How will a windfall profits tax on oil companies increase the supply of gasoline available to us or lower its cost?

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The short answer is it won't, but its effect depends on how they would use the money. If they just tax them to "punish" them, then there will be no benefit at all. But, if they use that money directly to pay for research and development on alternative fuels, then there would be a long term benefit.

So many of these things have questionable or such long-range returns, that it makes sense for the government to sponsor them, because there is no short-term return for the companies to do them. Plus, there are probably conflicts of interest for an oil company to research for alternatives to oil. But, the windfall tax won't increase the supply of gasoline or lower prices of gasoline in the near future.

In fact, it probably has no effect on gasoline at all. Sources: My opinion.

One of the *nine* bills currently in Congress (S.3044) might actually do it. There are actually several "windfall profits tax" bills in Congress right now. For convenience, I'll only discuss the ones introduced in 2008.

The one that might do something is at the bottom: S.2761: Latest Major Action: 3/13/2008 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance. Applies another 25% tax on "windfall" income, and only to: `(1) any integrated oil company (as defined in section 291(b)(4)), and `(2) any other producer or refiner of crude oil with gross receipts from the sale of such crude oil or refined oil products for the taxable year exceeding $1,000,000,000.

S.2782: Latest Major Action: 3/13/2008 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance. Pretty much the same as S.2761, except that all the proceeds are transferred to the highway repair fund that is currently funded exclusively with Federal gas tax.

This one might keep the road repair crews employed even if the "gas tax holiday" passes. H.R.5800: Latest Major Action: 4/15/2008 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Appropriations, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Much more complicated tax formula. The profits (as calculated by the formula, not standard accounting) are taxed at 50% (when profit is between 100% and 102% of "reasonable profit"), 75% (when profit is between 102% and 105% of "reasonable"), or 100% (when profit is above 105% of "reasonable"). The proceeds are sent to the Low-Income Home Energy Assistance Program; this is the fund that cuts down on the number of poor people who have their gas cut off in mid-winter.

H.R.6000: Latest Major Action: 5/9/2008 Referred to House subcommittee. Status: Referred to the Subcommittee on Highways and Transit. Taxes with the same formula as H.R.6000.

Also gives an income tax credit for buying "fuel-efficient American-made" cars. Any money from the tax that's left over after the tax credits is granted to subsidize public mass transit. S.1238: Latest Major Action: 4/26/2007 Referred to Senate committee.

Status: Read twice and referred to the Committee on Finance. Has technical changes to the accounting of inventories, foreign taxes, and amortization. Re-imposes royalties to the Federal Government on oil taken from Federal land; those royalties, comparable to what they'd pay you if they drilled on your land, had been paid by the oil companies up until 2005.

The money collected by all of those changes will be used: (1) 50 percent shall be available to offset the cost of legislation enacted after the date of enactment of this Act to carry out energy research in the United States, including research relating to-- (A) ethanol, and (B) biodiesel, and (2) 50 percent shall be available to offset the cost of legislation enacted after the date of enactment of this Act to carry out the development, purchase, and installation of infrastructure (including new fueling pumps, retrofitting of existing fueling pumps, and equipment necessary for the transportation of biofuels) necessary to deliver new fuels to consumers. Windfall profits tax calculated the way that S.2761 does, except at the 50% rate instead of 25%. Proceeds are funneled through the states to be used to help transportation of low income folks.

I'm anticipating this to be a "gas stamps" program similar to the "food stamps" that we've had for decades. S.3044: Latest Major Action: 6/11/2008 Senate floor actions. Status: Motion to proceed to measure considered in Senate.

Although the text is denser, it looks like pretty much the same windfall profits tax as S.2761. The proceeds are used: `(1) reduce the burdens on consumers of rising energy prices; `(2) diversify and expand the use of secure, efficient, and environmentally-friendly energy supplies and technologies; `(3) result in net reductions in emissions of greenhouse gases; and `(4) prevent energy price gouging, profiteering, and market manipulation. '.

Also allows the President to declare an energy emergency, for specified areas and only for 30 days at a time. When a declaration is in force, it prohibits selling fuel at an "unconscionably excessive price. " Interestingly, the language for figuring out if the gas prices are too high include: Factors Considered- In determining whether a violation of subsection (a) has occurred, there shall be taken into account, among other factors, whether-- (1) the price charged was a price that would reasonably exist in a competitive and freely functioning market; and (2) the amount of gasoline, other petroleum distillates, or biofuel the seller produced, distributed, or sold during the period the Proclamation was in effect increased over the average amount during the preceding 30 days.

The penalties for price gouging are purely civil, and I can see periods in which it could be profitable to consider them a cost of doing business. This bill also says the government won't add to the Strategic Petroleum Reserve until after the end of 2008. Another clause says the Attorney General can go after OPEC for violating American antitrust laws.

Another clause says that American firms can't buy oil in markets that are dominated by speculators. Sources: http://thomas.loc.gov/ .

2 When I read about this, the idea was to take the money and give it to poor people to buy gasoline (but not lotto tickets and beer). The Robin Hood thing. Another bad idea that will never really get through Congress.

Once the speculators are done running up the futures market, the bubble will burst, oil will fall, gas will get back into the $3.00 range, and people will forget about it.

When I read about this, the idea was to take the money and give it to poor people to buy gasoline (but not lotto tickets and beer). The Robin Hood thing. Another bad idea that will never really get through Congress.

Once the speculators are done running up the futures market, the bubble will burst, oil will fall, gas will get back into the $3.00 range, and people will forget about it.

True relief can only be found in one way...reducing dependence on oil. Oil prices contain two components...one is supply and demand, and because supplies are by and large stagnant (and if anything in danger of decreasing as we deplete the oil on top and have a harder time reaching what is left), and demand is increasing due to the industrialization of China and India (as well as our own increases in demand), that equates to an upward trend in oil prices until such time as our energy needs can be filled without the use of oil. The second component, which is what has made oil prices rise far more sharply than they would have under a pure supply and demand structure.

How sharply? No one knows for sure. But the conventional wisdom of the Wall Street analysts is that we are experiencing a significant bubble, and just like all bubbles (i.e.

The housing bubble as the most recent example), it will burst when speculators begin to realize that oil prices are overinflated. No one knows when that will happen, but in the meantime, it's making it hard for most middle class people to afford the spike in gas and food (which also relies on petroleum for its production) prices, and making it next to impossible, if not impossible for the poorest in our society to get by. Consider if you make $7 an hour and drive 25 miles each way to work in a vehicle that gets 20mpg.

You make $70 a day, it ends up being $50 after taxes. $2 gas cost you $5 a day to drive, $4 gas costs you $10 a day, or $5 more. You've just lost 10% of your takehome pay.

So you've got $1,000 a month takehome, $200 is going to gas, $600 is going to rent, $100 to utilities, that leaves you with $100 to buy food, used to be $200 when gas was $2 a gallon. Now food prices have gone up as well, so you have to feed your family on half the money when food costs about 50% more than it did. And all this transpired in a year or two!

A windfall profits tax could be used to directly subsidize gas the way we subsidize E85, or it could be sent out in the form of stimulus payments, and a portion of it could be applied to longterm initiatives to eventually reduce the price of energy by investment in alternative energy sources. That is how it would help.

It's not meant to decrease the price of gas. It's meant to finance relief from those hardest hit by high gas prices. This is a real financial crisis for millions of Americans, yet it is a windfall equivalent to winning the lottery 1,000 times for the companies that sell the oil.

True relief can only be found in one way...reducing dependence on oil. Oil prices contain two components...one is supply and demand, and because supplies are by and large stagnant (and if anything in danger of decreasing as we deplete the oil on top and have a harder time reaching what is left), and demand is increasing due to the industrialization of China and India (as well as our own increases in demand), that equates to an upward trend in oil prices until such time as our energy needs can be filled without the use of oil. The second component, which is what has made oil prices rise far more sharply than they would have under a pure supply and demand structure.

How sharply? No one knows for sure. But the conventional wisdom of the Wall Street analysts is that we are experiencing a significant bubble, and just like all bubbles (i.e.

The housing bubble as the most recent example), it will burst when speculators begin to realize that oil prices are overinflated. No one knows when that will happen, but in the meantime, it's making it hard for most middle class people to afford the spike in gas and food (which also relies on petroleum for its production) prices, and making it next to impossible, if not impossible for the poorest in our society to get by. Consider if you make $7 an hour and drive 25 miles each way to work in a vehicle that gets 20mpg.

You make $70 a day, it ends up being $50 after taxes. $2 gas cost you $5 a day to drive, $4 gas costs you $10 a day, or $5 more. You've just lost 10% of your takehome pay.

So you've got $1,000 a month takehome, $200 is going to gas, $600 is going to rent, $100 to utilities, that leaves you with $100 to buy food, used to be $200 when gas was $2 a gallon. Now food prices have gone up as well, so you have to feed your family on half the money when food costs about 50% more than it did. And all this transpired in a year or two!

A windfall profits tax could be used to directly subsidize gas the way we subsidize E85, or it could be sent out in the form of stimulus payments, and a portion of it could be applied to longterm initiatives to eventually reduce the price of energy by investment in alternative energy sources. That is how it would help.

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.