15265RE: [LandCafe] Re: 70% of oil price is speculation
- Feb 28, 2013
People don’t understand “rent collection” but they do understand taxes. Hence the Single Tax. However, we should understand that collecting rent is not a tax. It’s really a charge. You want $100 land – you pay $100. You want $1,000 land, You pay $1,000.
In similar fashion, you don’t heavily tax oil to stop speculation. The oil belongs to us (or should) and what the drillers pay for is the right to extract the oil. (This can be established by bidding.)
Speculators are an important part of the free market and shouldn’t be unjustly criticized. The easiest way to keep oil prices down is to build another refinery or two. However, NIMBY is a problem (Not In My Back Yard). Also, politicians are reluctant to pursue such building. One needs little imagination to guess why.
In California, our gas prices are hovering around $5 a gallon. Our Sacramento idiots even added sales tax to gas! Meantime, our refineries are partly closed down.
It's not a matter of buying oil from OPEC. It's a matter of
establishing a system where the price of the undrilled oil - that is,
oil still in the ground, below the wellhead, if possible - is taxed
heavily to discourage speculation. And further that anyone who drills,
processes, ships or sells the oil after that be able to keep the profits
from the difference between production costs and raw costs, minus the
taxes for pollution and land use for drilling areas, refineries, gas
The volatility - I pointed to the 3/4 drop from the summer of 2008
($147/barrel) to the winter of 2008-09 ($35/barrel) is pure market
manipulation. In the summer, there were tankers held by many of the
largest financial firms - Morgan Stanley, Goldman Sachs, etc. - parked
offshore, waiting for price appreciation - then these holdings were
dumped on the market, simultaneously with the beginning of the meltdown,
which also resulted in oil traders being forced to cover their margins,
driving prices down even more.
This kind of instability distorts buying decisions, causes millions to
go hungry and even starve (in developing countries, food, which is
highly dependent on oil availability/pricing, can be 70% of a family's
budget). It makes it impossible for businesses to make long-term buying
decisions without engaging in hedging themselves - something that would
be unnecessary in a Geoist system in which the surplus was taxed and
passed back to the people (well, we are being hopeful here!).
A good first step is to demand that those who BUY the oil take
possession of it.
The oil market - or, for that matter, the stock market - is often
compared to an auction market, but it is not that. When I buy a
painting at an auction, I have to take it home with me. There is no
market in speculating the price at which the final buyer will purchase
the artwork will be (maybe I shouldn't bring that up, or some Wall
Street type will create one!). You buy it, you own it, ought to be how
all commodities markets work.
--- In LandCafe@yahoogroups.com, "walto" wrote:
> --- In LandCafe@yahoogroups.com, "John" burns-john@ wrote:
> > Scott Baker hit upon a good point. 70% of oil - which is land as it
is a natural resource extracted from land - is because of private
speculation. Geonomics would spot this one of course, LVT, Georgism,
would not, but how?
> > Scott says oil should only sold to those who use it - of course. Oil
sits in large tanks and may be bought and sold many times. Oil is also
sold in tankers as they sail the open ocean. The oil in the ships may be
bought and sold 2 or 3 times on route, which is out of countries'
> > People in Europe are finding it difficult to pay for the heating
bills. It is either eat or heat.
> I also find it difficult to pay for my heating bills, but I sincerely
doubt that requiring me to buy my oil directly from OPEC is a sensible
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