Plan B Forum

Lord Jim wrote:The Saudis may be playing a complicated game...(they usually do)

Even if oil drops to $30 a barrel, they make a profit...

For the Russians, the Venezuelans and the Iranians (who they undoubtedly want to undermine, especially the Iranians) the price of oil needs to be in the $120 dollar per barrel range...

For the new US fracking production, it needs to be about in the $70-$75 per barrel range to remain profitable...

Currently it's just below that...

If the Saudis think that by driving oil prices below the profitability level of oil production in the US they'll somehow shutdown US energy production, they're making a mistake; part of what's driving down the value of oil is also our more efficient tapping of natural gas, which we have even greater reserves of...

Bottom line is, if oil stays at bellow $70 a barrel for a sustained period of time, it undermines our production sector, but it still remains a huge boost to consumer spending, business expansion, job creation, and deficit reduction...

At 70-75 dollars a barrel, we can have both, and see the Iranians and the Russkies take it in the chops to boot...

So as much as I would like to see gas go back down to $1.25 a gallon, that's probably not in our best interests...

TPFKA@W wrote:As good as it feels going down, it is going to hurt like heck when it inevitably goes back up. I would like to see the floating tax you mentioned some eons ago, keeping it at $4 a gallon and using the money for roads or some-such. It would keep John Q. interested in energy alternatives.

What we ought to do is chuck the outmoded, misdirected "user fee" model for funding federal highway monies entirely. The fact is that every single person in this country who uses any deliverable good or service, and/or who travels by any means other than by foot for any reason (which would be everybody) benefits from well kept up roads.

The gas tax is a regressive tax, hurting lower income people the most; it should be eliminated completely. Anything that can be done to reduce energy prices boosts the economy; low energy costs are just about the best bang for the buck stimulus for the economy we can have. Government at all levels should aggressively pursue polices designed to drive energy costs as low as possible. Raising taxes on gas or any other energy source is exactly the wrong approach.

To raise money for the federal highway fund, I would replace the dollars brought in by that ill advised tax with a novel approach; I would take a percentage of the dollar increase in overall annual tax revenue and dedicate it to the highway fund. (I'd have to look at the dollars involved more closely to know what that percentage would be, but that's the model I'd use)

It makes perfect sense; government revenues rise when the economy is growing, more people are working, production and construction are rising, etc. All of these things also increase highway use, and the need for up- keep dollars.

Overtime this would also create a "bank" of funding in good times that would be available during recessions when government revenues aren't rising. This approach would also build into the system an affirmative incentive for the government to pursue pro-growth policies, which would be another benefit. (As opposed to the anti-growth, regressive strategy represented by the gas tax)

This may be one of those ideas that just makes too much sense to ever be implemented by our dysfunctional government. Many Republicans would love the idea of eliminating the gas tax, but would balk at the idea of dedicating a fixed percentage of revenue increases, regardless of the deficit, and without any corresponding spending cuts.

Many Democrats would love to have more government money to spend without having to cut anything, but would squeal like stuck pigs over the idea of eliminating a tax, since reducing the tax burden is something that they apparently see as morally repugnant.

Econoline wrote:

TPFKA@W wrote:As good as it feels going down, it is going to hurt like heck when it inevitably goes back up. I would like to see the floating tax you mentioned some eons ago, keeping it at $4 a gallon and using the money for roads or some-such. It would keep John Q. interested in energy alternatives.

I don't recall Jim ever mentioning that idea, but I do recall mentioning it myself some time ago. (I think I may have suggested $5/gal.at the time...'cuz you know it's going to go up to that price at some point anyway...) It would be a great idea--impossible in our present political situation, but a great idea nevertheless. And if the money were used for research into alternative sources of energy, that would be even better.

TPFKA@W wrote:It was $1.99 here last night.

In 2013, energy sources and percent share of total electricity generation were

Coal 39%
Natural Gas 27%
Nuclear 19%
Hydropower 7%
Other Renewable 6%
Biomass 1.48%
Geothermal 0.41%
Solar 0.23%
Wind 4.13%
Petroleum 1%
Other Gases < 1%