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Interesting read. I doubt anyone can predict the month-by-month trend in the oil price roller coaster as this article attempts, but it's as well-reasoned a guess as I've come across for a while: a brief uptick now, a return to further weakness and a capitalation low in the second quarter, then gradual recovery.
Paid $1.65 a gallon yesterday for gas in Michigan. Knock-out the approximately 50-60 cents in state and federal taxes, and it was really only about $1.15 a gallon.
Than across the street we purchased a gallon jug of drinking water selling for $1.79 along with our groceries.
Maurice said, "My driving habits have not yet changed, as a result of cheaper gasoline."
Ours have - but not because of cheap gasoline. We've changed our habits to drive as little as possible nowdays. Many roads in Michigan resemble what I'd imagine a war zone to look like. I'm sure the surface of the moon would be better in comparison. A bit of a paradox having all that cheap gas and no roads to drive on.
Michigan voters in their wisdom overwhelmingly rejected a ballot proposal last spring which would have raised money for road repair. We all know, of course, that building roads and other infrastructure costs nothing and provides no jobs.
Ever notice in the debates how the candidates first tell about all the spending they would do (larger military for example) and than say in their next breath they will lower your taxes? No wonder Sanders and Trump are leading.
What is debatable, is whether or not you believe that adopting this tax increase is helpful to the US economy or detrimental.
Depends on how that additional revenue is used. In theory, spending that money on the broader economy can help the economy. But the record from both sides on making wise decisions to spend rather than ideological or pork barrel projects has been very poor.
It seems to me that with the level of money involved here, it wouldn't move the economy needle one way or the other. Seems more like a political move to get Republicans on record for opposing infrastructure and environmental issues by rejecting it since there isn't an iota of chance that it will pass. So, it is academic anyway.
Is it fair ?
That is entirely in the eye of the beholder. Any proposal creates winners and losers and they will take opposing side on it. There is no standard of fairness to measure against. Only ideology and hypocrisy.
Does this hurt job creation and lead to more layoffs?
Answer depends on who is spinning it on ideological lines. Job creation and layoffs are such a multi-variate problem that blaming one factor like this is a political game played by both parties. All answers are non-falsifiable.
Will this tax punish American businesses, while helping our Saudi, Kuwaiti, Iraqi and Irani "allies"? As far as I have read, this tax only will be imposed on US producers.
No, it would tax all oil used in the US imported or domestic but oil exported from the US to overseas would be exempt. The last clause does not mean much since there is very little oil exported at the moment but is a clever political ploy to dent the Republican "bad for (oil) business" objections by creating a red herring they cannot object to and nullifying the potential questions like the one posed above.
Will this tax support efforts to combat climate change, or just shift the production offshore? I don't see global demand for crude oil changing because of this tax.
Neither in practice. The problem might be what happens when the oil prices go up substantially if they do. The tax would likely create some friction on the economy as a marginal factor but only if the high oil prices are already creating a problem. It would have been much better if the proposal was tied to a max price of oil and would apply only below that. But this is a political proposal not a realistic one to do anything.
I expect the oil cartel, known as OPEC, with the support of our President, will manipulate the prices back up, once the back of the domestic oil boom is permanently broken.
I would worry a lot more about the Wall Street cartel with the support of our politicians on either side getting back into the commodities derivatives game and distorting oil prices than OPEC. The dramatic rise of oil prices over the last decade have not been because of OPEC.
For the last 40 years, our politicians have been chanting to us for the national purpose of energy independence. A government agency was created for this express need. And now that it is within our grasp, we find our politicians are trying to figure out ways to undermine it. It is hard for me to understand.
It is easier to understand if you realize that while both sides are in agreement over energy independence, the means to do so are in fundamental disagreement. One wants it via replacing fossil fuels with clean energy, the other by increasing fossil fuel production domestically. These are in direct conflict and each side has been thwarting the other's attempt as is typical in politics with no result other than what is happening without them.
Fracking isn't going to give us energy independence on its own. There isn't an unlimited supply of it even if we solved the potential problems with its side effects (water contamination, potential for earthquakes, etc). Clean energy cannot be used for many purposes that fossil fuels are needed for. If the country was run like a business, they would have created a long-term transition plan that would involve both accounting for the possibility that fossil fuels are going to get limited and more expensive and clean energy is limited in scope for solving all energy needs. But tearing things down than building solutions are easier.
The political situation is like trying to get Giants and Dodgers along with their fans to agree on working together to improve the dismal quality of NL West baseball. Not going to happen. Too busy and happy pulling the other down.
vkt said: "Seems more like a political move to get Republicans on record for opposing infrastructure and environmental issues by rejecting it since there isn't an iota of chance that it will pass."
That was exactly my thought also. The Democrats can be as cynical as anyone else.
Comments
Thanks for posting, Mark.
Fingers-very-crossed that does not happen!
Lifeboats leaving the dock.
http://www.bloomberg.com/news/articles/2016-02-09/anadarko-cuts-quarterly-dividend-to-weather-price-rout
Than across the street we purchased a gallon jug of drinking water selling for $1.79 along with our groceries.
Go figure.
Ours have - but not because of cheap gasoline. We've changed our habits to drive as little as possible nowdays. Many roads in Michigan resemble what I'd imagine a war zone to look like. I'm sure the surface of the moon would be better in comparison. A bit of a paradox having all that cheap gas and no roads to drive on.
Michigan voters in their wisdom overwhelmingly rejected a ballot proposal last spring which would have raised money for road repair. We all know, of course, that building roads and other infrastructure costs nothing and provides no jobs.
Ever notice in the debates how the candidates first tell about all the spending they would do (larger military for example) and than say in their next breath they will lower your taxes? No wonder Sanders and Trump are leading.
It seems to me that with the level of money involved here, it wouldn't move the economy needle one way or the other. Seems more like a political move to get Republicans on record for opposing infrastructure and environmental issues by rejecting it since there isn't an iota of chance that it will pass. So, it is academic anyway. That is entirely in the eye of the beholder. Any proposal creates winners and losers and they will take opposing side on it. There is no standard of fairness to measure against. Only ideology and hypocrisy. Answer depends on who is spinning it on ideological lines. Job creation and layoffs are such a multi-variate problem that blaming one factor like this is a political game played by both parties. All answers are non-falsifiable. No, it would tax all oil used in the US imported or domestic but oil exported from the US to overseas would be exempt. The last clause does not mean much since there is very little oil exported at the moment but is a clever political ploy to dent the Republican "bad for (oil) business" objections by creating a red herring they cannot object to and nullifying the potential questions like the one posed above. Neither in practice. The problem might be what happens when the oil prices go up substantially if they do. The tax would likely create some friction on the economy as a marginal factor but only if the high oil prices are already creating a problem. It would have been much better if the proposal was tied to a max price of oil and would apply only below that. But this is a political proposal not a realistic one to do anything. I would worry a lot more about the Wall Street cartel with the support of our politicians on either side getting back into the commodities derivatives game and distorting oil prices than OPEC. The dramatic rise of oil prices over the last decade have not been because of OPEC. It is easier to understand if you realize that while both sides are in agreement over energy independence, the means to do so are in fundamental disagreement. One wants it via replacing fossil fuels with clean energy, the other by increasing fossil fuel production domestically. These are in direct conflict and each side has been thwarting the other's attempt as is typical in politics with no result other than what is happening without them.
Fracking isn't going to give us energy independence on its own. There isn't an unlimited supply of it even if we solved the potential problems with its side effects (water contamination, potential for earthquakes, etc). Clean energy cannot be used for many purposes that fossil fuels are needed for. If the country was run like a business, they would have created a long-term transition plan that would involve both accounting for the possibility that fossil fuels are going to get limited and more expensive and clean energy is limited in scope for solving all energy needs. But tearing things down than building solutions are easier.
The political situation is like trying to get Giants and Dodgers along with their fans to agree on working together to improve the dismal quality of NL West baseball. Not going to happen. Too busy and happy pulling the other down.
That was exactly my thought also. The Democrats can be as cynical as anyone else.