 | Report on First General Assembly of ASPO Switzerland, May 24th 2008, University of Basel | The Oil Drum | Oil Reserves: Where Ghawar goes, the rest of OPEC follows |  |
| TOD Local Open Thread: What's your town doing about high gas prices? | The Oil Drum: Local | Putting a New Face on Selling Peak Oil: Kris Can | |
122 comments on How Will Local Governments Respond to Large Increases in Energy Bills?
Comments can no longer be added to this story.
| Show without comments | PDF version
122 comments on How Will Local Governments Respond to Large Increases in Energy Bills?
Comments can no longer be added to this story.
| Show without comments | PDF version
User login
Personnel
Classic posts
Archives
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
The Oil Drum: New York City archives
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- March 2006
- February 2006
- January 2006
- December 2005
- November 2005
- October 2005
- September 2005
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
In the past, when we've has fuel supply problems, we've rationed. Strict rationing now could provide a few years of lower fuel prices and avoid the need to raise taxes to cover governmental use of fuel. This could give goverments (and all of us) time to switch to more secure supplies of energy that have fixed rather than volatile costs.
Rationing: It's the American Way!
Chris
I'm not real optimistic about the existence of secure supplies of energy that have fixed costs. The receding-horizons process will clobber any notion of "fixed" price. Also, the usual suspects that get proposed are usually suppliers of electricity, not transportation fuel. That problem is not physically insurmountable, but it adds yet more to the economic and environmental costs of implementation.
Additionally, the economic effects of rationing fuel won't be any more pleasant, or popular, than taxation.
(you can see I fall more or less into the doom-and-gloom school of thought on what's coming our way)
I've been interested in some of the tradable ration schemes that are out there. One, TEQs has been highlighted here: http://europe.theoildrum.com/story/2006/8/4/163554/8625
It is not clear to me that this would have an adverse economic impact since it would tend to put money where it will be most quickly spent. The economic impact of exporting all of your money to buy fuel is probably not quite as bad as the problems that arise when that money is used to arm the people you are fighting. Reducing fuel prices through rationing also reduces that stream of funds to second order.
Chris
I don't believe rationing before an actually supply shortage will do any good. Any oil we save by rationing will be snapped up immediately by the world market. The only way we could make rationing work now is to continue buying oil on the market at current rates and store it for future use. If we don't it will be snapped up by the Chinese or Indians.
If you accept that the current price is an indication of a supply shortage, then we are at that point now. It is possible that there are suppliers out there who could supply much more oil but are not doing so to run the price up.
If the US decided to reduce its consumption of oil by half over five years through a rationing program, this would boost supply for the rest of the world by about 12% or so. The rest of the world would have to snap that up faster than usual to maintain prices at current levels if suppliers can not organize to restrict production. My guess is that prices would fall.
If the US can show that much discipline, I would think that some other importers would also follow suit. The reason for doing this is that no one but the US can float the blue water navy needed to secure the oil deliveries of the next decade but the US would have no interest, on its own, to do so once it no longer imports oil. Leaving oil tankers to the mercies of pirates of various sorts would make other countries consider rationing programs as well. I would guess that a world undelivered price of $10 a barrel could be achieved with adequate consumer discipline.
I don't think it makes all that much sense to maintain a reserve of oil if we are going to stop using it. The domestic supply should be adequate if we continue to reduce use going forward. Reserves are important for nations that put themselves at risk by relying on imports but they are just expensive toys for those who take their security more seriously. They could be used to destabilize supplier governments though with clever timing.
Chris