Who's Really to Blame for High Gas Prices? 18 comments
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I was watching the talking heads on cable news the other day and they went around the table answering the question "Who's to blame for high oil prices?". While I wasn't surprised, I was again disappointed by the rather insipid, cliche responses: OPEC, Congress, Big Oil. Not a single commentator said, "The US consumer."
We comprise 5% of the world's population and consume 25% of the world's energy. We want 3,000 sq ft houses and commute 50 miles each way in our SUVs so we can afford the 3,000 sq foot house. Until we start to behave like the rest of the world, we're going to pay high prices for gas like it or not, as now, they're catching up with us in consumption patterns. The days of $2 gas may be a thing of the past.
Not to sound preachy about it, but come on! When are the politicians going to stop pandering and face up to what's really going on?
Gas Tax Holiday?
Hmmm. We have a consumption pattern that has driven prices to record levels. So, what do we do to address this long term problem? Artificially decrease the price of gasoline to further spur consumption right when we started to see a decline in domestic consumption for the first time in decades. I mean, even for a Republican idea, that's a tax break that doesn't seem logical.
The Ethanol Hoax
The ethanol hoax continues, but at least there's a general acceptance amongst the general populous that it wasn't the best idea and we're now trading lower gas prices (if you can believe it) for increased food prices. I'd argue that the net difference has actually been an increase in overall real inflation for most consumers. But ethanol's here to stay. I mean, the political process begins in Iowa. What are the chances congress is going to eliminate the tariffs on ethanol from Brazil when the farmers that are reaping "windfall profits" would be forced to compete in an open market for a commodity like virtually every other commodity and industry in the world?
Speaking of Windfall Profits...
This talk of taxing the heck out of big oil is downright silly. Let's tax an industry every time its profits are at record levels to deter future investment so that when the next up cycle occurs, there's not enough capacity because everyone saw what happened the last time and didn't invest. With oil prices at these levels, free market forces are driving private equity, research dollars and sovereign wealth funds, for that matter, to invest in green energy plays since many endeavors that were unprofitable at $60 oil are now viable when competing with $130 oil.
Without throwing money at it, the free market will drive innovation and competition to create alternative energy technologies. Wind, solar and other alternative energies are picking up momentum (notice the stock sectors of late).
But let's leave the integrated oils alone. It's not their fault, and if you want them to continue to invest in new finds and infrastructure, there has to be a profit motive. If it's appropriate to enact new taxes on profitable industries, conversely, should we give such industries some extra dough during downturns? Should the government subsidize the airlines and US automakers this year because they're losing money? If oil drops back to $40 per barrel, do the big oil companies get their money back? Let's be honest, stop pandering and let the free market run its course.
OK, you've just experienced an Everyday Finance rant. There you have it. What do you think; who's to blame for these high oil prices?
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Do You have a large screen LCD or Plasma?
The energy consumption on either is equivalent to 2 running refrigerators.
Must be peak gas...LOL
CH
While a new refinery hasnt been built in the US the exsisting ones have expanded nicely. Why build a new one - jump through permitting hoops if you can expand the ones you have? Refinery utilization is in the economic range ~80% telling us we have just the right amount. It gets tight when we get hurricanes but otherwise we are right in the ballpark for refinery capacity. Refinery margins are tight further proof that there is plenty of competition.
This is an oil problem, it has little to do with refining. The only thing refiners have to work on is investing in cokers to enable them to make the most of heavier crudes.
A little research would have revealed that ethanol requires a lot of energy to produce and a gallon of it doesn't provide the same gas mileage as gasoline. Of course, the fools believe that the environment will be totally destroyed if the oil companies were allowed to drill in Anwar, and the outer continental shelf. To do so under the jurisdiction of US environmental oversight better insures less pollution than other governments would provide elsewhere in the world.
The man made global warming hoax is easily dispelled if one is to only study a freshman course in historical geology and learn about the many eras of global warming and cooling over tens of thousands of years. More recent scientific evidence strongly indicates that increases in the earth's temperature is closely related to thermal flares (sun spots). Also, the main so called "green house" gas is water vapor. Who can do away with evaporation of water from the ocean. lakes, rivers, rain, snow, etc.? And if we could, how would plants and animals survive without water sources?
Carbon caps is a stupid idea which will not accomplish one damn worthwhile thing, and will create a huge government bureaucracy, while enriching people like Al "Gork" who want to sell carbon caps.
If I don't own a car, I am not going to pollute the atmosphere with the by products of running an internal combustion engine. However, if I sell my caps to someone who does own a car, they are going to put those carbon emissions in the atmosphere, so the net result is about the same with regard to the bottom line.
If you've bothered to listen to your fellow citizen,- not your think alike friends, just joe next to you in a bar, -and not teach--listen.
You'll notice he's not too bright and has a terrible handle on economics and especially vis a vie our planets resources.
This outlook is reenforced by all his friends, who are, I can assure you not reading at this site but laying the blame on someone else.
Collectively they outnumber the informed about 25 to 1.
Now ask yourself in our fine Democracy, who our policymakers, running for election, pander to?? Better yet, just listen to them, and you'll know why we have corn ethanol, no wind turbines or neuclear plant building and are all marching down the "Yellow brick road" to consult the wizzard!
Now let's all follow our leaders advice and "drive" over to Wal-Mart to snap up some lead painted toys and poisen cat food from the guys that killed us with tainted Heperin.
Just put it on the Credit card--no equity left in the house--the stimulus bonus will pay before the 20% kicks in!.
Whos to blame?; Take a look in the mirror!.
The problem is clear; we now pump 5 million barrels in the US and import 12 million. In 1985 we pumped 9 million in the US and imported 4.3 million. This deficit was created by congressional incompetence, ignorance and inaction.
According to the US Mineral Management Service, the Outer Continental Shelf contains as much as 86 billion barrels of oil and 420 trillion cubic feet of gas. This is more than 10 times the oil and 20 times the natural gas we use each year. According to the Institute on Energy Research the US has oil shale formations from the Rocky Mountains and into Canada that has an estimated 1 to 2 trillion barrels of crude oil. This is more than 7 times the amount of crude oil reserves found in Saudi Arabia and enough oil to meet US demand for over 250 years. But the environmentalist and their friends in congress will never let it be drilled.
I almost forgot there is also the Artic National Wildlife Refuge (ANWR). Since 2000, U.S. oil consumption has increased 750,000 barrels a day. If we had started drilling in ANWR back in 1995 when it was brought before the House for permission to drill the U.S. would have an extra 1 million barrels of oil a day. However, President Clinton and congress killed the bill to open this region.
The Free Market is still the best determinant of price. When cartels, such as OPEC, affects the free market a government of citizen politicians must intervene. Considering that OPEC has the power to cut prices and destroy any alternative energy we, unfortunately, have to take collective action. A large tax on energy would, as it should, transfer the cost of oil to those who consume it or use products that do so. There should be no rebates as all they do is bring political log-rolling into the equation. The high taxes would dissuade the consumer from using petroleum products for transportation , increase airline costs and dissuade frivolous use of them, increase the use and expansion of public transportation and, hopefully, dissuade politicians from developing free parking spaces for students and government employees returning that property to taxable status.
The cause of this problem in a undisciplined citizenry awashed with undeserved entitlements.
www.frontlinethoughts....
If the US Government spent a trillion dollars over 8 years on domestic oil production from known reserves in the Gulf of Mexico, the Continental Shelf and coal gasification instead of War in Iraq gas would be $2 a gallon or less. America could quit sending billions to countries that sponsor terrorism. And reducing our trade imbalance keeps jobs in America. Every billion of trade deficit costs 13,000 jobs. $400 billion for oil last year: do the math.
America has 1/4th the coal on planet earth. South Africa is producing 300,000 barrels of gas and diesel a day from coal. And synthetic fuel from coal is cleaner burning than gas. And it can be produced cheaper than from $100+ a barrel crude oil.
Harness your anger at the pump. Call you're US Senators and demand domestic production in this decade. If you don’t raise your voice the oil companies and politicians will assume you are ready to pay even more.
The country's $9.4 trillion debt stemming from the war in Iraq weakened the value of the dollar, Hinchey said.
It's only a matter of time now before the Congressionally inspired so-called oil "bubble" is over and we go back to living normal lives. Seriously, though, it's also time to rethink our energy investments. Now the good ones will survive and the others won't, as the markets retreat to working like they're supposed to. (For example, watch how quickly the speculative fervor goes out of oil prices. TG!)
I don't know who you're referring to, but most of those 25 people you're talking about who have an opinion lay the fault for the energy mess we've found ourselves in just where it belongs: on Washington!
Current polls say 2/3 of your fellow citizens want us to drill for oil and gas in the onshore and offshore U.S. and ANWR. And 90% opine they wouldn't pay a nickel for CO2 recapture and carbon sequestration.
Give your fellow citizens some credit, fella. They obviously know alot more about our Congressionally manufactured energy crisis than the politicians (...or for that matter ALL the presidential candidates) do!
I was getting worried myself, but I gotta say, God BLESS America!
Alternative, cleaner fuels NOW