I filled up last night. Thank God my car takes regular because even that was $4.59.9 a gallon at the “discount” (laugh, nudge, guffaw) station. Mid range was almost $5.50 and high octane was almost $6.00. It’s probably going up as we speak.
This article from FT claims that the price of Brent crude understates the impact; partly because Brent was eased by releasing from strategic reserves and partly because the strait primarily serves gulf crudes.
How much mileage is left in that strategic reserves trick anyhow? I am under the impression the entirety of the reserve is measured in weeks of consumption, not months.
From what I understand, Biden released about half the Reserve and it wasn’t filled up later. So Trump is probably releasing everything left in the Reserve.
My understanding is that it won’t be released all at once, but rather spread out over several weeks. The same with the reserves released by other countries.
Different analysts have theorized that this releasing of strategic reserves really won’t help much to lower prices. I compare this to having a rain barrel, and you can use the water in it….but then there is a drought happening. The Strait of Hormuz is very important!
Funny how it matters who is in power when it comes to releasing oil from the Strategic Petroleum Reserve. Yes, it’s the NY Post, but in my opinion that makes it even more damning.
“It’s called the Strategic National Reserves, and it hasn’t been full for many decades. In fact, it’s been mostly empty. It’s supposed to only be used for large-scale emergency or conflict,” Trump continued.
“Now I see where Biden has just announced he’s going to take what we so carefully and magically built, and [sic] what will be a futile attempt to reduce oil and gasoline prices. They will soon bring it down to empty again. It just never ends!”
And now we see that Trump plans to stop sanctions on Iranian oil. Not all sanctions, just what is at sea right now. But still, that’s 140 million barrels of oil. So am I reading this correctly in that while the US is having trouble paying for its own war, it is bankrolling Iran here? Imagine the recreational outrage if Biden had loosened the sanctions! That’s 14 billion dollars (likely to be less but it could be up to that much so let’s use that number when we are angrily shouting from a soapbox) for missiles and terrorism and kicking puppies! Thanks Trump, what a wonderful gift!
Seriously, has there ever been a war where one side gave the other side billions of dollars during the conflict?
Diesel has now topped $5/gallon and gas is over $4 in my ID town (in nearby WA it’s roughly $6 and $5 respectively). A lot of folks around here have to drive a lot to get to work. I’m sure this is hitting them hard in the pocketbook.
Time to get some “I did that” Trump stickers to put on all the gas pumps.
Donald Trump will soon approach Congress with a bill for his Iran War of about $200 billion.
He has no offer of how he will pay this bill; he assumes the American people will just add it to our deficit. And after adding to our deficit, it goes onto the back burner. Republicans will continue fighting Republican wars. They will let Dems deal with it when they get back into power.
The Democratic Party should question this cost. Then they should demand an excise tax on US-produced petroleum of $10 per barrel. This will be to pay for Donald Trump’s war. They should request that it last for 6 months, then be eliminated. They should go through the bill with a fine comb, but this should be in addition to war-funding.
Right now, the US produces about 470 million barrels of oil per month. With prices at appx. $120 per barrel, the US will soon be producing about 500 million barrels per month. With a $10 surcharge per barrel, that will net the US about $10 billion per month on that surcharge. Over 6 months, it will be $60 billion towards the cost of the war. That would be $60 billion that will not be added to our deficit and $60 billion that the people of the United States will not have to pay some time in the future.
Republicans, who claim to be the party of “fiscal responsibility” will proclaim, “That’s absurd! This will just drive up the cost of gas more. And it is a scam by the Democrat Party to fleece Americans out of their hard-earned dollars!”
But here is the simple math: a month ago oil cost $70 per barrel; today it costs $110 per barrel. In a month it is expected to be $150 per barrel, or more. The only reason it has gone from $70 to $150 in two months is because Donald Trump and Benjamin Netanyahu decided they wanted to make a war on Iran and to close the Strait of Hormuz, through which 20% of all oil flows. US oil companies are reaping that windfall of a price that is $60 to $80 more per barrel without an increase in costs for oil produced in the United States.
0% of oil from the United States flows through the Strait of Hormuz, but 100% of US crude sells on world markets. So, because Netanyahu took his dog Trump for a walk to start a war with Iran, the cost of all oil has skyrocketed. And American oil companies are seeing extraordinary windfalls that will be netting their stockholders tremendous returns. For me, the cost of a gallon of gas has gone from $2.86 per gallon to $3.79 per gallon in four weeks.
Dolts on this Board will say: “You can’t tax oil companies.” “They’re just doing what the market calls for.” “A tax on the oil companies is regressive and will only hurt the consumer.”
“Fuck You!” I say.
Donald Trump chose to start a war that is benefiting oil producers extraordinarily. “Pay up!” I say!
Here here!
Right now I am very glad that my two main vehicles don’t rely oil. But, even if they didn’t, I could withstand the price increase. I’m hoping enough on the right get hurt enough to somehow open their eyes a bit to how DJT is not helping them and has no intention of doing so.
Here’s a thought - how far could that $200 billion go in terms of retrofitting US refineries to handle the heavy crude we produce and export, as opposed to protecting access to light crude we import - from largely reprehensible regimes?
Jimmy Carter passed a windfall profits tax following similar logic to that outlined by @candide. It’s hard to see something similar passed now, but that doesn’t mean that Elizabeth Warren et al shouldn’t propose an amendment.
The tax raised less revenue than anticipated, which underlines the need for careful planning or policy flexibility.
From a political standpoint, Warren and Democrats won’t want to touch oil prices. It’s better to put the entire blame for soaring prices on Trump and his policies.
The hope is that this generates enough blowback to allow the Democrats to take Congress in the midterms. Then the Democrats can take actions far stronger than just a tax on profits.
Sounds a lot like energy independence, which in my opinion is total bullshit. Oil is a global commodity and you pay the global price based on global supply and global demand. If the US somehow produced exactly enough of every grade of crude to meet domestic needs using domestic refineries, the price of crude would still be subject to the global market. US oil companies are not going to sell at $80 per barrel domestically when they can sell it abroad for $140. That mindset of having a closed society where we produce what we need for us and fuck everyone else just doesn’t work.
There’s a name for that by the way: Autarky. Generally connected with isolationism and poverty; North Korea is the most well known modern example of an attempt at autarky.
They might want to, given that there’s absolutely no chance of such a program passing this year. The dicey part is that Carter’s windfall profits tax (which actually was not a tax on windfall profits) wasn’t designed that well and ended up raising less revenue than anticipated. Democrats and liberals care about such things and those with an impressionistic view of policy will simply conclude that such efforts won’t work.
You could apply an oil export tax or a domestic extraction tax that kicks in for amounts above $120 per barrel. For example. But you would need to study this a little to calibrate things properly. Luckily, you can look at what Norway has done for guidance. They don’t engage in autarky, which yes is a bad thing.
I was working off the top of my head in this post. For a better view, visit Krugman’s substack. He has written sympathetically about Carter’s windfall profits tax, and also has noted that attempts at energy independence don’t work especially well given that oil trades in a global market. Except for those in the oil industry.
ETA: Communist Albania (1946-1987) is another classic example of autarky.
This afternoon, Valley Village, CA: D: 6.999, 87: 5.999 89:6.199 Pre:6.349
Can’t upload pic.
So Trump just announced that he’s postponing the bombing of nuclear power plants in Iran.
As a result (I guess), oil prices dropped 10% in the past 10 minutes.
Insider trading at it’s finest. That they believe him is a head scratcher.