Republicans/free market people, should we end oil subsidies?

[Jacobtm]

Recently, some Democrats have been calling for a windfall profits tax for oil companies. Most Republicans denounce this idea as nonsensical, because it interferes with the free market, etc.

But if Republicans are so concerned with the free market, why do they continue to support subsidies and special tax breaks for oil companies? Shouldn't the market be free from ALL government influence?

[A18]

I oppose all corporate welfare.

[??????????]

I oppose all corporate welfare.

[Bono]

I oppose all corporate welfare.

[John Dibble]

I oppose all corporate welfare.

[Nym90]

Recently, some Democrats have been calling for a windfall profits tax for oil companies. Most Republicans denounce this idea as nonsensical, because it interferes with the free market, etc.

But if Republicans are so concerned with the free market, why do they continue to support subsidies and special tax breaks for oil companies? Shouldn't the market be free from ALL government influence?

Assuming that your question is in reference to Republicans in Congress or the party leadership in general as opposed to members of this forum, the answer would be that they are beholden to corporate interests. The concept of a free market is merely a means to an end for them, certainly not an end in and of itself.

[MODU]

"Subsidies," as long as they are funding towards key projects, can be a necessary tool for the government to use, even if the recipient is a profit-producing company.  Take for example the oil extraction efforts in Colorado.  Currently, it is not a profitable venture for the oil companies to even attempt extracting the shale oil due to the expenses it takes to drill, heat, extract, and refine the raw product into oil we can currently easily extract from Alaska and the Gulf.  However, that oil under Colorado is theorized to be 8 times the amount of oil in Saudi Arabia.  So, it would be in the countries best interest to subsidize a company to cover some of the expenses in order to tap and extract that oil, and in return, the country would recover their subsidy expenses through all the taxes generated by that product.

So, as long as the subsidies are for the right projects, they are a good thing and do not go against the concept of free market, since the government would simply be a customer in the equation.

[Bono]

"Subsidies," as long as they are funding towards key projects, can be a necessary tool for the government to use, even if the recipient is a profit-producing company.  Take for example the oil extraction efforts in Colorado.  Currently, it is not a profitable venture for the oil companies to even attempt extracting the shale oil due to the expenses it takes to drill, heat, extract, and refine the raw product into oil we can currently easily extract from Alaska and the Gulf.  However, that oil under Colorado is theorized to be 8 times the amount of oil in Saudi Arabia.  So, it would be in the countries best interest to subsidize a company to cover some of the expenses in order to tap and extract that oil, and in return, the country would recover their subsidy expenses through all the taxes generated by that product.

So, as long as the subsidies are for the right projects, they are a good thing and do not go against the concept of free market, since the government would simply be a customer in the equation.

If oil prices raise above a certain value due to inreased scarcity, then companies will becomes interested in it exploring it without subsidies.

[MODU]

If oil prices raise above a certain value due to inreased scarcity, then companies will becomes interested in it exploring it without subsidies.

True, but it would be in the country's best interest to be proactive than reactive and wait for the market, especially in the terms of national (economic) security.

[Nym90]

If oil prices raise above a certain value due to inreased scarcity, then companies will becomes interested in it exploring it without subsidies.

True, but it would be in the country's best interest to be proactive than reactive and wait for the market, especially in the terms of national (economic) security.

Very true. That's the biggest flaw with a completely laissez-faire economy.

[MODU]

If oil prices raise above a certain value due to inreased scarcity, then companies will becomes interested in it exploring it without subsidies.

True, but it would be in the country's best interest to be proactive than reactive and wait for the market, especially in the terms of national (economic) security.

Very true. That's the biggest flaw with a completely laissez-faire economy.

Yeah.  Personally, I think it is impossible for there to be a true laissez-fair economy, no matter how hard to government tries . . . that is, without collapsing in upon itself.  The government will have to be the customer at some point, especially as it grows, requiring the investment and purchasing of services from companies.

[John Dibble]

If oil prices raise above a certain value due to inreased scarcity, then companies will becomes interested in it exploring it without subsidies.

True, but it would be in the country's best interest to be proactive than reactive and wait for the market, especially in the terms of national (economic) security.

Very true. That's the biggest flaw with a completely laissez-faire economy.

Yeah.  Personally, I think it is impossible for there to be a true laissez-fair economy, no matter how hard to government tries . . . that is, without collapsing in upon itself.  The government will have to be the customer at some point, especially as it grows, requiring the investment and purchasing of services from companies.

Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.

[MODU]

Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.

Yup.  That's the risk of doing business, be it government or private. 

[Bono]

Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.

Yup.  That's the risk of doing business, be it government or private. 

Except when it's private you're risking the money of people who voluntarily invested it, while in the public case you are using the taxpayers' money.
Besides, last time I checked the government can't predict the future anymore than the market can. In fact, it's worse.

[MODU]

Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.

Yup.  That's the risk of doing business, be it government or private. 

Except when it's private you're risking the money of people who voluntarily invested it, while in the public case you are using the taxpayers' money.
Besides, last time I checked the government can't predict the future anymore than the market can. In fact, it's worse.

Again, that's all the risk of doing business.  The Government/Companies pay my company money for a task in the hopes that we can do it faster and cheaper than they could internally.  We do the same with other companies.  Usually it works out for the best for both parties, sometimes it doesn't. 

[Nym90]

Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.

Yup.  That's the risk of doing business, be it government or private. 

Except when it's private you're risking the money of people who voluntarily invested it, while in the public case you are using the taxpayers' money.
Besides, last time I checked the government can't predict the future anymore than the market can. In fact, it's worse.

Again, that's all the risk of doing business.  The Government/Companies pay my company money for a task in the hopes that we can do it faster and cheaper than they could internally.  We do the same with other companies.  Usually it works out for the best for both parties, sometimes it doesn't. 

I view it as analogous to shareholders in a corporation. The shareholders don't necessarily agree with every single decision made by the CEO. The government in this case is simply acting as a huge corporation with 300 million shareholders. You are voluntarily investing in the country by choosing to live in it.

[John Dibble]

You are voluntarily investing in the country by choosing to live in it.

Keep in mind that there are people can't afford to leave(or, in some countries, simply aren't allowed to) even if they wanted to.

[Bono]

Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.

Yup.  That's the risk of doing business, be it government or private. 

Except when it's private you're risking the money of people who voluntarily invested it, while in the public case you are using the taxpayers' money.
Besides, last time I checked the government can't predict the future anymore than the market can. In fact, it's worse.

Again, that's all the risk of doing business.  The Government/Companies pay my company money for a task in the hopes that we can do it faster and cheaper than they could internally.  We do the same with other companies.  Usually it works out for the best for both parties, sometimes it doesn't. 

The government doesn't exist to do business. It's only product is security.

[MODU]

The government doesn't exist to do business. It's only product is security.

Which, in turn, creates business.  Companies are not going to develop nuclear weapons or high tech armor, nor build leavies around sinking cities just because.  Government wants those items, and they are not able to create them by themselves, so they pay companies to do the R&D and provide the products/services requested.

[David S]

I oppose all corporate welfare.

^^^^^^^

[Bono]

The government doesn't exist to do business. It's only product is security.

Which, in turn, creates business.  Companies are not going to develop nuclear weapons or high tech armor, nor build leavies around sinking cities just because.  Government wants those items, and they are not able to create them by themselves, so they pay companies to do the R&D and provide the products/services requested.

And this is related to what we were discussing how?

[MODU]

And this is related to what we were discussing how?

*sigh*  I give up.  Go back and read the whole thread.  You will see exactly how this is "related" since we are still on topic.

[Bono]

And this is related to what we were discussing how?

*sigh*  I give up.  Go back and read the whole thread.  You will see exactly how this is "related" since we are still on topic.

No, your argument was: "government needs to give subsidies to prevent future misgivings through speshul government powers of fortunetelling that the market doesn't possess", now has become "government needs to buy stuff".

[MODU]

No, your argument was: "government needs to give subsidies to prevent future misgivings through speshul government powers of fortunetelling that the market doesn't possess", now has become "government needs to buy stuff".

hahaha . . . no, that was never the basis of my discussion, but rather an example of why the government gives out subsidies.  And, I never indicated that the government posessed "future telling powers either."  You don't have to be a palm reader to see that our economy would suffer from constant rising fuel oil prices.  What I did say is that companies normally won't invest in a project (such as extracting oil from shale) until it is economically profitable for them, but a government can subsidize the company to overcome that financial hurdle in order to meet national needs.  Now, if you want to spin that some other way, feel free to do so.

[Bono]

No, your argument was: "government needs to give subsidies to prevent future misgivings through speshul government powers of fortunetelling that the market doesn't possess", now has become "government needs to buy stuff".

hahaha . . . no, that was never the basis of my discussion, but rather an example of why the government gives out subsidies.  And, I never indicated that the government posessed "future telling powers either."  You don't have to be a palm reader to see that our economy would suffer from constant rising fuel oil prices.  What I did say is that companies normally won't invest in a project (such as extracting oil from shale) until it is economically profitable for them, but a government can subsidize the company to overcome that financial hurdle in order to meet national needs.  Now, if you want to spin that some other way, feel free to do so.

There is such a thing as long-term investing, you know?
Plus taking out loans and such.
What you want to do is have a paternalistic state that will sheppard the sheep (ie the people) into what economic direction it finds most politically convenient at the time, without regard to the fact that bureocrats and the political process are much less quick to respond to chancing input than the market system.