House of Paine

fed gas tax elasticity

bench mark sweet crude:

 

"According to 
 the U.S. Department of Energy
 a 50-cent gas tax increase
    on top of 
the  present 
 three dollar  price
 could eventually 
reduce gasoline consumption
 by 10 to 15 percent "
  
  ie 1/6 th increase in price
means between a 1/10 th and a 1/7 th 
reduction in quantity 

hmmmnn
   

 thinkin  of adding more pump side  misery  ...


=================================================


well the editors of the washpost are ...


"If Mr. Bush really wants 
to promote 
more careful energy consumption
 he ought to tax gasoline "

 
"Contrary to what you might suppose
 there is something to be said 
for imposing an energy tax 
when prices are already high"

" Precisely because consumers 
are already outraged by fuel prices"

------- can't get no madder eh ? 

but there's good sound
         policy science here  too  keeeedz ----------------

 " a further tax-induced price increase 
would force demand down 
      more sharply
 than it would 
in normal market circumstances"


--------- the thrust behind this 
                     escapes me some what 
i know i thought i was entering
  Marshall world 
but     how a tax of a certain absolute size would
accelerate  its adjustment effect 

as it got laid on to
     higher and higher starting prices

 me  no see'm  ?????   -----------------

---- but i'll agree ...-----------

 "This would be painful"

----- ' cause ------

  " Consumers don't like cutting back"

----------- take this cod oil 
           for yer own good
         speech comin ??
             nope
          a  few fancy foot steps  instead ...------------

"  the sharp reduction
 in demand 
would cause the pretax fuel price
 to fall sharply too
 offsetting the after-tax increase "

----------- DID U GET THRU THAT ???

oh for a black board 

take it from the pinker
 
its pure cross of saint alfred shit
(yes we are indeed in Marshall world
if in a rather odd  piebald quad 

but soft ...comes more .... -----------

"This is a smart way 
to make oil producers 
subsidize U.S. taxpayers"

-------- here's  where
  they must have started
     to  feel awefully clever ----------

" Because of the energy tax
 producers would face lower demand
 and lower market prices..."

----------lacuna fill:

assume  extreme cases

  a)no cut in supply 
             or 
       b) no cut in demand 

under 
regime a) 
  to sell it all
the oilers would 
need to  swallow 
the  full weight of the tax 


under regime b)
users can't part with a drop

and therefore eat the whole tax 

in between

where either or both 
demand and supply can adjust 

  quantity  sold will fall 

and the tax burden 
will be shared between 
  oilers and users
depending on their respective tapers 

whats the washpost's probable  brake out...
                    -----------------
  


" producers  would
  pay perhaps a quarter 
of the energy tax
 with consumers picking up 
the balance"

-------- why a quarter ???

sorry mates 
 beyond  
 the plain geometry 
in your old 
frosh  micro text 
 this gets down to very precise
                    metrics 
at any rate 
here's the trigger puller.... -----


" they would be getting 
   Saudi Arabia's help
 in rebuilding the nation's finances"


------------ there's a carteresque finale ....--------------

"  And really
how painful would it be....
   a bit less energy
 once the initial
  lifestyle adjustments
          are made? 

         Is it really so terrible ?"


----------" err 
correction... correction 
    doc  priggles here 

  there's the little matter of the 
               actual income
                 expended 
           paying 
          this " near weightless"  gas tax  
         
surely that
           implies
         any  budget constrained household
             can now  buy  
               ' a little bit less
                        of everything else '

              thats  a sacrficed too 
                    is it not 
                             senior  Ink -Gent  ??

unless u intend to off set
 with an equal  tax cut else where 

like i saw one prog pushing

a cut in  SSI  payroll taxes  
with the gas tax rev pouring 
into the trust funds as
 a dollar for dollar replacement  --------