Weekend Open Thread (and a link to HO v. Econbrowser)
Posted by Prof. Goose on April 30, 2006 - 12:45am
[Editor's note] This is a brand new open thread. However, our "The Politics of Oil: The Discourse Must Change" is also under the fold of this post. Our position paper is also available as a PDF press release. Please take this .pdf and print it out/give it to others, or send this link (right click here for initial post address) to anyone you think needs the information contained therein. Politicians, media, blogs, you name it...it all helps. It is only through these small actions that the discourse can be changed. Thank you.
Leaders of both political parties are expressing concern about the high price of gasoline. President George Bush announced yesterday that he was suspending deliveries to the Strategic Petroleum Reserve in order to make more oil available to consumers as well as putting on hold the traditional regulations requiring additives to make fuel burn cleaner during the summer driving season.
Meanwhile, Democratic leaders have had their own response to rising gas prices. Senate Minority Leader Harry Reid has announced his support for the Menendez Amendment, which would "provide more than $6 billion in relief directly to the American people by eliminating the federal tax for both gas and diesel for 60 days." Senator Charles Schumer recently called for a federal investigation to determine whether oil companies are withholding gasoline production, and House Minority Leader Nancy Pelosi has blamed high gas prices on the administration's cozy relationship with the oil companies, price gouging, and royalty relief.
The editors of The Oil Drum are ideologically diverse. Over the last year, we have created a forum at www.theoildrum.com to encourage an open, rational, and fact-based discussion of energy issues. While individual editors frequently express an opinion on a subject, we have never felt it necessary to take a unified position on any specific issue. That is, until today.
We strongly feel that the leaders of both political parties are not only headed in the wrong direction with respect to gas prices, but we also worry that they fundamentally misunderstand the factors behind the current situation at gasoline stations around the US.
Public statements by political figures over the past several days would seem to suggest that oil companies and their record profits are the sole factor determining the price of gasoline. Not only is this untrue, but it is dangerous to give the American people the impression that only oil companies are to blame. The American people need to understand that the phenomenon of high gas prices cannot be attributed to a single source. They also need to understand that no one political party will be able to fix our current woes.
The major factor that determines gas prices is the price of crude oil from which gasoline is derived. When crude oil prices are high, so are gas prices. The following are just a few factors that affect the price of a barrel of oil:
- Oil companies do not single-handedly determine the price of oil. The price of oil is set on the crude oil futures market. Simply put, these prices are affected by supply and demand because, at present, oil trades in a global commodity market where increased demand or reduced supply in one place instantly translates into price shifts everywhere. A variety of publicly available information sources show that supply is relatively static at the moment, while world demand continues to grow as economies grow.
- We have provided evidence many times at The Oil Drum that the output of major oilfields is declining and that we may now have reached a peak or plateau in global oil supply. Oil companies have not been able to increase production for a number of years, and it is unclear that OPEC is accurately reporting their reserves. Even if there were significant sources of high quality oil remaining, it is getting increasingly difficult and expensive to drill. These factors, along with aging infrastructure for oil exploration and a retiring workforce are also contributing to high oil prices.
- The geopolitical situation is volatile, and an astute citizen may notice that every time there is news from Nigeria or Iran, the price of oil goes up because of the potential and real effects of these situations on world oil supply. Again, oil traders are fearful that the supply will not remain stable forever.
- Countries like China and India are industrializing at a great pace, and while we are accustomed to obtaining oil at a comfortable quantity and price, it will be impossible (and immoral) to deny similar resources to these countries. China is working furiously to secure new oil supplies, and they're content to negotiate with countries we're reluctant to deal with, like Iran and the Sudan.
These points demonstrate that disruptions in the supply of oil that affect the price of gasoline at the pump are not just a temporary glitch. For various reasons--decreased discoveries of new oilfields, geopolitical instability, international competition for oil supply--we can no longer assume that we will be able to consume as much oil as possible, or ever get it again for $1.50 a gallon.
Demagoguery and grandstanding are not strategies for addressing our energy problems. As an alternative, the editors of The Oil Drum put forth the following recommendations:
- It is nonsensical for political leaders of both parties to eliminate the gas tax temporarily or permanently as this will only worsen our dependence on oil by disincentivizing the innovation of oil alternatives and oil conservation efforts.
- Both mainstream American political parties are doing their country a disservice by accusing convenient scapegoats of price gouging or price fixing instead of educating the public about how the price of gas is actually set.
- Right now, governments should be focused on helping us cure our "addiction to oil." The answer does not lie in lowering gas prices, which will only encourage people to drive more and further waste our valuable resources. As the Department of Energy funded Hirsch Report on Peak Oil laid out, the consequences of not taking steps to transition away from oil could be dramatic to our economic system. Appropriate solutions include large-scale research, development, and implementation programs to improve the scalability of alternative sources of energy, other projects geared towards improving mass transit and carpooling programs across the country, providing incentives to buy smaller and more fuel efficient vehicles, and promoting a campaign to increase awareness about conservation.
The political discourse on this topic is simply so devoid of fact, and constructive discourse so buried and out of the mainstream, that we felt we needed to raise a voice of reason. Public officials will continue to misinform and obfuscate if we allow it.
The only solution is to educate the public about the most important problem we face as a generation. We, the citizens of the US and the world, must move our attention to this the issue of energy more than any other. We must hold our representative governments accountable for having an open and honest debate on the subject.
Simply put, we must learn more about where our energy comes from.
Contact
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http://www.fromthewilderness.com/free/ww3/042706_paradigm_speech.shtml
'On April 21, Russia's giant, Gazprom--for the second time in less than a year--threatened to shut off Europe's only major source of natural gas.' Did you hear how Putin, acting for Gazprom, was threatening to nuke the North Sea (Norway, Great Britain, and the Netherlands), plus Algeria? I missed it too.
Europe does not rely on a single source of natural gas. Arguably, the Russians are something like a swing producer, but they are not the only source of natural gas by any means. Further, the Russians have been very careful not to threaten Europe too explicitly, otherwise the Europeans will simply make different business plans - like major insulation programs instead of paying the Russians for unreliable supplies, or heavy investment in non-fossil fuel energy. (The Swedes, a group of Europeans with lots of experience in dealing with Russians, are already heading this way.)
The Russians, in typical Russian fashion, are already starting to overplay their hand. Not that Europeans aren't used to that, of course.
I could keep going on, but that little statement gives you an idea how important it is to actually think about what Ruppert says.
I am curious about 'transport inelasticity', for lack of a better word. What gasoline price point predictions can we make to determine when car-pooling kicks in to half the road vehicles vs the predominance of single occupancy commuters? Or will we never reach this level of vehicle occupancy saturation, but instead see a huge growth in motorcycles and scooters so that people can retain maximum personal travel-freedom?
Is it possible that people will keep their big auto or SUV for bad weather days, but primarily use a motorcycle or scooter the rest of the year? This is much cheaper than buying a new compact car, especially if the former vehicle is already paid off.
Any ideas on if people will vastly prefer buses to motorcycles? It seems to me that the lower the suburban density, the greater the preference for personalized transport because the buses are too far apart and the routes too few. Can buses ever approach the cost and energy efficiency of a small scooter? For example, a street-legal Honda Ruckus weighs 180 lbs, has a 49cc engine, a 1.3 gallon gastank, and probably gets over 125 mile/gal for $2 grand brand-new. Can a fully packed bus or light-rail system even come close to achieving this scheduling freedom, minimal cost, and outstanding fuel mileage/passenger?
Obviously, if the commuting distance is short: bicycling or walking is by far the cheapest.
When one considers the total cost and upkeep of high school buses plus the cost of all the older students personal vehicles-- would it be cheaper to subsidize scooters to the students and faculty instead of running busses and wasting all that school real estate to parking lots?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I am definitely seeing more people commuting on scooters and motorcycles in Phx, but we have mostly non-raining riding weather nearly year round. I found an informative link from last Aug. that highlights this growing trend:
http://www.msnbc.msn.com/id/9041933/
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
School buses are the safest means of transportation and they are not terribly energy inefficient so I do not see them as going away. Perhaps less air conditioning, and other fuel savings.
BTW: Perley Thomas, the man who designed your streetcars in New Orleans (built 1923 & 1924) also built the first safe school buses. Thomas Bus is now part of Daimler Chrysler.
I get 65 MPG highway and 55 city. I felt that I was a hypocrite for driving the Jeep while I preached the Peak Oil gospel. It helps to live in an urban environment, DC, but my scooter is a 500 cc bike and it can gi 100 MPH. So it is fine on the highway if you have the nerve to do so. It does get scary when a Tahoe blows past you doing 95 so I try to stick to back roads.
I am looking at other ways to reduce my carbon footprint and I think we Americans need to get off our lazy butts and change the ay we interact with each other an the world so everyone has some shot at normalcy as we transition into a world of increasing oil scarcity.
Tony
I get 65 MPG highway and 55 city. I felt that I was a hypocrite for driving the Jeep while I preached the Peak Oil gospel. It helps to live in an urban environment, DC, but my scooter is a 500 cc bike and it can gi 100 MPH. So it is fine on the highway if you have the nerve to do so. It does get scary when a Tahoe blows past you doing 95 so I try to stick to back roads.
I am looking at other ways to reduce my carbon footprint and I think we Americans need to get off our lazy butts and change the ay we interact with each other an the world so everyone has some shot at normalcy as we transition into a world of increasing oil scarcity.
Tony
Yes, easily. And using potentially renewable electricity.
And this is without trying to reduce weight (remember that today's LRVs were designed in the age of cheap electricity).
Substantial use of titanium in LRVs would be a good application of this metal for example. Or the new Aluminum-Lithium alloys.
What I find interesting is that when discussing this, non-Americans are often aghast that we would do such a thing. Education is the last thing they'd cut. They can't believe we'd reduce school hours rather than raise taxes or cut sports.
If such highly educated personages as these dismissive commenters can be so blind, what hope is there for the general masses?
All I can say is, when the panic hits home for the majority, it will be truly brutal.
I find this story rather unnerving:
Natural gas economy is losing steam
The experts didn't have a clue. Worse, they're still clueless.
They don't seem to get it. They know something is drastically wrong, but the only explanation they can imagine is some kind of conspiracy.
The idea that nature won't put more oil in the ground if you wave enough cash around seems to be completely beyond even the so-called experts.
What forecasts are those??? How many more years do we have to go before anyone in the MSM realizes there are geologic limits to fossil fuel extraction??
There are some "questionable" estimates of how much natural gas the US has (eg. a 65 years supply). But here's the kicker.
The article is a good example of two basically contradictory assertions.
- There's plenty of natural gas.
- People are paying high prices for natural gas.
Therefore, it follows from #1 and #2 that there must be some kind of conspiracy afoot to keep natural gas prices high. And so the average "consumer" jumps to this conclusion. And it's hard to blame him. But, if #1 is false (which it is for North America), then there's no mystery as to why prices are high. These remarks apply to oil as well.Strange, I never had this thought before but maybe somebody else here has.
Mainstream, establishment intellectuals; whether they be economists, scientists, journalists, commentators, or polititians, have a awful lot invested in the kind of societies we live in. So much of their prestige, position and power, is based on a civilization founded on abundent, cheap, and easy energy. Psychologically, ideologically, and not least, economically they have a great deal to lose, if Peak Oil is real, and the end of the "Age of Expansion" is nigh. Therefore, asking or expecting them to embrace change on such a scale, is, perhaps, less then realistic.
Of course there are notable exceptions; Will Hutton's article is excellent. There's also George Monbiot and many others. But, as yet, those with a contrary view are "voices crying in the wilderness." This is likely to change though, as the 'reality' of Peak Oil rears it's ugly head, and can no longer be ignored. Whether there will be enough of such voices, and whether enough people will hear them, and whether any action will be taken, like confronting existing power-structures, is as they say, another question entirely.
The above mentioned groups remind me of the French aristocracy and the incredible lifestyle they had at the palace of Versailles. A glorious, sheltered, and luxurious community - almost a world-within-a-world. For themselves they created a kind of paradise on earth, supported by staff of 50,000. There was lots of food, intrigue, gossip, sex, music, tension, excitement, and fun. The aristocracy knew very little about the lives of the vast majority of the population; which before the age of cheap/easy energy, provided the foundation opon which the whole, glittering edifice of Versaille was built. Like us, they we unaware of just how fragile their lifestyle actually was, and how brittle and delicate.
When one has this kind of lifestyle and has only known this kind of lifestyle; it becomes "reality" and is "natural." The idea of losing it, is insane and non-negotiable. Expecting such an aristocracy to recognise, accept, and institute fundamental social/economic reforms, of an almost "revolutionary" nature; is simply asking too much of mere mortals, in my opinion. Unfortunately, I don't think people in situations like this are capable, or able, to initiate these kinds of massive, institutional, changes.
Will our "aristocracy" do any better? I don't really know. I have my doubts, I really do. The rich and powerful have often, as a social group, shown an extraordinary ability, not to "see" the changes happening in the world around them - until it was too late. Here, one can sometimes feel something close to nostaligia or even sadness. It's a melancholy feeling, knowing what needs to be done, but not have the power to impliment anything. It's also a miserable thought, that we may even have reached the "too late" position already, and when the mainstream finally begins to take action on Peak Oil, we may even be battling against the inevitable collapse of our way of life and tilting at windmills. But, I suppose that's marginally better than just passively, negatively, and cynically accepting our fate. Surely, some of us at least, will choose to cling to our humanity and civilised values, and boldly face down the reality of barbarians at the gate. And I suppose, paradoxically, that doesn't make us all that different from the aristocrats in Versaille, does it?
http://observer.guardian.co.uk/comment/story/0,,1764542,00.html
By Will Hutton in today's (UK) Observer, it's one of the most sensible pieces on the current oil situation I've read from a top mainstream political writer. It acknowledges peak oil - though acknowledges an average predicted time to it of 10 years (we should be so lucky) and the depletion of Gharwar.
Conclusion is:
"It's a new world. Henry Kissinger thinks that the 21st-century struggle for oil reserves will match the 19th-century fight for colonies. The dangers are obvious. Britain in all this is the doe-eyed Bambi, bleating its faith in market forces in a world of predators. We should urgently slow down the depletion rate of North Sea oil and gas and establish a British strategic reserve and, with that protection, begin determinedly to build an economy that is not dependent on oil and gas. We should get serious about energy efficiency for solid environmental and strategic reasons. We should tax aviation fuel. We must accelerate our investment in renewable energy. We must research how to burn coal cleanly. And we must commission new nuclear reactors."
All to be applauded except maybe the last sentence.
The IOCs are reportedly having trouble recruiting oil workers for Nigeria. Gee, I wonder why...
The Predator State By James K. Galbraith
Costly Gas? Roll With It.
Some people here have wondered if we're not seeing crude supply shortages because we're outbidding others for it. That line suggests that might be the case.
We need government intervention, before we get sent back to the 1860 coal economy. If we demand Russ Fiengold style reform our congressmen will do the right thing.
Unrelated thought: Will energy shortages bring back slavery?
They could have used those rickshaws in New Orleans last year. They can drive through 2-3 feet of water.
Responding to your other point, I think 68.9 horses would do the work of 33 barrels of oil but check my math.
Gee, the high prices and shortages are not a sign of something wrong, it's a sign that things are going great. Silly us.
Seriously, I think this is a big deal, talking about a problem that will last years, rather than days or weeks or months.
And they needed to start talking about it more than 25 years ago. Failure in America's energy policy? Tragically comic to think America even has had an energy policy since Reagan was president.
To paraphrase another slogan from another time - 'Peak oil is here - get used to it.' It won't get better, as the lies meet the reality, and people again prove that comforting lies are what humans want, not reality. We only face reality when everything else fails.
Good luck to us all seems a fair sentiment.
x
i agree ... it will be interesting to watch the mood as this sinks in,
Wha....????
So wait a sec here, if the energy bigdog says "Demand exceeds supply" and it will be 2-3 years till we can meet the needs, what does that mean will happen for 2-3 years?
And what are these huge projects that are coming online in 2-3 years?
So, basically we are in for some very high prices for 2-3 years, then our whole future rests on this oil flooding the market come 2008.
Oh Dear....
Subkommander Dred
On Wednesday I sent a copy of THE POLITICS OF OIL: THE DISCOURSE MUST CHANGE to Jon Talton of the Arizona Republic. Today his colum on the editorial page of the Republic entitled Real truth on Big Oil laid the Peak Oil story out straight. He mentions Peak oil directly and that it may be soon. He also says that real leaders would acknowledge that Americans will have to make sacrifices including accepting higher fuel prices, halting urban sprawl, and requiring tough CAFE standards, among other things. In closing he says that "they won't tell us. They think we're stupid, that we can't handle the truth. And they might be right."
The main editorial is also calling for a floor of $3 per gal. for gas prices. This certainly isn't enough, but it's a start to encouraging alternate energy sources. At least is a crack in the MSM wall of silence.
Talton doesn't mention TOD so I don't know if I can take any credit for this. After all there are many other readers of TOD in Phoenix, and Talton may be a regular reader himself.
Jack Edmonds - Phoenix, Arizona
Found a link:
http://www.azcentral.com/arizonarepublic/opinions/articles/0430talton30.html
His editors are going to hear complaints from the realtors, car dealers, and so on. They may feel they have made a mistake. Several thousand atta-boys might help a lot. It's important.
Saudi slashes petrol prices by more than 30 pct
This will result in increased SA internal consumption, which will only help prove Westexas & Khebab's theory of rapid depletion of available exports. Oh, joy! =(
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
It may not be a forever kind of thing, but given current stagnant production and domestic unrest/upset in exporting countries, we probably will see less supply.
http://www.skysails.info/index.php?id=34&L=1
They claim it can cut fossil fuel use by 50%. I dunno. Doesn't seem like that little sail can make that much of a difference.
Looks like a lot of hype to me, particularly if this sail is supposed to be partially propelling a huge cargo ship.
It's one thing for a large spread of sail to nicely move a 1.500-ton sailing ship, but something else again to expect it to move a 40,000-ton container ship.
Furthermore, the typical modern cargo ship simply doesn't have a hull form that ia compatible with the use of sail. Unless the sail is used solely for downwind runs, it is going to be next to useless for tacking at sharp angles to the wind. During the 1860s -1880s, some large warships were designed with auxilliary sails, the main purpose of which was to conserve coal during long voyages while dependent upon extremely inefficient and unreliable low-pressure steam engines. The results were uniformly unsatisfactory. Even 10,000-ton early battleships hardly moved under sail alone, exhibited all sorts of handling problems; and in fact, the sails, masts, and yards, when not in use, produced wind resistance that ate into any energy savings they might have acrued while under sail.
It appears to me that large ships of modern hull form and sails are not a terribly compatible marriage. You could probably design large ships with partial sail power in mind, but to retrofit these sky sails onto existing ships seems to me to be quite dubious.
And another thing: how do you control this sky sail while it is hanging way up there? It looks more like a spinaker only useful for running downwind.
the parasurfers off huntington do move FAST though, lotta energy there
First, the economist John Kenneth Galbraith is dead at the age of 97. I have often criticized economists on TOD but he was, like John Maynard Keynes, one of the "good ones". This is sad news.
The second point is Iraq says Iran forces shelled Kurds in Iraq (with troops and missles) into the Kurdish areas of Northern Iraq. Turkey is amassing troops on their border with Iraq. Apparently there was a new attack today directed toward the PKK.
The situation there is getting out of control. There is real danger in this escalating geopolitical development. This is the kind of thing that leads to world wars. World War I was started by the assassination of Archduke Franz Ferdinand.
If you think I am alarmist here, you bet I am. These situations have a way of getting out of control. Iranian incursions into Iraq are far more worrisome than their nascent nuclear program in my view. More later on this or maybe a post.
See this link:
http://www.mms.gov/revaldiv/RedNatAssessment.htm
" The MMS estimates that the quantity of undiscovered technically recoverable resources ranges from 66.6 to 115.3 billion barrels of oil and 326.4 to 565.9 trillion cubic feet of natural gas. The mean or average estimate is 85.9 billion barrels of oil and 419.9 trillion cubic feet of natural gas. These volumes of UTRR for the OCS represent about 60 percent of the total oil and 40 percent of the total natural gas estimated to be contained in undiscovered fields in the United States. The mean estimates for both oil and gas increased about 15 percent compared to the 2001 assessment. For the oil resources, the vast majority of this increase occurred in the deepwater areas of the Gulf of Mexico, while for gas resources the majority of the increase was in deep gas plays located beneath the shallow water shelf of the Gulf of Mexico."
http://www.financialsense.com/Experts/2006/Simmons.html
Haven't listened to it yet. Available formats include Real Player, WinAmp, Windows Media, and mp3.