The Oil Drum: Australia/New Zealand

Sarkozy: "La demande en produits pétroliers est de plus en plus forte et l'offre n'augmente pas ou très peu"

Sarkozy: "Demand for oil is stronger and stronger and supply is increasing very little, if at all"

When I heard him say this on the radio this morning, and continue by adding that we had to be aware that prices would continue to remain high, I was pleasantly surprised. But that did not last.

[UPDATE, Chris Vernon] Here's Gordon Brown's contribution to the debate.

This story is part of my new Countdown to $200 oil series, which is the successor of my earlier, and now terminated by reality, Countdown to $100 Oil series.

As in previous years, I got my ass whipped in my latest attempt to suggest on Daily Kos that gas taxes should be increased, despite the fact that the place is completly dominated by Obama fans and Obama's solid stance against the gas-tax holiday.. Some commenters kindly called me a "rich elitist f*ck from Europe" (guilty on all counts, of course) for wanting to bankrupt poor Americans who cannot do without gasoline, preferably cheap, and are already struggling mightily.....

Atrocious policies but devious politics from McCain:

McCain Proposes Break in Gas Taxes

PITTSBURGH (AP) — John McCain wants the federal government to free people from paying gasoline taxes this summer and ensure that college students can secure loans this fall, a pair of proposals aimed at stemming pain from the country's troubled economy.
(...)
To help people weather the downturn immediately, McCain was calling for Congress to institute a "gas-tax holiday" by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day. He also renewed his call for the United States to stop adding to the Strategic Petroleum Reserve and thus lessen to some extent the worldwide demand for oil.

Let me make the following bets...(under the fold...)

This isn’t an argument about whether or not taxes—particularly energy taxes—are “good” or “bad.” Rather, this essay has a narrow focus: IF we’re going to attempt to reduce gasoline demand through taxation, what is the best way to do it?

Here’s my somewhat counter-intuitive theory: to most effectively reduce long-term gasoline demand, gasoline taxes should increase, not decrease, long-term price volatility.

First, let’s look at European gasoline taxes. In the UK, gasoline tax is .50 GBP per liter plus 17% VAT ($3.75/gallon before VAT, $4.42/gallon with VAT). In Germany it’s .65 Euro per liter plus 19% VAT ($3.80 per gallon before VAT, $4.53/gallon with VAT). Compare that with US taxes, which range from a low of $0.26/gallon (Alaska) to a high of $0.63/gallon (California). The much higher European taxes operate to reduce price volatility because they remain static in the face of changes in the underlying price of gasoline. For example, if taxes effectively double the price of gasoline, then a 10% increase in the pre-tax gasoline price results in only a 5% increase in the after-tax price of gasoline paid by the consumer.

I made the following comment recently in a discussion on Global Warming:

If you put it to a popular vote, and people learned that GHG emissions could be arrested (hypothetically) if they were willing to pay $7/gallon of gasoline, what percentage would vote for that? My guess is that it would be well less than 20%, implying that GW concerns will give way to economic concerns.

At one time I was really worried about Global Warming. And at the risk of starting a Global Warming debate here (one that I don't wish to participate in), my position is that the scientific consensus backs the hypothesis that human activity is contributing to Global Warming. I am not an atmospheric scientist, so in this case I rely on the scientific consensus of the experts. This is the same standard I apply to other fields in which I lack expertise.

Apropos of yesterday's gas tax report and discussion, today we bring you Alan Drake's ideas on post-peak mitigation. Alan is an engineer, former accountant, and professional researcher based in New Orleans with best hopes for many. Alan would also like to thank the lovely and talented Wendi Berman for her editing skills and assistance.

Many proponents for public spending on Post-Peak Oil mitigation are attracted to gasoline and diesel taxes or more generic oil and/or carbon taxes. In an era of rapidly increasing oil (and all other energy) prices, passing such taxes will be politically difficult and take precious time.

I would like to propose an alternative tax for Phase I of Peak Oil mitigation that adheres to Sen. Russell Long’s famous dictum “Don’t tax you, don’t tax me, let’s tax that fellow behind the tree!”

World Trade Organization (WTO) rules allow for a specific exemption that will allow the United States of America to impose a non-discriminatory tariff (it applies to all goods and taxable services, with a specific exemption for essential goods) if the funds raised are used to reduce our structural trade deficit, i.e. our oil consumption.

Specifically, the WTO allows nations with a structural balance of trade deficit (which the USA certainly has) to apply a non-discriminatory tariff if the funds from that tariff are used to reduce the structural trade deficit (which reducing oil use certainly would do). A separate section of the WTO treaty allows the importing nation to exempt “essential” goods.

In 2006, the USA imported $1.861 trillion in goods (and exported $1.023 trillion). This allows for significant revenues from a small percent tariff.

The frame is, erm, interesting. ("It's not because we need to destroy demand, it's because we need to pay for the infrastructure to keep demand increasing.") But hey, it's a start. (Here's a link to the story.)

WASHINGTON (AP) - Federal gasoline taxes should be raised up to 40 cents per gallon over five years, a special commission urged Tuesday in calling for drastic changes to fix aging bridges and roads and reduce traffic deaths.

The two-year study by the National Surface Transportation Policy and Revenue Study Commission is the first to recommend broad changes after the devastating bridge collapse in Minneapolis last August. It warns that urgent action is needed to avoid future disasters.

Here's a link to the National Surface Transportation Policy and Revenue Study Commission, which has links to the entire report and some other interesting materials.

Rep. John Dingell has a long history of opposing fuel-economy increases and other "green" initiatives.  His position as defender of Detroit's remaining auto industry more or less forces him to support the production of whatever vehicles are still profitable there, regardless of what they do to US energy security, balance of trade or global climate.  For the last 20 years or more, this has meant large cars and personal trucks:  the "guzzler" segment.  Because of this, I was surprised and pleased to learn of a proposal from him for a carbon tax and a petroleum tax, to help move the US away from both fossil fuels in general and petroleum in particular.

Both emotions lasted about as long as it took to read the summary.  It does not appear to be a serious basis for initiatives to move away from fossil energy.  Instead, it looks like a straw-man proposal designed to fail, while appearing to promote the interests of union labor in the process.  My final appraisal is "disappointingly cynical".

What's the meltdown price for uranium?

Add another certainty to death and taxes: Barring some sort of nuclear catastrophe or an instant, massive influx of new supply, the price of uranium oxide is going to continue its shocking rise for now.

The question for the fissile metal's producers, and for investors seeking to cash in on the gains, is how high can it get before its key nuclear power plant consumers defer plans to add reactors, or try to cut consumption at existing plants, as they wait for much delayed new mine supplies to come on stream and bring the price back down?

Since bottoming out at just $7 (U.S.) a pound in December, 2001, the "yellowcake" spot price has climbed almost exponentially, hitting $40 a pound about a year ago and a startling $120 a pound last month. This means it is very close to shattering the record high of $43 it hit back in 1979, which, adjusted for inflation, is the equivalent of $122.42 today. Already, some producers are predicting it could rise to $250 some time next year.

A good bit of this story was originally posted on September 6, 2005, when the politicians first began talking about price gouging and windfall profits taxes after the price rise due to Katrina--and was put together by SuperG, Yankee, and one of our old contributors who was an industry "insider." Since we're back where we started, yet again (we also re-ran this post on April 25, 2006, I thought this post should resurface just one more time. (You can go back to the dated link above for the old comments.)

Oh, and one more thing, can I yet again state my call for a gas tax (that I know won't happen, but I need a catharsis), just one more time? I've been doing it for three years, why stop now? (even if some would argue that it could be a regressive tax). Cheers, PG.

There's been some grumbling in the media about how Big Oil is gouging the public by charging record prices for gas while they reap record profits and "gouge" consumers. No one can dispute that oil companies are doing really well. And certainly no one can dispute that gas prices are high. But is the connection as straightforward as it gets portrayed in the media? If the oil companies were less greedy, would we see lower prices as the pump? Find out below the fold...