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Some speculation about the economic stimulus and oil companies

2Xtreme21

Diamond Member
Jun 13, 2004
7,045
0
0
Just something I've been thinking about. So assuming 80% of the population of the US receives $600 via the president's stimulus package, the government gives $145,564,800,000 to the tax payers of this country. Let's also assume that the average person spends between 5% and 10% (we'll use 7.5% -- source) of his/her income on gas. So, on average, $45 of that $600 will be spent on gas.

Now, let's take all 242,608,000 tax payers' $45 and throw it into the oil industry. I don't know about you, but if I were the head of a large oil corporation, I'd be jumping in my shoes since President Bush and the US government just gave me a $10,917,360,000 check.

Doesn't really sit well with me...

Edit: Dur, .075*600 = 45.
 

ProfJohn

Lifer
Jul 28, 2006
18,251
5
0
I think your numbers are off when you calculated how much money is being 'given' away.
Not every single person in the country will get that $600. In 1997 there were only 122 million tax returns filled.

Plus we are going to pay for that gas anyway. That extra money will most likely go to Walmart, Target, movie theater etc etc.
 

SSSnail

Lifer
Nov 29, 2006
17,461
80
86
Psssh.... they're gonna have to buy gas that week anyways to get their asses to Wally World and other crappy places that sell mostly "Made in China" craps.
 
Sep 12, 2004
16,852
59
86
Is the amount a person spends on gas going to change regardless of whether or not this handout is provided?

Probably not significantly. It could result that a very small percentage of that money is spent on gas (some people may use it to travel whereas they wouldn't without it) but I doubt it's anything close to what you're claiming.
 

miketheidiot

Lifer
Sep 3, 2004
11,062
1
0
Originally posted by: 2Xtreme21
Just something I've been thinking about. So assuming 80% of the population of the US receives $600 via the president's stimulus package, the government gives $145,564,800,000 to the tax payers of this country. Let's also assume that the average person spends between 5% and 10% (we'll use 7.5% -- source) of his/her income on gas. So, on average, $45 of that $600 will be spent on gas.

Now, let's take all 242,608,000 tax payers' $45 and throw it into the oil industry. I don't know about you, but if I were the head of a large oil corporation, I'd be jumping in my shoes since President Bush and the US government just gave me a $10,917,360,000 check.

Doesn't really sit well with me...

Edit: Dur, .075*600 = 45.
gas is a very inelastic good, consumption is unlikely to increase dramatically, or even significantly.
 

2Xtreme21

Diamond Member
Jun 13, 2004
7,045
0
0
You say that they might spend it on gas anyway, but the point is you're adding $600 to whatever money you have already. While you may not set aside $45 of the $600 check you receive for gas, you're going to set aside $45 of your current wealth + $600 for gas.
 

nageov3t

Lifer
Feb 18, 2004
42,816
83
91
what difference does it make if the $20/week people pay in gas every week comes from their paycheck or their tax refund?

people aren't going to drive cross country just because they have a check to pay for the gas with.
 

umbrella39

Lifer
Jun 11, 2004
13,819
1,123
126
Originally posted by: ProfJohn
I think your numbers are off when you calculated how much money is being 'given' away.
Not every single person in the country will get that $600. In 1997 there were only 122 million tax returns filled.

Plus we are going to pay for that gas anyway. That extra money will most likely go to Walmart, Target, movie theater etc etc.
I agree with the bolded part except that I think a lot of people will use it to pay down their Walmart and Target credit cards. I know we will be. $600-$1200 would pretty much take care of all my credit debt.
 

Genx87

Lifer
Apr 8, 2002
41,063
495
126
Your logic is flawless. I was holding off on buying my next tank of gas until the govt sent me 600 bucks back from the taxes I paid to them last year.
 

Mxylplyx

Diamond Member
Mar 21, 2007
4,197
100
106
I know many dems want to believe that everything politicians do is for the benefit of big oil, but come on, dont you think this is a little far reaching? I guess you could also accuse the government of supporting the illegal drug trade, because millions of that money will go to street level drug dealers.
 

kranky

Elite Member
Oct 9, 1999
20,999
109
106
This argument is illogical. More money in your pocket does not equal more spending on gas. Think of your own circumstances - are you going to spend more on gas because you get the check?

If you wanted to look cynically at who will secretly reap the benefit of this stimulus package, look at manufacturers and sellers of big screen TVs, digital cameras, and all the other trinkets that people feel they must own. I predict right now that there will be Black Friday-like competition among retailers when the checks start to arrive.

Or if people are feeling worried, they might choose to pay off bills and/or put the money into savings. That will benefit the banks.

But there's no way to make a legit argument that the oil companies will benefit.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
The main and gross flaw in your argument is that people are going to buy more gas than before. I spend a couple or few hundred/month but if I suddenly hit a landfall of $10k, do you know how much money I'd spend on gas next month? A couple or few hundred again.

You say that they might spend it on gas anyway, but the point is you're adding $600 to whatever money you have already. While you may not set aside $45 of the $600 check you receive for gas, you're going to set aside $45 of your current wealth + $600 for gas.
Oh come on, just admit it the argument is weak. They will spend it on gas anyway. They won't buy much if any more gas this way. Maybe a few people will buy an extra tank to save carpooling.

I guess you could also accuse the government of supporting the illegal drug trade, because millions of that money will go to street level drug dealers.
Now we ARE talking. I guarantee there will be more drugs consumed when people get the checks, and that is not reaching, it is realistic.
 

senseamp

Lifer
Feb 5, 2006
35,038
5,124
126
I hope people use the money to pay off their loans and bills or save it for the future. Screw the government telling you to spend it. It's being irresponsible with money on your behalf, what you should do is offset its irresponsibility with doing the responsible thing yourself.
Let's face it, if you spend that money, most of it is going to go to either OPEC for oil or China for junk.
 

FoBoT

No Lifer
Apr 30, 2001
63,089
12
76
fobot.com
Originally posted by: Genx87
Your logic is flawless. I was holding off on buying my next tank of gas until the govt sent me 600 bucks back from the taxes I paid to them last year.
yes, i have stopped driving and will wait to get my govt. check before buying anymore petroleum products

 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
101,626
5,921
126
Originally posted by: 2Xtreme21
Just something I've been thinking about. So assuming 80% of the population of the US receives $600 via the president's stimulus package, the government gives $145,564,800,000 to the tax payers of this country. Let's also assume that the average person spends between 5% and 10% (we'll use 7.5% -- source) of his/her income on gas. So, on average, $45 of that $600 will be spent on gas.

Now, let's take all 242,608,000 tax payers' $45 and throw it into the oil industry. I don't know about you, but if I were the head of a large oil corporation, I'd be jumping in my shoes since President Bush and the US government just gave me a $10,917,360,000 check.

Doesn't really sit well with me...

Edit: Dur, .075*600 = 45.
people would have bought gas anyway. the people who are going to benefit from this are walmart and anheuser-busch


i don't agree with krugman's view that people sticking the money in their bank account or paying down debt won't help. does he know what banks do? that's better than spending at walmart where 99 cents on every dollar goes to china. at least budweiser is made in the USA.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
Originally posted by: Genx87
Your logic is flawless. I was holding off on buying my next tank of gas until the govt sent me 600 bucks back from the taxes I paid to them last year.
LOL

and

QFT
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
I think a lot of that money will go to pay off bills that people cant afford to pay or for household items like refrigerators, TV's, or computers or something like that.
 

ProfJohn

Lifer
Jul 28, 2006
18,251
5
0
Originally posted by: piasabird
I think a lot of that money will go to pay off bills that people cant afford to pay or for household items like refrigerators, TV's, or computers or something like that.
Think of all the people running out to buy Blu-Ray players... hmmm decent idea :)

Think about it though, you get 600 bucks and it's 'free' money and not part of your budget so why not go out and buy a big item with it. I am sure a lot of people will be doing that, most middle income people.
 

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