Price of oil

[highnote]

I was driving along on vacaton listening to Public Radio and I heard an interesting statistic. I wondered how accurate it was.

The person who was being interviewed said that the cost of oil is about $2 per gallon for countries like France and China. Then they tax it 100% and use the $2 tax to help build their infrastructures and fund social programs. Then on the other hand the cost of oil for the U.S. is closer to $7 per gallon because of the money we pay to secure the oil and provide security for oil producing countries. As a result, we have less for our infrastructure and social programs.

This seems like an oversimplification, but also seems like it has some truth to it.

Anyone have any insights into this?

Thanks.

John

[Dick Schmidt]

John,


Those numbers don't make sense. Oil is a commodity and is traded internationally. It goes to the highest bidder, just like everything else. All oil is priced and paid for in dollars.

How could we sell gas at $2.50 a gal if oil is $7 a gal here? Only about 60% of a gallon of oil can be made into gas. Right now, gas is between $8 and $9 per U.S. gallon in England and Europe, so I don't think they are getting their oil all that cheaply.

Dick

[highnote]

John,


Those numbers don't make sense. Oil is a commodity and is traded internationally. It goes to the highest bidder, just like everything else. All oil is priced and paid for in dollars.

How could we sell gas at $2.50 a gal if oil is $7 a gal here? Only about 60% of a gallon of oil can be made into gas. Right now, gas is between $8 and $9 per U.S. gallon in England and Europe, so I don't think they are getting their oil all that cheaply.

Dick

Dick,

I think what the interviewee was suggesting was that there is a hidden cost to the price we pay for oil. That hidden cost is the price we taxpayers pay to provide security to oil producing countries. He was implying that since France and China and other countries don't have to pay for securing the oil, they are able to use the tax money on oil for the betterment of their country.

But I hear what you're saying. I thought that gas was higher than $4 per gallon in Europe. These guys were kind of rambling toward the end of the interview, so I'm not sure how accurate their remarks were. When I thought about what they were saying, the numbers didn't make sense.

However, the main thing that interested me was the hidden cost we are paying for our oil.

Then, on the other hand, what if we didn't pay those security costs? What would happen to the price of oil then?

Another point they were trying to make was that we really need to start thinking about alternative energy sources.

[DJofSD]

I thought that gas was higher than $4 per gallon in Europe.

More like $4 per liter.

DJofSD

[kenwoodallpromos]

"we pay to secure the oil and provide security for oil producing countries. As a result, we have less for our infrastructure and social programs."
Our security (military) IS a social program; it is called foreign aid because wimpy countries like France are chicken and cut and run!
Liberals call political priosons' forced labor to undercut our prices social programs. I do not know of any others. Free bicycle repair?LOL!

[highnote]

=kenwoodallpromos
Our security (military) IS a social program;

I agree. And it is an important social program. Thankfully the V.A. provides benefits to my 80 year old father who was a WWII POW.

National defense is vital. I'm not so sure National Offense is as important. I think we could save a lot of money there.

it is called foreign aid because wimpy countries like France are chicken and cut and run!

I don't think France being chicken is the reason they didn't go along with the invasion of Iraq. I think there are other political reasons. France has a long history of starting wars. How many times have they invaded England over the centuries? They also have a history of colonialism.


Liberals call political priosons' forced labor to undercut our prices social programs.

I don't understand the last point you are making. I think it's because of the typo.

Mainly, though, I'm interested in knowing if the price of gasoline is really $7 per gallon because of the cost of securing the oil and providing security to oil producing countries.

Maybe it would be better if we paid $5 tax on each gallon with the full knowledge that the tax is going to secure the oil. Then we could have our income taxes reduced by a like amount. That way, those who use the most gas pay the most to secure the oil. You'd see a lot more people using mopeds if that happened. :D

[GameTheory]

I agree. And it is an important social program. Thankfully the V.A. provides benefits to my 80 year old father who was a WWII POW.

National defense is vital. I'm not so sure National Offense is as important. I think we could save a lot of money there.



I don't think France being chicken is the reason they didn't go along with the invasion of Iraq. I think there are other political reasons. France has a long history of starting wars. How many times have they invaded England over the centuries? They also have a history of colonialism.




I don't understand the last point you are making. I think it's because of the typo.

Mainly, though, I'm interested in knowing if the price of gasoline is really $7 per gallon because of the cost of securing the oil and providing security to oil producing countries.

Maybe it would be better if we paid $5 tax on each gallon with the full knowledge that the tax is going to secure the oil. Then we could have our income taxes reduced by a like amount. That way, those who use the most gas pay the most to secure the oil. You'd see a lot more people using mopeds if that happened. :DThe thing is, we essentially provide the national defense for France and for most of Western Europe. We could probably bankrupt France anytime we choose by leaving them helpless and forcing them to build up their own military...

[hurrikane]

I think 7 a gal is a huge exageration.

NPR has a habit of making things up at times. Or lets say, they don't qualify their sources.

[JustMissed]

SJ, It it difficult for most folk to see "hidden cost".

The oil that is pumped from anywhere goes into the same barrel and is sold from that same barrel to everyone at the same price.

Aruba pays the same as Sweden and the same as GB and Italy and the US.

Fortunately or unfortunately, depending on how you look at it, the US is one of the largest per capita energy consumers in the world and consequently we have to raise Armies and pay out kick-backs(read Foreign Aid) in astronomical amounts to ensure a constant and continuous supply of petroleum.

If you added the cost of our National Defense and Foreign Aid the price of our petroleum, I would not be surprised if it were greater than $7 per gallon of gas.

Anyway, I suppose if we(Americans)want to continue with our high standard of living we will just have to accept things as they are.

You know John, some days after a trip to Walmart and I have loaded my car with all those fine products made in China, Taiwan or elsewhere. And all those fine Tyson Chicken products produced by illegal Mexican laborers-I notice that there are huge SUVs parked on either side of me and I cannot see to back out of my parking spot.

I slowly back-up hoping that a Lincoln Navigator will not smash into and total my $1,100 Ford Tempo. It's nice to think God is still looking out after me(read America), but some days it seems more difficult to do.

JM

[hurrikane]

the purpose of our national defense is not soley for gas and it isn't right to attribute that costs to teh price of oil

[highnote]

the purpose of our national defense is not soley for gas and it isn't right to attribute that costs to teh price of oil

I agree. We have to provide for national defense. One could argue that providing national defense for other countries is necessary for our national defense because we need to keep the oil flowing.

What complicates this is that we don't see the cost of securing the oil at the gas pump. Gas is stiill relatively cheap. I remember that back in 1978 was the first time it hit $1.00/gal. So if you adjust for inflation, $2.50/gal ain't bad.

Now the money for providing security and national defense for other countries has to come from somewhere. It doesn't come from the money we pay for gas. It must come from out taxes and also from the money we raise by selling treasury bonds to investors. At some point we have to pay interest on the bonds to the investors. Where does that money come from? -- From taxes. Who pays the taxes? You and me.

So even though you don't see the cost of providing defense for other countries and the cost of securing the oil reflected at the pump, it is there.

The more I think about it the more I realize how complicated it is. The money spent on defense and securing the oil pays for labor and equipment. So jobs are created which means there are some benefits to paying for other nations security. All this spending and investment leads to the creation of wealth.

Since I don't have much knowledge of economic theory, I'll stop here and leave it to the policy makers and consultants to figure out.

js

[wonatthewire1]

Since I don't have much knowledge of economic theory, I'll stop here and leave it to the policy makers and consultants to figure out.

And that is exactly how we want you to leave it

CHA CHING! Another sale > :D

[highnote]

JM

What? Because I am open minded and am willing to dig deeper into an issue and listen to all the arguments before making up my mind I don't have any convictions?

You can't insult me. So feel free to leave your posts up for all to read. I take no offense.

When I have a conviction I will stand by it. If you read my original post you will see that I was asking for feedback on this topic that I know very little about.

You think that just because I take a middle ground I don't have any balls?

I'll look between my legs -- you look between your ears! :lol:

Well maybe you do have something between your ears -- you knew enough to delete your post before anyone but me read it! :lol: :lol: :lol:

[PaceAdvantage]

Ouch JM! Not quick enough on the trigger!