727LOVER
Topic Author
Posts: 6598
Joined: Tue Oct 09, 2001 12:22 am

There Goes Your Tax Cut

Wed Mar 10, 2004 9:09 am

 Insane


http://aolsvc.news.aol.com/news/article.adp?id=20040305103109990003


Are Gas Prices Draining the Economy?



Analysis by Ramona Schindelheim




(March 9) -- Consumers and airlines may be feeling the impact of higher oil and gasoline prices right now. But a number of economists believe going forward that higher energy prices will have a slowing effect on economic growth overall.

As of Monday, gas prices were just a penny shy of an all-time record, before adjusting for inflation — the national average was $1.74 per gallon, up 22 cents from the beginning of the year. The previous record was $1.75 in August of last year.

Energy Department officials expect a new record soon. And many states are already reporting record highs — Virginia, North Carolina, South Carolina, Florida, Mississippi, California and Nevada to name a few. California still has the highest average at $2.12 a gallon, with gas prices in Los Angeles at $2.18.







Kathy Bostjancic, senior economist for Merrill Lynch, says the higher gasoline prices act as a "tax on consumers and corporations." Consumers pay more to fill their gas tanks and heat their homes, explains Bostjancic, and this "diminishes their disposable income."

Merrill Lynch estimates that every penny increase at the pump is equal to $1 billion in lost consumer spending. Using that equation, the 20-cent-a-gallon increase at the pump this year is taking $20 billion in spending out of the economy.


Wiping Out Benefit of Tax Cut?

Another way to think about it? Merrill Lynch estimates federal tax refunds this year would total about $55 billion from February through May. That would be about 30 percent higher than last year and would, theoretically, give the economy another boost similar to the one it got last summer from child tax credit checks.

But Bostjancic says Merrill Lynch believes the higher pump prices will wipe out as much as a third to half of the economic impact of federal refunds. Oil economist Phil Verleger of PK Verleger in Newport Beach, Calif., agrees. "The higher pump price is taking it [impact of refunds] all away. It has struck out the benefit of the tax cut."






Airlines are feeling the impact right now, Verleger says, but they are unable to pass the higher cost for jet fuel on to customers. "Continental tried to initiate a fuel surcharge last week, but the industry would not go along with it," he notes.

Verleger and airline analyst Ray Neidl of Blaylock in New York say airlines have excess capacity and too much competition, and they will have to absorb the higher fuel prices.

Bostjancic adds businesses have to do the same right now. "This is a tax on corporations," says Bostjancic, "The environment is such they can't pass along higher energy prices to end-use consumers at this time. You are not going to see higher cookie prices in the stores."

Verleger suggests down the road continuing price increases "will put pressure on corporate profits, which might lead to more layoffs."



I feel woozy....what did you put in that Pudding Pop?
 
JAL777
Posts: 2453
Joined: Wed Jun 04, 2003 10:13 pm

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 9:25 am

I have yet to hear of someone who changes their driving habits because of gas price increases.
 
ybacpa
Posts: 1080
Joined: Thu Mar 01, 2001 5:39 am

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 9:31 am

Like it or not though, the only way Americans are going to get out of gas guzzling cars, trucks, and SUVs and into more efficient vehicles is through more expensive fuel. Sorry guys, I don't like it any more than the next person, but tax breaks for fuel efficient cars and laws requiring manufactures to produce fuel efficient cars are not working.
SkyTeam: The alliance for third rate airlines finally getting their act together!
 
JAL777
Posts: 2453
Joined: Wed Jun 04, 2003 10:13 pm

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 9:39 am

Such laws aren't working 'cause there are none. I for one would love to see all those freaking SUV's off the road. And I do not feel sorry when I fill up my bike for $6.00 while the guy in the Suburban spends $75 on gas.
 
Klaus
Posts: 20578
Joined: Wed Jul 11, 2001 7:41 am

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 10:33 am

Are the special sponsoring laws for SUVs still in effect? (The special tax break for "trucks" as opposed to normal sedans.)
 
flight152
Posts: 3211
Joined: Fri Nov 24, 2000 8:04 am

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 11:23 am

Wow. I never thought i'd see the day 727LOVER started a thread he wasn't spewing his gay-marriage propaganda.
 
727LOVER
Topic Author
Posts: 6598
Joined: Tue Oct 09, 2001 12:22 am

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 8:53 pm

Wow. I never thought i'd see the day 727LOVER started a thread he wasn't spewing his gay-marriage propaganda.


WOW! Flight 152. Now I am confused.  Confused


When have I spewed gay-marriage propaganda? Back up your statement!!! Show me examples.
I feel woozy....what did you put in that Pudding Pop?
 
bigphilnyc
Posts: 3874
Joined: Sat Jan 19, 2002 10:43 pm

RE: There Goes Your Tax Cut

Wed Mar 10, 2004 9:31 pm

In the US, if multiple countries within an industry get together and raise prices together to take advantage of their consumers, it's called price fixing and it's very illegal.

Do it on an international level and you're called OPEC.

Fuckers.
Phil Derner Jr.
 
HOMER71
Posts: 2123
Joined: Fri Jul 20, 2001 10:56 pm

RE: There Goes Your Tax Cut

Thu Mar 11, 2004 1:33 am

Whoa, whoa, wait a minute. We were led to believe that the war in Iraq was all about the oil - shouldn't our gas prices be LOWER?!?  Big grin
"On spaceship earth there are no passengers...only crew."

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