Re: Oil prices (was Re: Kyoto, Driving our car (composite reply))

Michael Lorrey (
Fri, 12 Dec 1997 08:46:04 -0500

Wayne Hayes wrote:
> Michael Lorrey <> writes:
> >[Oil] prices remained above $23.00 per barrel for oil until the late 80's.
> >While supply may have been high, government policies kept oil prices
> >higher than they should have been.
> Could you please cite these policies and explain how they kept oil
> prices "higher than they should have been"? Then explain why the
> US has the cheapest oil prices in the world? As far as I understand
> it, the oil industry in the US receives tens of billions of dollars per
> year in direct and indirect subsidies from the US taxpayer. Here's
> a quote from

GOvernment policies like those that supported the sustaining of Saddam
Hussein's war against Iran. the US and Europe pumped billions of dollars
of tax money into supporting Husseins war machine. The Iran/Iraq
conflict in the Gulf kept oil transport and insurance costs high, and
limited the amount of oil Iran and Iraq could supply to the world
market. Our governments valued high oil prices more than the possibility
that fundamentalists could take over Iraq and come within striking
distance of Isreal for conventional weaponry. US and European support of
Isreal is the cause of the original oil embargo, and our idiotic
policies in Iran allowed a demagogue like Khomeni to take power there.

It doesn't matter that we now have the lowest oil prices in the world. I
don't see europeans spending even a double digit fraction of the hefty
taxes they levy on oil and gas on energy conservation or emissions
reduction. It funds their welfare states. I am comparing 70's and 80's
oil prices to 60's oil prices. Oil was $4-$8 per bbl in the 60's. It
went to $18-21 per bbl in 1973, and peaked at $32 per bbl in 1979. It
slowly dropped, far slower than supply/demand would indicate, partly due
to OPEC and partly due to oil companies and partly due to the US
sustaining Hussien in his war with Iran.
> }Most industrialized nations heavily tax petroleum because government
> }spend lots of money keeping the oil flowing and cleaning up the messes
> }caused by oil. But not in the USA where income and property taxpayers
> }pay through the nose since the tax on gasoline doesn't come close to
> }covering the costs.

We more than cover the costs. We build our entire highway system with
them. Oil spills are paid for by the spiller. SUrely you remember the
$30 billion bill passed to Exxon by the US gov't, the State of Alaska,
and the local indians and fishermen for the Valdez spill??? One of the
benefits of our highly litigious society.

We in America have nowhere near the same level of socialist nightmare
that high oiltax countries do.

> }
> }The Institute for Local Self Reliance has issued "Oil Slickers: How
> }Petroleum Benefits at the Taxpayer's Expense" ( or $10
> }from 1313 5th St. SE, Suite 306 Minneapolis, MN 55414), a compelling
> }analysis of the hidden costs of oil.
> }
> }Economists call them "externalities." They are costs that are
> }reflected in the price of product. For example, all the damages caused
> }by cigarettes isn't paid for by the tax on a pack of cigarettes.

Actually, studies have shown that cigarette taxes do pay for the costs.
States and the feds perfer to spend that money on other stuff and go
back for another helping. The only externalities that fossil fuels do
not pay for is the carbon emissions. I do support the enactment of a
mechanism to include the costs in the marketplace, as the US is pushing
in the Kyoto negotiations.

> }
> }ISLR estimates that the additional costs in tax subsidies, military
> }protection, and environmental and human health costs is between $42
> }and $350 billion annually. (The range is so wide because it depends on
> }what and how you count.) For perspective, the federal governments
> }deficit this year is less than $200 billion.

And where are the benefits counted???

> }
> }First is the $3.3 to $10.9 billion of tax breaks to the oil companies.
> }They have convinced Congress to grant them a whole list of tax
> }subsidies from the oil depletion allowance to accelerated depreciation
> }and a bunch of other breaks given to no other industry. The statutory
> }rate of taxation for American business is 35% before deductions. The
> }oil companies pay about 11%. Most other industries are much closer to
> }35%. Taxes that the oil companies don't pay means that other
> }taxpayers---or our grandchildren in the form of debt---do pay.

SOrry, the average tax rate for American corporations is about 14%.
SOrry, this is the same old tax justification bullshit. That doesn't
play on a Libertarian leaning mail list. Read the FAQ.

> }
> }It's not just federal taxes that are being tapped to meet our
> }petroleum addiction, but also local property taxes. ISLR estimated
> }that if the transportation taxes paid it's full freight in
> }Minneapolis, rather than some of the burden being paid by property
> }taxes, gasoline would cost another 18 cents/gallon.
> }
> }Second, taxpayers spend $26.6 to $70.7 billion to pay for military
> }protection in the Middle East and elsewhere. This figure is in
> }dollars, not in American blood (and health) that was lost in Oil War I
> }(you may remember it as the Gulf War) or could be lost in the upcoming
> }Oil War II.

Sorry, I don't think these figures are anywhere near accurate. The $60
billion cost of the Gulf War was paid for by other countries, mostly
Kuwait and Saudi Arabia, with the exception of only $5 billion.
Additionally, the total US defense budget is only $240 billion,
supporting over 1 million troops. We have less than 10,000 troops in the
Gulf Region right now, so as a proportionate cost we are talking about
$2.4 billion, though that could be as much as double due to higher costs
for forward deployment. Not much more, I know from experience.

> }
> }One Defense Department official recently told Congress that the last
> }war in 1991 might keep things quiet for 10 years.
> }
> }Third, and the hardest to quantify precisely-but likely the most
> }expensive of all-is the estimated $25.5 to $267 billion annual costs
> }in the form of environmental and health costs associated with
> }pollution...

How is it counted???? SOmebody is paying for it somewhere anyways, with
the exception of the CO2 dumping, which is now being addressed in Kyoto.
Whether its paid for directly or indirectly is irrelevant. Considering
that, according to the debate on this list, the stats show, at best,
that absoluteley no change is taking place. Things are possibly cooling
a bit more by a half a degree per decade, or warmer by hald a degree
per decade. As I stated in a previous post, since the average global
warming at sea level is mostly because Northern Hemisphere cooling from
sulfates levels reduction is slowing, global warming COULD be caused by
us not polluting ENOUGH.... THink about that...
> He goes on to interpret this data in ways I don't agree with, but up
> to this point his "facts" jive with what I've heard elsewhere.
> In conclusion, Americans should be the last people on earth to be
> complaining about the price of oil. What you *should* be doing
> is complaining about billions of your tax dollars subsidizing it's
> price.

Hey, I didnt' say anything about prices RIGHT NOW, did I??????? I Like
them where they are, and think they possibly should have carbon taxes
added if, and only if, global warming does indeed seem to be occuring in
a way that we cannot fix any other way. I would prefer that rather than
governments raking in tons of dough on carbon taxes, which they would
most likely misappropriate, misspend, and waste away without
accomplishing anything, that the fees be levied as part of a emissions
trading market.

			Michael Lorrey
------------------------------------------------------------	Inventor of the Lorrey Drive
MikeySoft: Graphic Design/Animation/Publishing/Engineering
How many fnords did you see before breakfast today?