Proposed windfall profits tax on crude oil: some major errors in estimation

Journal Article · · J. Energy Dev.; (United States)

OSTI ID:5525134

Mead, W J; Deacon, R T

The Carter program for decontrolling crude-oil prices includes a 50 percent windfall profits tax which would generate a net tax revenue of $142.2 billion over an 11-year period. The proposal is based on assumptions that domestic crude oil will rise to $22 per barrel and that the increase will be passed on to consumers, although there was no market study to indicate if this will actually happen. A projected decline in refinery profits will reduce supplies and raise prices, but this will be constrained if more refined products are imported. An economic disequilibrium will develop and could be intensified if independent refiners are subsidized and the costs are passed on to consumers. Vertically-integrated firms could transfer refining costs to more profitable divisions. The authors doubt that product prices will keep pace with domestic crude oil prices to produce the anticipated profit, but they point out that the desired revenue will be raised because this tax is actually an excise rather than a profits tax. 4 figures, 1 table. (DCK)

• Research Organization: Univ. of California, Santa Barbara
• OSTI ID: 5525134
• Journal Information: J. Energy Dev.; (United States), Journal Name: J. Energy Dev.; (United States) Vol. 5:1; ISSN JENDD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
021000 -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
DEREGULATION
ECONOMIC POLICY
ENERGY SOURCES
FOSSIL FUELS
FUELS
GOVERNMENT POLICIES
LEGISLATION
PETROLEUM
PRICES
TAXES
WINDFALL PROFITS TAX