Jim Kingsdale

Lower Oil Prices Equivalent to $300B Tax Cut

Yes I think $600 of stimulus spending and tax cuts is a big deal. If you don't, how do you explain that the numbers Congress has been tossing out are so much smaller?

An oil price increase is not like a tax increase in that it's continuation is not assured, that is true. But it is worse than a tax increase in its immediate macro economic impact in a Keynesian sense because not only is the money taken away from consumers but instead of it going to their government and thus providing some benefits as is the case with a tax increase, with an oil price increase 2/3rds of it goes out of the country and has zero economic benefit to the U.S.

You might want to stick to factual analysis - ad hominem accusations don't help anyone.

Economic Anomalies Explained

Reagan campaigned on a combination of lower taxes, higher military spending and lower deficits -using the laughable Laffer Curve to justify what George I correctly called "vudoo economics." But the Reagan insiders at the time were specifically trying to achieve huge budget deficits on the theory that a big enough deficit would be the only thing that could "stop the Democrats from spending money."

That theory didn't work either because it turns out that the American public actually likes the programs that the government spends money on. Each and every program has its powerful and/or broad based constituency - even those awful earmarks.

Anyway, I believe that Reagan knew very well that the Laffer Curve was a joke and did not mind at all inflating the budget deficit. Reagan is a false god of the GOP, in my view. He was a great orator but actually a very ineffectual president with one important exception: he shifted the country away from a union stranglehold on the corporate cost structure.

That shift has continued ever since Reagan and has now unfortunately gone too far. This election will reverse the shift of wealth away from working people that Reagan began, assuming Obama is elected.

Incidentally, for those who thing Reagan brought down the Soviet Union through militiary spending, that is wrong. What brought it down, aside from its own corrupt and inefficient system, was low oil prices. It is true that Reagan's CIA helped engineer those low oil prices.

Hurricane Damage Impacts Oil Price

Yank - you make a valid point if oil stays around the current price. But if oil goes back to making new highs as I expect it will within a year to 18 months then people will look for that 100+ mpg car, not the 28 mpg improvement, imho. Jim

Maxwell's Oil Analysis

Paul, having conviction about Peak Oil is not the same as thinking that oil is truly scarce right now. Timing may not be everything - unless you measure your profits each day, week, month or quarter. In which case the real likelihood of a near term over-supply in oil is something to consider before buying oil on the basis that you will be proven right in 3 - 5 years.

Maxwell's Oil Analysis

Some analysts think the existing grid can supply up to 80% of U.S. car with electricity because they will be recharged at night when there is plenty of spare capacity. I don't know what the right number is but I do think there is a lot of off peak spare capacity.
The problem will be producing enough plug in hybrid to satisfy demand and make a difference. Another problem is getting a cost effective efficient battery - not totally here yet.
So bottom line is that plug in hybrids won't solve the oil price crisis we will face around 2013.

Slow Start for Lithium-ion Hybrids

It's interesting that we have one vote for NiMH, one for lithium-ion, and two for capacitors. My point was that technological developments will be determinative in terms of when l-i becomes dominent, which should be a fairly non-controversial comment - true by definition. Same would hold for the possibility of capacitors. Maybe they both work for different markets. The only controversial thing in what I wrote - and the only reason to write it in the first place - is that the onset of the l-i age of motoring may not be quite as fast as all the car companies' announcements would suggest. Note that SQM's capital budget puts lithium in 3rd priority and only expands that capacity by 25%. Seems like SQM also thinks there is some time before a huge order inflow happens.

Incidentally, I love SQM's product line. But the stock doesn't seem cheap at somewhere around 25 -30 times projected earnings.

Upside to Oil Stocks?

To Eric Fox: your point is directed to the right subject but is far from complete. The countries that are increasing their oil useage include, in addition to China: India, the rest of the Far East, Russia, Mexico, virtually all of South America, and most importantly the Middle East. I'd love to give you a number for the sum total of demand increases in those countries but I don't have it. Can someone else provide that number? My SWAG on it would be somewhere around 1.5 mb/d per year. OECD countries, on the other hand use about 45 mb/d and might see a decline of about 1% in use due to higher costs, which would be 450 kb/d.

Saudi Oil Meeting Scenarios

Please inform me, sir. I'm always interested in learning, not so interested in name calling.

Crude Oil Prices: Bears Will Soon Win Out

That said, I'd be surprised if oil did not encounter a serious correction at some point this year. It's overdue.

Crude Oil Prices: Bears Will Soon Win Out

The family of anyone who thinks oil is infinite and renewable should not let him play with real money.