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Old 10-15-2012, 04:42 AM   #28
Balla_Status's Avatar
Join Date: Dec 2006
Posts: 4,151
Default Re: Should the government cut entitlements?

Originally Posted by MavsSuperFan
Most oil rich nations charge a fee for every barrel of oil extracted from their national reserves. America doesnt because the argument goes that if the government charged a fee per barrel of oil extracted the oil companies wouldn't want to drill as much, unemployment would increase and the price of gas would increase.

I suspect the main reason is because the oil industry has effective lobbyists and donates significant amounts to many senators and congressmen. Sometimes even giving ex-politicians positions on their board and hiring them as lobbyists, for substantial sums.

The main benefit the American government gets from Exxon drilling our oil is that they will hire Americans who will pay taxes and not need government assistance. There is a multiplier effect as well since these oil workers will spend their earnings and further simulate local economies, and the places they patronize will spend their earnings and so on. This is why it makes sense sometimes to give big corporations tax breaks in order to induce them to build factories and plants. Even if the amount of direct tax revenue created by a new plant is less than the cumulative tax cuts and subsides, the multiplier effect of more working people will often make it beneficial in the long run.

With that said it would be smart for America to start charging big corporations for every barrel of oil they extract from our reserves, like every other nation does.

Every oil/gas producing state charges per BOE in America (minus California I believe). So you're wrong on that.

EDIT: Nevermind I was wrong. California already taxes the shit out of oil/gas production

Last edited by Balla_Status : 10-15-2012 at 04:47 AM.
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