For several months, I've been brain storming on ideas that would change our energy crisis. Oil prices continue to rise without good reason. Although there are days where reservers appear to be lower and then there's announcements that there's more reserves than normal because of a 2% drop in Americans driving behavior. In either situation, you see the prices rise modestly. It's a trend that is being driven by speculation.
Although Obama has spelled out some amazing proposals to fight off oil futures speculation, there's an even simpler solution. Just raise the Capital Gains tax on oil futures trading. It would set the tempo for those risk takers who'd likely invest less if the incentive was less than par. For example, when Capital Gains taxes are raised on home ownership, investors are less likely to risk money on something where the return is taxed away. This had an effect on the bubble that we've experienced over the past 5 years.
I propose that they raise the Capital Gains tax on OIL futures trading. As a result, speculators will head towards the exit doors and the price of oil will drop to levels that are consistent with supply and demand. Assuming that other factors proposed by Obama are also met, we could be seeing oil at the historic $60.00 per barrel.
Let's compare Gold prices. Although there is an abundance of GOLD throughout the world, the GOLD commodities price is extremely high. But prices for jewelry are still reasonably low. This should be the same for GAS. The retail market price for oil is significantly higher than what the real market would bear if not for speculators. The cost to make GAS has not changed....and neither has the wholesale cost of OIL. This would explain why Exxon is making record breaking profits quarter after quarter. Let's NOT tax the oil companies...but lets nip this in the butt by increasing capital gains on oil futures.
Ken
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