From: Lee Corbin (lcorbin@tsoft.com)
Date: Mon Jan 27 2003 - 20:57:54 MST
Mike Lorrey beautifully explains
> > Could someone knowledgeable start a thread on "oil economics"?
> > Wouldn't a Western takeover of Iraq just put the oil at market
> > prices, (to the main betterment of Europe)?
> While the US satisfies the majority of its oil needs via
> domestic reserves, and much of the rest via Mexico and
> Venezuela, this is not in a vacuum. The oil market is a
> global market, and a restriction of middle eastern supplies
> to Europe causes Europe to bid on oil from Mexico and
> Venezuela, thus raising their prices.
Yes, I had figured out this much. How could it be otherwise
in a global market?
> By keeping the US from replacing the Iraq government (and thus causing
> Iraq to freely produce oil at Pre-Gulf War levels), Europe keeps oil
> prices artificially raised.
I see. (I cut a part of Mike's response where he explained
why European governments with their large welfare states and
heavy financially reliance on over-priced gasoline and high
taxes have no particular incentive to see the price of oil drop.)
> Oil prices in a free Iraq world would be around $10/bbl.
> They are currently around $30/bbl, partly due to the
> restriction on Iraqi oil exports, partly on the Venezuelan
> civil conflict (which can also be traced to left wing
> organizations), and partly on global uncertainty over
> future US actions in Iraq.
>
> Europe has a vested domestic interest in keeping the US from liberating
> Iraq, in that if oil prices drop to $10/bbl in a post-Saddam world,
> European oil/gas tax revenues will drop precipitously, US products will
> drop in cost faster than European products, leading to reductions in
> European exports and increases in imports from the US,
Double whammy! So you are saying that one result of a drop
to $10/barrel will be that oil/gas tax revenues will fall.
This I understand; it would provoke a fiscal crisis for their
governments.
But what I don't follow here is why the European products' costs
wouldn't also drop along with the oil and gas prices. Yet that
is what you are saying, right?
> ...causing increases in unemployment, decreases in income taxes,
> and widespread domestic unrest. Governments will be forced to
> limit social welfare services, causing greater unrest, or else
> [increase] taxes, causing unrest and capital flight.
I see how it all fits together now. Thanks for the explanation.
> In the end, it will spell a further condemnation of socialist policies
> in Europe, and an endorsement of free market US policies. Socialist
> parties in power across Europe cannot let this happen as a matter of
> their own survival in power.
Here is the rest of your message about a link between global
warming and oil. Quite amazing.
Lee
----------------------------Original Message----------------------------
> What is interesting is the oil economics if you dovetail it with global
> warming politics.
>
> It is a fact that the countries which are the biggest proponents of
> theories of catastrophic anthropic global warming are also those with
> the largest a) welfare social state apparatus, and b) degrees of
> taxation of fossil fuels which are spent on that welfare state.
>
> I have stated on occasion that it is my belief that this is the case
> because this high degree of social welfare, from socialized national
> health care to unemployment and education subsidies in these countries
> puts their economies at a competitive disadvantage to more free market
> nations like the US, which enjoys relatively low fossil fuel taxation
> and limited social welfare. These countries want global governmental
> solutions to the alleged greenhouse effect in order to force us to
> implement similar high fossil fuel taxes.
>
> How does this apply to the Iraq situation? While the US satisfies the
> majority of its oil needs via domestic reserves, and much of the rest
> via Mexico and Venezuela, this is not in a vacuum. The oil market is a
> global market, and a restriction of middle eastern supplies to Europe
> causes Europe to bid on oil from Mexico and Venezuela, thus raising
> their prices.
>
> By keeping the US from replacing the Iraq government (and thus causing
> Iraq to freely produce oil at Pre-Gulf War levels), Europe keeps oil
> prices artificially raised. Oil prices in a free Iraq world would be
> around $10/bbl. They are currently around $30/bbl, partly due to the
> restriction on Iraqi oil exports, partly on the Venezuelan civil
> conflict (which can also be traced to left wing organizations), and
> partly on global uncertainty over future US actions in Iraq.
>
> Europe has a vested domestic interest in keeping the US from liberating
> Iraq, in that if oil prices drop to $10/bbl in a post-Saddam world,
> European oil/gas tax revenues will drop precipitously, US products will
> drop in cost faster than European products, leading to reductions in
> European exports and increases in imports from the US, causing
> increases in unemployment, decreases in income taxes, and widespread
> domestic unrest. Governments will be forced to drastically limit social
> welfare services, causing greater unrest, or else drastic increases in
> taxes, causing unrest and capital flight.
>
> In the end, it will spell a further condemnation of socialist policies
> in Europe, and an endorsement of free market US policies. Socialist
> parties in power across Europe cannot let this happen as a matter of
> their own survival in power.
>
> =====
> Mike Lorrey
> "Live Free or Die, Death is not the Worst of Evils."
> - Gen. John Stark
> "Pacifists are Objectively Pro-Fascist." - George Orwell
> "Treason doth never Prosper. What is the Reason?
> For if it Prosper, none Dare call it Treason..." - Ovid
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