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eastbay
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Joined: Dec 18, 2004
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Location: One Mile From the Columbia River
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 Posted: Sat Jul 05, 2008 8:40 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| Hogan wrote: | S. Korea to cut oil tax if oil hits $170
| Quote: | | The plans follow a 10.5 trillion won ($10.01 billion) package introduced last month to ease the financial burden of high oil prices on low-income individuals and self-owned businesses. |
| Quote: | | The government said last month it would come up with extra contingency plans, including a cut in oil taxes, if Dubai oil tops $170 a barrel. |
link
Subsidizing. Have to keep that economic ball rolling. |
That'll help make more fuel available for everyone. 
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idiom
Intermediate Crude
Joined: Aug 23, 2004
Posts: 530
Location: New Zealand
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| Posted: Sat Jul 05, 2008 8:46 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| With such inelastic demand, the market signals are being destroyed not demand. |
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idiom
Intermediate Crude
Joined: Aug 23, 2004
Posts: 530
Location: New Zealand
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| Posted: Sat Jul 05, 2008 8:52 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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This is not a subsidy they are backing off, it is a tax. Oil will become cheaper in South Korea. The price is artifically inflated to decrease demand ahead of PO.
Such hedges allow countries to mitigate the fast onset of PO. The States never had a tax or anything. The States only have the SPR which could be used for the same thing, to keep effective US prices below $150 for six months. |
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DantesPeak
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Joined: Oct 23, 2004
Posts: 5928
Location: New Jersey
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| Posted: Sun Jul 06, 2008 8:29 am Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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Contrary to many predictions I recently heard from main stream economic analysts, the gross amount of subsidies around the world are increasing as the price of energy rises.
Most people in the world would have their lives significantly disrupted by paying twice as much for energy as one year ago. Almost all countries, no matter how much they believe in 'free markets' will increase their subsidies to avoid protests, strikes, riots, etc. That includes the US, where I expect the first rebate program will be followed by a second - this year - more specifically targeted to those most effected by higher energy prices.
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idiom
Intermediate Crude
Joined: Aug 23, 2004
Posts: 530
Location: New Zealand
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| Posted: Sun Jul 06, 2008 3:32 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| Reckon this will be followed by headline like "U.S. to open SPR if Oil hits $170"" No matter how bad an idea that is? |
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DantesPeak
Expert
Joined: Oct 23, 2004
Posts: 5928
Location: New Jersey
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| Posted: Sun Jul 06, 2008 3:54 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| idiom wrote: | | Reckon this will be followed by headline like "U.S. to open SPR if Oil hits $170"" No matter how bad an idea that is? |
Probably.
SPR was authorized by Congress to be used only in the event of physical disruptions to the oil market. That would seem to include hurricanes, blocked shipping channels, etc. However Congress changed its own rules this year by not allowing the SPR to be refilled (except by payment of oil royalties from the GOM).
So it's quite possible that Congress could vote to release the SPR before the elections. It's also possible that would have a significant - though short lived - negative impact on the price of oil.
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OilFinder2
Light Sweet Crude
Joined: Mar 26, 2008
Posts: 1371
Location: Seattle
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| Posted: Sun Jul 06, 2008 5:57 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| idiom wrote: | | With such inelastic demand, the market signals are being destroyed not demand. |
Sorry to say, but oil demand in Korea is a bit more elastic than you think.
--> LINK <--
| Quote: | South Korea's June Crude Oil Imports Drop 6.1%; Cost Jumps 71%
By Shinhye Kang
July 1 (Bloomberg) -- South Korea, the world's fifth- biggest crude oil buyer, imported 6.1 percent less of the fuel in June as prices rose from a year earlier.
Imports dropped to 66.4 million barrels last month from 70.7 million barrels a year ago, the Ministry of Knowledge Economy said in an e-mailed statement today. The import bill increased 70.5 percent to $8.25 billion in June because of higher oil prices.
Crude-oil imports in the first half of this year fell 1.2 percent to 433.8 million barrels, the ministry said. |
That comes to 143,333 fewer bpd in demand. Or at least in imports. But since South Korea has basically no oil production, that should be a pretty close surrogate to actual demand, unless they've started importing large quantities of refined gasoline and diesel.
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idiom
Intermediate Crude
Joined: Aug 23, 2004
Posts: 530
Location: New Zealand
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| Posted: Sun Jul 06, 2008 6:10 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| When the price doubles does consumption halve? No? Wow, it might not be perfectly elastic then. |
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wisconsin_cur
Moderator
Joined: May 10, 2007
Posts: 3228
Location: Resiliency Farm
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| Posted: Sun Jul 06, 2008 6:17 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| OilFinder2 wrote: | | Sorry to say, but oil demand in Korea is a bit more elastic than you think. |
or not?
Crude inventories in S. Korea,
| Quote: | | SEOUL, June 20 (Reuters) - South Korea's commercial crude inventory fell nearly 37 percent by end-May from a year ago as high oil prices continued to discourage refiners from making new purchases, state-run Korea National Oil Corp (KNOC) said Friday. |
37%... ouch
| Quote: | | South Korea's four refiners -- SK Energy (096770.KS: Quote, Profile, Research), GS Caltex, S-Oil Corp (010950.KS: Quote, Profile, Research) and Hyundai Oilbank Corp -- had 14.51 million barrels of crude left in stocks by May 31, compared to 22.95 million barrels a year before, KNOC's monthly data showed. |
That would be a loss in stocks of about 8.44 million barrels
| Quote: | Along with the fall, overall private oil stocks by end-May fell 8.9 percent from a year ago to 70.18 million barrels.
"The problem is continuing. High crude oil prices are pressuring refiners to use stocks rather than make new imports," said Uhm Kwang-yong, domestic products analyst at KNOC.
The end-May crude inventory volume was enough to meet 6.7 days of the country's demand, down from 10.9 days on average in the previous year. |
So we don't really know how much usage has gone down... they have been using existing stocks.
Imagine what will happen to prices when they have to start importing again 
Sorry OF2. The real world is more complicated than you perceive.
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Last edited by wisconsin_cur on Sun Jul 06, 2008 6:23 pm; edited 2 times in total |
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FireJack
Heavy Crude
Joined: Mar 16, 2005
Posts: 456
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| Posted: Sun Jul 06, 2008 6:18 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| Its really starting to come together. Prices have been relentlessly rising of late and all these people who have been trying to bunker down are starting to realize its just going to get worse. I'm betting that just when these countries reach a breaking point shortages will start to appear then oil rising $10-$20 a day will be the norm as everyone panics. Good idea to be prepared for that day. |
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OilFinder2
Light Sweet Crude
Joined: Mar 26, 2008
Posts: 1371
Location: Seattle
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| Posted: Sun Jul 06, 2008 6:29 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| wisconsin_cur wrote: | | OilFinder2 wrote: | | Sorry to say, but oil demand in Korea is a bit more elastic than you think. |
or not?
Crude inventories in S. Korea,
| Quote: | | SEOUL, June 20 (Reuters) - South Korea's commercial crude inventory fell nearly 37 percent by end-May from a year ago as high oil prices continued to discourage refiners from making new purchases, state-run Korea National Oil Corp (KNOC) said Friday. |
37%... ouch |
South Korean oil demand has been flat for several years. It would be nice to see actual recent figures, but I'd be willing to bet that much of the decline in crude imports represents decreased demand.
A decrease in storage does not necessarily mean a lack of supply, it could mean they don't want to have $140 oil sitting around idle in storage. It's getting too expensive to keep in storage, so they take a "lean inventory" approach.
Same goes with US storage, I might add.
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OilFinder2
Light Sweet Crude
Joined: Mar 26, 2008
Posts: 1371
Location: Seattle
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| Posted: Sun Jul 06, 2008 6:33 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| OilFinder2 wrote: | | South Korean oil demand has been flat for several years. |
As I said.
South Korean oil demand through 2006.
source
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Abundance - what a concept! |
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wisconsin_cur
Moderator
Joined: May 10, 2007
Posts: 3228
Location: Resiliency Farm
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| Posted: Sun Jul 06, 2008 6:35 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| OilFinder2 wrote: | | wisconsin_cur wrote: | | OilFinder2 wrote: | | Sorry to say, but oil demand in Korea is a bit more elastic than you think. |
or not?
Crude inventories in S. Korea,
| Quote: | | SEOUL, June 20 (Reuters) - South Korea's commercial crude inventory fell nearly 37 percent by end-May from a year ago as high oil prices continued to discourage refiners from making new purchases, state-run Korea National Oil Corp (KNOC) said Friday. |
37%... ouch |
South Korean oil demand has been flat for several years. It would be nice to see actual recent figures, but I'd be willing to bet that much of the decline in crude imports represents decreased demand.
A decrease in storage does not necessarily mean a lack of supply, it could mean they don't want to have $140 oil sitting around idle in storage. It's getting too expensive to keep in storage, so they take a "lean inventory" approach.
Same goes with US storage, I might add. |
You quoted a decline in imports. I demonstrated that a decline in imports has been more than accounted for by a decrease in stocks year over year.
No one claimed they could not buy it, only that it (more than) accounts for your noted drop in imports, negating your argument about elasticity of demand. period.
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cube
Fusion
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Joined: Mar 12, 2005
Posts: 3796
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| Posted: Sun Jul 06, 2008 6:43 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| Hogan wrote: | S. Korea to cut oil tax if oil hits $170
| Quote: | | The plans follow a 10.5 trillion won ($10.01 billion) package introduced last month to ease the financial burden of high oil prices on low-income individuals and self-owned businesses. |
| Quote: | | The government said last month it would come up with extra contingency plans, including a cut in oil taxes, if Dubai oil tops $170 a barrel. |
link
Subsidizing. Have to keep that economic ball rolling. |
This is why I always have a good laugh whenever anyone proposes a "government solution". 
//
I fully expect government (to do what gov. always does best) tax the productive part of the economy and subsidize the failing part. |
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misterno
Heavy Crude
Joined: Mar 07, 2007
Posts: 314
Location: Houston, TX
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| Posted: Sun Jul 06, 2008 9:09 pm Post subject: Re: S. Korea to cut oil tax if oil hits $170 |
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| OilFinder2 wrote: | | OilFinder2 wrote: | | South Korean oil demand has been flat for several years. |
As I said.
South Korean oil demand through 2006.
source |
South Korea has been growing with positive % for many years. So how come their demand is flat for so many years?
Anyone care to comment? |
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