6 Mar 2011

Oil price increases a ‘tax’? Yes. Reduce the tax by reducing U.S. oil dependence

Written by energyscout


Think of the current increases in crude oil prices as a” tax” on energy consumers. That’s what Larry Kudlow, conservative talk show host on CNBC-TV and author who served as Associate Director for Economics and Planning in the Office of the Management and Budget during Ronald Reagan’s first term, 1981-85, called it during his Saturday, March 6, afternoon radio program on WMAL, 630 AM, in the Washington, DC, USA metro area.

Larry Kudlow. Credit: CNBC

TheEnergyFix is calling him on it. These increases should be thought of as a “tax” brought on by the lack of a coherent energy policy that should include deliberate, sustained steps to reduce America’s dependence on crude oil.  As long as America imports more than two-thirds of the oil it consumes (which it has since 2008), this “tax” will continue to eat into consumer’s discretionary income and complicate the global economic recovery.

As oil prices hover over $100 per barrel and risk going higher, the pain for for all will get worse before it goes away.

Yes the short-term supply reductions tied to unrest in Libya are beginning to wreck havoc with the oil markets, especially for “sweet” low-sulfur, crude. When supply returns to normal — whatever normal is — prices should ease. But this “tax” on America’s oil dependence will remain.

Want to reduce this “tax”? Cut U.S. dependence on crude oil and all of its byproducts, including gasoline, heating oil, diesel and industrial fuels. And boost incentives for sources of energy that replace them.



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