Wednesday, May 7, 2008

Gas Tax Holiday, More gifts for us, Big Oil, or China?

At first it was just another distraction from real problems but it might help some so no real harm. No one will be against it and the issue will go away.

So now we have another issue of little consequence eating up time. Obama's statement that it would just give the oil companies more money and not help anyone i thought was just silly and now i realize that it is at least a serious distortion. Some pundit explained it and it made a little more sense. Supply and demand. You lower prices, 18 cents tax gone, demand goes up and prices go up eating up 6-8 cents of the price drop. I understand that. The question i have is does directly apply now. If gas was 21.18 would dropping it to 21.00 increase demand? Could it be mitigated by tying the cut to the price, .18 at $4, .17 at $3.90 and so on. That aside the effect is a 10-12 cent drop and the oil companies make 6-8 cents more. I will accept that that won't directly help most directly. The question is how much will it effect transport costs of the things we buy. Can it have a snowball effect down on prices like it when gas went up?

The flip side is were that tax won't be going. The logic would be to push some road construction projects off, tighten the belt and for goodness sake stop building bike paths, hiking trails and parks with transport funds. Make any sense? In all likelihood the money will just be borrowed from overseas with interest. China? More dept not really worth it. As with increasingly more ideas i don't trust D.C. to do it reasonably, so I am not for it.

Let's just fix the problem. The mass number of miracle cars we need aren't around the corner as much as i would like them to be so more oil for the time. Alaska and continental shelf drilling, close the Enron loophole, regulate speculators just a little, build refineries even if the government has to do it, and allow or encourage or have the government build coal liquification plants.