RE: madman2 - "Why should the guy who commutes 2 hours a day on public transportation subsidize the gas price of the family with 3 SUVS"
I think you are on to something. The price of gas should not be subsidize, nor should the price of PUBLIC transportation or mail delivery. How about education?

Whats our guess? Does the average family with three SUVs (there can't be that many) paid more in taxes than the average guy who takes a highly subsidized ride for 2 hours on public transportation.

Sadman...

The Senators played to their respective core constituencies. The problem was that despite focus on the oil companies extremely large profits, no one managed to put forth a line of reasoning that framed the issue in a clear understandable manner.
I don’t find this surprising, when has Congress ever managed to demonstrate a competency on anything; particularly on something that affects every American. On the Democratic side, except from oil producing states, they were explaining why the oil companies should pay more taxes since they make so much money on very high priced gasoline. The Republicans were predictably defending the oil companies because, well, because they get a plentiful wad of contributions from these gas pumpers. So for a prolonged period of time these sound bite hawkers volleyed back and forth about why the other side was wrong.
But what was the real issue? What should the American people know about the long established and cozy relationship between Congress and the oil companies? Let’s frame the issue for them, they’ll never be able to do it for themselves and definitely not for the voters.
The question that should be addressed in the public arena is: Do the oil companies receive special and advantageous treatment from the federal government and thereby from which they derive an economic benefit at the expense of the American public? Now everyone already knows the answer to the question, right? Probably not.
OK, we’ve got the question; but what do we know about the circumstances and facts pertaining to the question?
Do the oil companies get any special tax breaks / benefits from the government?
Do the oil companies gain economically from these breaks?
If the oil companies pay less taxes because of the tax breaks, then who is left to make up the difference in Government spending? (Whether the Government spends too much or not enough is not the question, whether the Government spends an amount as low as the most rabid “smaller government” ideologue or as huge as the most expansive zealot of big government; someone picks up the cost of what the oil companies do not contribute.)
In order to make the profits, the oil companies have to charge who a price that includes the profits?
Is it equitable that corporations are more equal than individuals when it comes to the taxes that they pay?
If the oil companies pay less, then isn’t Congress raising the taxes on the average American?
So the question isn’t that oil companies should pay more taxes because they make huge amounts of profit. The question isn’t whether oil companies should share a greater burden than other industries. The question isn't should oil companies be special? The questions isn’t even should oil companies be able to use their profits to buy politicians.
The question is: Are the American people being treated fairly by their government?
And given the answer, both the Democrats and the Republicans are in the wrong. Again!

Well, Gary, point one, ever drop in the bucket counts so let's add that drop. Secondly, here I agree I think subsidies to ALL businesses and industries should be rescinded, no problem with that, it adds more drops to the bucket. Last, so what that they're heavily taxed? They made EXCELLENT profits, they're making lots of money and paying their top managers top dollar so I repeat, so what that they're heavily taxed. They don't need subsidies, they're making money!

Nate Bowman @ 10:22am -- Yesssss! T/U for the reference.

enough already on the us vs them. when i go to the pump i don't pull up the democratic pump vs the republic meter and/or forsake the independent syringe.

A free market means just that- no parachutes, no mattresses, no pillows. Period. Not for some idustries and not others. If you are in the game- you are in, you take the profits and the losses. You want hands off government- cool. Now take your hands off my wallet. If you are such experts and excellent business people you'll find a way to make profits without it. Like the rest of us.

Profits reflect how well a company is meeting the needs of its customers?

Except in inelastic or mostly inelastic markets. People driving to work, as is required in many areas with little to no mass transit, or mass transit which would require 3 hour or more commutes each way (out here in suboonia NJ, a 15 minute drive to my auto mechanic takes from an hour and a half to two hours on the NJ bus system. Pprivate, for those who say private is better.)

These people can choose to drive less and as a consequence work less, get paid less, and then lose any income. They can try to find work with similar compensation close to home. Good luck with that.

I remember during an earlier price spike talking to a guy at my local gas station. I asked if customers were a acting unhappy. He grinned, then said that he had a second job in Pennsylvania, but found that he was making nothing when he paid for the gas to get there and back. He quit that PA job.

When heating oil is the product, people do try to do with less, somethimes without. Sometimes they freeze to death.

So, no, people are not flocking to gas stations and buying heating oil to show the oil companies how much they love their products.

I recall reading during one of the other run ups of the price of oil and then the price of gas, diesel, and heating fuels that the price goes up so fast because the oil companies charge a fixed percentage of the base price of oil as profit..So the price goes up exponentially, not linearly. (Math types, correect me if I'm wrong on this wording, please.)

For example, if the price of oil is $10 a barrel, and the profit is 10% (I don't know what it is exactly), then the profit per barrel purchased or extracted is $1.

If the cost of a barrel increases, with all other costs being nearly identical, the profit is stil 10%. Example: $100 per barrel cost means $10 profit per barrel; $125 per barrel cost means $12.50 per barrel profit.

High prices per barrel actually benefit the oil companies. (Note: Yes, in the real world, there will be increases for the oil companies in the cost of their own transportation and energy required to produce their refined products, and these examples are unable to take those into consideration.

Why not have any tax incentives be based on the price per barrel? If the price plummets, then X number of barrels extracted would indeed get a higher subsidy and assist with explorations and extraction under difficult conditions, if that is indeed necessary.

If the average profit is higher than a certain amount, no subsidies whatsoever.

Yes, exploration and extraction is going to become more and more difficult and expensive. The oil extracted from the Canadian oil sands tend to also cause more environment damage in being extracted. Perhaps the environmental costs MUST be figured into whatever taxes are paid, as in actually being higher.

And, perhaps a Democratic president and congress should have done something about developing clean and cleaner alternatives while they had a damn majority. Now, the House is in the control of the hands of those with...less than science-based evaluations

It's a little late to be moaning, What can we do?, after the Dems did next to nothing.

There's an absurdity in this discussion: even IF doing away with these subsidies raised the "price at the pump", so what?

Why should the guy who commutes 2 hours a day on public transportation subsidize the gas price of the family with 3 SUVS?

And why are we keeping the price of gas artificially low? to begin with Isn't the free-market supposed to be holy?

I'm for cutting their subsidies, but the statement that all they do is take the oil out of the ground ignores the processing these companies do.

If they passed the cost on to consumers at the pump, $4.00 gas would cost $4.065 which is similar to the normal week-to-week price fluctuation we're used to seeing.

I think it is important to bring up in this context that the high gas prices we have right now have nothing to do with supply and demand. They have to do with commodities speculation.

http://www.reuters.com/article/2011/04/12/us-goldman-brent-recommendation-idUSTRE73B3EN20110412

Since supply is not down, the fear-mongering call to drill, drill, drill is specious.

Global tax rates may be 40% but what are the actual US tax rates? Is there a better place than the U.S. that the oil companies will go if the Feds increase the amount of taxes that they pay?

Aren't quotes of tax rates and taxes paid by oil companies (for example) based on a fraction of total income? Isn't the income considered for taxation analogous to the amount taxpayers pay toward social security, where income above that amount is not subject to social security contributions?

Such quotes of figures by oil companies are disingenuous at best.

Let them pass on the extra cost to the consumer. That way, those of us who use more gas will pay more -- and those that don't do not have to subsidize their neighbor's SUV habit.

I agree that it is feel-good theater.

People are angry.
Politicians act angry.
They act angry at the culprits.
Next month, politicians will still accept donations from the culprits.
The culprits will keep their subsidies.

Dear Robert,

I do not own any stocks or mutual funds. now can you address my 3 points.

typo: i didn't mean to type "taxes" in 3. it should read:

(Profits are the measure of how well a business meets the demands of buyers in an economy. They're not a bad thing, unless you're a Democrat looking to demogogue the industry as evil being evil.)

The guest from Politico is doing the standard he said/she said misrepresentation.

Withdrawing subsidies will not force us over to Saudi Arabian oil -- we're already there. Even on the _most_ optimistic accounts of American oil reserves, we would make very little dent in oil imports. Moreover, if conservatives actually believe the economics they claim, the added oil from US reserves must be averaged over global consumption. If US production goes up and supply increases, prices decline and global consumption goes up.

Tapping US reserves will do nearly nothing to reduce prices or reduce US imports. To claim otherwise is a flat lie.

Can't believe you guys are still defending ethenol subsidies. How many people have to starve worldwide for our greed?

A peritinent social goal that you didn't mention is the need to get a handle on global warming. Oil companies have a strong interest in promoting the use of fossil fuels as opposed to carbon-free energy sources and have been global warming deniers.

The role of these subsidies should be considered in that context too - it's not just a question of energy independence.

They seem to make two arguments. 1: It's unfair to single us out. 2: If you do this, it will result in all sorts of "bad stuff". Then they act like the two arguments are related. Wouldn't the "bad stuff" still happen if the tax changes applied to all industries?

Is it even conceivable that anyone will raise ecological questions at these hearings? Big oil is more responsible than anyone for global warming, and these subsidies represent our complicity in destroying the planet; without them, we'd have weened off oil some time ago and might have stood a chance at combating ecological destruction.

Conservatives are _committed_ opposing subsidies for 'exploration' -- if those conservatives are consistent. Such subsidies are distortionary on classical economic understanding.

But of course, conservatives steadfastly support the oil companies. Why?

Lee Raymond retired from Exxon with $400M. With these profits, how can we seriously believe that these companies need more taxpayer-funded relief?

It's interesting you hear you give a brief history of America's corporate welfare program but very frustrating (and so why the chuckles) that it just continues, it doesn't end, nothing has been/is done about it, We can talk about how selfish and hateful (my opinion) the CEOs of these companies are but it's our government that has done nothing about changing it. Let's see if they can do it now. NOT!!
I'd also like to know if Gary has tons of stocks in the oil companies or is in upper management of one of the companies!

Oil companies supply a vital product that we want and need. Only 2 percent of their profits come from retail sales at the pump. Yet with the help of the MSM, Democrats have effectively demonized oil producers. Now, Democrats are using cheap demogoguery for political gain. Here's why:

1. Whatever additional revenues we get from discontinuing oil subsidies are a drop in the deficit bucket.

2. Why won't Democrats be a fair broker and rescind subsidies to ALL businesses and industries? Wouldn't that close the deficit gap further?

3. Oil is one of the most heavily taxed products. Oil companies pay taxes in the billions of dollars. Yet oil companies are not as profitable as many other companies. Why penalize only them for success in the marketplace? (taxes are the measure of how well a business meets the demands of buyers in an economy.)