Re: Why we need to keep gas above $4

In article <0jkf84phqif5p4ho4inn8jm3rt0217p6p4@[EMAIL PROTECTED]
>,
 Captain Compassion <daranc@[EMAIL PROTECTED]
> wrote:

> Why we need to keep gas above $4
>
http://articles.moneycentral.msn.com/Investing/StrategyLab/Rnd17/P2/TheAmateur
> Journal20080722.aspx
> 
> A new gasoline tax that ensured high prices would accelerate the move
> toward fuel-efficient vehicles and provide enough revenue to allow a
> cut in cor****ate taxes.
> 
> On the surface, the market's behavior on certain days of June and July
> has been so illogical that my brain simply has refused to accept it.
> Double-digit intraday swings in prices of stocks without any material
> catalyst have become routine.
> 
> But last week's trading has finally explained what should have been
> clear for a while: Though current economic troubles may have started
> with lax credit and underwriting standards and the ensuing
> subprime-mortgage fiasco, they will likely continue or end based on
> the behavior of another, seemingly unrelated macroeconomic input: oil
> prices.
> 
> Forget the ****d short selling hype or the problems of Fannie Mae
> (FNM, news, msgs) and Freddie Mac (FRE, news, msgs). These are simply
> headline grabbers and symptoms of the U.S. economy's problems. 
> 
> The seemingly unstoppable rise of oil prices over the past several
> years has brought chaos and pain to so many sectors of the economy
> that even presumably conservative U.S. politicians have called for a
> gas tax "holiday" to give consumers short-term relief at the pump. 
> 
> However, the solution to our economic woes lies actually in the
> opposite direction: making sure prices for gasoline stay high long
> enough. Let me explain.
> 
> An addiction that can be broken 
> 
> Many economists have argued for years that even a doubling or tripling
> of oil prices would have little effect on demand because of that
> demand's inelasticity. U.S. consumers are supposedly so addicted to
> gas-guzzling trucks and SUVs that pretty much every politician and
> economist out there has ridiculed suggestions that demand could
> decline.
> 
> One might argue that this notion was sup****ted by hard data. Even when
> oil prices doubled and tripled from their multiyear lows of the early
> 2000s, the growth in demand did not really slow. But contrary to the
> conventional beliefs, the "unthinkable" finally happened this year:
> Sales of cars overtook truck and SUV sales, and gasoline demand
> faltered.
> 
> According to the data from the Energy Information Administration,
> gasoline demand in the U.S. has been running consistently below last
> year's levels. Though it is difficult to pinpoint the exact price
> level that triggered this seismic change, the demand for the
> supposedly inelastic product started to decline somewhere around $4 a
> gallon. 
> 
> One might say it wasn't just the price at the pump but rather
> combination of several economic woes that has led consumers to cut
> back. I agree, but only to a point. I don't think it was by accident
> that the sectors that have declined the most recently -- auto
> manufacturers, airlines, convenience stores, casinos, hotels, car
> rental companies, restaurants, etc. -- have one ingredient in common:
> They are particularly affected by high energy prices.

In order to agree or disagree, one must first establish whether or not 
oil based fuels are "good" or "bad."

Only the free market has the bona fides to decide that issue, of course.

Not just a "tax holiday" is called for, but rather a permanent 
elimination of excise taxes on fuel.

-- 
NeoLibertarian

http://www.elihu.envy.nu/NeoPics/UncleHood.jpg