Lower Oil Prices Are a Free-Market Victory

[4est_4est_Gump]

And a big tax cut.
Larry Kudlow, NRO
NOVEMBER 28

Seldom has so much good news been portrayed so negatively. Oil prices continue to fall in the U.S. and around the world, but near everyone in the media is grumpy about it. The headlines today are among the silliest I’ve seen: Energy-company stocks are declining, oil deflation is an economic threat, the Fed might raise rates much later than expected, OPEC is dissolving, shale companies are going bankrupt, Russia is going bankrupt(!), and on and on.

...

First, U.S. oil production has nearly doubled in recent years to 9 million barrels a day, and the Paris-based International Energy Agency (IEA) expects U.S. supply to rise by more than 1 million barrels a day next year. And it is this supply increase that is driving down prices. Saudi Arabia and OPEC have essentially thrown in the towel, surrendering to the inevitability of lower prices from exploding U.S. energy production.

This is not only a triumph of U.S. energy independence, it is a victory for the workings of the free market. Greater supply, not government cartels, is driving down prices.

...

The American energy revolution, combined with the market forces of supply and demand, is delivering something on the order of a $125 billion tax cut. Not only have wholesale oil prices dropped from about $100 a barrel to $66, but gasoline prices have fallen from near $4 a gallon to $2.78 at the week’s close.

That’s a tax cut. With no big-government spending hikes.

While very few Democrats, including President Obama, supported the entrepreneurial, innovative dynamism of horizontal drilling and hydraulic fracturing, they’ve lately tried to take credit for the oil and gas shale revolution. No one’s buying it. AEI’s Mark Perry actually wonders why the Democrats aren’t scheduling hearings in the lame-duck Congress to blame oil-industry manipulators and evil speculators for the drop in oil prices.

Of course, the far-left Democratic enviros aren’t sitting still. The EPA is now taking aim at the entire U.S. energy industry with its newly proposed smog rules — probably the most expensive regulations in history — even though the fracking revolution is producing much cleaner energy than ever before.

So what we have is a clean-energy revolution, and it’s lighting a much-needed fire under the economy.

As energy prices are falling, GDP is being revised higher. Real economic growth in the third quarter shifted up from 3.5 percent to 3.9 percent, led by an increase in business fixed investment. The last two quarters averaged 4.2 percent at an annual rate.

...

http://www.nationalreview.com/node/393638/print

 

[Sean]

You think oil is a free market? It's a fucking cartel, for fuck sake.

 

[4est_4est_Gump]

tee hee

http://www.breitbart.com/Big-Govern...lation-Good-for-Shoppers-or-Death-for-Nations

 

[RobDownSouth]

You think oil is a free market? It's a fucking cartel, for fuck sake.

If you really want to have a laugh, ask the Chief how the price of oil (a commodity) is gonna plummet if the Fair Tax is enacted.

The last time I asked he insinuated that Saudi Arabia would magically drop their price by 25% or so, because freedom.

 

[Que]

Remember all the people that said oil from the Canadian Oil sands would have NO impact on US crude prices paid, much less on gasoline?

Because greedy oil companies would just take all those "extra" profits? Turns out you have to sell your oil for what you can get for it. Shocking, right?

You think oil is a free market? It's a fucking cartel, for fuck sake.

Last I checked most US oil producers were not countries and not member states of OPEC.

From the Department of Energy Information, United States Government:

In contrast to OPEC oil production, which is subject to central coordination, non-OPEC producers make independent decisions about oil production. Also, in contrast to OPEC, where oil production is mostly in the hands of national oil companies (NOCs), international or investor-owned oil companies (IOCs) perform most of the production activities in non-OPEC countries. IOCs seek primarily to increase shareholder value and make investment decisions based on economic factors. While some NOCs operate in a similar manner as IOCs, many have additional objectives such as providing employment, infrastructure, or revenue that impact their country in a broader sense. As a result, non-OPEC investment, and thus future supply capability, tends to respond more readily to changes strictly in market conditions.

Producers in non-OPEC countries are generally regarded as price takers, that is, they respond to market prices rather than attempt to influence prices by managing production. As a result, non-OPEC producers tend to produce at or near full capacity and so have little spare capacity. Other things being equal, lower levels of non-OPEC supply tend to put upward pressure on prices by decreasing total global supply and increasing the "call on OPEC." The greater the call on OPEC, the greater is its likely ability to influence prices.

---------------------------------------------------------------------------------------

If you really want to have a laugh, ask the Chief how the price of oil (a commodity) is gonna plummet if the Fair Tax is enacted.

The last time I asked he insinuated that Saudi Arabia would magically drop their price by 25% or so, because freedom.

Tell us again how the hidden tax on the poor and the elderly that is called inflation is GREAT for the economy, how it enriches a nation in real terms not just in an inflated number.

That is always good for a laugh.

 

[FGB]

There is an oil glut right now.

Time to do maintenance on some refineries to bring the price of gasoline back up!

 

[RobDownSouth]

There is an oil glut right now.

Time to do maintenance on some refineries to bring the price of gasoline back up!

That's a good idea....I doubt it will happen though.

I've read that the catalyst for the drop is that Libya finally got their wells and pipelines back up to 100% output after the civil war knocked most of their capacity offline for several years.

And just when it hit the market, the european economy as a whole began to slow down.

The OPEC folks assumed that Saudi Arabia would simply cut production to keep oil over $100 a barrel, just like the did in the oil bust of 1986.

They thought wrong.

The Saudis remember they cut production but oil still cratered even further, causing a 5 year dip in Saudi revenues. Like the noted philosopher Dubya the Feckless once opined "fool me once, shame on you. fool me twice...uh..we can't get fooled again!"

At the current pricing, it's unprofitable to produce shale oil in North Dakota basin, and marginally profitable for Texas shale. I believe the goal of the Saudis is to force at least some of the US oil producers to go bust with this aggressive pricing.

Naturally, Republicans will blame this on President Obama. The free market cannot fail, dontcha know.

 

[SgtSpiderMan]

Raise the Federal Gas Tax to pay for some infrastructure.

 

[Que]

Raise the Federal Gas Tax to pay for some infrastructure.

Did you even read the article? Having more money in consumers hands to spend this Christmas and going forward instead of sending it to Opec is suddenly a bad thing to you?

...But if we borrow money from China to encourage people not to look for work that "stimulates?"

 

[SgtSpiderMan]

Did you even read the article? Having more money in consumers hands to spend this Christmas and going forward instead of sending it to Opec is suddenly a bad thing to you?

...But if we borrow money from China to encourage people not to look for work that "stimulates?"

I'm surprised to learn that OPEC is the recipient of the Federal Gas Tax.

 

[Que]

I'm surprised to learn that OPEC is the recipient of the Federal Gas Tax.

You cannot possibly always be this goddamned, fucking obtuse.

Money NOT going to OPEC is a WINDFALL. A BOOST to the ECONOMY.

Your IDIOTIC plan to SQUANDER that WINDFALL that is NOT going to OPEC on an ill-advised increase in the gasoline tax will not cause any increase in economic activity in the short term and over the long haul, the dollar amount will have to be adjusted downward as the money is fed into the maw of the Federal Government to then be re-distributed.

Your idea has the same effect as if money rained down from heaven tomorrow and the recommendation was that we raise taxes because if the money is given to government is is magically MORE after the government gets its sticky, inefficient fingers on it than when it fell from heaven.

 

[SgtSpiderMan]

You cannot possibly always be this goddamned, fucking obtuse.

Money NOT going to OPEC is a WINDFALL. A BOOST to the ECONOMY.

Your IDIOTIC plan to SQUANDER that WINDFALL that is NOT going to OPEC on an ill-advised increase in the gasoline tax will not cause any increase in economic activity in the short term and over the long haul, the dollar amount will have to be adjusted downward as the money is fed into the maw of the Federal Government to then be re-distributed.

Your idea has the same effect as if money rained down from heaven tomorrow and the recommendation was that we raise taxes because if the money is given to government is is magically MORE after the government gets its sticky, inefficient fingers on it than when it fell from heaven.

I can only base my responses to your posts on your posts. You specifically said the money would be going to OPEC. That doesn't make me obtuse.

Infrastructure would have a larger & better impact on the economy. As you pointed out in another thread one could go out & buy more cigarettes or a big screen TV, or we can give thousands a job, improve our property values, reduce our use of oil, reduce the need for a car, and make life more enjoyable.

Your quote about spending "windfalls" is below, enjoy.

If we doubled the payouts on every government program tomorrow, there would be more big screens, more x-boxes, more cigarettes, scratchers tickets, more sports book, more drugs and alcohol and the exact same impoverished conditions that exist today.

 

[Que]

You just failed the Turing test.

No actual human is this stupid.

 

[SgtSpiderMan]

You just failed the Turing test.

No actual human is this stupid.

I'm sorry you don't agree with what you said.

 

[BotanyBoy]

You think oil is a free market? It's a fucking cartel, for fuck sake.

LOL

http://www.breitbart.com/Big-Govern...lation-Good-for-Shoppers-or-Death-for-Nations

Ahhh yes breitbart....one step below Salon and National Enquirer...a 4est favroite.

Last I checked most US oil producers were not countries and not member states of OPEC.

Does NOTHING to refute the fact that they are gangsters of the highest caliber right next to Wall St. Bankers and Congress critters. Get fuckin' real bro....

Tell us again how the hidden tax on the poor and the elderly that is called inflation is GREAT for the economy, how it enriches a nation in real terms not just in an inflated number.

That is always good for a laugh.

True story, bet the "TAX THE POOR CUZ FUCK EM!!" lefties who want to haz moar gas taxes don't go for that one.

Did you even read the article? Having more money in consumers hands to spend this Christmas and going forward instead of sending it to Opec is suddenly a bad thing to you?/QUOTE]

Didn't come from the US Treasury..../leftyRAGE.

...But if we borrow money from China to encourage people not to look for work that "stimulates?"

How the fuck does the US borrowing from china encourage people not to look for work??

This is always good for a laugh

 

[Que]

I can only base my responses to your posts on your posts.

Really? You cannot formulate an opinon and express yourself better unless and until I type some random words that enable you to make your (feeble) point by mis-characterizing what I said? Really?

You specifically said the money would be going to OPEC.

~SpideyMode~

"I didn't say that!"


...And I didn't.

What I said as you helpfully fucking quoted was:

Did you even read the article? Having more money in consumers hands to spend this Christmas and going forward instead of sending it to OPEC is suddenly a bad thing to you?

...But if we borrow money from China to encourage people not to look for work that "stimulates?"

I said not ONE thing about your alternative being send the windfall back to OPEC in the form of higher gasoline taxes that bizarrely go to OPEC. I said that your idea implied that there was something wrong with the fact that now money was in consumers hands instead of OPEC.

The money that USED to go to OPEC is in consumers hands NOW. Your plan negates that wondrous blessing from on high. Idiot. Pointing out that you clearly think that the money that is NOW in consumers hands must be a BAD thing because you want to take it back OUT of their hands and send it to the Federal Governement.

That doesn't make me obtuse.

No it does not "make" you obtuse.

~SpideyMode~

"I Didn't say that!"

...And I didn't.

Your post demonstrates that you are in this instance either being obtuse or you are sincerely dumb. This interaction did not make you the obtuse mushroom that you are. it merely highlights it. What "makes" you that way is anyones guess. If you want me to speculate I think it is a marginal IQ with just enough education to tie your self into knots. ~shrug~

Infrastructure would have a larger & better impact on the economy.

Since your proposal will be less than 800 billion dollars will that be more or less of an impact than the stimulus package?

If we had simply mailed checks at random to people for the sum of 800 billion dollars that would have resulted in more stimulative activity than the shovel ready projects amounted to.

As you pointed out in another thread one could go out & buy more cigarettes or a big screen TV.

Holy false equivalence Batman! I mean Spiderman. I was pointing out that giving money to indolent people in poverty will not raise THEM out of poverty, I made ZERO comment on what if an stimulative effect that would have on the economy.

Since you asked it will have none. Why? Because the money comes FROM our economy (likely borrowed) and through their fingers in statistically known ways that do not result in capital growth activities. Strirring money around. You are far to stupid for a discourse in why that is, bit it is so. Not at all what we are discussing here. Here money that used to LEAVE our economy has STAYED. This is a net increase in available capital.

Yes SOME of it will be squandered by the impoverished and the rich alike. SOME of it will be actually put to use and as I said it is a WINDFALL. Borrowing money to give it away? NOT a windfall.

we can give thousands a job, improve our property values, reduce our use of oil, reduce the need for a car, and make life more enjoyable.

I assume you are in favor of Keystone then?

Money sent to Washington then sent back to the states is not more money than you had before you stirred the money through Washington.

Your quote about spending "windfalls" is below, enjoy.

~SpideyMode~

"I didn't say that."

...And I didn't. My out of context quote about what impoverished people that drive little do with their income because they have no job to drive to, had ZERO to do with "windfalls" of any kind and everything to do with the fact that you cannot pay people to become middle class and make better choices with their resources.

What happens to every single driver in this country NOT just the ones on assistance is a bigger pool than that.

I hope that your area has a great voucher program so that whatever it is that you do for the educational system will be put out of business by more efficient private educational delivery systems.

 

[islandman]

^^^That's a lot of effort to spend on a thread that incorrectly assigns the price of oil to a "free market".

Guess there are people here who are more bored than I am currently.

 

[Que]

^^^That's a lot of effort to spend on a thread that incorrectly assigns the price of oil to a "free market".

Guess there are people here who are more bored than I am currently.

There have been no free markets since the inception of this country. At argument is whether "free-market forces" writ large are having an impact or not.

There are interventionists that believe government is (and should be) the biggest driving force in economic activity but as this latest development has shown, the market even while fettered the way it does has a bigger impact on market fluctuation than the most ardent central planner could ever dream of.

 

[islandman]

There have been no free markets since the inception of this country.

You're half right. There were also no free markets prior to its inception.

There are interventionists that believe government is (and should be) the biggest driving force in economic activity but as this latest development has shown, the market even while fettered the way it does has a bigger impact on market fluctuation than the most ardent central planner could ever dream of.

And now I'm wondering why you're equating "big government" and "central planning" to an economic cartel. I think perhaps you're thinking "cabal" but typing "government"?

No matter. If I hadn't lost all interest after Gump's oopsie, I certainly have now.

 

[Que]

Does NOTHING to refute the fact that they are gangsters of the highest caliber right next to Wall St. Bankers and Congress critters. Get fuckin' real bro....

So what happened? Did the evil greedy gangsters just forget to collude with each other, or does having more sources of competition inside the good ole USA cause pressure on the entire world market in a direction that favors high horsepower gas guzzling goodness?

A while back the Feds (post airline dereg) figured out that the arilines were using the Sabre sytem for price-fixing.

It actually wasn't like that. You ever notice Ernie has the NW corner Gas Station. When Bert on the SE corner raises or lowers the price Ernie keeps his a penny or two similar. Problem is there is always some ASSHOLE that undercuts you in some dingy ass gas station that is probably a front for evil drug money...so you cant just get Bert and Ernie continually raising prices.

That is what happened to the airlines. They TRIED to play nice, but they all want to sneak a LITTLE market share here and there, even when they were peeking at each-others rates minute by minute through Sabre and trying to hold the line.

This is what happens with market forces. Do the big guys find ways to fuck us? Sure. Because they hate us? No. Because they love profits. FGB called it. They have done without maintenance while they could command $4/gal so they will now take one gulf coast and one Cali refinery off-line for (needed) repairs and we will once again be fucked.

Point of the article and my points is there is no leak-proof cabal that some market force cannot fuck with. They fuck with us but it is like holding back the tide. Sooner or later the tide fucks with their sand-castle and we all give a Huzzah!

True story, bet the "TAX THE POOR CUZ FUCK EM!!" lefties who want to haz moar gas taxes don't go for that one.

Good point.

Gas taxes are regressive in a multiplicity of ways.

First a poor guy often commutes farther, and a rich guys Porsche can only burn so much more gas than a poor guys Yugo, and the difference is not that much.

Also it is built-in to the price of everything we buy. Truckers bring us everything pretty much.

It also has a dampening effect on expansion of small business and interstate commerce since for ti to BE interstate commerce you have to ship it.

I have a ridiculously heavy stove that would bring $6000 maybe to the right buyer on your coast or maybe back east. Shipping it for say 2/3 of what it would be last time I checked might make the risk of shipping it for a buyers approval worth it.

How the fuck does the US borrowing from china encourage people not to look for work??

I was (admitedly) being both snarky and obtuse with that one. Not Spidey obtuse, but not exactly translucent.

I mean to say that if Nancy Pelosi thought that having longer unemployment benefits using money we borrow from china to pay for it was worth $2 in the economy from some bizarre math, then free money from OPEC that we do not have to pay interest on that we can spend right now has to be a really good deal.

 

[BotanyBoy]

There have been no free markets since the inception of this country. At argument is whether "free-market forces" writ large are having an impact or not.

No one argues if they have an impact or not...that's a duh. I've never even herd a single lefty on this board claim that market forces don't have an impact on our economy/pricing of goods n' services etc.

There are interventionists that believe government is (and should be) the biggest driving force in economic activity but as this latest development has shown, the market even while fettered the way it does has a bigger impact on market fluctuation than the most ardent central planner could ever dream of.

That's a load of dreamy RW horse shit and even you know it.

Central planning makes/breaks an economy and nation...ours has global reach.

Name one single "ohh free market vew dew is the cure awll!! Gubbmitn = pure evil 110% time all the time!" nation that does......right.

 

[Que]

You're half right. There were also no free markets prior to its inception.




And now I'm wondering why you're equating "big government" and "central planning" to an economic cartel. I think perhaps you're thinking "cabal" but typing "government"?

No matter. If I hadn't lost all interest after Gump's oopsie, I certainly have now.

No..I typed exactly what I meant.

Some people claim govt can and should influence the price of gas (beyond getting out of the way)

This latest decline shows government has little to no effect. They cannot even forecast it much less influence it. (Other than getting out of the way.)

 

[islandman]

No..I typed exactly what I meant.

Some people thing govt can and should influence the price of gas (beyond getting out of the way)

This latest decline shows government has little to no effect.

What you half-meant.

Your premise is flawed. You're arguing about the fleas and ignoring the mutt. That is your prerogative, of course, but you shouldn't be surprised when no one takes it or you seriously.

Now beyond bored. But, still, amused.

 

[Que]

No one argues if they have an impact or not...that's a duh. I've never even herd a single lefty on this board claim that market forces don't have an impact on our economy/pricing of goods n' services etc.



That's a load of dreamy RW horse shit and even you know it.

Central planning makes/breaks an economy and nation...ours has global reach.

Name one single "ohh free market vew dew is the cure awll!! Gubbmitn = pure evil 110% time all the time!" nation that does......right.

Of course they do. Bob is speculating that it is the evil Saudis manipulating everything. All the Saudis are doing is trying to make their monthly nut. As the price falls they need more. Producing less isn't shoring up the price the way they would like it to so they say fuck, it we have oil, pump it!

All of these players want to keep that floor up and they are all failing at doing so. The market won, for now.

Government has been trying to no avail to influence the price of gas for a host of political reasons, people vote pocketbook all to no avail.

Does the market get it right all the time? of course not. But it is the engine, government is the brakeman in the caboose of a very long train.

 

[Que]

What you half-meant.

Your premise is flawed. You're arguing about the fleas and ignoring the mutt. That is your prerogative, of course, but you shouldn't be surprised when no one takes it or you seriously.

Now beyond bored. But, still, amused.

I dunno. You seem fairly entertained with your own smugness.

Why don't you explain it to the class? Since my pedestrian understanding of economics is evidently only concerned with the fleas and you see the entire picture.

Enlighten us.