Well Aged and Taxed to Perfection…

There I was, surrounded by thousands of barrels of Kentucky's finest — seemingly, enough bourbon to get every of-age taxpayer in the U.S. a little tipsy. By any stretch of the imagination, this place was paradise. Rolling hills as far as you could see and the air was thick with the smell of the latest batch. But even this paradise, hidden well in the confines of the Kentucky Bourbon Trail, was prey to Uncle Sam's grubby little hands.

You see, on my recent trip to Kentucky's Bourbon Trail, one thing stuck in my mind: TAXES. I was utterly shocked when I heard what the distillery tour guide was saying about a $13.50 per gallon tax on any distilled bourbon. That's over $700 of taxes per barrel. And that's before the bourbon even gets to the bottle. For me and you, fellow Whiskey Shooter, there's another tax when we get to the counter — somewhere around 6%.

So what's the total bourbon tax?

According to the Kentucky Distillers' Association, around 53% of the cost of the average-priced bottle goes to local, state, and government taxes.

I guess that's why the tour guide took the time to tell us about the taxes. That way we wouldn't be bitter when we paid $30 for a bottle of "corn juice."

So the tour went on and our group wandered through the rest of the distillery — tasting the freshly distilled 160 proof grain alcohol, feeling the corn mash and playing in the gift shop...

But wait. Isn't this taxation that same kind that created rebellions?

My tour group, and Americans in general, have been lulled to sleep, as if Uncle Sam slipped us a Mickey. Last I checked, the U.S. isn't an alcohol supplier. Nor is it a real estate agent. Nor is it a car lot. But it seems like the current administration wants to get its hands on everything.

And the way things are going, who knows what's next…

The Latest Nickel-and-Dime "Tax"

You gotta give it to 'em: At least Washington came up with an appropriate nickname for its latest cash grenade. It's called "cash for clunkers," and last week the House approved the bill — with your money!

It simply amazes me that something this poorly thought up could pass so quickly through the largest legislative body in the U.S. Just think about it: 435 well-paid pairs of eyes took a look at this bill. And a majority OK'd it!

In case you haven't heard of the latest clunker of a bill, let me give you the rundown…

It's a $4 billion plan to subsidize sales of new cars with better mpg. Essentially, if you have a car that gets less than 18 miles per gallon and you "upgrade" to a new car that gets at least four more miles per gallon, you're eligible for at least a $3,500 tax credit.

I love the well-accepted term "tax credit." Does everyone on the Hill think we're that easily swayed by bills that contain such positive-sounding phrasing?

Here at the Whiskey Bar, we aren't that easily fooled. This "tax credit" is a simple euphemism for free money — money that you and I as U.S. taxpayers are providing. Simply put, it's taking money from our pockets and giving it to new car buyers in an effort to jump-start new car sales.

I don't know about you, but paying for my neighbor's car wasn't on my agenda today.

But let's dig a little deeper, since we could be footing the bill…

The bill, as it stands, is less likely to be affecting normal car owners — so this is for our SUV/truck-driving neighbor. Because even if you bought a 1990 Chevy Cavalier or Ford Taurus, you're still probably getting well above 18 mpg.

So obviously, this bill is almost strictly for those non-Peak Oil-thinking, overzealous SUV or truck buyers. These folks have roughly the same restraint and foresight as those who purchased houses that they couldn't afford.

This bill is almost comical. But frankly, where does the spending stop on Capitol Hill? Combine this with the latest auto bailouts and it's really starting to look like our nation has turned into a new and used car lot.

Things are getting scary 'round these parts.

Government Spends, You Save…

Those dollars in your pocket aren't looking as great as they once did. And as I see it, with an overburdened and overspending government, the dollar could be in for a crude awakening.

That's because one thing is for sure: Over the next few years, the world is going to spin, the U.S. government is going to spend, and all of this will be running on the same fuel: oil.

As I wrote a few months back, the price of gasoline is going to rise. And that mainly stems from the rising price of crude oil.

As you know, the world's commodities (most notably oil) are priced in U.S. dollars. As the dollar weakens, and as the Earth still spins and demands more energy, the price of oil is going to rise.

In my opinion, over the next three months to five years, oil is going to rocket — even more so than the price of gold. We got a taste of what can happen when oil spiked last year to $147 per barrel. And from my standpoint, it's inevitably going to be back to those levels, or higher.

My best advice for protecting your hard-earned dollars over the next five years is simply to invest in all facets of the oil industry: oil service companies, oil holding companies, oil technology companies, and the commodity itself (through ETFs or commodity options).

Sure, the Obama administration wants to improve mpg, but one thing is for sure: We're still going to be burning oil for decades to come — more and more every year. And although we may hit some rough patches for demand, the overall trend line is going to be UP.

By investing in oil, you'll protect your wealth and profit at the same time.

After all, we all want to be able to afford our next bottle of bourbon.

Just after special Whiskey agent and commodities correspondent Matt "Minsley" Insley sent me the final draft of this article, our ranch correspondent Linda Brady Traynham sent me a delightful write up on this "cash for clunkers" idiocy. Look for it tomorrow in Morning Whiskey.

I'd braced myself for voluminous and largely negative feedback from yesterday's article ("Too Stupid to Survive" by James Howard Kunstler) and my editorial agreement with it.

Well, the email count was indeed unusually high — tipping into the triple digits — but the missives were nearly to a one supportive. Supportive? Heck, the love was pouring out of the screen and soaking the keyboard. My Grinch-like shriveled heart swelled to bursting.

The responses are simply too numerous to share in one Shot glass. I honestly don't know where to begin, Shooters. I wish there were a way to run them all so I didn't have to choose! So many constructive ideas, civil disagreements and intelligent counterpoints…your editor shivers gently with joy.

I will try to get back to as many of you personally as I can, but for today's Shot we'll take a look at just a few…

Dear Gary and James,

As I am sure you know, Europe is far ahead in general and the Scandinavian countries in particular. They learn to walk early in their lives and do not feel it is an inconvenience and insult. Image that.

My wife, who is a Dane, comes from a town called Vejle in Jutland. They have dedicated bike paths everywhere. The motoring public actually respects and yields to pedestrians and bikers. Image THAT. They have entire walking streets in the center of their towns where one can park a bike and shop and enjoy pleasant conversation with people of the town. Imagine. And I mean face to face not iphone to iphone. It is a pleasant pastime.

The town is devoted to people. They have convenient restrooms that are clean and close. They have windmills everywhere and they are energy efficient to the max in industry and home. They have entire towns that are completely green energy. They are not nuclear in Denmark, but are in Sweden.

I live in Hawaii. We know the end of cheap energy is upon us. It has been the most expensive power grid in the nation. So, alternative energy is coming on very strong indeed. Tourism will probably die in this century. James, you are right. This is probably of necessity not positive choice. I love to travel. It is still possible without cheap energy. Always was. It is just harder and more expensive.

Anyway, all over America people are preparing for what is obvious. There is going to be a catharsis and convulsion. America will suffer and respond and grow in another direction. Believe it. This country is not done yet. People of reason and foresight are doing the change NOW.

James, not all of us are hamburger-eating Walmart shoppers. Some of us actually are buying land to farm and building homes that can function after the emergency has us in its grip.

This and other publications give us a touch in the darkness. We are going to find a new way. Many already have.

Keep the faith, Brothers. This ain't over yet.

Thanks for writing and the perspective. Nothing much to add to that.

Here's that tiny bit of dissent I mentioned…

I'm happy to let you dream your dream of pedestrian-centered urban centers, and I'm happy to live in a world where the "tyranny of the automobile" reflects the tyranny of free choice. I happen to prefer living in the country with frequent visits (usually by train) to the city. By choice, I will continue to opt for an auto-centric style of living, making whatever trade-offs are required to do so. You sometimes come across as someone whose ideal job would be Central Planner in the Obama administration. Live and let live!!

Well, that hurt.

I'm not trying to plan anyone's life. I just don't want any automobile-lovers to be too terribly surprised as the infrastructure that enables their lust becomes increasingly untenable.

I'm letting you live, Shooter. Enjoy those laughing joyrides for as long as you can. I promise not to send any government spooks to stop you.

Rob Coates, Chair of the Libertarian Party in Idaho rides to my rescue…

Hi Gary,

Walkable communities, railroad trains, cars, trucks, railroad rights of way, the interstate highway system and oil in the United States are all tied together by taxes and regulations. Over the years our big brother has decided what's best for the little people. Tax policy, regulations and subsidies were created to move us in that direction. If we actually had a free market built on a foundation of private property rights, we just might have dramatically different (and better!) communities.

I often get mistaken for a car-hating commie when I question the future place of the automobile in our lives. I mentioned this to Mr. Oates and he had this to say:

It's too bad that many (most) people are stuck thinking about things as they are and not spending any time considering the possibilities of what could still be, if government got out of the way. Transportation in the U.S. certainly would have evolved dramatically differently without the heavy hand of government regulation and "back room deals" tipping the playing field in favor of certain groups, industries or transportation modes.

I've said it before and I'll repeat it now; a free market would have allowed a mix of transportation modalities: walking, bicycling, rail and highway. That's what markets do; provide choice and quality.

The car-dependent sprawl wrapping itself around you isn't the child of the free market; it's the result of directed government action. It's government-enabled monopoly. But it probably won't hold together much longer.

Never confuse "I want" with "ought", I always say. I love The City of New York, but I have no illusions about it holding together in a recognizable way for the rest of my natural life. Why do people feel thus about their civilizations, empires, ways of life or federally-funded highway systems?

And speaking of cities…

Gary, you probably have more topics to research and write on than you know what to do with, but if you're open to suggestions that are participatory, perhaps you could ask your readers in the greater Detroit area if their situation is really as dire as it appears from the outside. I've begun looking at the images of Detroit's decay on You Tube and other sites, and I can't find the words to describe my shock at what I've seen. It looks like a combination of the aftermath of the Battle of Berlin and a cityscape from a Mad Max film. For those of us not living in that area, seeing it is beyond belief. How is it possible that we've let a great American city, filled with unique architecture and powerful civic monuments, fall into ruin right in our midst? If this is any kind of a precursor to what's in store generally for us, Americans better get used to the idea of living in hell f or the foreseeable future.

I know that there may be other perspectives about what's going on that are at odds with this outlook, but only those at Ground Zero would have a real sense of what's transpiring. Don't know if this suggestion has any merit for your fine publication, but if this is the direction we're heading collectively, Costa Rica is looking better by the day...

Now there's an interesting suggestion. How 'bout it, Shooters? Care to share your firsthand experience of the decay about which we trip so lightly in these pages? Send pictures!

I'm also happy to tell of the ray of hope now shining on my current and blighted little burg. On the corner of Baltimore's N. Charles and W Preston — mere blocks from the Whiskey Bunker — a new Indian restaurant has recently opened. Your editor stumbled across it last night and ordered chicken tikka takeout. It is with extreme pleasure that I report it was quality, delicious and shockingly affordable. The remains of last night's meal are sitting on the bar and will be devoured as soon as I finish typing "Regards, Gary Gibson, Managing Editor, Whiskey & Gunpowder."