Some speculation about the economic stimulus and oil companies

[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.

 

[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.

 

[bamacre]

Yeah, people would have bought gas anyway.

 

[SSSnail]

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.

 

[TastesLikeChicken]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.