What are the pros and cons of ending oil subsidies in the U.S.?

[BigV]

Originally Posted by baystater

What are the pros and cons of ending oil subsidies in the U.S.?

And please I just want analysis and possible debate of how it affects economies, markets, etc. I don't want political rhetoric.

Thank you.

I'm not an expert in anything, but from what I've observed is that anytime you make it more expensive for a business to do something, the business just passess the cost to the consumer. Increase the taxes for your landlord and your rent will go up to compensate (as an example).

This works in any industry and I don't think Oil is an exception.

[shaker281]

Originally Posted by NeilVA

Even if we back out taxes and compare it to Europes prices w/o taxes, we still end up with about a 50% discount compared to Europe.If we could get Big Oil out of DC, we would probably and finally get affordable cars with diesel engines. So with their higher MPG we would make the the higher cost at the pump with cars that go further on less gas. We could also get rid of Ethanol which does not boost MPG.

A big part of the difference between our core gas cost and Europe is because refineries are built to handle the special characteristics of the oil produced by their primary sources of supply.

And diesels do not appeal to the average American. You cannot force people to buy a product they do not want. Plus, diesels carry a initial cost premium that offsests some of their fuel efficiency. And America's refineries are optimized for gasoline, not diesel.

Agreed on the ethanol thing. And hybrids take years to break even due to their much higher price. Driving 100,000 miles at 40 MPG uses 2500 gallons. Diving that same 100,000 miles at 25 MPG uses 4000 gallons. That 1500 gallon difference at $4 a gallon is $6000. The average hybrid costs about $5-6K more (plus tax and possibly finance charges and loss of interest). Since the average driver goes 10,000 miles a year, it could take 10 years to break even!

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