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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (271544)2/3/2006 6:57:08 AM
From: Road Walker  Read Replies (2) of 1575352
 
re: The current reason why oil is at a premium starts with the fact that supply and demand are in almost perfect equilibrium. The risk premium is added because of geopolitical events that are or could take place in oil producing nations. I don't think announcing a conservation program in the US would have much impact because of the length of time it would take to get such a program in place and effective. Long term, I think it would have impact but not immediately.

How about this...

1. Raise the Fed gas tax from 17 cents a gallon to 60 cents a gallon, effective immediately.
2. Mandate that the states charge a $500 annual license premium for any passenger vehicle that gets less then 20 MPG, effective in 3 months.
3. Us the proceeds to give a tax rebate of $7000 on the purchase of any passenger vehicle that gets better than 32 MPG, and no state sales tax, maybe 0% interest loans.
Might have to change the numbers, this is off the top of my head.

This would certainly have a significant first year demand effect. And the oil traders, who look out at least six months on the supply/demand curve would recognize that the "perfect balance of supply/demand" was about to change. Bye bye risk premium... the risk would be lower oil prices.

John
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