Gas prices set to destroy United States

[tcaudilllg]

My mom just told me that she's looking for a job as a sales associate at Walmart, as opposed to a higher paying job working in Cincinnatti. (she lives in Monroe, a suburb between Cincinnatti and Dayton) The reason: gas prices. She says that the increased earnings she would get from a higher paying job would be more than offset by the transportation costs of going back-and-forth to work. This is the new financial reality in America today: people with college degrees are taking unskilled jobs because they pay more than professional work. (after transportation costs are considered)

And wonderful, we have an incompetant president who is incapable of seeing the reality in front of his face. Or... should I ask myself what the conservatives have to gain from reformer-types like my mother thinking they've got to live on the edge of their seats? There may be something more nefarious at work here.

[misutii]

good it's about time america died. look on the bright side, if it falls it will likely splinter into a number of smaller countries, one of which might actually bloom into a real democracy

[Lotus]

good it's about time america died. look on the bright side, if it falls it will likely splinter into a number of smaller countries, one of which might actually bloom into a real democracy

haha

[Creepy-bg]

good it's about time america died. look on the bright side, if it falls it will likely splinter into a number of smaller countries, one of which might actually bloom into a real democracy

+20

[xyz]

Gas prices will not destroy america. tons of companies have been looking into alternative fuels for a long time.

http://www.popularmechanics.com/auto...html?series=19

Personally I can't wait for the hybrids and full electric cars to pickup. (Hell, even the 'hybrid' cars that run on electricity but have a gas carburator to charge the battery AS YOUR DRIVING sound cool) , although some of these cars propose to do mass changes to america's infrastructure. I don't think those will do too well.

In the mean time, shortened cylinder heads and big engine modifications will come soon as well for that 35 MPG. But, I think this would probably be more of a band-aid than a long term solution to the oil problem.

http://www.popularmechanics.com/auto...s/4261289.html

[Creepy-bg]

Gas prices will not destroy america. tons of companies have been looking into alternative fuels for a long time.

http://www.popularmechanics.com/auto...html?series=19

Personally I can't wait for the hybrids and full electric cars to pickup. (Hell, even the 'hybrid' cars that run on electricity but have a gas carburator to charge the battery AS YOUR DRIVING sound cool) , although some of these cars propose to do mass changes to america's infrastructure. I don't think those will do too well.

In the mean time, shortened cylinder heads and big engine modifications will come soon as well for that 35 MPG. But, I think this would probably be more of a band-aid than a long term solution to the oil problem.

http://www.popularmechanics.com/auto...s/4261289.html

too bad they don't have plugs for electric cars in Bakersfield

[Not A Communist Shill]

Petrol in Americar is cheap! More than double the price here!

[Creepy-bg]

Petrol in Americar is cheap! More than double the price here!

nobody cares about France

[Lotus]

Petrol in Americar is cheap! More than double the price here!

Hey! I'm in your signature... what's that all about?

[Creepy-bg]

Hey! I'm in your signature... what's that all about?

that means he fancies you

[xyz]

too bad they don't have plugs for electric cars in Bakersfield

Whats with you guys and the bakersfield and gay jokes?

[Not A Communist Shill]

Hey! I'm in your signature... what's that all about?

that means he fancies you

Actually that is a list of all the people I have an irredeemable hatred for. (This doesn't necessarily mean I don't fancy you, however).

[Lotus]

Actually that is a list of all the people I have an irredeemable hatred for. (This doesn't necessarily mean I don't fancy you, however).

haha, what did I ever do to you?

EDIT: Awwww, you're in there too!

[xyz]

Petrol in Americar is cheap! More than double the price here!

True, but don't you bike more in france?

Wait, you're not even in france are you!?

[Not A Communist Shill]

haha, what did I ever do to you?

It's what you are going to do to me that I'm scared of. The tea leaves...the heavens have fated it.

[discojoe]

OIL PRICES
Oil Prices Are the Key to the Economy & the 2008 Election
Oil Prices Have Doubled Since Democrats Seized Congress
USA Oil Costs Are Up Over $400 Billion Annually Since 1/01/07
High Oil Prices Are Damaging the USA Economy
Abandoning Iraq Would Cause Oil Prices to Skyrocket
No One is Talking About Real World Oil Price Solutions




OVERVIEW - THE REALITY OF OIL PRICES

As discussed on the "Crude Oil" page, oil is the life blood of the economy. Therefore, it follows that the price of oil affects the cost of everything that:

• is made from oil byproducts
  
• is fueled by oil byproducts
  
• is lubricated by oil byproducts
  
• is packaged in materials made from oil byproducts
  
• involves transport by vehicles fueled by oil byproducts.
  

Despite these realities, almost no one in politics is talking about the fact that the dramatic increase in oil prices is a primary driver in the current economic slow down that America is experiencing. Here are a few facts to consider:

• Every additional dollar spent on oil or its byproducts is less money for consumers to spend on other products and services that drive the economy, or to meet their mortgage and other debt obligations.
  
• Lower consumer spending and the fears of it:
  • Cause firms to reduce manufacturing and service capacity along with related employment.
  • Cause companies to reduce capital spending that is also a driver of economic growth.
  • Is a large contributing factor in the drop in stock market values.
    

A History of Oil Prices per Barrel vs Euro/Dollar Exchange

Oil prices have risen dramatically since May 2003, and they are a major contributing factor to the current economic slow down. Please consider the following data:
% Euro/ %
Oil Price Change Dollar Change

• May 2003 $22.00 1.2877
• Nov. 2006 $59.00 168% 1.2762 (1.15%)
  
• Apr. 2008 $118.00 100% 1.5646 22.6%
• Total Change 436% 21.5%

The increase in oil prices since May 2003 and November 2006 have been enormous. Some argue that the increase in the value of the Euro vs the U.S. dollar has had a significant impact on the increase in the price of oil. The data above refutes that assertion.

[discojoe]

What is the increase in oil prices costing Americans?

The USA consumes about 7.5 billion barrels of oil each year. Therefore, Americans are annually paying a lot more for oil as this chart demonstrates:

Price Change Billions/Bbls Cost $B

• May 2003 $22.00
• Nov. 2006 $59.00 $37.00 x 7.5 $277.5
  
• Apr. 2008 $118.00 $59.00 x 7.5 $442.5
  
• Total Change $96.00 x 7.5 $720.0
  

This dramatic increase in the price of oil has become a huge drag on the U.S. economy because of all the reasons listed above. To put the total cost increase impact in perspective, the Pentagon budget for 2007 was about $620 billion. It is interesting to note that the increase in oil costs dwarfs the $125 billion annual cost of staying in Iraq to defend our access to Middle East oil.

[discojoe]

Why Have Oil Prices Risen So Much So Fast?

Oil prices rise and fall around the following key factors:

• The global demand for oil
• The global supply of oil
• Political risk
• Investor Demand/Hype
  

Let's examine each factor:

• Demand
  

Global economic growth has accelerated significantly since May 2003. The USA and the EU economies have performed well as have China's and India's. Therefore, the demand for oil has risen. However, global economic growth has eased significantly since November 2006 and this has relieved growth pressure on global oil supply.

[discojoe]

• Supply
  

World oil production has continued to grow to exceed the demand growth. There have been no supply shortfalls and the margin between supply and demand has not moved significantly. Iraqi daily oil production currently approximates the differential by which global supply exceeds global demand. Therefore, any significant interruption of Iraqi oil exports could create a supply crisis.

• Political Risk
  

There was almost no political risk premium in the price of oil in May 2003 because the USA had just asserted its military dominance in the Middle East by taking down Saddam, and thereby strongly demonstrating its willingness to defend its interests in the region.

[discojoe]

Since that time, there has been a steady erosion in the American voter's commitment to Iraq. This is reflected in polls that show almost 60% of voters wanting America out of Iraq within one year without apparent regard for the economic consequences.
In response to voter attitudes on Iraq, and as part of a political power strategy, the Democrat Party strongly advocates an early withdrawal of U.S. ground forces from Iraq without offering a credible security plan to deal with the chaos that would follow in Iraq, and the potential that it could ultimately threaten the other Middle East regimes.
As a result of the deterioration of political resolve on Iraq, the risk of an interruption in the supply of oil from Iraq and possibly the greater Middle East has continued to grow.
The increased risk of a supply disruption in Iraq and perhaps beyond has contributed to dramatic increases in the political risk premium embedded in the price of oil. If the Democrats take full power and execute their plan for an early withdrawal of U.S. ground forces from Iraq, the political risk premium in the price of oil will certainly increase as the fear moves toward reality.

[discojoe]

• Investor/Hedger Demand/Hype
  

The Political Risk factors driving the radical increase in the price of oil since 2003 have attracted a large volume of speculative investors seeking to profit from the growing potential for higher oil prices and/or to hedge against that possibility as it might adversely affect their other interests. The additional demand they create for oil based financial instruments has contributed to the rise in oil prices.

If a major supply disruption were to appear imminent or actually occur in Iraq or if chaos should accelerate in the Middle East, oil would become an even greater investor safe haven/investment, and the demand they create could serve as a strong impetus to even higher oil prices.

[discojoe]

The Geo-Strategic Effect of Higher Oil Prices
Over 60% of the increased costs shown above has been going into the coffers of oil exporters who are also enjoying the higher oil prices being paid by the rest of the world's oil importers. These massive increases in cash inflows from higher oil prices have fueled the increase in belligerency from Russia and Iran as well as providing additional funds for Al Qaeda's financial sponsors to invest in their terrorist activities.

In Iran's case, it means they have more money to finance Shiite militias in Iraq that are killing American soldiers as well as accelerate their quest to build their military and develop nuclear weapons that could enable them to further intimidate their Israeli and Arab Gulf State adversaries. In spite of the huge increases in oil prices, Iran is experiencing significant economic problems. Were it not for the huge oil price increases, the Iranian regime might have fallen by now.
The Myths of the Oil Exporter Viewpoint

The advocates of a withdrawal from Iraq want us to believe that chaos in Iraq would not follow the USA's exit, and would not affect oil prices. This premise rests on the misguided belief that it would still be in the exporter's self-interest to sell oil to the USA at a price that does not wreck the global economy, and thereby reduce the demand for oil. This myopic viewpoint ignores the following realities:

• Oil is a finite asset, and a depleting resource for an exporter for as long as production continues. Their objective is not to increase their near term revenues by increasing production, but to maximize the total value they receive for their oil reserves over its production life.
• From a macro perspective, total oil revenue for the reserves can be maximized by limiting the production rate and forcing up the price.
• Too high a price can create demand destruction, and put downward pressure on the price, but total long term revenue can still be maximized by lowering the rate of production.
  
• The current Arab Gulf State regimes are the swing producers for global oil and they have been increasing oil production to match demand growth in exchange for America's military defense of their interests. They are not generally hostile to America, but they have enjoyed the huge rise oil prices which is largely unrelated to supply/demand factors.
  
• All of the major oil exporters rely almost exclusively on oil and natural gas revenues to sustain their economies. None of them are significant exporters of anything else, and their economies would crumble if oil returned to $22 per barrel.
• The Arab Gulf State regimes are largely run by small royal cliques that do not share the wealth with their people as they should. The regimes are militarily weak and often unpopular with the mass of their citizens. Perhaps a majority of Saudis subscribe to radical Wahabism and oppose the current regime.
  
• The Arab Gulf State regimes are vulnerable to intimidation and/or attacks from radical Islamist elements that aspire to depose them. This would likely intensify if the USA ground forces leave Iraq.
  
• An America withdrawal from Iraq would position Al Qaeda and/or Iran on the Saudi/Kuwait borders, and could represent a breach of faith on America's defense commitment to the Arab regimes. This could force them into a choice between entering anti-American accommodations with Al Qaeda and/or Iran or to fleeing the region.
• Direct or indirect control of the Arab Gulf State reserves by radical Islamists would end accommodation with the USA and America's worst enemies could control almost 80% of the earth's oil reserves. With that control, it would be in their zealous self-interest to limit supply, force up prices and increase their power at America's expense.

[discojoe]

Rather than reconsidering the disastrous effects of their Iraq retreat policy on oil prices, the Democrats conveniently blame the huge increase in oil prices on price gouging by "Big Oil", and they clamor for higher taxes on "Big Oil" to redress this unfairness. Please consider the following realities about the taxes paid by USA "Big Oil":$Billions
Exxon Mobil 2004 2007 Change

Total taxes paid $57 $102 +$50
Net Income $25 $ 41 +$16

This chart demonstrates that 75% of Exxon's increase in pretax income from 2004 to 2007 went to pay federal, state and local taxes rather than to Exxon shareholders. Therefore, governments have been the largest beneficiaries of the increase in oil prices since 2004, and these additional taxes represent a huge indirect tax increase on American consumers that no one is talking about.

[discojoe]

These hidden additional taxes are a drag on economic growth, but the bigger problem is that over 50% of the increase in oil costs has been going to foreign exporters of oil that cannot be taxed by the USA. Often the beneficiaries of these additional dollars are exporters like Iran, Russia and Venezuela who are America's greatest global adversaries.

Every dollar Exxon pays in taxes is a dollar that is unavailable to find more oil or develop new energy resources. Democrats understand all of this, but they love the benefits of hidden indirect tax increases that they do not have to defend to their voters. The fact that the higher oil cost burden falls disproportionately on low income Democrat voters is acceptable collateral damage because they know their voters will never figure it out.

The second big myth about USA "Big Oil" is that these firms have restricted their oil development and production rates to drive up the price of oil. Please consider the following facts about USA "Big Oil" that refute this assertion:

12/31/07

Proved Oil
Billions of Barrels Reserves

Exxon Mobil 7.7
Chevron Texaco 7.1
Conoco Phillips 3.1
Total USA "Big Oil" Reserves 17.9
Total Global Oil Reserves 1,182.0
USA "Big Oil" as % Global Total 1.5%

[xyz]

...What is the point?? It's not even particularly interesting or annoying or anything anymore... You're just copying niffweed now.

[discojoe]

The price of oil is determined on the global market. The chart above demonstrates that USA "Big Oil's" reserves are not large enough to have a material effect on the price of oil.

The truth is that oil prices have risen dramatically because of the increasing threat to global oil supply in Iraq and the greater Middle East that is created by the Democrat's demands for a reckless abandonment of Iraq to chaos that could end Iraqi exports, and threaten global access to Middle East oil. This problem is exacerbated by the Democrat's determined refusal to aggressively support nuclear and clean coal plant construction as well as oil drilling in ANWR and offshore USA.

Blaming higher oil prices on "Big Oil" is just convenient demagoguery that furthers the Democrat's self-serving political ambitions at the expense of American consumers.

[discojoe]

Summary Comments

Educated and reasonable people could argue about the of oil today. What is indisputable is that the oil price has risen radically since May 2003, and October 2006 and it cannot be explained by significant changes in the demand/supply balance or currency exchange movements. It can be explained by the changes it the political risk and investment profile.

Everyone is talking about the $125 billion per year that the USA is spending in Iraq, but no one is adequately describing:

* The economic reasons for that continuing investment in relation to the additional almost $600 billion per year we are paying for oil largely as a result of our lack of political resolve on Iraq or
* the radical increase that would occur in that amount if we abandon Iraq and possibly the whole Middle East to chaos or
* the direct negative effect it would have on every voter's financial well being.

Nobody is talking about the underlying reasons for the dramatic increase in the price of oil or quantifying the dollar magnitude of that increase or discussing the devastating impact on the economy or offering serious ideas for reducing oil prices. I would offer the following solutions that should have the effect of significantly reducing the price of oil and thereby relieving the stress on the economy.

* Eradicate the stigma attached to oil and the myths of energy independence by educating American voters about the perspectives represented in this analysis, and the economic effect of a withdrawal from Iraq on their personal financial well being. This would require strong political leadership that appears to be missing, but if accomplished this should cause the poll numbers on Iraq to shift in favor of staying in Iraq for as long as it takes to defend our vital strategic interests.
* Congress should pass a resolution with a strong majority that unequivocally states that America will remain in Iraq to help that nation recover, to defeat our terrorist enemies and to defend our vital economic interests no matter how long it takes.
* Congress should dramatically increase the incentives to rapidly build new nuclear and clean coal fired power plants and to incent a shift to electric fueled transportation.
* Congress should incent consumers to decrease their energy consumption by 20%.
* Congress should adequately fund initiatives to create viable new energy sources.

[discojoe]

All of the above measures would:

* Send a strong message of resolve to the oil markets that should drive down the price of oil,
* Encourage speculative financial investors to leave the oil markets, and
* Dishearten Al Qaeda's leaders who are eagerly awaiting a USA departure from Iraq and
deprive their investors of funds and rationale to continue their investments in terror.
* Deprive Russia and Iran of huge amounts of cash flow they need to maintain their regimes and persist in their antagonism toward the USA.

Perhaps more significantly, the failure to adopt these measures will very likely produce an ever increasing oil price that will severely retard economic growth, and could produce an oil price driven global economic catastrophe if the USA abandons Iraq and the Middle East to domination by America's worst enemies.

[Not A Communist Shill]

[Lotus]

...What is the point?? It's not even particularly interesting or annoying or anything anymore... You're just copying niffweed now.

Yes. It is, actually.

[xyz]

I sit corrected.

[Creepy-bg]

oh, you cleaned off your gnome. gimme an hour or so (I just ate a chili dog )

[discojoe]

You're just copying niffweed now.

Not at all.

[Creepy-bg]

I sit corrected.

[Lotus]

Not at all.

I like Niffweed better.

[discojoe]

I like Niffweed better.

so am i

[Creepy-Cyclops]

Oh my, oh dear, it's dear, oh my dear.

I like Neil Young.

[discojoe]

I like Avon Barksdale.

[Creepy-bg]

I like chocolate milk

[tcaudilllg]

@Discojoe:
You're missing one important detail from all of that, a very meaningful step the U.S. could take to drive down oil prices.

Oil is right now a lucrative market. Too lucrative, for both the EU and the United States. In the interest of national security, oil should be made much, much harder to profit from. Raising oil investment taxes to astronomical levels will short circuit the exploding price growth. Couple this with incentives to sell off existing oil stock. Do non-countries need gold reserves? No, so why do they need oil? Leave oil reserves in the hands of countries, and keep the investors far, far away.

If after all this the price of oil is still high, we know that investor speculation is not a factor of it. At least then we will know point-blank with whom the blame lies, whether with the Saudis or whomever.

Also, oil is too vital to leave in the hands of profit seekers, who may be inclined to greed. Instead, oil management should be left to non-profits which, like the United States Postal Service, have only their own financial solvency in mind.

I think it quite likely our president has, in light of this palpable solution, a conflict of interest with those of the United States.