On Tuesday, September 12, 2000 8:30 AM Michael S. Lorrey
retroman@turbont.net wrote:
> > But don't you think a more efficient method of get cheap energy would be
to
> > increase oil drilling, especially outside OPEC controlled areas? Also,
> > fomenting rebellion within OPEC might be another solution. I'm not
calling
> > for military action...
>
> The current spike in prices is not due to the suppliers, but due to the
> increases in taxation and environmental mandates adding to the cost of
fuel.
> Here in the US, most all the spike in the last year is a result of the
> introduction of new rules by the EPA regarding additives and processes for
> refineries. The fact that production has increased by 2 million barrels a
day
> over the last four months with no change in prices indicates that its not
a
> matter of supply, unless this is a result of some european countries
> deactivating nuclear plants, with the electric demand being satisfied by
new
> fossil fuel burning plants.
I don't think you are wrong here, but you seem not to be completely correct.
After all, the price did rise after oil prices rose. Some of the taxes on
fuel here and abroad are also percentage based, so they fluctuate with the
prices, making it far worse when prices rise fast. Fuel taxes here, while
lower than most of the world, are still a significant piece of the total
price anyhow and this is not new. Federal and State taxes on gasoline,
e.g., have been around for decades.
Now, one area where you are very correct is that new regulations on refining
processes and other environmental legislation has culled the oil refining
capacity in the US. This means that an increase in production takes time to
find its way to the consumer, especially since the over a decade stable low
price of oil sort of made everyone complacent, including regulators. (Much
as I despise regulators and their superiors, I don't think they intended to
whack the prices up so high. I might be wrong here...)
That said, I still think breaking up OPEC or otherwise creating dissension
in its ranks would lead to greater supply and lower prices -- all other
things being equal, of course.:)
Cheers!
Daniel Ust
http://uweb.superlink.net/neptune/
This archive was generated by hypermail 2b29 : Mon Oct 02 2000 - 17:37:47 MDT