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Originally Posted by tomauto
American families seem to be hurting very badly with the current prices. The tax on fuel is not going to hurt the rich, it will hurt the middle class much more, but it will reduce demand indeed.
I do agree that we need to reduce demand. But with elections both parties would want to improve their image, so I think there will be a price ceiling to fuel costs.
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Its no longer about "image". Both parties are absolutely worthless, having allowed us to get to where the situation is as desperate as it is today.
A price ceiling will just result in shortages, gas lines, gas on even/odd days, and a nasty recession just like it did in the 70's. Given a price ceiling, there will be no incentive for anyone to reduce consumption, and no incentive for anyone to increase production, either.
China, India, Japan, Korea, Russia and Europe literally have TRILLIONS of US dollars they can and are using to buy oil or gasoline and there isn't enough oil and gas being produced for everyone to have all they please. So the laws of supply and demand say that if you don't increase the supply, the price must rise until demand drops. If we just print more dollars, they become worth less oil, gas, or whatever other commodity you'd like to measure them against. That's what's been happening.
The reality is that consumption needs to drop by a huge percentage so that instead of their being an oil and gas shortage, there is instead an oil and gas glut. Then the price will drop. If you suggest a rationing scheme by which we reduce consumption on the order of 30%, that would solve it, but recognize that rationing schemes don't necessarily end up with rational results. American families are ABSOLUTELY GLUTTONOUS consumers of gas and oil. Count the SUV's, vans, trucks, and high horsepower cars vs the miserly little cars on the road some day. I'd bet 2/3 of the SUV's you see have only 1 or 2 people in them, and no gear requiring such a guzzling behemouth to drag around 95% of the time. Yeah, there's our soccer mom, driving 40 or 50 mi to take her kid to soccer practice, or dad doing the 70 or 100 mi round trip to work. But why do they drive these huge beasts to get there and back? Status. Pure and simple. Be cool, drive a Hummer or an Escalade. Raise the price to $5.00 a gallon and they will ditch their Hummers and buy miserly Saturns like me. Hey, I have a big van and a race car, but my big van only leaves the driveway to tow the trailer to a race 3 or 4 times a year. In the past, that was a dozen times a year. The higher the price of gas, the more I avoid driving it any distance. I use it when I need to, otherwise I drive my Saturn.
In summary, consumption needs to drop dramatically or this nation is going to quickly collapse to where your dollars "aren't worth a Continental".
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