Quote:
Originally Posted by ikaris
About the thought of the green shift/carbon tax whatever you want to call it... To those who say that the energy producers will just shift the cost to the consumers, how is that even possible?
If you are competing in a global market where the price of oil is relative to fluctuations seen that are beyond our specific control, if we as a country implement a tax that costs energy producers more money to produce oil but then sell this oil at the global market price, don't the costs only impact the energy producers?
eg. Let's say the price of oil is $120 dollars a barrel. The $15/dollar per tonne carbon tax introduced impacts the energy producers (primarily in the oil sands) so that their cost to pull out the oil is an extra $6 dollars a barrel. I believe to break even in the oilsands, oil has to be at least worth $50 dollars a barrel (that is a very conservative number, in reality it's less). The energy producer (we'll say Syncrude) still has to sell the oil at $120 dollars a barrel based on the current market price.
It seems to me that this increase in taxes has to be absorbed by the energy producer in their profits. Could somebody please provide a detailed explanation as to how an energy producer can somehow burden consumers with this cost?
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Becuase not only are oil sands productions going to be taxed by the Green Shift. Natural Gas, which is used to heat homes, business, etc will be taxed. Those increased costs will be passed to consumers because every competitor will be taxed, so every competitor will raise prices. Diesel, which is used by nearly every transport company, will be taxed. Those increases will be passed down the line, eventually, to consumers, again because everyone is taxed, so everyone will raise their prices to compensate.
There are two examples...would you like more? It's not necessarily all about the oil sands when it comes to consumer impact. It's my belief, that the impact the oil sands feels will simply kill the economy, because you're right, they can't simply up the price of oil to overcome the additional costs they are facing.