ECONOMIC ASPECTS OF THE TAXATION OF DECONTROLLED NATURAL GAS
Bills to decontrol completely natural gas prices have been introduced. As a corollary, a "windfall profits tax" on the rise in price for those categories of gas not at market levels has been proposed. This paper uses a simulation of the natural gas market to estimate the effects of two types of natural gas windfall profits taxes under alternative assumptions concerning supply elasticities and the course of future prices. We estimate the induced changes in production, the division of incremental revenues and the welfare cost. We conclude that the defects of such taxes are likely to outweigh any advantages.
The Irreversible Output Effects of Severance Taxes on Oil
This article explains why the output effect of a severance tax on oil is not generally reversed when the tax is removed. It is shown that this severance-tax-induced irreversibility in supply has important implications for both the interpretation and estimation of the supply of oil. Specifically, severance taxes cause a path dependence in supply that makes the concept of a supply curve for oil ambiguous. The authors provide estimates for the case of Kansas that indicate that the magnitude of the irreversible effects of severance taxes is large.
The Use of Qualitative Information in Macro-Economic Policy Analysis
The majority of macro-economic policy models takes for granted that conflicts among objectives can be assessed by means of a tradeoff analysis. Such tradeoffs imply that sacrifices and benefits of various impacts of decisions can be measured on a cardinal scale, so that a conventional macro-economic utility or welfare analysis can be applied.