OPEC's Production Cuts: Balderdash

• Report this Comment On October 24, 2008, at 6:29 PM, sangjmoon wrote:

  I predicted the oil bubble popping back in April. The funny thing about OPEC cutting oil production is that it has never been successful at enforcing it. Member nations pump as much oil as the market wants. Any cut in production usually is a result of market forces rather than anything OPEC has done. However, they were good at affecting the psychology aspect affecting oil prices in the 1970s. Now, the cat is pretty much out of the bag, and OPEC no longer has the impact it used to. What will be very interesting to see is how the lower oil prices affects Venezuela. Chavez has been increasing his military and welfare programs, and with oil at the price it is now, he isn't able to afford the increased recurring costs of his spending splurge let alone his attempts to spread his influence through his external spending. As for what will be the next bubble to pop, that will be the gold bubble, and after that it will be the economic armageddon as he bulk of the baby boomers retire driving government spending through the roof through Medicare/Medicaid and Social Security. That will make the current economic problems look like a sunny day.

  There is concern that the drop in oil price will stagnate the push for alternative fuels. This is ok. The government should get out of the business of affecting demand for alternative fuels. The mandated quotas and subsidies for ethanol only spiraled food prices through the roof showing again why government shouldn't do things like this. What the government should be doing is only funding research and development of alternative fuels and leaving supply and demand to the market.

• Report this Comment On October 25, 2008, at 11:57 AM, Brettze wrote:

  people looking for profits from alternate energy programs should forget about profits.. They will never come, but there is an intangible profit that can be made on alternate energy programs.. The intangible profit will come in form of suppressed fossil fuel prices as a result of the substitute sources that will come from alternate energy programs... Capitalists wont touch alternate energy programs, but socialists can do well to levy a tax on fossil fuel to pay for alternate energy programs that can grow at a pace to replace an equivalent of one million barrels of fossil fuel daily per year. This tax will suppress fossil fuel prices and will pay for itself.. Since nobody will be volunteering to come with capital for alternate energy programs, it is simply logic to use tax on fossil fuel in order to suppress consumption and price. It is not an artificial ideal liberal thing, but it really depends on the management abilities of the government to carry it out successfully. Bureaucrats may not be as interested in suppressing fossil fuel prices as consumers do. Maybe we can assign this task to the military..since fossil fuels are the centerpiece of historic battles!!

• Report this Comment On October 25, 2008, at 12:02 PM, Brettze wrote:

  If we increase fossil fuel consumption than anticipated, we can raise the tax levy on fossil fuel accordingly . This way we can afford to expand altenrate energy programs faster on annual basis as needed. If we slow fossil fuel consumption growht, we can lower the tax levy. We can allow reasonable inflation adjustment on fossil fuel prices much similar to our utility commissions...Big Oil and Big Coal will have to answer to a new layer of bureaucratic commission dealing on fossil fuel prices much similiar to kilowatt hour prices..

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