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Saudi pumping is not related to Paris. Paris is where a new form of wealth tax is applied but only to countries who agree to the tax. For countries who do not sign, they effectively gain a windfall. Saudi pumping and OPEC abandoning the quotas is a response to Russian/Iranian market share dominating their export markets to India & China. All comdty's are tired to inflation, interest rate hikes are tied to inflation demand. 20 dollar oil is a supply glut and a global balance sheet recession, and has nothing to do with Paris either. 20/bbl oil is only tied to the supply clearing, which we are already starting to see out of high margin places like GOM & Alaska throttling down, just like what happened in the 80-95 period. On average, a Paris accord carbon tax will simply be passed through, ad valorem to the downstream; just like the US highway tax is actually 57% of the gasoline ROB price you pay at the pump, and at the airport. Ethanol subsidies are another pass-thru. Using round numbers for the Alberta implementation, taking the Carbon Metric Ton price from 50 to 180/MT will approximately add about 1.00/gal to Brent linked gasoline's in the USA, and about 1.57/gal to German blends. In this scenario the Paris accord will make personal utility & transport cost prohibitive to most undermployed Americans & Europeans, which is great because it will force OECD consumers to shift their consumption towards mass utility transport, ride sharing. This is expected to lead to a windfall in discretionary spending unless public transport & rideshare simply jack their prices to meet the new shift in transport demand. Paris is actually a huge wealth transfer to industrializing countries where they are being paid to continue on their path to industrialization at the subsidization of industrialized countries which are seeing stallspeed growth thanks to developing markets moving from export manufacturing goods -> import service/luxury consumption to domestic consumption + domestic service generation economic models. Given what happened with healthcare premiums post-Obamacare, the likelihood of retail urban consumers being forced to burden a highway price hike, which evaporates all windfalls from abandoning car ownership is 100% likely.
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Dec 10, 2015 08:54
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| # ¿ May 21, 2024 08:56 |
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