Wednesday, April 2, 2008


Cue the scary sounding music....oil execs are in the house.

No this is no longer April Fool's. What I am about to say is real, this is not a test. I actually am in agreement with Democrats in Congress. Kinda. The socialists grilling oil execs about daring to make a profit was scary yesterday. Essentially it came down to asking how dare you make a profit?

But, they are right that the tax breaks enacted in the 90s - when oil was at $10- need to be scrapped ASAP. Those tax breaks were enacted to incentive drilling when drilling was not cost-effective. It was a stupid idea to begin with. Oil companies should not get tax breaks just like GM shouldn't just like Microsoft shouldn't. But even more so, now that oil is $100+ and the B-I-G O-I-L (cue evil sounding music) companies are making more money than they know what to do with. So yeah those tax breaks should be history.

Now of course as soon as the gubemint does something not entirely stupid, it has to turn around and do something very stupid. The $18B in additional taxes that would be paid by B-I-G O-I-L (cue evil music) would also be put in a fund for development of "alternative energy". How much does anyone want to bed that $15 of that $18B will go into the hands of the biggest "alt en" contributors to Nancy, Harry and Hillary? Here's a better idea. Give that $18B to consumers in the form of a tax credit for installing solar panels, or buying a hybrid car or replacing grass with desert landscaping. In other words, use the $18B towards green things, but put the choice in the hands of the public. Let the public through the marketplace decide how to best spend the money.

And getting back to the 2008 DC OIL WITCH TRIALS. Two days ago I paid $3.79 for gas. I drive one of them there fancy European cars which needs 93 Octane, so it would have been $3.45 for regular. Still pretty high. And sure I would love for it to be $2.45 or $1.45. Yet unlike the vast majority of clueless Americans I don't blame Exxon or Shell. It would be like blaming McDonald's because the price of potatoes and beef tripled and therefore the price of a Big Mac meal went up. Oil, like beef is a worldwide traded commodity whose price is set by nobody and everybody. The price of oil is at $100 because the dollar has been recklessly devalued by Bernanke in order to pay for all the shit that congress gives away. And on topof it all, a $750B to $1T housing bailout is coming which will erode the dollar even more. But that concept is obviously a little too advanced for Congress to comprehend. Much easier to scream B-I-G O-I-L, B-I-G O-I-L, mumble something about Haliburton and go on your merry way.

And even at $3.79, I filled up 11 gallons. I fill up a little less than once a week, usually 8 or 9 days in between fill ups. So I spend less than $40 a week. I drive a small, 4 cylinder fuel efficient car that gets 30+ MPG on the highway and even in stop and go traffic gets 22/23. My advice to all the whiners out there sitting in their 6L V8 truck/suv as they go 15MPH to their suburban office park. and crying about the price of gas is this: get a smaller car or shut the fuck up.


Anonymous said...

There's a bigger picture here. People are so tight paying ridiculous mortgages, car payments, credit card bills. Even a $20 a week increase in gas costs puts them over the edge.

Zach said...

As long as we're making wishes here, let's just return $18b to taxpayers in the form of lower rates on other highly distortionary taxes. Oh wait, that would make too much sense.

Ed said...

anon #1:

Which is also why even a slight ARM adjustment leads many to go the foreclosure route. I remember reading about someone whose ARM readjusted from $850 to $1075. Pretty big change percentage wise, but only $225 more a month yet she she was saying how she would be forced to foreclose because she was strapped for money.

I honestly don't know how people can live like that.

Anonymous said...

The elephant in the room that Congress, BIG OIL (lol) nor the MSM will mention is that a big chunk of the increase in oil prices is the devaluation of the (petro)dollar.

Yes, the tax breaks should be eliminated, post haste...but there is some truth to grilling; no oil company period is going to work more than half-assed on AltNRG. It would be akin to the corner drug-dealer handing out passes to the rehab clinic. Make AltNRG research mean something, and some one will start it up...probably the next "bubble".

Ed said...

I'd be all over alt-en if it was feasible. I would love nothing more than to never send another $1 to the Saudis or Kuwaits or Dubaians (?). But the surest way to fuck it up is to have government run it.