[SauronOfMordor]

If the US taxed oil prices would go up. OPEC just does a cut off and world price goes up. The only way to stick it to the mulahs is to produce the marginal domestic barrel that breaks the back of the market. If you understood margins you would realize that does not mean replace.

The break-even point for getting oil from tar sand is estimated around $30/bbl, oil shale is $40/bbl. Coal can be converted to gasoline as well. Why don't we see it happening more? Because for all of these, the big cost is up-front capital cost, and investors are not going to put up the money unless they are sure that oil prices will stay stably above $40/bbl. And we know that OPEC will crash the price of oil (bankrupting the operations) as soon as it sees investment occuring heavily.

So a variable tariff that sets a floor of $40/bbl would allow investors to predict a demand for oil substitutes at a price point that makes investment worthwhile

[WOSG]

" The break-even point for getting oil from tar sand is estimated around $30/bbl, oil shale is $40/bbl. Coal can be converted to gasoline as well. Why don't we see it happening more? Because for all of these, the big cost is up-front capital cost, and investors are not going to put up the money unless they are sure that oil prices will stay stably above $40/bbl. And we know that OPEC will crash the price of oil (bankrupting the operations) as soon as it sees investment occuring heavily.

So a variable tariff that sets a floor of $40/bbl would allow investors to predict a demand for oil substitutes at a price point that makes investment worthwhile"

Yes, that is my thinking as well. The floor makes sure the investment works.

This is classic protectionism, something I normally oppose, but I will make an exception when the foreign producers are oil dictatorships growing fat on our oil dependency.