Should Oil Be Cheap?

[burlesona]

Business Week Magazine makes a compelling case for a price-floor on oil, which I covered on my blog today: http://neohouston.wordpress.com/2008/07/28...d-oil-be-cheap/

Basically, they suggest putting in a tax that kicks in when oil drops below a certain price, effectively the tax would be the difference between the market price and the target price, a "floor" if you will that the price cannot fall below.

Keeping energy expensive is good for a lot of the country (like HOUSTON maybe?), and price stability is better for the market. I think the idea of a price-floor is pretty good, especially if the revenues can be used to improve the long-term financial health of the country.

[houstonmacbro]

While I do not like PAYING for expensive oil, I think it helps move us to conserve more.

[crunchtastic]

Business Week Magazine makes a compelling case for a price-floor on oil. Keeping energy expensive is good for a lot of the country (like HOUSTON maybe?), and price stability is better for the market.

Check it out on my blog today:

http://neohouston.wordpress.com/2008/07/28...d-oil-be-cheap/

This is a good topic of conversation, but shilling for your own blog rather than sharing your opinions here on this forum, that's weak. IMHO.

[houstonmacbro]

This is a good topic of conversation, but shilling for your own blog rather than sharing your opinions here on this forum, that's weak. IMHO.

Yeah, most of us just do that kind of shilling in the footers and signatures.

[burlesona]

This is a good topic of conversation, but shilling for your own blog rather than sharing your opinions here on this forum, that's weak. IMHO.

You want me to repost and repost? I follow about a dozen forums etc. I'd like to post all that jazz on each of them to get feedback, but it's a lot easier to just give you a link and ask what you think about it.

So, have you got any actual thoughts?

Personally, I think the price-floor on oil has some merit.

[TJones]

Burlesona, not necessarily CHEAP oil. Just what it's true WORTH is. There is a difference.

[barracuda]

Nobody wants to pay more, but I think high prices are the only way people will really conserve energy and provide the needed stimulus for developing renewable alternatives.

The major downside I see is that high gas prices hit the poor the most, at least in the short term. $4 or $5 gas has to be tough if you're earning minimum wage. But hopefully mass transit and better city planning would compensate over time.

[Mark F. Barnes]

I'd be more happy with a dollar that was really worth a dollar.

[jm1fd]

Nobody wants to pay more, but I think high prices are the only way people will really conserve energy and provide the needed stimulus for developing renewable alternatives.

Exactly! Just look at Europe....their high tax on fuel has resulted in the market developing cars that run on Dandelion juice!

[RedScare]

ABCNews just reported that US vehicle miles driven are 40 BILLION less over the last year, 9.6 BILLION fewer miles driven in just May 2008 over May 2007. If the goal is lowering vehicle use, high gas prices will definitely do it. However, NPR was reporting the huge dropoff in gasoline taxes due to lower gasoline purchases is leading to potential massive reductions in money for infrastructure needs.

[Jeebus]

I'd be more happy with a dollar that was really worth a dollar.

Finally some one is hitting the nail - period.

NPR was reporting the huge dropoff in gasoline taxes due to lower gasoline purchases is leading to potential massive reductions in money for infrastructure needs.

I figured as much. The question is how do we fix this? More tax on already inflated gas?

[RedScare]

Finally some one is hitting the nail - period.

I figured as much. The question is how do we fix this? More tax on already inflated gas?

Some in Congress are proposing a 50 cent per gallon increase in the gas tax. Ted Poe claimed it should come from income taxes already paid. Ted Poe is wrong, as income taxes already paid are producing a $490 Billion deficit. So in reality, Ted Poe is proposing BORROWING more money. I may not like paying another 50 cents a gallon, but as long as politicians figure the best way to pay for things is to go deeper in debt, Mark Barne's dollar is going nowhere but down.

[Mark F. Barnes]

Some in Congress are proposing a 50 cent per gallon increase in the gas tax. Ted Poe claimed it should come from income taxes already paid. Ted Poe is wrong, as income taxes already paid are producing a $490 Billion deficit. So in reality, Ted Poe is proposing BORROWING more money. I may not like paying another 50 cents a gallon, but as long as politicians figure the best way to pay for things is to go deeper in debt, Mark Barne's dollar is going nowhere but down.

Exactly, we've been robbing Peter to pay Paul for way too long. A meteorite the size of Arizona, could fall out of the sky and land on D.C. at the height of the busiest day in the governments schedule, and not kill or injure one true economist. This shell game that politicians have been playing with us since Tricky Dick pulled us off the Gold Standard in 1971 is killing us slowly but surely, and every since then, countries have been abusing our floating dollar to create artificial trade deficits. It's been a long slippery slope ever since. The Breton Woods system wasn't perfect, but it gave us sustenance.

[RedScare]

Exactly, we've been robbing Peter to pay Paul for way too long. A meteorite the size of Arizona, could fall out of the sky and land on D.C. at the height of the busiest day in the governments schedule, and not kill or injure one true economist. This shell game that politicians have been playing with us since Tricky Dick pulled us off the Gold Standard in 1971 is killing us slowly but surely, and every since then, countries have been abusing our floating dollar to create artificial trade deficits. It's been a long slippery slope ever since. The Breton Woods system wasn't perfect, but it gave us sustenance.

Hmm, it may be killing us quickly but surely.

2009 Budget To Hit Half Trillion Dollar Deficit

$482 Billion projected deficit BEFORE Iraq spending is included, which has been running around $180-200 Billion a year. The 2 year budget deficit could be 1 Trillion Dollars!

Well, Bush wanted a legacy.

[Mark F. Barnes]

The numbers are staggering......................

[Subdude]

I saw the Business Week article and thought about posting it myself. There are a lot of good reasons for oil that is consistently expensive. Relying on market prices is too volatile, so putting a floor on the price can help ensure that other technologies start making economic sense. And even if there isn't a replacement (the remark about cars running on dandelion juice) it means that people will still have an incentive to make long-term changes to conserve more. Keeping prices artificially high is the rationale behind the European CO2 trading system, where the hope is that high emissions prices will help make carbon capture technologies eventually economically feasible. The article also points out the security aspect - using so much oil means sending a lot of money to countries that probably wouldn't be on our Christmas card list.

Cheap oil is good for America in just the same way that cheap crack cocaine is good for addicts.

[CoolBuddy06]

ABCNews just reported that US vehicle miles driven are 40 BILLION less over the last year, 9.6 BILLION fewer miles driven in just May 2008 over May 2007. If the goal is lowering vehicle use, high gas prices will definitely do it. However, NPR was reporting the huge dropoff in gasoline taxes due to lower gasoline purchases is leading to potential massive reductions in money for infrastructure needs.

Yeah, saw this in the news. High prices definitely makes me drive less. I pass up many short trips and took up working longer hours and fewer days. But the concern is what will happen to the poor. May not be too bad if cities improve mass transit.

[Subdude]

Exactly, we've been robbing Peter to pay Paul for way too long. A meteorite the size of Arizona, could fall out of the sky and land on D.C. at the height of the busiest day in the governments schedule, and not kill or injure one true economist. This shell game that politicians have been playing with us since Tricky Dick pulled us off the Gold Standard in 1971 is killing us slowly but surely, and every since then, countries have been abusing our floating dollar to create artificial trade deficits. It's been a long slippery slope ever since. The Breton Woods system wasn't perfect, but it gave us sustenance.

And another thing. You oughtn't blame other countries for abusing the dollar. The American government has been more than happy to acquiesce in the ongoing devaluation of the American peso. Blaming those nefarious foreigners for what happened to the dollar is as pointless as blaming those mysterious dastardly speculators for the price of oil. We have wanted a cheap dollar all along, we just can't come out and say it. Look at it this way: The extra price you pay for oil is, in a sense, the excess tax that the American government would have to collect to reduce the deficit and support the value of the dollar, only it is afraid to.

Are you better off paying it in taxes to the US government, or to countries like Venezuela and Saudi Arabia? You tell me.

You want the truth? You can't handle the truth!

[houstonmacbro]

And another thing. You oughtn't blame other countries for abusing the dollar. The American government has been more than happy to acquiesce in the ongoing devaluation of the American peso. Blaming those nefarious foreigners for what happened to the dollar is as pointless as blaming those mysterious dastardly speculators for the price of oil. We have wanted a cheap dollar all along, we just can't come out and say it. Look at it this way: The extra price you pay for oil is, in a sense, the excess tax that the American government would have to collect to reduce the deficit and support the value of the dollar, only it is afraid to.

Are you better off paying it in taxes to the US government, or to countries like Venezuela and Saudi Arabia? You tell me.

You want the truth? You can't handle the truth!

Amen. I have a classmate who is died-in-the-wool Conservative. We take a lot of classes together and always get into strong dollar-weak dollar debates and he claims we WANT a strong dollar (well, at least he does) because it encourages overseas spending in or on the US. That is then supposed to amount to trickle-down $$$ being watered on the rest of us. What it doesn't take into consideration is that now it is more expensive for all of us to buy things that many overseas find 'cheap'.

I dunno ... it doesn't seem very economical to me, and certainly isn't helping my pocketbook.

[Mark F. Barnes]

And another thing. You oughtn't blame other countries for abusing the dollar. The American government has been more than happy to acquiesce in the ongoing devaluation of the American peso. Blaming those nefarious foreigners for what happened to the dollar is as pointless as blaming those mysterious dastardly speculators for the price of oil. We have wanted a cheap dollar all along, we just can't come out and say it. Look at it this way: The extra price you pay for oil is, in a sense, the excess tax that the American government would have to collect to reduce the deficit and support the value of the dollar, only it is afraid to.

Are you better off paying it in taxes to the US government, or to countries like Venezuela and Saudi Arabia? You tell me.

You want the truth? You can't handle the truth!

I'm not "Blaming" foreign countries of anything, perhaps abuse was too harsh a word for you, so let's just says "take advantage of", does that make it feel any better. If you read into my post a little better, the only blame I am laying is completely on ourselves, ourselves being our dear people in Washington D.C., that supposedly are looking out for our better interests. Like leaving the neighborhood pedophile in charge of the kids, is more like it. He's not "abusing" them, simply "taking advantage of them". We (the U.S.) are the only ones to blame for the devaluation of the American buck, and I look no further than the District of Columbia for answers.

And for the record, I have no desire to pay taxes to anyone, present company included. However I shell out my shillings to the powers to be, every quarter. I look so forward to my $25K September payment already. And come next year after dumping close to $90K into our precious government, they will show their appreciation by giving me back somewhere under $5000.00 of my own money back, because I have overpaid them (or at least I hope so). Interest free of course, gratis, but for some reason I short them, it will cost me 3 times that if I am late. You really got to love the system. But hey, it's the American way right?

The right of Life, Liberty and the Pursuit of Happiness..................so long as you let me continually have anal intercourse with you three times a day.

[Subdude]

Sorry Mark I'm in a bit of a ranty mood myself today. And houstonmacbro I really wouldn't classify currency policy on either side of the political spectrum. If there is a political aspect then it is invisible to me. And there isn't anything inherently good or bad about a strong or weak currency. They each have their advantages and disadvantages at different times. My point is only that the US has been living large with a huge deficit and cheapened currency for a long time, and everything is hunky-dory because we can pay our debts back with depreciated money. As John Connally once told foreigners, "It is our currency but your problem". Fair enough, but we shouldn't blame the rest of the world for our choices and we have to accept that there is also a price to be paid for a cheap dollar, especially at the gas pump.

[houstonmacbro]

Fair enough, but we shouldn't blame the rest of the world for our choices and we have to accept that there is also a price to be paid for a cheap dollar, especially at the gas pump.

I am in 100% agreement.

I guess my argument isn't necessarily about conservatives or liberals, but about economic sense. Lately it seems that good financial decisions at the government level are not that good and has placed us in a position that borders on economic endangerment.

[barracuda]

Excellent post Mark.

I am in 100% agreement.

I guess my argument isn't necessarily about conservatives or liberals, but about economic sense. Lately it seems that good financial decisions at the government level are not that good and has placed us in a position that borders on economic endangerment.

There is no economic sense, only politics. Both candidates have economic plans that are unfeasible, but they have to sell a story. What happens after inauguration will be a different story. The new president will to have to clean up the current mess before they can start new spending programs. And McCain will not be able to make the Bush tax cuts permanent, unless he finds another source of income or a way to cut existing spending. It's just another one of those "read my lips...no new taxes" moments...a pie in the sky campaign promise that is quickly broken once reality sets in.

[Disastro]

Yes, oil should be cheap and those ingrates in Iraq should be giving us oil at a discount price since our guys are over there dieing to give them democracy.

I think cheap/free oil from Iraq should be the payback!

Who's with me??