Controlling the price of gasoline at the pump is a matter of national security.
On Friday, oil spiked $10.75 a barrel, a record single-day increase, which followed on the heels of a $5.49 a barrel jump the day before.…
"A sinister cabal of superior writers."
Article comments
— go to most recent comments26 - Jet in Columbus
Cindy Europe is paying dollars on the gallon tax-We're paying cents on a gallon of gas. it's that simple
27 - Clavos
"that 7.6 could be halved and they'd still have hundreds of millions in profit."
Sure, Jet, but why should they? 7.6 percent for the amount of risk they take is a reasonable profit; many other industries (manufacturing, e.g.) have higher profits with lower levels of risk.
And BTW, I read your comment completely before I replied. I didn't address that point because I saw no reason to.
28 - Jet in Columbus
No politician in his right mind would try to raise our federal tax on gasoline, it'd be career suicide..
Ther was an "under the table" deal where the U.S. government would up the tax per gallon by .75 or more, and they'd also increase the kickbacks that big oil is getting to keep them from complaining.
Big oil got their kickbacks
need I say more?
29 - Jet in Columbus
Risk? what risk?... no this should be laughable.
30 - Jet in Columbus
They have billions of dollars a year profits to protect them from this so-called risks.
The call it a golden umbrella
31 - Jet in Columbus
Do quote Doc "How did this get published without it being labeled a satire?"
32 - Cindy D
thanks for the info (Jet, Clav), i will update my databank
33 - Jet in Columbus
A profit is something you can stick in your pocket AFTER expenses.
That's after paying the payroll
That's after banking funds for replenishing on-hnd stock, and shipping.
That's after taxes
That's after paying for speculating new oil sources
That's after repairing equipment like after Katrina.
That's after paying insurance against unforseen "riscs" like a tanker breaking in half so that it doesn't come out of their bottom line-it comes out of some insurance company's
And it still totals multi-billions of dollars Clavos, and you can't candy-coat that.
After all that, of course there's the tax breaks from the government (us) too.
34 - Jet in Columbus
Other than that, the article was a rather enjoyable read Clavos... It's been a long time since I've laughed that hard...
XXXXXOOOOOO :)
35 - Dave Nalle
Great idea, Clav. Liked it even better when I proposed it 2 years ago, but you put it well and it takes even more courage to suggest it now when prices are already high. My goal was to raise prices to the $5 range, but if we could get it up to $6 or more then we'd really see some progress from the private sector with solutions to our fuel problem.
I do think a good portion of the tax ought to go into improving public transportation infrastructure. In a lot of the parts of the country where people drive a great deal it's at least partially because the public transportation sucks. To go from my house to locations in north austin requires a 5 minute drive to the nearest bus stop then a 45 minute ride to the only bus route intersection which is way down in south austin and then another 45 minute ride from there to north austin. An hour and a half to travel 15 miles, a trip that would take 20 minutes by car.
Dave
36 - jamminsue
I left my job of five years working for a man that I love as a son, because he is moving 25 miles south of our offices, changing a 15 minute commute EACH WAY to 1:20, adding a little over 10 extra hours on the road in a week and a huge increase of miles. I am very sad about it. Cosidering I am 51 without a college degree, trying to get a job in the construction industry in Las Vegas, NV is insane/ It is insane to quit, but I do like to have enough money left after rent and gas to buy food and medicine, I cannot do so at the gas prices at the end of May. Luckily I found a job not far from home. Im still concerned about fuel prices, but if it gets too awful, my new boss said I could telecommute 2 of 5 days, wich would definietly help.
37 - Clavos
Dave,
The tragedy is that, had such a tax been enacted just two years ago, our situation today would likely be much further along the road to complete independence from OPEC.
Instead, we've got the clown congress in DC enacting such worthless ideas as new CAFE standards for 12 years in the future, and seriously debating a cap-and-trade tax (S. 2191) that will likely significantly exacerbate our economic problems in exchange for an inadequate reduction in carbon.
38 - Cindy D
In reality, those most responsible for high prices are the oil owners; nations such as Saudi Arabia, Iran, and others in the Middle East, and Venezuela in our own hemisphere. They enjoy unimaginable riches; riches which have come primarily from the USA and Europe, and there is no end in sight to this unprecedented transfer of wealth....
As the base prices have risen inexorably, thanks to the greed of the producers, speculators have begun to play an increasingly influential (and detrimental) role in pricing.
This is a really funny stuff to hear from the mouth of a capitalist. Are these neutral assertions Clav? I mean you aren't blaming oil owners or speculators right? Is it just my inference? It's too subtle to tell.
So, we have the market (of which the owners of oil are a part) which is responsible for high oil prices, and which in another fashion (via speculators) is exacerbating the problem. We have the solution, which will certainly deeply harm the economy and likely push more Americans into bankruptcy. All this will be happening while the market (which is really sort of god to some people) saves us.
Great system. Waiting for the market to decide when to act is like waiting until your house is on fire to invest in an extinguisher.
With a bit of forethought (say from a government that actually puts some value in science) we would have already had alternatives in place (consider the French).
39 - Cindy D
Oh, wait...did I mention "The Market" can only save us if the government steps in and punishes its citizens for what The Market failed to accomplish without government intervention?
40 - Clavos
"So, we have the market (of which the owners of oil are a part) which is responsible for high oil prices, and which in another fashion (via speculators) is exacerbating the problem."
keep raising them until such point that demand slows enough to reduce their revenue, even at the higher prices.
Not quite. More accurately: "We have the owners and speculators manipulating the market, resulting in artificially high prices, which will remain so until we, the demand side of the equation, signal by our decreased demand that the price has gone too high. To date, we haven't done so to a great enough degree to convince the arabs that their prices are too high, so they
"We have the solution, which will certainly deeply harm the economy and likely push more Americans into bankruptcy."
Maybe. We'll find out for sure either way, because OPEC will raise prices to the $6 level before the end of the year. At least, if we raise them through taxation, we keep the extra revenue (and return it to the people in the form of reduced payroll taxes and stepped up R&D), instead of making the arabs even richer.
41 - Todd
You're blaming the skyrocketing oil/gasoline prices on oil-producing nations? Get real.
It's our foreign policy, silly. Look at the value of the dollar. It's tanking. If you want prices to stabilize, we should get out of the Middle East and stop threatening Iran. We should also stop spending and start paying off our debt. We should also get rid of the Federal Reserve, which is a root cause of the situation we're in.
Oil speculators? Oil-producing nations? Ha.
42 - Clavos
"Look at the value of the dollar. It's tanking."
While the devaluing dollar has certainly had a negative effect on oil prices (as it has on virtually all imports), the price of gasoline (oil) has been rising far longer than the dollar has been losing value.
43 - Cindy D
We have the owners and speculators manipulating the market, resulting in artificially high prices...
A funny thing here is that I cannot decide whether to use "flaws" or "legitimate practices" in describing manipulation in the market economy. Manipulation of the market is part and parcel of the market--we can't have it both ways. It is in the realm of fantasy to imagine some ideal market where this is not so. It is certainly not reasonable to assess the actual market as if its own flaws exist apart from it. But is manipulation even a flaw?
It is legitimate for owners to get the highest prices they possibly can, manipulation is treated as fair practice when we are considering our own internal market--even if that manipulation sabotages choices that would be better for the economic health of our population.
Look at what GM and the oil industry did with the EV1. The battery technology was withheld and kept secret (until after the cars were destroyed) so that the consumer would not be able to make a realistic assessment of the electric car. The auto industry makes a great deal of money on servicing of cars--a great deal of that money would be lost with electric cars. The oil industry's interest in destroying this technology doesn't require further comment.
...which will remain so until we, the demand side of the equation, signal by our decreased demand that the price has gone too high....
And then we will what, magically replace our infrastructure overnight? Will The Market pay for that? How much will all those people who are bankrupt be able to contribute to this demand. I guess we'll find out.
Until the oil industry gets tired of its new profits, they're just as likely as anything else to keep sabotaging our demand as they have done in the past (just look at who bought 60% of the battery technology from GM). By that time we should be in crisis after crisis.
44 - Jet in Columbus
Clavos, t5at so-called "Clown Congress" can't get anything done because they don't have enough of a majority to override a Clown president that knows they don't have enough of a majority to override his vetos, so he sabotages everything he tries to do.
45 - Jet in Columbus
What's the sense of producing an energy-efficient car that only the rich can afford?
46 - Clavos
So, Cindy, you are content with allowing the oil producers to set their own prices, instead of trying to seize the initiative ourselves, and by means of taxes we can return to the people, raise the price to where demand is diminished to the point that OPEC must react and lower their prices?
"It is legitimate for owners to get the highest prices they possibly can, manipulation is treated as fair practice when we are considering our own internal market--even if that manipulation sabotages choices that would be better for the economic health of our population."
This is essentially correct, and the best way to stop the rise in prices is to not buy the product; i.e., to reduce demand. However, the American consumer has demonstrated repeatedly that the only stimulus to which they will react to reduce demand, is higher prices.
By raising the tax on fuel substantially, we get an immediate reaction from consumers; they will consume less: by carpooling, by using public transportation where available, by consolidating trips, eliminating trips where possible, driving more conservatively (I could stand to do that; I'm a terrible leadfoot), those who can, will switch to more fuel efficient cars (Many already are; Toyota just sold its millionth Prius, and GM has seen enough of a shift in demand they're seriously revamping their product lineup, as I noted in the article).
By paying the tax back to the consumers, we reduce the pain to a minimum, while still keeping the price of fuel high and reducing demand; to bring their sales back up, OPEC will have no choice but to increase supply or simply reduce the price of a barrel; either way the price goes down, and stays down, as long as demand remains lower than supply.
47 - Clavos
According to Edmunds, the Prius, at a base price of $21,500 is only a little more expensive than the best-selling car in America, the Camry (Base $19,000).
Hardly a car "only the rich can afford," and not the only fuel efficient car on the market by a long shot; plenty of cars in the $15,000 to $17,000 range deliver better than 30 mpg.
48 - Jet in Columbus
I repeat-the vast majority of the working public can't afford-or don't have the credit to buy the fuel efficent cars. Big business and Big oil under the Bush administration has destroyed their own customers-the middle class by pricing their product out of the reach of the very people they need to buy them.
All those billions we've uselessly spent in Iraq would've been better spent giving anyone who needs a fuel-efficient vehicle a subsidy to buy one.
49 - Jet in Columbus
DAMN IT Clavos-wake up and smell the fucking coffee. The vast majority of us are rolling pennies to fucking put gas in the 15-year-old rustbuckets we can barely afford now.
ARGUE THAT POINT AWAY
We can't afford a god-damned $70 tank of gas, where the hell do you think we're going to get the money for a $20,000 car???????? What wages we barely make are going to buy basic necessities like groceries.
Get your head out of your fucking ass and look at the economic REALITY of this country.
50 - Jordan Richardson
What this article shows is Clavos' innate misunderstanding of the poor and working class in America. Raising gas prices for ANY reason, even if it involves a rebate that shows up in the mail at a later date, will do more harm than good. Jet's right when he says that these products are out of reach for the average American. Many Americans are working two or more jobs and still come up below the poverty line, so the notion of shifting over to a fuel-efficient car is a pipe dream that few can think about affording.
With homes closing and people being forced out of places they've lived in for years, the LAST THING America needs right now is an increase meant to "take the power back" from oil producers. There's a global food shortage going on, people are losing their jobs because they can't afford the gas to drive to work, and the economies of once stable countries are on the verge of collapse. As such, the notion of introducing HIGHER gas prices at this time in history seems a decidedly cruel notion.
51 - Cindy D
Jet,
What's the sense of producing an energy-efficient car that only the rich can afford?
Jet? This doesn't compute to me. What is the sense in making a gasoline car (1900s), Television, household appliance, computer, cellular phone that only the rich can afford (when you first make it)?
In the 1980s I showed my husband an advertisement for a phone you could use from your suitcase. The price was astronomical. In the 1990s they were affordable--now they can be had for free!
The EV1 came out in 1997, that is eleven years ago.
52 - Jet in Columbus
You're too damned busy with your Republican talking points trying to blame congress, because they can't fix TEN YEARS WORTH of damage that the GOP Bush-rubber stamp congress did in only the last year and a half?
53 - Cindy D
@#47
Clav, why do you think the Japanese have the Prius? Where was the American equal to the Prius, when it was launched?
Do you think that the American market wasn't ready for the technology? No demand?
54 - Jet in Columbus
Cindy-re-read #49
55 - Clavos
"...the LAST THING America needs right now is an increase meant to "take the power back" from oil producers."
Maybe. The point is the arabs are already raising the prices. Those "poor and working class" people are going to be paying $6 for their gas anyway.
The only difference will be it will be going into arab pockets, not American ones.
56 - Jet in Columbus
Clavos, I'm sorry I lost my temper, but damn it. I could write an expanded article on what I said in two paragraphs in #49-but what would be the use when people like you don't care to hear it, or worse-yet refuse to acknowledge the absolute truth of our reality in this country?
57 - Clavos
"Clav, why do you think the Japanese have the Prius? Where was the American equal to the Prius, when it was launched?"
Excellent question, Cindy.
Until recently the American manufacturers hadn't a clue about that end of the US auto market; they were totally focused on the SUV/truck market and ignored the smaller cars for years.
There's a reason Toyota is now about to overtake GM and become the largest automaker in the world: they're smarter than the American companies.
The market IS here; Toyota saw it (so did Honda), and that's why Toyota just sold its millionth Prius, while the best the Americans have managed to do is come out with hybrid SUVs. Talk about oxymorons!
58 - Jet in Columbus
Clavos, The only new cars being sold are to the upper middle class and the rich (and middle-class people that either lie-or the dealships fudge their income levels on the applications for the loan)
If the only market you have is to them, you produce what they want to buy-SUVs.
The Japanese and Koreans are producing cars that the middle class can barely afford-which is why they're doing better American car makers.
Most Americans can barely afford to pay the required insurance on an financed new car, much less put gas in it. On top of that the maintanance costs required to keep a warrantee from becoming invalid on a new car take them out of reach of working class people. Oxygen sensors, $100 tunes ups, dealer priced services because gas stations don't fix cars any more. The days of being able to work on your car and save some money are long gone.
It's sad that you've lost sight of that reality.
59 - Jet in Columbus
The absolute reality of #49, and the government's (and your) refusal to address it) or acknowledge it, is what has gotten this country in the state that it is now.
on the verge of bankruptcy.
60 - Dave Nalle
Jet. I have only this to say on the subject of affordable cars.
1997 Geo Metro - 50mpg, Sells for about $700. And it's a damned reliable car rated 9.2 out of 10 by consumers at edmunds.com. If you want a newer model you can get a Suzuki Swift which is the same car and they made them up until 2006. And strangely they're all made by exploited peasants in that third world nation - Canada.
Dave
61 - Jet in Columbus
Sorry Dave, but in the humid days and heavily salted winters of Ohio, you won't find one worth buying, much less trying to maintain and find parts for a ten-year-old car...
At least you gave a thinking man's answer.
Jet
62 - Cindy D
Jet,
In other words, @#55, the poor and "working class" (i.e.) the "new poor" are already doomed.
They won't be able to contribute to consumerism much anyhow so fuck'em. We must never have doubt in The Mmmmmmarket.
63 - pleasexcuetheinterruption
Jet,
I really think your missing the point of Clavos' article here and I think if you take a closer look at some of your criticisms they don't really hold water.
I see smoke and mirrors here. Trying to palm off billions of profit by using a tiny number for it- 7.6 percent is an obscene old and tired trick that no one's buying any more.
Maybe so, but all Clavos is saying is we could say the exact same think about every other major industry in the U.S. People call oil profits obscene, but they're not any more obscene than anyone else's.
If they cut their profits in half to say 4 percent, their bottom line would still be healthly in the green by hundreds of millions.
Very true. But what would cutting profits in half really do for the price of oil? You would reduce the profits as a percent of revenue by 3.6%. Even if all of this money was channelled directly into lowering prices, prices would only drop by 3.6%. That would drop retail values from the 4.50 or whatever you're paying now, by only 16c. Not exactly the results we're looking for!
They're so profitable because they're not building refineries, they're not building refineries so that there's a gasoline shortage which makes them obscene profits under "supply and demand" why would you do something to bring down the price of gasoline, unless you knew it helped your bottom line?
Except all of the price increases right now are occurring upstream in the oil business. Not downstream at the refinery or retail level. Supply shortages may have been driven by limited refinery capacity in the past, but that is completely untrue in the present situation.
64 - Cindy D
@#46
Clav,
I will answer in bits. As Akismet reads my post as spam.
Part I:
So, Cindy, you are content with allowing the oil producers to set their own prices, instead of trying to seize the initiative ourselves, and by means of taxes we can return to the people, raise the price to where demand is diminished to the point that OPEC must react and lower their prices?
Content? I've never been content with having to clean up the crap that The Market excretes. But it seems capitalism cannot exist without constant bail-out by government at the expense of taxpayers. That is why I'm not a capitalist.
65 - pleasexcuetheinterruption
As for problems building refineries, if you put a referendom on November's ballot saying that if we approve a couple new refineries being built to lower the price of a gallon of gas back to the obscene level of $2 a gallon, it'd win by a landslide.
But again, the recent price increases have not been driven by the increased price of refined gasoline, they are being driven by the price increases in crude. Before the refineries even get their hands on it. Crude gasoline has more than doubled. It makes perfect sense that retail values have almost doubled. The only reason it hasn't doubled is because the refineries are losing money.
66 - Cindy D
@#46
Clav,
Part II
This is essentially correct, and the best way to stop the rise in prices is to not buy the product; i.e., to reduce demand. However, the American consumer has demonstrated repeatedly that the only stimulus to which they will react to reduce demand, is higher prices.
Clav, you mean the American consumer behaves according to the dictates of capitalism? How do you think they got that way?
So far, in order for capitalism to work effectively, we would have to:
A) have owners that aren't greedily (artificially) raising their prices as high as possible.
B) consumers that are not price-driven.
C) speculators that don't take advantage of this.
Okay, well there you have it. But, wait, capitalism seems to have disappeared in there somewhere.
And now, since we don't have A,B, and C we are calling for the government to step in and bail The Market out?
67 - Cindy D
@346
Clav,
Part III
Which brings me around to what I first said: This is a really funny stuff to hear from the mouth of a capitalist. (who still thinks the market economy will save us)
The average citizen will do all the things you said, s/he will be forced to by sheer dire circumstance if nothing else. Yet the oil industry will reap higher reward throughout.
--see #49 and #50 I don't need to reiterate the same points as they were well-addressed in those posts.
Does this seem to you like a system that is intelligent? Trusting the equivalent of our economic air supply to those (our great big market players) who have every right and reason to use it to keep the plastic bag firmly over our heads?
So, if you are going to propose a solution that is not based on The Market, then kindly stop chanting its incantations.
68 - pleasexcuetheinterruption
A profit is something you can stick in your pocket AFTER expenses.
That's after paying the payroll
...
That's after paying insurance against unforseen "riscs" like a tanker breaking in half so that it doesn't come out of their bottom line-it comes out of some insurance company's
And it still totals multi-billions of dollars Clavos, and you can't candy-coat that.
After all that, of course there's the tax breaks from the government (us) too.
Yes but if you observe any industry in the U.S. the theoretical zero profit rule of economics doesn't exactly work out. As Clavos pointed out their profit margin isn't higher than anyone elses. Why are Exxon's profits obscene, but GM's profits (until the auto-industry went south) the result of good ol' American business?
Also, not that it matters, but I think your figures on the state gas tax don't include the federal gas tax.
69 - Jet in Columbus
PETI-tackle the reality of #49... or try to.
70 - Jet in Columbus
We're talking apples and oranges here. If the kid down the block is selling lemonade for .50 a glass and it only costs him .25, does that give the oil industry an excuse for their profits? There are many sources of lemonade-just like there are many sources of cars-BUT THERE'S ONLY ONE SOURCE OF OIL... and it has us by the balls.
Oil is for all intents and purposes a monopoly, because it's the only source of energy that this country is geared for. Airlines are going out of business because of greed, people are working two jobs, one to by gas to get to the other one.
what good is it to raise gasoline taxes to make us drive less, if the general public HAS to drive in order to make a living. The oil companies KNOW that no matter the price, we'll pay it in order to make a meager living to put more money in their pockets.
71 - Cindy D
Post # 49 is the best post in the thread, it cuts through all the bullshit and spells out the problem in words anyone (except the unaffected) can understand.
Thank you for that Jet.
72 - pleasexcuetheinterruption
DAMN IT Clavos-wake up and smell the fucking coffee. The vast majority of us are rolling pennies to fucking put gas in the 15-year-old rustbuckets we can barely afford now.
ARGUE THAT POINT AWAY
We can't afford a god-damned $70 tank of gas, where the hell do you think we're going to get the money for a $20,000 car???????? What wages we barely make are going to buy basic necessities like groceries.
Get your head out of your fucking ass and look at the economic REALITY of this country.
I don't think Clavos' idea is meant to ignore the fustration. I think Clavos should have phrased it as a rebate instead of a payroll tax cut. Either way (with the difference being the effect on the unemployed) no American stands to lose a single penny. We tax gasoline at 2 dollars a gallon. On average, everyone ends up paying an extra 2 thousand dollars on gas tax. Everyone gets a 2000 dollar rebate check. The people who drive more than average, or who drive 10mpg vehicles, lose money. The people who drive less than average make money.
It all breaks even. Look at it as an opportunity to make money. If you don't drive at all, you made 2000 dollars. If you use half as much as the average person, you made 1000 dollars. Free money!
73 - Jet in Columbus
Argue with #49, I've said all I can say on this subject, much to all of your relief no doubt.
Come up with a valid denial of the points in #49 and I'll humbly and meekly announce I'm wrong.
We can candy-coat this debate all we want and someone will intentionally say something that everyone will want to argue and distract away from the reality of what #49 is.
Until then, I'm off to Wal-Mart for supplies... I have to see if I can find a locking gas cap somewhere.
74 - pleasexcuetheinterruption
Almost anyone who makes less than 100k a year stands to make money on this. They consume less than the rich. They consume less transported goods. They fly less. They take fewer long drives for fun. They are more likely to take public transit when they can. They overrall consume less fuel than the wealthy. As a result, the rebate would be larger than the amount of money they spent on the gas tax. Most people making less than 100k a year would make money on this deal. The effects of the day-to-day cost increases could be mitigated by slowly implementing the program, 50c per year for 4 years, gradually increasing the rebate from 500, to 2000 dollars simultaneously.
75 - Jet in Columbus
Dear God, that's about as rediculous as the housewife that announced that she saved her husband %75 because she bought a $150 dress that she didn't need on sale