An energy policy is not just about lower fuel costs. It is about making America energy independent. Independent from treacherous sources. It is about saving American blood and American treasure.

It is about balancing the trade deficit and thus strengthening the dollar. It is about defeating terrorism at its roots instead of sending our soldiers to face a brutal enemy. It is about freeing ourselves from old fears and embracing new 5th generation technologies to safely and efficiently provide American energy to warm our homes and to keep the lights on in America.

It will not be an easy road. The agents of fear have deeply infected our national psyche. We must raise our eyes to a brighter future and step in that direction.

In many OPEC nations the cost of oil to the state is free. The exploration and development costs were done by western counties long ago and nationalized by the host nation. Cost is not a factor. The price of oil is determined on the free market.

Restated: the cost of oil/gas at the well head has nothing to do with the price of gas at the pump! Again, the cost of oil/gas has does not affect the price of gas at the pump.

Conversely, the amount of gas people buy drives the price. The economic term is "demand driven pricing". Even if Big Oil was losing a dollar a gallon or making an extra dollar a gallon, the price would be the same because they have to sell or store. Once the tanks fill, they have lower the price to where "oil in" equals "oil out".

Big Oil (Exxon Mobil, ConocoPhillips Co., Shell Oil Co., Chevron and BP) distribute oil/gas. The amount gas Big Oil has to distribute is fixed in the short run (long term covered later). Flow from the well head, pipeline capacity, shipping capacity and refinery services all have contracts with the Big Oil that must be paid even if oil/gas is not flowing. The oil/gas is moving through the pipeline constantly. It has to be either sold or stored. If Big Oil charges too much, less gas will be sold, their storage tanks will begin to fill.

If the price is too low, Americans buy more gas than is coming down the pipeline, they will soon face panic-causing shortages.

To avoid those gut wrenching “out of gas” signs hand written on the bottom of a Frito box, Big Oil has to raise its prices to slow demand. People buy less at $4.25/gal that at $4.00/gal. This price increase causes profits to soar. Soon congress is talking nationalization.

Suppose, 150 million gallons/day are in the pipeline. The average price is $4.00/gallon. If Americans start buying 160 million gallons/day, Big Oil sees a shortage in the very near future. They raise the price to say $4.25, Americans buy less. The shortage is avoided. Big Oil profits soar. Congress starts talking nationalization.

Suppose, as Hillary and McCain suggested that the feds remove their 13.5 cent tax. The drivers are going to by more gas (say a 155 million gallons a day) at the new lower price of $411.5. Big Oil is going to have to move the price up to $4.25 to avoid a shortage. Congress is going to talk about  indicting Big Oil for "stealing the tax break".

Suppose America puts an a $.25 tax on at the pump. The shortage would still be avoided. The oil companies profits wouldn’t soar. The money could be used to reduce the burden on American tax payers (Right!). A good idea but we can do better!

Suppose that America went to the Group of Eight(G-8: Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the US) countries that control 65% of the worlds GNP. Suppose America presented a plan to place a tariff of $2.40 on each gallon of OPEC oil (controls 65% of the world's oil) to be implemented at 10 cents a month over the next two years. Suppose this plan passed.

That is less than the increases that we are now experiencing.  We could use our increasing share of oil revenue to reduce income taxes or save social security. Because the tariff is on foreign oil, the US and G-8 oil will be now be more valuable. Exploration incentives would increase.

America would also announce that the US was going to safely and efficiently bring all its energy resources to market: including ANWR, the Florida offshore deposits and the midwest shale oil.

Also America would announce that we are building 8 regional nuclear power plants with the capacity to convert water to hydrogen and oxygen. Hydrogen is one of our best bet for a safe clean engine in the future. We are way behind Europe on nuclear power plants. France gets 78% of its electrical energy from clean efficient 4th generation plants. We will build 5th generation plants.

It is counter-intuitive but putting rising tariffs on OPEC oil may lead to a decrease in the price of oil! Oil sold this month will have a smaller tariff than oil sold next month, this would be incentive sell this month.

As the tarrifs reach deeper and deeper into OPEC’s pockets, it may have to sell more oil to keep the sheikhs and princes in the lifestyle to which they have become accustomed.

As they see America and other G-8 countries drilling to bring more untaxed oil onto the market, they will realize that their oil will be worth less in the future. Future increases production means future increases in supply, driving the price down. Maybe at $.10/month. Maybe more. Previously we were talking short term, this measure puts addresses the long term availability.

Can you imagine: increasing tarrifs, making the price of oil go down, taking money out of OPEC pockets, putting it in ours, think about it.

This is a big idea. A big Reagan-sized idea! This is as big as defeating the Soviet Union. This takes vision and courage. It is not about just lowering gas prices. It is about the dollar getting real respect. It is about the trade deficit dropping like a rock. It is about defeating terrorism by draining its source of funding. It is about America tackling the real problem of safe clean energy to replace oil from a position of strength. It is about America assuming is position as the world leader, as once again becoming the shining city on the hill.

I like this idea.
It has more advantages, some which have not even been mentioned.  Just the impact on the futures market would be a good start. The big question is how do we get the morons on the hill to stop pointing fingers at each other long enough to even think this through. Then there is also the question about all the members of Congress that really don’t want us to be energy independent. It would interfere with their Cap and Trade moneymaking schemes. Then there are the Man Made Global Warming crowds. They really really don’t want us to be energy dependant, which has nothing to do with protecting the environment, but protecting the march towards Communism.
The big question then is there a way we can back enough of people that would try to block this into a tight enough corner they would have no other choice to but to go for it?


More discussion on this would be welcome.

watcher wrote:I like this idea.
It has more advantages, some which have not even been mentioned. Just the impact on the futures market would be a good start. The big question is how do we get the morons on the hill to stop pointing fingers at each other long enough to even think this through. Then there is also the question about all the members of Congress that really don’t want us to be energy independent. It would interfere with their Cap and Trade moneymaking schemes. Then there are the Man Made Global Warming crowds. They really really don’t want us to be energy dependant, which has nothing to do with protecting the environment, but protecting the march towards Communism.
The big question then is there a way we can back enough of people that would try to block this into a tight enough corner they would have no other choice to but to go for it?


More discussion on this would be welcome.

Exactly. This is about power. Who will have it, and how much. The Democrat Party agenda, regardless of what BHO says, has remained consistent for decades. Tax, tax, tax. And, make as many as possible dependent on government for survival. The Marxists, of both parties, see the latest energy debacle as a means to grab more power over their constituents. Fixing the problem, any problem for that matter, is the farthest thing from their minds.

Just like the last energy crisis, this country faced, a free market solution is the answer. Not government.

Drill here! Drill now!

oneamerican wrote:   The price of oil is determined on the free market.

Some of your words have merit; however, Russia would never go along with your tariff.  So, ok..G7.  Now, the G-7 all put a tariff on OPEC oil, but Russia doesn't.  Will that bring the price of oil down at the US gas pump?  Hardly.  You said:   The price of oil is determined on the free market.   What it will do will cause an ever larger decline in our gasoline supply bringing the price up even more.  Countries like China, India, Russia and a slew of others will be getting more because OPEC will profit more by selling to suppliers who are not bound to the G7 tariff.

Supply does have an impact.  If we announced today that we are going after our own oil, OPEC would increase supply dropping the price pretty quick.  The last thing they want is for us to harvest our own product.

The probability that crude oil prices would increase with a tariff is correct. The question would be how much?
We have the basic problem of the cost of oil is crippling us. The price is becoming beyond reach for even Middle America.  Middle America pays most of the taxes, not the highest percentage but we are the largest group of taxpayers. We cannot afford government to raise our taxes to look for an alternative source that may pan out sometime in the future. We need our taxes going into something that we know works now.
Considering how much we import even a small tariff would bring huge amounts into an energy fund. If we put that money directly into a nuclear power plant we could start decreasing our needed amount of oil as soon as it came on line. Right now our government charges money for ‘leases’ on a set amount of land to oil companies to explore for oil. Mind you, they are not drilling for it, just looking for possible future places. If we gave our own American Oil companies a break on the amount of those leases in return for absorbing a portion of any increase that happen due to a tariff we may be able to have our cake and eat it to. Mexico and Canada as well as some of the other countries we buy from import other goods other than oil. There could be potential problems with that but I am not sure how much or how bad. Some of the Arab nations that import oil could continue to raise prices in protest of a tariff but as soon as they see this country is actually doing something other than arguing about what they are going to do they may be just a little concerned and just except it.  What else do they have to export? SAND!

Figures on how much we import and from whom by
Energy Information Administration of US Government.
http://www.eia.doe.gov/
Page: with imports figures http://www.eia.doe.gov/pub/oil_gas/petr ... mport.html

There was a report made by the International Association for Energy Economics back in 1988 about the tariff idea. www.iaee.org/doucumens/vol_9(3).pdf.

Some of the inherent problems with tariffs are they are not popular in other countries especially the ones that are affected and go against the basic rule of this counties Free Market policy.  They have been tired before, the latest with the steel industry, and caused major havoc with other products that we imported beside steel. In the end we had to lift the tariff on steel and we lost a huge industry anyway. The death of American steel did not happen just because of tariffs.  The industry was fraught with years of mismanagement, non re-investment back into the modernization of the production line, poor quality product especially wire rope and constant labor and union problems. Foreign steel was able to overtake US steel in many different ways. Some say greed of the owners, others say greed of the unions caused the eventual breakdown and shutdown of steel.

Steel is not oil and its now 2008. I do not in any way shape or form have the qualifications to make any determination on tariffs. Our government does.
The morons on the hill can summon people that do. I still like the idea, if not for the actual use of a tariff but for the pure simple fact it is an idea.

bedbug wrote:

watcher wrote:The Democrat Party agenda, regardless of what BHO says, has remained consistent for decades. Tax, tax, tax. And, make as many as possible dependent on government for survival...
Just like the last energy crisis, this country faced, a free market solution is the answer.  

Drill here! Drill now!

Exactly.  The Democrats want to increase the cost of energy to the point where no one but the rich can afford to drive or have air conditioning and everyone must ride their bike to work or take a bus.  It is rather humorous that the Chinese are so excited to throw out those bikes and buy cars but the democrats want us all to ride inefficient public transportation and be dependent on Big Government for our livelihood.  They have no concept of economics or finance.  So frustrating.

http://www.beyondthemargin.net/2008/06/alternative-energy-panacea-or-placebo.html