Socialism – Now In Chu-able Form

Jumpin' on the Euro-gas Chu-Chu train!

Steven Chu famously offered that “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” a feat well under way under the Øbama administration. Gas prices have literally soared to new heights under the guiding hands of Øbama and Chu. In this campaign season, however, Stevie’s tune has changed. “I no longer share that view,” he recently quipped. That view is anathema to his boss’s reelection efforts!

Despite protestations to the contrary, I offer the Chu and Øbama merely no longer share that view with the public. The blocking of the Keystone XL pipeline is policy pointing to the view continuing to be alive and well in the administration. Oil production on federal lands having dropped to the lowest level in known history is physical performance pointing to the view continuing to be alive and well within the administration.

Just how, do you suppose, the prices would be inflated to European Sized? Why, by the same mechanism as the gas price inflation in Europe and, for that matter, our northern neighbors, Canada: through taxation. It is estimated that the taxes imposed on the sale of a gallon of gasoline are already on the order of 12 times  the amount earned by the oil companies as profit (more or less depending on what state you’re buying it in) – in the revenue split, taxes are second only to production (including materials) and transportation, with profit so far back in the running as to not count at the finish line (of course, even those paltry profits-per-gallon add up to billions at the end of the year).

“Hey, Pateratic!” you say. “What about production costs! Can’t the price be inflated through them?”

“Sure,” I reply. “Simply by increasing the regulatory burden and fee structure for production methods, components, and facilities, prices will be driven up. But note who would be doing this: not the oil companies, but the government. Enforced unionism for the workforce, too, can and is employed to drive costs higher.”

“You could increase the cost of production by opening new facilities,” I continue, “but the government won’t let you. Besides, if you did, that increase in costs would be ameliorated by the associated increase in production capacity and, therefor, supply would increase to the demand, driving prices lower  – absent of additional taxation and otther artificial perturbations to normal market forces.”

“Hey, Pateratic!” you again offer. “What about TRANSPORTATION costs! How can the government manipulate those? Those MUST be the responsibility of those capitalist pigs!”

“Nope. You’ve already seen an example, but you don’t realize it,” I reply. “Denying permission to build Keystone XL requires that Canada either sell to another market, or transport the crude to our refineries (Canada has surprisingly few, considering how low her population to land mass ratio is) via comparatively expensive truck or rail. Whether they choose more expensive transport, or choose another market, the results in the US are the same: a higher fuel costs. There’s one example. Another is the regulatory burdens and fees placed on those who truck hazardous material across our border and within our own country. Also, show me a tanker truck driver who isn’t a member of the Teamsters – enforced unionism. Finally, the licensing fees for each mode of transport, and (and this one is a bit Catch-22 in this case) the cost of fuel for the modes of transport – including all the taxes per gallon used.”

“Again, ” I continue, “you could drive up the cost of transportation by buying additional vehicles; however, without the additional capacity, they would sit idle, making that a poor business decision.”

“Man, you’re scaring me! They’re really into our pockets deep, aren’t they?”

“Oh, you have no idea!” I reply. “We haven’t even scratched the surface of even this gasoline example! Permit fees and leases for exploration. Permitting fees for drilling. Inspection and compliance costs. Legal expenses to fend off environmentalists – and the loss of sunk costs when the fight is unsuccessful. Permitting, inspection fees, and taxes on the distributors (gas station owners)… There is much, much more than this!”

From this hypothetical conversation, it is easy to see one reason why liberals would want to see Euro-styled fuel prices here. They see it as a veritable treasure trove of new tax revenue because, seriously: does anyone see a viable electrified car in the future? The Tesla turns to a very expensive brick if its batteries fully discharge. Consumers Report couldn’t keep their Fisker running long enough to get beyond their first test. The Chevy Volt is purported to perform better as fuel for a wienie-roast. Aside from these issues, all of these are impractical to buy, and equally impractical to maintain – and new gasoline-fueled cars are far cheaper to operate, and get comparatively better EPA estimated mileage! Since there is no viable, affordable alternatives to gasoline powered conveyances, if Euro-style prices were imposed here, the government gets rake in massive taxes from all who can still afford to buy gasoline – and there will be many. Note that none of what the government would impose is a benefit to anyone who is working to provide the product unless, of course, they are also on one of the myriad entitlement programs sapping the life out of our country at present – assuming the monies collected are not wasted in other modes (like, for instance, paying off cronies investing in ‘green‘ energy companies. I am personally convinced that ‘green’, in this context, refers to the color of the money lining the pockets of the associated Øbama crony capitalists, but that’s me…)

And what of Øbama’s claim that they are drilling more now than ever? The key part of that claim is the term ‘they‘. Though you are led to belief otherwise through his rhetoric, it is despite the Øbama administration that this is occurring; not due to it. The oil fields being drill, drill, drilled are, to a one, on private land. Those output of fields on public lands is at a nine year low…

Note: very little hyperbole had to be employed to achieve the sensational tone I was looking for. That alone should scare the crap out of you.

– Pateratic

 

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