took a risk and invested in energy company shares. You want to remove part of their reward because they have made more than you think is reasonable.

Are you also willing to use government funds to compensate people who took a risk in investing in dotcoms and lost money? If not, why not? Surely if the government is entitled to share in the rewards from investments it should also share in the downside when things go wrong?

Also, why assume that the government will do a better job than the market in allocating funds to research into alternative energy? Any evidence for that?I already answered this. Clearly I wasted my time since you don't even remember.Why should those who didn't take the risk of investing in oil company shares decide they are entitled to the benefits that belong to those who did take that risk?

Would the same principle apply to compensate investors who lose money because the company they invest in loses money due to changed economic conditions?
As even Bill Gates' father believes when he debated on the side of keeping the inheritance tax, people become billionaires because they start in a great country and environment in the first place. So when you make your billions, you do indeed owe some back to the society that enabled you to be a success in the first place.

People are sacrificing their lives in Iraq just so Exxon and Shell can make money selling gas. Some taxes are indeed reasonable including a tax to make us less dependent on oil and less likely to keep fighting wars for oil.

Also, the current corporate structure does not include the true costs of goods in the apparent manufacturing costs. For example, that gas you paid for didn't include the cost of global warming or cost of the war to keep oil supplies available or the cost of the pollution going into the air at the refinery or the cost of the fire protection service at the refinery or the cost of disposing of all the refinery byproducts and so on.

In other words, disposal costs, pollution costs, and the costs of international relations when resources are purchased from foreign countries by companies like oil companies are not included in the cost of the gasoline. Who else should pay those costs? Consumers and corporations alike pay those costs through taxes mostly. It took more than the investment in the refinery, oil wells, and shipping to get that gas to your car. We all invested to a certain extent, some more than others. I would love to charge the oil companies for the cost of the Iraq war.

The other issue here is utilities. We have to eat, drink, have electricity, transportation, sewer, garbage and so on. There are times when the free market has to be regulated somewhat. Otherwise corporations could charge so much for products we have to have that all the wealth would shift into a few hands. Supply and demand and a free market work most of the time. But not all the time. You can't price fuel so high that the poor can't heat their homes or get to work while you rake in record profits. Many a revolution have been the result of such economic systems.


-

[Skeptic Ginger]

Yes please.Let me give you a hint. The answer is somewhere in these 8 pages and it is in at least three posts.

[Skeptic Ginger]

Electricity markets are NOT normal markets. They are very bizarre. And one of the main reasons they are bizarre is that electric power cannot really be stockpiled, but most other products (including oil and gas) can be. If the price on oil fluctuates significantly, then one can make money off of stockpiling oil with reserves. This does in fact happen. Not only do such stockpiles themselves dampen out these fluctuations, but because they will become more prevalent as fluctuations increase, the incentive to try to artificially force such fluctuations is dramatically reduced. It's very hard to make money off of it. Electricity, however, doesn't work that way. It cannot be stockpiled, it MUST be created on demand. That gives producers leverage that simply doesn't exist in ordinary markets. Couple that to government regulations which make market entry (ie, building a new power plant) in California prohibitive, and you get a situation ripe for abuse. And while I agree that government regulation can (if done well) help prevent such abuse, the idea that markets IN GENERAL are subject to such abuse doesn't actually have any basis.Right, as if Enron was the only company to ever act so unethically....

Ex-Tyco Executives Convicted In Retrial, Former CEO, CFO Found Guilty of Stealing Millions (http://www.washingtonpost.com/wp-dyn/content/article/2005/06/17/AR2005061701003.html)

THE TOP 100 CORPORATE CRIMINALS OF THE 1990's (http://www.corporatecrimereporter.com/top100.html#Annotated)

Corporate Ethics & Governance Watchdog (http://www.corp-ethics.com/)

Ralph Nader's web page (http://nader.org/)

My position on regulating corporations has nothing to do with crime and abuse. The point is corporations have corporate goals. Sometimes corporate goals are not in the best interest of society. There is nothing evil or bad or unethical about this, it's just a fact of the system. That's what needs regulation. Crimes and greed are separate issues.

[Jaggy Bunnet]

Investing in alternative energy promotes a long term solution. High gas prices are still affordable for most people. Without alternative energy sources, the price of transportation will not remain affordable.

So you agree that the comments you made about pricing people out were totally irrelevant to the solution you proposed - a windfall tax?

I already answered this. Clearly I wasted my time since you don't even remember.

That is not an answer, unless you are asserting that oil company shareholders receive benefits from living in a society that nobody else gets. Some people chose to invest, others did not. Both had a free choice and both should accept the consequences of their actions.

You want to give yourself a free one way bet - take none of the risk of investing but have the government grab some of the benefits from those that did take the risk and apply them as you wish them applied.

[Jaggy Bunnet]

Let me give you a hint. The answer is somewhere in these 8 pages and it is in at least three posts.

Then you will have no problem linking to it.

Of course we may disagree that selling a commodity you own at the market price amounts to obscene profiteering, which appears to be your argument.

[Jaggy Bunnet]

Since you haven't taken the time to read either the Congressional inquiry into oil company profits or the very detailed and referenced argument for the windfall profits tax that I linked to. I'm not going to spoon feed that information to you. Read the links then we can discuss this further.

Detailed and referenced? You mean there was research showing the impact it would have on gas prices and supply? And a breakdown of profits between extraction activities, refining and retailing?

Or is it simply a case of "look at this big number, its not fair"?

[rockoon]

Increase in power? New tax? It's hardly either of those. First, taxes on the wealthiest members of the USA were lowered when Bush came into office and the windfall tax was used in the past under similar circumstances.


Lowered taxes on nearly everyone in the country.

Why are you neglecting the whole story?


Your premise that increased taxes equals increased power is a stretch. I understand your reasoning but don't agree with it at all.


You are advocating a NEW tax, not an increase in the current taxes. Lets call your new tax the "Steal From Those Evil Oil Guys Tax" until you can show why it shouldn't be considered stealing. Without justification, all it amounts to is stealing. I've asked you to justify it previously. You haven't.


The government takes more or less of my money. It may have a large or small impact on my life. It's the impact on my life that I measure the government's power by.


Ayn Rand fan?


I'm not going to argue the tax code with you here. I don't have the time or motivation. You are getting waaaay too far off topic.


You are proposing a new tax but refuse to consider how the tax will be implimented and handled, or how such taxes have historically been implimented or handled? Thats just great. So you come to us with a half-assed tax idea and expect us to simply accept it?


No. And if you read the history of the oil rich Mid East region from 1900 to present, there is nothing but oil companies partnered with the US and British government involvement and meddling in the area.


Yeah you are right..

China isnt meddling in the middle east.
Spain arent meddling in the middle east.
France isnt meddling in the middle east.
Russia isnt meddling in the middle east.
Germany isnt meddling in the middle east.
Italy isnt meddling in the middle east.
Japan isnt meddling in the middle east.
North Korea isnt meddling in the middle east.
South Korea isnt meddling in the middle east.
Australia isnt meddling in the middle east.
Canada isnt meddling in the middle east.
South Africa isnt meddling in the middle east.

Your are so right... bad bad Americans and British. They are so damn evil. Nothing else matters but how evil the rich Oil Conspiracy of the Americans and British are. Those evil scum sucking American Oil barons. Evil Evil Evil. So damn evil. We should ignore facts and just keep saying how evil evil evil those scum sucking americans are.

To quote Lauper... "I see your true colors shining through"


You may or may not think the evidence for conspiracy is convincing, but the web site and movie the thread is about present the evidence for who killed the electric car. That's where the conspiracy suggstion came from.


Occams razor should be your friend, not your enemy.


I posted information on the LA Red Car Line which was bought and dismantled by Firestone Tire and Rubber which was then found liable for the action in civil court.


Not criminal court? Funny, that. Do you understand the differnece? Its a very big difference. Big and meaningful.


I was responding to your statement that xyz amounted to social engineering. The implication was social engineering didn't currently occur. It obviously does. I am not going to discuss the pros and cons of all the social engineering goals of the tax code. Again, you are getting waaay off topic.


You claimed it wasnt applicable to this case. Are you retracting your claim that this combo "windfall tax" and "tax deduction for alternative energy research" isnt social engineering. You point blank said that is wasnt in a previous post.


You obviously ignored my link to the Congressional investigation into oil company record profits at a time when gas prices were reaching record highs.


Every company that makes a profit has had record profits. You swing the term "record profit" around like its a weapon. Only the underlying could be considered a weapon but I'm pretty sure that you can't use that underlying reason as a weapon or you would have done so.


I run my own business. When the costs of goods I sell increase, I pass on the cost, I don't pass on the cost plus an additional increase in my profits as a percentage of those costs; and then, on top of that, also claim I am merely passing on the cost of those goods to me.


Do you maximize your profits in a legal manner, or not?


The oil companies not only passed on the increased costs, claimed they weren't charging more in profits when they were, and they also only talked about profits for refined petroleum and neglected to mention their huge increase in profits for their share of the unrefined product business.


It would have been illegal for them not to make those profits. ILLEGAL AS IN AGAINST THE LAW. You are blaming them for doing what they HAD to do.


If you want to discuss Libertarianism vs capitalism with some regulation start a new thread.


I don't want to discuss that. I still havent discussed that. You're AGAIN imagining or manufacturing and I personally don't care which.. you are dead wrong about what I wish to and have discussed.


So the excessive profits have a good effect and the tax on those excessive profits has a bad effect?


I never said that either was good or bad. I just point out that we cannot simply assume that one is good and one is bad. We need evidence for such things, and you have not provided any evidence whatsoever..


Your position is that govenment assessing a windfall profits tax on oil is social engineering (your words), bad for everyone (your words) and you have stated no alternative.


I never said it would be bad for everyone. I said that it will effect everyone.

You should show that it will indeed be good for everyone, or we must assume that the possibility exists that it will be bad for everyone.

Are you suggesting that we should simply take your word for it that this is a great idea?


That would be a position of all or none, all capitalism, no socialism. If that isn't your position, then state where you think government can intervene in the oil market.


Please show WHY it should intervene, first. Only then can I really consider what methods might be justified.


I said the government needs to regulate corporations to some extent.


You picked a specific extent. Windfall tax for the evil oil folks, and a tax deduction if they play nice with your pet social engineering ideas that havent been shown to actualy be good ideas.


You said yourself corporate loyalty is to shareholders. I agree. That's why government has to regulate to some degree. Capitalism with some regulation. That is mostly capitalism with a little socialism. It isn't all socialism as you imply. Whether or not you used the term socialism, your criticisms are all along the lines of criticism of socialistic actions of the government.


I never implied anything. You are again dead wrong and making things up. My criticism isnt bound to social policy.. its bound to finding out precisely how much thought you have put into this.

Judging by the way you have repeatedly avoided detailing how much thought you have put into this, I can only assume that you haven't put much at all into it. The ball is still in your court on that.

If you can show that you have actualy considered the implications of your policy ideas, then I suggest you do so. Otherwise we are left with "Skeptigirls ideas lead to the unknown"

[BobK]

Increase in power? New tax? It's hardly either of those. First, taxes on the wealthiest members of the USA were lowered when Bush came into office and the windfall tax was used in the past under similar circumstances.
What history shows. (http://www.bloomberg.com/apps/news?pid=10000039&sid=aBGNUdjfCZVU&refer=columnist_hassett)
What would such a tax accomplish? In this case, we have a history to go on. In 1980, President Carter signed into law the Crude Oil Windfall Profit Tax Act, enacted in concert with the gradual dismantling of domestic oil price controls that were in effect throughout the 1970s. The law, which was repealed in the late 1980s, established excise taxes as high as 70 percent on the difference between the selling price and a price set by law.

Economic theory suggests that such a measure would discourage exploration. Drilling for oil is very risky, and investors will take that risk only if they believe there is some chance they will make great profits. Take away the profits, and drilling will stop. It doesn't matter that the tax doesn't, as in the Dorgan bill, apply to new wells. Are oil companies really to believe that similar laws won't be passed again?

In 1990, the U.S. Congressional Research Service studied the effects of the 1980s tax, and found that it had exactly the predicted effect. U.S. production was reduced, and reliance on foreign oil increased sharply. Reinstating the tax would, Congress's research agency concluded, ``make the U.S. more dependent upon foreign oil.''
That sounds really great, doesn't it?

I run my own business. When the costs of goods I sell increase, I pass on the cost, I don't pass on the cost plus an additional increase in my profits as a percentage of those costs; and then, on top of that, also claim I am merely passing on the cost of those goods to me.
If you invest $1000 in a stock of 1000 widgets and sell them for $1100 you make 10% profit on your investment. When your investment cost for 1000 widgets goes to $2000, you're claiming you would sell them for $2100 and be happy making 5% profit on your investment? That makes absolutely no business sense. How long do you expect to stay in business using that business model?

Article (http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR2005102702399.html)
Most financial institutions, such as commercial banks, are routinely more profitable than Exxon Mobil was in its third quarter. For example, Exxon Mobil's gross margin of 9.8 cents of profit for every dollar of revenue pales in comparison to Citigroup Inc.'s 15.7 cents in 2004. By percentage of total revenue, banking is consistently the most profitable industry in America, followed closely by the drug industry.

Should all businesses that have a greater return on revenue than the oil companies pay windfall profit taxes?

[Skeptic Ginger]

So you agree that the comments you made about pricing people out were totally irrelevant to the solution you proposed - a windfall tax?An answer involving more than one concept in a sentence too much for you? I stand by my answer and no, I do not agree with you.

That is not an answer, unless you are asserting that oil company shareholders receive benefits from living in a society that nobody else gets. Some people chose to invest, others did not. Both had a free choice and both should accept the consequences of their actions.

You want to give yourself a free one way bet - take none of the risk of investing but have the government grab some of the benefits from those that did take the risk and apply them as you wish them applied.I realize you don't get the big picture here. But I'm not sure I can explain it to you. There are market forces that work against society along with all the forces that work for society. When you analyze why certain things happen, in the marketplace there are certain factors at work.

One market force that doesn't always benefit society is the corporation does indeed have the goal of acting for the benefit of the corporation. It isn't bad or good, it just is. So it benefits the corporation to develop a monopoly and then to increase profits as high as the market will bear. For utilities, that can have devastating consequences to society. Thus you need regulation.

One flaw in our current system is we haven't traditionally included the cost of disposal in the cost of a product. Some of that has changed with fines for toxic spills and the development of the superfund. Taxes are now levied on some raw materials that then cover the cost of disposal tax payers are eventually stuck with when the product is disposed of. Those are regulations that government (or society if you will) needs because the market system has the cost of disposal flaw.

If people fail to look at the big picture, and just make stupid statements like, "they invested so they should get the profits", then problems do not get solved.

[Skeptic Ginger]

Let me give you free market fanciers another situation. In the pharmaceutical marketplace, when a successful drug is developed, other companies put their R&D money into copycat drugs to go after a share of the proven market. That's a safer investment for a corporation to make than developing a new drug with an unproven market.

But for society, there are consequences. If we only developed the most profitable drugs, then some very important but less profitable drugs might never become available.

We are currently seeing antibiotic resistance developing to all of the antibiotics on the market. But very few if any drug companies are investing R&D money to develop new antibiotics. While you might think it is a sure bet since the current ones don't work, there are several problems with the size of the market for new antibiotics.

One, compared to drugs like the statins which are expected to be used by a large number of people for long periods of time, antibiotics will be used by less people and for short periods of time. And two, any new antibiotic must be conserved to prevent rapid development of resistance. What that means is, I as a person prescribing the new antibiotic will only want to use it as a last resort with the bacteria that have resistance to everything else. I know the more the new drug is used, the sooner inevitable resistance will develop. It's the nature of bacteria and evolution.

So if it isn't the most profitable choice for a pharmaceutical company to put R&D money into new antibiotics, without government incentives, (or a CEO who is afraid of bacterial antibiotic resistance), we would start to see a big increase in death from infection. As it is we already are seeing increased deaths from infection but it will get a lot worse.

The free market, while still the best economic system by far, is not sufficient by itself to give the most people the best life. I say drop the stereotype belief that all government involvement in the free market is doomed to failure and instead adopt the position that there may be ways to make government intervention when it is needed, better or more efficient.

[Skeptic Ginger]

Rockoon, your post is so full of fallacies and misinformation, and it's clear you prefer those distortions to seeking what the best evidence shows, I don't have time to reply. If you want to pick out one or two facts to address, go ahead. Otherwise you appear to be a lost cause.

[Skeptic Ginger]

What history shows. (http://www.bloomberg.com/apps/news?pid=10000039&sid=aBGNUdjfCZVU&refer=columnist_hassett)

That sounds really great, doesn't it?How does taxing the largest net profit ever made by oil companies take their profit away?

And, I don't want them to drill more wells. I don't care if they are the companies that develop new energy sources. There is no reason to care if oil companies are discouraged since the problem is no matter how you cut the cake, oil resources are finite. Whether we run out now or in 100 years, we will still run out.

The concept of 'Peak Oil' (http://en.wikipedia.org/wiki/Hubbert_peak) has been extensively written about. The evidence is clear we are running low includes the fact oil companies having overstated their reserves for quite some time. Add to that current Chinese and Indian prosperity and you have rising middle classes in the two most populous countries in the world. Middle class means 2 cars and 2.2 kids in the suburbs if we are any example. Anyone can see what's ahead here.


If you invest $1000 in a stock of 1000 widgets and sell them for $1100 you make 10% profit on your investment. When your investment cost for 1000 widgets goes to $2000, you're claiming you would sell them for $2100 and be happy making 5% profit on your investment? That makes absolutely no business sense. How long do you expect to stay in business using that business model?

Article (http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR2005102702399.html)


Should all businesses that have a greater return on revenue than the oil companies pay windfall profit taxes?
Your example is meaningless without volume added in. Why do you think there are volume discounts? 5% of a million is more than 10% of 100,000. In the case of oil revenues you can think of the cost of gas as the volume. The bigger the cost, the bigger the total that percent translates into.

If it weren't for the fact these guys were also making billions from the oil fields to the refinery you would have a point about lost opportunity costs. In other words, the money used to buy the gas wholesale might make a bigger profit on some other product. But that wasn't the case. If you look into it you'll see these CEOs were totally distorting their testimony before Congress by omitting the figures from their share of the profits from the ground to the refinery. The oil companies are the ones getting $75/barrel, not the people of Nigeria. The Saudi people don't get the oil revenues either though I don't know what the mix is between big oil and the royal family, nor how much the royal family gives back to the country. I don't know what the situation is in all the other countries but I'm sure the oil companies get much of it.

Major Oil Companies Operating in the Gulf Region; Compiled by Eric V. Thompson; 2006; source: University of Virginia (http://www.jewishvirtuallibrary.org/jsource/US-Israel/oilgulf.html)

Africa's Oil Tycoons; The Nation; Mar, 2004 (http://www.thenation.com/doc/20040412/eviatar)

We'll have to see what happens in Venezuela and Bolivia. Will the pigs turn into people or will the farm become a co-op? One can always hope.

[rockoon]

Rockoon, your post is so full of fallacies and misinformation, and it's clear you prefer those distortions to seeking what the best evidence shows, I don't have time to reply. If you want to pick out one or two facts to address, go ahead. Otherwise you appear to be a lost cause.

She "doesnt have time" to detail where she believes her tax theory will lead, let alone provide evidence to support that belief.

I can play that game.

Lets create a new tax on the poorest people in america, and give them tax deductions if they invest money in "alternative energy" research. This is such an outstandingly great idea that I do not need to detail the theoretical benefits or costs. After all, alternative energy research is good good good good.

[BobK]

How does taxing the largest net profit ever made by oil companies take their profit away?
profit - tax = less profit. Seems simple to me. Do you really have a problem understanding that concept? Or are you just looking for attention, because no one understands you?

And, I don't want them to drill more wells. I don't care if they are the companies that develop new energy sources. There is no reason to care if oil companies are discouraged since the problem is no matter how you cut the cake, oil resources are finite. Whether we run out now or in 100 years, we will still run out. What kind of thinking is that?:confused:
You seem to be in favor of being wasteful. If we don't drill for oil, it will never be of use. If we don't make use of what is useful, it's wasted. Frankly, I'm in favor of not being wasteful.
I'm glad we didn't start using that concept 100 years ago. Wouldn't even be any plastic products, since they're made from oil.

The concept of 'Peak Oil' (http://en.wikipedia.org/wiki/Hubbert_peak) has been extensively written about. The evidence is clear we are running low includes the fact oil companies having overstated their reserves for quite some time. Add to that current Chinese and Indian prosperity and you have rising middle classes in the two most populous countries in the world. Middle class means 2 cars and 2.2 kids in the suburbs if we are any example. Anyone can see what's ahead here.
Yeah. Let's leave it in the ground and we'll always have oil.:rolleyes:

Your example is meaningless without volume added in. Why do you think there are volume discounts? 5% of a million is more than 10% of 100,000. In the case of oil revenues you can think of the cost of gas as the volume. The bigger the cost, the bigger the total that percent translates into.
You mean, meaningless to you.
Companies are supposed to be working to achieve the optimum saddle point between risk and reward.
If a no risk investment can return close to or greater than a risky investment; due to profits being taken on the basis of earning too many dollars, rather than percentage returned on total investment; no rational investor would want to do anything other than invest in the no risk situation (savings insured by FDIC for example).
For example, consider more than $1,000 windfall profit and the windfall is taxed at 75%. Company 1 has invested $10,000 and earns $1000. Gets 10% return on investment(ROI). No windfall profit.
Company 2, has invested $1,000,000 and earns $100,001. With a windfall profit tax, government takes 75% of $100,000 off the top due to calling it a windfall. That leaves company 2 with $26,000 profit. That's 2.6% ROI. Company 2 realizes if they put their investment in saving accounts, they can earn 4% interest on their $1,000,000 and get $40,000 profit. A 4% ROI and they take absolutely no risk. I don't know what you'd do with your $1,000,000 business investment, but I sure know what I'd do with mine.
Do you see now why windfall profit taxes stifle business? Investment goes where the investor thinks they've found their optimum risk reward ratio.

If it weren't for the fact these guys were also making billions from the oil fields to the refinery you would have a point about lost opportunity costs. In other words, the money used to buy the gas wholesale might make a bigger profit on some other product. But that wasn't the case. If you look into it you'll see these CEOs were totally distorting their testimony before Congress by omitting the figures from their share of the profits from the ground to the refinery. The oil companies are the ones getting $75/barrel, not the people of Nigeria. The Saudi people don't get the oil revenues either though I don't know what the mix is between big oil and the royal family, nor how much the royal family gives back to the country. I don't know what the situation is in all the other countries but I'm sure the oil companies get much of it.

Major Oil Companies Operating in the Gulf Region; Compiled by Eric V. Thompson; 2006; source: University of Virginia (http://www.jewishvirtuallibrary.org/jsource/US-Israel/oilgulf.html)

Africa's Oil Tycoons; The Nation; Mar, 2004 (http://www.thenation.com/doc/20040412/eviatar)

We'll have to see what happens in Venezuela and Bolivia. Will the pigs turn into people or will the farm become a co-op? One can always hope.
Has nothing to do with the effect of a windfall profit tax.

[BobK]

Skeptigirl,

I notice you didn't answer this question I asked.
Should all businesses that have a greater return on revenue than the oil companies pay windfall profit taxes?

Maybe you would like to answer and expound on your reasoning, so I can get a better handle on where you're coming from.

[Jaggy Bunnet]

An answer involving more than one concept in a sentence too much for you? I stand by my answer and no, I do not agree with you.

When they contradict each other, then I look for clarification. Windfall taxes put upward pressure on prices. Yet you propose it as a solution to high prices.

It's not my fault if you are economically illiterate.

I realize you don't get the big picture here. But I'm not sure I can explain it to you. There are market forces that work against society along with all the forces that work for society. When you analyze why certain things happen, in the marketplace there are certain factors at work.

One market force that doesn't always benefit society is the corporation does indeed have the goal of acting for the benefit of the corporation. It isn't bad or good, it just is. So it benefits the corporation to develop a monopoly and then to increase profits as high as the market will bear. For utilities, that can have devastating consequences to society. Thus you need regulation.

You have any evidence that there is a monopoly driving world oil prices? Or even an oligopoly?

If not then please explain why you think reference to a monopoly is relevant.

One flaw in our current system is we haven't traditionally included the cost of disposal in the cost of a product. Some of that has changed with fines for toxic spills and the development of the superfund. Taxes are now levied on some raw materials that then cover the cost of disposal tax payers are eventually stuck with when the product is disposed of. Those are regulations that government (or society if you will) needs because the market system has the cost of disposal flaw.

Which has absolutely nothing to do with a windfall tax. These costs exist and should be priced in whether the oil companies are making profits or losses.

So again, irrelevant.

If people fail to look at the big picture, and just make stupid statements like, "they invested so they should get the profits", then problems do not get solved.

No, a stupid statement would be "they invested so I should get the profits", a bit like the one you are making. Neither of the problems you have identified in the post quoted, nor the pricing out you mentioned previously, are dealt with by your proposed solution. Probably because you are acting out of jealousy, not common sense.

[blutoski]

You have any evidence that there is a monopoly driving world oil prices? Or even an oligopoly?

All other parts of the discussion aside: this is pretty much established. The purpose and function of OPEC is to influence pricing through oligopoly.

[Skeptic Ginger]

profit - tax = less profit. Seems simple to me. Do you really have a problem understanding that concept? Or are you just looking for attention, because no one understands you?Are you seriously implying a windfall profits tax would send oil company investors fleeing to other markets?

What kind of thinking is that?:confused:
You seem to be in favor of being wasteful. If we don't drill for oil, it will never be of use. If we don't make use of what is useful, it's wasted. Frankly, I'm in favor of not being wasteful.
I'm glad we didn't start using that concept 100 years ago. Wouldn't even be any plastic products, since they're made from oil.

Yeah. Let's leave it in the ground and we'll always have oil.:rolleyes: So you are claiming there is plenty of oil in the ground to gas up all the future cars in China? I don't think this argument even needs addressing. Regardless of how much oil is left in the ground to be used by humans, it is or will soon not be enough to meet demand. With impending high demand compared to supply anyone with common sense would start addressing that problem now, not merely look for more oil.

Has nothing to do with the effect of a windfall profit tax.It has to do with the actual profits. Your example is the same one the oil company CEOs tried on Congress. They claimed their profit was the same % as always but conveniently left out the fact that was only the profit post refinement. The real increase in profit these companies are making is pre-refinement. Your argument leaves out 3/4 of the oil profit picture.

[Skeptic Ginger]

Skeptigirl,

I notice you didn't answer this question I asked.
Should all businesses that have a greater return on revenue than the oil companies pay windfall profit taxes?

Maybe you would like to answer and expound on your reasoning, so I can get a better handle on where you're coming from.People are free to invest or not aren't they? You seem to think no one will invest in oil if taxes take away some of the profit. That's a bit far fetched. So your concerns of the effects of a windfall profits tax are fabricated. Woe is me I only made 300 billion this quarter.

[Skeptic Ginger]

When they contradict each other, then I look for clarification. Windfall taxes put upward pressure on prices. Yet you propose it as a solution to high prices.

It's not my fault if you are economically illiterate.....I can only say to this post, my economic literacy is quite sufficient. And what I have posted speaks to that. Whether you understand the concepts or not is your problem and I can't help you there.

If you merely disagreed we might have a discussion. But feigning superiority doesn't make it so. I understood the return on the dollar argument you and Bob made and indicated that by my post. If you recall I said the argument would be valid if it were true but the additional profits from the sale of the unrefined oil was also going into the pockets of the same oil companies and that profit is not the same percent return before and after increased crude oil prices like that on the refined product.

Rather than discuss this point you both responded by repeating your argument on return on the dollar and making the foolish statement I don't understand. Clearly I do and you have both ignored the pre-refinery profit issues here.

[BobK]

All other parts of the discussion aside: this is pretty much established. The purpose and function of OPEC is to influence pricing through oligopoly.
I tend to agree with you that OPEC is an oligopoly. OPEC involves countries setting production rates and export prices.

I suppose one could stretch to make a case for the OPEC countries being the 'evil ones'. After all, they have greater reserves and aren't playing as nicely as some here would wish.

The discussion has touched on whether oil companies are involved in one. On this point I have to agree with Jaggy Bunnet. I haven't seen evidence of it.

Why punish U.S. companies for so called windfall profits, if someone else has the oligopoly?

Non-OPEC (http://www.eia.doe.gov/emeu/cabs/nonopec.html)
OPEC (http://www.eia.doe.gov/cabs/opec.html)

[BobK]

People are free to invest or not aren't they? You seem to think no one will invest in oil if taxes take away some of the profit. That's a bit far fetched. So your concerns of the effects of a windfall profits tax are fabricated. Woe is me I only made 300 billion this quarter.
Again you ignored the question I asked. You know, the one you quoted in the post I just took this quote of your's from. And, it constituted my entire original post. If you can't answer it and logically justify your answer, you're simply blowing smoke on things you evidently know little about.

Here it is once more. Should all businesses that have a greater return on revenue than the oil companies pay windfall profit taxes?

[BobK]

Are you seriously implying a windfall profits tax would send oil company investors fleeing to other markets?
I was just showing you how to do the math properly. The statement below of yours indicates you have problems with it. Originally Posted by skeptigirl :
How does taxing the largest net profit ever made by oil companies take their profit away?
So, once again here's the equation. profit-tax = less profit.

So you are claiming there is plenty of oil in the ground to gas up all the future cars in China? I don't think this argument even needs addressing. Regardless of how much oil is left in the ground to be used by humans, it is or will soon not be enough to meet demand. With impending high demand compared to supply anyone with common sense would start addressing that problem now, not merely look for more oil.
I said I don't like waste. If we don't drill for oil we know exists, we're wasting a useful product. You're the one that's against drilling and therefore evidently in favor of waste.

It has to do with the actual profits. Your example is the same one the oil company CEOs tried on Congress. They claimed their profit was the same % as always but conveniently left out the fact that was only the profit post refinement. The real increase in profit these companies are making is pre-refinement. Your argument leaves out 3/4 of the oil profit picture.
So, did Congress charge those lying CEO's with perjury? If not, why not? Maybe you should write your congressman and find out.

Of course your position is the countries that have the oil have nothing to do with the price. It's all the evil oil company's fault.

This is becoming very tedious and useless. Not like the oil you want to avoid drilling for. That would be useful.

[Jaggy Bunnet]

I can only say to this post, my economic literacy is quite sufficient. And what I have posted speaks to that. Whether you understand the concepts or not is your problem and I can't help you there.

If you merely disagreed we might have a discussion. But feigning superiority doesn't make it so. I understood the return on the dollar argument you and Bob made and indicated that by my post. If you recall I said the argument would be valid if it were true but the additional profits from the sale of the unrefined oil was also going into the pockets of the same oil companies and that profit is not the same percent return before and after increased crude oil prices like that on the refined product.

Rather than discuss this point you both responded by repeating your argument on return on the dollar and making the foolish statement I don't understand. Clearly I do and you have both ignored the pre-refinery profit issues here.

You have suggested three problems:

High prices meaning people cannot afford essential gas;
A monopoly artificially inflating prices; &
The failure of pricing to exclude externalities like pollution and clean up costs.

You have suggested one solution, a windfall tax, that will not address any of these problems. How can we have a sensible discussion if your solution does not address what you say the problem is?

[Jaggy Bunnet]

All other parts of the discussion aside: this is pretty much established. The purpose and function of OPEC is to influence pricing through oligopoly.

That may well be true. However IF that is the oligopoly she is referring to, then why is the windfall tax to be imposed on companies that are not members of the oligopoly?

[Jaggy Bunnet]

I can only say to this post, my economic literacy is quite sufficient. And what I have posted speaks to that. Whether you understand the concepts or not is your problem and I can't help you there.

If you merely disagreed we might have a discussion. But feigning superiority doesn't make it so. I understood the return on the dollar argument you and Bob made and indicated that by my post. If you recall I said the argument would be valid if it were true but the additional profits from the sale of the unrefined oil was also going into the pockets of the same oil companies and that profit is not the same percent return before and after increased crude oil prices like that on the refined product.

Rather than discuss this point you both responded by repeating your argument on return on the dollar and making the foolish statement I don't understand. Clearly I do and you have both ignored the pre-refinery profit issues here.

You were the one who when asked for evidence talked about margins at the petrol pump. Do you seriously expect US firms to sell oil at below the market price? Why?

What do you think would happen if US firms could not charge market prices for their oil?

[Skeptic Ginger]

Again you ignored the question I asked. You know, the one you quoted in the post I just took this quote of your's from. And, it constituted my entire original post. If you can't answer it and logically justify your answer, you're simply blowing smoke on things you evidently know little about.

Here it is once more. Should all businesses that have a greater return on revenue than the oil companies pay windfall profit taxes?No. You are choosing one measure of many. Rate of return, total gain, specifics about the natural resource as in this case, pollution tax and so on, there are many things one can base a tax on.

[Skeptic Ginger]

...

So, did Congress charge those lying CEO's with perjury? If not, why not? Maybe you should write your congressman and find out.

Of course your position is the countries that have the oil have nothing to do with the price. It's all the evil oil company's fault.

This is becoming very tedious and useless. Not like the oil you want to avoid drilling for. That would be useful.Congress didn't press the questions so there was no perjury. Barbara Boxer came the closest to actually getting answers from the guys. There was no real inquiry, it was all for show. The Republican majority didn't really want to question the obscene profits. Why should they when they are getting their cut as well?

[Skeptic Ginger]

You have suggested three problems:

High prices meaning people cannot afford essential gas;
A monopoly artificially inflating prices; &
The failure of pricing to exclude externalities like pollution and clean up costs.

You have suggested one solution, a windfall tax, that will not address any of these problems. How can we have a sensible discussion if your solution does not address what you say the problem is?You're making a fallacious argument that because a solution doesn't cover the spectrum of market regulation needs, it is therefore not a viable option.

And that would be include not exclude on the pricing failure.

[Skeptic Ginger]

You were the one who when asked for evidence talked about margins at the petrol pump. Do you seriously expect US firms to sell oil at below the market price? Why?

What do you think would happen if US firms could not charge market prices for their oil?More fallacious arguing. How does a windfall profits tax on oil to be used for R&D in alternative energy result in pricing gas below market price?

[rockoon]

You're making a fallacious argument that because a solution doesn't cover the spectrum of market regulation needs, it is therefore not a viable option.

And that would be include not exclude on the pricing failure.

Your proposed solution not only doesnt cover the spectrum of the "market regulation needs" that you claim exist, it actualy works to thwart them.

A windfall tax will increase the price of oil over the long term. As well as it being the logical conclusion, historical evidence has been given in this thread to support it.

[Jaggy Bunnet]

You're making a fallacious argument that because a solution doesn't cover the spectrum of market regulation needs, it is therefore not a viable option.

And that would be include not exclude on the pricing failure.

Well normally when one proposes a solution, you can actually identify the problem it is meant to address. So far none of the problems you have identified are dealt with by your proposed solution.

What is the problem that you want to address with the windfall tax?

[Jaggy Bunnet]

More fallacious arguing. How does a windfall profits tax on oil to be used for R&D in alternative energy result in pricing gas below market price?

You were the one that raised the issue of high profits pre-refining. It is difficult to tell what problem you were referring to as they seem to keep moving - from high prices, to monopolistic behaviour to failure to deal with externalities.

So to be clear. What is your proposal to deal with high pre refining profits and how will it:

Reduce retail prices; or
Tackle alleged monopolistic practices; or
Price in externalities?

If it does none of these, then why raise it?

[Jaggy Bunnet]

No. You are choosing one measure of many. Rate of return, total gain, specifics about the natural resource as in this case, pollution tax and so on, there are many things one can base a tax on.

So what is the specific measure (or measures) that you are using to justify a windfall tax on oil companies?

Should all companies that meet those measures (whether involved in the oil industry or not) be subject to the windfall tax? If not, why not?

[Skeptic Ginger]

In all of your answers, Jag, you haven't provided one source showing the actual profits of the oil companies wasn't excessive, nor have you addressed the Congressional testimony, nor have you addressed the article supporting the windfall tax other than some brief mention (you or Bob?) it wasn't well sourced which it was. Have you even looked at the record profits to see just what accounts for those record high numbers?

You note a windfall tax will have a negative effect on new oil exploration yet record profits in the oil industry indicate there is plenty of motivation for exploration tax or not.

You claim more taxes will increase costs at the pump but ignore the fact the whole purpose of the tax is to fund measures that will decrease demand at those pumps.

And you've thrown out a bit of straw claiming I haven't solved all the world's problems. You've mixed up statements about Who Killed the Electric Car with windfall profits taxes as far as conspiracy goes and you've attributed conspiracy theories to me which were actually in the film, not in my posts. (Though I do think price collusion certainly occurs as well as the dishonest representation of the profits to Congress.)

Because it's clear you didn't look at these links, here are some highlights:

Big oil CEOs under fire in Congress Lawmakers spar with execs from Exxon, Chevron over high prices, record profits, consumer pain. (http://money.cnn.com/2005/11/09/news/economy/oil_hearing/index.htm)
November 9, 2005: 2:43 PM EST
By Chris Isidore, CNN/Money senior writer

As a result, there have been suggestions in Congress about instituting a windfall-profits tax, with the money distributed to lower-income consumers to help them with energy costs.

"To my constituents, today's hearing is about shared sacrifices in tough times versus oil company greed," said Sen. Barbara Boxer, D-Calif. "Working people struggle with high gas prices and your sacrifices appear to be nothing."

The industry's third-quarter profits jumped 62 percent to nearly $26 billion as Exxon Mobil, the nation's biggest oil company, posted the fattest corporate profit in history. Oil company's stocks are up some 40 percent from a year ago, giving big gains to shareholders.

Along with talk of a tax on industry profits, there's been speculation that the oil companies were guilty of price gouging following Hurricane Katrina, or of not investing enough in refineries in order to manipulate the market and increase profits.


As Oil Company CEOs Prepare to Testify, Congress Should Pursue Windfall Profits Tax; Statement of Tyson Slocum, Acting Director of Public Citizen’s Critical Mass Energy Program (http://www.citizen.org/pressroom/release.cfm?ID=2151)Oil companies downplay these earnings, highlighting the small profit margins (typically around 8 to 10 percent) that measuring net income as a share of total revenues produces when compared to other industries.

But measuring earnings as a share of revenues is not an accurate calculation of return on investment. In fact, when communicating to Wall Street and investors, companies like ExxonMobil emphasize a completely different methodology to measure profitability, as evidenced by the following excerpt from the company’s 2004 annual report: “ExxonMobil believes that return on average capital employed is the most relevant metric for measuring financial performance in a capital-intensive industry such as” petroleum.

ExxonMobil’s 2005 annual report filed with the Securities and Exchange Commission shows that that company’s global operations enjoyed a 30.9 percent rate of return on average capital employed. The company’s rate of profit in the United States was even higher: domestic drilling provided a 46 percent rate of return on average capital employed, while domestic refining returned 58.8 percent.

This is why a windfall profits tax is justified. It will cost billions of dollars to finance the investments needed to shift our economy away from oil, provide more money to encourage energy efficiency in our homes and cars, and provide more capital for mass transit improvements. All of this can be done with the implementation of a windfall profits tax.

A windfall profits tax is also justified because government investigations have found that oil company profits are partially tied to anti-competitive practices. A 2001 Federal Trade Commission investigation revealed evidence of unilateral withholding, which occurs when an oil company controls such a large share of the market that it doesn’t even need to collude with other companies to manipulate supplies and prices – it can do so on its own.

And big oil companies certainly do control the market. In 1993, the five largest U.S. oil refining companies controlled 34.5 percent of domestic oil refinery capacity while the top 10 companies controlled 55.6 percent. By 2004, the top five companies – ConocoPhillips, Valero, ExxonMobil, Shell and BP – controlled 56.3 percent, and the top 10 refiners controlled 83 percent. So as a result of all of recent mergers, the largest five oil refiners today control more capacity than the largest 10 did a decade ago.

The time for Congress to act is now.
the complete statement (http://www.citizen.org/documents/senatetestimony06.pdf)

[Ziggurat]

In all of your answers, Jag, you haven't provided one source showing the actual profits of the oil companies wasn't excessive,

The burden is on you, not Jag, because you made the initial claim. You haven't even defined the term "excessive profit" (and I really don't know what you mean by it), so I'm not even sure how you think anyone else CAN evaluate your claim, let alone provide evidence in any direction.

[Jaggy Bunnet]

In all of your answers, Jag, you haven't provided one source showing the actual profits of the oil companies wasn't excessive, nor have you addressed the Congressional testimony, nor have you addressed the article supporting the windfall tax other than some brief mention (you or Bob?) it wasn't well sourced which it was. Have you even looked at the record profits to see just what accounts for those record high numbers?

You haven't defined excessive. How can you possibly expect me to prove that profits are not excessive (a subjective term) if you won't define how you are using that term?

What specifically in the testimony would you like me to address? To me it reads like a lot of politicians getting their soundbites in because it will play well with the voters.

As for the article:

It claims that imposing a windfall tax will "protect consumers from high prices". No explanation of how. This is utter nonsense - how does imposing additional costs reduce prices?

It also admits that the last time a windfall tax was imposed it failed, but that this could not possibly happen this time because "World oil markets aren’t going to collapse any time soon" - I'm sure nobody was expecting oil markets to collapse last time, or they would not have imposed a windfall tax. So despite the fact they admit it failed last time they want to try again because the crystal ball is working this time, and there is no chance the predictions could be as wrong as they were last time. Perhaps they should go for the million dollars?

And it finishes up with some statistics about domestic refining capacity. Not that these appear to be relevant as increased profits arise on the raw material, not in the refining process. I think this is meant to provide support for the claim that the record high profits are due to anti-competitive practices (because there is certainly no evidence anywhere else) but as no such claim is actually made it is difficult to tell.

What I don't see is any analysis of the impact of the tax on gas prices (despite a claim it is going to protect consumers from high prices), or any analysis of whether the record profits are due to high commodity prices (which are outside the companies control) or because they are making an increased return on refining activity. No modelling, no research, just "they've made too much money".

You note a windfall tax will have a negative effect on new oil exploration yet record profits in the oil industry indicate there is plenty of motivation for exploration tax or not.

The higher the oil price, the more exploration will take place because fields that are marginal at lower prices become economic. However if you impose a tax you reduce the return to the investor, making those fields less viable. There is no incentive to explore if you cannot make an acceptable after tax profit if you find oil. Surely you are not suggesting that a windfall tax would have no impact?

You claim more taxes will increase costs at the pump

Do you disagree? If so can you explain how imposing more costs will reduce prices?
but ignore the fact the whole purpose of the tax is to fund measures that will decrease demand at those pumps.

Which will not happen in the short term. Neither you nor the article you linked to seem terribly willing to point out to the hard pressed driver that is being "protected" by a windfall tax that they might have to endure a decade of higher prices before the alternatives become widely available. And I suspect that estimate is very much on the low side.

And you've thrown out a bit of straw claiming I haven't solved all the world's problems. You've mixed up statements about Who Killed the Electric Car with windfall profits taxes as far as conspiracy goes and you've attributed conspiracy theories to me which were actually in the film, not in my posts. (Though I do think price collusion certainly occurs as well as the dishonest representation of the profits to Congress.)

Nope, no straw thrown by me.

You identified three specific issues all related to oil profits, not electric cars:

http://forums.randi.org/showthread.php?postid=1780621#post1780621

In this post you state:

"And guess what? The oil company profits are currently quite obscene. If you let people charge as much as the market will bear for certain commodities that people have to have for survival such as gas, when there is a shortage of those commodities where are the brakes on the costs? We know from history greed in humans can be immense. Are you suggesting oil companies should be unrestricted in pricing their products regardless of the effect on the rest of us?"

I took this to mean you were worried about people being unable to afford the gas they need for survival. As the only proposal is the windfall tax, I assumed this was meant to resolve this problem. That is, after all, one of the claims in the article you linked to.

and in this post:

http://forums.randi.org/showthread.php?postid=1787112#post1787112

you talk about externalities in the context of oil company profits and make mention of monopolistic practices as an example of when intervention in the free market is justified.

So all of the problems I am asking you to solve are those that you have raised in the context of the windfall tax (and not all the world's problems - now that is throwing straw).

You raised problems.

You proposed a solution.

I want to know how you think YOUR solution deals with the problems YOU raised.

[Jaggy Bunnet]

So what is the specific measure (or measures) that you are using to justify a windfall tax on oil companies?

Should all companies that meet those measures (whether involved in the oil industry or not) be subject to the windfall tax? If not, why not?

Any chance of answering these questions?

[Skeptic Ginger]

The burden is on you, not Jag, because you made the initial claim. You haven't even defined the term "excessive profit" (and I really don't know what you mean by it), so I'm not even sure how you think anyone else CAN evaluate your claim, let alone provide evidence in any direction.But I provided several sources, these guys just ignored.

[Skeptic Ginger]

Any chance of answering these questions?
Any chance of reading the answers I posted?

See my last post for both the discussion of excessive, the evidence of excessive, and the rational for the windfall tax.

Is a citation too much for you actually read? It has to be my personal discourse? I posted sections of the citation. The citations support what I've said. I cited the sources in two posts now and referred to them in several other posts including this one. And you guys just keep ignoring them.

And so far all you've cited is other posts.

[Jaggy Bunnet]

Any chance of reading the answers I posted?

See my last post for both the discussion of excessive, the evidence of excessive, and the rational for the windfall tax.

Is a citation too much for you actually read? It has to be my personal discourse? I posted sections of the citation. The citations support what I've said. I cited the sources in two posts now and referred to them in several other posts including this one. And you guys just keep ignoring them.

And so far all you've cited is other posts.

I've read it, but it does not contain what you claim it does.

For example in the section on return on capital, where is the comparison to other industries? You cannot quote a figure in isolation and claim it is excessive, you need context, which is sadly missing from the article you linked to.

So how about you answer the questions. Do it directly, not by saying "read the article", cos I already have and the answers are not there. If you think the definition of excessive profits is in the article, quote it. Just that one section, nothing else.

You might also want to read the Federal Trade Commission report referred to in the article you cite. It gives a very different impression form the press release which is simply dishonest when it claims there were anti-competitive practices when they were SPECIFICALLY stated in the report to NOT violate anti-trust laws. Although the full paper at least contains the full conclusion, it puts a very slanted interpretation on it.

Also bear in mind that the FTC report said there was no evidence of collusion, but this does not stop the article claiming, without providing any evidence, that there is a monopoly operating (although they don't appear to know what a monopoly is as they state that "ExxonMobil and the other oil operators operate as a type of monopoly").

Now this post and my previous one quite clearly demonstrate I have read the articles as you requested. And the answers to the questions are not there.

So instead of evading and throwing straw, how about you answer a couple of very simple questions?



So what is the specific measure (or measures) that you are using to justify a windfall tax on oil companies?



Should all companies that meet those measures (whether involved in the oil industry or not) be subject to the windfall tax? If not, why not?

[BobK]

But I provided several sources, these guys just ignored.
I take exception to that remark.:mad: You're implying I have been disingenuous in my arguments. I did not ignore it.

Show a link and quote where your definition of 'excessive profit' is clearly and coherently defined.

The shallow definiton of 'excessive profit' you have asserted is, 'obscene profit'. Your definition is totally subjective and depends entirely on personal point of view.

You want only oil companies to pay such a tax. Evidently you lack standards that would apply equally to all. It seems to me, and probably others, an indication of an unwarranted underlying bias in your nature. I hope it is confined to this subject.

[Skeptic Ginger]

I've read it, but it does not contain what you claim it does.

For example in the section on return on capital, where is the comparison to other industries? You cannot quote a figure in isolation and claim it is excessive, you need context, which is sadly missing from the article you linked to.

So how about you answer the questions. Do it directly, not by saying "read the article", cos I already have and the answers are not there. If you think the definition of excessive profits is in the article, quote it. Just that one section, nothing else.

Now this post and my previous one quite clearly demonstrate I have read the articles as you requested. And the answers to the questions are not there.

So instead of evading and throwing straw, how about you answer a couple of very simple questions?

So what is the specific measure (or measures) that you are using to justify a windfall tax on oil companies?

Should all companies that meet those measures (whether involved in the oil industry or not) be subject to the windfall tax? If not, why not?I've rearranged but not changed your post because it is repetitive.

Re comparing other industry profit margins as a measure of either excessive profits or justifying the windfall profit tax. I addressed this already.

Are you still implying investors are going to flee the oil industry in search of more lucrative places to invest? I think the obvious answer to that question also makes your claim of comparison of other industry profit margins irrelevant.

No one is suggesting taxing excess profit margins, the tax is specifically to address the looming fuel shortage crisis. But were we to consider profit margins, the issue of total profit margin is being ignored here while accepting the oil company lie of claiming only the post refinery profit margin. The oil companies are not merely collecting the same profit margin. They are collecting the same profit margin only on selling the refined product. That margin purposefully hides the pre-refinery profit and the fact that by inflating the cost pre-refinery, the post-refinery profit is actually much larger than the claimed margin.

The companies sell the oil to their own refineries then sell the gas. If on paper I charge myself $75 dollars a barrel then calculate profit from selling gas at 5% margin, it looks like I am only charging 5% above cost. What I am leaving out is the fact that I'm the one who profited from the price of the crude oil. And, in real dollars, by inflating the cost of crude to the refinery that I own, the 5% margin is only on paper. In reality, it is much much higher. You guys are just ignoring that.


You might also want to read the Federal Trade Commission report referred to in the article you cite. It gives a very different impression form the press release which is simply dishonest when it claims there were anti-competitive practices when they were SPECIFICALLY stated in the report to NOT violate anti-trust laws. Although the full paper at least contains the full conclusion, it puts a very slanted interpretation on it.

Also bear in mind that the FTC report said there was no evidence of collusion, but this does not stop the article claiming, without providing any evidence, that there is a monopoly operating (although they don't appear to know what a monopoly is as they state that "ExxonMobil and the other oil operators operate as a type of monopoly").I'll look at the FTC report but the current government has gutted the effectiveness of a number of agencies so I'll also have to see how valid the agency remains.

(As examples, the money to enforce OSHA regulations on TB protection for health care workers was blocked when the regulations could not be changed. The FDA conveniently approved a campaign donor's product against the recommendations of their own scientists, and over half the IRS "death tax" enforcement lawyers were laid off in the last few days despite actions to reinstate the "death tax". This administration has changed the face of government agencies to make many of the protections offered by those agencies ineffective. I'll be posting a new thread on this in the next few days.)

The fact the FTC found no collusion or other illegal activity if that's what they indeed said, doesn't change anything about excessive profits or windfall tax. I have said nothing about fining the companies for illegal activities. But to think their profits aren't excessive or that a monopoly doesn't exist because the FTC made a statement or it isn't provable in court is naive.

edited to add I found nothing of what you say about FTC reports. You'll have to give more info on that source.

From the first link:Officials from New Jersey, Arizona and South Carolina, as well as the chairman of the Federal Trade Commission, were due to speak about efforts to combat gouging. New Jersey and South Carolina have filed anti-gouging suits against oil companies and station owners.

From the second link:A 2001 Federal Trade Commission investigation revealed evidence of unilateral withholding, which occurs when an oil company controls such a large share of the market that it doesn’t even need to collude with other companies to manipulate supplies and prices – it can do so on its own.

From the full report:FTC Not Adequately Protecting Consumers
At the same time that the FTC concludes that refining markets are uncompetitive, the agency consistently allows refining capacity to be controlled by fewer hands, allowing companies to keep most of their refining assets when they merge, as a recent overview of FTC-approved mergers demonstrates.

The major condition demanded by the FTC for approval of the August 2002 ConocoPhillips
merger was that the company had to sell two of its refineries—representing less than 4% of its domestic refining capacity. Phillips was required only to sell a Utah refinery, and Conoco had to sell a Colorado refinery. But even with this forced sale, ConocoPhillips remains by far the largest domestic refiner, controlling refineries with capacity of 2.2 million barrels of oil per day—or 13% of America’s entire capacity.

The major condition the FTC set when approving the October 2001 ChevronTexaco merger was that Texaco had to sell its shares in two of its joint refining and marketing enterprises (Equilon and Motiva). Prior to the merger, Texaco had a 44% stake in Equilon, with Shell owning the rest; Texaco owned 31% of Motiva, with the national oil company of Saudi Arabia (Saudi Aramco) also owning 31%, and Royal Dutch Shell owning the remaining 38%. The FTC allowed Shell to purchase 100% of Equilon, and Shell and Saudi Aramco bought out Texaco’s share of Motiva, leaving Motiva a 50-50 venture between Shell and Saudi Aramco.

Prior to the merger, Texaco’s share of Equilon and Motiva refinery capacity equaled more than 500,000 barrels of oil per day—which was simply scooped up by another member of the elite top five companies, Shell. Had the FTC forced Texaco to sell its share to a smaller, independent company, the stranglehold by the nation’s largest oil companies could have been weakened.

As a condition of the 1999 merger creating ExxonMobil, Exxon had to sell some of its gas retail stations in the Northeast U.S. and a single oil refinery in California. Valero Energy, the nation’s fifth largest owner of oil refineries, purchased these assets. So, just as with the ChevronTexaco merger, the inadequacy of the forced divestiture mandated by the FTC was compounded by the fact that the assets were simply transferred to another large oil company, ensuring that the consolidation of the largest companies remained high.

The sale of the Golden Eagle refinery was ordered by the FTC as a condition of Valero’s purchase of Ultramar Diamond Shamrock in 2001. Just as with ExxonMobil and ChevronTexaco, Valero sold the refinery, along with 70 retail gas stations, to another large company, Tesoro. But while the FTC forced Valero to sell one of its four California refineries, the agency allowed the company to purchase Orion Refining’s only refinery in July 2003, and then, just last month, approved Valero’s purchase of the U.S. oil refinery company Premcor. This acquisition of Orion’s Louisiana refinery and Premcor defeats the original intent of the FTC’s order for Valero to divest one of its California refineries.

[Jaggy Bunnet]

I've rearranged but not changed your post because it is repetitive.

How about answering the questions I asked you? That would help with avoiding repetition?

No one is suggesting taxing excess profit margins

so why have you made references to obscene profits and excessive profits? You are the one who raised these issues, so do not try and run away from it now.

I'll look at the FTC report but the current government has gutted the effectiveness of a number of agencies so I'll also have to see how valid the agency remains.

Isn't it strange that how "valid" the agency is only becomes of concern when its true position is revealed (not supporting your position) but you did not have any such concerns when your source was referring to it.

As for the current government being responsible, the report was issued in March 2001. Are you really suggesting that they had time to gut the organisation, rewrite the report and issue it within two months of taking office?

The fact the FTC found no collusion or other illegal activity if that's what they indeed said, doesn't change anything about excessive profits or windfall tax. I have said nothing about fining the companies for illegal activities. But to think their profits aren't excessive or that a monopoly doesn't exist because the FTC made a statement or it isn't provable in court is naive.

And to assert that a monopoly exists with no evidence is unjustified - your claim, you provide the evidence. The FTC went looking and they couldn't find it. And as you still refuse to provide a definition of excessive, any comment you make on that subject is utterly meaningless.

edited to add I found nothing of what you say about FTC reports. You'll have to give more info on that source.

"First and foremost, the Commission considered whether conduct that violated the antitrust laws - specifically, collusion - led to the price increases. Notably, the Commission's investigation uncovered no evidence tending to demonstrate the existence of collusive behavior, and considerable evidence suggesting that collusion was unlikely. "

An extract from the conclusion to the report. As that conclusion was quoted in full in the article you cited, I am at a loss as to why you cannot find it. Have you read the article? So your comment about "if that's what they indeed said" could have been avoided had you bothered to read your own source.

For the full report, go here:

http://www.ftc.gov/os/2001/03/mwgasrpt.htm

took all of three seconds to find on google - FTC report oil 2001.

So what are we left with:

You claim the oil companies make excessive profits, but refuse to define the term.

You claim that the oil companies operate as a monopoly despite the FTC report looking at this concluding there was no evidence and considerable evidence that collusion did not take place.

You apparently haven't read the source that you cited.

Perhaps you need to think about changing your name - Unskeptigirl perhaps?

[Jaggy Bunnet]

But I provided several sources, these guys just ignored.

Nope, we read them.

Unfortunately they also do not contain a definition of excessive profits.

Are you willing to provide such a definition?

If not, why not as it is your claim?

[The Don]

One way in which a windfall tax would "help" the consumer is in driving up energy prices. Higher energy prices means that currently marginal sources of energy will suddenly become competitively priced.

If you then subsidise the "green" sources of energy, you porvide a means to attract the opportunists, charlatans and mountebanks into the industry by enabling them to use the existing shoddy technology and generate "excessive profits" from them

(for the purposes of the above paragraph, excessive profit is defined as being a return in excess of what is considered reasonable for the level of investment, risk and innovation being employed and the barriers of entry to that market. This precise figure is impossible to calculate but an indication that excessive profits are to be had is the flood of the self same opportunists, charlatans and mountebanks into the market (rather like the Ostrich farms in the UK about 10 years ago)).

Edited to add (because I was getting sick of the quick reply window)

I'm tempted to think that offering financial incentives to develop certain technologies may even have a negative effect. This would happen if the overall quality of the R&D is reduced by entrants to the marketplace who are only there for the money.

[Jaggy Bunnet]

I'm tempted to think that offering financial incentives to develop certain technologies may even have a negative effect. This would happen if the overall quality of the R&D is reduced by entrants to the marketplace who are only there for the money.

Difficult to measure.

However when the UK were proposing to introduce a tax incentive for R&D expenditure the initial proposal was to only give relief for INCREASED expenditure. So you look at what a company has spent in the past and they only get the incentive if they spend more this year. Great in theory but swiftly abandoned for being massively complex to implement in practice.

Instead we have the same cash available being spread more widely as it is given on ALL R&D expenditure, not just the incremental stuff. Whether this has actually resulted in more R&D taking place is open to debate.

[The Don]

Instead we have the same cash available being spread more widely as it is given on ALL R&D expenditure, not just the incremental stuff. Whether this has actually resulted in more R&D taking place is open to debate.
It did result in more expenditure being classed as R&D though.

Commerce will always find a way to expoit any incentive.

[Jaggy Bunnet]

It did result in more expenditure being classed as R&D though.

Commerce will always find a way to expoit any incentive.

Not really. How it is classed is unimportant. It either meets the definition or it doesn't.

In fact the relief has suffered from low take up rates - it is estimated that less than half of companies entitled to the relief actually claim it.

I suspect that in a large percentage of companies who do benefit from it, the availability of the relief had no bearing on the decision to proceed with the R&D. In other words the amount of R&D was unchanged by the availability of the relief.

[Jaggy Bunnet]

Perhaps you need to think about changing your name - Unskeptigirl perhaps?

This was unnecessary. Sorry.

[Skeptic Ginger]

I answered your questions Jag. Several times now.

Excessive profits: the total profit margin of the oil companies not merely the profit margin on refined gasoline.

How more clearly must I say it before you actually look at the true profit figure?

All the while you claim the windfall tax will discourage oil investment. And absurd claim given the current oil market.

[Skeptic Ginger]

This was unnecessary. Sorry.And should I call you unquestioning talking point repeater?

[Ziggurat]

Excessive profits: the total profit margin of the oil companies not merely the profit margin on refined gasoline.

How more clearly must I say it before you actually look at the true profit figure?

You aren't defining the term "excessive profit", you're defining which profit should be evaluated in making the determination. But you have NOT established what guidelines one should use to actually decide whether or not these specified profits are excessive. Is it based upon some particular profit margin percentage? Some particular dollar amount? Some relative margin compared to other industries? On what basis are we supposed to determine whether or not a given profit is excessive? You have not answered that question, and until you do, the term "excessive profit" is meaningless.

[rockoon]

Excessive profit: I know it when I see it?

[I'll_buy_that]

did anyone see the article about this car?
http://www.technoride.com/article/Telsa+Roadster+Electric+Car+Is+the+Time+Right/183939_1.aspx
300 miles on a single charge, but a full charge takes 3 1/2 hours.
lights, A/C or Heat and radio would significantly shorten this.

seems reasonable if all i did was ride to a from work each day, but what if i wanted to go on longer trips?

It seems the EV isn't dead, just never made that practical given that oil is still an inexpensive way to fuel cars.

[Skeptic Ginger]

You guys are funny. Do you really think I'm the one who doesn't know what I'm talking about here? Have you even looked at the data before putting your collective feet in your mouths?

Your issues, profits reinvested in new oil production and percent return on investment. Perhaps you've heard/read/seen the oil company ad campaign claiming innocence. Or perhaps you trust the government isn't corrupted by ties to the oil industry (among ties to many other big industries) and large campaign contributions. Perhaps you only look as far as the majority corporate controlled mainstream media for information.

Fortunately the real data is still readily available from source after source on the Internet. Heaven help us if Net Neutrality isn't maintained.

Oil industry awash in record levels of cash But a smaller portion of profits is going to find new oil discoveries; (http://www.msnbc.msn.com/id/8646744/) By John W. Schoen; Senior Producer, MSNBC; Updated: 6:12 a.m. MT July 21, 2005

By just about any measure, the past three years have produced one of the biggest cash gushers in the oil industry’s history. Since January of 2002, the price of crude has tripled, leaving oil producers awash in profits. During that period, the top 10 major public oil companies have sold some $1.5 trillion worth of crude, pocketing profits of more than $125 billion.

“This is the mother of all booms,” said Oppenheimer & Co. oil analyst Fadel Gheit. “They have so much profit, it’s almost an embarrassment of riches. They don’t know what to do with it. The reason for the boom is simple. Much of the investment in finding that oil -- and developing the wells and pipelines needed to produce it -- has already been made. So an oil field that was profitable with oil selling for $20 a barrel is much more profitable with oil trading around $60.Oil Doesn't Want Focus on Big Profit - Companies Stepping Up Advertising; (http://www.washingtonpost.com/wp-dyn/content/article/2005/10/25/AR2005102501655.html)Frank Ahrens, Washington Post Staff Writer; Wednesday, October 26, 2005;

Grumbling already has begun on Capitol Hill: Last month, one senator proposed a windfall-profit tax on oil conglomerates, and yesterday, House Republicans warned energy companies against price gouging. [All for show, no doubt.]

To deflect the damage, the energy industry is relying on an ad campaign that was escalating even before hurricanes Katrina and Rita blitzed Gulf Coast petroleum refineries. The print and television ads are designed to educate consumers and lawmakers with a "we're all in this together" tone.

The most conspicuously non-oil oil ads come from the former British Petroleum, which removed the oil from its name and became BP. Now, the company advertises itself as "Beyond Petroleum." The company's logo resembles a sun with leaves.

Stumble onto a BP television ad and it is easy to assume it is a commercial for a company that makes solar panels. Or that BP is an environmental organization of some sort.

"Solar is but a tiny, tiny, tiny part of their business," Brinker said. "They make 99.9 percent of their money in the oil business."

"Yes, our numbers are large, but when you figure the size of the companies, we are at an all-industry average," Cavaney said. "We are half the size of the returns of the financials and pharmaceuticals."Interestingly the WA Post article leaves the statement in the last paragraph unchallenged whether it is actually true. Given that a company with 0.1% non-oil energy production claims to be a diversified energy company, one would be a fool to believe that statement.

Of course comparing one's profit margin to pharmaceuticals is comparing one price gouger to another but that requires another thread. Also the investment in R&D in the pharmaceutical industry is like night and say with the oil companies as these links support. I don't know anything about the financial industry sector.

So that statement aside for the moment, here's the other side of oil industry advertising on the same page as the article:

The Google Ad:
Oil and Gas Investor returns climb as oil and gas drilling ventures succeed. www.northstarenergyinc.comWelcome to Northstar Energy Online! (http://www.northstarenergyinc.com/)...an independent producer of oil and gas....U.S. Energy Outlook - Investment Opportunities - Tax Advantages (http://www.northstarenergyinc.com/index.php/investments/16/)

...substantial tax benefits which flow directly to individual investors. Investors may receive tax deductions totaling approximately 75 to 85 percent of capital contributions in the first year, with the remaining balance written off during subsequent years. For most investors, percentage depletion and depreciation of tangible equipment costs are available to shelter ordinary income at rates of up to 50 percent of cash distributions in the first seven years and 30 percent thereafter. The drilling program also shelters passive income.

In other words, tax deductions obtained from intangible drilling and development costs (as well as depreciation of tangible costs) may be used to offset the investor's taxable income from other sources. Also, a portion of the investor's taxable income generated by the drilling program may be reduced by deductions from depreciations and percentage depletion allowances.The Google ad:
Oil and Gas Opportunities Monthy Cash Flow, Tax Breaks High Energy Prices, High Potential www.sourceoil.comGet your information (http://www.sourceoil.com/inv_relations.html) on an industry with a surging demand growth that potentially offers:
Rapid Return on Investment
Long-term Income Stream
Significant Tax Advantages

Investor FAQ (http://www.sourceoil.com/faqs.html)

5. ...Given our current production, we expect returns to be far superior to many other business of which we are aware.

6. Q. Why.....

A: ...Our extremely low cost of operations and cost of drilling completing a well.The Google ad:
Oil And Gas Investment Realistic solid investment for new gas well - high volume field! www.FossilOilandGas.comFossil Oil & Gas, LLC. - Attention Investor! (http://fossiloilandgas.com/ad.htm?gclid=CLHj7sm4rYYCFRSDCwodHBPrAg)
Attention Investor! (http://fossiloilandgas.com/ad.htm?gclid=CIKn56W4rYYCFQiICwodHVhTBA)

Do you expect more from your investment dollars?
Do you want to step it up a notch and take advantage of the high-energy prices?
Do you have anything in your portfolio earning you 50 to 100% or Better?




Continuing with a little more Internet searching....
RECORD OIL INDUSTRY PROFITS SQUEEZE HOUSEHOLD BUDGETS (http://www.consumersunion.org/pub/core_other_issues/001541.html)Domestic companies account for over three quarters of recent price spikes

FOR IMMEDIATE RELEASE
Friday, Oct. 29, 2004 U.S. oil companies’ profits for the first nine months of this year have increased by more than 35 percent over last year, with the bulk of those profits coming from charges for domestic oil and gas refining, not from higher crude oil prices, consumer groups say.

Consumer Federation of America and Consumers Union say the record profits, coupled with the Department of Energy’s latest report that heating oil prices have hit a new record --$2.06 per gallon --are a clear indication that oil companies are profiting at the expense of American consumers.

“After analyzing the most recent quarterly statements of the domestic U.S. oil industry, it is not only clear that profits have climbed to record levels, but that the major source of those profit increases is the jump in domestic refining and marketing margins,” said Mark Cooper, director of research for the Consumer Federation of America. “Well over half of that increase in profits has come not from crude oil, but from profits on domestic U.S. refining and marketing.”

“While the media and the Bush Administration blame OPEC,” added Gene Kimmelman, senior policy director for Consumers Union, “a close look at prices and profits shows that a large part of the problem is in domestic markets. As the Government Accountability Office recently concluded, mergers and the resulting concentrated markets have contributed to the problem.”

Cooper said the analysis shows that PROFIT MARGINS on refining and marketing – known as the domestic spread – have set records for gasoline, heating oil and diesel fuel in the past nine months. Since domestic oil companies profit from U.S. production when prices rise, almost three-quarters of the price increases for oil products and 90 percent of the increase in natural gas wellhead prices have gone to domestic, not foreign oil firms.Appears I missed this. An additional place to hide the profit margin is to omit the profit margin of refining the gas.

Oil Industry Guzzles Profits (http://thinkprogress.org/2005/05/09/consumers-on-fumes-oil-industry-guzzels-profits/)Over the last year, gas prices have increased by 39 percent. Consumers are struggling to pay prices that average $2.23 per gallon. Meanwhile, the oil companies are raking in record profits, giving their executives fat raises and asking for billions in incentives from taxpayers.

OIL INDUSTRY COFFERS SWELLING WITH CASH: According to the Wall Street Journal, “Exxon Mobil Corp. and Royal Dutch/Shell Group both reported huge increases in first-quarter income, benefiting from the industrywide bonanza also swelling the coffers of their peers: high prices for the oil they pump and high margins for refining it.” [Wall Street Journal, 4/29/05]

RECORD PROFITS FOR EXXON: Exxon “said net income totaled $7.86 billion, or $1.22 a share, up 44% from $5.44 billion, or 83 cents a share, a year earlier…. Exxon’s results were a record first-quarter take for the oil behemoth… [Wall Street Journal, 4/29/05]

SHELL PROFITS UP 40% FROM LAST YEAR: Shell “reported net income of $6.8 billion … up 40% from $4.85 billion in the first quarter of 2004.” [Wall Street Journal, 4/29/05]

$30 BILLION IN EXTRA REVENUE FOR CONOCOPHILLIPS: The Houston Chronicle reports “ConocoPhillips, the nation’s third-largest oil and gas company, said today that first-quarter earnings soared year-over-year on high oil prices…. Total revenue was $38.9 billion, up from $30.2 billion last year….” [Houston Chronicle, 4/27/05]

EXXON’S HEADACHE — WHAT TO DO WITH $40 BILLION IN CASH?: Exxon Mobil’s “soon-to-retire CEO suddenly has a new anxiety: how to spend the windfall wrought by $55-a-barrel oil. By the end of April, Exxon will have a cash hoard of more than $25 billion…. If oil simply stays where it is now, Exxon’s cash could approach $40 billion in 12 months. By then [Exxon’s CEO] is expected to have handed off the top job — and the headache of what to do with all that cash.” [Fortune Magazine]

OIL INDUSTRY EXECUTIVES GET 109.1% RAISE: The recent Wall Street Journal compensation survey found that oil and gas executives’ total direct compensation (2004) was about $16.5 million (median). And the median percent change from 2003 to 2004 was 109.1 percent. This was by far the highest of the industries profiled. [Wall Street Journal CEO Compensation Survey]

BILLIONS IN GIVEAWAYS TO OIL INDUSTRY TUCKED IN ENERGY BILL: In the Energy Policy Act of 2005, oil and gas companies will receive $515 million in authorized spending from the U.S. government, including “$125 million to reimburse oil and gas producers for 115% of the costs of remediating, reclaiming, and closing orphaned wells.” The bill also created a $2 billion ultra-deepwater fund to pay for research that companies are already pursuing without government help. On top of that, the bill provided $3.275 billion in new tax breaks to the oil and gas industry. [Taxpayer.net]

Oil companies rake in record profits in spite of falling production (http://rawstory.com/news/2005/Oil_companies_rake_in_record_profits_in_spite_of_f alling_product_0725.html)In a report published last week, Merrill Lynch & Co. said the aggregate net income of the 70 largest companies in the sector is expected to rise 26% this year to $230 billion, on sales of $2.57 trillion, up nearly 10%. The reasons: high oil prices and fat refining margins, plus a pickup in oil-field services, particularly in rates for drilling rigs. The 70 companies are expected to return about $110 billion to shareholders this year through dividends and share buybacks, Merrill Lynch added.

[In fairness] Merrill Lynch says that the cost of finding and developing oil rose 22% in 2004.

[And gee, profits only rose twice that.] At Shell, despite an expected 3% fall in production, higher oil prices are expected to boost exploration and production profits by 43% in the second quarter and lift companywide earnings once again when the company reports on Thursday, Deutsche Bank estimates. France's Total SA is expected to report an increase in net income of 30% to 40% or more on Aug. 4. "If anything, it should be toward the upper end of that," said Lucas Herrmann, a Deutsche Bank analyst in London, citing output growth at the company and strong refining margins. Total is Europe's largest refiner of crude oil.Not to mention the estimated earnings were based on a prediction of FALLING gas prices which actually went up 30% instead.

Skyrocketing Gasoline Prices and Record Oil Company Profits: No Coincidence (http://www.citizen.org/cmep/energy_enviro_nuclear/articles.cfm?ID=13912)As Americans shell out more dollars at the pump, the profit margin by U.S. oil refiners has shot up 79% from 1999 (the year Exxon and Mobil merged) to 2004. See a breakdown of ExxonMobil's Profits here. (http://69.63.136.213/cmep/energy_enviro_nuclear/electricity/Oil_and_Gas/articles.cfm?ID=14217)

From the link: Exxon profit margins:

Return on Capital: 13% in 2002; 24% in 2004
Return on Capital, US Oil production only: 19% in 2002; 37% in 2004
Return on Capital, US Oil Refining only: 9% in 2002; 29% in 2004

Record oil company profits not bringing new capacity Feb 25, 2005 12:00 PM (http://deltafarmpress.com/mag/farming_record_oil_company/)


I would think the tax breaks and tax subsidies would bother you guys. If you would bother to look instead of taking the oil company marketing ads for fact, you'd see the MARGINS are up large amounts. Money isn't being re-invested in energy production. Why should they? Profits will continue to rise on the gas shortage. The fact no new refineries are being built with these record profits is certainly a clear indication of at least the short term and more likely the long term strategy of the big oil companies. Squeeze the consumer.


Now I will repeat what I have said several times. There isn't necessarily evil going on here with the exception of the dis-information campaign and corruption in our government. What there is is normal corporate behavior to benefit the corporate bottom line. That's capitalism and it mostly works.

But, when you get certain situations, and this is clearly one of them, you don't want a government giving tax breaks in exchange for campaign donations, and you don't want the oil companies to also control the media and actually hold offices in the government like Bush and Cheney.

You do want government intervention and regulations to benefit the majority of the people. In this case, the majority of the people will benefit from government intervention that encourages alternative energy production and energy conservation. We are not benefiting from current government intervention in the oil markets because the majority of the people are either complacent or misinformed as you guys seem to be. People trust their government a little too much and don't notice how controlled their sources of information really are.

[Skeptic Ginger]

did anyone see the article about this car?
http://www.technoride.com/article/Telsa+Roadster+Electric+Car+Is+the+Time+Right/183939_1.aspx
300 miles on a single charge, but a full charge takes 3 1/2 hours.
lights, A/C or Heat and radio would significantly shorten this.

seems reasonable if all i did was ride to a from work each day, but what if i wanted to go on longer trips?

It seems the EV isn't dead, just never made that practical given that oil is still an inexpensive way to fuel cars.

And there is the Loremo (http://www.loremo.com/index_en.php), a new German car that will soon be on the market and for a reasonable price. It gets >150 mpg.

I am very excited about that one and it's encouraging to see it isn't the only one being developed.

The market appears to be correcting the shortsighted killing of the electric car, if it did indeed occur.

Tesla plans to sell the Roadster for $80,000-$120,000, releasing it in mid-2007, first in California and then expanding to Chicago, New York, and Miami, then other cities.I wonder if they know about the $11,000 Loremo?

[Old man]

Come on, guys, you're brow-beating her. You asked for her definition and here it is- Excessive profits: the total profit margin of the oil companies not merely the profit margin on refined gasoline.

How more clearly must I say it ...
She thinks that oil companies should not be allowed any profit.

[Skeptic Ginger]

Come on, guys, you're brow-beating her. You asked for her definition and here it is-
She thinks that oil companies should not be allowed any profit.
Can't tell if this post is sarcastic or just ignorant?

I have no need of assistance here, see my previous posts. Thanks anyway.

[Ziggurat]

You guys are funny. Do you really think I'm the one who doesn't know what I'm talking about here?

You got the problem wrong: whether or not you know what you're talking about, you have introduced a term, "excessive profits", for which there is no standard definition and for which you have not provided a definition. Debate is useless without a definition, nobody but you knows what the term means, and so it doesn't matter if you know what you're talking about. You still need to define your terms, and you have not done so. It's really that simple.

Have you even looked at the data before putting your collective feet in your mouths?

The data is irrelevant if we do not know the definition of the term "excessive profit". The data do not define the term. There is no standard definition. In order to continue to use that term, you MUST define it, or everything you say based upon it becomes worthless. It's really that simple, and I'm amazed that you consistently refuse to address such a simple and fundamental point.

[Skeptic Ginger]

Can't admit you're wrong, eh Zig? Prefer to switch the argument to semantics instead of the actual discussion?

Let's pick an arbitrary definition from one of the articles I cited: “They have so much profit, it’s almost an embarrassment of riches."

You are also trying to take this semantic argument out of context. The context is, does this corporate behavior require government regulation, not, what is the definition of excessive. By trying to isolate your one criteria from the discussion, whether the profits are excessive, you are merely avoiding the actual issue here. That's a waste of thread space. Why not discuss the actual issue?

[Jaggy Bunnet]

Can't admit you're wrong, eh Zig? Prefer to switch the argument to semantics instead of the actual discussion?

Let's pick an arbitrary definition from the articles I cited: "“They have so much profit, it’s almost an embarrassment of riches. "

So you admit that you have no clear definition of what you mean, yet you demand that somebody else prove that excessive profits are NOT being made? What evidence would satisfy you, based on the supposed definition you have provided (and leaving aside the fact that it is not in fact a definition), that excessive profits are not being made?

Pathetic.

[Jaggy Bunnet]

I answered your questions Jag. Several times now.

Excessive profits: the total profit margin of the oil companies not merely the profit margin on refined gasoline.

Nope, that is not an answer unless you are saying that ANY profit an oil company makes is excessive. If that is your position there is absolutely no point in this discussion.

[Jaggy Bunnet]

And should I call you unquestioning talking point repeater?

No, just answer the frigging questions.

Or admit that you have no meaningful definition of "excessive profits" and it it simply a catchphrase to throw about in the absence of a real argument.

[Skeptic Ginger]

Here's the real issue again throwing your straw out of the way,

I would think the tax breaks and tax subsidies would bother you guys. If you would bother to look instead of taking the oil company marketing ads for fact, you'd see the MARGINS are up large amounts. Money isn't being re-invested in energy production. Why should they? Profits will continue to rise on the gas shortage. The fact no new refineries are being built with these record profits is certainly a clear indication of at least the short term and more likely the long term strategy of the big oil companies. Squeeze the consumer.


Now I will repeat what I have said several times. There isn't necessarily evil going on here with the exception of the dis-information campaign and corruption in our government. What there is is normal corporate behavior to benefit the corporate bottom line. That's capitalism and it mostly works.

But, when you get certain situations, and this is clearly one of them, you don't want a government giving tax breaks in exchange for campaign donations, and you don't want the oil companies to also control the media and actually hold offices in the government like Bush and Cheney.

You do want government intervention and regulations to benefit the majority of the people. In this case, the majority of the people will benefit from government intervention that encourages alternative energy production and energy conservation. We are not benefiting from current government intervention in the oil markets because the majority of the people are either complacent or misinformed as you guys seem to be. People trust their government a little too much and don't notice how controlled their sources of information really are.

[Jaggy Bunnet]

Can't tell if this post is sarcastic or just ignorant?

I have no need of assistance here, see my previous posts. Thanks anyway.

Yeah. You are quite happy to keep dodging questions and posting meaningless links rather than address issues or deal with the actual FTC report and not the inaccurate summary you linked to.

Perhaps because doing so would require you to think rather than cut and paste.

[Skeptic Ginger]

Here's the real issue again throwing your straw out of the way,

You are also trying to take this semantic argument out of context. The context is, does this corporate behavior require government regulation, not, what is the definition of excessive. By trying to isolate your one criteria from the discussion, whether the profits are excessive, you are merely avoiding the actual issue here. That's a waste of thread space. Why not discuss the actual issue?

I would think the tax breaks and tax subsidies would bother you guys. If you would bother to look instead of taking the oil company marketing ads for fact, you'd see the MARGINS are up large amounts. Money isn't being re-invested in energy production. Why should they? Profits will continue to rise on the gas shortage. The fact no new refineries are being built with these record profits is certainly a clear indication of at least the short term and more likely the long term strategy of the big oil companies. Squeeze the consumer.


Now I will repeat what I have said several times. There isn't necessarily evil going on here with the exception of the dis-information campaign and corruption in our government. What there is is normal corporate behavior to benefit the corporate bottom line. That's capitalism and it mostly works.

But, when you get certain situations, and this is clearly one of them, you don't want a government giving tax breaks in exchange for campaign donations, and you don't want the oil companies to also control the media and actually hold offices in the government like Bush and Cheney.

You do want government intervention and regulations to benefit the majority of the people. In this case, the majority of the people will benefit from government intervention that encourages alternative energy production and energy conservation. We are not benefiting from current government intervention in the oil markets because the majority of the people are either complacent or misinformed as you guys seem to be. People trust their government a little too much and don't notice how controlled their sources of information really are.

[Jaggy Bunnet]

The fact no new refineries are being built with these record profits is certainly a clear indication of at least the short term and more likely the long term strategy of the big oil companies. Squeeze the consumer.

Your argument is that we are at peak oil and that we need to reduce the amount used.

If you are correct, why would companies invest in new refineries? Do you have any idea how long a refinery needs to operate for to get back the investment in building it?

If available oil is going to decrease, exactly what are they going to refine in the new refineries you want them to build?

[Skeptic Ginger]

Jaggy, you and/or one of the 3 or 4 of you, (I'm losing track of who said what) are the ones who claimed a windfall profits tax would stifle investment in new sources of oil. I highlighted the point the profits were not going into looking for new sources of oil.

In looking at that response to the concern the tax would stifle reinvestment in new sources of oil, I discovered the bottleneck in the supply of gasoline was at the refinery, not the oil fields. So I thought you might be interested to know there also was no investment in refinery capacity, thereby keeping supply low so prices at the pump would continue to climb.

Personally, the price at the pump and the bottleneck at the refinery are not my concerns. If you'd pay any attention to what I've been saying instead of trying to find some semantic straw man, you know what I am concerned about is investing in alternative energy sources and conservation of current energy use by increasing efficiency.

You ignore the fact the government is currently subsidizing more drilling and exploration while claiming it is inefficient for the government to subsidize alternative energy and conservation by increased efficiency. Considering the profits, the oil companies don't need my tax dollars to subsidize drilling and exploration. But they have enough to be taxed to subsidize alternative energy. And if we don't do that but merely allow the free market to function without regulation, the price of gas will eventually be too high for much of the population.

The alternative energy market might indeed catch up eventually, but at an unnecessary cost in the meantime.

[Jaggy Bunnet]

You guys are funny. Do you really think I'm the one who doesn't know what I'm talking about here? Have you even looked at the data before putting your collective feet in your mouths?

Given that a company with 0.1% non-oil energy production claims to be a diversified energy company, one would be a fool to believe that statement.


OK lets spend a little time looking at the claims you linked to about BP shall we?

You claim they have 0.1% non-oil energy production. The facts prove you wrong. Follow the link to the notes to their accounts to Dec 2005 and go to note 6. This gives a breakdown of Revenue between oil (Exploration & Production and Refining & Marketing, hell lets even throw in the Other Business & Corporate as that is mainly the petrochemical business that they sold during the year) and non-oil (Gas, Power & Renewables).

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/secret_area/secret_investors/STAGING/local_assets/downloads_pdfs/bp_ara_2005_annual_report_and_accounts.pdf

What do we get? Total non-oil revenue - c$25.5bn. Total Revenue c$262bn.

Percentage from non-oil is roughly 9.7%. So you were out by a factor of nearly 100. Looks like the statement one would be a fool to believe is the one that you parrot.

Maybe he was talking about profits when he referred to making their money? Lets look at the numbers (same note). Well he gets closer, but still out by a factor of 34 as 3.4% of pre tax profits come from Gas, Power & Renewables.

How about the comments about it removing petroleum from its name and calling itself BP? Well this is true, but it is deliberately misleading to suggest it has anything to do with deflecting damage in the current market environment. It happened in 1998, when they merged with Amoco to form BP Amoco, which changed to just BP in 2002.

Well what about campaign contributions? Surely they must be one of these big oil companies buying influence?

Eh, no. Not since 2002. When the Chairman said:

"That is why we've decided, as a global policy, that from now on we will make no political contributions from corporate funds anywhere in the world."

Source: http://www.guardian.co.uk/Archive/Article/0,4273,4365524,00.html

Perhaps you would like to look at the data a bit more, well, skeptically, before you accept it as being true.

[Jaggy Bunnet]

Jaggy, you and/or one of the 3 or 4 of you, (I'm losing track of who said what) are the ones who claimed a windfall profits tax would stifle investment in new sources of oil. I highlighted the point the profits were not going into looking for new sources of oil.

Nope not me.

In looking at that response to the concern the tax would stifle reinvestment in new sources of oil, I discovered the bottleneck in the supply of gasoline was at the refinery, not the oil fields. So I thought you might be interested to know there also was no investment in refinery capacity, thereby keeping supply low so prices at the pump would continue to climb.

So are you claiming that oil supply is going to increase (meaning more refineries are needed) or that we are at peak oil and that oil supply is going to decrease (meaning it makes no sense to build new refineries). You seem to be claiming both at different points in this thread.

Personally, the price at the pump and the bottleneck at the refinery are not my concerns. If you'd pay any attention to what I've been saying instead of trying to find some semantic straw man, you know what I am concerned about is investing in alternative energy sources and conservation of current energy use by increasing efficiency.

You raised the issue of people being unable to afford the gas they needed to survive, not me. If it is not your concern, why raise it?

You ignore the fact the government is currently subsidizing more drilling and exploration while claiming it is inefficient for the government to subsidize alternative energy and conservation by increased efficiency.

Nope. I have simply asked for EVIDENCE that the government has a good track record in directing public cash.

Considering the profits, the oil companies don't need my tax dollars to subsidize drilling and exploration.

Finally something we agree on.

Given that the government thinks this IS a good use of public money, can you perhaps understand why I doubt that they will do a good job of directing future subsidies as well? If the subsidies that currently exist are illogical, the answer is not to give the same people more money to make further subsidies....

But they have enough to be taxed to subsidize alternative energy. And if we don't do that but merely allow the free market to function without regulation, the price of gas will eventually be too high for much of the population.

Enough? How are you defining "enough"?

And I thought that the price at the pump was not your concern?

The alternative energy market might indeed catch up eventually, but at an unnecessary cost in the meantime.

And yet you have no evidence at all that your windfall tax will lead to LOWER pump prices in the meantime. Logic says it will drive prices higher.

[ZirconBlue]

Skeptigirl,

I am sympathetic to the points (I think) you are trying to make, but I do think it is fair to ask for a definition of "excessive profits". I'm not trying to join the gang-up on you. I am sincerely interested and would like to hear all sides of this debate, but I don't think you're holding up your end by avoiding a formal definition of what you think "excessive" means in this context.

ETA: Actual content. I'm not sure what keys I hit, but I was not ready to submit, yet.

[EHocking]

Can't admit you're wrong, eh Zig? Prefer to switch the argument to semantics instead of the actual discussion?

Let's pick an arbitrary definition from one of the articles I cited: “They have so much profit, it’s almost an embarrassment of riches."

You are also trying to take this semantic argument out of context. The context is, does this corporate behavior require government regulation, not, what is the definition of excessive. By trying to isolate your one criteria from the discussion, whether the profits are excessive, you are merely avoiding the actual issue here. That's a waste of thread space. Why not discuss the actual issue?If the argument is that "excessively" profitable corporations should be hit with a windfall tax, why confine it only to oil companies?

While, yes, it's true that the company with the greatest increase in revenue *is* an oil company, Rosnest, it is the only oil company in the top 20.

Ironically, considering the subject of this thread, the leading company as far as return on revenue goes (ie profit) it's an electricity supplier - National Grid.

Source is Fortune 500.
http://money.cnn.com/magazines/fortune/global500/2006/performers/companies/highest_returns_revenues/index.html

[BobK]

Here's a primer on gas prices from the DOE (http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/primer_on_gasoline_prices/html/petbro.html)

[Peskanov]

If the argument is that "excessively" profitable corporations should be hit with a windfall tax, why confine it only to oil companies?

Because energy is critical for any advanced society? Because it also involves inteernational politics an strategic issues?

Just a sugestion...

[Ziggurat]

Can't admit you're wrong, eh Zig? Prefer to switch the argument to semantics instead of the actual discussion?

Wrong about what? I'm not the one making claims. In fact, I haven't even contended that your claims are wrong. ALL I've done is ask you to provide a definition for the term on which your OWN claim rests. That's all I've been asking for: a definition of your term. Without it, the debate cannot proceed: I cannot agree OR disagree with you because I do not know what you mean.

Let's pick an arbitrary definition from one of the articles I cited: “They have so much profit, it’s almost an embarrassment of riches."

Well, you got the "arbitrary" part right, because that's not even a definition. Here's something that looks like a definition: "An excess profit is a profit that is an embarrassment of riches". Of course, such a definition is no better, because it's merely substituting one undefined phrase (embarrassment of riches) for another (excess profit). I still don't know how to tell if something qualifies, and it's even worse now because I could imagine a specific definition for "excess profit" might exist, but "embarrassment of riches", whatever it means, is almost certainly subjective.

You are also trying to take this semantic argument out of context. The context is, does this corporate behavior require government regulation,

Way to try to change the subject. You didn't say that corporate behavior required government regulation. You said that excessive oil company profits should be subject to a windfall tax. That's a far more specific claim on your part. If the question is merely should government regulate corporate behavior, well, that's actually a rather boring question, because government WILL regulate it, so the issue really is always going to be to what extent, not whether or not to do so at all. Which is why it matters that you called for windfall profit taxation, and NOT simply some nebulous, unspecified regulation.

That's a waste of thread space. Why not discuss the actual issue?

I can't unless you provide a definition for the terms you use. Otherwise we'll just be talking past each other, which is just as much of a waste of space as your refusal to provide the most basic courtesy to your opponents of defining your terms.

[Jaggy Bunnet]

Because energy is critical for any advanced society? Because it also involves inteernational politics an strategic issues?

Just a sugestion...

More critical than electricity? After all the most profitable company based on the cite is an electricity, not an oil company.

[BobK]

Tax dollars from all companies look and spend the same.

Point out the companies listed that have 'excessive profits'. Justification would be nice.

Here are the top 6 U.S. oil companies and the top 6 other U.S. companies by revenue.

figures are $ millions World oil Co.
Oil Co. revenue profit return rank by revenue
Exxon 339,938 36,130 10.6% 1
Chevron 189,481 14,099 7.4% 4
Conoco 166,683 13,529 8.1% 5
Marathon 58,958 3,032 5.1% 14
Sunoco 31,176 974 3.1% 22
Hess 23,255 1,242 5.3% 25

Other U.S.
Walmart 315,654 11,231 3.6%
GM 192,604 -10,576 loss
Ford 177,210 2,024 1.1%
GE 157,153 16,353 10.4
Citigroup 131,045 24,589 18.8%
Amer. Intl. 108,905 10,477 9.6%

My thanks to EHocking for providing a link to the data I used.

[TjW]

skeptigirl:
Should restaurants pay a windfall tax on their profits from fountain drinks? There's two or three cents worth of syrup and CO2 in that generally-over-a-dollar drink. Are they making an excess profit?

[Peskanov]

More critical than electricity? After all the most profitable company based on the cite is an electricity, not an oil company.

Electricity is energy too.
Therefore, it's ok for me if the state tries to control several aspects of the bussines (like profits) to ensure the wellfare of the society.
This can mean several thing, from taxing to price regulation, depending on the specific interest of the society.

Certainly, my wellfare does not depend on the price of icecreams, so I don't care about the profits of the icecream industries.

[Skeptic Ginger]

Skeptigirl,

I am sympathetic to the points (I think) you are trying to make, but I do think it is fair to ask for a definition of "excessive profits". I'm not trying to join the gang-up on you. I am sincerely interested and would like to hear all sides of this debate, but I don't think you're holding up your end by avoiding a formal definition of what you think "excessive" means in this context.

ETA: Actual content. I'm not sure what keys I hit, but I was not ready to submit, yet.The whole point of claiming I didn't define excessive profits is based on the false premise that the reason I gave for the windfall profits tax is the oil companies are making excessive profits. I never said the main or only reason for the tax was "excessive profits" unless something I said was misunderstood. And if there was a misunderstanding I have clarified the reason for the tax several times now.

What I did say was oil company profits have been obscene. Which they have. That sentiment was echoed by others in the many sources I cited. For example, the reason for the Congressional hearings was because the profits seemed excessive in light of record gasoline prices.

To get past the "define excessive" straw man I quoted one of the sources and said, "Let's pick an arbitrary definition [of excessive] from one of the articles I cited: “They have so much profit, it’s almost an embarrassment of riches." That would certainly define excessive.

I also made a number of other more specific comments about just how much greater the profits were than implied when the oil companies testified before Congress and in the oil company ads. In both places, the oil companies noted a supposed unchanged profit margin from gasoline but purposefully left out the profit margin increases in both unrefined oil and as I later found, in the actual refinery profit margin. If the profits were usual and reasonable if one only knew the facts, then why hide the facts?

There is no question the profits in the oil industry are indeed excessive. If that is an issue by itself, and you just want my opinion why I think it is excessive, then I give you my personal values. Making a killing at the expense of others is not one of my values. Making a reasonable profit is. Not taking advantage of monopolies and supply shortages is one of my values. I had the chance to overcharge people for flu shots several years in a row. I chose not to.

In the beginning of this discussion I said oil company profits were obscene. If Zig and Jag and Bob want to discuss the windfall profits tax then the definition of obscene or excessive profits is not the relevant issue. If they want to know my personal morals and definition of excessive profits then claim that personal value, in isolation from other market factors, is what I base the rationale for a windfall profits tax on oil companies, that straw man is disingenuous to this discussion.

In other words, I said the windfall profits tax was for a number of reasons and had a desired result. Instead, it was claimed I said the tax was because the profits were obscene, which, while I did say that, I didn't say that was the reason for the tax.

[Skeptic Ginger]

If the argument is that "excessively" profitable corporations should be hit with a windfall tax, why confine it only to oil companies?

While, yes, it's true that the company with the greatest increase in revenue *is* an oil company, Rosnest, it is the only oil company in the top 20.

Ironically, considering the subject of this thread, the leading company as far as return on revenue goes (ie profit) it's an electricity supplier - National Grid.

Source is Fortune 500.
http://money.cnn.com/magazines/fortune/global500/2006/performers/companies/highest_returns_revenues/index.htmlAnd here you see Zig has successfully used the straw man to argue against all that I posted, as well on your own, you ignored what I posted.

The question is, does this specific circumstance require a windfall profits tax. The question is not, what is the definition of excessive? The question is not what level of profit requires a windfall tax? Isolating one criteria from the discussion, whether the profits are excessive, completely ignores the real issue.

Maybe the problem is many of you are assuming "Windfall Profits" defines the reason for the tax. It doesn't. With that additional note, I repeat again what I said.

Oil company profit MARGINS (as well as net profits) are up by large amounts. Money isn't being re-invested in energy production. Why should they? Profits will continue to rise on the gas shortage. The fact no new refineries are being built with these record profits is certainly a clear indication of at least the short term and more likely the long term strategy of the big oil companies. Squeeze the consumer.

There isn't necessarily evil going on here with the exception of the dis-information campaign and corruption in our government. What is going on here is normal corporate behavior to benefit the corporate bottom line. That's capitalism and it mostly works.

But, when you get certain situations, and this is clearly one of them, you don't want a government giving tax breaks in exchange for campaign donations, and you don't want the oil companies to also control the media and actually hold offices in the government like Bush and Cheney.

You do want government intervention and regulations to benefit the majority of the people. In this case, the majority of the people would benefit from government intervention that encourages alternative energy production and energy conservation. That's what the windfall tax is all about.

We are not benefiting from current government intervention and regulations in the oil markets which subsidizes oil exploration through tax write offs, and which allowed consolidation of big oil companies which now have monopoly positions.

[Skeptic Ginger]

Because energy is critical for any advanced society? Because it also involves inteernational politics an strategic issues?

Just a sugestion...Exactly. And I never said the reason for the tax was the profits were obscene, I just said the profits were obscene. So why keep arguing over the issue of taxing excessive profits? It's a straw man.

[Skeptic Ginger]

Here's a primer on gas prices from the DOE (http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/primer_on_gasoline_prices/html/petbro.html)
And the point of this link, Bob?

It describes everything about why gas prices are high except who gets the money and what is the government or industry doing about the crisis? It makes me wonder why the DOE feels the need to put up a web page such as this. Is it supposed to make the gas consumer say, "Oh gee, now I see why prices are so high"?

Also, according to other sources, the damage to the infrastructure from Katrina is not as big a factor in refinery capacity as claimed in this source but that's not a big issue.

The fact we have no choice but to use gas [or ride a bike] is made clear here as well.However, prices of basic energy (gasoline, electricity, natural gas, heating oil) are generally more volatile than prices of other commodities. One reason is that consumers are limited in their ability to substitute between fuels when the price for gasoline, for example, fluctuates. So, while consumers can substitute readily between food products when relative prices shift, most do not have that option in fueling their vehicles.All the more reason government needs to be intervening in this market for the benefit of the majority of people who supposedly elect that government.

[Skeptic Ginger]

Wrong about what? I'm not the one making claims. In fact, I haven't even contended that your claims are wrong. ALL I've done is ask you to provide a definition for the term on which your OWN claim rests. No matter how many times or how many ways I say the claim does not rest on this? So instead of discussing what the claim does rest on, you prefer this little means of avoidance.

Way to try to change the subject. You didn't say that corporate behavior required government regulation. You said that excessive oil company profits should be subject to a windfall tax. That's a far more specific claim on your part. If the question is merely should government regulate corporate behavior, well, that's actually a rather boring question, because government WILL regulate it, so the issue really is always going to be to what extent, not whether or not to do so at all. Which is why it matters that you called for windfall profit taxation, and NOT simply some nebulous, unspecified regulation.Some corporate behavior does indeed require government intervention. Why do you insist on ignoring the reasons for the windfall tax? Why keep claiming the reason for the tax is the profits are excessive when that isn't the reason for the tax?

I can't unless you provide a definition for the terms you use. Otherwise we'll just be talking past each other, which is just as much of a waste of space as your refusal to provide the most basic courtesy to your opponents of defining your terms.If you want to discuss the profits being obscene, it's opinion. If you want to discuss the windfall tax and government regulations of corporate behavior, then quit arguing straw.

[Skeptic Ginger]

More critical than electricity? After all the most profitable company based on the cite is an electricity, not an oil company.You have a case for taxing a company that produces electricity and putting the money into alternative energy research? So make your case, I'm listening.

[Jaggy Bunnet]

Maybe the problem is many of you are assuming "Windfall Profits" defines the reason for the tax. It doesn't. With that additional note, I repeat again what I said.

A Windfall Profits Tax is by its very definition, a tax imposed on windfall profits. Therefore in considering whether one is justified, it is necessary to define the windfall profits to which it applies.

Which you have consistently refused to do.

I also note that you have nothing to say about the fact that the claims you posted about BP were wrong. Seems a bit typical of this thread.

You post a claim or link to an article making a claim as "evidence" of windfall profits (without ever defining that term) and when the information in that article is shown to be false or misleading, you do not argue the point or reconsider your position based on the real information, you spam some more, equally inaccurate, links.

FTC report showing no evidence of collusion, as opposed to the claimed anti-competitive behaviour. Of course when you found out that the FTC report did not say what you thought it said it was because the current government had gutted that agency so it was no longer valid. And the evidence you produced for this claim (that within 3 months of taking office the administration had gutted the FTC, rewritten and published this report) was, as usual, completely missing.
BP and its non-oil revenue (not the 0.1% you claimed but 9.7%).
That you have defined the term "excessive profits". Those who disagree with you: Me, ZirconBlue, Ziggurat, Rockoon (thats just those who have specifically stated in this thread that they do not think you have defined the term). Nobody has posted in support of your contention that you have defined the term.

[Jaggy Bunnet]

You have a case for taxing a company that produces electricity and putting the money into alternative energy research? So make your case, I'm listening.

No YOU explain why a windfall profits tax is justified on oil companies but not on an electricity company despite the fact that the electricity company is making a far higher profit margin.

Maybe you could start by defining what these windfall profits are that you want to tax?

[Skeptic Ginger]

skeptigirl:
Should restaurants pay a windfall tax on their profits from fountain drinks? There's two or three cents worth of syrup and CO2 in that generally-over-a-dollar drink. Are they making an excess profit?
Can none of you read?????????????????????????????????????

I hate to shout but this is one time it is called for.

THE FACT THE PROFITS ARE EXCESSIVE IS NOT THE REASON FOR THE TAX!!!

[rockoon]

Can none of you read?????????????????????????????????????

I hate to shout but this is one time it is called for.

THE FACT THE PROFITS ARE EXCESSIVE IS NOT THE REASON FOR THE TAX!!!

Are you suggesting that a "windfall tax" applies to companies that are NOT making "excessive profits?"

[Skeptic Ginger]

I also note that you have nothing to say about the fact that the claims you posted about BP were wrong. Seems a bit typical of this thread.From the BP website, the rosy picture:
BP Solar is a global company with over 2200 employees focused on harnessing the sun's energy to produce solar electricity. (http://www.bp.com/sectiongenericarticle.do?categoryId=3050467&contentId=3060085) This includes the design, manufacturing, marketing and installation of quality solar electric systems for a wide range of applications in the residential, commercial and industrial sectors. In the U.S., BP Solar employs more than 500 employees and runs the largest fully-integrated solar manufacturing facility in the country.

Hydrogen fueled power plants (http://www.bpalternativenergy.com/liveassets/bp_internet/alternativenergy/landing_hydrogen.html)Carson Project
When completed, the project will be the largest hydrogen-fired power generation facility of its type in the world, producing 500 MW of low carbon electricity for California. 500 MW of electricity is enough to power about half a million homes.

Peterhead Project
When completed, the plant will be the largest hydrogen-fired power generation facility in the world, producing 350 mw of low carbon electricity, enough to power a quarter of a million homes in a city the size of Glasgow.

From the financial statement, the true fraction:
BP Financial Statement, second qtr/half year, 2006 (http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/bp_second_quarter_2006_results.pdf)

pg 9 500 million new capital over ten years in biofuels

pg 10 As part of BP Alternative Energy’s strategy, we entered into a strategic alliance with Clipper Windpower plc and signed an agreement with GE to jointly develop and deploy hydrogen power projects.

pg 12 “We have 16 major projects [all oil] currently under development scheduled to start up in the 2007-9 period, and a further 11 under appraisal. Beyond 2009 we now see a further 26 major projects [all oil] which would be expected to develop around 8 billion boe. These projects support our expectation that we will move 11 billion boe from non-proven resources to proved reserves between now and 2010, underpinning our continued renewal beyond this decade.

Capital expenditure excluding acquisitions is expected to be between $15.5 billion and $16 billion for the year, greater than previously estimated as a result of higher sector-specific inflation, driven by high oil prices. Divestment proceeds are also expected to be significantly higher than previously estimated at more than $6 billion.”The entire statement is oil, oil, oil. Maybe you can find more capital investment or assets in that statement for alternative energy than I did.


The definition of "windfall profits tax" is what you tax. Are you just arguing what percentage of the profits get taxed? It's insane to keep insisting the reason for the tax is the profits are too high, as if anyone in this thread or in any of the cited sources made that claim.

Why you tax the profits is not the same as what you tax.

Let's ignore all the real issues. Instead, let's all argue about whether the profit margin alone is a reason to tax a business. No it isn't. See we agree. Now can we move on and address the real issues here?

[Skeptic Ginger]

Are you suggesting that a "windfall tax" applies to companies that are NOT making "excessive profits?"What you tax: windfall profit

Why you tax it: MANY REASONS

Do you always tax it? Of course not!

Are there other taxes? Yes
Are they all on windfall profits? No
Why call these profits a windfall in this case? Because the oil market is susceptible to windfall profits for any number of reasons.

[rockoon]

What you tax: windfall profit

Why you tax it: MANY REASONS

Do you always tax it? Of course not!

Ok, what is a windfall profit? Be specific because I want a test that tells me if ABC company has made a windfall profit this year.

[Skeptic Ginger]

:jedi:

You [as in those arguing straw] are all still ignoring all the other issues here. Care to move past this one and address the rest?

I'm done arguing what is a windfall and how much is a windfall because that isn't and never was the issue, rock. But you can see what I edited into my post while you were writing.

[rockoon]

Consider this scenario..

ABC Corp is projecting big profits for next year. These profits are in danger of perhaps maybe being considered "windfall profits" and would then be subject to a "windfall tax."

The bean counters at ABC calculate that if they make $1000 next year, then they will be hit with a 33% "Windfall tax" but if they only make $999 next year, they wont be.

The bean counters report to the CEO of ABC that if profits go over $999, then they better be higher that $1498 because making $1498 is worse than making $999.

The CEO then realized why a graduated tax system is far better than this ********.

[Skeptic Ginger]

Financial Dictionary; the Language of Money (http://www.anz.com/edna/dictionary.asp?action=content&content=windfall_profit)Windfall profit

An unexpected benefit, often resulting from an event beyond the control of the recipient.Nothing here about amount.


Look who's arguing on the side of Jag, Zig, Bob and Rock. Why it's the Heritage Foundation. (http://www.heritage.org/Research/EnergyandEnvironment/wm918.cfm)

When you're ready to discuss the real issues let me know. My guess is none of you will.

[rockoon]

That can't be your definition of a "Windfall Profit"

You believe that the oil companies are colluding to manipulate price by intentionally not building new refineries, so as to increase long term profits at the expense of short term profits (clearly 2 refineries are better than 1 in the short term)

According to you, it was planned profit and that certainly can't be "unexpected" profit.

[Jaggy Bunnet]

Can none of you read?????????????????????????????????????

I hate to shout but this is one time it is called for.

THE FACT THE PROFITS ARE EXCESSIVE IS NOT THE REASON FOR THE TAX!!!

It's insane to keep insisting the reason for the tax is the profits are too high, as if anyone in this thread or in any of the cited sources made that claim.

Really, then I wonder who posted this:

"In all of your answers, Jag, you haven't provided one source showing the actual profits of the oil companies wasn't excessive"

And whose sources contain the following statements:

"At the same time, oil company profits have soared.

As a result, there have been suggestions in Congress about instituting a windfall-profits tax, "

Looks to me like the record profits are directly related to the suggestions about windfall-profits tax.

And from the other source, what immediately preceded this statement?

"This is why a windfall profits tax is justified."

Why it is a discussion of the record oil company profits. So looks like that source also thinks the justification for windfall profits tax is record profits.

Or what about the Washington Post article?

"Now, even as high gasoline prices continue to anger motorists and aggravate financial problems at General Motors Corp. and Ford Motor Co., the oil companies have begun to report record quarterly profit. Yesterday, British energy giant BP PLC reported a $6.53 billion third-quarter profit, up from $4.87 billion in the same period last year. And tomorrow, analysts expect Exxon Mobil Corp. to show that it earned nearly $9 billion over the past three months -- the largest corporate quarterly profit ever.

Grumbling already has begun on Capitol Hill: Last month, one senator proposed a windfall-profit tax on oil conglomerates,"

Looks like they think the proposal for a windfall profit tax is because of record profits as well.

Three specific examples of where the sources you rely on directly link the proposal for a windfall tax to the record profits. Yet you claim none of them have done so. Did you not read them or were you simply being dishonest?

[Jaggy Bunnet]

.

To keep things simple, I have removed fr0m the post quoted all of the bits that do not address the points raised in the post you quoted, i.e. that do not relate to you defending the claim that BP receives only 0.1% non-oil revenue, that it changed its name to deflect damage in the current market environment by not including the word "petroleum" (despite this word not appearing since 1998) and that oil companies make political contributions to gain influence, when BP has a stated policy of never paying such contributions.

Unfortunately that doesn't leave a lot. Like to try defending these claims or admit they were inaccurate?

[Ziggurat]

Look who's arguing on the side of Jag, Zig, Bob and Rock. Why it's the Heritage Foundation. (http://www.heritage.org/Research/EnergyandEnvironment/wm918.cfm)

I haven't PICKED a side because I still don't know what the hell you're talking about because you won't define your terms. Now you insist that "excess profit" is irrelevant. Fine: I'll just ignore everything you said previously, and try to start over. You want a tax on "windfall profits". What is a windfall profit? Let's start there. But in the meantime, do me the courtesy of not assuming a position for me. The whole "guilt by association" thing you tried to pull above is so trite and pathetic, I really thought it would be beneath you. You're not getting piled on because we're all just horrible, lousy people who don't like you.

When you're ready to discuss the real issues let me know. My guess is none of you will.

When you're willing to tell me what the hell you mean by anything you say, let me know. But I've been asking for a while now, with no luck.

[Old man]

If the argument is that "excessively" profitable corporations should be hit with a windfall tax, why confine it only to oil companies?
Because energy is critical for any advanced society? Because it also involves inteernational politics an strategic issues?

Just a sugestion...
If "energy is critical", why not tax all highly profitable businesses? Wouldn't that give us more tax dollars to throw at alternate energy?
Can none of you read?????????????????????????????????????

I hate to shout but this is one time it is called for.

THE FACT THE PROFITS ARE EXCESSIVE IS NOT THE REASON FOR THE TAX!!!
I'd like to think that we read. Perhaps you're having a little trouble seeing the forest through the trees.

Your stated reason is to subsidize alternate energy, but I'd like to know why you seem to expect only 'big oil' to pick up the tab. You've spent a lot of your posting time accusing 'big oil' of making 'obscene' and 'embarrassing' profits. Several of us would like to know how you define obscene profits, because it sure looks like that's why you want to single out 'big oil' for your 'windfall profit' taxes.

Is my understanding correct?

[Old man]

Come on, guys, you're brow-beating her. You asked for her definition and here it is-
She thinks that oil companies should not be allowed any profit.
Can't tell if this post is sarcastic or just ignorant?

I have no need of assistance here, see my previous posts. Thanks anyway.
Sarcastic, but in a friendly, joking way.

This is not your definition?

Excessive profits: the total profit margin of the oil companies not merely the profit margin on refined gasoline.

How more clearly must I say it ...?

If it is, how is it different from "oil companies should not be allowed any profit"?
If it isn't, then, because I'm stoopid, and 'ignorant', could you please rephrase your definition of "Excessive profits" in a way I might be able to understand?;)

[Peskanov]

Old man,

If "energy is critical", why not tax all highly profitable businesses? Wouldn't that give us more tax dollars to throw at alternate energy?

Well, we are already taxing all bussines and using part of the money for alternative energies (read: eolics).

The question is: why should we tax oil companies *more* than the rest to invest in cleaner technologies?

I don't have a clear stance in that question, but I think the premises of the problem are good enough to al least consider it.
- Free market economies are wary with monopolies because they make competition nearly impossible; the success of one company can be an anchor for the society.
- In this case, the success of one industrial sector (oils) can be an anchor for all the energy techs trying to compete.
- This is a social problem, because society is interested in reducing pollution.

Therefore, the idea of limiting the success of the oil industries to improve posibilities of alternative energies has some merit.

Obviously, only scientist with wide knowledge about industrial processes and economist can pass a good judgement on this question. I can only state my prefered politics.

[Old man]

Well, we are already taxing all bussines ...
Point taken. I'm already aware of the fact that other 'reasonable' taxes are being collected. I thought it fairly obvious that we are talking about 'windfall' taxes on 'excessive' profits. My bad.

However (since I don't know anything at all about taxation in Spain), you may not realize that in the USA, all taxes are borne ultimately by the consumer. Tarriffs, excise taxes, property taxes, and corporate income taxes are all passed on to the consumer.


- Free market economies are wary with monopolies because they make competition nearly impossible; the success of one company can be an anchor for the society.
- In this case, the success of one industrial sector (oils) can be an anchor for all the energy techs trying to compete.
I don't understand what you mean by the above statement.

[Skeptic Ginger]

Here is a summary of what started this exchange and one more attempt to clear the straw out of this discussion. The essential points are posted with all the extra removed so if you skim it, you'll remain lost in the straw. The links are there if one wants to see the entire post and context but one need not click on the links to find the summarized points. Quotes are from the posts, if not in quotes it is paraphrased.

The exchange started here with Jag claiming consumers just need to live where they work.

Skeptigirl: One size fits all solution is unrealistic.

Jag: Bigger solution needed, electric car alone is not enough.

I'm all for big solutions, but a lot of little ones can add up as well.

...Implementing the solutions is as important as developing them. You can more easily increase auto efficiency and develop alternative fuels than you can get people to make major lifestyle changes.

In a sense, the Middle East crisis may be doing us one favor (not that there isn't a better way than a war to fix the energy crisis). The higher the gas prices the more attractive alternative fuels become. It's better those prices go up before we run out of oil rather than when we run out.

But we also need to collect a windfall tax from the oil companies. The money needs to be put into R&D. If the oil companies invest in fuel efficiency and/or alternative sources of energy, they can deduct that from the windfall tax.

Why should those who didn't take the risk of investing in oil company shares decide they are entitled to the benefits that belong to those who did take that risk?

Would the same principle apply to compensate investors who lose money because the company they invest in loses money due to changed economic conditions?

Skeptigirl: Corporate profits rely on things investors don't pay for like infrastructure and defense. Taxes are justified.

Products prices don't include such things as cost of disposal. It's a natural flaw in free markets. Regulations and taxes are justified.

Monopolies are a result of free markets but also pose a risk to free markets. Regulations are needed to keep monopolies from destroying free markets and are especially needed in utilities and basic necessities markets.

The Don noted people get rich in countries with poor infrastructure and defense spending isn't solely for oil. Regardless, oil company profits still rely on costs not paid by investors for infrastructure and defense spending - neither of Don's points negated justification for taxes and regulations.

The problem about imposing taxes to effect social engineering change is that the results are difficult to predict....

If we put a tax in place to subsidise alternative energy, all that will happen is that alternatives will become even less affordable in real terms as people exploit the tax loophole to make more money. The first in line will be the oil companies who will see an opportunity to make even more money....

all that would happen if they [were] going to receive a windfall tax is that they'd "lose" their profits, it's surprisingly easy.

...We were talking about imposing a windfall profits tax to subsidize R&D in alternative energy sources, not "social engineering". If the oil companies wanted to invest in the R&D themselves, it would be tax deductible.

...The oil company profits are currently quite obscene. If you let people charge as much as the market will bear for certain commodities that people have to have for survival such as gas, when there is a shortage of those commodities where are the brakes on the costs? We know from history greed in humans can be immense. Are you suggesting oil companies should be unrestricted in pricing their products regardless of the effect on the rest of us?

And there is the crux of this discussion. Two completely separate issues.

Why tax oil companies, what would be the goal and would the actual result achieve that goal?The claim has been made the oil companies and/or oil market would suffer from the tax. Current profits are large enough the claimed negative results of the tax wouldn't happen.

[Skeptic Ginger]

Now continuing on with the discussion of the issues under all the straw:

In the first issue, how excessive the current profits are is unrelated to the reason for the tax. How high gas prices are and may go, oil company monopoly of the market, the idea of peak oil, and the bottleneck at the refineries are all relevant.


In the second issue, taxing the net profit or % return on the dollar does involve defining what is excessive profit when one evaluates the claim, taxing the profit will have negative consequences, namely the additional tax will cause the oil companies to pass the cost on at the pumps
and/or it will discourage investors
and/or it will result in halting or slowing exploration for and development of new oil resources.

This is where the use of the term, windfall profit tax, becomes relevant. By defining the portion of profits taxed as specifically extra or "excessive' profit, you also deny the claim the tax it is part of cost of goods sold. How or whether you stop oil companies from passing on the tax to consumers would be up to the legislature and how the law is written.

The profit in the current case of the oil companies is unquestionably large. The definition of what is excessive isn't based on a fixed value. It is a relative value.

As a relative value one defines "excessive profit" relative to two different criteria. One criteria is, will the added tax indeed affect investing/production activities? Considering the real or total profit margin/return on investment of the oil companies, which is very high relative to other industry investment options, there's no way investors are going to flee the oil markets if a windfall profit tax is levied.

The second criteria one judges "excessive profit" is whether the amount of profit is a fair amount. Then what does one judge fairness by? Monopoly power used to drive up prices is not considered fair in a free market system if the monopoly uses uncompetitive practices. In other words, if you cheat at capitalism, you don't have a free market and you don't get the benefit of supply and demand forces operating.

In the case of the oil companies, maintaining a bottleneck at the refinery when there is more than sufficient capital in the company to increase capacity (and compensate for any Katrina damage) isn't using supply and demand, it is manipulating supply. That isn't a free market.

Is it evil just because it is manipulating supply? No, it's what one expects corporations to do. That's why government taxes and regulations are needed to keep the free market system functioning at an optimal level. We shouldn't expect the oil companies to be concerned about alternative energy sources unless it benefits the corporation. But we should expect government to be concerned about 'peak oil' and stimulating research in alternative fuel sources.

Don's issue of the government not being very good at interfering in the free market was valid and also worth discussing. I happen to think that's only true because of flaws in the system. If scientific consensus instead of campaign contributions was the basis for how one regulates and taxes particular industries, government regulations in free markets would be a lot more successful. While we aren't likely to get a perfect system of government, we can certainly improve things by dumping the current administration which has gone much too far into the pockets of big corporations.

[Skeptic Ginger]

That can't be your definition of a "Windfall Profit"

You believe that the oil companies are colluding to manipulate price by intentionally not building new refineries, so as to increase long term profits at the expense of short term profits (clearly 2 refineries are better than 1 in the short term)

According to you, it was planned profit and that certainly can't be "unexpected" profit.One more bit of straw to deal with. Just because oil company monopolies have taken advantage of the "windfall" doesn't mean there is no windfall involved.

[Old man]

Now continuing on with the discussion of the issues under all the straw:

In the first issue, how excessive the current profits are is unrelated to the reason for the tax. How high gas prices are and may go, oil company monopoly of the market, the idea of peak oil, and the bottleneck at the refineries are all relevant.


In the second issue, taxing the net profit or % return on the dollar does involve defining what is excessive profit when one evaluates the claim, taxing the profit will have negative consequences, namely the additional tax will cause the oil companies to pass the cost on at the pumps
and/or it will discourage investors
and/or it will result in halting or slowing exploration for and development of new oil resources.

This is where the use of the term, windfall profit tax, becomes relevant. By defining the portion of profits taxed as specifically extra or "excessive' profit, you also deny the claim the tax it is part of cost of goods sold. How or whether you stop oil companies from passing on the tax to consumers would be up to the legislature and how the law is written.

The profit in the current case of the oil companies is unquestionably large. The definition of what is excessive isn't based on a fixed value. It is a relative value.

As a relative value one defines "excessive profit" relative to two different criteria. One criteria is, will the added tax indeed affect investing/production activities? Considering the real or total profit margin/return on investment of the oil companies, which is very high relative to other industry investment options, there's no way investors are going to flee the oil markets if a windfall profit tax is levied.

The second criteria one judges "excessive profit" is whether the amount of profit is a fair amount. Then what does one judge fairness by? Monopoly power used to drive up prices is not considered fair in a free market system if the monopoly uses uncompetitive practices. In other words, if you cheat at capitalism, you don't have a free market and you don't get the benefit of supply and demand forces operating.

Thank you, skeptigirl, this is a much better definition.

But, why then, did you make the "Excessive profits: the total profit margin of the oil companies" statement?

[Skeptic Ginger]

Thank you, skeptigirl, this is a much better definition.

But, why then, did you make the "Excessive profits: the total profit margin of the oil companies" statement?Because the oil companies themselves, in their ads and when they testified before Congress claimed their large net profits represented the same profit margin they had previously made and the only reason the net was so high was they were dealing with bigger numbers all the way around. That was a lie. Their real profit margin has about doubled while the companies purposefully only discuss the profit margin from the refinery to the gas pump purchase.

Jag wanted to discuss the profits as if the profit margin was indeed the same and the tax would make that profit margin smaller. The fact that isn't true in this case is still being ignored by many people in this discussion.

[Peskanov]

Oldman,

However (since I don't know anything at all about taxation in Spain), you may not realize that in the USA, all taxes are borne ultimately by the consumer. Tarriffs, excise taxes, property taxes, and corporate income taxes are all passed on to the consumer.

Of course, but I don't see that as a negative thing. Usually, high taxes are present when citizens can pay them. I wouldn't mind paying more taxes if this means living like an scandinavian!

I don't understand what you mean by the above statement.

I mean there are situations where a society based on free market, is damaged by this free market, and in that case state intervention is justified..

Monopolies are a known example.

Now, let's look the energy sector. There are several companies playing there, so there is not a monopoly, right? However the problem is similar to monopolies. Oil is a very cheap source of energy; add to this economies of scale (HUGE scale), and that renders other energies uncompetitive. The scale of the oil industry is so big we become totally dependent on it.
Only using government intervention we can diversify our energy sources; a free market will not allow it until oil becames scarce.

So yes, if the interest of society is to balance the use of different energies, it is reasonable to punish the oil sector.
How to do that? I don't know. Windfall taxes could be a way. Or not. In any case, adjustements should be made in the energy sector, not in other others.

[Skeptic Ginger]

If "energy is critical", why not tax all highly profitable businesses? Wouldn't that give us more tax dollars to throw at alternate energy?All businesses are taxed. The issue here is should these circumstances be considered an exception. Clearly they are.

Your stated reason is to subsidize alternate energy, but I'd like to know why you seem to expect only 'big oil' to pick up the tab. You've spent a lot of your posting time accusing 'big oil' of making 'obscene' and 'embarrassing' profits. Several of us would like to know how you define obscene profits, because it sure looks like that's why you want to single out 'big oil' for your 'windfall profit' taxes.

Is my understanding correct?Many people besides myself think the oil companies are being exceptionally greedy in the current situation. It's opinion, but I share it with others. As for why single out oil companies to subsidize alternative fuels, the fact oil runs almost all our cars and there are few alternatives is one reason. It is oil that we currently are running out of, that is making large profits because we are running out and taxing oil revenues is certainly logical.

However, if that isn't logical enough, the following paper describes many additional reasons. It's better to read the actual paper but I quoted a lot here because the issues are multiple and all the issues need to be considered. To try to simplify this discussion down to, "Skeptigirl wants oil companies taxed because they are making a lot of money", is foolish. It ignores the issues that the public needs to be aware of so they are not susceptible to the oil company campaign pretending gas prices are out of their control and their profits only appear "excessive" but really aren't.



I posted this source and some of the following already but the points have been covered in straw so here they are uncovered once again. I took out the references to shorten the quote but the facts in the paper are all from cited sources.

Consolidation in the Energy Industry: Raising Prices at the Pump? (http://www.citizen.org/documents/senatetestimony06.pdf)When communicating to the general public and lawmakers, oil companies downplay these record profits by calculating profits differently when they communicate with Wall Street and shareholders. When speaking to lawmakers and the general public, the oil industry highlights the small profit margins (typically around 8 to 10 percent) that measuring net income as a share of total revenues produces. [They may have a better understanding of how the profit picture is being distorted here but I believe what I said about proclaiming profit margins post-refinery and omitting margins pre-refinery are correct.]

But that’s not the measurement ExxonMobil uses when talking to investors and Wall Street. For example, here’s an excerpt from the company’s 2004 annual report: “ExxonMobil believes that return on average capital employed is the most relevant metric for measuring financial performance in a capital-intensive industry such as” petroleum. ExxonMobil’s 2004 10-k shows that that company’s global operations enjoyed a 23.6% rate of return on average capital employed. And the company’s rate of profit in the U.S. was even higher: domestic drilling provided a 37.0% rate of return on average capital employed, while domestic refining returned 28.6%. The company is making its biggest profit margins off the U.S. market. And ExxonMobil’s 2005 earnings release shows a 29.8% return on average capital employed for its global operations (it hasn’t yet released geographic or sector details of 2005 earnings).

The oil industry has also been falsely using the weather as an excuse for their record profits. Oil and gasoline prices—and oil company profits—were rising long before Hurricane Katrina wreaked havoc. U.S. gasoline prices jumped 23% from June 6 to Aug. 22 (Katrina made landfall at New Orleans on August 29). Indeed, profits for U.S. oil refiners have been at record highs. In 1999, U.S. oil refiners made 22.8 cents for every gallon of gasoline refined from crude oil. By 2004, they were making 40.8 cents for every gallon of gasoline refined, a 79% jump. And, according to industry analysts, those profit margins have soared even higher in 2005, to 99 cents on each gallon sold.

Faced with these facts, Congress and the White House instead recently passed energy legislation that does nothing to address any of the fundamental problems plaguing America’s energy policies—after all, if it did, why are having this hearing today? As a whole, the Senate voted to approve HR 6, the “comprehensive” energy bill, by a vote of 74 to 268, even though the only “comprehensive” aspect of the legislation is the $5 billion in subsidies to oil companies. Section 1329 allows “geological and geophysical” costs associated with oil exploration to be written off faster than present law, costing taxpayers $1 billion over the next decade. Section 1323 provides owners of oil refineries $400 million in tax breaks over 10 years. Sections 1325-6 allows natural gas companies like ExxonMobil to save $1.035 billion by depreciating their property at a much faster rate than current law. A number of provisions provide roughly $1 billion in royalty relief.

And Title IX, Subtitle J of the energy bill creates a new $1.5 billion spending program that benefits oil companies seeking to drill deepwater wells. The only possible explanation for why Congress would bestow these subsidies on oil companies are the $55 million in campaign contributions by the oil industry to Congress and the White House since 2001, with 81% of that total going to Republicans.

And environmental regulations are not restricting oil drilling in the United States. An Interior Department study concludes that federal leasing restrictions—in the form of wilderness designations and other leasing restrictions—completely block drilling of only 15.5% of the oil in the five major U.S. production basins on 104 million acres stretching from Montana to New Mexico. While only 15.5% is totally off-limits, 57% of America’s oil reserves on federal land are fully available for drilling, with the remaining 27.5% featuring partial limitations on drilling. This report contradicts industry claims that environmental laws are squelching production.

Congress can restore accountability to oil and gas markets and protect consumers by supporting Public Citizen’s 5-point reform plan:

• Implement a windfall profits tax and close loopholes allowing oil companies to escape paying adequate royalties.
• Launch an immediate investigation, including the use of subpoena, into uncompetitive practices by oil companies.
• Strengthen anti-trust laws by empowering the Federal Trade Commission to crack down on unilateral withholding and other non-collusive anti-competitive actions by oil companies.
• Re-regulate energy trading exchanges to restore transparency.
• Improve fuel economy standards to reduce demand.

In just the last few years, mergers between giant oil companies—such as Exxon and Mobil, Chevron and Texaco, Conoco and Phillips—have resulted in just a few companies controlling a significant amount of America’s gasoline, squelching competition. And the mergers continue unabated as the big just keep getting bigger: in August 2005 ChevronTexaco acquired Unocal, and in December ConocoPhillips acquired Burlington Resources. A number of independent refineries have been closed, some due to uncompetitive actions by larger oil companies, further restricting capacity. As a result, consumers are paying more at the pump than they would if they had access to competitive markets and five oil companies are reaping the largest profits in history.

...it isn’t so much an OPEC oil cartel, but rather a corporate cartel that should concern policymakers. Consider that the top five oil companies also produce 14% of the world’s oil. Combined, these five companies produce 10 million barrels of oil a day—more than Saudi Arabia’s export of 8.73 million barrels of oil a day.

The consolidation of downstream assets—particularly refineries—also plays a big role in determining the price of a gallon of gas. Recent mergers have resulted in dangerously concentrated levels of ownership over U.S. oil refining.

Because most of the largest companies are also vertically integrated, they enjoy significant market share in oil drilling and retail sales.

The proof is in the numbers. Profit margins for U.S. oil refiners have been at record highs. In 1999, U.S. oil refiners made 22.8 cents for every gallon of gasoline refined from crude oil. By 2004, they were making 40.8 cents for every gallon of gasoline refined, a 79% jump. And, according to industry analysts, those profit margins have soared even higher in 2005, to 99 cents on each gallon sold. It is no coincidence that oil corporation profits—including refining—are enjoying record highs.

A congressional investigation uncovered internal memos written by major oil companies operating in the U.S. discussing their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. From 1995-2002, 97% of the more than 920,000 barrels of oil per day of capacity that has been shut down were owned by smaller, independent refiners. Were this capacity to be in operation today, refiners could use it to better meet today’s reformulated gasoline blend needs.

A recent congressional investigation concluded that “crude oil prices are affected by trading not only on regulated exchanges like the NYMEX, but also on unregulated OTC markets that have become major trading centers for energy contracts and derivatives. The lack of information on prices and large positions in OTC markets makes it difficult in many instances, if not impossible in practice, to determine whether traders have manipulated crude oil prices.”

And these energy traders happily boast in public about how they’re price-gouging Americans, as a recent Associated press article makes clear: energy “traders who profited enormously on the supply crunch following Hurricane Katrina cashed out of the market ahead of the long weekend. ‘There are traders who made so much money this week, they won't have to punch another ticket for the rest of this year,’ said Addison Armstrong, manager of exchange-traded markets for TFS Energy Futures.”

But manipulation occurs even on the regulated exchanges. Just last month, the U.S. Commodity Futures Trading Commission issued a civil penalty against Shell Oil for “non-competitive transactions” in U.S. crude oil futures markets. The CFTC has a troublesome streak of “revolving door” appointments and hiring which may further hamper the ability of the agency to effectively regulate the energy trading industry. In August 2004, CFTC chairman James Newsome left the Commission to accept a $1 million yearly salary as president of NYMEX, the world’s largest energy futures marketplace. Just weeks later, Scott Parsons, the CFTC’s chief operating officer, resigned to become executive vice-president for government affairs at the Managed Funds Association, a hedge-fund industry group that figures prominently in energy derivatives markets. Such prominent defections hampers the CFTC’s ability to protect consumers.

Why We Need a Windfall Profits Tax

In most industries, when the main component (crude oil) of a product (gasoline) skyrockets in price, those higher costs eat into profit margins. But not the oil industry, because ExxonMobil and the other major oil companies operate as a type of monopoly, with massive oil production, refining and retail marketing operations.

House Speaker J. Dennis Hastert recently scolded the industry’s profits, saying “It is time to invest in America…we expect oil companies to do their part to help ease the pain American families are feeling from high energy prices.” But only one company—Citgo—has bothered to heed Hastert’s call. The company, a U.S. subsidiary of the Venezuelan state oil company, has dedicated tens of millions of dollars for low income American families in Chicago, New York, Boston and Maine.

[EHocking]

And here you see Zig has successfully used the straw man to argue against all that I posted, as well on your own, you ignored what I posted.I haven't ignored what you posted, I'm confused by it. YOu seem to be stuck on the excessive profits of the oil industry and whether that should trigger a windfall tax, ie:
The question is, does this specific circumstance require a windfall profits tax. The question is not, what is the definition of excessive? The question is not what level of profit requires a windfall tax? Isolating one criteria from the discussion, whether the profits are excessive, completely ignores the real issue.
Maybe the problem is many of you are assuming "Windfall Profits" defines the reason for the tax. It doesn't. With that additional note, I repeat again what I said.
Oil company profit MARGINS (as well as net profits) are up by large amounts. Here's where I'm confused. You say that excessive profits growth has nothing to do with your argument, then immediately go on about oil company profits. First it's confusing and second, it's inaccurate.

Headliners for growth of profit in the last year? Internet Services, then Railroads, THEN oil&gas (figure includes mining). Refining comes in 6th. <http://money.cnn.com/magazines/fortune/fortune500/performers/industries/growth_in_profits/1yr.html>

For the last 5 years, the leader is oil & gas SERVICES (not oil companies) and then Homebuilders.
Refining comes in 3rd, and crude production (including mining) comes in 7th.
<http://money.cnn.com/magazines/fortune/fortune500/performers/industries/growth_in_profits/5yr.html>

It may be that the media and governments are using the oil companies as a public whipping boy, but the facts don't back the bias, whatever the reasons for that bias may be.

You also mention NET profit? Oil and Gas come in second to banks/securities. How about a windfall tax on banks?
<http://money.cnn.com/magazines/fortune/fortune500/performers/companies/profits/index.html>

Ironically (considering your statement below) oil companies are not even market leaders in increased revenue in the past year. <http://money.cnn.com/magazines/fortune/fortune500/performers/industries/growth_in_revenues/index.html>.

Money isn't being re-invested in energy production.Producing and refining crude oil IS energy production, or at least the supply of energy fuel. Exploration and development programmes ARE a reinvestment in energy production. Or I'm missing your point here.
Did you mean alternative energy production? Why should they? Profits will continue to rise on the gas shortage. BUt you say that this is not a reason to implement a windfal tax, so why mention it?The fact no new refineries are being built with these record profits is certainly a clear indication of at least the short term and more likely the long term strategy of the big oil companies. Squeeze the consumer.Incorrect in both fact and assumption. Refineries ARE being built >http://money.cnn.com/2005/12/28/news/international/refinery_investments/>. Just not in the USA.
There isn't necessarily evil going on here with the exception of the dis-information campaign and corruption in our government. What is going on here is normal corporate behavior to benefit the corporate bottom line. That's capitalism and it mostly works.It seems that your beef should be with the US government, rather than the oil companies that do business in the States.
But, when you get certain situations, and this is clearly one of them, you don't want a government giving tax breaks in exchange for campaign donations, and you don't want the oil companies to also control the media and actually hold offices in the government like Bush and Cheney.
You do want government intervention and regulations to benefit the majority of the people. In this case, the majority of the people would benefit from government intervention that encourages alternative energy production and energy conservation. That's what the windfall tax is all about.OK - nothing about oil company profits. Good. Also your beef is with the government and not the oil companies. OK.
By definition, really, alternative energy is not an oil company's core business. Oil and gas is, otherwise it would not be an O&G company, it'd be a alternative fuel company. As for conservation of O&G - let's hit the automotive industry (getting back to the OT) with a windfall tax. Out of the top 10 largest corporations, automotive manufacturers make up half the list.
If you want to conserve fuel - get the consumer to build and buy vehicles that consume the fuel more efficiently. For instance, for energy consumption, is it better to hit the electricity supplier with a windfall tax during a period of high demand, or get consumers to use more efficient lighting and heating devices?
We are not benefiting from current government intervention and regulations in the oil markets which subsidizes oil exploration through tax write offs, and which allowed consolidation of big oil companies which now have monopoly positions.So your beef is with government. Yes, industry receives subsidies from government. That's what government does with it's economic policies, attempts to protect it's own and leech as much as possible where the big bucks are. It also takes with the left while giving with the right. For instance, the UK doubled the tax on North Sea producers in Jan this year, the second time in 3 years.
The US government policy on oil and energy conservation does not necessarily reflect the rest of the world's attitudes.
As the largest consumer of crude (mostly by vehicles), the US CONSUMER should be taxed harder to curtail their dependence on crude.

[Skeptic Ginger]

I'm going to assume, EH that you haven't read my last 5 posts. If you don't get it after reading them, I'll answer your issues.

[Jaggy Bunnet]

Skeptigirl: Corporate profits rely on things investors don't pay for like infrastructure and defense. Taxes are justified.

Don't think anyone has argued differently. What you have not shown is how these benefits relate directly to oil companies that mean they should pay ADDITIONAL taxes that other industries, who enjoy the same benefits, would not pay.

And there is the crux of this discussion. Two completely separate issues.

Why tax oil companies, what would be the goal and would the actual result achieve that goal?The claim has been made the oil companies and/or oil market would suffer from the tax. Current profits are large enough the claimed negative results of the tax wouldn't happen.

OK - so can you answer the first question. Why oil? Why not banks, who make bigger profits, or internet services whose profits are growing faster?

On the second question, clearly oil companies would suffer from the tax - they have to pay it. The more interesting question is what effect would imposing the tax have on their activities - if they would continue to invest/explore because even after the tax the return they get is acceptable then the tax would have limited overall economic effect. However if the post tax return would not justify taking the risk involved in building new refineries or exploring new fields then it reduces supply and increases prices which may or may not be a desirable outcome (makes alternatives more competitive, but consumers suffer). What I have not seen is any evidence that the impact has been considered. Saying profits are "large enough" is meaningless.

[Jaggy Bunnet]

As a relative value one defines "excessive profit" relative to two different criteria. One criteria is, will the added tax indeed affect investing/production activities? Considering the real or total profit margin/return on investment of the oil companies, which is very high relative to other industry investment options, there's no way investors are going to flee the oil markets if a windfall profit tax is levied.

In the short term, it doesn't really matter if investors flee or not as all that would happen is the share price would fall. In the longer term clearly it is relevant to the ability of the companies to raise new capital if required to fund development activities.

However you need to be careful about looking at an overall return on capital figure and assuming that it is relevant to all of the companies activities. As mentioned in your cite there are some fields that are profitable at low oil prices and that the capital has already been spent on to bring on line. An increased oil price will result in very high returns on capital arising on those fields. However most of these fields are, unsurprisingly, already being exploited as obviously the oil companies will have a preference to minimise the extraction costs.

However as oil prices increase, fields which were uneconomic to exploit at $20 a barrel may become viable. Clearly the return on capital on such investments will be lower. However if you only look at the return on capital of the company as a whole, you ignore the impact of the windfall tax on whether marginal investments will go ahead.

The second criteria one judges "excessive profit" is whether the amount of profit is a fair amount. Then what does one judge fairness by? Monopoly power used to drive up prices is not considered fair in a free market system if the monopoly uses uncompetitive practices. In other words, if you cheat at capitalism, you don't have a free market and you don't get the benefit of supply and demand forces operating.

In the case of the oil companies, maintaining a bottleneck at the refinery when there is more than sufficient capital in the company to increase capacity (and compensate for any Katrina damage) isn't using supply and demand, it is manipulating supply. That isn't a free market.[/QUOTE]

What monopoly are you referring to? The FTC report cited in your link says there is no evidence of collusion.

As for sufficient capital to increase capacity, see above comments. Saying, your return on capital is 30% therefore you have plenty incentive to invest is meaningless. Each individual investment must be appraised as to whether it will make an acceptable return on investment. If all my existing investments return 30%, but the cost of extracting new oil from new finds would only give a return of 3%, then I am better leaving the money in the bank.

[Jaggy Bunnet]

Because the oil companies themselves, in their ads and when they testified before Congress claimed their large net profits represented the same profit margin they had previously made and the only reason the net was so high was they were dealing with bigger numbers all the way around. That was a lie. Their real profit margin has about doubled while the companies purposefully only discuss the profit margin from the refinery to the gas pump purchase.

Jag wanted to discuss the profits as if the profit margin was indeed the same and the tax would make that profit margin smaller. The fact that isn't true in this case is still being ignored by many people in this discussion.

Nope, I am quite happy to discuss their full profits. In fact I raised the issue of how the profits are split between exploration/production, refining and retail. Please do not misrepresent me.

Of course oil companies are making large profits when the market price for oil increases. Nobody denies this. And unsurprisingly most of that profit is on exploration/production because the raw material they are extracting has increased in value. Just like banks with a large portfolio of fixed rate mortgages will make more money when interest rates go down. Whether that is sufficient reason for a new tax being imposed is another matter.

[EHocking]

I'm going to assume, EH that you haven't read my last 5 posts. If you don't get it after reading them, I'll answer your issues.It's the second time you've made that error.

As I stated at the very start of my last post, "I haven't ignored what you posted, I'm confused by it. "

Your assumptions on my reading capabilities are as inaccurate as some of your conclusions on industry profit leaders.

Also it's an extremely insulting tactic to avoid answering my posts.

Try dropping the ad homs and address the post instead.

[Meffy]

FWIW, another data point. I call this obscene profits but of course YMMV. http://www.chron.com/disp/story.mpl/ap/fn/4075835.html

[jimlintott]

Here is why we really need electric cars. Who wants to live in this future world?

http://www.youtube.com/watch?v=VF8mF77chU8&mode=related&search=

[Skeptic Ginger]

It's the second time you've made that error.

As I stated at the very start of my last post, "I haven't ignored what you posted, I'm confused by it. "

Your assumptions on my reading capabilities are as inaccurate as some of your conclusions on industry profit leaders.

Also it's an extremely insulting tactic to avoid answering my posts.

Try dropping the ad homs and address the post instead.It wasn't an ad hom, it wasn't sarcastic. Your bad assumption there.

Your post quoted an earlier post of mine and the answers to it were in my following posts. If you read the posts subsequent to the one you quoted and still don't find the answer, let me know.

[Skeptic Ginger]

Here is why we really need electric cars. Who wants to live in this future world?

http://www.youtube.com/watch?v=VF8mF77chU8&mode=related&search=
Funny. :D

[Skeptic Ginger]

Nope, I am quite happy to discuss their full profits. In fact I raised the issue of how the profits are split between exploration/production, refining and retail. Please do not misrepresent me.

....Then why did you give an example of a small profit margin made smaller by the windfall tax leading to the return on investment being lower after the tax than other industry average returns?

[Skeptic Ginger]

Don't think anyone has argued differently. What you have not shown is how these benefits relate directly to oil companies that mean they should pay ADDITIONAL taxes that other industries, who enjoy the same benefits, would not pay.



OK - so can you answer the first question. Why oil? Why not banks, who make bigger profits, or internet services whose profits are growing faster?

On the second question, clearly oil companies would suffer from the tax - they have to pay it. The more interesting question is what effect would imposing the tax have on their activities - if they would continue to invest/explore because even after the tax the return they get is acceptable then the tax would have limited overall economic effect. However if the post tax return would not justify taking the risk involved in building new refineries or exploring new fields then it reduces supply and increases prices which may or may not be a desirable outcome (makes alternatives more competitive, but consumers suffer). What I have not seen is any evidence that the impact has been considered. Saying profits are "large enough" is meaningless.
The profits are large enough taxing them would not eliminate investors, it wouldn't discourage the search for more oil, it wouldn't impact the current oil market. These profits are HUGE compared to other investment opportunities. I'm going to buy oil stocks after reading all this and I still would like to see the tax.

If we don't invest in alternative fuels, it's a no brainer what the result would be.

[Jaggy Bunnet]

Then why did you give an example of a small profit margin made smaller by the windfall tax leading to the return on investment being lower after the tax than other industry average returns?

Can you point me to where I have done this? Maybe I have not expressed my point clearly.

[Jaggy Bunnet]

The profits are large enough taxing them would not eliminate investors, it wouldn't discourage the search for more oil, it wouldn't impact the current oil market. These profits are HUGE compared to other investment opportunities. I'm going to buy oil stocks after reading all this and I still would like to see the tax.

If we don't invest in alternative fuels, it's a no brainer what the result would be.

Evidence for your claims?

The search for more oil is likely to involve smaller finds, in less accessible locations. Evidence of this is the size of finds in the North Sea:

http://www.woodmacresearch.com/cgi-bin/corp/portal/corp//corpPressDetail.jsp?BV_SessionID=@@@@1450367124.11 54075190@@@@&BV_EngineID=cccdaddigildkhdcflgcegjdffjdgih.0&oid=746780

Interestingly that research also shows that the industry has been shifting rigs from exploration to development activities (in other words extracting known oil faster rather than looking for new sources) - seems like a strange way to restrict supply to force prices higher, surely it should be the other way round?

They also have some interesting comments on refining capacity:

http://www.woodmacresearch.com/cgi-bin/corp/portal/corp/corpPressDetail.jsp?BV_SessionID=@@@@1450367124.11 54075190@@@@&BV_EngineID=cccdaddigildkhdcflgcegjdffjdgih.0&oid=724741

"It seems that not a day can go by right now without hearing of yet another refining investment. At the end of January 2006, approximately 500 refinery projects, including 66 new-build refineries, had been announced, with no doubt many more being considered in-house."

[EHocking]

It wasn't an ad hom, it wasn't sarcastic. Your bad assumption there.

Your post quoted an earlier post of mine and the answers to it were in my following posts. If you read the posts subsequent to the one you quoted and still don't find the answer, let me know.Third post from you ignoring any points I've made.

Since I have answered your posts point by point, it would have been at least a courtesy to attempt to reciprocate, instead you fob me off with avoidances such as "You haven't read my posts", "You have ignored my points".

The irony is that in three replies from you, you've not addressed a single point in any of my posts, but accused me of ignoring or not reading YOUR posts.....

[EHocking]

...These profits are HUGE compared to other investment opportunities. ...Wrong.

Here's the top 20 earners from Fortune 500 (again)

1 year growth in Profit

Chemicals 1221.4
Oil & Gas 945.3
Automotive 854.8
Telecommunications 795.3
Internet 758.8
Mining 449.4
Insurance 423.7
Waste Management 411.1
Wholesale 408.1
Computers 339.4
Food & Drug 327.3
Rail 231.6
Energy / Pipelines 197.2
Pharmeceuticals196.7

5 year growth in Profit
Insurance 274.4
Automotive 233.6
Chemicals 194.9
Internet 163.4
Health 135.6
Bank / Securities 126.7
Oil & Gas Service 115.1
Mining 78.2
Home Bruilders 57
Oil & Gas 48.3
Rail 47.2
Paper / Trees 47.2

(Edited to sort out lack of table HTML!)

[MilwaukeeMike]

I know the stone cutters have tried to hold it back.....:) Simpsons Rule

[Skeptic Ginger]

EH I'll say it again. The points you claim are unclear are elaborated on in the posts after the one you quoted.

[Skeptic Ginger]

Anyone who thinks the oil company profits have no margin for a tax and want evidence a tax wouldn't hurt the industry are simply being absurd.

[rockoon]

Anyone who thinks the oil company profits have no margin for a tax and want evidence a tax wouldn't hurt the industry are simply being absurd.

Because you say so?

I would like that evidence, and evidence that it wont hurt mom and pop.

Also, I would like it explained in clear english why the oil industry should be the target.

[Skeptic Ginger]

Because it's do obvious, Rocky. Where have you been?

[Old man]

Because it's do(sic) obvious, Rocky.
Yeah, Rocky, ya big dope.
OIL (and its production) IS EVIL, EVIL, EVIL!

I think we should put an 'excessive' earnings tax on doctors.:eek:

(edited to fix typo)

[rockoon]

Yeah, Rocky, ya big dope.
OIL (and its production) IS EVIL, EVIL, EVIL!


Well as long as we have a good reason for doing it...


Wait a minute... if we have such a good reason for taxing the public (since that is what this amounts to) then why are we hiding that tax on the public under the guise of a tax on oil companies?

[Skeptic Ginger]

Considering the size of the current oil company profits, I think your sarcasm is really a joke on yourselves. How about a new thread with a poll of the board members to see who is the fool?

[rockoon]

Considering the size of the current oil company profits, I think your sarcasm is really a joke on yourselves. How about a new thread with a poll of the board members to see who is the fool?

A tax wont change the size of the profits. The oil companies will lay that tax cost onto the consumers of their product.

The public will pay it.

Why do you wish to hide this tax on the people under the guise of a 'windfall tax' levied onto the oil companies?

Do you suppose that perhaps the public will reject any notion of a tax proposed to them honestly, for the purposes of "alternative energy research?"



With your proposed tax deduction for oil companies that invest in "alternative energy research" this amounts to a free credit paid by the public. The oil companies will still charge rates that factor in the "windfall tax", yet they will get to deduct whatever they spend on "alternative energy research" and you can be sure that they will infact deduct every single penny, paying nothing new into the general fund.

This amounts to forcing the public to pay for the oil companies R&D, which could infact turn out to be a big windfall for them with patent rights as the big prize.

Why not cut out the middle man?

[EHocking]

EH I'll say it again. The points you claim are unclear are elaborated on in the posts after the one you quoted.You answered not one of the points I raised.

Doesn't look like you will either - so don't bother.

[Jaggy Bunnet]

Anyone who thinks the oil company profits have no margin for a tax and want evidence a tax wouldn't hurt the industry are simply being absurd.

What is absurd is a statement like "they are large enough". That is meaningless.

Where is the research on the impact of a tax? Where is the evidence of collusion or of anti-competitive practices?

Answer: there is none. Your proposal is based on nothing other than jealousy - they have more money than I do, therefore I want to use some of their money for MY purposes.

So lets look at a situation where there have been recent rises in oil taxation to see what happens. The UK introduced a supplementary charge on oil company profits in 2002 (an additional 10% tax) and raised it at the start of this year (to 20%). The tax rate for oil companies has therefore increased from 30% in 2002 to 50% today. As financing costs are not deductible for supplmentary charge purposes (but are for "normal" corporation tax) the effective rates are actually even higher.

The impact?

"In 2002, when this tax was first introduced, we saw the level of activity, specifically in exploration drilling, drop from 35 mobile drilling units to about a dozen. "

And

"We had tendered for three rigs but after an investment review following the announcement of an increase in supplementary corporation tax we have unfortunately only been able to commit to two rigs at this time.

"We are disappointed by the government's recent decision and we are continuing to evaluate the impact that the proposals might have on our business."

http://news.bbc.co.uk/1/low/scotland/4537660.stm

But you of course know better than people actually involved in the industry who have to make investment decisions.

You claim to be a skeptic, so where is the evidence?

[Skeptic Ginger]

Had to dredge this thread up after hearing today another major influence on why car companies might want to kill electric cars.

The major dealerships, (according to the caller on Air America so I haven't checked the facts yet), make about 40% of their profits on after sales car maintenance and repair. Considering they charge hundreds of dollars for routine maintenance and recommend replacing major components like timing chains but don't make them easy to replace, and considering a few decades ago outrageously expensive parts went on the market and automakers made sure only their fuel pump or oil filters, etc. would fit their cars, the 40% figure doesn't seem out of line.

Given that large profit share on repairs and maintenance, electric cars so far have needed very little maintenance.

I think the caller was Paul Scott, co-founder of Plug In America, who sponsored the film I believe. He is publicizing the fact the City of Pasadena is protesting the canceled leases (http://www.pasadenastarnews.com/news/ci_4139889) for their fleet of Nissan electric cars. It seems Nissan came for the cars to destroy them and the city wouldn't unlock the parking lot gate.

Very interesting development.

[Johnny Pneumatic]

The key problem with biofuels (ethanol and biodiesels) is that there just isn't enough energy from the sun landing on arable land to meet demand. If every Joule of energy landing on plants (forests, lawns, crops...) in the US were converted to fuel, it would meet less than half of automobile needs. (49Quads available, and shrinking, versus 102Quads required, and growing)


Bull.

[Jaggy Bunnet]

Had to dredge this thread up after hearing today another major influence on why car companies might want to kill electric cars.

The major dealerships, (according to the caller on Air America so I haven't checked the facts yet), make about 40% of their profits on after sales car maintenance and repair. Considering they charge hundreds of dollars for routine maintenance and recommend replacing major components like timing chains but don't make them easy to replace, and considering a few decades ago outrageously expensive parts went on the market and automakers made sure only their fuel pump or oil filters, etc. would fit their cars, the 40% figure doesn't seem out of line.

Given that large profit share on repairs and maintenance, electric cars so far have needed very little maintenance.

I think the caller was Paul Scott, co-founder of Plug In America, who sponsored the film I believe. He is publicizing the fact the City of Pasadena is protesting the canceled leases (http://www.pasadenastarnews.com/news/ci_4139889) for their fleet of Nissan electric cars. It seems Nissan came for the cars to destroy them and the city wouldn't unlock the parking lot gate.

Very interesting development.

Given how accurate some of the other sources you have cited have been (remember the claim that 99.9% of BP's money came from oil which was easily demonstrated to be patently false) then I will need to see some evidence before I accept that 40% of car manufacturers profits come from servicing activity.

I would also need to see some evidence that they would make less money from electric car servicing than from ICE.

Don't suppose you fancy addressing the articles I linked to about the impact of an actual tax change on oil exploration activity which seem to contradict your claims?

[Ziggurat]

Given how accurate some of the other sources you have cited have been (remember the claim that 99.9% of BP's money came from oil which was easily demonstrated to be patently false) then I will need to see some evidence before I accept that 40% of car manufacturers profits come from servicing activity.

The problem with her argument goes beyond that, though. For one thing, what's the breakdown of investment and operating expenses for different parts of a dealership? If the servicing accounts for 40% of the profits but 60% of the investment, for example, then the switch isn't going to be all bad news for dealers. Furthermore, the dealers are not the manufacturer. Why one earth would the manufacturer mind reducing the dealer's profits, if it increases their own? They wouldn't, which is why they try to make cars reliable (and compared to twenty or even ten years ago, they are pretty reliable).

Lastly, of course, there's a flip side to the dealership service/electric car issue. Namely: electric cars are dangerous to service because of very high voltages, which is why they've only been leased from the major manufacturers (worries about liability when a mechanic gets himself killed working under the hood). Which means that while service might be more infrequent than for ICE cars, most service MUST be done by a dealership, and cannot be done at third-party mechanics.

Basically, though, if the car can be sold at a reasonable profit, it will be, because the first company to do so will make a bundle from it at the expense of their competitors. But there's every reason to think that it cannot be.

Oh, and skepticgirl? That Pasadena thing? Yeah, it's interesting: it's also quite troubling that a city thinks it can just decide to violate its contractual obligations with no legal basis. Doesn't that trouble you?

[Skeptic Ginger]

Given how accurate some of the other sources you have cited have been (remember the claim that 99.9% of BP's money came from oil which was easily demonstrated to be patently false) ...I supported that with the company's financial statement which backed up the source's figures. Where as you posted a company webpage as evidence if I recall.

[Skeptic Ginger]

And Zig, Pasadena is going through the courts, hardly breaking a contract illegally. If you would bother to read the report, the city invested considerably in infrastructure to accommodate the cars. They felt the ending of the lease was capricious.

[Ziggurat]

And Zig, Pasadena is going through the courts, hardly breaking a contract illegally.

I didn't say "illegally", I said "without legal basis." As far as I can tell this remains a civil matter, not a criminal matter, which is why I purposely did not use the word "illegally".

If you would bother to read the report, the city invested considerably in infrastructure to accommodate the cars. They felt the ending of the lease was capricious.

They can "feel" all they want to, that doesn't give them a legal basis on which to violate a contract. And it can even be true that Nissan is screwing them over, but all that would mean is they signed a contract under terms they shouldn't have accepted in the first place, not that they have the right to change those terms without Nissan's consent after the fact.

And you didn't answer my question: does this trouble you or not that they feel entitled to break a contract like this?

[Dave1001]

I didn't say "illegally", I said "without legal basis." As far as I can tell this remains a civil matter, not a criminal matter, which is why I purposely did not use the word "illegally".



They can "feel" all they want to, that doesn't give them a legal basis on which to violate a contract. And it can even be true that Nissan is screwing them over, but all that would mean is they signed a contract under terms they shouldn't have accepted in the first place, not that they have the right to change those terms without Nissan's consent after the fact.

And you didn't answer my question: does this trouble you or not that they feel entitled to break a contract like this?

There's no need to fetishize having a "legal basis" to break a contract. In my understanding, most contract theorists like for parties to be able to break contracts without a "legal basis", because it keeps our overal economy more liquid and efficient. The courts can sort out the damages to parties.

Let's say I made a contract with you to build a skyscraper for you in 5 years for $50 million dollars. 1 year into the contract, you find a reputable company that can finish the skyscraper I started in only 1 year for $10 million dollars. Having the skyscraper done 3 years early will allow you $25 million extra in rental fees that otherwise would not have been collected. You'd be very irrational not to break the contract with me and make a new one with the reputable company. The courts would be unlikely to require you to pay me the $50 million owed: I have an obligation to mitigate damages by making reasonable efforts to find other work. This all makes sense from a contractual standpoint. Encouraging economically efficient activity plays a much stronger role in American contract civil law than forcing people to do what they signed their name to on a piece of paper.

Sorry if I'm preachy or didactic about this -I'm a 3rd year law student showing off what I've learned in the past couple years.:p

[Jaggy Bunnet]

I supported that with the company's financial statement which backed up the source's figures. Where as you posted a company webpage as evidence if I recall.

This is so wrong it is hard to believe. I, not you, provided the first link to the company's financial statements. And these DO NOT IN ANY WAY support or back up the 0.1% claim.

Go look at post #371. I, not you, provide the link to the company's financial statements and the correct percentages for non-oil activity are not the 0.1% claimed but 9.7% for revenue and 3.4% for profits.

The only reference I can see you having made to the BP financial statements (in post 392) is where you linked to some narrative comments about future investments. Clearly these are not relevant to the percentage of current income that comes from non-oil activity, which is what the claim was.

Now it may be that your recollection is simply faulty, in which case please withdraw your comments and acknowledge that there has been NOTHING posted in support of the 0.1% claim because it is simply not true as the financial statements show.

Alternatively if you think that something that DOES support the 0.1% non-oil claim has been posted please either repost the link explaining clearly what figures you believe justify the 0.1% claim or, if you think this has already been done, provide the post number where you think this took place.

[RatBoy]

Tax dollars from all companies look and spend the same.

Point out the companies listed that have 'excessive profits'. Justification would be nice.

Here are the top 6 U.S. oil companies and the top 6 other U.S. companies by revenue.

figures are $ millions World oil Co.
Oil Co. revenue profit return rank by revenue
Exxon 339,938 36,130 10.6% 1
Chevron 189,481 14,099 7.4% 4
Conoco 166,683 13,529 8.1% 5
Marathon 58,958 3,032 5.1% 14
Sunoco 31,176 974 3.1% 22
Hess 23,255 1,242 5.3% 25

Other U.S.
Walmart 315,654 11,231 3.6%
GM 192,604 -10,576 loss
Ford 177,210 2,024 1.1%
GE 157,153 16,353 10.4
Citigroup 131,045 24,589 18.8%
Amer. Intl. 108,905 10,477 9.6%

My thanks to EHocking for providing a link to the data I used.

Friends, given the return figures that Bob K. quoted here, should Walmart, GE, Citigroup, and American International not also be impacted by such a tax? They've all got fairly significant return percentages or profit dollars.

I find it hard to single out one particular industry for a tax, even if the use of the money would be used for alternative energy research (which I very much agree we need), just because their business model makes them successful. After all, WalMart USES vast amounts of energy and petroleum products in their distribution chain - shouldn't we, then, tax THEM as well? It'd certainly be in their interest to reduce oil dependency and perhaps find alternative energy sources for their transportation needs? Their return percentage is only 3.6, but WOW! That's over eleven billion dollars just sitting out there waiting to be taxed.

I don't know that the oil industry has a particular culpability in NOT doing research, not putting up refineries (existing US environmental regulations make these projects extremely expensive, not to mention the NIMBY factor), and not looking at alternative energy sources more than they are now. They are, after all, OIL companies and are seemingly successful in what they do. In time, as we collectively wean ourselves from the petroleum teat, I think we can see an expanding emphasis on alternatives from these companies (their sales and resultant profits will have to come from SOMEWHERE), but let's remember that successful companies tend to stick to their core competencies.

(Not a dig at oil companies, WalMart, or any other JREF Forum poster. Thanks for letting me air my $0.02!)

[Jaggy Bunnet]

I don't know that the oil industry has a particular culpability in NOT doing research, not putting up refineries (existing US environmental regulations make these projects extremely expensive, not to mention the NIMBY factor), and not looking at alternative energy sources more than they are now.

Of course before we even consider whether the oil industry has a culpability for such things, we should consider whether these are actually happening. For example, on the claim that oil companies are deliberately restricting refining capacity, this appears to be contrary to the facts. To repost my previous link:

"At the end of January 2006, approximately 500 refinery projects, including 66 new-build refineries, had been announced, with no doubt many more being considered in-house."

http://www.woodmacresearch.com/cgi-bin/corp/portal/corp/corpPressDetail.jsp?BV_SessionID=@@@@0919807344.11 55222913@@@@&BV_EngineID=ccceaddihmhjklicflgcegjdffjdgig.0&oid=724741

[The Don]

Certainly some time ago finance accounted for more than 100% of profits for car companies.

Manufacturing and servicing mass market vehicles in the UK isn't much of a money maker

[Jaggy Bunnet]

This is so wrong it is hard to believe. I, not you, provided the first link to the company's financial statements. And these DO NOT IN ANY WAY support or back up the 0.1% claim.

Go look at post #371. I, not you, provide the link to the company's financial statements and the correct percentages for non-oil activity are not the 0.1% claimed but 9.7% for revenue and 3.4% for profits.

The only reference I can see you having made to the BP financial statements (in post 392) is where you linked to some narrative comments about future investments. Clearly these are not relevant to the percentage of current income that comes from non-oil activity, which is what the claim was.

Now it may be that your recollection is simply faulty, in which case please withdraw your comments and acknowledge that there has been NOTHING posted in support of the 0.1% claim because it is simply not true as the financial statements show.

Alternatively if you think that something that DOES support the 0.1% non-oil claim has been posted please either repost the link explaining clearly what figures you believe justify the 0.1% claim or, if you think this has already been done, provide the post number where you think this took place.

Bumped for Skeptigirl.

The fact that you have not addressed the specific points in this post which show very clearly that your previous post was inaccurate is making me doubt whether those inaccuracies were accidental as opposed to a deliberate attempt to mislead.

[Beerina]

"It seems that not a day can go by right now without hearing of yet another refining investment. At the end of January 2006, approximately 500 refinery projects, including 66 new-build refineries, had been announced, with no doubt many more being considered in-house."

Let's not rule out the political climate, either. It's easier to brush by the environmental laws because of the need, much like it is for electrical plants in California. So there is some incentive to let things "go to hell" so you don't have to fight the rediculous laws. Let them get torn down or overlooked by politicians seeking re-election. And the populations have nobody to blame but themselves for letting things get that way in the first place.

[kittykatkarma]

Popular Science had an WEB EXCLUSIVE (http://www.popsci.com/popsci/whatsnew/5d7ee60b60a5c010vgnvcm1000004eecbccdrcrd.html)
Who Killed the Electric Car? on the 17th. The detail is much the same as what we've already surfaced here, but still a decent read.

[rwp]

Dave Barthmuss of GM communications offers a blog titled: Who Ignored the Facts About the Electric Car? (http://fyi.gmblogs.com/2006/06/who_ignored_the_facts_about_th.html)

I searched to see if this link had been posted previously but I did not find it. Please forgive me if it has been posted already.

[Peskanov]

That text was linked at the beginning of the thread, I think.

BTW, at last I have seen the film. It's quite interesting.
Imho, the main reason for killing the Calfornia mandate is outlined in this piece of interview:

Tom Everhart
Board Member (1989-2002) General Motors

I made the case, at the General Motors board, that the reason for the EV1 was to give GM a big headstart in how you transform electricity into the drive power of a car.
And we give them two/three years lead, and in my judgement it did.

But my frustations was the caps were not on lead, and the reason, which was also discussed in the board, there was not a profit seen to be coming out from either electric cars or hybrids. They couldn't understand how Toyota could possibly make a profit from the Prius for example. "They are going to loose the tshirt".
And as evens has shown, I don't think Toyota is loosing the tshirt.

(Transcription mine; feel free to correct it).

I said something like that previously on this thread. It's pretty obvious EVs are not a good bussines right now. Not as good as ICEs, I mean!