Toss a barrel of $139 oil into the economy and the ripples will swamp some of the boats trying to stay afloat in the current sea of economic troubles. And planes. Airlines are grounding their least fuel-efficient planes in an attempt to cut costs. So fewer budget-priced seats will be available to holidaymakers. Businessmen, too, are beginning to respond to the rising cost of company meetings by discovering the virtues of teleconferencing. Of course, home-bound consumers and desk-bound businessmen could drive, but petrol prices being what they are, that, too, is expensive.
All of which adds to the pressure on politicians to do something. Not for them Ronald Reagan’s famous plea to his officials: “Don’t just do something, stand there.” Some sensible new policies are badly needed but that is not on the cards, since the inclination of politicians is to do the opposite of what needs doing.
In their never-ending hunt for the quick fix, politicians in America and Britain want to ease the pain at the pumps by lowering petrol taxes. Never mind that prices would soon rise so that the net effect would be to lower the tax receipts of the US and UK Treasuries and increase those of the House of Saud, Hugo Chavez, Vladimir Putin and others not kindly disposed to western democracies. Even if prices did fall, the result would be to encourage greater use of petrol, and to discourage the development of alternatives to the use of oil-based products.
Basic supply and demand policies:
drill here
drill now
lowers the prices
Economics 101, really.
How about pressing the oil out of environmentalists?
Great idea Jeffersonian! I like the sound of cold-pressed, extra virgin (well, maybe) environmentalist oil.
How about a windfall profits tax like we had in the late 70’s. It dropped the prices and increased the supply. If the people profitting on high oil find it is going for taxes it eliminates the incentive to bid up prices for larger profits and it will provide billions for research and a new refinery that oil won’t build.
The problem as I see it is in trying to get the Environmental Protection Agency to stop opposing the construction of the new refineries that we so desperately need, and which they are so dead-set against!
Re #4, Art;
There are no windfall profits accruing to the U.S. oil industry. Their profit margins have not increased and are somewhat in the middle of the pack as far as net profit margins for large corporations. Microsoft makes a much larger profit margin on their software sales. Are you in favor of a windfall profit tax on sales of Microsoft Office?
Watch the oil companies carefully – sure! Incent them to spend more money on research, development and exploration – you bet, assuming the environmentalists can be persuaded to let us have more energy sources. But slap a tax on them just because of some cheap political rhetoric that is not true – no way.
companies/corporations don’t pay taxes — CUSTOMERS of companies/corporations pay taxes.
#6 & #7 the oil companies and traders are making huge profits on oil, the largest profits ever for any company. Microsoft is about 10% of what they are showing each quarter. I agree that corporations don’t pay taxes but the profits go to the shareholders of which some of the largest are the exec’s in thease companies. We can’t lay all the blame on the EPA as the oil companies have shut down refineries and have not attempted to upgrade them or build new ones. This happened in a town near where I live about 15 years ago. The refinery was taken apart and moved to So. America and there was no outcry from the EPA or environmentalists to shut it down. A windfall profits tax on all excess oil profits would enable the money to be set aside for research for new energy sources such as oil shale, hydrogen etc., exploration and monies to build a new refinery to lease out to some firm to produce oil products, rather than have it go directly into the general fund. And while I am ranting we have to get out of the ethanol farce using corn, peerhaps something alse that is less costly and wouldnt drive up food costs the way corn does. ethanol hasn’t helped in any way to supplement the use of gasoline as the loss of mileage means the same amount of gasoline is consumed whether using gas or gas w/ ethanol added.
Taking corn out of the mouths of hungry people and using it to make fuel for motor vehicles is immoral.