Oil Windfall Tax: A Good Idea

Reuters: Obama backs oil profits tax

Background
After gas prices skyrocketed pass $4 last week, and as they continue to head up this week, some may have been hoping for a quick fix in the style of the (completely useless) economic stimulus some weeks ago. In response to those concerns today, Obama pledged to raise taxes on windfall oil profits if elected. This position would be politically unsustainable for the simple reason that nobody wants new taxes in a time of an economic downturn, so Obama appended to his position that he would "use the money to help families pay for their skyrocketing energy costs and other bills."

Several weeks ago, a bill was blocked by Republican opposition that would have repealed tax cuts for oil companies and instead used the 10-billion-something-dollars to pay for tax rebates for renewable energy.

A good idea
If the plan Obama has proposed was enacted in coordination with the repeal of tax cuts, it would be a good move for the economy of the U.S., our long term safety, and our long term economic outlook. The windfall tax profit would have help boost the economy through its profits, but, as well, would raise gas prices, as would the repeal of tax cuts. Though that may damage the economy in the short run, in the long run, it would save much time in effort. First, if gas prices were higher, hybrids, all electric cars, and renewable energy would look much more attractive to the average consumer. Second, if some of the pain of fighting global warming is felt now, it won’t be felt later, when it could come in a large burst after the approval of a cap and trade program.

Gas Prices Too High for Old Pumps

U.S. (TGW) – Some U.S. gas stations with older pumps say their pump’s prices can’t go high enough for current gas prices past $4 a gallon.

Though most stations have computerized digital gas pumps, older mechanical pumps can only handle prices up to $3.99.

One side of the central pump at Bender's Oil Service in Lebanon is out of service because there is no 4 in the dollar column -- the pump can only handle prices up to $3.99.

"So we shut that side right down," said Kurt Kozikowski of Bender's Oil. "Now, luckily the rest of the pumps can go up to $5.99."

New pumps can cost up to $15,000 each and refurbished ones an upwards of $3,000.

"I remember when I used to get three gallons for a dollar," said resident Gene Bergeron. "The pumps couldn't handle $2 back then."

An Avon company that refurbishes pumps said it has about 1,700 of the pumps in its show and a 14-week backlog on orders.

Via :: WFSB

ExxonMobil Agrees to Cease All Operations, Calls for International Boycott of Petroleum

Exxon HQ (TGW) – ExxonMobil Corp. announced today that it has fully realized the dangers of global warming and has agreed to cease all operations, CEO Rex Tillerson said today.

The company has also called for an international boycott of all fossil fuels.

“The facts can not be denied,” Tillerson said in a press conference. “After meeting with Al Gore yesterday, I have come to the conclusion the Earth is in fact warming because of humans.”

He declared all ExxonMobil operations would be shut down by August 1.

“This is just a small step,” Michael Boskin, an ExxonMobil board member, said. “150 years of greenhouse gas emissions cannot be overturned by something simple like this. That is why I have decided to create the nonprofit ExxonNewEnergy Group, which will invest in renewable energy and reforestation efforts.”

He said all Exxon profits from the last 3 years would be donated to the fund.

President Bush greeted the decision with glee. “I’m glad someone is finally doing something about this potential disaster,” he said.

Via :: Aprils Fools

Find Oil Contributions per Politician (and Presidential Candidates!)

(Special Report) – From Oil Change International comes a new tool that lets you track oil industry campaign contributions to any and every U.S. politician: Follow the Oil Money.

With a simple name or zip code search you can see how much money your local politician is receiving in campaign contributions from oil companies.

Even better, the site shows how much money current presidential candidates receive.

1. Hillary Clinton (D) $235,250 -- Biggest contributors: Global Partners LP, CAMA Intl and Exxon Mobil
2. John McCain (R) $206,935 -- Biggest contributors: Hess Corp and Glencore Ltd
3. Barack Obama (D) $110,412 -- Biggest contributors: Exxon Mobil and Hess Corp
4. Mike Huckabee (R) $18,700 -- Biggest contributor: Oil and Gas Producer

Note: Rudy Giuliani and Mitt Romney received more, though they now have dropped out.

(h/t Solve Climate Chronicles)

Oil Watch: January 13 to January 18 - Prices, Causes and Effects

Closing price: $90.57 per barrel (steady)
National gas average: $3.00 (steady)

Expect prices to rise until an economic stimulus package is revealed.

Causes:
1. Weak dollar
A lower dollar makes oil cheaper in countries that use other currencies.
2. Recession worries in the U.S.

Effects:
Positive feedback: higher gas and oil prices could hurt the economy more.

Oil Watch: December 31 to January 5 Prices, Causes and Effects

Closing price: $97.91 per barrel (up)
National gas average: $3.01 (up)

Although we predicted oil would remain steady, oil spiked this week to over $100.

Causes:
1. Weak dollar
A lower dollar makes oil cheaper in countries that use other currencies.
1. U.S. economy
An economic report relieved some worries about the U.S. economy.
3. Mexico exports down
Because of bad weather
4. Instability in the Middle East
In Pakistan and Indonesia.

Effects:
Market jitters, rising gas prices.

Oil Watch: 12/17/07 - 12/22/07 Prices, Causes and Effects

Closing price: $93.31 per barrel (up)
National gas average: $3.00 (down)

Oil prices are leveling off, it appears.

Causes:
1. Weak dollar
A lower dollar makes oil cheaper in countries that use other currencies.
2. U.S. economy
An economic report relieved some worries about the U.S. economy.
3. Low stockpiles
U.S. crude stockpiles hit the lowest in nearly three years.

Effects:
Market jitters.

Oil Watch: 12/10/07 - 12/15/07 Prices, Causes and Effects

Closing price: $91.27 per barrel (up)
National gas average: $3.00 (down)

Though oil prices went up this week, they are still on a relatively downward trend.

Causes:
1. Stronger dollar
The dollar was unusually strong this week.
2. Concerns over U.S. economy
There are concerns that increased fuel prices along with other problems are slowing the U.S. economy, and therefore the U.S.’s oil demand.

Effects:
Prices are staying in about the same price range, though prices rose slightly this week. Prices will continue to stay steady, if not drop.

OIl Watch: 12/03/07 - 12/08/07 Prices, Causes and Effects

Closing price: $87.46 per barrel (down)
National gas average: $3.01 (down)

Expect oil prices to drop even more.

Cause(s):
1. Weak dollar (again)
Yes, this is essentially permanent. A lower dollar makes oil cheaper in countries that use other currencies.
2. Rising U.S. inventories
Sending prices down.
3. Boost in U.S. domestic production
Also sending prices down.

Effects:
Companies that use oil everyday (think: Boeing) are happy about this. As said previously, oil prices will continue to sink and eventually level out.

Oil Watch: 11/26/07 - 12/01/07 Prices, Causes, and Effects

Closing price: $90.05 per barrel (down)
National gas average: $3.07 (down)

Expect oil prices to stay steady or even drop, unless prices hit $100. Most likely though, oil will drop as production is expected to increase.

Causes:
1. Weak dollar (again)
Yes, this is essentially permanent. A lower dollar makes oil cheaper in countries that use other currencies.
2. OPEC increases production
As we predicted last week.
3. Enbridge pipeline repair
Prices had spiked $4 after the blast

Effect(s):
Expect oil to continue heading south, unless the U.S. economy does a total 180 degree turn.

Oil Watch: 11/19/07 - 11/24/07 Prices, Causes and Effects

Closing price: $98.18 per barrel (up)
National gas average: $3.08 (down)

Expect oil prices to stay steady or even drop, unless prices hit $100. Most likely though, oil will drop as production is expected to increase.

Cause(s):
1. Weak dollar (again)
Yes, this is essentially permanent. A lower dollar makes oil cheaper in countries that use other currencies.
2. Thanksgiving
Needs no explanation.

Effect(s):
OPEC finally seems ready to increase output.

Oil Watch: 11/12/2007 - 11/17/2007 - Prices, Causes, and Effects

Closing price: $95.10 per barrel (down)
National gas average: $3.10 (up)

Oil down since last week, the first time in a while, but don’t expect $60 or $70 or even $80 anytime soon. Our prediction still stands: $100 oil soon.

Cause(s):
1. Dollar rising\weak dollar (again)
The dollar is still on life support, but it’s doing better. A lower dollar makes oil cheaper in countries that use other currencies.
2. Nigerian output disruptions
Rebels. Again.
3. More oil than expected
Government data showed a surprise 2.8 million build in crude inventories last week

Effect(s):
Gas prices still slowly rising, along with heating oil prices.

Oil Watch: 11/05/2007 - 11/10/2007 Prices, Causes and Effects

Closing price: $96.32 per barrel.
National gas average: $3.09

Getting closer to 100… But options on December crude oil futures expire Tuesday, with investors holding many $100 ‘call options’ – which allow traders to buy the underlying futures contract at a predetermined price and date – which could cause prices to rise even higher, because holders of $100 call options will enjoy a payout if prices hit $100.

Cause(s):
1. Weak dollar (again)
A lower dollar makes oil cheaper in countries that use other currencies.
2. European output disruptions
9 oil and gas platforms were shut down because of a storm.
3. Shortage fears
Investors fear winter shortages


Effect(s):
Gas prices slowly rising, along with heating oil prices. The good news: energy consumption is also on a downward trend.

Oil Watch: 10/29/2007 - 11/03/2007 - Prices, Causes, and Effects

Closing price: $95.93 per barrel.
National gas average: $2.97

Prices continue to rise…

Cause(s):
1. Weak dollar (again)
A lower dollar makes oil cheaper in countries that use other currencies.
2. Nigerian output disruptions (again)
A rebel attack struck an oil rig. (again)
3. Shortage fears
Investors fear winter shortages

Effect(s):
Gas prices slowly rising, along with heating oil prices.

Oil Watch: 10/22/2007 - 10/27/2007 - Prices, Causes, and Effects

Closing price: $91.86 per barrel.

After an all-time high of $92.22, oil settled down $0.36 to $91.86. This is the $90 a barrel analysts have been predicting; where’s the skyrocketing gas prices? Gas remains constant at around $2.80 nationally.

Cause(s):
1. Weak dollar (again)
A lower dollar makes oil cheaper in countries that use other currencies.
2. Nigerian output disruptions
A rebel attack struck an oil rig.
3. Political tensions in the Middle East.
Investors fear new Iranian sanctions could disrupt production in the important exporter, while Turkey still has thousands of troops amassed on Iraq’s doorstep.

Effect(s):
Not much… Gas prices have remained relatively constant, giving consumers no reason to worry until winter comes around and heating oil is needed.

Oil Watch: 10/15/2007 - 10/20/2007 - Prices, Causes, and Effects

This week we begin our weekly series, Oil Watch. We’ll discuss prices, causes, and effects.

Closing price: $88.60 per barrel.

Oil prices skyrocketed this week to over $90 a barrel, before coming down slightly. Meanwhile, gas prices have stayed relatively steady.

Cause(s):
1. Weak dollar
A lower dollar makes oil cheaper in countries that use other currencies.
2. Turkey-Iraq tensions
Iraq is still the 14th largest oil producer.

Effect(s):
Stock market rattled