What happens to domestic price and production, if all imported oil and oil products carry a 20% tariff, on top of the global price?
Steve
1 Like
Just like the Canada situation, it gets complicated in some spots.
Quick question - do you know the largest oil producer in Guyana?
Ans: Oh, just a “small” oil company called ExxonMobil. As I understand, there are some “technicalities” with another small oil company in Guyana called Chevron
1 Like
Our youngest grandchild, age 3, will only eat her toast on Monday morning if it is cut a certain way. Then on Tuesday she will insist, to the point of aggrieved crying jags, that she has never eaten it that way and she will only eat it some other way. That is the way I view tfg and us speculating over what will happen in 2025.
IF we enact tariffs as claimed, energy costs will rise a lot. Even the subservient Congresscritters currently in power know that, which is why they say those threatened tariffs are just a ‘negotiating tool.’ But just in case it does happen, we went ahead and agreed to replace our 18 year old 10 seer air conditioner/furnace combo with a much higher efficiency heat pump/furnace combo which should allow us to take advantage of rebates presently in place and use less electricity/fuel in future years.
Based on past experience, I predict that we will likely extend the tax cuts passed in 2017, add another $4T to our $35T deficits, and blame ‘liberal spending’ for those deficits- again. That will happen, IMO, because that money will flow into the hands of the billionaires presently in charge.
If they really do cut $Trillions from Medicaid, SS, chips, etc., states will have to pick up the tab or else there will be a very strong deflationary force in the form of rising poverty for millions of people who are already on the edge.
I don’t know which way to cut the toast on that on that one. If pushed, I would agree with ip’s prediction that the pitch forks would come out and that we will likely just deficit spend our way to prosperity which has been the norm for 24 years.
4 Likes
“We” won’t be imposing tariffs. He will be imposing them. From this link:
Section 232 of the Trade Expansion Act of 1962 (known as the Trade Expansion Act) grants the president broad power to adjust imports if they are found to be a threat to U.S. national security, including through the imposition of tariffs.
There is another more likely probability. More people will die. More will suffer food insecurity. More will end up in for profit prisons. These are not bugs of poorly thought out policies. These are features of well planned policies.
5 Likes
The issue is employment. We are in the demand side part of the cycle. We need to expand the middle class. If we operate in reverse then we get calamity. See what happened to Liz Truss? We will have that here in spades very soon. As people get laid off because of austerity policies and tariffs lower prices things will get bad.
@WendyBG et al beware of the bond market and US paper. Even short term paper is dangerous if you study the UK and Truss’s actions.
When Trump first levied higher tariffs we had inflation. And the tariffs may have reduced inflation. Now we have minor inflation. It is very bad idea to raise tariff rtes.
Ironic.
At first people will love lower prices. But merchants will hate it and some will fail.
Tariffs cut off trade. Meaning people are laid off. The economy quickly feels that. Demand is cut off prices fall.
Austerity makes that much worse. These policies are always created hand in hand. Austerity cuts off more jobs. Not just public sector jobs but also private sector. Prices fall. This happens rapidly.
Recession and prices fall further.
Liz has been brought up several times lately. Big difference: the US does not have “no confidence” votes. Everyone that will form the government in January, has a free hand for two years. One POTUS and 2/3rds of the Senate have security for even longer.
Second, don’t do “austerity” in an even-handed manner. Target certain “others” to be really rogered, rather than take away a smaller amount from the base. Then spin everything like crazy. Remember all those polls, before the election, about how everyone was suffering? Now look at the “news” about holiday travel and sales.
2 Likes
Austerity is completely bad news even according to musk.
The opposition is sharpening their tools.
Blame will be squarely laid.
When it comes to crude oil, location of origination matters. One barrel of crude is not necessarily the same as another when it comes to optimizing refining production. There are some alternatives that can work reasonably well, but the selection of crude production blends from around the world, based on the chemical composition of those crudes, is an important part of efficient refining production, based on the processing units a refinery has and the refined product they are looking to produce. If you make a refiner choose different crude slates, they should still be able to produce most if not all of their product, but they will do so at higher cost and greater waste. Either way, finished product prices will increase, except possibly for asphalt, which might use that waste stream to some extent.
IP
There was a proposal, in the late 70s, to tax imported oil, to give pricing cover to the alternate energy projects in the US, that were trying to produce “shale” oil, or build coal liquefaction plants. The opposition at the time, howled about “making gas more expensive”, so the US remained dependent on imported oil. When I was at the pump seal company, I saw a lot of these projects come across my desk. They all failed, because they could never be cost competitive with where OPEC was holding the price. Now, we have another administration that wants to increase US production.
Steve
Because gas is so expensive today? $2.49/gal at our Costco this morning, down from last week’s $2.89. I asked DH if he thought it was Black Friday pricing. Also important to note that unlike boxed cereal or the ever shrinking “half gallon” of ice cream, there’s no shrinkflation in play here. A gallon of gas is still an actual gallon.
IP
3 Likes