December 19, 2008

THE REASON GAS TAXES ARE SO EFFECTIVE IS BECAUSE OF THE OIL CURSE...:

OPEC Losing Its Muscle : Despite its bluster about cutting production, the cartel has been unable to marshal its members to halt oil's sliding price. (Stanley Reed, 12/19/08, Der Spiegel)

The situation recalls the late 1990s when a fractious OPEC watched prices hit record lows. Today the organization is trying to present a united front, but profound differences exist. On the one hand are the Saudis and other Persian Gulf states. They are the only countries with enough production capacity to make big cuts. Yet they don't want to inflict further damage on the global economy by forcing prices too high. Then there are the hardliners like Iran and Venezuela that want sharply higher prices to support their social programs. Crude prices are well below the $100 per barrel and $86 per barrel Venezuela and Iran need to pay their bills, according to Washington consultant PFC Energy.

As OPEC strives to retain its clout, a glut is emerging that could drive prices even lower. Off Iran's Kharg Island oil terminal are seven supertankers laden with Iranian crude. Iran is storing oil on board in hopes of higher prices later, according to an industry source. Worldwide, an estimated 21 ships are holding about 40 million barrels. At the end of October there were just five. That means producers have been churning out 750,000 to 1 million barrels a day for which there are no ready buyers. With the production cuts, OPEC is simply trying to avoid swamping the world with oil.


...these regimes are so rotten precisely because they rely on oil revenue instead of taxes. All cheap gas does is prop up evil.

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Posted by Orrin Judd at December 19, 2008 8:08 AM
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