High Gas Prices Cannot Keep the Economy Down

Discussion in 'Economy' started by red states rule, Jul 4, 2006.

  1. red states rule
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    red states rule Senior Member

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    As Americans jammed the highways and airports to enjoy their holiday, I thought how PO'd the libs must be.

    With gas near $3 a gallon, Americans are enjoying the holiday and do not seemed a bit worse for wear with high energy prices

    The US economy is so strong, high oil prices cannot stop it from growing.

    Of course, libs were running around saying how the high gas prices would keep people home this 4th of July.

    Wrong! Libs keep chanting their doom and gloom message and it keeps falling on deaf ears

    I found this article which proves my point (in addition to the crowded highways)


    http://www.csmonitor.com/2006/0515/p09s02-coop.html

    Why $3 gas won't slow the US economy
    We're in the middle of a boom spurred by lower taxes, big productivity, and free-market resiliency.
    By Lawrence Kudlow

    NEW YORK – As all the pollsters are telling us, there's an inverse relationship between rising gasoline prices and President Bush's falling approval ratings - most especially his approval rating on the economy. Of course, these polls describe a certain national angst over energy that harkens back to the dreadful 1970s. But there's a better reality out there: Namely, the upturn in gas prices simply is not stopping the economy the way it did three decades ago.
    Today's economy may be the greatest story never told. It's an American boom, spurred by lower tax rates, huge profits, big productivity, plentiful jobs, and an ongoing free-market capitalist resiliency. It's also a global boom, marked by a spread of free- market capitalism like we've never seen before.
    The political resolution to the disconnect between fear (high energy prices) and reality (a great economy) remains to be seen. But as the data keep rolling in, the economy continues to surpass not only the pessimism of its critics, but even the optimism of its supporters.

    Recent data on production, retail sales, and employment are stronger than expected. The latest durable-goods report shows huge gains in orders for big-ticket items such as airplanes, transportation, metals, machinery, and computers - even cars and parts. These orders suggest that the economic boom will continue as far as the eye can see. And there's more: The backlog of unfilled orders, the best leading indicator of business activity, gained 12 percent at an annual rate in the first quarter. With this kind of real-world corporate activity in the pipeline, highly profitable businesses will be doing a lot of hiring in the months ahead in order to expand plant and equipment capacity.

    As for the energy angst, President Bush recently outlined a sensible pro-market mid-course policy correction. He is suspending the ethanol tax mandate that forced gasoline distributors to switch to the corn-based fuel from the MTBE oxygenate. This ethanol regulation was one of the great energy-policy bungles of all time. Neither refiners nor transporters were anywhere near ready to implement this misguided mandate, which drove up pump prices by 50 cents in just a few weeks.

    But with Mr. Bush's recent action, futures prices for unleaded gasoline are already retreating, and it wouldn't surprise me if the whole ethanol price hike effect was reversed. Crude oil is also declining in the aftermath of the Bush announcements, which included the decision to stop the crude-oil fill rate for the Strategic Petroleum Reserve. At the margin, government deregulation is giving markets more latitude - always a good thing.

    The big point here is that free markets work. Rising prices from the global boom will lead to more conservation, less consumption, and more production, but only so long as government stays out of the way. Instead of blaming ExxonMobil for high gas prices, irate motorists and voters should blame Congress for mandating, regulating, and taxing against energy.

    Indeed, bashing big oil won't create a drop of new energy. Actually, over the past 15 years, ExxonMobil's total investment has exceeded the company's earnings, according to Washington analyst James K. Glassman. Meanwhile, all the evidence from time immemorial shows that gas prices are set by market forces, not manipulation at the production level. So-called price gouging is nothing but a political red herring. Windfall profits taxes and special tax subsidies will only diminish energy investment, not increase it.

    Energy is best left in the hands of the free market. With this in mind, Congress should allow environmentally friendly drilling in the Arctic National Wildlife Refuge and the Outer Continental Shelf, the building of more LNG terminals, and the creation of nuclear power facilities. Deregulation works: Just look at the boom in Canadian oil sands.

    Bush can also build on his new energy policy with more pro-growth measures that will extend the economic boom: Get rid of the ethanol tax for good. Repeal the tariff on imported ethanol from Brazil and elsewhere. Repeal the multiple taxation of dividends and cap gains. And abolish the death tax while you're at it.

    Exercise the budget veto pen to stop bridges and railroads to nowhere. Go back to the Reagan economic model of a strong dollar to hold down inflation and lower-tax-rate incentives to promote economic growth. That model will work as well today as it did 25 years ago, when it launched the long prosperity boom we continue to enjoy.

    Most of all, let free markets work. This is the new worldwide message of freedom, prosperity, and optimism.

    • Lawrence Kudlow is CEO of Kudlow & Co., an economic and investment research firm. ©2006 Creators Syndicate Inc.
     
  2. Mr.Conley
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    Mr.Conley Senior Member

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    Yea, I pretty much agree with everything he said except maybe the MBTE suspension. Apparently MBTE can cause cancer. Then again, I believe that about 20-30 states have already banned MBTE in gasoline due to the health risk. I guess I could see pushing the requirement back a few years until ethanol's price falls and producers are ready, but I don't think it was nessicary to completely trash the idea. Just a quibble though
     
  3. 1549
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    1549 Active Member

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    $75 a barrel: a new record.
     
  4. Mr.Conley
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    Mr.Conley Senior Member

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    I think that we're going to hit $80 in the next few months.
     
  5. 1549
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    1549 Active Member

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    I can't wait. When it happens I'll be sure to post that America does not care, liberals are suicidal, and George Bush is likely some sort of prophet.
     
  6. CharlestonChad
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    CharlestonChad Baller Deluxe

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    Without taxes on gasoline, the roads won't be maintained and/or paved. A company would come along and pave the roads, setting up toll boths everywhere.
     
  7. red states rule
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    red states rule Senior Member

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    Since government makes 5 times the money oil companies make on a gallon of gas, the roads should be paved in 24K gold

    To libs, the profit of the oil companies are obsene. Why aren't libs outraged over the tax gouging the govenment is involved in?
     
  8. CharlestonChad
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    CharlestonChad Baller Deluxe

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    Dude, everything isn't black and white. Every issue does not have to be divided into Liberals on one side and Conservatives on the other. Even right wing talk radio shunned oil companies for their outragous profits. Both parties agree that the oil companies are out of control (well actually the contrary, literally speaking) with the profits they are making.

    It cost millions of dollars to just repave an existing mile of 4 lane highway. Just imagine how much it cost to actually build a new highway, add lanes, build bridges, ect...
     
  9. red states rule
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    red states rule Senior Member

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    The amount of money the government is taking in on gas taxes, royalties payments, off shore leases, and other payments - the roads should be paved in gold. In the last 20 years the government has taken in over $2.2 trillion dollars

    On top of that you have tolls being charged on roads that were to paid with the gas taxes.

    Now of course, you have libs wanting to charge people for every mile they drive.

    It is black and white. You have libs wanting to pick the pockets of the producers even more then they are now. Of course, you want us to shut up and pay the tax.
     
  10. KarlMarx
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    KarlMarx Senior Member

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    Let's not forget that, because oil company profits are up, they wanted to introduce a windfall profits tax.
     

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