Wednesday, August 24, 2011

$50 a Barrel Tax on imported oil


We have an economic malaise of no confidence. Capital is readily available but no where to apply it. What is a country to do? The tax proposed in the title is counter intuitive, but let me postulate that a large cash inflow into the U.S. Treasury will raise confidence and that this inflow may not create much if any outflow from consumer's pockets. This is because the world crude oil market will drop on lesser demand on the margin and speculators will leave the world market further deflating prices. It's very likely that world oil price will drop to $50 leaving the U. S. consumer at the same $100 level prevalent now which will also keep domestic alternative energy investments and oil and gas drillers from suffering and it makes much more sense than promising a $2 a gallon gas price.

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