And While We're on the Subject of Oil Subsidies…
Our previous blog post made the connection between China's increasing demand for imported oil, The People's Republic's subsidies for the black gold ($40b p.a.) and the policy's inflationary effect on U.S. gas prices. Common sense (and The New York Times) suggest that other "managed economies" are using the same pro-growth strategy, amplifying the inflationary effect on world oil prices. "The oil company BP, known for thorough statistical analysis of energy markets [excellent hat tip to Big Oil!], estimates that countries with subsidies accounted for 96 percent of the world’s increase in oil use last year — growth that has helped drive prices to record levels." Hey, what happened to "Let's all blame the evil speculators?" Anyway, you think the U.S. is "addicted to oil?" Malaysia spent 7.5 percent of its economic output on oil subsidies. Indonesia shelled-out $20b this year to keep prices down. And where there's no political will to let the free market do its thing, there's no way they'll stop. "You talk about subsidies, you’re not only talking about the economy," asserts Purnomo Yusgiantoro, Indonesia’s minister of energy and mineral resources. "You’re talking about politics.” I.e. his job. So they're damned if they do, damned if they don't. And for this you pay at the pump. [thanks to OldDavid for the link]
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ZoomZoom said: I keep hearing “wean ourselves off of gasoline and diesel”, but nobody has suggested a viable alternative fuel and feedstock for these things: [...] From: http://peakoildebunked.blogspot.com/2008/01/326-detailed-breakdown-of-us-petroleum.html We see your entire list amounts to almost nothing compared to the oil consumed by passenger vehicles. Solve that 41% problem and you effectively have no more problem. If you still have a problem, move on to trucking (12%).
If you've been watching the news, you can see what happens when these countries reduce oil subsidies, people riot/protest. And, to answer a previous poster: what makes you think that the citizens of these countries can see that they are indirectly paying for the oil through increased government spending that at least eventually comes from their pocket? Most US citizens can't seem to figure this out judging by who runs this country-we did vote for our leaders afterall. Politicians get elected based on what they promise to do for their constituents, and the people who vote for them can't seem to figure out they will have to pay for these programs through either direct taxation or indirect taxation (inflationary borrowing and spending).