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Eric_W.

Oil Floor tax

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Just wondering, but I noticed some talk about an "oil floor tax" in Businessweek the other day and wondered if it could actually be feasible.

 

A quote about it from the Christian Science Monitor:

"An alternative would be for the government to set a floor price for oil and then tax the difference between that floor price and the actual price. If oil remains above the floor, there is no tax, but if oil prices drop below it, investors, entrepreneurs and inventors all will know that there will be a market for their products at the floor price. Revenue from the taxes can either be used to accelerate the development of new energy technologies or to offset other taxes."

 

Could this be useful in any way?

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On previous times we debated this topic, there was credible evidence that said that if the private sector ever did begin to develop some alternative to oil/petroleum, OPEC's response would be to DROP the price of oil to the point that the alternative was no longer feasible from a cost standpoint. Once the alternative companies were bankrupt, the price would go back up again.

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that seems like a great argument DeCoach... know where i could get something near this?

 

*to be more "topic-specific"... i think this aff would be, in essence, a negative incentive (but none the less, it seems seemingly topical)... although, i don't know what advantages you could really garnish off of this case besides heg, modeling....

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Interesting idea, but I think it suffers from the problem that it's only effective after oil prices actually drop past the floor. In essence, it can hold onto a good trend, but it doesn't have any ability to reverse a bad one, such as they one we are currently experiencing.

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