Thursday, May 15, 2008

#122 - Congess Hoarding Oil?

Hey Guys,

As you know I try to keep up with whats going on, and today I find out congress has recently voted on a resolution to stop hoarding oil... then my jaw dropped. This means this whole time the government has been using our tax dollars hoarding oil manipulating the oil supply, effecting the prices. So we can pay our taxes so they can raise prices, and then pay more taxes on the higher price.

Are you starting to see why I have a problem with government intervention in the supply and demand of resources.

Now they keep talking about the benefit of a tax holiday, how about getting rid of the tax altogether? How about we stop using our tax dollars to have our troops protect oil drilling around the world so these oil companies don't have to pay for their own security? How about we stop subsidizing corn which detracts R&D dollars from more viable alternative fuels and pushes food prices up?

Worried about Fuel Prices? Then stop asking how the government can help, and start asking how you can get them out your business so nature can takes it's course.

What does that mean?

Oil Prices rising at a natural rate due to NORMAL market pressures (not those created by government manipulation) will force the development and wide scale of adoption of alternative transportation and fuels.

This is nature and the free market at work, a TRULY free market is nature at work.



I'm not sure if "hoarding" is the proper term. The US created the strategic petroleum reserve in the aftermath of the 1973 oil embargo. Its purpose is to soften future short term supply disruptions. In other words, it's a temporary resource in case of an emergency. If we stop contributing to it (about 175,000 barrels per day), the per gallon price may fall by around 4 cents.

I'm not saying you're wrong; I just think it's not something to get excited about.

Since you seem interested in economics in general (specifically, if you want to see why the gas tax holiday is misleading, visit my blog):

Alex Merced said...

I agree this is not a major contributor to gas prices, it still just seems like an inappropriate use of tax dollars despite intention.