Wednesday, August 18, 2004
Bush Tax Cuts Have Been Erased
High Oil Prices Erase Effects of Bush Tax Cuts
You've heard Elephant say it before, but high oil prices are a danger to Bush's reelection. Current oil prices are fast approaching $50 a barrell and a good chunk of that price is a risk premium the markets have added due to instability in Iraq and Saudi Arabia. Do the math, the current high prices are costing the economy roughly $300 million a day. So, that money we got from the tax cuts is actually flowing out of the country. As EOTE reader "B" working the oil fields in Canada knows, it's salad days for oil exporters.
Great story on CNN.com, money quote
"The U.S. uses 20 million barrels of oil a day. Prices are currently inflated by about $15 a barrel, and that additional cost is effectively a $300 million dollar-a-day tax on Americans, eating away at disposable income for people in this country," said Gheit, adding that no tax break would be able to offset an amount that large.
http://money.cnn.com/2004/08/18/markets/oil/index.htm
If you remember, Bush's father used the strategic petroleum reserve as leverage during the first Gulf War. His administration released oil to temper the markets as the invasion of Kuait began. As a result, oil prices collapsed shortly after the war to around $10/bbl and stayed low through most of the 1990s. In fact, the Economist magazine even ran a cover predicting (wrongly) that oil would fall to $5/bbl.
Bush talks a good game on leadership, and made a tough (and in my opinion wrong) decision to pre-emptively attack Iraq. But the lack of planning and the botched post war planning is making us pay a price. His father got it, Bush doesn't seem to get it. He needs to if he wants another four years.
You've heard Elephant say it before, but high oil prices are a danger to Bush's reelection. Current oil prices are fast approaching $50 a barrell and a good chunk of that price is a risk premium the markets have added due to instability in Iraq and Saudi Arabia. Do the math, the current high prices are costing the economy roughly $300 million a day. So, that money we got from the tax cuts is actually flowing out of the country. As EOTE reader "B" working the oil fields in Canada knows, it's salad days for oil exporters.
Great story on CNN.com, money quote
"The U.S. uses 20 million barrels of oil a day. Prices are currently inflated by about $15 a barrel, and that additional cost is effectively a $300 million dollar-a-day tax on Americans, eating away at disposable income for people in this country," said Gheit, adding that no tax break would be able to offset an amount that large.
http://money.cnn.com/2004/08/18/markets/oil/index.htm
If you remember, Bush's father used the strategic petroleum reserve as leverage during the first Gulf War. His administration released oil to temper the markets as the invasion of Kuait began. As a result, oil prices collapsed shortly after the war to around $10/bbl and stayed low through most of the 1990s. In fact, the Economist magazine even ran a cover predicting (wrongly) that oil would fall to $5/bbl.
Bush talks a good game on leadership, and made a tough (and in my opinion wrong) decision to pre-emptively attack Iraq. But the lack of planning and the botched post war planning is making us pay a price. His father got it, Bush doesn't seem to get it. He needs to if he wants another four years.
Comments:
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Well, it's certainly a double edged sword, these high oil prices. We're enjoying the short term benefits here in Alberta: Paying off the debt, showing a huge budget surplus, high employment, etc. Who knows, our provincial government may even start putting money back into infrastructure, education and health care.
But in the longer term these prices are going to hurt big time. We're going to be feeling the pain of higher costs in every sector: manufacturing, transportation, tourism, etc.
So here's a question for you: No doubt the higher oil prices are going to slow down the economy. But this is a worldwide issue (more specifically the highly industrialized countries), not just the US and Canada. Given that, will the effects of high energy costs be that detrimental in the long run? Or will it spur on the development of more efficient technologies and alternate energy sources? And maybe get a few SUVs off the streets?
B
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But in the longer term these prices are going to hurt big time. We're going to be feeling the pain of higher costs in every sector: manufacturing, transportation, tourism, etc.
So here's a question for you: No doubt the higher oil prices are going to slow down the economy. But this is a worldwide issue (more specifically the highly industrialized countries), not just the US and Canada. Given that, will the effects of high energy costs be that detrimental in the long run? Or will it spur on the development of more efficient technologies and alternate energy sources? And maybe get a few SUVs off the streets?
B
# posted by 
: 11:32 AM
: 11:32 AM << Home
