June 14, 2008

OMG, the R word!

No, not 'recession'.


Gasoline rationing and small car loan subsidies are measures intended to bring oil consumption for private transportation under predictable control and to encourage drivers to adopt small private vehicles. Gasoline rationing has been viewed as a last resort, but it is an essential step toward reducing oil consumption in a planned way while giving everyone an equal shot at gasoline regardless of her or his income.

A planned, progressive cutback in U.S. petroleum consumption through gasoline rationing could bring an immediate moderation in world oil prices.

Gasoline rationing would also be a major step in reducing exhaust gases that are causing global warming.

Two years ago Harvard economist Martin Feldstein proposed gasoline rationing as an equitable way to cut gasoline consumption. His plan is similar to that of the Standby Gasoline Rationing Plan drafted by the U.S. Department of Energy exactly 28 years ago, in June 1980, to address the threat of oil shortages. Putting gasoline rationing into effect, the plan says, would be costly and complex, but "options have been incorporated into the plan to provide, to the maximum extent practical, equity among gasoline users throughout the nation and to provide flexibility to minimize disparities among states."

This is almost as stupid as that assweavil McCain's dipshit idea to drop the gas tax, because it's worked everytime...

Instead, Douglas Holtz-Eakin, McCain's chief economic adviser, told McClatchy that a "holiday from the 18.4 cent per gallon federal gasoline tax has lowered prices every time it's been tried "and it is felt all through the economy."

It works, as long as you're goal is drive oil company profits up and create a black market with it's requisite crime. In point of fact, Dougie, it's never worked. Some economics advisor YOU turned out to be.

But, boys and girls, before you lose all hope and decide the world has gone full tilt crazy, there's a glimmer of hope and reason.

Perhaps the quickest action, the experts said, would be ordering curbs on financial speculation. Financial industry heavyweights have acknowledged in recent testimony before Congress that such speculation is driving oil prices higher.

Pension funds, endowments and other big institutional investors are pumping big money into index funds linked to commodities, including oil, driving up demand — and prices. The popular Goldman Sachs Commodities Index attracted $260 billion in investment last year, compared to $13 billion five years earlier.

Complicating any effort to harness that, about 30 percent of the trading in crude oil is done in "dark areas" — markets in London and Dubai — that aren't regulated by the U.S. Commodity Futures Trading Commission (CFTC).

President Bush could order the CFTC to regulate U.S. investments in those markets with a snap of his fingers, said Michael Greenberger, a law professor at the University of Maryland and a former director of trading for the CFTC.

"Essentially this could be ended this afternoon if the Bush administration had the stomach to do it," he said. "Those abdications of responsibility and allowing these exchanges to trade in 'dark' markets ... provides an environment for speculators to thrive."

The CFTC is investigating the link between speculation and oil prices but hasn't scheduled any action.

And there you have it, take out the speculation and there's the end. I, personally, think it's much easier. Take up taxes on capital gains made in energy or energy related trading to 75% and watch as people stop dumping money into the commodities markets. But either way, really, would alleviate the situation rapidly.

Posted by mcblogger at June 14, 2008 02:37 PM

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