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Would this strategy work to lower gas prices?

J

JS80

Lifer
So OPEC is basically a monopoly and they figured out they can cut supply to increase oil prices. Since demand is fairly inelastic, oil prices indeed go up as supplies are cut. The only way to counter this is to lower the demand. So would this strategy work:

Tell OPEC that yes, you can control the supply, but we (the US, largest consumer of oil) can indeed control demand. The first way of doing this would be to beg Americans to stop buying gas. This obviously does not work. So what we do is beg Americans to lower their gas demand through grassroots campaigns (encourage public transportation and carpooling - both of which we do not nearly push hard enough) AND at the same time impose an extraordinary tax on gasoline. I'm talking eurotrash style 100% tax.

This would cause a hurtful pain in the short-term for many Americans. However, I feel we have the resources to absorb it. But if this reduces demand significantly, this will shock the world oil futures market (which is a fvcking ponzi scheme to begin with - futures contract values are larger than actual supply of oil :roll: ) and futures prices would start to fall.

When this happens, remove the extra tax. Oil prices would not rebound to previous levels as demand becomes normalized because traders will realize that the US has the power to significantly control demand. I suggest this because oil prices went up just because OPEC was formed and had the threat of decreasing supply. In the same logic, if we have the power to threaten the decreasing of demand, oil prices will not go up/prices will go down.
 
The people that would vote yes on such things would summarily fire themselves in the next election. And that would be the first thing to be changed by the new regime that comes in.
 
I just say we take a hint from Brazil and throw some investment dollars into using sugar cane for ethanol production instead of buying farers votes and getting less out of grains.

We cut down on demand as well as getting our fuels from a much more renewable resource than oil.

Win/Win.
 
Your logic is based on an incorrect assumption. OPEC does not control the supply and they aren't a monopoly. In the last few years, OPEC has said to supply as much oil as possible. That means they haven't done a thing to control supply in years. They are stuck on maximum open. It is like they floored the accelerator and it jammed in the floored position. They simply are not in control of oil supply today.
 
what do you think about increasing the supply?

if the greenies get out of the way, the US can increase oil production (ANWR and off shore CA/FL) and increase gasoline production with more refineries

plus new technology can be used to get oil/oil products from non-traditional sources, like shale and coal, etc
 
like the tax would ever go away.



anyway, the demand for gas is very elastic, as we learned from the oil shocks. it's inelastic short term, but as price goes up people buy more efficient cars and don't drive as much.
 
Originally posted by: dullard
In the last few years, OPEC has said to supply as much oil as possible. That means they haven't done a thing to control supply in years. They are stuck on maximum open.
Click to expand...

:thumbsup:

they are making so much money, they want to increase production/keep production at maximum to get large $$$ to build cool malls and hotels and fund terrorism, etc
 
The greatest threat the US poses to OPEC is the development of alternative fuels and conservation. Two things that high gas prices are accelerating. There is so much research going into alternate fuels and conservtion right now that there is no way to stop it, even if oil prices fall considerably. People are TIRED of being reliant on nutjobs in the ME for energy. The longer OPEC keeps oil prices artificially high (along with the trading idiots) the more it hurt the oil producers over the long run.
 
Originally posted by: FoBoT
what do you think about increasing the supply?

if the greenies get out of the way, the US can increase oil production (ANWR and off shore CA/FL) and increase gasoline production with more refineries

plus new technology can be used to get oil/oil products from non-traditional sources, like shale and coal, etc
Click to expand...

Amen! Start drilling around Alaska and Florida. Hell, China is already drilling just outside U.S. waters off Florida. Reduce dependence on foreign oil so we don't have to keep butting in when those wacky Iraqis get outta control.
 
Wait.

Instead of taxing the fuel, why not just not subsidize it? I heard fuel in the US was subsidized.

Am I wrong?

edit: I would also like to mention that I have only read the article up to the point of "eurostyle 100% tax"

edit 2: finished reading the article. Yes, you could get every American to use public transport, but the mor important question is: What public transport? Quite frankly, the public transport infrastructure in most American cities sucks, at least compared to European standards. Instead of spending such a massive amount on the military, may the government should start investing into public transport.

/me dons flamesuit.
 
Originally posted by: logic1485
Wait.

Instead of taxing the fuel, why not just not subsidize it? I heard fuel in the US was subsidized.

Am I wrong?
Click to expand...

it depends on how you look at it

oil companies have gotten tax breaks/incentives to do more exploration and research, some people call that "subsidizing big oil". it depends on what your agenda is
 
Originally posted by: logic1485
Wait.

Instead of taxing the fuel, why not just not subsidize it? I heard fuel in the US was subsidized.

Am I wrong?

edit: I would also like to mention that I have only read the article up to the point of "eurostyle 100% tax"

edit 2: finished reading the article. Yes, you could get every American to use public transport, but the mor important question is: What public transport? Quite frankly, the public transport infrastructure in most American cities sucks, at least compared to European standards. Instead of spending such a massive amount on the military, may the government should start investing into public transport.

/me dons flamesuit.
Click to expand...

Subsidizing gas would only encourage people to use more. We need to encourage people to use less if we want to force prices to drop. Raising the gas tax and lowering other taxes while keeping spending stable or decreasing spending is one way to do that, but people won't go for it.
 
I don't care about offshore drilling as long as we don't run into their rigs. :laugh:

Just how much product do they expect from ANWR?
 
several things.

the whole anwar thing, drilling there would yield little to no impact on the fule prices in this country. Its just a smoke screen to get the oil comps more money.

There are dramatic differences between why euros can have the high taxes and why it would destroy the economy of this country. Thier cities/countires cover much less space than US one sdo, and by and large have very well set up public train/subway systems. 99% of this country does not. And almst no way to travel across the country. You might have bus routs, but get real. You would never, ever convince most people to ride a bus. While the 'raise the gas tax would cut comsumption' line gets thrown around alot, and it would cut consumption, it would also have steep economic impacts. Nearly all goods are delivered by truck, and when you increase the fuel prices you increase the cost of goods to the consumer, on every product from food to cars. This gets a double impact from the cost increase.

The most economical way to cut consumtpion is to find an alternate fuel method for cars and phase those ina s people buy new ones. The cost of building a public transportation system across the whole nation would run into the billions of dollars. More refineries built right now would make the fastest impact on prices, we have a severe lack of refining ability at the moment, but you wont see oil companies build more, as they are perfectly happy with the higher prices as it means they get to pocket more money.
 
Yes, in America the profit on gasoline is subsidized. This subsidy does not make gasoline cheaper, it makes selling gasoline more profitable.

That is also what would happen if ANWAR is developed, or if off-shore drilling is increased. The price consumers pay for gasoline will be unaffected, but oil companies, and politicians, will be richer.

And we take great risk of despoiling the Earth, which is pretty stupid since we are part of the Earth.
 
Originally posted by: MS Dawn
I don't care about offshore drilling as long as we don't run into their rigs. :laugh:

Just how much product do they expect from ANWR?
Click to expand...

Supposedly about 10 billion barrels in reserves, with a peak production level of around 800,000 barrels per day.
 
I've read several times, (but don't have the links) that most of the oil from Alaska is already beeing shipped to Japan and China, rather than being shipped to us for our consumption, so why would drilling the AWNR make any difference in our prices? It would be interesting to find out just how much of that oil IS being brought to the US for our use, and how much is sold elsewhere...

This link from 2000, says only 7% goes to the orient:
http://www.ncseonline.org/NLE/CRSreports/natural/nrgen-25.cfm

This link from 2005 discusses the issue, and says that AWNR oil COULD be exported:
http://seattletimes.nwsource.com/html/localnews/2002245699_export17m.html

In fact, MANY links I'm seeing say that much of the AWNR oil could end up going to China or other countries, instead of the US:
http://www.news-miner.com/Stories/0,1413,113~7244~3099175,00.html

http://www.sierraclub.org/arctic/justthefacts/crudebehavior.asp

http://www.arcticwildlife.org/oil10myths.htm

http://defazio.house.gov/031600EGRelease.htm

http://www.ens-newswire.com/ens/mar2005/2005-03-17-10.asp
 
Originally posted by: dullard
Your logic is based on an incorrect assumption. OPEC does not control the supply and they aren't a monopoly. In the last few years, OPEC has said to supply as much oil as possible. That means they haven't done a thing to control supply in years. They are stuck on maximum open. It is like they floored the accelerator and it jammed in the floored position. They simply are not in control of oil supply today.
Click to expand...

:thumbsup:
 
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