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Oil price slump

17/01/2016

Response to Paul Krugman’s article in New York Times

http://krugman.blogs.nytimes.com/2016/01/16/oil-goes-nonlinear/#commentsContainer

Good for the oil producing companies and countries to suffer from oil price slump. For years the oil producing corporations exploited their position of being large and very profitable, neglecting and jeopardizing any long term energy policy needs and alternative solutions to wasteful energy usage. The declined oil and commodity prices are due to alternative energy and material technologies like the cheap gas, which is by 30% less polluting than the oil. This means less CO2 emission, less pollution, etc. Good for everybody except for the oil producing corporations, whose steering long arms are everywhere.

Those who suffer from oil price slump are those who invested in environmentally dangerous oil cracking technologies on assumption of above 75 $ per gallon oil price. The others are the huge corporations who used for years their financial power to block change in US energy policy, that could diversify energy sources and make it environmentally more friendly.

Instead of feeling sorrow for oil price slump, and its impact on the oil producers, it is exactly the time to call for abolishing the subsidies this industry is getting by not taxing the environmental damage it causes, and by using public money to built roads used by private cars. It is time to introduce in the US taxation of economic activities with negative green house effect. At today’s oil price it would not be felt by the consumers, and it would bring positive long term developments. For example it could help to close the US federal budget deficit, it would have positive impact on the climate change, and if the additional federal government income would be invested into infrastructure, like modern railway system or some social issues, like Medicare or education, it would bring even a positive economic growth.

And yes, the low energy prices are good for economy. It is like tax reduction. Since when tax reduction damages economy? High energy prices transferred financial resources from productive economies like US, Europe, Japan and China to non productive Saudis and other OPEC countries, who used these funds to personal luxuries of political elites, investments in real estate without real economic need and wars. It is just good that this flow of financial resources will stop and the money will remain in the countries whose people work to earn it.

The time came to think in an alternative concepts of thoughts and realities. Tax imposed on fuels and other polluting products, relative to their level of green house effect and pollution can be easily explained to the public by the need to find funding to clean the mess this activities caused.

Then people and corporation would adopt a different approach. For example no more electricity production from coal, meat price would jump (due to methane emitting cows and pigs) etc. (bad for unhealthy burgers). People would find another way for transportation than the highly inefficient private cars. (Ineffective because of traffic jumps, one man one car system, bigger and bigger cars, etc.)

How all this can be bad?

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