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Amlord
We had another thread on whether or not Oil companies were gouging us at the pumps here. Since then, gas prices have risen sharply.

Each party in Congress is sniping at the other that they are to blame. The Republicans claim that Congressional Democrats blocked an energy bill years for years and have blocked drilling in ANWR.

The Democrats counter that energy companies had a hand in developing the current energy policy and that the Republicans are in bed with them.

Questions for debate:

What is causing the current run up of gas prices?

Is there anything the government can do in the short term to lower gas prices at the pump?

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lederuvdapac
Well Amlord, i think that the true question really is should the government do anything? I am sure there are ways in which the government can help gas prices in the short term...but those changes and government interference will have long term consequences that will hurt rather than help our economy. Government should stay out of the economy as much as possible and let the markets swork themselves out. The reason prices are high is obviously because demand is higher than supply. People have to adjust.

The best thing the government can do is put initiatives into alternative fuel sources of energy. Take away our dependance on foreign oil. You know the best way to deal with Iran? Create an alternative energy source and share it with your allies. The Iranian economy is not an economy of sorts but rather a gold mine.

English Horn
A rare case when lederuvdapac and myself are fully in agreement flowers.gif . If demand doesn't fall, gas prices will stay where they are - or move higher. Just this morning I saw on MSNBC that only 30 percent of all vehicles sold in United States have 4-cilinder engines - the rest is 6 and 8 cilinder begemoths. Until people start sharing their rides to work, until people stop buying vehicles that go 14 miles per gallon on the highway - gas prices are here to stay. As a matter of fact, I wouldn't mind seeing an extra tax on gasoline - to be used for development of alternative energy sources ONLY.
DaffyGrl
What is causing the current run up of gas prices?

Partly, it is the usual start-of-summer hike (a month or two earlier this year), when gas companies know that people tend to drive more, so they jack prices up. Happens every year. Unfortunately, this year we also have the saber-rattling in Iran, which has investors’ collective sphincters puckering.
QUOTE
Steaming drivers furious at $3-a-gallon gas can direct at least part of their anger at the row between the United States and Iran, which experts agree helps increase prices by frightening investors -- and there isn't much anybody can do about it in the short term.
<snip>
"We're not short on supply -- we're potentially short if something were to happen," said Stephen Jones, a principal at the Purvin & Gertz energy consulting firm in Houston. SF Chronicle

Is there anything the government can do in the short term to lower gas prices at the pump?

No. There is no short term relief possible.

As for generally and long-term, I’d say quit poking foreign hornets’ nests with a stick would be a good start at keeping prices down. Instead of political photo ops and paying lip service to alternative fuels while continuing to line the oil industry’s pockets with more dough, make a true commitment to alternatives, or at least make the oil industry increase their output (as if they haven’t made enough money to do so in the last 20 years). Offer incentives to people to use alternative means of transportation. Plan communities so that people don’t have to drive 100 miles to a decent job.

There are soooo many things, but nothing will ease the immediate pain. If the past is any indication, I believe gas will go up to $4...or maybe a tad above that this summer because of the whole Middle East mess... then it will gradually go back to low $3 range, and everyone will feel like they’re getting a bargain.

Same as it ever was.
Cube Jockey
What is causing the current run up of gas prices?

The usual actors - supply, predicted increase in demand for summer driving, and instability in the middle east this time more to do with Iran.

The supply is the more interesting item though, the industry has finally realized that they won't be able to keep finding new sources of oil to keep up with rising demand and in fact some reserves have "peaked" already.

Is there anything the government can do in the short term to lower gas prices at the pump?

Sure, they could lower taxes on the gas and they could also make use of the strategic oil reserves to ease the pain a bit. Both things however will ultimately prove to be futile gestures because it just brings about temporary relief, it doesn't solve the problem or even address it.

What they should be doing is taking this opportunity to get public support for bold new initiatives to do things like massively increase public transit infrastructure, invest in alternative sources of fuel and infrastructure and take the lead globally in the energy game.

They should be realizing that it doesn't matter one bit if they fight terrorists all over the globe when Iran can send the price of oil skyrocketing and bring our economy to its knees. But I feel that we'll have to wait for a new administration for anything to happen there, because this one just doesn't get it. In the meantime expect gas in all parts of the country to be above $3 a gallon for good by the end of the year.
barnaby2341
QUOTE(lederuvdapac @ Apr 24 2006, 01:58 PM)
Well Amlord, i think that the true question really is should the government do anything? I am sure there are ways in which the government can help gas prices in the short term...but those changes and government interference will have long term consequences that will hurt rather than help our economy. Government should stay out of the economy as much as possible and let the markets swork themselves out. The reason prices are high is obviously because demand is higher than supply. People have to adjust.

The best thing the government can do is put initiatives into alternative fuel sources of energy. Take away our dependance on foreign oil. You know the best way to deal with Iran? Create an alternative energy source and share it with your allies. The Iranian economy is not an economy of sorts but rather a gold mine.
*


lederuvdapac, where to start?

Government should stay out of the economy.... This is an interesting statement, considering the Big Three are propped up by state and local subsidies and/or tax abatement. If Government should stay out of the economy then Ford, Chrysler, and GM would all be out of business. Include Boeing in there as well. Big Business and Big Government go hand in hand. You don't make trade agreements with Malaysia like Boeing did, without assistance from Government. Business and Government are intertwined in many ways, to suggest government should stop "meddling" with business is frankly a very uninformed opinion.

Next, we shall go to dependence on foreign oil.... doesn't exist. We get most of our daily consumption from domestic sources or Canada and Mexico. Saudi Arabian imports only account for 14.5% of our daily usage.

Iran, they pose no threat to the U.S. just as the North Koreans pose no threat. Even if the Iranians get a nuclear weapon, which they continue to state is not their purpose for enrichment, they could not use it on the United States because that would be suicidal. It is illogical to think that M.A.D. would work with Russia, but not with Iran. Two ironic considerations, prior to the Shah being overthrown, Kissinger was working on a way to develop nuclear energy in Iran and second, we plan on deterring Iran from obtaining a weapon by unleashing one upon them. The height of hypocrisy in American foreign policy, no wonder our list of allies has diminished.

The lies told about oil and the increases are numerous. First it was refineries, then it was bad weather in the Gulf, now it is speculative increases. First $62 a barrel, then $65, and now $70, why, no reason. I do know this, refinery capacity has been the same for almost three years now and oil continues to increase. So it can't be refineries, but whenever Congress pulls the oil companies onto the Senate floor, not under oath by the way, the Republicans wouldn't allow it, the price of oil decreases. My solution; take oil off the trader's market, conglomerate the oil companies into a monopoly and regulate them. In essence, nationalize the oil, it is no longer a commodity, it is a necessity, treat it as such.
Amlord
What is causing the current run up of gas prices?

The short answer is the rising price of crude oil.

The more complex answer is rising demand for crude oil. I was watching Fox News Sunday yesterday morning when Juan Williams was going on and on about how the oil companies are gouging us because crude oil supplies were at an eight year high. His fellow panelists put their heads down when Williams refused to hear anything about demand being involved in the supply-demand equation. Demand is at an all time high.

OPEC has an interesting graph on the price of oil in the G7 countries. Notice that the US's prices are lower because not only are taxes lower, but the margin the oil companies get on gas here is moderate (certainly compared to the UK and Japan).

OPEC also reports that global oil demand grew by 1.2% in 2005 and is expected to rise by 1.7% in 2006. link. Refining capacity remains finite and even though crude oil stocks are high, prices are also high because of the lack of refining capacity.

QUOTE(OPEC report)
Global oil prices were volatile for most of March before increasing steadily at the end of the month. As a result, the OPEC Reference Basket averaged $57.86/b for the month, a gain of $1.24 or over 2%. Prices continued to move higher in April, with the Basket reaching a new record high of $65.02/b on 17 April. Crude prices have moved higher, despite rising crude inventory levels, the report said. In the week ended 7 April, US crude stocks reached 346 mb, the highest level since 1998.


Is there anything the government can do in the short term to lower gas prices at the pump?

There is, but it is unwise. A windfall profit tax would be idiotic, considering that investors can get better returns on investment in several sectors other than petroleum companies. This would drive capital investment out of the oil companies, causing even greater hardship down the line.

Refining capacity needs to be addressed. http://www.icfi.com/newsroom/refinery-capacity-2005.asp Refining capacity is lagging global demand. Either we need to shore this up (a long term fix, not a short term one) or make an aggressive reduction of global oil demand. Of course, we can only affect domestic demand, which accounts for about 25% of the world's demand.
nighttimer
QUOTE(Amlord @ Apr 24 2006, 02:52 PM)
Questions for debate:

What is causing the current run up of gas prices?

Is there anything the government can do in the short term to lower gas prices at the pump?



1. Well, it's not the weather. There's civil unrest in Nigeria, but that's hardly news. Hugo Chavez likes tweaking George Bush, but he hasn't cut off Venzuela's oil imports yet and neither has President Ahmedinejad in Iraq. Of course, it would be nice if Iran, our 51st state, was doing it's share of oil production, but it isn't and probably won't for some time to come.

Of course, the United States is in competition with other nations such as China to quench our mutual thirst for oil. That's what we're told anyway. China uses 6.5 million barrels of oil a day which while impressive, is nothing compared to Uncle Sam dependency on the petroleum fix for 20 million barrels a day.

I give up. What is causing the current run-up of gas prices? unsure.gif

2. Who says conservatives hate the French? They see nothing wrong in embracing a laissez-faire approach of "allowing the marketplace to work things out" with as little interference from the government as possible. Problem is, the only thing that happens with gas prices when the market takes its own course is the oil companies hear the cash registers ringing while everyone else takes it in the shorts.

You know it's bad when even Bill O' Reilly says the oil companies are gouging John Q. Public.

You are being gouged by the American oil companies. Gas supplies, gas supplies are at an eight-year high. Gas prices have doubled since 2004. Even if you don't know anything about economics, this one's pretty obvious...U.S. oil companies are exploiting uncertainty in the world by raising prices they don't have to raise. The companies are making record profits while American workers are getting hurt. Every time the commodities speculators bid up a barrel of oil, the price of a barrel of oil, every time they bid it up, you pay more at the pump. It has nothing to do with supply and demand. It's all about exploiting fears about Iran, terrorism, what might happen down the road. President Bush knows what's going on, but doesn't like to interfere with big business.

http://www.foxnews.com/story/0,2933,192263,00.html

Ooooh....Mr. "Who's Looking Out For You?" sez we're getting ripped off by the likes of Exxon and Shell. Gee, no duh, Bill. But what are we gonna DO about it?

There are several choices. Conserve and drive less and buy less gasoline. I can't remember the last time I filled up, but when I do buy gas, gas is ALL I buy. No soft drinks, no junk food, no anti-freeze. Nothing. Just the gas and then I only buy as much as I've budgeted a not a nickel more.

Demand the government get busy on alternative fuels and driving down consumption of gas. We're a nation of oiloholics and we've got to realize that we can no longer have it all; gas under $2 bucks, huge hunks of Detroit steel like Escalades and Expeditions that get 12 miles to the gallon and driving these gas-gulping hulks to the corner Starbucks.

Personally, I'm in favor of some harsh medicine for the oil companies. I favor a windfall-profit tax on their profits with the revenues directed toward paying for prescription drugs for seniors and medical care for the nation's 40 million uninsured.

Radical? Socialist? Wealth redistribution? Not at all. I'm just in favor of the oil companies doing their patriotic part to help Americans struggling to get through a rough patch.

Self-sacrifice. It's the American way. us.gif
Trouble
QUOTE
What is causing the current run up of gas prices?

Is there anything the government can do in the short term to lower gas prices at the pump?


No, there is not much one can do as several events are converging which inflate the price and none of them are within the reach of the consumer.

For example the October estimate was 25% refining and 20% gas production was taken off line. After Rita hit I've heard offline losses closer to 30% on refining and 25% on natural gas production for the april-may-june interval. There are concerns the repairs have not progressed far enough to meet summer driving demands.

Also, ethanol is replacing MTBE as the leading additive in unleaded gasoline. Both MTBE and ethanol are used to increase the oxygen content of gasoline and decrease air pollution. MTBE was supposed to be phased out in '02 in California, but it has taken till now to phase it out of the remaining areas. Unfortunately the retooling needed has slowed an already stretched refining side.

If memory serves me correct, diesel is supposed to be reformulated this year to reduce the sulfur content closer to european levels.

The only thing the government could do is loosen their emergency reserve but then I don't think this classifies as an emergency.

Add to this reports of our good friend Mr. Chavez planning to switch the alloted supply of oil from america to India and possibly China, there is one more factor that will continue to erode supply.

For a more detailed commentary on the above events I found this blog helpful.
A left Handed person
What is causing the current run up of gas prices?

In the long term, prices have been increasing because of inflation, and of an increasing demand from growing nations like China.

This particular spike is caused by a number instabilities in oil producing countries, and Venezualas insistence on increasingly giving oil away for services instead of dollars.

Iran is also supposed to switch to selling for Euros sometime this year. Some think they were bluffing when they said that they would do that, but if they do do that, it could be bad for us, and it would certainly increase oil prices for us.

http://www.csmonitor.com/2005/0830/p03s01-wome.html
Possibly pre-emptive speculation is pushing prices up already?

Is there anything the government can do in the short term to lower gas prices at the pump?

It can open up the oil reserves like it did during Katrina, but I doubt it will. The damaged infrastructure after Katrina was temporary, and the opening of the reserves was just to make sure that we didn't fall into a recession while repairs were taking place.
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lederuvdapac
QUOTE(Cube Jockey)
What they should be doing is taking this opportunity to get public support for bold new initiatives to do things like massively increase public transit infrastructure, invest in alternative sources of fuel and infrastructure and take the lead globally in the energy game.

They should be realizing that it doesn't matter one bit if they fight terrorists all over the globe when Iran can send the price of oil skyrocketing and bring our economy to its knees. But I feel that we'll have to wait for a new administration for anything to happen there, because this one just doesn't get it. In the meantime expect gas in all parts of the country to be above $3 a gallon for good by the end of the year.


CJ, another weird occurrence in this thread but I completely agree with you. This is an opportunity for our representatives to gain support for alternative energy sources as they see that oil won't be here forever and could be very expensive in the near future.

QUOTE(barnaby2341)
lederuvdapac, where to start?

Government should stay out of the economy.... This is an interesting statement, considering the Big Three are propped up by state and local subsidies and/or tax abatement. If Government should stay out of the economy then Ford, Chrysler, and GM would all be out of business. Include Boeing in there as well. Big Business and Big Government go hand in hand. You don't make trade agreements with Malaysia like Boeing did, without assistance from Government. Business and Government are intertwined in many ways, to suggest government should stop "meddling" with business is frankly a very uninformed opinion.


Well barnaby2341...where should I start? I don't wish to push this off-topic but i diagree with you. Ford, Chrysler, and GM should be able to go out of business if they are unable to compete. Government should do nothing to bail them out. Thats how free market economics works. If the government subsidizes domestic companies like that, then investors and entrepreneurs will take risks that are too large since they believe if their investment goes dead, the government will be there to bail them out. It shouldnt work that way. Investment is about taking risks and if your risk fails you...well thats how the economy goes. If you look at Bush's current policy, he is no longer bailing these companies out when they head towards bankruptcy. If these companies created products that had a demand than this wouldnt happen, but unfortunately they cannot compete with foreign car manufacturers.

There is little doubt that government has a hand in where companies can do business and other such matters but its my opinion that it should stay out of the economy as much as possible.

QUOTE(barnaby2341)
The lies told about oil and the increases are numerous. First it was refineries, then it was bad weather in the Gulf, now it is speculative increases. First $62 a barrel, then $65, and now $70, why, no reason. I do know this, refinery capacity has been the same for almost three years now and oil continues to increase. So it can't be refineries, but whenever Congress pulls the oil companies onto the Senate floor, not under oath by the way, the Republicans wouldn't allow it, the price of oil decreases. My solution; take oil off the trader's market, conglomerate the oil companies into a monopoly and regulate them. In essence, nationalize the oil, it is no longer a commodity, it is a necessity, treat it as such.


That is probably the worst thing that the government can do. Subsidies do not work and they never should be used. The only industry that i can reasonably see the government subsidizing is agriculture because if there was ever a serious problem...we need food. Other than that, nationalizing oil would be an incredible drain on the economy. The best thing that the government in this situation can do is nothing. People will have to adjust to the market and its simple as that.
TedN5
What is causing the current run up of gas prices?

In part, I responded to this on the "What are you paying?" topic. Let me come at it from another perspective. World demand for oil is growing rapidly, production is growing much less rapidly and new discoveries are harder and more expensive to produce, there is less than 1 million barrels per day of excess of supply over demand, and any little supply or political uncertainty creates wild speculation in the spot market. Several political problems have exacerbated speculation, some of them self inflicted by US policy. The continued chaos in Iraq has removed some oil that was available to world economy before the invasion. The political turmoil in Nigeria has disrupted much of its production. The shouting match between the neocrazies and Ahmadinejad threatens Iran's 4mbpd and possibly other Persian Gulf exports.

On the other hand, major western oil companies have a harder and harder time adding to their reserves. Traditionally, much of their profit has been in production. Now they are attempting to force more of their profits downstream to refining and wholesale of product. This may account for their failure to invest their windfalls in refine capacity. (They may also be influenced by the knowledge that more and more petroleum may not be available in the future for new refineries).

Then we have to throw in all the other influences that have been mentioned like seasonal driving patterns, conversion from the poisonous MBTE, variations in environmental regulations and the like.

Ultimately, in 2, 5, or 10 years total world production will start to decline while demand continues to grow and all of these supply disruptions will seem minor.

Is there anything the government can do in the short term to lower gas prices at the pump?

I don't think they should seek to do anything to lower prices other than cooling the confrontation with Iran, as Senator Lugar suggested. The high prices should help to signal Americans that the party is over. There will be no more cheap oil. I do think there should be an effort to channel the windfalls and other funds into massive efforts to improve end use efficiency, particularly in transport. Some of this could be done with a windfall profits tax on oil companies partially rebated for new investments in alternatives and improvements in end use efficiency. (Purchases of existing companies active in these areas should be excluded from any rebates).

I don't expect anything from this administration. It's practically part of the oil industry and has no credibility to explain to the American people what is happening.
Macura
What is causing the current run up of gas prices?

What's causing the run up of gas prices is nothing more than pure speculation in the oil markets. Nothing tangible has changed in recent months to cause a rise in prices but by using fear over a possible disruption of iranian supply those who profit in oil have found an excuse to raise prices and squeeze just a little more profit than usual.

Is there anything the government can do in the short term to lower gas prices at the pump?

Short term the government can do little to reduce prices at the pump, medium-term the government can open oil exploration further in the Gulf of Mexico and Alaska lessening the need for reliance upon foreign oil. Tax incentives on the purchase of hybrid cars can also lower consumer demand of oil. However any direct outside the market related act the government takes can have the effect of causing further uncertainty in oil prices.
Eeyore
What is causing the current run up of gas prices?

For me the more interesting answer is how the US manage to keep its fuel prices so low for so long.

We live in a world with scarce resources in which two thirds of the world is defined as developing. If I was selling oil I wouldn;t be rushing to market with it. The less I sell today the better my resources pay off for me.

On top of that we have created a tough situation for ourselves around the world. Where we have taken stands Iran, Angola for instance) the world wide demand creates customers against our wishes.

China and India are developing and their demand will increase rapidly.

Nigeria is facing unrest. Iran is being discussed as a military target. Iraq has production problems. We had a disruption in our production last year. our refineries are apparently going through the annual change to some summer blend or something. (Do we order our fuel from Starbucks now?) Venezuela is not so friendly. Our good will is not on the rise.


We had an opportunity in the 1970s when we invented Earth Day and had some ecological push going forward to create the car of the next generation and have it on the roads today.

We instead went for the cheap oil approach and pushed for new supplies without trying to hedge demand.

now we have a new crisis and the 1970s momentum is a distant dream and we have a new vision for creating the environmentally more friendly vehicle to be on the road next generation, We dropped the ball and perhaps lost the opportunity to have the next Henry Ford or Bill Gates drive our economy forward.

Is there anything the government can do in the short term to lower gas prices at the pump?


It probably could, but should it. We should tax the hell out of gas and have us use the revenues to reduce our dependency on oil.
skeeterses
I voted yes, but I should probably change that to a Maybe after I explain. Short of subsidizing the construction of new oil refineries, there are a few things that Government can do to lower gas prices slightly. For starters, Local Governments have to drastically increase the number of licensed Taxi Cab drivers in their cities. Right now, TaxiCab rides in America are way too expensive to use on a daily basis. Unless you happen to live in a big city like Washington DC or New York City, Public Transportation is not going to be a feasible option. If City Councils can lower the price of a TaxiCab ride by increasing the slots, then people will do much more carpooling. TaxiCab drivers will not like that idea, but then of course, pizza delivery drivers don't like low wages either.

This idea can help keep the gas prices below $3/gallon for the time being. However, when the price of oil gets above $100/barrel, we may all have to get used to walking and riding bikes everywhere. So I say exercise and prepare yourself for that time.
DaffyGrl
I heard this on the radio coming to work this morning, and was shocked, I tell you - SHOCKED! wink.gif
QUOTE
President Bush, under pressure to do something about gasoline prices that are expected to stay high through the summer, has ordered an investigation into possible cheating in the markets.

During the last few days, Mr. Bush asked his Energy and Justice departments to open inquiries into whether the price of gasoline has been illegally manipulated, said White House press secretary Scott McClellan. Mr. Bush planned to announce the action Tuesday during a speech in Washington. CBS

The cynical side of me says that this is just a PR ploy, but maybe, just maybe, it will make a tiny bit of difference????
nemov
QUOTE(DaffyGrl @ Apr 25 2006, 10:07 AM)
I heard this on the radio coming to work this morning, and was shocked, I tell you - SHOCKED!  wink.gif
QUOTE
President Bush, under pressure to do something about gasoline prices that are expected to stay high through the summer, has ordered an investigation into possible cheating in the markets.

During the last few days, Mr. Bush asked his Energy and Justice departments to open inquiries into whether the price of gasoline has been illegally manipulated, said White House press secretary Scott McClellan. Mr. Bush planned to announce the action Tuesday during a speech in Washington. CBS

The cynical side of me says that this is just a PR ploy, but maybe, just maybe, it will make a tiny bit of difference????
*



This is ALL PR. How is this going to make any difference? We might as well look for Bigfoot and UFO's with the money wasted on this "investigation." Are people out there so misinformed that they'll actually believe the President is doing something?
DaffyGrl
QUOTE(nemov)
This is ALL PR. How is this going to make any difference? We might as well look for Bigfoot and UFO's with the money wasted on this "investigation." Are people out there so misinformed that they'll actually believe the President is doing something?

Easy there big fella. I'm hardly a Bush fan...ask anyone here at ad.gif laugh.gif Misinformed? Ouch, that was a cheap shot.

The mere fact that he's actually addressing the issue surprises the heck out of me. And price gouging does occur (look what happened in Georgia after Katrina). If nothing else, it serves as notice to those who are/were/planning to price gouge.
nighttimer
QUOTE(DaffyGrl @ Apr 25 2006, 10:07 AM)
The cynical side of me says that this is just a PR ploy, but maybe, just maybe, it will make a tiny bit of difference????


You should listen to your cynical side, DaffyGrl. It's going to save you from the crapola coming out of Dubya's mouth.

The President says we won't be stockpiling any crude oil for the strategic oil reserve until the fall. Great! And how many barrells of oil will that leave for the marketplace? A whopping 2 million barrells---TOTAL. Which when you consider that the U.S. gulps down almost 20 million barrels of oil every day, Bush's action (and I use the word "action" in a liberal sense), is literally just a drop in the bucket.

Oh, and the President is going to suspend enviromental regulations on gasoline for refiners. Who cares if you can breathe as long as your OPEC-friendly SUV can fill up for under $3 bucks a gallon? Besides---can you really trust air you can't see?

However, give Bush his due. Rather than call for a windfall-profits tax as Senator Arlen Specter has, Bush says the oil companies should lose some $3 billion in tax breaks instead. I'm sure Dubya will tell Denny Hastert and Bill Frist to get on that rightaway!

There's nothing so funny as watching a man largely made by oil money trying to talk tough to oil companies. rolleyes.gif
barnaby2341
I agree with skeeter, we should all start taking our bikes to work. If you have a shower at your place of employment, or work near a health club you could easily reduce your costs of energy by riding a bicycle. It really is that bad. When I got out of the Marines in 2002, I was paying $13 for a full tank of gas, now it is $32. 4 years and 250% increase. Staggering.

Lederuvdapac, you may not agree with subsidizing, but that is the way corporations do business. The government does research and development. If an idea is marketable, then a corporation will take it over and market it. Take Cisco for example, the leading producer of Networking equipment. Did Cisco create the Internet, of course not, the U.S. Government did through the research and development project known as DARPA, and Cisco sold it. Do you really believe that corporations will spend billions of dollars on a speculative product? That is naive. Another example of subsidies is the ANWAR drilling project. Who is going to pay for the drilling in Alaska? Exxon, BP, Chevron or you? Of course you are going to make the investment for them, but the Oil corporations are going to make the profit; not you. And that's fact, the ANWAR project is in the U.S. budget, the U.S. budget is an estimate of expenditures based on tax revenues; YOUR MONEY!

The theory of supply and demand that you learned in school is far different than the reality of supply and demand. Supply and demand applies to workers like me and you, supply and demand applies to the small business owners, supply and demand does not apply to major corporations like Ford or GM. If a plant is not making enough profit then the CFO goes to the Governor of the state and negotiates a deal to get subsidized. The leverage that the Auto Maker has is the loss of well paying jobs to 3,500 or so plant workers. Now you have 3,500 disgruntled unemployed voters wondering why Governor Smucatelli did not do enough to keep the plant open. Each of those plant workers needs to eat and that will affect the surrounding restaraunts and other businesses. The Auto Maker is beholden only to their stockholders so they don't care if an entire community is destroyed by their departure. If GM or Ford can make more money paying Mexicans, Chinese, or Indians less wages then they will give severance to all the plant workers and wish them good luck. Meanwhile the vacuum created by the plant relocating increases the supply of workers in the community but not the demand, so the guy making $50,000 a year is now going to work for much less which also affects everyone else. The Union construction worker that made $25 a hour will not be able to negotiate a raise in their new contract because the void created by the auto plant has forced those workers to search for a new occupation as a construction worker. Substitute construction worker with any occupation you like, the result is the same, a race to the bottom with the American worker reaching new depths while the CFO and stockholders reach new heights, such as Exxon did in this last quarter.

Nationalize the oil production with regulation, and create new technologies to replace the need for oil. It can be done, we just have to find the will. The current format is not sustainable. We have finite resources and a growing population, not to mention only 52 oil investment companies allowing their fears and greed to dictate the price to 6 billion customers. Intervention is necessary.
lederuvdapac
QUOTE(barnaby2341)
Lederuvdapac, you may not agree with subsidizing, but that is the way corporations do business. The government does research and development. If an idea is marketable, then a corporation will take it over and market it. Take Cisco for example, the leading producer of Networking equipment. Did Cisco create the Internet, of course not, the U.S. Government did through the research and development project known as DARPA, and Cisco sold it. Do you really believe that corporations will spend billions of dollars on a speculative product? That is naive. Another example of subsidies is the ANWAR drilling project. Who is going to pay for the drilling in Alaska? Exxon, BP, Chevron or you? Of course you are going to make the investment for them, but the Oil corporations are going to make the profit; not you. And that's fact, the ANWAR project is in the U.S. budget, the U.S. budget is an estimate of expenditures based on tax revenues; YOUR MONEY!


Well you are correct when you say that I do not agree with subsidizing. The government should have little pull in the economics of the nation. If private enterprise do not have a profit motive to undertake a certain project than it should be left at that. Corporations won't spend billions of dollars on a speculative product yet our government (using our tax dollars) will...that's saying something. There is nothing the government can accomplish that private enterprise cannot do in half the time at 1/10 the price. If there is a demand for a product and business sees that, then they will seize the opportunity. If not even corporations will touch a project...than there is good reason.

QUOTE(barnaby2341)
The theory of supply and demand that you learned in school is far different than the reality of supply and demand. Supply and demand applies to workers like me and you, supply and demand applies to the small business owners, supply and demand does not apply to major corporations like Ford or GM. If a plant is not making enough profit then the CFO goes to the Governor of the state and negotiates a deal to get subsidized. The leverage that the Auto Maker has is the loss of well paying jobs to 3,500 or so plant workers. Now you have 3,500 disgruntled unemployed voters wondering why Governor Smucatelli did not do enough to keep the plant open. Each of those plant workers needs to eat and that will affect the surrounding restaraunts and other businesses. The Auto Maker is beholden only to their stockholders so they don't care if an entire community is destroyed by their departure. If GM or Ford can make more money paying Mexicans, Chinese, or Indians less wages then they will give severance to all the plant workers and wish them good luck. Meanwhile the vacuum created by the plant relocating increases the supply of workers in the community but not the demand, so the guy making $50,000 a year is now going to work for much less which also affects everyone else. The Union construction worker that made $25 a hour will not be able to negotiate a raise in their new contract because the void created by the auto plant has forced those workers to search for a new occupation as a construction worker. Substitute construction worker with any occupation you like, the result is the same, a race to the bottom with the American worker reaching new depths while the CFO and stockholders reach new heights, such as Exxon did in this last quarter.


The theory of supply of demand is reality...it is just how it is being applied. If a corporation cannot make enough profit to stay competitive, than they should be allowed to go bankrupt, not be bailed out by the government. Yes, there will be many disgruntled workers but that is a short term problem than could have been a long term problem through subsidies. President Bush's current economic policy seems to favor NOT bailing out large corporations if they go down because in the long run, it is better for the economy to focus money on industries that we are competitive. If the government adopts a policy of protectionism, than as I said before, investors will take risks that are above their ability since they will believe if their investment goes sour that the government will bail them out.

To go back on topic, there is little that can be done by the US government to make gas prices go down because the global demand for oil (especially in developing nations like India and China) makes demand larger than supply. There is nothing that can or should be done other than adjust to the changes and look towards alternative energy sources.
nighttimer
QUOTE(lederuvdapac @ Apr 25 2006, 05:20 PM)
Well you are correct when you say that I do not agree with subsidizing. The government should have little pull in the economics of the nation. If private enterprise do not have a profit motive to undertake a certain project than it should be left at that. Corporations won't spend billions of dollars on a speculative product yet our government (using our tax dollars) will...that's saying something. There is nothing the government can accomplish that private enterprise cannot do in half the time at 1/10 the price. If there is a demand for a product and business sees that, then they will seize the opportunity. If not even corporations will touch a project...than there is good reason.
*



The government that governs least, governs best, eh, lederuvdapac? I don't entirely disagree with you though my bone of contention is when the government intrudes upon individual privacy, not regulation of business.

And if you really think there is "nothing" that government can accomplish that private enterprise can't do cheaper, easier and faster, I would have to guess you've never traveled on a interstate highway. There is a reason it's call "U.S. Interstate-80" instead of "General Motors Interstate-80" NO corporation could have bore the cost of building a highway system from state-to-state. GM provided the cheerleading, but Dwight Eisenhower the initiative and the money.

Simply put, I disagree that the profit motive is the only reason why a enterprise should undertake a venture. Allowing drug companies to have carte blanche in researching treatments for AIDS or insurance companies to decide which group deserves coverage and which does not, is too important to be left up to merely the bottom line.

I don't share your faith in corporations shying away from projects for purely good reasons. The health, welfare and happiness of American citizens should not depend soley upon whether or not a buck can be made on it.

As time has illustrated, allowing corporations to base decisions upon how much money will it cost can have fatal consequences for ordinary people. Consider the sad case of the Ford Pinto:

Through early production of the model, it became a focus of a major scandal when it was discovered that the car's design allowed its fuel tank to be easily damaged in the event of a rear-end collision which often resulted in deadly fires and explosions. The problem was that the vehicle lacked a true rear bumper as well as any reinforcing structure between the rear panel and the tank, and in certain collisions, the tank would be thrust forward into the differential, which had a number of protruding bolts that could puncture the tank. This, and the fact that the doors could potentially jam during an accident (due to poor reinforcing) made the car a potential deathtrap.

Ford was allegedly aware of this design flaw but refused to pay the minimal expense of a redesign. Instead, it was argued, Ford decided it would be cheaper to pay off possible lawsuits for resulting deaths. This discovery of Ford's apparent gross disregard for human lives in favor of profits led to major lawsuits, inconclusive criminal charges, and a costly recall of all affected Pintos. Ford lost several million dollars and gained a reputation for manufacturing "the barbecue that seats four."


http://en.wikipedia.org/wiki/Ford_Pinto

Corporations, such as oil companies, cannot be trusted to "do the right thing" out of the kindness of their hearts. They must be monitored, regulated and investigated when they put profit ahead of the public good or the national interest.

QUOTE
To go back on topic, there is little that can be done by the US government to make gas prices go down because the global demand for oil (especially in developing nations like India and China) makes demand larger than supply. There is nothing that can or should be done other than adjust to the changes and look towards alternative energy sources.


Little that can be done or little that WILL be done, Leder? There is much that our elected leaders can do if they are willing to. But since Bush gave $14.5 billion in tax breaks to Big Oil in the last energy bill and Big Oil gave 79 percent of their $61.5 million in campaign contributions to Republicans in the last two presidential elections, one would expect business to go on as usual.

There is much that could be done to cut the nation's dependency of oil. But will the Bush Administration lead the way in greater fuel efficiency and cutting our consumption. Not. Bloody. Likely.

By adding only $600-$800 to the sticker price, automakers could offer consumers an SUV that gets the fuel economy of today’s family car. For $2,000 more, consumers could have an SUV that gets the fuel economy of a compact car. With gasoline at just two dollars per gallon, this SUV would save each driver more than $6,000 on fuel costs during the vehicle’s lifetime, and the technologies needed to get this SUV to more than 35 mpg would pay for themselves in less than four years.

Getting technologies like these into the fleet over the next 10 years and then tapping into the growing potential of hybrid cars and trucks could get us to the point of saving 5 million to 6 million barrels of oil per day by 2025. That would be enough of a reduction to stop the current growth in oil demand and hold us where we are today while we wait for the breakthroughs that are needed for clean and renewable alternatives to oil.

The problem is that automakers are not giving consumers these choices. Instead, for the past 20 years, similar technologies have been used to double horsepower and increase weight by 25 percent. As a result, the average fuel economy of new automobiles is lower today than it was 20 years ago.


http://www.tompaine.com/articles/2005/11/1...ica_off_oil.php

It would be a mistake to simply throw our hands up in disgust and dig deeper as the price of the pump continues to sprial insanely upward WITHOUT REASON. There is no current gas shortage. There is no current natural disaster a la Hurricane Katrina. The situtations in countries such as Nigeria or Iran are no less stable than before. Wake up America! You are being PLAYED for a SUCKER.

Don't believe nothing can be done. Don't believe the hype. hmmm.gif
Amlord
The government could realistically do something in the very short term to reduce gas prices: cut the federal tax on gasoline.

The current rate of tax on gasoline is 18.4 cents per gallon. The federal government racks in $100 million a day in this gas tax.

The oil companies make about 7 to 9 cents per gallon, the feds make more than double that.

That tax money is targeted at highway funds for roads and bridges. Not exactly pork, but not exactly a pressing need.

Senator Robert Menendez has proposed that the feds suspend this tax for two months: link. It would be extremely short term in terms of relief, but it would be something.
lederuvdapac
QUOTE(nighttimer)
The government that governs least, governs best, eh, lederuvdapac?


You betcha flowers.gif

QUOTE(nighttimer)
And if you really think there is "nothing" that government can accomplish that private enterprise can't do cheaper, easier and faster, I would have to guess you've never traveled on a interstate highway. There is a reason it's call "U.S. Interstate-80" instead of "General Motors Interstate-80" NO corporation could have bore the cost of building a highway system from state-to-state. GM provided the cheerleading, but Dwight Eisenhower the initiative and the money.

Simply put, I disagree that the profit motive is the only reason why a enterprise should undertake a venture. Allowing drug companies to have carte blanche in researching treatments for AIDS or insurance companies to decide which group deserves coverage and which does not, is too important to be left up to merely the bottom line.


Well nighttimer, of course I have traveled on an interstate highway...and i have also passed through one too many tolls. When NYC built the Verrazzano Bridge to connect staten island and brooklyn...it was supposed to last only long enough to pay for the project, about two years i believe was the time stated. The bridge was paid off in 6 months and yet approximately 40 years later it still costs money to go from staten island to brooklyn and vice-versa. As you can see, there is a profit motive for such things as highways...it just takes an entrepreneur to see it. Now whether you think that such things as highways and bridges and all that should be government run is for another debate...i am just making the point that its possible to have a profit motive.

If the people vote to put money towards AIDS research than the voice of the people should be heard and government should encourage private enterprise to commit to R&D with incentives. No company should be forced into something. The reason there was a flu vaccine scare a while ago is because American companies saw no profit in manufacturing of the drug. It should depend on demand. If there is a demand for a flu vaccine or a new AIDS drug...than private enterprise will make the supply. But if there isnt a demand...the government cant create demand...only supply and thats when it becomes a failed expenditure.

QUOTE(nighttimer)
I don't share your faith in corporations shying away from projects for purely good reasons. The health, welfare and happiness of American citizens should not depend soley upon whether or not a buck can be made on it.


Well this is just a philosophical disagreement. I think that the selfishness of the entrepreneur IS in the best interest of the consumer. The health, welfare, and happiness of American citizens should not be decided by government but by the people themselves. If there is demand...someone will create a supply.

QUOTE(nighttimer)
As time has illustrated, allowing corporations to base decisions upon how much money will it cost can have fatal consequences for ordinary people. Consider the sad case of the Ford Pinto:

Through early production of the model, it became a focus of a major scandal when it was discovered that the car's design allowed its fuel tank to be easily damaged in the event of a rear-end collision which often resulted in deadly fires and explosions. The problem was that the vehicle lacked a true rear bumper as well as any reinforcing structure between the rear panel and the tank, and in certain collisions, the tank would be thrust forward into the differential, which had a number of protruding bolts that could puncture the tank. This, and the fact that the doors could potentially jam during an accident (due to poor reinforcing) made the car a potential deathtrap.

Ford was allegedly aware of this design flaw but refused to pay the minimal expense of a redesign. Instead, it was argued, Ford decided it would be cheaper to pay off possible lawsuits for resulting deaths. This discovery of Ford's apparent gross disregard for human lives in favor of profits led to major lawsuits, inconclusive criminal charges, and a costly recall of all affected Pintos. Ford lost several million dollars and gained a reputation for manufacturing "the barbecue that seats four."

http://en.wikipedia.org/wiki/Ford_Pinto

Corporations, such as oil companies, cannot be trusted to "do the right thing" out of the kindness of their hearts. They must be monitored, regulated and investigated when they put profit ahead of the public good or the national interest.


Corporations can be trusted to "do the right thing" if the people tell them what the right thing is....and they do that by either buying or not buying their product. If the Ford model was so dangerous than logic dictates that the consumer would not purchase it. If the consumer knows that the car is more dangerous than others and still purchases the product than it is their choice. The government shouldnt have any say because how the hell do they know what the people want? What better indicator of what the people want than a look at what they purchase?

For example, why should the government regulate the safety of vehicles? What if the car manufacturer doesnt want to add air bags or other safety features? Shouldn it be up to the consumer whether or not they want a car with air bags? I say yes. If there is a demand for cars with high safety features than that is what will be built by car manufacturers.

QUOTE(nighttimer)
Little that can be done or little that WILL be done, Leder? There is much that our elected leaders can do if they are willing to. But since Bush gave $14.5 billion in tax breaks to Big Oil in the last energy bill and Big Oil gave 79 percent of their $61.5 million in campaign contributions to Republicans in the last two presidential elections, one would expect business to go on as usual.


Well my point is that there is little that should be done actually. Of course the price of oil going up hurts the economy...but thats with every product. Price controls would be bad news and be a serious drain on the economy. When supply is lower than demand...the price goes up and people have to adjust. People talk about price gouging as if it was a real term. Peopl say that oil companies are taking too much profit and are making us pay for it. Well the thing with this (as with any market)...they can charge whatever they want for their product. The reason that it is in their interest to keep prices down is because if it gets too high, demand will go down and so will their profits. If one big oil company is offering X for its gasoline and another oil company is offering Y for its gasoline and X<Y than obviously people will go to X for their gas.
QUOTE(nighttimer)
There is much that could be done to cut the nation's dependency of oil. But will the Bush Administration lead the way in greater fuel efficiency and cutting our consumption. Not. Bloody. Likely.


And thats where I am in agreement with you. It doesnt look like the Bush administration cares much about new alternative fuel sources. But i can bet you that there are private enterprises out there that are trying to find a way to get new technologies into cars at a marketable price. Its in their interest to do so if there is a demand for it. If there is no demand than the car companies will be wasting their money.

QUOTE(nighttimer)
It would be a mistake to simply throw our hands up in disgust and dig deeper as the price of the pump continues to sprial insanely upward WITHOUT REASON. There is no current gas shortage. There is no current natural disaster a la Hurricane Katrina. The situtations in countries such as Nigeria or Iran are no less stable than before. Wake up America! You are being PLAYED for a SUCKER.

Don't believe nothing can be done. Don't believe the hype. hmmm.gif


I am only being played if i choose to be. Its up to the people of this nation to make their own individual choices about whats important and what isnt. Nobody is saying that these choices will be easy but they are necessary and unavoidable. Things can be done....but nothing should be done.
skeeterses
QUOTE(nighttimer)
And if you really think there is "nothing" that government can accomplish that private enterprise can't do cheaper, easier and faster, I would have to guess you've never traveled on a interstate highway. There is a reason it's call "U.S. Interstate-80" instead of "General Motors Interstate-80" NO corporation could have bore the cost of building a highway system from state-to-state. GM provided the cheerleading, but Dwight Eisenhower the initiative and the money.

There was a reason why it wasn't profitable to build highways. Highways simply were not necessary and should not be necessary. The United States used to have an excellent railroad system, which is far more energy efficient than Jumbo Jets and Interstate highways. If there is anything that the Government can do to help reduce gas prices, Government needs to halt all construction on the Interstate Highway System, and halt all construction on new parking lots. Building more highways only encourages unneccessary gas usage and clutters up the landscape with concrete monstrosities.
nighttimer
QUOTE(lederuvdapac @ Apr 25 2006, 09:32 PM)
Corporations can be trusted to "do the right thing" if the people tell them what the right thing is....and they do that by either buying or not buying their product. If the Ford model was so dangerous than logic dictates that the consumer would not purchase it. If the consumer knows that the car is more dangerous than others and still purchases the product than it is their choice. The government shouldnt have any say because how the hell do they know what the people want? What better indicator of what the people want than a look at what they purchase?

For example, why should the government regulate the safety of vehicles? What if the car manufacturer doesnt want to add air bags or other safety features? Shouldn it be up to the consumer whether or not they want a car with air bags? I say yes. If there is a demand for cars with high safety features than that is what will be built by car manufacturers.

I am only being played if i choose to be. Its up to the people of this nation to make their own individual choices about whats important and what isnt. Nobody is saying that these choices will be easy but they are necessary and unavoidable. Things can be done....but nothing should be done.
*



Not to drift too far from the topic, but I have to challenge your remark, If the Ford model was so dangerous than logic dictates that the consumer would not purchase it. If the consumer knows that the car is more dangerous than others and still purchases the product than it is their choice.

The critical phrase there is IF THE CONSUMER KNOWS...

In the case of the Ford Pinto, the consumer did not know the danger and the Ford Motor Company certainly wasn't going to tell them beforehand. So, if the manufacturer makes the conscious choice to produce a dangerous product because they determine it is cheaper to deal with the future lawsuits instead of fixing a design flaw AND the public has no way of knowing this, how are they to be protected from an unsafe product?

Because there it is impossible for the consumer to know what a manufacturer wishes to conceal from them, some safeguards must be in place to rectify this dilemma.

It is beyond the ability of the ordinary citizen to protect themselves from predatory businesses. The free market is not a self-cleaning oven that catches all flaws in the marketplace. If a car manufacturer makes a decision they would rather allow buyers of their vehicles to be cooked like a burnt wiener because it would hurt profits to build a safer car, there has to be an independent authority that can step in and say, "You can't do that." This is a job only the federal government is equipped to do.

If that is interfering with the marketplace, I say Hooray for interference.

Because we all know that corporations will befoul the environment, overcharge consumers, manipulate the stock market, discriminate in its hiring and promotion of women, minorities and others, defraud the federal government and engage in other activities that have Ken Lay and Jeff Skilling facing hard time in a Houston courtroom even as we debate, there IS a place for regulation, oversight, and not permitting businesses to conduct business in any manner they see fit.

ESPECIALLY Big Oil where they produce a product that is so essential to the national security and general welfare and they have a monopoly no less.

dry.gif
lederuvdapac
QUOTE(nighttimer)
Not to drift too far from the topic, but I have to challenge your remark, If the Ford model was so dangerous than logic dictates that the consumer would not purchase it. If the consumer knows that the car is more dangerous than others and still purchases the product than it is their choice.

The critical phrase there is IF THE CONSUMER KNOWS...

In the case of the Ford Pinto, the consumer did not know the danger and the Ford Motor Company certainly wasn't going to tell them beforehand. So, if the manufacturer makes the conscious choice to produce a dangerous product because they determine it is cheaper to deal with the future lawsuits instead of fixing a design flaw AND the public has no way of knowing this, how are they to be protected from an unsafe product?

Because there it is impossible for the consumer to know what a manufacturer wishes to conceal from them, some safeguards must be in place to rectify this dilemma.

It is beyond the ability of the ordinary citizen to protect themselves from predatory businesses. The free market is not a self-cleaning oven that catches all flaws in the marketplace. If a car manufacturer makes a decision they would rather allow buyers of their vehicles to be cooked like a burnt wiener because it would hurt profits to build a safer car, there has to be an independent authority that can step in and say, "You can't do that." This is a job only the federal government is equipped to do.

If that is interfering with the marketplace, I say Hooray for interference.

Because we all know that corporations will befoul the environment, overcharge consumers, manipulate the stock market, discriminate in its hiring and promotion of women, minorities and others, defraud the federal government and engage in other activities that have Ken Lay and Jeff Skilling facing hard time in a Houston courtroom even as we debate, there IS a place for regulation, oversight, and not permitting businesses to conduct business in any manner they see fit.

ESPECIALLY Big Oil where they produce a product that is so essential to the national security and general welfare and they have a monopoly no less.


One thing that the company is not allowed to do is lie and if it lies or coerces people in any way...that is when the law should get involved. Other than that, the government should stay away. If Ford made safety claims about its product and it was then found out to be false...then they should be prosecuted. But if Ford says flat out the specifications of their vehicle and acknowledges that its safety features arent very high...then it should be up to the consumer whether or not they want to buy the product.

I mean look at the situation you presented. The Ford Pinto was presented and I am assuming that Ford withheld info that it had a flawed design. Well people died because of it and the news became public. Now demand for the product goes down. This results in the loss of millions for Ford. Is that not an incentive NOT to deceive in the future? There shouldnt be any government safeguards on products. What must be done is the company should be told that it is in their interest to tell the truth about their product because if they lie, than they will be the ones who will take the huge hit. If they do not lie about their cars safety features and people buy their product anyway, than the consumer is taking a calculated risk...but it is there risk to take.

Furthermore, why should that independent authority be government? The private sector is perfectly equipped to evaluate the safety of a car (e.g. insurance companies). It shouldnt be the government telling a company "you can't do that." it should be the consumer.

Companies will do what the consumers demand. If they choose not listen then they do it at their own risk because their competitor might. Fraud, lying, and coercion should not be tolerated and thats the ONLY time government should get involved to prosecute. Just like the instance you have showed with the Enron Scandal. The Enron execs were saying that they were making profits they weren't and they got caught. Now they are on trial.

Finally, there is no monopoly on oil. To my understanding their are 5 big oil companies. The only time there can be a monopoly is when government gets involved and prevents others from entering the marketplace. The government shouldnt do anything wth the current situation other than lax current restrictions and regulations that contribute to the high prices.
Julian
I was watching the evening TV news earlier this week (on the BBC I think) and they had an interesting 'behind the story' type analytical piece.

Apparently, crude oil supplies are still rising 3% faster than demand.

What is in short supply is the refining capacity that turns crude oil into the fuel that we put into our vehicles, burn in our homes, etc.

And, so the TV piece went, there are a number of factors that have prevented the big oil companies from building more refineries.

The first is simple economics - limited capacity gives limited availability of end products, driving up their prices. The corporations therefore not only make more operating profit, but they don't have to offset it against the (large) cost of building a new refinery.

The second is long term worries about 'peak oil'. No oil company wants to be the one who builds a new refinery just as growth in crude oil supplies stops, lumbering them with a hugely expensive facility that they can't use (because oil supplies start to fall).

And the third is the confluence of planning and environmental concerns from local government and various residents' and pressure groups. Oil refineries are large and unsightly facilities that need lots of incoming and outgoing pipes, powerlines, roads, and so on. Mostly they're built on the coast to be close to inbound piplines and tanker terminals, which are themselves limited to certain suitable areas (those with deep enough water, for example).

By unhappy coincidence, suitable locations for oil refineries tend either to be in areas already built up and inhabited (in which case nimby insticnts kick in, with some legitimacy). Or they tend to be in remote and uninhabited areas, which in developed countries tend to only be remote and uninhabited because of some other environmental or leisure value (national parks, habitats for rare animals, etc.)

A third strand of the rise in oil prices, and the main reason for increased crude oil prices, is market speculation. Traders are looking at what might happen to supply and demand if Iranian sabre-rattling comes to some kind of fruition; if Iraqi unrest continues; if these two areas of concern spread into a region-wide Middle Eastern conflict of some kind; if Venezuelan distaste for US foreign policy spills over into oil trading policy; if Nigerian civil unrest disrupts oil supplies; if Chinese, Indian and other Asian economic growth (including a recovered Japan, chich would still dwarf China economically for at least another decade) continues to increase global demand for oil; if America doesn't take urgent steps to shift away from a cheap-oil mindset - all these 'if's are being treated by markets as 'when's, which is driving up prices higher than any real occurances would merit.

And the only people making anything from that are the speculators (and the oil extraction companies), who tend to be the same ones that do the refining and the retailing, of which more later.

One problem with markets is that they usually react late to a particular situation, and then overreact, correcting themselves later, if at all. There's a reason people talk in terms of things happening 'over the economic cycle'. Market trades can be WORSE than Chicken Licken. It isn't a case of 'the sky is falling'. Nothing happens, but they start panciking about what might happen if the sky falls.

It's a tricky question, therefore.

However, I think one thing governments could do is pass legislation that forces oil companies to use some of the windfall profits they are making from high oil prices to open new refineries. Governments could in return offer tax breaks in the future should oil supplies actually peak and make plants redundant.

Also, I think a critical eye needs to be cast over the whole oil industry. Vertical integration works well from a cost efficiency perspective, which works well for consumers, intermediaries and producers as long as markets are stable and predictable. However, when markets become subject to change for whatever reason - like oil has been pretty much continually since 1974 - vertical integration gives terrible flexibility to cope with it. I think anti-trust legislators need to look at whether the oil majors need to be broken up into smaller functional units.

I'm not sure whather it's absolutely necessary to break them up, but I do think the situation needs to be urgently examined.

For example, perhaps refineries should be operated by independent businesses who get paid according to volume throughput, and not market prices of end products. It then becomes in their interests to make sure they have optimal capacity at all times, rather than the current situation where undercapacity increases profits - where's the incentive to expand there?
DaffyGrl
I don't have much time to expand on this, but I saw this item yesterday and it is pertinent to the discussion about monopolies and gouging.
QUOTE
There's a revolution of sorts brewing at a small gas station near Fallston, North Carolina. The Rockett Express has shut down its gas pumps in protest over high prices. The owners say they would rather stop selling gasoline than pass along to their customers the additional 11 cents more per gallon they say they have to pay than their brand-name competitors down the road.

The 'outrage' factor has spread. In the San Diego area, at least three independent stations also closed in protest after they say they were quoted 40 cents per gallon more than their brand-name competitors. CNN

It would seem that not only is the end consumer being gouged, but also those independent station owners who don't have the big Exxon/Mobil/Chevron/Arco/Shell sign out front. dry.gif

And jeez louise, what about this:
QUOTE
Oil prices eased in New York Wednesday after a weekly government report showed that U.S. refineries increased their gasoline and crude output, easing concerns about a supply crunch ahead of the summer driving season.

The Energy Department said that refineries operated at 88.2 per cent of their capacity last week. According to Bloomberg, that is the highest level since the week ended Jan. 6. Globe and Mail

One of the biggest excuses for the rapid price increases was the refineries' output. You can't tell me that oil refineries ramped up production in a week, causing prices to fall without there being some sort of gouging/price fixing going on.
KivrotHaTaavah
Julian:

You are correct re supply still exceeding demand. You are also correct re refining capacity, given that no new refinery has been built in the US since the 1980s [with all credit due and owing to the EPA and the enviro-Nazis].

You are also correct re market speculation. I agree to a large extent with what you wrote re the speculation, but to me, the problem reduces itself to the reality that it wasn't until but five or so years ago that any of us really paid much attention to the commodities market. But now, everyone and his brother is investing in commodities and it is most likely these newbies that are responsible for the simply insane market speculation. I have heard some estimate that the "fear factor" is responsible for $10-15 of the cost of oil on the futures market. Of course, there might not be much room for the speculation if there was some more spare production capacity, but there apparently is not, and so we have your posited scenario [i.e., with spare production capacity, we could assume that Nigeria stops extracting oil and/or delivering the same to market, but no problem, since someone else with spare production capacity picks up the dropped ball and runs with it (as it were); or stated in simpler terms, the oil market now has no safety net]. And to that we can add, not enough oil rigs are being made and the old ones are falling apart, not enough oil tankers, not enough petroleum engineers and other skilled workers, etc.

Oh, and not for you, but instead for those speaking in terms of a "free market supply and demand," sorry, but such does not, and never did, exist in oil/gas. How can you have a free market when only a select few have access to what I will call the raw material? And that's how OPEC manipulates the market. OPEC at one time wanted to forestall the development of alternative sources of energy [for the obvious reason that the same would put a hurt on their finances] and so they dropped the proverbial bottom out of the price of oil by simply increasing supply to an absurdly high level, giving us "cheap oil" and gas, and there was then no reason to develop an alternative fuel. And then we heard OPEC speaking of keeping oil at a benchmark $30 a barrel [or, for them, "basket"]. And they do that by simply extracting less oil and thereby tightening the supply.

And to go back to what I said above, and to relate this to spare production capacity, the proverbial golden age of the same was indeed in the 1980s, as we not only had plenty of spare production capacity when it comes to extraction, but also when it comes to refining. And that's why the EPA and the enviro-Nazis got away with making it almost impossible to build a new oil refinery. Why should Big Oil and some others have been so concerned given all that spare production [refining] capacity? And so they weren't. And now, here we are. No spare production capacity and some newbies in the market running around like Chicken Little. And you are also correct why Big Oil does not otherwise want to build a new refinery or two or three or four. It isn't what the conspiracy buffs and Big Oil haters think, since this isn't about driving up the price by artificially creating a supply problem, but it is instead Big Oil remembering when the bottom dropped out of oil and oil was selling for $10 a barrel. No refinery is worth building with oil at $10 a barrel.

Oh, and to the refining capacity problem as a general matter we can add the additional problem created by reformulation/local regulation. Such explains why there have been price spikes and shortages in certain areas [i.e., gas cannot go from point A to point B because the gas at point A is not properly formulated, or so says point B]. Such also no doubt explains why gas costs more in California than Texas and Ohio, even though California has a lower state gas tax than both Texas and Ohio [you want clean air, well, you're going to have to pay a premium for the same].

And lastly, Julian, you have proposed a reasonable partial solution to the problem, i.e., our government provides some safeguard to Big Oil and anyone else who wants to build and operate a refinery or two [just in case the bottom drops out] and otherwise provides another rather direct incentive tied to actual production [refinery] output. And the Saudis, well, ironically enough, they are our best friends when it comes to oil. They have by far the largest proven reserves of any of the OPEC members, more than Indonesia, Libya, Venezuela, and Nigeria, combined. The Saudis are usually the ones who bully the other OPEC members into keeping the price of oil at some reasonable level via the increase of production quotas. The Saudis are doing so for one very simple reason. It was not the oil consuming countries that were hurt by the oil problems in the 1970s, but the OPEC countries. And so we find the Saudis reporting that the price of oil "needs to be comfortable for both consumers and producers, and at a level where investors will put money in to grow this industry."

I am otherwise hopeful re China. China simply cannot sustain the level or rate of oil consumption that it experienced last year and so its demand for oil will taper off [if for no other reason than many an oil purchase was a one-time deal and China also had some problems with coal availability and so had to use oil to supply electricity that was normally provided by use of coal].

And things appear to be looking up on the supply side, since despite the doomsdayers, we are finding and bringing into production more oil fields. Some brave souls are even suggesting that in 2 years time, our problem will not be too great a demand, but too great a supply.

And truly lastly, not that I want the aged and retired to suffer, but going back to some becoming concerned with the commodities market for the first time, pension funds have dropped a huge amount of money in oil. Should their return decline over time, or the NYSE start offering a better rate of return, the pension fund managers might jump off the oil train and leave us with a collapse in the price of oil.
TedN5
QUOTE
(Julian)
Apparently, crude oil supplies are still rising 3% faster than demand.


I would be interested in seeing the source on this. Here is the outlook of the IEA in early April indicating that more oil was going to be required from OPEC this year than previously expected. (See this Article).

QUOTE
A combination of higher demand and lower non-OPEC supply increases the burden this year on OPEC, source of more than a third of world supply, according to the report.

The Organization of the Petroleum Exporting Countries, already pumping oil near capacity, needs to pump 29.4 million bpd this year, 400,000 bpd more than expected last month and 300,000 bpd less than members produced in March, the IEA said.


Whatever the balance between short term supply growth and short term demand growth, the long term demand growth is out stripping growth in proven reserves by several factors, although no one knows for certain what the proven reserves in Saudi Arabia are.

This is a complicated business to get a handle on even though I've read a number of books and reports on the subject.
Amlord
Slate had an excellent article yesterday on this subject:

I smell gas: A subject that makes congressmen stupid.

The summary:

QUOTE
What none can acknowledge is that higher gas prices in the United States are a good thing. To be sure, oil at $70 a barrel causes hardships for working people and delights some of the world's worst dictators. But cheap gasoline imposes its own costs on society: greenhouse gas emissions, air pollution and its attendant health risks, traffic congestion, and accidents. The ideal way to cope with these externalities would be with higher gas taxes or a carbon tax. But these are politically impossible ideas at the moment—Democrats lost control of Congress in part because they passed a 4-cent-per-gallon tax increase in 1993. The next best solution is the one that has arrived on its own: a high market price for oil, which spurs conservation and substitution. Sustained high prices will bring about behavioral and political changes: energy conservation, public transportation, less exurban sprawl, and eventually the economic viability of alternative fuel sources such as biomass, fuel cells, wind, and solar power, which may one day undermine the power of the oil oligarchs. Are politicians too stupid to understand this, or just smart enough not to say it aloud?


High prices fuel innovation. Government does not fuel innovation.

Those that look to government to solve the "big problems" are simply deluding themselves by assigning qualities to government which it does not possess: namely, problem solving.

High prices not only make formerly unattractive fuel sources now more affordable, it means the payoff for developing an alternative to oil energy that must more alluring.

Of course, politicians will use anything for political gain. Thus Congress is finger-pointed (something government does extremely well rolleyes.gif ). It's Bush. It's Exxon. It's Lee Raymond. It's Democrats blocking the energy bill. It's ... somebody.

What it really is is supply and demand. Demand is growing, supply is moderately fixed (especially for refined petroleum products). Prices are rising. Alternatives are only a few dollars away...
barnaby2341
QUOTE
High prices fuel innovation.  Government does not fuel innovation.

Those that look to government to solve the "big problems" are simply deluding themselves by assigning qualities to government which it does not possess: namely, problem solving.

High prices not only make formerly unattractive fuel sources now more affordable, it means the payoff for developing an alternative to oil energy that must more alluring.

Of course, politicians will use anything for political gain.  Thus Congress is finger-pointed (something government does extremely well  rolleyes.gif ).  It's Bush.  It's Exxon.  It's Lee Raymond.  It's Democrats blocking the energy bill.  It's ... somebody.

What it really is is supply and demand.  Demand is growing, supply is moderately fixed (especially for refined petroleum products).  Prices are rising.  Alternatives are only a few dollars away...

Interesting argument, but unfortunately, it nevers meets the ultimate goal: Lower energy costs. Oil companies are receiving billions of dollars in tax abatement. The reason for that is to reduce the cost on the American people. But that never happens. If it is supply and demand, which by the way, is delusional then why is there so much government interference, a.k.a. subsidies, in the oil industry? It doesn't make sense to claim capitalistic supply and demand while in the same breath you are asking for Socialistic subsidies. Either you are a profitable company or you are not. Now if you argue that Energy is a necesity, then treat it as such, like water and electricity. But that argument isn't being made. You are intelligent enough, why can't you figure out that socialism, in the form of subsidies or tax abatement, IS NOT SUPPLY AND DEMAND.

Welfare is a Social Program
Social Programs comes from Tax Dollars
Subsidies come from Tax Dollars
Subsidies are a Social Program
Social Programs are Socialism
Socialism is NOT Capitalism
Capitalism deals with Supply and Demand

Even if the new technologies were invented for low cost energy. Who do you think is going to develop them? The Oil corporations? You truly expect them to invest in a new technology that will reduce their profit? You could forego the investment in technology and just reduce the profit of the stockholders. That won't happen. And then, when the new technology does hit the market, (and by hitting the market I mean that your tax dollars go the R & D and somebody with government connections starts a corporation that just so happens to believe that this new technology is the wave of the future), then costs are still going to be exorbitant because that is how new technology works. VCRs, computers, DVDs all used to be high priced items, but no longer because they are commonplace. Energy costs are never going to go down because energy's demand has reach the point of necessity. Nationalize it.
Amlord
QUOTE(barnaby2341 @ Apr 27 2006, 06:11 PM)
Interesting argument, but unfortunately, it nevers meets the ultimate goal: Lower energy costs.  Oil companies are receiving billions of dollars in tax abatement.  The reason for that is to reduce the cost on the American people.  But that never happens.  If it is supply and demand, which by the way, is delusional then why is there so much government interference, a.k.a. subsidies, in the oil industry?

To use your words: "interesting argument".

Let's examine what is going on and whether or not government's past actions have had an impact on the "ultimate goal": lower energy costs.

First off, I don't understand your dismissal of supply and demand as "delusional". Maybe you think it's delusional in this case, but not generally. It's unclear what your meaning is.

Government interference in the oil industry is aimed at increasing supply. According to the Green Scissors Report of the National Resource Defense Council link, the oil industry has received $26 billion in subsidies over the past decade. That's $2.6 billion a year for the industry. Let's keep in mind that the USA is the third leading producer of oil in the world at 5.4 mb/d--bigger than Iran, China, Mexico or Venezuela. Most people tend to forget that. In the same period, we have subsidized $66 billon for nuclear power, $12 billion for alternative energy sources, and $8 billion on conservation efforts. It seems proportional. These subsidies have helped US companies find oil through deep water drilling in the Gulf of Mexico and other efforts, without which we'd be in a bigger bind.

QUOTE
It doesn't make sense to claim capitalistic supply and demand while in the same breath you are asking for Socialistic subsidies.  Either you are a profitable company or you are not.  Now if you argue that Energy is a necesity, then treat it as such, like water and electricity.  But that argument isn't being made.  You are intelligent enough, why can't you figure out that socialism, in the form of subsidies or tax abatement, IS NOT SUPPLY AND DEMAND. 


I never asked for subsidies. It was you who said that cheap energy was the goal. Subsidizing drilling efforts is an attempt to increase supply and lower price. Isn't that what you asked for?

QUOTE
Even if the new technologies were invented for low cost energy.  Who do you think is going to develop them?  The Oil corporations?  You truly expect them to invest in a new technology that will reduce their profit?  You could forego the investment in technology and just reduce the profit of the stockholders.  That won't happen.


Was the automobile subsidized by the feds? How the heck did it displace the horse and buggy without a government subsidy?

QUOTE
And then, when the new technology does hit the market, (and by hitting the market I mean that your tax dollars go the R & D and somebody with government connections starts a corporation that just so happens to believe that this new technology is the wave of the future), then costs are still going to be exorbitant because that is how new technology works.  VCRs, computers, DVDs all used to be high priced items, but no longer because they are commonplace.  Energy costs are never going to go down because energy's demand has reach the point of necessity.  Nationalize it.


Of course the cost of a good decreases with time as economies of scale kick in. Manufacturing 100 VCRs is more expensive (per piece) than making 100,000.

Nationalizing the energy industry ( wacko.gif ) will not solve any problems. The supply and demand equation is still valid. We'd have to eminent domain billions of barrels of oil (last I checked, the government didn't just take people's assets without compensating them). We still only produce less than half of the oil we use in the US, so we'd still have to import oil. This solves nothing.

High gas prices should be seen as a good thing for those that want an alternative to them. You cannot on one hand criticize our dependence on fossil fuels and on the other hand bemoan their rising prices (of course that does not stop politicians from doing so...ahem Bush, Kerry, Gore, Pelosi). High prices are the impetus for innovation.
DaffyGrl
QUOTE(Amlord)
High prices not only make formerly unattractive fuel sources now more affordable, it means the payoff for developing an alternative to oil energy that must more alluring.

Of course, politicians will use anything for political gain. Thus Congress is finger-pointed (something government does extremely well  ). It's Bush. It's Exxon. It's Lee Raymond. It's Democrats blocking the energy bill. It's ... somebody.

How right you are. To prove how much government is “committed” to alternative fuels, check this out:
QUOTE
After the conference, which addressed high gas prices, Hastert and other Congressmen had been carted away in fuel saving and alternatively powered automobiles. Just blocks away from the scene, Hastert is reported to have ditched his in favor of his usual official car [DG-an SUV, naturally!]. Raw Story

They can’t even make a commitment to alternative fuels to transport their lazy butts a few blocks! laugh.gif This confirms my belief that the whole alternative fuel push by government is all lip service and photo ops, a sop to a public that doesn’t look beneath the surface. Meanwhile politicos continue to work hand-in-hand with the oil companies. As long as this marriage from hell lasts, there will be no real investment in alternative fuels and we, the consumers, will still have no choice other than conventional fuels at outrageous prices.

I worked for a company involved in alternative fuel production 7 years ago. They went out of business, but not because of the product. The CEO was a "Ken Lay-lite" and sucked the life right out of the company. But in 7 years, I haven't seen that much more progress. Yes, there are a couple more hybrid car models on the market, but that's about it.
TedN5
QUOTE
(Amlord)
Government interference in the oil industry is aimed at increasing supply. According to the Green Scissors Report of the National Resource Defense Council link, the oil industry has received $26 billion in subsidies over the past decade. That's $2.6 billion a year for the industry.


These figures are expenditures by the Department of Energy for R&D only and grossly underestimate the total subsidies to the oil industry. The link is really a critique of energy legislation as it existed in 2002 which was enacted last year approximately doubling R&D subsidies to the oil and gas industry. It is rather a good study and I urge ADers to read it. Amlords quoted figures totally ignore these additional subsidies and the tax subsidies received through things like percentage depletion allowance and the $20 to $60 billion of our defense budget that goes directly to protecting our foreign oil interests. (Some would estimate a much higher cost).

There are long term strategies to reduce the amount of oil consumed in the US without drastically impacting the economy adversely, probably even stimulating it. Several times in the past, I have tried to direct ADers to the study Winning the Oil End Game at RMI.org website. Here is the Abstract of that study:

QUOTE
This independent, peer-reviewed synthesis for American business and military leaders charts a roadmap for getting the United States completely, attractively, and profitably off oil. Our strategy integrates four technological ways to displace oil: using oil twice as efficiently, then substituting biofuels, saved natural gas, and, optionally, hydrogen. Fully applying today's best efficiency technologies in a doubled-GDP 2025 economy would save half the projected U.S. oil use at half its forecast cost per barrel. Non-oil substitutes for the remaining consumption would also cost less than oil. These comparisons conservatively assign zero value to avoiding oil's many "externalized" costs, including the costs incurred by military insecurity, rivalry with developing countries, pollution, and depletion. The vehicle improvements and other savings required needn't be as fast as those achieved after the 1979 oil shock.

The route we suggest for the transition beyond oil will expand customer choice and wealth, and will be led by business for profit. We propose novel public policies to accelerate this transition that are market-oriented without taxes and innovation-driven without mandates. A $180-billion investment over the next decade will yield $130-billion annual savings by 2025; revitalize the automotive, truck, aviation, and hydrocarbon industries; create a million jobs in both industrial and rural areas; rebalance trade; make the United States more secure, prosperous, equitable, and environmentally healthy; encourage other countries to get off oil too; and make the world more developed, fair, and peaceful.


And Here is where you can download the whole thing. This study also contains a discussion of energy subsidies (as they existed in 2004) and the need to level the playing field between alternative energy sources and with end use improvements in energy efficiency.
Amlord
QUOTE(TedN5 @ Apr 28 2006, 11:46 AM)
And Here is where you can download the whole thing. This study also contains a discussion of energy subsidies (as they existed in 2004) and the  need to level the playing field between alternative energy sources and with end use improvements in energy efficiency.
*



This proposal has many merits. It offers a realistic look at where we are and where we should be heading.

But the paper refutes what many here seem to believe: that oil companies and car manufacturers are blocking progress in the energy field. The first pages include quote after quote from oil company and car manufacturer executives and from people such as Sheikh Zaki Yamani warning about the coming metamorphosis of the energy market.

Winning the Oil Endgame points out how the Big Three have been losing market share not only in foreign markets, but here at home as well. There are many reasons for this, and lack of innovation is certainly among them.

The solution to an alternative to oil is not restricted to a US company. And I challenge anyone who thinks that a behemoth industry such as the Big Three represent can not be replaced by an entirely new venture.

In the 1990, Boeing had a virtual monopoly on the commercial airliner business. Airbus was formed in the 1970s and by 2000 had captured almost 40% of the market. By 2004, it had the majority share of the market. Although Airbus did not form "from scratch" it did enter a market that it was not in before and performed admirably well.

I predict the same to happen with energy. Currently, oil companies are the major producers of hydrogen gas in the US (from methane). Should hydrogen become a viable fuel, I suspect that oil companies and electricity companies will become the major suppliers of hydrogen through either methane or electrolysis production.

This just in: Congress has proposed the H Prize a $100 million prize for developing a viable hydrogen solution to our fuel woes.

I believe the sun is setting on the oil industry and in only a few years we will see a revolution in the energy field. It's only a matter of time.
carlitoswhey
QUOTE(DaffyGrl @ Apr 28 2006, 10:45 AM)
They can’t even make a commitment to alternative fuels to transport their lazy butts a few blockslaugh.gif This confirms my belief that the whole alternative fuel push by government is all lip service and photo ops, a sop to a public that doesn’t look beneath the surface. Meanwhile politicos continue to work hand-in-hand with the oil companies. As long as this marriage from hell lasts, there will be no real investment in alternative fuels and we, the consumers, will still have no choice other than conventional fuels at outrageous prices.

The politicians are hypocrites for pandering via hopping into these vehicles, and Hastert is worse for hopping back out again. That said, I believe that automobiles and gasoline only account for about 1/3 of oil consumption by the USA. The rest is used in power plants. We would do a whole lot more for oil dependence by moving to alternative fuels for our electricity than by symbolic acts of corn-fueled limo service.

Consider Ted Kennedy, champion of the little guy, who is single-handedly blocking the first major offshore windfarm because it would obscure his view from Nantucket. link This an example of not just NIMBYism (not in my back yard) but BANANAism (build absolutely nothing anywhere near anything). The same people blocking oil exploration off both coasts and in Alaska are blocking nuclear power plants and even wind farms. Driving a prius may make someone feel good and it does contribute to a better environment, but it does virtually nothing to address our dependence on foreign oil. And, as Trey Parker and Matt Stone recently noted, the Pious, er Prius, can emit a tremendous cloud of smug.

edit - I had forgotten about this bit of symbolism from our advocates on the hill. from foxnews.com. A pox on both their houses.
QUOTE
Car Carrying Member of Gas Guzzlers?

After gathering at a Capitol Hill gas station yesterday to condemn President Bush for rising gas prices — some Democratic senators hopped into cars for the one-block trip back to their offices. According to The Washington Post, California's Barbara Boxer got into a Chrysler LHS, and New York's Chuck Schumer hopped into a Hyundai Elantra.

Similarly after voting on the Senate floor yesterday — Democrats Ben Nelson of Nebraska, Bob Menendez of New Jersey, Evan Bayh of Indiana, and Ted Kennedy of Massachusetts all got into cars for the trip back to their offices — across the street.

And, after some of the same Senate votes, Republicans John Sununu of New Hampshire, Richard Lugar of Indiana and Jim DeMint of South Carolina used their cars for the same trip. Indeed, the Post found after a quick survey of the cars, that the Democrats got a bit better mileage than the GOP vehicles.
TedN5
QUOTE
(carlitoswhey)
I believe that automobiles and gasoline only account for about 1/3 of oil consumption by the USA. The rest is used in power plants


I think your statistics are way off. For 2003 the transportation sector consumed 65.8% of total US consumption and electric utilities burned only 0.53%. Transportation use has been increasing while utility use has decreased. Spreadsheet of Historical Consumption by Sector
DaffyGrl
I occasionally listen to a ‘net station that broadcasts from Martha’s Vineyard, and first heard about the wind farm a couple of years* ago (thereabouts). There is widespread opposition to the project, not just the Kennedy’s. Teddy is just representing his constituency.
QUOTE
By a two-to-one margin, voters on Nantucket have said no to a 130-turbine wind farm proposed for Nantucket Sound. MSNBC

I also saw a TV report on this some time ago, and I must say; I also wouldn’t want it off my coast (it's butt ugly). And I love alternative energy. Palm Springs and places like it are great places for wind farms…not the ocean.

And, carlitoswhey, the real nub of the problem lies in your own source:
QUOTE
The Cape Wind developers, he said, want to erect a sprawling, for-profit field of giant windmills on public, state-owned territory. Kennedy noted that the project was the beneficiary of more lenient regulations included in last year's energy bill, which could have put it on a faster track to construction; therefore, a special deal was warranted to stop it.


BTW, "BANANA-ism" - I love it! I've never heard that one. laugh.gif

*It has been 5, according to Save Our Sound
carlitoswhey
QUOTE(TedN5 @ Apr 28 2006, 02:50 PM)
QUOTE
(carlitoswhey)
I believe that automobiles and gasoline only account for about 1/3 of oil consumption by the USA. The rest is used in power plants


I think your statistics are way off. For 2003 the transportation sector consumed 65.8% of total US consumption and electric utilities burned only 0.53%. Transportation use has been increasing while utility use has decreased. Spreadsheet of Historical Consumption by Sector
*


My bad. I had my 1/3 and 2/3 mixed up. Thanks for the correction.

Just for anyone else who is reading your reply, the "0.53%" is not right, though.
link Your table only provided a percentage for transportation, the other categories were just absolute usage in gallonage.

QUOTE
Petroleum products, especially motor gasoline, distillate (diesel) fuel, and jet fuel, provide virtually all of the energy consumed in the transportation sector. Transportation is the greatest single use of petroleum, accounting for an estimated 67 percent of all U.S. petroleum consumed in 2004. The industrial sector is the second largest petroleum consuming sector and accounts for about 23 percent of all petroleum consumption in the U.S. Residential/Commercial and the electric utility sectors account for the remaining 8 percent of petroleum consumption.

Demand for petroleum products in the United States averaged 19.7 million barrels per day in 2004. This represents about 3 gallons of petroleum each day for every person in the country. By comparison, petroleum demand averaged about 2 gallons per person per day in the early 1950's and nearly 3.6 gallons per person per day in 1978.


We use less petroleum per person than we did in 1978. Who knew?

Anyway, "transportation" isn't just automobiles, it includes all sectors. Gasoline does accounts for 44% of our petroleum usage, which is where I may have gotten my 1/3 and 2/3 mixed up. It's a big number, but I bet most Americans think that gasoline uses a much higher percentage of crude oil imports. If Americans all got 10% better mileage, that would reduce total petroleum usage by something like 4%. Which would be a good thing, but still not change the overall dynamic of the problem. I'd agree with Amlord - higher prices are more likely to stimulate alternatives, whether for energy or transportation needs.

Daffygrl, I understand that Ted is representing his constituents. Why wouldn't they want the government to keep someone from developing energy on government land? They are wealthy and can afford to heat their homes, so if their representatives can keep the views, more power to them. That doesn't mean that they aren't complete hypocrites. If not Nantucket, where? My guess - no where near a rich-person's coastline.

As for the land being state-owned territory, well, there is part of your problem.
TedN5
I guess I need to watch my reference too! 0.53 mbpd of 20 mbpd works out to about 2.64%.

QUOTE
(carlitoswhey)
We use less petroleum per person than we did in 1978. Who knew?


Actually, I did but I've followed this issue for a long time. The reduction has been almost entirely due to improvements in efficiency heavily driven by the CAFE standards on new cars. If we had imposed them on light trucks and SUVs when these became a significant part of the market we would be in a much better position. I'm sure part of the reduction in per capita use, however, is due to the substitution effect of replacing oil burning utilities and home heating with gas and coal fired plants.
DaffyGrl
QUOTE
Daffygrl, I understand that Ted is representing his constituents. Why wouldn't they want the government to keep someone from developing energy on government land? They are wealthy and can afford to heat their homes, so if their representatives can keep the views, more power to them. That doesn't mean that they aren't complete hypocrites. If not Nantucket, where? My guess - no where near a rich-person's coastline.

Not everyone who lives in Nantucket, Martha's Vineyard, etc. is wealthy. And it is a spectacular area frequented by millions of tourists each year (and, btw, it's in flight paths, and if JFK Jr. were still alive, he could tell you it gets pretty foggy out there). Do you have any idea the scope of this project? Even if you excoriate the Kennedys and lump everyone else who lives on the Cape as wealthy individuals not worthy of an opinion (which is odd, I thought conservatives liked wealthy people unsure.gif ), there are other groups you can vent your spleen on - environmentalists, the tourist trade, and all the folks whose livelihood depends on the tourist trade.
QUOTE
Covering 24 square miles, the plant would consist of 130, 417 foot wind turbines connected to a central service platform holding 40,000 gallons of transformer oil and 1000 gallons of diesel fuel, with a helicopter pad on top. Each massive turbine blade will be 164 feet long with a total diameter of 328 feet (rotating football field). Each turbine will have a base diameter of 16 feet and an above-water profile taller than the Statue of Liberty (305’) and the Cape Cod Canal bridges (275').
carlitoswhey
QUOTE(DaffyGrl @ Apr 28 2006, 04:10 PM)
QUOTE
Daffygrl, I understand that Ted is representing his constituents. Why wouldn't they want the government to keep someone from developing energy on government land? They are wealthy and can afford to heat their homes, so if their representatives can keep the views, more power to them. That doesn't mean that they aren't complete hypocrites. If not Nantucket, where? My guess - no where near a rich-person's coastline.

Not everyone who lives in Nantucket, Martha's Vineyard, etc. is wealthy. And it is a spectacular area frequented by millions of tourists each year (and, btw, it's in flight paths, and if JFK Jr. were still alive, he could tell you it gets pretty foggy out there). Do you have any idea the scope of this project? Even if you excoriate the Kennedys and lump everyone else who lives on the Cape as wealthy individuals not worthy of an opinion (which is odd, I thought conservatives liked wealthy people unsure.gif ), there are other groups you can vent your spleen on - environmentalists, the tourist trade, and all the folks whose livelihood depends on the tourist trade.
QUOTE
Covering 24 square miles, the plant would consist of 130, 417 foot wind turbines connected to a central service platform holding 40,000 gallons of transformer oil and 1000 gallons of diesel fuel, with a helicopter pad on top. Each massive turbine blade will be 164 feet long with a total diameter of 328 feet (rotating football field). Each turbine will have a base diameter of 16 feet and an above-water profile taller than the Statue of Liberty (305’) and the Cape Cod Canal bridges (275').


The same complaints were made in Denmark in the 90's, and haven't panned out. link

And, call me cynical, but I bet the rich people have the power to lobby against this, and the regular folks you cite in Nantucket and Martha's Vineyard would rather have cheaper electricity. Based on my personal experience, and the blue election map in 2000 and 2004, I believe that there are more (liberal) environmentalists in New England than there are in most of the rest of the country. Certainly more than there are in the midwest and South, places where we actually mine for coal and drill for oil. New England has much higher energy costs (especially home heating) vs. the rest of the nation. Shouldn't they lead by example - siting a new renewable energy source off their shores? Wouldn't this show us that they weren't just all talk regarding the environment?

This same thing happened when I lived in the UK. Everyone whined whined whined about fossil fuel usage, and then when locations with the proper conditions for a wind farm were published, everyone was against it. It would 'ruin the fine Scottish view' and all.

Click here and scroll down to see a simulation of the view from Nantucket after the wind farm is built. You can't even really see the turbines.

My question still stands. If not here, where? If renewable energy can't be produced in the ultra-liberal Northeast, where can it be produced? If silent, environmentally-neutral wind turbines are too much to bear, when and where are we going to build things like refineries, oil wells, nuclear plants that will create the energy we need? Or should we just complain about the 'government' and 'gas prices'?
Ted
What is causing the current run up of gas prices?
The price of oil as dictated by market conditions. We of course share the blame since we have studiously avoided doing what we needed to do to increase our own oil supply. Voted against drilling in ANWAR, off shore, the gulf etc……. OR doing smart things like increase the CAFÉ. We deserve this for being just plain stupid. Why did it take Bush pushing Congress before the idiots even considered treating SUVs as cars and NOT trucks?????

Is there anything the government can do in the short term to lower gas prices at the pump?
Not much except lower taxes (gove makes more money – for doing nothing- on oil than oil companies). Also we could force a change to fewer “boutique” gas formulations.

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Carl
And, call me cynical, but I bet the rich people have the power to lobby against this, and the regular folks you cite in Nantucket and Martha's Vineyard would rather have cheaper electricity. Based on my personal experience, and the blue election map in 2000 and 2004, I believe that there are more (liberal) environmentalists in New England than there are in most of the rest of the country. Certainly more than there are in the midwest and South, places where we actually mine for coal and drill for oil. New England has much higher energy costs (especially home heating) vs. the rest of the nation. Shouldn't they lead by example - siting a new renewable energy source off their shores? Wouldn't this show us that they weren't just all talk regarding the environment?



Yes I agree. I just got an electric bill with the cost at 20 cents a KWH!!! Almost twice what it was 2 years ago. And our “Senior” Senator votes to kill the wind farm. He is nothing but a lying fool and how Teddy K gets reelected here time and again is beyond me.
Bikerdad
What is causing the current run up of gas prices?
Speculation driven by the Iranian tensions. Seasonal summer run-up. Supply restrictions driven by the switch from the gov't mandated MBTE to Ethanol. Refining capacity restrictions driven by the requirement to do necessary maintenance on refineries that were kept on-line to cover capacity reduction resulting from the Katrina/Rita damage to Gulf Coast refineries. And finally, the increasing demand from China and India for oil.

Is there anything the government can do in the short term to lower gas prices at the pump?
Lower gasoline taxes. Nuke China and India. All things considered, I think the latter is actually more likely to occur than the gov't (Federal, State and local) lowering gas taxes. ph34r.gif
skeeterses
If the speculators are the only ones driving up the gas prices up, then the American motorist has nothing to worry about. The reason is that speculation will only keep up the prices until the last gambler shows up. At that point, the price will fall back to its natural market condition and the stupid speculators lose their shirts. If the speculators are correct about the future price, it's only because of growing demand and diminishing supply.
AuthorMusician
QUOTE(DaffyGrl @ Apr 28 2006, 04:10 PM)
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Daffygrl, I understand that Ted is representing his constituents. Why wouldn't they want the government to keep someone from developing energy on government land? They are wealthy and can afford to heat their homes, so if their representatives can keep the views, more power to them. That doesn't mean that they aren't complete hypocrites. If not Nantucket, where? My guess - no where near a rich-person's coastline.

Not everyone who lives in Nantucket, Martha's Vineyard, etc. is wealthy. And it is a spectacular area frequented by millions of tourists each year (and, btw, it's in flight paths, and if JFK Jr. were still alive, he could tell you it gets pretty foggy out there). Do you have any idea the scope of this project? Even if you excoriate the Kennedys and lump everyone else who lives on the Cape as wealthy individuals not worthy of an opinion (which is odd, I thought conservatives liked wealthy people unsure.gif ), there are other groups you can vent your spleen on - environmentalists, the tourist trade, and all the folks whose livelihood depends on the tourist trade.
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Covering 24 square miles, the plant would consist of 130, 417 foot wind turbines connected to a central service platform holding 40,000 gallons of transformer oil and 1000 gallons of diesel fuel, with a helicopter pad on top. Each massive turbine blade will be 164 feet long with a total diameter of 328 feet (rotating football field). Each turbine will have a base diameter of 16 feet and an above-water profile taller than the Statue of Liberty (305’) and the Cape Cod Canal bridges (275').

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Why put a wind farm on dry land when there's a really big ocean there with regular tidal flows? Put in tidal generators. Here's a starting point link, but the technology is pretty darn available right now:

Tidal Power Primer

One thing that has impressed me about free enterprise in the United States is that it seems to be run by maniacs and clowns. This is the true problem. We have the solutions all around us, but none of these monied interests see them. Instead, up comes a boneheaded approach that is bound to be protested and fought. Put wind farms in the Midwest, put tidal generators on the coasts. Hello, where's common sense when we need it?

Ah, but if we did exploit these energy sources, then the price of electricity would fall. Suddenly, fully electric vehicles become economically feasible. Hey, that's just no fun, or something like that.
DaffyGrl
California (who is the lead plaintiff), Maine, Massachusetts, New Jersey, New Mexico, Oregon, Rhode Island and Vermont, plus New York City and DC are joining together to sue the Bush administration, alleging that new federal fuel economy standards for light trucks and sport utility vehicles violate federal environmental laws. (I wasn’t aware that states could sue the federal government; maybe others can shed some light on that particular aspect)
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Late last year, the Bush administration unveiled the first broad overhaul of mileage regulations for S.U.V.'s, pickup trucks and minivans since the rules were created in the 1970's. Currently, each automaker's annual production of passenger cars must average 27.5 miles a gallon, while light trucks, which include S.U.V.'s, must average 21.6 miles a gallon in 2006 models.
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Environmentalists say the Bush administration's new truck fuel economy system will not do enough to curb oil consumption and adds uncertainty to a complex system already characterized by loopholes.
<snip>
"You can't propose something that's not technically feasible for them to achieve," he added. NY Times

This is a good example of how the government can actually affect gas prices, whether it is by withholding supply or pandering to the automotive industry by being lax on fuel economy regulations.

That last quote in the article is priceless. It shows how bogged down the industry is in the current technology and its resistance to any sort of change. To all of those touting research into new technologies to replace internal combustion, and how many are available, or nearly available, can you explain why the industry still falls back on the excuse that it isn’t “technically feasible” for the industry to improve on fuel economy?

Instead of setting new standards for elephantine SUV's, I think they should just quit making the wasteful piles of junk....or at the very least, penalize those who buy them with the huge gas guzzler tax they slap on performance vehicles. thumbsup.gif
Bikerdad
Some observations: wind farms are most sensibly built where there's wind. Coastal areas handily meet this criteria, such as Martha's Vineyard. Location of wind farms should take into consideration the geographic cost basis of alternative. Putting a wind farm rather than a coal power plant into the Powder River Basin would be nuts. Putting a wind farm in Martha's Vineyard rather than railing coal 2,000 miles for a powerplant would make a lot more sense.

Airbus was not "entering a brand new field." The British contribution to Airbus was BOAC, which built civilian airliners but was being crushed by Boeing and McDonnell-Douglas. Nor is Airbus a poster child of capitalist startups. It was an excercise in Anglo-French economic nationalism, heavily subsidized and given protected markets.

DaffyGrl, your creative snipping is priceless. The Administration's plan improves overall fleet gas mileage. By breaking things into smaller groups, automakers are no longer able to shield the crappy mileage of a F-350 Crew Cab with the much better mileage of a Ford Ranger. How is that a "bad thing"?
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