U.S. sticks it to transit users while gifting drivers a tax cut
In 2009, the government decided to grant an equal tax break to commuters who take public transit, allowing them to write off part of the cost of their bus or train tickets. In Washington, D.C., the transit authority noticed a slight increase in ridership. In New York, more than 700,000 people were eligible for the benefit.Actually it makes perfect sense when you want to incentivize purchase of a bailed out car industry. It makes perfect sense if you need to encourage the repetitive purchase of vehicles, over and over and over. It helps to give a boost to a "vital" industry that is extremely susceptible to rising oil prices and then later gas prices which if you haven't noticed WTI is climbing back towards the magic $100 marker as talk of "the recovery" picks up.
But the lawmakers slapped a sunset clause onto the subsidy. So on Jan. 1, the tax benefit for transit takers will be automatically reduced to $130 a month, from $245.
At the same time, the tax benefit for drivers will increase $5 to $250 a month.
“All along we have always asserted it’s a backwards policy thrust that we have right now,” said Billy Terry, senior legislative representative of the American Public Transportation Association. “To have parking more incentivized than transit absolutely makes no sense.”
Interestingly enough, despite the U.S.'s record "fracking boom" the overall pattern of oil prices hasn't changed, in fact 2012 saw a much lower dive down to $80.
WTI-Brent Spread Narrowing as U.S. Exports Record Fuels
While the U.S. is pumping the most crude oil in a quarter century, laws prohibit most exports, driving down costs for domestic refiners and spurring record shipments of everything from diesel to gasoline that will diminish stockpiles. The forecasters expect Brent prices to weaken as regional supply recovers, led by Iran and Libya.Take note first, on how important the Libyan and Iranian supplies are for lowering affordability for the Europeans. This goes back to what I said on Libya way back on Hellberta. The "nuclear deal" and lifting of sanctions with Iran is also well timed.
“The continuing arbitrage for oil products out of the U.S. is going to move WTI higher,” said Eugen Weinberg, the head of commodities research at Commerzbank in Frankfurt. “We’re likely to see negative surprises for Brent because right now the market is not yet pricing in the return of Libyan and Iranian barrels.”
Second, the U.S. is going to drive WTI prices higher. Now, I disagree with their reasoning. Beyond standard considerations, supply constraints, etc, oil is largely driven by speculation which is itself driven by expectations of the future. Generally oil price will rise if demand for oil is going to go up, or that there is an expectation supply is going to go down. Not surprisingly oil price tends to follow the same pattern as economic confidence. It's good, it's good, oil price rises, but as affordability hits the ceiling of $100 and begins hitting resistance it does not have enough momentum to go beyond $110 (as I forecast back in January), and it is at these points that the "recovery stalls".
|The above chart I stole from YCharts but the doodles are mine.|
As you can see as well our window of affordability as I like to call it is getting smaller, and smaller.
Which brings us to:
Fossil Fuel Subsidies Nearly $800 per Canadian, says the IMF
What the general public is mostly unaware of is the prices we pay for energy are subsidized prices. When we pay $50 at the gas pump, the gas we got is actually worth more than $50. When we pay $100 for our hydro bill, the energy we used is actually worth more than $100. Why? It’s because the government financially subsidizes the energy we use. They have been doing this for years but most of the general public are not aware of this. The energy prices we consumers see are below market levels.This is why I have to laugh when we talk about "low inflation" and the government supposedly fighting it. They're hiding true inflation from you around every corner. It's a joke. It's an excuse to keep interest rates low to keep lending rolling to keep this stupid impossible monetary game show on air.
You might think: Isn’t that great? The government is paying for part of my gas! Let’s trace it backward, where does the government get their money to subsidize your gas? That’s from government revenues. Where does the government get their revenues? Mostly from taxes. The federal government of Canada get more than 80 percent of their revenue from two sources: income taxes and consumption taxes (source: StatsCan). Who pay the government those incomes taxes and consumption taxes? That’s the taxpayers. You get the picture … it’s you. The gas you get from the pump is paid partly by you at the gas station. The other part of the cost is also paid by you, but indirectly through the withholding tax from your paycheque and through the GST you pay when you go shopping.
Warning: Things may be more expensive than they appear
Here is another example of how we provide the illusion of cheap:
PHNOM PENH, Cambodia – Striking workers making shoes and clothes for Western brands have blocked roads and briefly scuffled with police in Cambodia.
The workers are demanding a two-fold increase in the minimum wage to $160.
The protests Friday snarled traffic in and around the capital Phnom Penh.
Human rights activist Om Sam Ath said protesters blocking a highway leading to Sihanoukville throw stones at police, who fired into the air.
He said four workers were injured, but it was unclear how serious the injuries were.
Most of the country’s 500 factories have been closed since Thursday, when the manufacturers association urged its members to cease operations, citing the fear of violence.
The garment industry employs more than 500,000 people and is Cambodia’s biggest export earner.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.
Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.