
Does anyone remember in May when a
Goldman Sachs analyst predicted $200 barrel of oil prices by the end of the year, and in July when the price of a barrel of oil was around $150 a barrel, and we were talking $6.00 a gallon by the end of the year?.... So what the hell happened?? To put it in Lehman's terms (not Lehman Brothers), supply stayed steady, while demand dropped (due to a number of things...mostly a cut in consumer spending due to the recession we're in, also because people couldn't afford $4.00 a gallon so they found other means of transportation). When there is a drop in demand, the price goes down (think about bulls tickets in 1998 compared to this year). In the summer, there was a big scare that we might be consuming way too much oil, and prices had to go up so we would be forced to figure something out (alternative energy, hybrid vehicles, public transportation). Well, now oil and gas prices are the lowest they have been in 3 years, and i think this will lead to an increase in demand (because people can afford it again). This increase in demand will shoot oil prices back up to around $100 a barrel (my guess is in the next 2 years) and we will hear the same energy shortage talk that we heard over the summer. So....how do we fix this?? I think we should steal a page from the Europeans book and tax the shit out of gas. Does anyone notice that they pay about double the price we do? Gas should remain around $4.00 a gallon and the taxes that we pay should go to fund 2 things: 1) Research and development for alternative energy and 2) Public Transportation. This would a) decrease energy consumption and b) help America become energy independent (something Obama wants to do in the next 10 years.) If we are going to implement this strategy, we need to wait until the recession is over because doing this will only hurt our economy in the short term, but in the long term i think we can benefit from high gas taxes.
Sorry for gettin all economicy and financy today but i just had to get this off my chest... I'll be back to sports or food or something tommorrow.