Fiscal Policy Essay

1769 words - 8 pages

Fiscal Policy and ExxonMobil

Introduction
Government spending has been an instrumental component and reflection for the United States economy. As an integral part of the business cycle, the last several years have been through the trough since the recession in 2008. While government spending has been increasing, for a couple years it did reduce in addition to maintaining a steady quantity of spending up until the past few years of recovering and growth. As a result, there has been a steady increase of spending in the past three, with anticipation of greater spending in the years ahead. While the overall amount of spending has been increasing as a result of a stronger economy, there has ...view middle of the document...

In retrospect, the economy today has benefited from the bailout a few years ago to help jumpstart the growth in the last few years. With the growth of the economy, the marginal increased spending will be less than the current and anticipated GDP values. (J. Clemens, S. Miran, 2012) Without substantial changes in the tax rates in addition to the reducing GDP consumption as a part of the fiscal policy. ‘In September 2012, a Congressional Research Service study claimed that there is no evidence that changes in top marginal tax rates have had any impact on economic growth in the United States since World War II. In the weeks leading up to the election, the CRS study was spun as evidence that President Obama's proposal to raise the top marginal tax rate to 39.6 percent could "spread the wealth around" without forgoing economic growth.” (Taylor, 2014)
Impact of Fiscal Policies
For ExxonMobil the stability and integrity of any governments fiscal policies play a major role in the companies prices, growth, and success. The oil and natural resources industry play a huge part in our nation’s economic performance. When the companies like Exxonmobil have to cut back on the supply of gas then they too have to make changes and that can affect jobs in the countries that ExxonMobil are in.If ExxonMobil continues to take a loss because of the low cost of oil compared to where it was a couple of years ago, investors will start to rethink how and where they want to invest their money at. Supply and Demand can often time dictate when the governments intervene with fiscal policies. When the demand for oil or gas is low it can severely affect the price at which oil or gas can be sold at. If there is a surplus of oil supply on the shelves for companies then the cost of oil per barrel will begin to drop as a bidding war can be the result. The infrastructure of the oil industry in the United States is looking for the government to find a way to help fund its cost. With the drop in oil prices over the past few years, it has affected the big companies like ExxonMobil , because low oil cost means low gas cost. Some economist say that is can have an adverse effect on the gas companies as well. When gas prices are low, spending trends change. Consumers start to purchase big gas guzzling vehicles like suvs and trucks. Then the demand for gas will start to climb allowing companies like ExxonMobil to benefit because the cycle of supply and demand can balance back out.

Macroeconomics Affects
Not only can fiscal policy affect the oil and gas industry but there are other events that can cause significant areas of concern for companies like ExxonMobil as well. Technology and how well it improves each year can greatly affect the outcome for the oil and gas industry. Let’s take the automobile industry for example. With the improvement in gas consumption in new cars today, it has slowed the consumption therefore the demand for gas worldwide. Also the weather can play an...

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