RE:RE:RE:Sign of the Times expecting government to fix the high petrol price problem is oxymoron because they are the problem.
Modifying Clint Eastwood phrase: Go Ahead, screw the consumer
Surtax, windfall tax, carbon tax, etc only hurt the consumer. Yes, it would curb demand somewhat but we know petrol demand is inelastic until it isn't. I don't know where is that point. However, oil companies will surely refrain from adding production or go find new oil. Less supply will keep prices up even if demand is reduced. Just ask, how did we end up with high oil prices today? Answer, green zealots pushing anti oil, anti pipeline, carbon tax, more regulation, ESG.and other fake news. Russian sanction? Blah, india and china are buying up russian oil by the boat loads which should free up more opec oil for others but yet, why oil price still so high?
That's why i said before, oil companies should pay down their debt, buyback shares and prepare for war against green zealots and government idiots.
Experienced wrote:
mrbb wrote: Experienced wrote:
Why do I mention this?
Unless I am atypical ( perhaps I am ), this spells a sea change in the future market for oil demand for transportation oil.
i think ur wrong on this one. Electricity being cheaper than gasoline won't last long. Early EV adopter is exploiting this price arbitrage window and it won't last forever. Canada gets $23 bllion from gas tax, government wouldn't let that off the hook for EV. This time is different, oil profit ain't going into developinh oil project or building more refinery. Oil demand might stabilze but 100+ oil is the new normal.
You make a good point about the gas tax revenue and it is possible that the oil price might stay around 100 a barrel for the foreseable future.
That said - here's my take.
If the oil price stays above 100 then we will see what the Brits have done and Governments around the world are talking about doing - a surtax on the oil companies. This surtax would go a long way towards recovering lost tax revenue from the gas tax as more people shift to EVs.
Further, the Trudueau Government is also raising the carbon tax and if anyone thinks it will be tax neutral is living in a dream world IMHO and so the carbon tax will also help to recover lost revenue from the gas tax.
Will the price differential between electricity prices and oil prices diminish somewhat over time?
My answer is probably. The reason for this is that in order to increase elecricity production to meet the rising demand from EVs and other sources, there will need to investment in infrastructure which of course costs money which will need to be recouped by electricity producers. BUT, I do believe that the relative price of electricity vs oil will be in favour of electricity for the foreseable future.
One fly in the ointment that I see is that the increasing reliance on renewables like wind and solar will likely result in increasing failures of the electricity grid to meet demand.
When I put all this together, I have invested in electricity producers and have taken a position as a significant shareholder in a private company which will help companies with lower electricity costs and provide security of supply in the event of a grid failure.