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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Kirk © who wrote (21943)3/27/2005 8:48:02 AM
From: Boca_PETE   of 42834
 
re: "higher oil acts as a tax on the economy"

NOT DOLLAR-FOR-DOLLAR and MAYBE NOT AT ALL!

Close examination of the complex sources and uses of the cash flows generated at the local gas station pump all the way back through the transportation, refinement, and production of petroleum products and the finding costs of crude reserves reveals that a major portion of revenue gets spent back into the U.S. economy in the form of expended costs, operating expenses, taxes (collected by governments and then redistributed in the form of government expenditures), and oil company profits distributed to U.S. shareholders in the form of cash dividends which are either spent, invested and spent, or saved and re-loaned by financial institutions and invested re-saved, or spent in the USA.

One must also offset oil dollars flowing out of the USA due to our huge oil imports and U.S. based oil company investments in international oil exploration and production, against repatriated oil profits that are re-invested by oil companies in U.S. oil related projects or distributed to U.S. shareholders who spend, save or invest such dividend dollars.

From my viewpoint, the above described complexities beg explanation by those asserting that higher oil prices act as a tax on the economy.

P
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