Where, oh where is the outrage?
October 18th, 2007 by Grant in: Oil & GasAnother example of economic short-term memory.
Crude prices are continuing upward, as today Nymex Crude closed just shy of $90 per barrel. But in contrast to previous spikes, we’re not hearing the political sounding board in Washington cry for windfall profits taxes, and the talking heads are not aghast with news of gasoline shortages…
Oil is up 8% just in the few weeks since the Fed cut interest rates to bail us out of the credit crisis, and in the process fueled one of the strongest commodities (pardon the pun) we’ve seen in a long time as the thought of a higher inflation rate suddenly improved.
I find it interesting that even as crude oil is setting new records, gasoline prices have yet to follow suit.
Perhaps this is why no one really cares about the price of oil right not…
Just wait.
Tags: commodities | crude chart | crude oil | gasoline | oil prices | WTIC
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October 19th, 2007 at 7:00 am
You are right, it is odd. However, I think it is the new normal. People now accept, within the context of global warming, China and recent history, that gas is no longer cheap the way it was in the 1990s and the early part of this decade. Also, the politicians, Dems and Repubs alike, know the don’t have the answer to lowering prices, so they keep quiet.
There has been documented evidence that consumers are consciously driving less, and driving less impulsively. There is also evidence that people are buying smaller cars. Unsold SUVs sit on dealer lots. I defy you to sample media for a day and not see a sale or a special on an SUV.
As I will shortly write in my blog, the price of oil is on a long upward trend. There may be fluctuations due to news stories that are perceived to potentially affect the price of oil. That being said, my prediction is the the price of oil, will, starting in 2005-2006 go up an average of 10-15% a year for the next 10 years, if not more. I know what that could mean, $125 - 150 oil. When the politicians start to tax it even more, because they can put it under the ‘global warming’ umbrella, there will be widespread support for alternative energy, which will be good.
Pain brings about change.
David
October 20th, 2007 at 1:53 pm
David, there has been a lot of speculation that the current oil boom will end up like the tech boom of the late 90’s. In effect, it will all come crashing down in a very short time period.
You probably have a better recolection of that time period than do I. Do you see any similarities between todays oil boom and the boom of the “dotcom” era?
As for the possibility that the government may put petroleum economics under a global warming umbrella to effect an increase in taxes, I don’t see this happening.
The last thing the government needs to do is shift research and development to clean energy by increasing a tax on the petroleum industry.
The more appropriate way to handle this would be to create attractive tax incentives for establishing alternative energy sources.
At this juncture, the petroleum industry has much more economic influence than our government. Currently, there is very little keeping major oil companies in the United States. Placing an increased tax burdon on them may just force them to pack up and go elsewhere (Dubai, India, China, Japan…). Where will US economics be then if that happens?
Great discussion starter!