The Battle Behind the Pumpscivics.sites.unc.edu/files/2012/05/BattleBehindthePumps...1 The Battle Behind the Pumps Overview In a guided reading activity, students will gain an understanding

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TheBattleBehindthePumpsOverviewInaguidedreadingactivity,studentswillgainanunderstandingofhowtheeconomicconceptsofsupplyanddemandcanbeusedtoexplainthedrasticincreasesinthepriceofoil.Then,assumingtherolesofGeneralAssemblyrepresentativesorlobbyists,studentswillparticipateinacommitteesimulationdebatingandvotingonaproposedgasolinetaxsuspensionbill.(ForanalternativeGeneralAssemblysimulation,seeExploringtheNCGeneralAssemblythroughaBillonFlagDesecration,availableinCAROLINAK-12’sDatabaseofK-12Resources.)CourseCivicsandEconomicsNCEssentialStandardsforAmericanHistory:TheFoundingPrinciples,CivicsandEconomics• FP.E.1.1Comparehowindividualsandgovernmentsutilizescarceresources(human,naturalandcapital)in

traditional,command,marketandmixedeconomies.• FP.E.1.2Analyzeamarketeconomyintermsofeconomiccharacteristics,therolestheyplayindecision-

makingandtheimportanceofeachrole• FP.E.1.3Explainhowsupplyanddemanddetermineequilibriumpriceandquantityproduced• FP.E.1.6Comparenational,stateandlocaleconomicactivityEssentialQuestions• HowarepricesdeterminedintheUS?• Whataffectdopriceshaveonconsumerdecisions?• Inwhatwaysdoesthepriceofgasdifferfromthepriceofotherconsumergoods?• Whatservicesarefundedbythegastax?• Howdostatelegislatorsdebate,change,andvoteonbillsincommittee?Materials• WhyisthePriceofOilIncreasing?ReadingandActivity,attached• USMapofgasolinetaxes,October2016mapattached(checkwww.api.orgforupdatedmaps)• ProposedBillonsuspendingtheNCfueltax,attached• GeneralAssemblyFinanceCommitteeMeetingInstructions,attached• Internetaccess(optional)• 5ReasonstoLove$4Gas,attached• SampleTestQuestionsandAnswerKey,attachedDurationTwoblockperiodsPreparationStudentsshouldhaveabasicknowledgeofsupplyanddemandanditseffectonpricesettinginamarketeconomy.StudentsshouldalsohaveanunderstandingofthestructureoftheGeneralAssemblyandthestatelegislativeprocess(seeTheNorthCarolinaGeneralAssembly-HowYourLawsareMadepowerpoint;availableinCAROLINAK-12’sDatabaseofK-12Resources)Procedure

ExploringSoaringGasPrices

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1. Asawarmup,creativelysetupthefollowingscenarioforstudentstoimagineinordertospurtheirthinkingregardinggasolineprices:

Iwantyoutoimaginethatitisabeautifulsummerdayandyouarecruisinginyourdreamcar.Isitaconvertible?AnSUV?AHummeroraPorsche?Whatevercaryourheartdesires,that’swhatyouarecurrentlydriving.You’vegotthewindowsdownandthemusicup,becausetheweatherisperfect.Schoolisout,youhavetheboyorgirlofyourdreamsintheseatnexttoyou,andyouhavenoresponsibilitiesonthisawesomeday.Nowimaginethatbecauseit’ssobeautifuloutside,andbecauseyouandyoursweetiehavenowheretobe,youdecidetotakeanimpromptudrivetothebeach.Youpullintothegasstationandpreparetofillyourtankup,butthenyouseethatgashasjumped$1.00inpriceovernight!It’snowsoexpensive,yourealizethatyoucanbarelyaffordtodrivehome,andcertainlynotallthewaytothebeach.Sadly,theboyorgirlofyourdreamsbecomesangrythatthejoyridetothebeachiscanceled.Heorshestompsawayfromthecartocallarideandsuddenly,yourperfectdayisnowallbutperfect.

Discuss:• Whywasgasolinecrucialtocontinuingyourperfectday?Howdidyoufeelwhenyousawthatthe

pricesofgashadskyrocketed?Doesthiseverhappeninreality?• Doesanyoneknowwhatdeterminesthepriceofgas,andwhyitcanvaryfromdaytoday?• Howdoindividualconsumersusegasolineintheireverydaylives?• Howdobusinessesusegasoline(encouragestudentstoconsiderproduction,distribution,etc.)?• Wheredoesgasolinecomefrom?Howisitproduced?• Whatindividualsandbusinesseswouldbenefitfromhighergaspricesandinwhatways?• Whatindividualsandbusinesseswouldbehurtbyhighergaspricesandinwhatways?• Whathashappenedtothepriceofgasolineoverthepastfewyears?• Howareoilandgasolinerelated?

2. Afterstudentshavesharedtheirpriorknowledgeaboutgasoline,passoutWhyisthePriceofOil

Increasing?ReadingandActivity.Eitherindividuallyorinpairs,studentsshouldreadthehandoutandcompletethequestions.Reviewanswerstothequestionsafterstudentsarefinished.Conceptsmaybedifficultforstudentsweakinmath.Provideone-on-oneassistancetostudentswhohavestruggledgraspingbasicconceptsofsupplyanddemand,orassignthemalearningpartner.

3. Introducestudentstotheconceptoffueltaxes.Thegasoline(orfuel)taxisplacedonimportersof

gasolinetobepassedontoconsumers,unlikeasalestaxwhichischargedatthetimeofpurchase.InNorthCarolina,revenuefromthegasolinetaxisusedtofundroads.Localgovernmentsreceivefundingbasedontheamountofgassoldintheirarea.ProjecttheUSmapofgasolinetaxes(attached).Havestudentsdiscuss:• Whatdoyounoticefirstaboutthismap?Doesanythingsurpriseorconcernyou?• WhatistheNCgasolinetaxbasedonthemap?• HowdoestheNCgasolinetaxcomparetootherstatesinthesoutheast?• HowdoestheNCgasolinetaxcomparetootherregionsoftheUS?• Whatstateshaveahighertaxongasoline?Lowertax?

NCGeneralAssemblyFinanceCommitteeMeetingSimulation

4. TellstudentsthattheywillbethinkingmoreabouttheseissuesbyparticipatinginaGeneralAssemblysimulation.TellstudentssomeofthemhavebeenrecentlyelectedtotheHouseofRepresentativesandwereassignedbytheSpeakeroftheHousetotheFinanceCommittee.ExplaintostudentsthattherearemorethanadozencommitteesforeachhouseoftheGeneralAssembly,andtheirworkisveryimportant,aseverybillintroducedwillbestudiedbyatleastonecommitteeintheSenateandintheHouseofRepresentatives.InformthestudentsthattheywillbestudyinganddebatingabillthathasbeenintroducedtosuspendtheNCfueltaxfor90days.Therestoftheclasswillactaslobbyistgroupswho

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wanttoexpresstheirviewsabouttheproposedbilltothecommitteemembers,inhopesofinfluencingthelegislators’opinions.

5. Giveeachstudentacopyoftheattacheddraftbillfora90-daysuspensionofthegastax.Haveastudentvolunteerreadthebilloutloudandensureallstudentsunderstandwhatthebillisproposingascurrentlywritten.Allowstudentstoaskquestionsifclarificationisneeded.

6. Next,dividestudentsintosevengroups.OnegroupwillactasthemembersoftheHouseFinanceCommitteeandtheother6groupswillbespecialinterestgroups.Givegroupstheattachedappropriateinstructions.Instructstudentstosilentlyreadthehandoutprovidedforapproximately5minutes,thenexplainthedirections:

• Committeemembers/legislators:(providethesestudentswithInstructionsforMembersoftheHouse

FinanceCommittee&SummaryofSpecialInterestGroups.AlsoassignonestudentinthisgrouptobetheCommitteeChairandgivehim/herInstructionsfortheCommitteeChair*.)

YouwillspendthefollowingworktimereviewingthebillthatwasintroducedbyHousememberBoylan.UndertheleadershipofyourChair,youshoulddiscussyourinitialopinionsofthebill.Rememberasyoudiscussthebillthatamendmentstothebillcanbemadebyyou,aslegislators,atanypointbycrossingthroughthetextandrewritingitatwill.

YoushouldalsoreviewtheSummaryofSpecialInterestGroups,anddeterminehowtobestaddresstheseopposingviews,consideringthe“commongood”ofNorthCarolina.Asagroup,youshouldformatleasttwofollow-upquestionsforeachspecialinterestgroupinpreparationfortheirtestimonies.

• SpecialInterestGroups:(providethesestudentsInstructionsfor_____,aswellasSummaryofSpecial

InterestGroups.)

Eachofyou,aslobbyistsforspecialinterestgroups,willworkoncreatinga3-minutepresentationtopresenttothepaneloflegislativecommitteemembers.YourgoalistoconvincemembersoftheHouseFinanceCommitteetoeithersupportornotsupportabillforsuspendingtheNCgastaxfor90days.Youshouldformargumentsbasedonthefactsgivenabouttheviewsofyourspecialinterestgroup,aswellasmakeinferencesthatmighthelpyourposition.Organizethesethoughtsintoapresentationthatwillconvincethiscommitteetoseethingsyourway.Inadditiontoconsideringyourgroup’sviews,youshouldthinkofwaystoargueagainstyouropponent’sviews.*Makesureyouhaveaconcisepresentationprepared,sinceyouwillbestoppedwhenyouhavereachedyour3-minutetimeallotment,whetheryouarefinishedornot.

7. Reviewyourexpectationsforrespectfulgroupworkandallowstudentstoprepareforthesimulationin

theirgroups.Tellthegroupstheywillhavetheremainderofclasstoprepareforthecommitteemeeting,whichshouldtakeplaceatthebeginningofthenextclass.Circulatearoundtheroomtoassistgroupsastheyprepare,givingperiodictimewarnings.Thissimulationisdesignedtobeentirelystudentlead,withthestudentplayingtheChairmantoleadthesimulation.Duringthepreparationphase,theteachershoulddiscussappropriateprocedurewiththeChairsohe/sheknowshowtocallthemeetingtoorder,makeintroductions,summarizethepurposeofthemeeting,etc.

Circulatearoundtheroomasgroupswork,ensuringtheyareontherighttrack.Letstudentsknowtheywillhaveabriefamountoftimeinthebeginningofthenextclasstoorganizethemselves,butthatanylooseendsregardingtheirpresentationsshouldbetiedupforhomework.Youmayalsowishtoinstructstudentstocome“dressed”incharactertomorrow,astheywoulddressiftheywereactuallyparticipatinginacommitteemeeting.

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ConductingtheSimulation8. OnDay2,useyourdiscretionregardingwhetheryourstudentsneedmorepreparationtime.Onceitis

timeforthecommitteemeetingtobegin,reviewbehaviorexpectationsforbeingarespectfulparticipant.Havethelegislatorgrouptakeseatsinthefrontoftheclassroomfacingthelobbyists.AskthestudentassignedasChairtocallthemeetingtoorder,givinganoverviewofthebillthatisbeingdiscussed,aswellasremindingstudentsoftheformatandorderforthetestimonies(teachersmaywanttodisplaythisontheboardoronchartpaper).

Chairmancallsmeetingtoorderandgivesoverview 1minutePresentationfromtheNorthCarolinianCitizenCoalition 2-3minutesFollow-upquestionsfromlegislators 2minutesPresentationfromtheNC-DOT 2-3minutesFollow-upquestionsfromlegislators 2minutesPresentationfromNCPovertyProject 2-3minutesFollow-upquestionsfromlegislators 2minutesPresentationfromTarHeelEconomicAssociation 2-3minutesFollow-upquestionsfromlegislators 2minutesPresentationfromAmericanPetroleumInstitute 2-3minutesFollow-upquestionsfromlegislators 2minutesPresentationfromSierraClub 2-3minutesFollow-upquestionsfromlegislators 2minutesChairmancancallforanyfinalcommentsorquestionsfrompresentinggroupsandlegislators(teacher’spreferenceiftimepermits)

5minutes

Chairmanleadsopendeliberationofcommittee Upto10minutes(ifconsensuscannotbemet,Chaircan“tableconversationuntilnextmeeting”

Ø Itisrecommendedthatteacherstimestudentpresentations,keepingthemat3minutes;

otherwisethesimulationcanbecomelengthy.9. Allowforaround45minutesforthesimulatedcommitteemeeting.Oncethecommentsessionhasended,

theCommitteememberswilldeliberatetheproposedbillinfrontoftheclass,determininghowtheywillpresentittotheGeneralAssembly.Teacherscanfocustheclassdiscussiondependingontimelimitations;iftheCommitteememberscannotcometoanagreement,theChaircanendthediscussionbysayingtheissuewillbe“placedontheagendaofthenextmeeting”(ifthisoccurs,discusswhyconsensuswassodifficultduringthedebriefing).Otherwise,thechairpersonwillhavethecommitteevoteontheproposedbill.

DebriefingtheSimulation

10. Afterthesimulationhasended,havestudentsapplaudthemselvesfortheirhardworkanddebriefusingthediscussionquestionsbelow:• Whatisyouropinionofthecommittee’sdecision?Explain.• ImaginetheNCGeneralAssemblypassedsuchabill.Wouldyousupportit?Whyorwhynot?• Thoseofyouwhopresentedtocommittee,whatdoyouthinkthebestpartofyourpresentationwas

andwhy?Howwouldyouchangeyourpresentationtoimproveitfornexttime?• Whatskillsareimportantwhenpresentingtoabodyofprofessionals?(Discusspresentationskillssuch

asbeingprepared,speakingclearly,beingbriefandconcise,etc.)• Whyisitimportantwhenpreparingapresentationtoconsiderwhattheoppositeviewmightbe?• WereyouactuallyservingontheGeneralAssembly,whatotherfactorsmightinfluenceyouthatwere

notnecessarilyrepresentedinthisactivity?• Mostcitizensarenotelectedofficials.Inwhatwaysmightindividualcitizensoutsideofthesebodies

haveinfluencedthisprocess?Howcanyouletyouropinionbeknown?• Whatisyouropinionofthegovernmentinfluencingthepriceofgas?

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• Whataresomeviewpointsthatwerenotsharedduringthecommitteemeeting?• Whateconomicconcernscanyouthinkofregardinghighgasprices?Explain• Whatareenvironmentalconcernscanyouthinkofregardinghighgasprices?Explain.• Doyouthinkitisimportantthatindividualcitizenslobbytheirstategoverningbodiesabouttaxesand

spending?Whyorwhynot?• Whatfactorsinfluencelegislatorsinthedecisionstheymake?• Howmightalegislatordecidewhatitbestforthestateasawhole(the"commongood")?• Whatwouldhappenifcitizensdidnotmaketheiropinionsknowntolegislators?Howmightour

societybeaffected?• Whichofthespecialinterestgroupswouldyousayhadeconomicinterests?Explain.• Whichofthespecialinterestgroupshadpublicinterests,single-issueinterests,orideological

interests?Explain.• Wouldyouwanttobeastatelegislatorwhomakesthesekindsofdecisions?Whyorwhynot?• WhyisitimportantforNorthCarolinacitizenstoparticipateintheelectionprocessoftheirlegislators?• Howistheworkofstatelegislatorsrelevanttoeachofus?

CulminatingActivities• Havethestudentscreatea“T”Chartwitha“+”overonecolumnanda“–”overtheothercolumn.Have

themlistallthegoodthingsaboutmoreexpensivegasunderthe“+”andallthebadthingsaboutmoreexpensivegasunderthe“–“.Then,havethemreadthearticleFiveReasonstoLove$4Gasandreturntotheirchartandrevisethe“+”sidewithanyofthetopicsfromthearticlethattheyfoundconvincing.

DifferentiationStudentswithspecialneeds• Ensurethatstudentsareplacedinmixedabilitygroups.• Studentswhodonotworkwellinsmallgroupsmayworkaloneaslegislativereporters.Theycanresearch

thegastaxcontroversyontheinternetwhiletheremainderofclasspreparesforthesimulation.Duringthesimulationtheyshouldobserveandtakenotesoftheopinionsrepresentedbyparticipants.Theyshouldthencomposeanewspaperarticleaboutthedifferentopinionsaboutthegastaxholidaybill.

AIG• Researchalternativefuelsourcessuchasethanolandhydrogen.Havestudentcreateacostanalysis

comparingtherisinggasolinepriceswiththatofalternativeenergyinitiatives.

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Name:_________________________

WhyisthePriceofOilIncreasing?Adaptedfrom“WeCanLowerOilPricesNow”ByMARTINFELDSTEINJuly1,2008

Whyhasthepriceofgasincreasedsorapidlyoverthepastfewmonths?Economicsoffersasimplesupply-and-demandexplanation.

1.Makeaquickpredictionregardingwhyyouthinkthepriceofgasoftenincreases:WeallknowthatrisingincomesinChina,IndiaandtheGulfstateshaveincreasedthedemandforoilandmanyothercommodities.

2.Belowisagenericsupplyanddemandgraphforoil.• Wouldmoreconsumersinthemarketforoil(China,IndiaandtheGulfstates)changesupplyor

demand?_______________________________________________________________________• Wouldtherebeanincreaseordecrease?______________________________________________• Showthechangeonthegraphbelowbasedonyourlasttwoanswers.LabelthenewcurveD*.• Howdoesthechangeaffecttheequilibriumpriceinthemarketforoil?Usingdashedlines,showthe

oldequilibriumpriceandthenewequilibriumprice.

Buthowcouldthemodest,one-yearriseofthesedemandsleadtosuchdrasticincreasesintheprice

ofoil?Let'stakealookatthemarketforoil.Intheshortrun,thereislittlescopeforincreasingthesupplyofoilinresponsetoaglobalincreaseindemand.Fordemandandsupplytobalance–forthemarkettoclear–thepriceofoilmustrise.

Ifthedemandforoilwereveryprice-sensitive,arelativelysmallincreaseinpricewouldreduceglobaldemandbyenoughtooffset

theinitialriseindemand.However,sincedemandisactuallyquiteinsensitivetopriceintheshortrun,ittakesaverylargepricerisetobringglobaldemandintolinewithsupply.Demandforoilisnotverysensitivetopricechangesbecausetherearefewpracticalsubstitutes.IfthegrocerystoreraisesthepriceofCoca-Cola,acustomercanchoosetobuyPepsiColainstead.Ifthegasstationontheotherhandraisesthepriceofgasolineduetomoreexpensiveoil,acustomerhasnootheralternativetopowertheirexistingautomobile.Oilisalsoanecessityformanyconsumersintheformofgasolinetopowercarsfortransportationtowork.Withfeweasyreplacementsandastrongneed,pricechangeshavelittleeffectonthequantityofoildemanded.

3.Thearticlestatesthatthedemandforoilisveryinsensitivetochangesinprice.Thismeansachangeinpricehasverylittleeffectonthequantitydemandedforoil.Ineconomics,thisiscalledinelasticdemand.

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Othergoodsthoughhaveelasticdemand,meaningachangeinthepriceofagoodhasaverylargeaffectonthequantitydemanded.

• Whichofthegraphsbelowshowselasticdemand?Howcanyoutell?

• Whichofthegraphsbelowshowsinelasticdemand?Howcanyoutell?

• Whichgraphwouldbestrepresentthedemandcurveforoil?Explain

Supplyforoilisalsonotverypricesensitive.Becauseoftherelativescarcityofoilandtheexpensive

equipmentnecessarytoretrieveoil,productioncannotincreaserapidlytorespondtoincreasesinprice.Sincebothproductionandconsumptionarerelativelyinelastic(ignoringtheimpactofpolitical,culturalandenvironmentaldisruption),changesininvestment–evenhugechangesininvestment-areunlikelytobringaboutacorrespondingincreaseinsupply.Theworldoilmarkethasbecomerelativelyinelasticinthesensethatlargeincreasesininvestmentnolongerproducesimultaneousincreasesinsupply.Evenassumingtherearenopoliticalobstacles,culturaldisruptions,weatherproblems,orgeographicalchallengestodelayexplorationandproduction,itstilltypicallytakesmanyyearstodevelopanewoilfield.Forexample,preliminaryestimatesshowthatexplorationanddrillingoffofthecoastofNorthCarolinawouldtakenearlyeightyearsbeforeoilwouldactuallybeavailableforrefining.Inaddition,ourabilitytobringnewproductionon-lineisfurtherlimitedbythepoliticalobjectivesandculturalchallengesoftheproducernation.TakealookatnationssuchasIran,Iraq,Venezuela,orNigeria.Asdescribedbyculturaleconomics,anypotentialelasticityhasbeendecreasedbylocalrestrictions.Withaverylowshort-runpricesensitivityofdemandandlittlescopetoraisesupplyintheshortrun,evenarelativelysmallincreaseinoildemandbythehigh-growtheconomiescanleadtoaverylargeshort-runriseinthepriceofoil.

4.Thereadingstatesthatthesupplyforoilisalsoveryinsensitivetochangesinprice.Thismeansachangeispricehasverylittleeffectonthequantitysuppliedforoil.Ineconomics,thisiscalledinelasticsupply.Othergoodsthoughhaveelasticsupply,meaningachangeinthepriceofagoodhasaverylargeaffectonthequantitysupplied.

• Whichofthegraphsonthefollowingpageshowselasticsupply?Howcanyoutell?

• Whichofthegraphsonthefollowingpageshowsinelasticsupply?Howcanyoutell?

• Whichgraphwouldbestrepresentthedemandcurveforoil?Explain.

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GraphA GraphB

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5.Let’sreturntoouranalysisofthemarketforoil.Belowisourfirstgenericsupplyanddemandgraphforoiltotheleftandourrevisedsupplyanddemandgraphforoiltotheright.Thedashedlineshighlightthechangeinpricethatoccurredonourgenericsupplyanddemandcurve.Usethemtocomparetothechangeinequilibriumpriceonournewsupplyanddemandcurve

• Ifweincreasedemandonbothgraphsthesameamount,whathappenstoprice?

Thesituationforoilismorecomplexthough.Whenwillanownerofoilreduceproductionorincreaseinventoriesinsteadofsellinghisoil?Asimplifiedansweristhathewillkeeptheoilinthegroundifitspriceisexpectedtoriseinthefuturecomparedtothecurrentprice.Theactualpriceofoilmayrisefasterorslowerthanisexpected,butthedecisiontosell(orhold)theoildependsontheexpectedpricerise.

Thereareofcourseconsiderationsofrisk,andoftheimpactofpricechangesonlong-termconsumerbehavior,thatcomplicatetheoilowner'sdecision–andthereforethebehaviorofprices.TheOrganizationofPetroleumExportingCountries(theOPECcartel),withitsstrongpricingpower,stillplaysarole.Butthefundamentalinsightisthatownersofoilwilladjusttheirproductionandinventoriesbasedonhowmuchthepriceofoilisexpectedtorise.Ifthepriceofoilisexpectedtorisefaster,they'llkeeptheoilintheground.Incontrast,ifthepriceofoilisnotexpectedtoriseasfastastherateofinterest,theownerswillextractmoreandinvesttheproceeds.

Therelationshipbetweenfutureandcurrentoilpricesimpliesthatanexpectedchangeinthefuturepriceofoilwillhaveanimmediateimpactonthecurrentpriceofoil.Thus,whenoilproducersconcludedthatthedemandforoilinChinaandsomeothercountrieswillgrowmorerapidlyinfutureyearsthantheyhadpreviouslyexpected,theyinferredthatthefuturepriceofoilwouldbehigherthantheyhadpreviouslybelieved.Theyhaverespondedbyreducingsupplyofoilinanticipationofgreaterreturnsinthefuture.

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6.Belowisthegenericsupplyanddemandgraphforoil.• Willtheexpectationbyproducersofhighpricesinthefuturechangethesupplyordemand

foroil?

• Wouldtherebeanincreaseordecrease?• Showthechangeonthegraphbelowbasedonyourlasttwoanswer.LabelthenewcurveS*.

• Howdoesthechangeaffecttheequilibriumpriceinthemarketforoil?Usingdashedlines,

showtheoldequilibriumpriceandthenewequilibriumprice.

7.Let’sreturntoouranalysisofthemarketforoil.Belowisourfirstgenericsupplyanddemandgraphforoiltotheleftandourevennewerrevisedinelasticsupplyanddemandgraphforoiltotheright.Thedashedlineshighlightthechangeinpricethatoccurredonourgenericsupplyanddemandcurve.Usethemtocomparetothechangeinequilibriumpriceonournewsupplyanddemandcurve.Thearrowsshowthenewequilibriumpriceoneachgraph.

• Ifweincreasedemandonbothgraphsthesameamount,whathappenstoprice?

• Whichgraphpredictsalargerincreaseinprice?

8.So,fromwhatwehavejustlearned,whyisthepriceofoilincreasing?Whyisthepriceofoilincreasingatsuchafastpace?

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WhyisthePriceofOilIncreasing?ANSWERKEY1.Answerswillvary.2.Belowisagenericsupplyanddemandgraphforoil.

• Wouldmoreconsumersinthemarketforoilchangesupplyordemand?Demand• Wouldtherebeanincreaseordecrease?Increase• Showthechangeonthegraphbelowbasedonyourlasttwoanswer.LabelthenewcurveD*.• Howdoesthechangeaffecttheequilibriumpriceinthemarketforoil?Usingdashedlines,showtheold

equilibriumpriceandthenewequilibriumprice.

3.GraphBshowsanelasticdemandcurve,becauseasthepriceonthey-axischanges,thequantityonthex-axischangesalargeamount.GraphAshowsaninelasticdemandcurve,becauseasthepriceonthey-axischanges,thequantityonthex-axischangesasmallamount.4.GraphBshowsanelasticsupplycurve,becauseasthepriceonthey-axischanges,thequantityonthex-axischangesalargeamount.GraphAshowsaninelasticsupplycurve,becauseasthepriceonthey-axischanges,thequantityonthex-axischangesasmallamount.5.Let’sreturntoouranalysisofthemarketforoil.Belowisourfirstgenericsupplyanddemandgraphforoiltotheleftandourrevisedsupplyanddemandgraphforoiltotheright.

• Ifweincreasedemandonbothgraphsthesameamount,whathappenstoprice?Priceincreases.• Whichgraphpredictsalargerincreaseinprice?Equilibriumpriceontherevisedoilmarketgraphincreases

morethanthegenericgraphbecauseoftheinelasticsupplyanddemandcurves.

6.Belowisthegenericsupplyanddemandgraphforoil.

• Willtheexpectationbyproducersofhighpricesinthefuturechangethesupplyordemandforoil?Supply• Wouldtherebeanincreaseordecrease?Decrease• Showthechangeonthegraphbelowbasedonyourlasttwoanswer.LabelthenewcurveS*.• Howdoesthechangeaffecttheequilibriumpriceinthemarketforoil?Usingdashedlines,showtheold

equilibriumpriceandthenewequilibriumprice.

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7.Let’sreturntoouranalysisofthemarketforoil.Belowisourfirstgenericsupplyanddemandgraphforoiltotheleftandourevennewerrevisedsupplyanddemandgraphforoiltotheright.

• Ifweincreasedemandonbothgraphsthesameamount,whathappenstoprice?o (Thedashedlineshighlightthechangeinpricethatoccurredonourgenericsupplyanddemandcurve.

Usethemtocomparetothechangeinequilibriumpriceonournewsupplyanddemandcurve.Thearrowsshowthenewequilibriumpriceoneachgraph)

• Whichgraphpredictsalargerincreaseinprice?Equilibriumpriceontherevisedoilmarketgraphincreasesmorethanthegenericgraphbecauseoftheinelasticsupplyanddemandcurves.

8.Duetotheinelasticsupplyanddemandforoil,anincreaseindemandforoilandadecreaseinthesupplyofoilleadstoaverylargeincreaseintheequilibriumpriceforoil.

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GENERALASSEMBLYOFNORTHCAROLINA

SESSION2017

H1

HOUSEBILL2193

ShortTitle:SuspendCollectionoftheFuelTax. (Public)

Sponsors: RepresentativeBoylan.

Referredto: Finance.

May19,2017

ABILLTOBEENTITLED

ANACTtosuspendthecollectionoftheNorthCarolinamotorfuelstaxforaperiodofninetydaystobeginwhenthisactbecomeslaw.

TheGeneralAssemblyofNorthCarolinaenacts:

SECTION1.AlltaxesrequiredtobecollectedpursuanttoPart3ofArticle36CofChapter105oftheGeneralStatutesaresuspendedfora90-dayperiod.Attheendofthe90-daysuspension,alltaxesrequiredtobecollectedpursuanttoPart3ofArticle36CofChapter105oftheGeneralStatutesshallbereinstatedattheratetobeestablishedbytheMotorFuelsSectionoftheDepartmentofRevenueconsistentwithanyapplicablelawsregardingtheestablishmentofthemotorfuelstaxes.

SECTION2.Thisactiseffectivewhenitbecomeslaw.

ForReference:Chapter105Article36CPart3.Natureoffueltax.

ThisArticleimposesataxonmotorfueltoproviderevenuefortheState'stransportationneedsandfortheotherpurposeslistedinPart7ofthisArticle.Thetaxiscollectedfromthesupplierorimporterofthefuelbecausethismethodisthemostefficientwaytocollectthetax.Thetaxisdesigned,however,tobepaidultimatelybythepersonwhoconsumesthefuel.Thetaxbecomesapartofthecostofthefuelandisconsequentlypaidbythosewhosubsequentlypurchaseandconsumethefuel.(1997-60,s.1.)

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ParticipatinginaGeneralAssemblyFinanceCommitteeMeeting

SummaryofSpecialInterestGroups•NorthCarolinaCitizenCoalitionNorthCarolinianCitizenCoalition(NCCC)isagrassrootsorganizationwithamissiontoinfluencelegislationpassedbytheGeneralAssemblytobenefitthecommongoodofallNCresidents.NCCChasstartedanewcampaigninNorthCarolinainresponsetotherisingpriceofgasoline;theyhopetoencouragethestatelegislaturetopassabilltosuspendthetaxonfuelfor90days.Withoutthissuspension,theNCCCfearsthatNorthCarolina’sunemploymentratewillcontinuetogrowandfamilieswillcontinuetostruggle.•NorthCarolinaDepartmentofTransportationTheNorthCarolinaDepartmentofTransportation(NC-DOT)istheexecutivedepartmentoftheNCstategovernmentresponsibleforoverseeingthestate’stransportationsystems.RepresentativesfromNC-DOThaveseriousbudgetaryconcernsregardingtheproposaltosuspendthegastax.SincefueltaxesfundNC-DOT’sworkinmaintainingsafeanduncongestedroadways,thelackoffundingthatwouldresultfromtheproposedbillwouldbedamagingtoNC-DOT’sworkandNorthCarolina’sroadways.•NorthCarolinaPovertyProjectTheNorthCarolinaPovertyProjectisanorganizationwiththegoalsofaddressingthepressingneedsofthosecurrentlylivingatorbelowthepovertylevel.TheyhopetoconvinceNorthCarolina’slegislatorstoimprovethecircumstancesofworkingpeopleandalleviatetheburdenonthoseimpoverishedbypassingtheproposedgastaxsuspension,aswellasamendingthebillfurtherbyrequestinga$200gascardbeissuedtoeachNorthCarolinianmakinglessthan$25,000ayear.•TarHeelStateEconomicAssociationTheTarHeelStateEconomicAssociationisastateorganizationthatrepresentsNorthCarolina’seconomists.Thegroupfeelsthatthereisnorealbenefittosuspendingthegastax,sincetheamountofmoneyNorthCarolinian’swouldsavewouldnotmakeasubstantialdifferenceinoureconomyorinthefinancialsituationsofcitizensacrossourstate.•AmericanPetroleumInstituteTheAmericanPetroleumInstitute,commonlyreferredtoasAPI,isthemainU.Stradeassociationfortheoilandnaturalgasindustry,representingabout400corporationsinvolvedinproduction,refinement,distribution,andmanyotheraspectsoftheindustry.TheNorthCarolinabranchoftheAPIsupportsthesuspensionofthegastax,feelingitwouldnotonlybenefitcitizens,buttheUSbasedPetroleumindustriesaswell.•SierraClubTheSierraclubisanationalorganizationofenvironmentalenthusiastsdedicatedtopromotetheresponsibleuseoftheearth'sresourcesandprovideeducationonhowtoprotectandrestorethequalityoftheenvironment.TheSierraClubstronglyencouragestheGeneralAssemblytonotsupportthisbillandtomaintainthecurrenttaxongas.Theyfeelthiswillencouragecitizenstouselessfuel;thusimprovingourstate’senvironmenttremendously.

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InstructionsforMembersoftheHouseFinanceCommitteeAstheNCHouseFinanceCommittee,youandyourfellowlegislatorsareholdingahearingtohelpyoudeterminewhetherornottofavorabillsuspendingtheNCgastaxfor90days.AsamemberoftheNorthCarolinaGeneralAssembly,yourepresenttheinterestsofyourconstituentsinyourhomedistrictandyourjobasanappointedmemberoftheFinanceCommitteeistodeterminehowthebillyouareconsideringshouldbereportedtothefloor.Youhavethechoiceofreportingthebillasfavorable,favorableasamended(ifyoumakeanychangestothebill),orunfavorableasabill.Youmayalsoofferacommitteesubstitute,inwhichyourewritetheentirebillasyouseefit.Thefollowinggroupswilltestifybeforeyoutodayinhopestoinfluenceyouropinionregardingthisbill:•TheNorthCarolinianCitizenCoalition•NorthCarolinaDepartmentofTransportation•NorthCarolinaPovertyProject•TarHeelStateEconomicAssociation•AmericanPetroleumInstitute•SierraClubYourjob:1.UndertheleadershipoftheChair,reviewthebillthatwasintroducedbyHousememberBoylanasagroup.Eachofyoushouldexpressyourinitialopinionsofthebill,notinganyamendments(changes)thatyouwouldliketomake.2.PrepareforthegroupswhowillbetestifyinginfrontofyoutodaybyreviewingtheSummaryofSpecialInterestGroups.Discussthepositionthateachgrouphastakenontheproposedbill,andinferwhattypesofthingstheymightsayintheirtestimonytoyou.Create2-3questionsforeachgroup,whichwillhelpyougainfurtherdetailsontheirpositionorperhapsevenchallengetheirviews.3.Onceitistimeforthemeetingtobegin,theChairwillwelcomeeveryonethencallupeachpresentinggrouptotestify(upto3minutesisallowed.)Listencarefullytotheirposition,opinion,andrequest.4.Aftereachgroup’spresentation,theChairwillopenthefloorforquestions.Youmayrefertothequestionsthatyoupreviouslycreatedorasknewquestionsbasedoninformationyouhearinthegroups’testimonies.Remember,youneedtogatheralloftheinformationyoucaninordertomakeaninformeddecision.5.Oncethetestimoniesarecomplete,theChairwillleadtheCommitteeinanopendeliberation;atthistime,youwillexpresswhereyounowstandontheissueofsuspendingtheNCgastaxfor90days.Rememberingthatthegroupsthatpresentedtoyoutodaywillbehavearoleineithersupportingornotsupportingyouinyourreelection,youandyourfellowlegislatorsshouldattempttocometoaconsensusregardingthebillthroughaprocessofdialogue,debate,andcompromise.7.Attheendofthemeeting,youwilldecidetoreportthebillbacktothefullflooroftheGeneralAssemblyasfavorableorunfavorable.Youcanalsochoosetomakechangestothebill,andreportitbacktothefullfloorasfavorablewithamendments.Finally,youmayalsocompletelychangethebillandcreateaCommitteeSubstitutethatyoutakebacktotheGeneralAssembly.

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InstructionsforCommitteeChair:Youwillbeinformedwhenitistimetobeginthecitizentestimonysessionofthiscommitteemeeting.Atthestartofthismeeting,youwillwelcometestifyingcitizensandreviewthepurposeofthemeetingbysayingsomethingsuchas:“Thankyouallforbeingheretoday.IunderstandthisisaveryimportantissueforsomeofyouanditisanissuethatweastheFinanceCommitteearegoingtopaycloseattentiontoaswedeterminewhetherornottorecommendtheproposedbillregardingwhetherornottosuspendtheNCgastaxfor90days.Wewillbegintestimoniesnow.”Callthefirstinterestgroupatthistimetopresent.Aftereachgroupfinishestheirstatement,youwillsay,“Thankyouforyourcomments.Atthistime,I’dliketoopenthefloorupforquestionsfromcommitteemembers”.Committeemembersandyoucanaskquestionsatthistime.YouwillthencallupthenextgrouplistedontheSummaryofParticipantsandfollowthesameprocedure.Afterallgroupshavepresentedandbeenquestioned,endthepubliccommentsectionofthehearingbysaying:“Thankyouallforyourcomments.AtthistimetheCommitteeisgoingtoadjourntodiscussthismatter.Again,wethankyouforyourthoughts.”Youwillthenleadyourfellowcommitteemembersinanopendiscussionabouttheiropinionsregardingsuspendingthegastax.Testifyinggroupscanonlylistentoyouatthispoint.Theycannotcommentorinteractwithcommitteemembers.Ifyougettoapointthatyoufeelallcommitteemembersareinagreementorhavereachedacompromise,youcancallforavoteandadjournthemeeting.Youcanalsopostponeadecisiontothenextmeetingifthecommitteefeelsmoreinformation,research,statistics,etc.isneededafterthediscussion.**Ifatanypointyouareunsureofwhattodo,signalyourteacherforassistance.

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InstructionsfortheNorthCarolinianCitizenCoalitionYouarepartofacitizenadvocacygroupcalledtheNorthCarolinianCitizenCoalitionwhoistestifyingtodayatahearingoftheNorthCarolinaGeneralAssembly’sHouseFinanceCommittee.YourgrouphopestoconvincetheFinanceCommitteethemthattheySHOULDreportFAVORABLYonaproposedbilltosuspendthegastaxfor90days.Yourgroup’smissionistohelprelieveNorthCarolinaresidentsoftheeconomicpressureofhighergasprices.Thepriceofgasolinehasincreasedoveradollarpergallonsincelastyear,resultinginthealltimehighpricesofmorethan$4agallon.Thereseemstobenoindicationofthepricesstabilizinginthenearfuture.FamiliesacrossNorthCarolinaarestrugglingwithhigherfuelprices,particularlycoupledwiththehigherpricesforfood,recordunemploymentrates,flatwages,andthedeepeninghousingcrisis.Familiesarebeingforcedtoreducetheirspending.Thetourismindustryhasparticularlyseenadecreaseintravelandvacationsduetohighgasprices.ThisalonecouldhurttheeconomyofNorthCarolinaandleadtofurtherunemployment.YourgroupfeelsthatitiscrucialthattheFinanceCommitteemembersreportfavorableonthebilltosuspendthegastaxfor90days.ThiswillputmuchneededmoneybackintothepocketsofhardworkingNorthCarolinians.

PrepareYourPresentation1.Choosewhowillfulfillthedifferentofficesforyourgrouplistedbelow.Name:_____________________1.Director–keepsconversationfocusedandensuresgroupisontaskName:_____________________2.Researcher-usestextbook,Internet,andotherresourceswhennecessaryName:_____________________3.Presenter-Presentsargumenttocommitteemembers(mayselectoneotherpersonfromyourgrouptoassistyouifneeded)Name:_____________________4.Communications-takesnotes;conferswithinstructorifnecessary.2.Readtheproposedbillregardinga90-daysuspensionoftheNCgastax.3.Developa3-5-minutepresentationwiththepurposeofconvincingNCstatelegislatorstoFAVORtheproposedbillsuspendingthegastaxforthenext90days.Beginbybrainstormingargumentsforyourpresentation.YourstatementmustincludeatleastonereferencetotheNorthCarolinaStateConstitution.4.Makesureyourpresentationincludesconvincingreasonswhylegislatorsshouldseethingsyourway.Usetheinformationaboveasastartingpointandaddanyotherreasonstoargueyourside.Youshouldalsospendtimeinferringhowotherspecialinterestgroupsmayfeelaboutthisissue(seetheprovidedSummaryofSpecialInterestGroups).Iftheyarearguinganoppositeview,thinkaboutwaystoopposetheirviewpointsinyourpresentation.5.Whenpresenting,beconsiderate,clear,andconvincing.Afteryourpresentation,thecommitteememberswillbeabletoaskquestionsofyourentiregroup.(*Questionsshouldbeansweredbyallgroupmembers,includingthosewhodidnotpresentthetestimony.)6.Oncethehearingiscomplete,thepaneloflegislatorswillholdanopendeliberationtodetermineiftheywillreportthebillbacktotheflooroftheGeneralAssemblyasfavorableorunfavorable.Theymayalsochoosetomakechangestothebill,andreportitbacktothefullfloorasfavorablewithamendments.Finally,theyalsohavetheoptionofcompletelychangingthebillandcreatingaCommitteeSubstitutetotakebacktotheGeneralAssembly.

InstructionsforNorthCarolinaDepartmentofTransportation(NC-DOT)

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TodayyouandotherlobbyistsfortheNC-DOTaretestifyingatahearingoftheNorthCarolinaGeneralAssembly’sHouseFinanceCommittee.YouhopetoconvincethemthattheyshouldNOTFAVORabillsuspendingthegastaxfor90days.TheDepartmentofTransportationisresponsiblefortheconstructionandmaintenanceofhighwaysinNorthCarolina.TheNCfueltaxisamajorsourceofrevenuedesignatedtohelpprovidefundingforthestate’stransportationneeds.IftheGeneralAssemblytakesawaythegastaxfor90days,itwillbeincrediblydifficultfortheNC-DOTtoensureourstate’sroadsareadequateandsafe.AsthepopulationofNCcontinuestogrow,transportationrevenueisessentialtoeasecongestionandmaintainqualityroads.A90-daysuspensionofthegastaxcouldcostthestateandlocalgovernmentmillionsofdollars.Whilecitizensmaycurrentlybecomplainingofhighgasprices,suspendingthegastaxwillonlyleadtothemcomplainingaboutpoorroadconditionsinstead.

PrepareYourPresentation1.ChoosewhowillfulfillthedifferentofficesforyourgrouplistedbelowName:_____________________1.Director–keepsconversationfocusedandensuresgroupisontaskName:_____________________2.Researcher-usestextbook,Internet,andotherresourceswhennecessaryName:_____________________3.Presenter-Presentsargumenttocommitteemembers(mayselectoneotherpersonfromyourgrouptoassistyouifneeded)Name:_____________________4.Communications-takesnotes;conferswithinstructorifnecessary.2.Readtheproposedbillregardinga90-daysuspensionoftheNCgastax.3.Developa3-5-minutepresentationwiththepurposeofconvincingNCstatelegislatorstoNOTFAVORtheproposedbillsuspendingthegastaxforthenext90days.Beginbybrainstormingargumentsforyourpresentation.YourstatementmustincludeatleastonereferencetotheNorthCarolinaStateConstitution.4.Makesureyourpresentationincludesconvincingreasonswhylegislatorsshouldseethingsyourway.Usetheinformationaboveasastartingpointandaddanyotherreasonstoargueyourside.Youshouldalsospendtimeinferringhowotherspecialinterestgroupsmayfeelaboutthisissue(seetheprovidedSummaryofSpecialInterestGroups).Iftheyarearguinganoppositeview,thinkaboutwaystoopposetheirviewpointsinyourpresentation.5.Whenpresenting,beconsiderate,clear,andconvincing.Afteryourpresentation,thecommitteememberswillbeabletoaskquestionsofyourentiregroup.(*Questionsshouldbeansweredbyallgroupmembers,includingthosewhodidnotpresentthetestimony.)6.Oncethehearingiscomplete,thepaneloflegislatorswillholdanopendeliberationtodetermineiftheywillreportthebillbacktotheflooroftheGeneralAssemblyasfavorableorunfavorable.Theymayalsochoosetomakechangestothebill,andreportitbacktothefullfloorasfavorablewithamendments.Finally,theyalsohavetheoptionofcompletelychangingthebillandcreatingaCommitteeSubstitutetotakebacktotheGeneralAssembly.

InstructionsfortheTarHeelStateEconomicAssociation

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TodayyouandotherlobbyistsfortheTarHeelStateEconomicAssociationofNorthCarolinaaretestifyingatahearingoftheNorthCarolinaGeneralAssembly’sHouseFinanceCommittee.YouhopetoconvincethemthattheyshouldNOTFAVORabillsuspendingthegastaxforthenext90days.Mosteconomistsadvocateincreasedtaxesonenergyproductsratherthanataxsuspension.TheTarHeelStateEconomicAssociationbelievesthatthebestwaytoincreaserevenueinourstateistotaxthebehaviorsthatwewouldprefertodiscourage.Onesuchbehaviortodiscourageiscitizensburningtoomuchfuel,whichdamagestheenvironmentandleadstowastefulness.IftheGeneralAssemblywantstosuspendordecreaseatax,theAssociationrecommendsgettingridoftheincometax.Anincometaxdiscourageswork,whichwedon’twanttodo;butataxongasolinediscouragespollution.Publicfinanceexpertshavelongpreachedthatconsumptiontaxesarebetterthanincometaxesforlong-runeconomicgrowth,becauseincometaxesdiscouragesavingandinvestment.Anincreasedrelianceongastaxesoverincometaxeswouldmakethetaxcodemorefavorabletogrowth.Yourgroupalsobelievestheideaofagastaxsuspensionisashort-termgimmickratherthanalong-termsolutiontoournation’senergycrisis.Thereisnoproofthata90-daysuspensionwillprovideanyrealrelief.Inactuality,thesavingstoeachindividualcitizenwillbeminimal.Alternatively,risinggaspriceswillencouragefirmstodevotemoreresearch&developmentspendingongasolinesubstitutes,whichcancreatejobsandprovidesubstantialrelieftooureconomy.

PrepareYourPresentation

1.Choosewhowillfulfillthedifferentofficesforyourgrouplistedbelow.Name:_____________________1.Director–keepsconversationfocusedandensuresgroupisontaskName:_____________________2.Researcher-usestextbook,Internet,andotherresourceswhennecessaryName:_____________________3.Presenter-Presentsargumenttocommitteemembers(mayselectoneotherpersonfromyourgrouptoassistyouifneeded)Name:_____________________4.Communications-takesnotes;conferswithinstructorifnecessary.2.Readtheproposedbillregardinga90-daysuspensionoftheNCgastax.3.Developa3-5-minutepresentationwiththepurposeofconvincingNCstatelegislatorstoNOTFAVORtheproposedbillsuspendingthegastaxforthenext90days.Beginbybrainstormingargumentsforyourpresentation.YourstatementmustincludeatleastonereferencetotheNorthCarolinaStateConstitution.4.Makesureyourpresentationincludesconvincingreasonswhylegislatorsshouldseethingsyourway.Usetheinformationaboveasastartingpointandaddanyotherreasonstoargueyourside.Youshouldalsospendtimeinferringhowotherspecialinterestgroupsmayfeelaboutthisissue(seetheprovidedSummaryofSpecialInterestGroups).Iftheyarearguinganoppositeview,thinkaboutwaystoopposetheirviewpointsinyourpresentation.5.Whenpresenting,beconsiderate,clear,andconvincing.Afteryourpresentation,thecommitteememberswillbeabletoaskquestionsofyourentiregroup.(*Questionsshouldbeansweredbyallgroupmembers,includingthosewhodidnotpresentthetestimony.) 6.Oncethehearingiscomplete,thepaneloflegislatorswillholdanopendeliberationtodetermineiftheywillreportthebillbacktotheflooroftheGeneralAssemblyasfavorableorunfavorable.Theymayalsochoosetomakechangestothebill,andreportitbacktothefullfloorasfavorablewithamendments.Finally,theyalsohavetheoptionofcompletelychangingthebillandcreatingaCommitteeSubstitutetotakebacktotheGeneralAssembly.

InstructionsfortheNorthCarolinaPovertyProject

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YouarepartofacitizenadvocacygroupcalledNorthCarolinaPovertyProjectwhoistestifyingatahearingoftheNorthCarolinaGeneralAssembly’sHouseFinanceCommittee.YouhopetoconvincethemthattheyshouldnotonlyFAVORtheproposedbillsuspendingthegastaxfor90days,butalsotoAMENDitfurther.TheNorthCarolinaPovertyProjectisanorganizationwiththegoalsofaddressingthepressingneedsofthosecurrentlylivingatorbelowthepovertylevelandinfluencingpolicymakerstoimprovethecircumstancesofimpoverishedpeople.YourgroupbelievesthatwhileallNCresidentsarebeingnegativelyimpactedbysoaringfuelcosts,itisthoseinpovertywhoareexperiencingthegreatestburden.Familieswhocouldnotevenaffordtomeettheirbasicneedsbeforecancertainlynotbesuccessfulwithsuchoutrageouspricesforfuelinourstate.Toensurethelowerclasscansurvivethisdifficulteconomictime,yourgroupbelievestheGeneralAssemblyshouldnotonlysuspendthegastaxfor90days,butalsosubsidizegasforNorthCarolinian’sinlowincomebrackets.ThismeansyouwanttheGeneralAssemblytodivertmoneyfromothergovernmentprogramssuchaseducationandpublicsafetyinordertosendeverycitizenmakinglessthan$25,000ayeara$200gascardtohelpthempayforfuel.


InstructionsforAmericanPetroleumInstitute(API)

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TodayyouandotherlobbyistsforAPIaretestifyingatahearingoftheNorthCarolinaGeneralAssembly’sHouseFinanceCommittee.YouhopetoconvincethemthattheyshouldFAVORabillregardingabillsuspendingthegastaxfor90days.TheAmericanPetroleumInstitute,commonlyreferredtoasAPI,isthemainU.Stradeassociationfortheoilandnaturalgasindustry,representingabout400corporationsinvolvedinproduction,refinement,distribution,andmanyotheraspectsoftheindustry.Theassociation’sprimaryresponsibilitiesincludeadvocacyandnegotiationwithgovernmental,legal,andregulatoryagencies.NorthCarolinalawstatesthatthefueltaxiscollectedfromthesupplierorimporterofthefuel.Asuspensionofthetaxwouldthusdecreasethecostofimportingoil,thusnotonlydecreasingwhatNorthCarolina’scitizen’spayatthepump,butdecreasingthefeesthoseinthegasindustrypay.Yourorganizationfeelsthiswouldbeagoodthingindividualsandthegasindustry.In2006,America'smajoroilandnaturalgascompaniesincurredmorethan$90billioninincometaxtothefederalgovernment.Inaddition,thesecompaniescollectedover$48billioninexcisetaxesin2006onbehalfoftheIRS.ForpetroleumcompaniesbasedintheUSneedtobeabletocompeteintheglobaloilandgasmarket,andtoensureastablesupplyhereathome,theymustexperiencethistypeoftaxrelief.HightaxescanaffectUSgascompanies'abilitytostaycompetitiveintheworldmarket.SuspendingthegastaxwillofferrelieftoconsumersandallowUnitedStateoilcompaniestoavoidbankruptcyinatimeofincreasingworldeconomicinstability.


InstructionsfortheSierraClub

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TodayyouandotherlobbyistsfortheSierraClubofNorthCarolinaaretestifyingatahearingoftheNorthCarolinaGeneralAssembly’sHouseFinanceCommittee.YouhopetoconvincethemthattheyshouldNOTFAVORabillsuspendingthegastaxforthenext90days.ThemissionstatementoftheSierraclubreads“Topracticeandpromotetheresponsibleuseoftheearth'secosystemsandresources;toeducateandenlisthumanitytoprotectandrestorethequalityofthenaturalandhumanenvironment;andtousealllawfulmeanstocarryouttheseobjectives.”AsrepresentativesoftheSierraclub,youfeelsuspendingthegastaxiswouldbeahugemistake.Theburningofgasolineemitsseveralpollutants;theseincludecarbondioxide,acauseofglobalwarming.Thus,yourgroupfeelsthemoregasistaxed,thebetter.Highergasolinetaxesarethemostdirectandleastinvasivepolicytoaddressenvironmentalconcerns.Inyourview,highergaspriceswillencouragecitizenstoreduceemissionsofcarbondioxide(emittedfromthegasolineinourvehicles)andeventuallywillleadcitizenstopurchasingenvironmentallycleanermodesoftransportation(suchashybridcars.)Alreadysalesforscootersandotherenergyefficientformsoftransportation,havejumped23.6percentinthefirstquarterof2008(comparedwiththesameperiodin2007).AsfarastheSierraClubisconcerned,thehigherthecostofbadenvironmentalfuels,themorelikelycitizensaretoconsider“greener”modesoftransportation.

PrepareYourPresentation1.Choosewhowillfulfillthedifferentofficesforyourgrouplistedbelow.Name:_____________________1.Director–keepsconversationfocusedandensuresgroupisontaskName:_____________________2.Researcher-usestextbook,Internet,andotherresourceswhennecessaryName:_____________________3.Presenter-Presentsargumenttocommitteemembers(mayselectoneotherpersonfromyourgrouptoassistyouifneeded)Name:_____________________4.Communications-takesnotes;conferswithinstructorifnecessary.2.Readtheproposedbillregardinga90-daysuspensionoftheNCgastax.3.Developa3-5-minutepresentationwiththepurposeofconvincingNCstatelegislatorstoNOTFAVORtheproposedbillsuspendingthegastaxforthenext90days.Beginbybrainstormingargumentsforyourpresentation.YourstatementmustincludeatleastonereferencetotheNorthCarolinaStateConstitution.4.Makesureyourpresentationincludesconvincingreasonswhylegislatorsshouldseethingsyourway.Usetheinformationaboveasastartingpointandaddanyotherreasonstoargueyourside.Youshouldalsospendtimeinferringhowotherspecialinterestgroupsmayfeelaboutthisissue(seetheprovidedSummaryofSpecialInterestGroups).Iftheyarearguinganoppositeview,thinkaboutwaystoopposetheirviewpointsinyourpresentation.5.Whenpresenting,beconsiderate,clear,andconvincing.Afteryourpresentation,thecommitteememberswillbeabletoaskquestionsofyourentiregroup.(*Questionsshouldbeansweredbyallgroupmembers,includingthosewhodidnotpresentthetestimony.)6.Oncethehearingiscomplete,thepaneloflegislatorswillholdanopendeliberationtodetermineiftheywillreportthebillbacktotheflooroftheGeneralAssemblyasfavorableorunfavorable.Theymayalsochoosetomakechangestothebill,andreportitbacktothefullfloorasfavorablewithamendments.Finally,theyalsohavetheoptionofcompletelychangingthebillandcreatingaCommitteeSubstitutetotakebacktotheGeneralAssembly.

TheList:FiveReasonstoLove$4Gas

From:http://www.foreignpolicy.com/

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Sure,it’sruiningtheglobaleconomyandmakingeveryonemiserable,butthere’sanunderappreciatedupsidetothehighpriceofoil.1.ThemasstransitboomWhat’shappening:From2000to2005,fewerthan5percentofAmericansusedmasstransitfortheircommutes,comparedwithabout50percentinJapanandEurope.Butthatmaybechanging.MoreU.S.commutersthaneveraretakingbuses,subways,orlightrailtoworkinsteadofdrivingtheircars.Americanstooknearly85millionmoretripsinthefirstthreemonthsof2008thantheydidinthesameperiodin2007,arecentAmericanPublicTransportationAssociationstudyfound.Ridershipin2007wasthehighestin50years.Whyit’shappening:It’snotrocketscience.Formany,aroundtripbusormetrofareiseasiertostomachthangaspricesthatinsomeplaceshaveclimbedto$4.79pergallon.ThreequartersofAmericansnowbelievemoremoneyshouldbespentondevelopingandimprovingmasstransitsystems,andcitiesareresponding.ExpansionandrenovationprojectsareintheworksforsouthernCalifornia,NewYork,Philadelphia,Seattle,andWashington,DC.Europe,meanwhile,istakingtransittothenextlevel:Paris,whichhasbeenupdatingitslightrailnetwork,isinstallingenergy-efficienttrainsonseveralMétrolines,whileLondonplanstoincreaseitssystem’soverallcapacityby50percentby2022.2.LowerobesityratesWhat’shappening:Risinggaspricesandsmallerbeltsizesgotogether,accordingtoCharlesCourtemancheofWashingtonUniversityinSt.Louis.Hisresearchfoundthat,foreverydollarincreaseintheaveragerealpriceofgas,overweightandobesitylevelsintheUnitedStateswoulddeclineby16percentaftersevenyears.HisstudyalsoattributestheoutwardexpansionofAmericanwaistlinesbetween1979and2004inparttofallingprices.SimilarresearchpublishedintheEuropeanJournalofPublicHealthfoundthatEuropeancountrieswithhighergasolinepricestendtohavelowerratesofobesity.Whyit’shappening:Oneword:exercise.BikeshopsacrosstheUnitedStatesarereportingrecordsales,andBritainisevenpromotinganational“BikeWeek”toencouragecommuterstoride,notdrive,totheoffice.Notonlyistwo-wheelingacheaperwaytotravel,it’salsohealthier.Courtemanche’sresultsshowthat“theaveragepersonwalksorbicyclesanaverageof0.5timesmoreperweekifthepriceofgasrisesby$1.”Anotherfactorheidentifiesisthatcost-consciousAmericansarechoosingtoeatatrestaurantslessfrequently.Indeed,avirtuouscyclecouldbeatwork:AstudypublishedinTheEngineeringEconomistfoundthatAmericanstodayusenearlyabillionadditionalgallonsofgasolineeachyear,comparedwith1960,solelybecausetheyweighmore.3.FeweraccidentsWhat’shappening:ThispastMemorialDay,normallyatimewhenAmericandriversswarmthecountry’sinterstatesandpoliceexpectlargenumbersofaccidents,manystatesreportedthattrafficdeathswerethelowestinyears.Forinstance,NorthCarolinasawjustfivetrafficfatalitiesoverMemorialDayweekend,downfrom19in2007.Ohioexperienceditslowestnumberofaccidentsin38years,andotherstatesreportedsimilardeclines.Whyit’shappening:Americansaredrivingathistoriclows,accordingtoaMayU.S.DepartmentofTransportation(DOT)report,andlessdrivingmeansfeweraccidents.Andtheymaybedrivingslowerandmorecautiously,too.IanParry,aseniorfellowatResourcesfortheFuture,anenergythinktank,saysthatwhiletheeffectwouldbemodest,somepeople“willrealizetheycandrivelessaggressively”andconservegasmileage.Accordingtofueleconomy.gov,aU.S.governmentWebsite,“each5mphyoudriveover60mphislikepayinganadditional$0.20pergallon.”

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4.ShortercommutesWhat’shappening:Worryaboutrisinggaspriceshasencouragedworkerstomoveclosertotheirjobstocutcostsandfindalternatewaysoftravelingtowork.Andformanyofthosethatstilldrive,less-packedroadsareactuallyproducingshortercommutes.Whilethechangeisbynomeansuniform,insomeofthemostcongestedareasofsouthernCalifornia,theaveragecommutetimehasreportedlyfallenby5or6minutes.ThatcouldmakeforasunnierLosAngeles:a2006paperinSciencefoundthatpeoplewithshortercommutetimestendtobehappier.Whyit’shappening:ConfirmingthepredictionsofexpertssuchasHarvardeconomistGregoryMankiw,theDOTestimatesthatsinceNovember2006,cumulativevehiclemilestraveledhavedroppedby17.3billionmiles.Andwithfewercarsontheroad,asMankiwforecastin2006,thosestillabletoafforddrivingarefindingmorelanesclear.InEurope,however,theeffecthassofarbeentheopposite,asstrikingtruckdriversinBritain,Spain,andFrancehaveslowedorshutdownentirehighwaystoprotestdieselprices.5.ThebiofuelscrazeWhat’shappening:Moreoftheworld’sfueliscomingfromrenewableenergysourcesinsteadofMiddleEastoildrums.Globalproductionofbiofuels—generallyethanolderivedfromcorn,butalsoplantoilsthatproducebiodiesel—roughlytripledfrom2000to2007.Criticsofbiofuelspointtostudiesindicatingthattheincreasingdiversionofcerealcropsforbiofuelproductionisdrivingupfoodpricesaroundtheworld.Supporterscounterthattheanswerisn’ttogiveuponalternativestogasoline,buttodevelop“next-generation”biofuels(think:switchgrassandalgae)thatdon’tinterferewiththefoodsupply.Andwithoutbiofuels,“the[oil]pricestodaythatweareexperiencingcouldbemuchhigher,”saysFatihBiroloftheInternationalEnergyAgency.Whyit’shappening:Everyonerespondstoincentives.TheU.S.Congresshassetanationalgoalof36billiongallonsofbiofuelproductionby2022,andgeneroussubsidiesareaccordinglyinplacetomakethathappen.InEurope,publicpolicyhasalsoledtheway.TheEuropeanUnionwantsbiofuelstoconstitute10percentofthefuelmixby2020,atargetthathascomeunderscrutinyasfoodpriceshaverisensharplyinrecentmonths.Accessedfrom:http://www.foreignpolicy.com/

PracticeTestQuestions

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1.Belowisagraphrepresentingthesupplyanddemandforoilintheworldmarket.Whichwouldmostlikelyincreasetheequilibriumpriceofoil,butnottheequilibriumquantity?

A)developingcountriesincreaseworlddemandforoilB)newdrillingtechnologyincreasestheoutputofoilfromexistingoilfields C)individualsincreasepurchasesofhybridautomobilesD)OPECreducessupplyofoilininternationalmarkets

2.Oilwouldbebestclassifiedunderwhichfactorofproduction? A)naturalresources B)labor C)capital D)entrepreneurship3.Whichisthebestdefinitionforpriceelasticityofdemand?

A)Changeinpricethatresultsfromachangeinquantitydemanded.B)Changeinpricethatresultsfromachangeinincome.C)Changeinquantitydemandedthatresultsfromachangeinprice.D)Changeinquantitydemandedthatresultsfromachangeinincome.

4.Ifgasolinedemandisinelastic,andthepriceofgasolineincreases,whichofthefollowingismostlikelytooccur?

A)Quantitydemandedwillfallbyarelativelylargeamount.B)Quantitydemandedwillfallbyarelativelysmallamount.C)Quantitydemandedwillriseintheshortrun,butfallinthelongrun.D)Quantitydemandedwillfallintheshortrun,butriseinthelongrun.

5.Whichbestexplainstheroleofcommitteesinthelegislativeprocess? A)Committeesareformedtodelaythepassageofbillsandslowthelegislativeprocess. B)CommitteesareformedtocreateamendmentstotheNCConstitution.

C)Committeesareformedtoallowlegislatorstostudyanddebatebillsingreaterdepth.D)Committeeshaveaverysmallroleinthelegislativeprocess.

Quantity

Price

25

PracticeTestQuestions-ANSWERKEY

1.Belowisagraphrepresentingthesupplyanddemandforoilintheworldmarket.Whichwouldmostlikelyincreasetheequilibriumpriceofoil,butnottheequilibriumquantity?

A)developingcountriesincreaseworlddemandforoilB)newdrillingtechnologyincreasestheoutputofoilfromexistingoilfields C)individualsincreasepurchasesofhybridautomobilesD)OPECreducessupplyofoilininternationalmarkets

2.Oilwouldbebestclassifiedunderwhichfactorofproduction? A)naturalresources B)labor C)capital D)entrepreneurship3.Whichisthebestdefinitionforpriceelasticityofdemand?

A)Changeinpricethatresultsfromachangeinquantitydemanded.B)Changeinpricethatresultsfromachangeinincome.C)Changeinquantitydemandedthatresultsfromachangeinprice.D)Changeinquantitydemandedthatresultsfromachangeinincome.

4.Ifgasolinedemandisinelastic,andthepriceofgasolineincreases,whichofthefollowingismostlikelytooccur?

A)Quantitydemandedwillfallbyarelativelylargeamount.B)Quantitydemandedwillfallbyarelativelysmallamount.C)Quantitydemandedwillriseintheshortrun,butfallinthelongrun.D)Quantitydemandedwillfallintheshortrun,butriseinthelongrun.

5.Whichbestexplainstheroleofcommitteesinthelegislativeprocess? A)Committeesareformedtodelaythepassageofbillsandslowthelegislativeprocess. B)CommitteesareformedtocreateamendmentstotheNCConstitution.

C)Committeesareformedtoallowlegislatorstostudyanddebatebillsingreaterdepth.D)Committeeshaveaverysmallroleinthelegislativeprocess.

Quantity

Price

Greater than 49.5

40.0 – 49.5

Less than 40.0

U.S. AVERAGE: 48.08

48.8642.23

48.41

61.47

69.80

51.60

52.65

35.15

49.57

54.98

39.31

39.80

44.40

37.1940.20

35.70

50.10

47.0041.40

48.4042.40

46.15

51.4049.52

67.80

56.59

51.9247.81

40.40

45.10

42.43

35.40

38.40

37.2837.40

38.41

51.13

51.3050.85

50.5346.41

40.79

30.65

62.00

44.9452.4056.7032.9041.4051.90

41.90 (DC)

Disclaimer: This report is posted for informational purposes only and should not be relied upon or used for compliance purposes.

GASOLINE TAXESCOMBINED LOCAL, STATE AND FEDERAL (CENTS PER GALLON)R AT E S E F F E C T I V E 1 0 / 1 / 2 0 1 6

Documents

The Battle Behind the Pumpscivics.sites.unc.edu/files/2012/05/BattleBehindthePumps...1 The Battle Behind the Pumps Overview In a guided reading activity, students will gain an understanding