Article excerpt:
"Cheap oil will directly boost growth in most of the world, but with side effects that need to be managed. The fall in oil prices will encourage oil consumption, both in the short term (people will use their cars more) and long term (they'll buy cars that are less fuel-efficient). This works against reducing carbon emissions, and over time could help to restore OPEC's market power. Later, if prices bounce back, the economic hit would be disruptive.
The answer is for governments to smooth prices by adjusting the tax on fuel. When prices are low, like now, a higher gas tax would barely be noticed. Almost painlessly, it would raise revenues to pay for tax cuts elsewhere -- while maintaining the incentive for energy efficiency and keeping OPEC on its heels. If and when prices go back up, governments can soften the blow to their economies by lowering the tax."
kick-opec-while-it-s-down
Comments
Yes..........once the "tax harpoon" is pushed into a taxpayers arse; removal is almost impossible. One does know that the harpoon head is shaped for insertion, with removal not anticipated, eh???
What I can't compute is the nature of the endgame. OK, our best-buddies the Saudi's can shut down our shale and marginally more-expensive production. Then what? They can jack up the price again but not all that far- our reserves aren't going anywhere- if they increase the barrel price a bit too much, we're back on line again. It seems to me that from an anti-OPEC cartel situation we are in a very good position: no need to even actually pump, just maintain the threat.
Some things are not adding up here, at least to me.
I'm going to post this over in the "Where to invest in Oil ... after it bottoms, of course" thread also, to try to get as many opinions as possible.
Strong dollar
More fuel efficient cars
Shale oil or the threat of it
Paranoia shale will eat into margins at OPEC
Let's see what should cause a floor under oil price
Instability in the gulf middle east. This has become perpetual so maybe people don't even care?
Demand vs supply. I would have thought demand is ever increasing, but it would seem not?
That's why I think prices are fixed. Oil and gold as well.