America subsidizes so many ridiculous things. What if America subsidized the American oil industry to keep the rigs working no matter how low oil got, invested in refineries that produced with our oil? It would stimulate the economy, keep Americans working and crush our rivals. It seems any monies they pay out would probably come back to the government in the form of increased taxes. Russia, Nicaragua, Iran, all Arab countries are taking a huge hit right now, we could crush them and they have nothing else to rely on. It looks to me like the whole world relies on the money it makes off of America, without that where would they be. Would that work?
Hypothetical American financial question
- Thread starter jamnolfin
- Start date
It's not always our oil that becomes a problem, it's a global economy so when Europe suffers we also suffer a little.
Posted from Rivals Mobile
Posted from Rivals Mobile
government control of the economy would screw up the price signals. the low price tells private enterprise that we have enough oil, take a break from drilling. there is so much now in the u.s. we are running out of places to store it. investment banks are renting tankers to park offshore to create extra storage, and the rental rates are spiking.
compare the relatively unsubsidized oil market to interest rates. goverment sets the interest rate. rates are low. savers get nothing. the low rates mean we have a glut of everything. soon, we will have a world wide depression.
compare the relatively unsubsidized oil market to interest rates. goverment sets the interest rate. rates are low. savers get nothing. the low rates mean we have a glut of everything. soon, we will have a world wide depression.
America subsidizes so many ridiculous things. What if America subsidized the American oil industry to keep the rigs working no matter how low oil got, invested in refineries that produced with our oil?
Taking taxpayer money to fund unprofitable activities actually results in less net wealth. It cannot consequently make us better off overall, but it is a certain advantage to those who receive the taxpayer largesse.
It would stimulate the economy,
The government can only give with one hand what it takes with the other. This isn't manna from heaven, so there is no net benefit from compelling an unprofitable line of investment to the economy at large. In fact, the opposite is a more likely result as you divert wealth from investing in profitable (and thereby wealth building) activities into politically favored, but unprofitable, investments.
It seems any monies they pay out would probably come back to the government in the form of increased taxes.
No doubt the taxman could reap some of it, but having acknowledged the industry you want to funnel tax money into is an unprofitable venture, it cannot reap more than is sown.
Taking taxpayer money to fund unprofitable activities actually results in less net wealth. It cannot consequently make us better off overall, but it is a certain advantage to those who receive the taxpayer largesse.
It would stimulate the economy,
The government can only give with one hand what it takes with the other. This isn't manna from heaven, so there is no net benefit from compelling an unprofitable line of investment to the economy at large. In fact, the opposite is a more likely result as you divert wealth from investing in profitable (and thereby wealth building) activities into politically favored, but unprofitable, investments.
It seems any monies they pay out would probably come back to the government in the form of increased taxes.
No doubt the taxman could reap some of it, but having acknowledged the industry you want to funnel tax money into is an unprofitable venture, it cannot reap more than is sown.
The United States only gets about 12% of its oil from the
Middle East. A fact not many people realize. 39% is domestic, 20% Latin
America, 16% Canada..the other 10% is Africa. We dont need the Middle
east Oil
That is really immaterial, because if for some reason Middle Eastern oil went offline their customers (Japan, China, etc.) would come to Canada, Venezuela, Nigeria, etc. and bid up the price we pay.
Just because it doesn't travel from Saudi Arabia doesn't mean their actions don't impact the price we pay. We source most of closer because it makes sense to reduce shipping costs.
Middle East. A fact not many people realize. 39% is domestic, 20% Latin
America, 16% Canada..the other 10% is Africa. We dont need the Middle
east Oil
That is really immaterial, because if for some reason Middle Eastern oil went offline their customers (Japan, China, etc.) would come to Canada, Venezuela, Nigeria, etc. and bid up the price we pay.
Just because it doesn't travel from Saudi Arabia doesn't mean their actions don't impact the price we pay. We source most of closer because it makes sense to reduce shipping costs.
Keep in mind, we could replace the 10% from Africa and 12% from Middle east easily with Canada. Their supply is absolutely astounding and they have not even touched the tip of the scale. While OPEC could force others to buy from elsewhere thus increasing the price, I was simply stating, the myth we need the middle east for oil is just that..A myth. Maybe other nations do..We dont.
oil is mostly fungible, so it doesn't matter whose oil you buy. boycotting mid east oil for african or canadian oil just shifts things around, it doesnt change the aggregate market impact.
right now, oil producers are pumping as if there is no global recession, while most consumers have bought pretty much everything they need. After you have a refridgerator or two, two cars, etc., you don't really need anymore. At some point, subsidies no longer stimulate the economy.
right now, oil producers are pumping as if there is no global recession, while most consumers have bought pretty much everything they need. After you have a refridgerator or two, two cars, etc., you don't really need anymore. At some point, subsidies no longer stimulate the economy.
Thanks guys, I'm not smart enough to continue the conversation, lol. I like to pick peoples brains that are smarter than me. One thing I want to add. I'm not saying do this because of cheaper oil prices, I'm saying get the percentages of oil coming from America and Canada up compared to where they are now. We are crushing Russia and Iran right now and could really hurt them by not buying their oil and getting more of ours out there. Between sanctions and oil prices these 2 countries don't have much fight in them right now.
oil is low because a lot of factories are producing at half capacity. in other words, global demand is just not there, not even at the lower prices, because people already have enough stuff.
we already buy most of our oil from the U.S., Canada, Mexico, Venezuela, and Africa. We do that because the transportation cost is part of the total cost. We could boycott certain countries, but we would end up paying more because the oil we are currently buying is the stuff that has the lowest transportation costs for us.
Still, hypothetically, we could boycott Canadian oil or Venezuelan oil. But we would then have to replace that with oil from somewhere else - say Kuwait - and then Canada and Venezuela would sell the oil that we used to buy to the people who used to buy from Kuwait. So you just change things around, pay extra transportation costs, and don't solve anything.
It used to be that OPEC would step in and cut production, and then the price would go up again. They are not doing that now. There are many possible explanations. One is that as a cartel, they are less strong than they used to be. Another theory is they want to crush marginal producers like Canadian tar sands and U.S. frackers who have high production costs and lose money at this price. a third theory is that this is an intentional manipulation to hurt Russia. The most likely explanation is that there simply is not enough demand during a recession for all of the oil.
we already buy most of our oil from the U.S., Canada, Mexico, Venezuela, and Africa. We do that because the transportation cost is part of the total cost. We could boycott certain countries, but we would end up paying more because the oil we are currently buying is the stuff that has the lowest transportation costs for us.
Still, hypothetically, we could boycott Canadian oil or Venezuelan oil. But we would then have to replace that with oil from somewhere else - say Kuwait - and then Canada and Venezuela would sell the oil that we used to buy to the people who used to buy from Kuwait. So you just change things around, pay extra transportation costs, and don't solve anything.
It used to be that OPEC would step in and cut production, and then the price would go up again. They are not doing that now. There are many possible explanations. One is that as a cartel, they are less strong than they used to be. Another theory is they want to crush marginal producers like Canadian tar sands and U.S. frackers who have high production costs and lose money at this price. a third theory is that this is an intentional manipulation to hurt Russia. The most likely explanation is that there simply is not enough demand during a recession for all of the oil.
This is a fantastic topic, but my guess is it goes the way of politics and gets locked. I will say this though no one has mentioned China and how their decrease in demand has effected oil prices. Energy is the number 1 indicator of a strong economy and right now the only reason our economy is less pathetic than it has been the last 8 years or so is because oil prices are low and this gives more disposable income to the majority of Americans. When gas prices go back to almost $4 per gallon watch how fast the economy tanks again. Oh and IMO the less govt. has to do with our economy the better.
Keep in mind, we could replace the 10% from Africa and
12% from Middle east easily with Canada. Their supply is absolutely
astounding and they have not even touched the tip of the scale. While
OPEC could force others to buy from elsewhere thus increasing the price,
I was simply stating, the myth we need the middle east for oil is just
that..A myth. Maybe other nations do..We dont.
You're looking at this wrong.
Last time I checked Japan imports over 90% of their oil from the Middle East. They don't 'need' it to come from there, they could decide to go to Canada, or Russia (their Russian imports are up over 50% this year alone), or somewhere else. So you could say it is a 'myth' they depend on Middle East oil, but the reality is without the supply from OPEC the prices that Canada, Russia (and the U.S.!) producers charge would rise in order to bring demand in line with supply.
Americans who found themselves bidding with the Japanese for Canadian oil might not 'need' middle Eastern oil, but they benefit in reduced price from its availability in general.
12% from Middle east easily with Canada. Their supply is absolutely
astounding and they have not even touched the tip of the scale. While
OPEC could force others to buy from elsewhere thus increasing the price,
I was simply stating, the myth we need the middle east for oil is just
that..A myth. Maybe other nations do..We dont.
You're looking at this wrong.
Last time I checked Japan imports over 90% of their oil from the Middle East. They don't 'need' it to come from there, they could decide to go to Canada, or Russia (their Russian imports are up over 50% this year alone), or somewhere else. So you could say it is a 'myth' they depend on Middle East oil, but the reality is without the supply from OPEC the prices that Canada, Russia (and the U.S.!) producers charge would rise in order to bring demand in line with supply.
Americans who found themselves bidding with the Japanese for Canadian oil might not 'need' middle Eastern oil, but they benefit in reduced price from its availability in general.
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