Odl Dan , How ?

How do we engage the American population into become part of this war solution. Every one sits at home and plays guess the President ? There must be a way as in WW11 that we can as individuals get together and take down the enemy. If we do not they will do it to us if we leave the door open.

 

World War Eleven? Where the heck have I been?

 

Good question. You're right... the American public is not asked to make any sacrifices except for those whose sons and daughters and wives and husbands are sent over. Everyone else is encouraged to go about their lives as if nothing is happening.

The main thing the US public can do is USE LESS GAS! This is a war for oil... nothing more and nothing less. If we can reduce the need for fuel in the United States by 50% THERE WILL BE NO NEED FOR WAR and we can let those people just duke it out amongst themselves. The ONLY reason we have a military presence in the Middle East is because of oil... and the ONLY reason we have to do that is because we use too much... more than twice as much per capita of anywhere else in the world. The reason we use too much is because it's TOO CHEAP here, and it's too cheap here because our government SUBSIDIZES the oil business and commits our military to capture and protect oil resources abroad to KEEP it cheap. We're caught in the Catch-22... we can't quit because it's cheap, and we can't raise the price because we use too much... it is a classic true "addiction".

Other countries use a fuel tax to raise the price to a level that keeps the consumption low by market forces which incentivize people to make wise decisions when purchasing cars and deciding how their daily errands shall be run. It has been shown that a fuel tax in the US is a political cyanide pill and nobody will touch it, even though it is the easiest and most straightforward solution.

Since the government is incompetent to deal with the situation the people will have to do so. In order for the public to take control, we should institute a VOLUNTARY FUEL TAX. Yes, voluntary. If you don't want to do it you don't have to, but everybody will think you're a schmuck if you don't... peer pressure will save us. Here's how it works. We peg the "true cost of gas" to the price in a European country... say... Norway for instance (where gasoline costs about double what it does here even though they are a net exporter). When you pay for your gasoline you pay the "true cost" price at the pump. Yes... $5/gallon... ouch.. it hurts! (you begin to think of ways to buy less) The regular price goes to the petrofuel corporation as always, and the excess is credited to your Energy Savings Account. You can spend money from that account via a debit card for approved energy saving devices and services.... such as home insulation, high efficiency windows, a car that gets over 40mpg, solar panels, wind turbines, reflective roofing, etc.

In other words, we can't expect the government to tax energy and spend it in the right places to reduce our energy needs, so we do it ourselves... we take President Jimmy Carter's advice and declare the "moral equivalent of war" on the energy problem. If enough of us do as much as we can and do it fast enough, we can forget about middle east oil... don't need it... don't want it.

And while we're at it, we'll be making a big step towards solving the greenhouse gas climate-change problem while we're at it. It's moral, it's patriotic, it's right, and it's wise. And by crashing the market for their product by refusing to buy, we hit the bad guys where it hurts.

 

As a person who drives many miles a day to and from work in a very very large city I dont agree with your solution to make me pay out the ass to fill my car. You must not have to drive a lot or live in a small town. Houston is a huge city and just to get to work or to a coin shop I have to drive 20-30 miles or more. I dont think you are taking into account how large not only some cities are but how large America is and how much people are required to drive in their daily lives for business and how much or economy is supported by shipping...its not like we all just drive for the fun of it, if I could I would work close to home, but I cant.

The fact of the matter is also that there is no viable alternative to gas. You cant keep an airplane in the air for 7-10 hours over the ocean on solar power or lard....there is simply no viable alternative and until there is we must use gas. Nor do I agree that our only reason for being in the ME is oil...that is a grande over simplification of history. To say that if we did not need to deal with other nations for oil there would be no more war is almost child like in its naiveté. We have to deal with other nations for business and economic reasons or we can crawl up into a little ball and isolate ourselves from the rest of the world, that isnt going to happen and could be more dangerous that what we do now...The problems in this world were not caused by the US, these problems started long ago with british and eurpean colonialism (read a history of the middle east) and the US inherited much of these problems as we became the last western superpower...we are feeling the backlash of hundreds of years of colonialism...and yes...this colonialsm concern natural resources. We have allies, we have enemies...oil or not this will not change...


I have visited Norway on business. They are a large producer of oil in the north sea and they hold and huge oil conference every other year called the ONS (Offshore North Sea) in Stavanger. They are socialist...they are not paying the true price of oil, they could easily be filling tanks in Norway far cheaper than most nations as most of their oil industry is government owned...what makes their gas more expensive as well as other nations like the UK is huge government taxes...the price of cigarettes in Norway is about 8 USD a pack a beer is about the same...they have socialized medicine as well as many other government run and subsidized services. It is the taxes that makes their gas more expensive...add that to the fact that people live in smaller towns and cities with much smaller population...you get where I am going...

Norway is the 8th largest oil producer in the world, they can fill their peoples tanks for free if they wanted to without taking much of a loss in profit (much like venezuala does)...they simply choose to tax it to the extreme to pay for socialist programs they COULD be paying with profits they are making from oil exportation (in truth they have recently privatized some of the oil industry there which also is a factor).

While I was in stavanger almost everything was in walking distance as the town was so small.

Now as for American gas, again I think you are quite off the mark when it comes to gas prices. The prices are in fact HIGHER than they could be even with the huge herculean task and work that goes into getting gas into your tanks...its a testament to cooperation and private industry and a century of refinement in the process that they can do it for so cheap.

Many people do not understand how the oil industry works so there is a lot of misinformation out there. Lets take the huge reserves found recently in Bo Hai Bay China as and example of a new reserve about to be exploited and start the process from the beginning:

1. BP, Shell, etc.. spend millions of dollars traveling all over the globe searching for reserves. 99% of the time they are throwing that money away as they find nothing. 1% of the time they may find a reserve of oil or natural gas or both. In this case they found what may be a huge reserve of oil in china off the coast in what is called Bo Hai Bay. By the time the company has found this reserve they may have spent billions already.

1. Now the industry goes in hills and valleys, drilling and down time. It may be a decade before another well is drilled. This means that all the companies that supply the large firms must some how stay in business (my company is a service and tool company that makes pipe for other industry in the down time with our forging and machine shops). After the reserve is found the company must now employ engineers, manufacturing companies, service companies, etc... to make the tools, the platforms, and design the wells. This may cost in the billions as well.

3. Now also during this time the company is funding research in both alternative energy (oil companies are the biggest researchers into alterative energy, it makes sense, they want to be the one to introduce the next best thing) and advanced drilling such as intelligent well completions, robotics, horizontal and deep sea drilling....more money they have spent without a return in investment.

4. Now the company is ready to begin drilling. They now must employ service companies, tool companies, engineers, and the like to set it up and spend the time and money drilling. An offshore drilling platform cost anywhere between 500,000 to 2,000,000 million dollars a day to operate...with no return on the investment until the reservoir is tapped and is converted to pump the oil.

5. So now you have oil being pumped and sent in ships (some that begin the refining process because of research and development). These huge tankers (again that cost millions to operate), must get this crude to refineries who then will either refine to oil or gas. These refineries are often outside the US, not because the oil company wants this but because of massive restrictions to refinery. The US hasnt built a refinery since the 70's and many are still operating with ancient technology. The best refineries are in nations like Indonesia, Venezuela, SA, etc...where the government see this as big business and good jobs...which it is.

6. So now the oil is refined (either here or outside the US) and is ready to go. They must now pay for 3rd party shippers to transport the gas to every location (and of course places like California pay a premium because they have little to no refineries and because of restictions gas must be refined just for them to specific standards they have set.) Once the oil hits substations they must pay for those substations and then they must pay again to shipped to the retailer. The retailer takes his tiny cut and the government ads on about half the oil price in taxes.

This is for any new well they would like to start. Often times the company has paid out billions before ever seeing a dime and that is not counting deals they must make with local governments and all the additional costs of operating. The price is so daunting to oil companies that decades will go buy until they find a reserve that is worth taking this chance on and in some rare cases the reserve is not near as large as they thought and they lose money.

Now the lions share of oil that we use in the US are from establishes producers such as Saudi Arabia, Venezuela, Nigeria, Norway, Russia, UAE, etc...In essence we buy oil off the international market from opec nations...the top opec nations include SA, Iran, UAE, Venezuela, Kuwait, Nigeria, Algeria. These nations set prices...they do not divert from these prices and they offer the oil, in essence, to the international community. This subjects the oil to the futures market...in essence a stock market commodity set-up where companies buy oil and hold it until the price goes up and then they sell and release for a profit. The US, because of certain deals we have made is assured a certain amount and must get the rest off this market. These people do nothing but buy and sell oil for a profit and will always be happy to see oil prices go up in and emergency they might have created.

There is no lack of oil, there is a lack of people willing to put in the money it must take to produce outside the opec and a lack of people you are willing to sell without a windfall profit. This and taxes are the reason why oil prices rise...oil companies and producers prices are pretty much set...SA will sell at a set price as will BP...the middle men including the government are the ones who add on and hike the prices.

MY company has a program that tracks every well, every known reservoir, every producer in the world and I can tell you without doubt there are huge reserves that are just sitting untapped...

The US government does little to invest in alternative energy thus the oil companies do it for them...they have also taken it upon themselves to assure that the people in this nation can make it to point a to b with reasonable costs and to keep industry going...

As most may know almost all of industry relies on petroleum...not just for power but for the products we use...almost everything we use from our tooth brushes to the computer I am typing on is made from petroleum products. If petroleum prices skyrocketed or if petroleum was eliminated we would be back to the middle ages...as I look around my house I see countless things I use everyday made from, or on machines that use, petroleum...my toothbrush, my CD's and DVD'd, my computer and its components, my camera, my TV, etc...

But along the lines of what you suggest, oil prices HAVE gone up as they should. It is the one industry that has been immune (by force) to inflation but I dont think its GOOD that oil becomes more expensive. As a person who works and survives in this economy I do not see consumerism and industry as bad. It employs us, it keeps this economy going...you may not care as you might be somehow removed from this but I NEED a car, I NEED to drive, I NEED certain things to live. If you make a living selling coins you have minted...you NEED us to continue to make money and you NEED us to continue to be able to buy your coins and with out business and consumerism...no one will buy anything you produce because they will be to busy either paying taxes to pay for huge complex public transportation for a city like Houston or paying for gas.


As for the original topic...I think people need to take steps on their own to support this war. I send care packages to soldiers, work, pay taxes, etc...there is not a hell of a lot more I can do...I work 8-10 hours a day 5 days a week and on the weekends, I upkeep and help in my community (as does my muslim evil wife)...I think thats the most we CAN do unless we are retired...if I were retired or I owned a business I would do more. Helping to support our men in the military is big, without us, there would be no military....So I work, I pay taxes, I help keep the economy going, I vote, I pay the salaries of those who are paid to fight for us...

Sorry so long...

 

Oil exploration is at a all time high now. My brother and I just signed a lease with Chesapeak oil on the farm (640 acres) down in Tx. made out pretty good too. I figure they'll hit gas between 20,000-30,000 feet if they drill where I told them to

Ben

 

A true addiction...

Thanks Drusus for an explanation of a viewpoint from the oil business side of things. I too have visited Norway... lived in Trondheim for a year in fact... and know several people that are closely involved in the oil business there. You seem to have a problem with the socialist nature of the country and the free medical service and high taxes. The locals don't seem to mind as they have a sense of confidence and security that we will NEVER have in this country. As a matter of fact... I personally had experience with the Norwegian health care system when I came down with acute appendicitis during my stay. You arrive at the hospital and they just take care of you, then wish you well and send you home. There is no paperwork! No endless questions and forms... it's about HEALTH not about money!

But the fact is that basis for the high taxes on fuel in Norway has nothing to do with providing social services (though of course that is a side benefit). The Norwegian parliament is well aware that they could, if they choose, provide free opr subsidized fuel to the citizenry. They choose not to do so specifically to avoid the structural problems that subsidized fuel causes. As an example... your statement:

No clearer expression of addiction could be composed. America is structurally addicted to oil because we have always had it cheap. That's why our cities are so spread out and why many city streets don't even have sidewalks anymore. That's why Detroit dug up the streetcar rails, and why Los Angeles is a cesspool of smog. You made the CHOICE to live 20-30 miles from your work... because oil was cheap. I'm just guessing now, but I also imagine that you drive a large heavy vehicle that gets less than 20 miles per gallon. How high would gasoline have to get before you'd start thinking about a more fuel-efficient vehicle? $5/gallon? $7/gallon? How high would it have to get before you'd consider moving closer to your place of work? $8/gallon? $9/gallon? How high would it have to get before Houston would consider a light-rail system for commuters? $10/gallon? The entire infrastructure of American society is FOUNDED upon the principal of cheap gas and the use of personal cars for everything. THAT is the problem. We can't drill our way out of this, and we can't imperialize our way out of this. We have a huge amount of work to do to get out from under this addiction... and we MUST do so. You tell me that I have a childlike naivete because I think that we can avoid war by aggressive energy conservation. Certainly there are other problems that can lead to conflict... but I think you are blinding yourself to the reality of the situation because your livelihood is based on the continuing of this addiction. You're one of the entourage of the drug kingpin and can see no wrong. This boat is heading downstream towards a waterfall, and you're paddling as hard as you can and saying "Look how fast we're going" while some of us are standing in the prow looking ahead and saying "Look where we're going". Not one single time did you acknowledge that conservation would help. When you're selling the dope you don't want people to go into recovery.... it's bad for business.

 

Chuckle, everyone has lived in Norway at some point it seems. Bodo (above the Artic Circle) for 6 months from Sep 84-Mar 85 when I was in the Air Force.

Ben

 

Its not a view point from the oil business, I am not the oil business...I am just an american worker and it is simply a correction of misconceptions, accept them or not. No, I dont have a problem with socialism in Norway at all, to each his or her own. From my experience the people there seem to like the system they have and that is all that matters... They seem happy with the way things are and that fine. I am not against socialism. I am against American socialism

Of course I made a choice to work 20-30 miles away from my job...but when the alternative is not working or working in what is around my house that being corner stores and resturants...or selling my house and moving every time I get a new job.....is that a choice? I guess I could pick up and move every time I get a new job...and never have a permanent home but is that right? I own a house...it happens to be a bit out of town...where there are no real jobs...I own this house there because the houses in town are out of my price range...guess I should just live in an apartment and move from location to location to live close to where I work...and since I work in an industrial area of town....that isnt possible anyway...there is simply no way I could live close to the location I work nor would I want to live next to manufacturing plants. You may be right that our infrastructure was designed this way but the fact is, that is how its designed...and I must cope with it, all I can do is vote, sign an petition, try to be heard but I am not a city planner and to redesign Houston? Good luck…12 million people...if I want affordable housing I must live away from my work...if I want to visit the coin shop I must drive 20-30 miles,if I want to visist some of my friends..I have to drive miles...or should I live next to everything I might need or want?

You are incorrect in assuming I drive a big truck or car...you could not be further from the truth which is a good lesson not to assume about people you know nothing about. I ride a motorcycle...a more fuel efficient but viable manner of transportation does not exist...when the weather is terrible...or when I need it, I drive a small ford ranger...it is not a large gas guzzler...it is the smallest truck on the market.

Now of course you are not aware that houston HAS a light rail which is completely worthless as it only reaches a small percentage of the city...there are plans on making it larger and of course I would ride it if it went to my area and took me to where I needed to go...of course it doesn’t so again...I guess I should pack up and move.

Me and a huge amount of the rest of America is either employed or dependant on gas...including yourself. I guess we aren’t all so lucky to have our own business where we make it seem like we are removed from this system...I have a feeling if I bought one of your coins you would take my money even though it is oil money...I bet if I spent enough to by a hundred coins with the money I make from the oil industry you would accept that payment…I doubt you question where you money comes from…I am sure you are just above it enough to sound righteous but when the cash is put in front of you, you will take it.

I have never once said the oil industry is beyond reproach, you put words in peoples mouths and assume quite a lot...I have simply said that in your house right now you have huge amounts of petroleum products...the computer you wrote your missive against the evil oil companies that provide millions of jobs world wide is made from petroleum products...you use them, you cannot live in the modern world without them. I also said the THE NUMBER ONE researchers into alternative energy are oil companies...this is a fact...and its a good thing...If oil goes away and these companies fall...there will be millions out of a job and you damn well better hope there is someplace for these people to go and there are viable alternatives to take the place of not just the jobs but what petroleum is used for, if not, you might find it hard to sell a coin with no computers being made, and a big portion of the US out of work...do you run your machines on solar power? Or wind?

I certainly agree there needs to be alternatives developed, I simply do not vilify companies who provide for us our means to get around and a good percentage of the products we use on a daily basis and emply huge amounts of people...We all cant be mint masters living off the money others make and use to purchase goods...its great you can survive removed from these things (you aren’t but I assume you try to as much as possible) but we all cant do this...I try my best to conserve fuel, buy smaller vehicles, dont use plastics when I can, etc...thats the best I can do right now...I exist in the American economy, I work 8-10 hours a day 5 days a week to support myself and keep myself in a house, food, and a coin here and there...I am not anti-American, I am not anti-consumerism (helps the economy, creates jobs), I am not anti-big business (again...we have a population to support and they all dont want to live in cabins out in the sticks...)

And Yes, your view to me seems naive, like you would see America take a huge step backwards...and oil would in no way even come close to end wars.

 

Hi Drusus:
I'm glad my assumption was wrong about your vehicle choices! The Ford Ranger is a good piece of equipment, and you're correct that a motorcycle is among the most fuel-efficient means of personal transport.

And I'm not advocating the complete abolishment of oil as you seem to think. Yes, my computer is made of plastics derived from oil, and yes I am bound to the oil society as you are, as are we all. What I object to is the SQUANDERING of oil. I think that oil is too precious as an industrial input to use it up merely by burning it... that would be like burning beautiful hardwood lumber in a wood stove instead of as furniture. It's too PRECIOUS a resource simply to burn it all up in a few short decades of living like kings, and thereby doom our desendants to living like dogs.

Weaning ourselves off of the oil addiction does not mean that we quit entirely... merely that we use responsibly. We can use alcohol responsibly by having a glass of wine with dinner... or irresponsibly by drinking quarts of whiskey in a alleyway. I suggest our oil use resembles the latter and I'm trying to make some suggestions as to how to deal with it. All you seem to be saying is that the poor drunk can't quit and it's up to us to provide him another quart today, and two more tomorrow rather than suggesting intervention. That's not a solution, and does not even address the problem.

I'm perfectly willing to accept that my tax idea may be unacceptable in the US economy.... but some basic changes must be made. So what other suggestions are there? Stay the course? Maybe we should invade Indonesia too... I hear they have some oil resources we could take. Or Venezuela... they're a lot closer and that Hugo Chavez is a pretty offensive guy.

Sooner or later we have to face the fact that we've chosen an unsustainable development path. Jimmy Carter would have had us face it sooner... BushCheney would have us put blinders on and force our children to deal with it. But face it we must.

 

I want to retire to Norway!

Anyway, there isn't an energy expert out there that hasn't advocated conservation as the first best step to decreasing our dependence on petroleum. Some have suggested a large tax hike as a way to get people to lessen their dependence, but politicians don't have the guts to implement this plan and are unlikely to in the near future.

One thing that hasn't been mentioned is that even if we decrease our dependence, China will only increase it's use of petroleum over the next couple of decades as it ratchets up it's economy. China is poised to become the next great consumer of oil regardless of what we do and that is certain to drive the prices up relatively soon. Conservation is simply the easiest, most ovbvious course of action that each of us can take. Forced conservation through higher taxes is painfully unpopular but is one of the few if not the only method that will change Americans consumption habits. Nobody wants more taxes but certain people would be willing to stomach the cost if they thought that the extra money would be used for creating viable alternatives to oil.

If our government would launch an initiative along the lines of the 1960's race to the moon to build an alternative energy program from the ground up, we could solve this problem in less than 10 years I'd be willing to wager. Current industry tooling and incentives are detriments to coming up with a radical new concept to the problem of energy use. If the oil companies are making record profits, what is their reason for changing the current paradigm? Change is like a train coming straight at you, you can climb aborad, get out of the way, or get run over by it. You just can't stop it.

 

both these nations sell us oil freely...Chevez talks big but in the end, he sells us the oil and suckles at the US teet. There are more than enough nations that sell us oil freely to ever have to invade for it. Every OPEC nation save Iran sells us oil and every other oil producing nation sells it to us...we are not lacking those willing to sell so I fear the war for oil bit doesnt make much sense. Not that much this administration has done DOES make sense.

 

Selling is one thing for nations who have little else to sell. Charging via OPEC the oil mafia is another thing that has direct impact in more ways then one. It takes money from what is left of the middle class. It also emboldens these nations to go nuclear with the large profits we give them. It is not quit that simple !
The Airforce spends 5B a year on fuel. By 2016 they hope to be using synthetic fuel which is now in very positive test mode on B-52s . Same performance , made via the Fisher- Tropsch process ( German 1920 ) .
Alternative fuels have been in a state of limbo but they work. Green waste= Ethanol , coal and natural gas =
Synthetic jet fuel & diesel.Corn based ethanol = food based product to make fuel.What we lack is refining capacity. Thirty five dollar oil would put excess dollars given to terror groups out of the question.
The oil companies sit in a unique position. They have so much excess cash that the could create , transport and distribute all fuels including synthetics. Ethanol refineries are very checp to build in relation to gasoline cracking refineries. Pre processed coal ( very low sulpher) lets power plants that are old use this powdered product to spray in to the boiler units and make minor adjustments rather then going through a long rebuild which would not be cost effective.
Do a search on Point Thompson Alaska. A massive find that has set idle for ten years. We now have huge shale oil deposits in Utah and Colorado. Coal of the best quality in Wyoming in vast amounts,and the new leases in the gulf ( Eight to be exact. We could be oil independent in ten years. Why buy from crooks and those who give money to terrorists ? We can kick them where it hurts, in the wallet with our technology.

 

Interesting discussion in that the only options presented are either (1) government intervention to secure oil supplies through war, or (2) government intervention to control demand through taxes or other restrictions. Many people can't even conceive of an alternative without government even though that's how the energy business was built in the first place.

 

Perhaps that's because there is only one method for the public to control energy policy-Through regulation. If you've come up with an alternative or have somehow convinced the oil companies to voluntarily change their business model, we'd all love to hear about it. The only real power we have is to not consume. Our culture in completely entangled in patroleum products from our choice of home locations to just about any goods and services you can name.

Capitalism is inherently short-sighted in it's purest form. Money in your hand today is perferable to any consquences down the line. We have been sold down the oil river with a large outboard motor and there is a large wall of flames roaring towards us and unless we get out of the boat and start walking along the shoreline, we will surely perish. Regardless of how the energy business began there is but one way for us to gracefully bow out of our dependence on patroleum, we need to have the courage to swallow the bitter pills and take the necessary steps to end this cycle and if that takes popularly inspired governmental regulations and painful restrictions and even tax hikes, we will all be better off in the end for acting today.

 

There are a host of independent research to show what works. Most being over 20 years old. The energy policy we so badly need is in conference on "K" Street in D.C. . We are under the " Golden Rule " those who have the gold make the rule. Congress keeps changing your attention to different subjects. They really know very little about any thing but their own well being and bank account.

 

Moen,

Free market forces are remarkably efficient at solving problems such as the energy problem if given a chance. After all, this is how the energy supplies came into existence in the first place. Last year, senior executives from the major oil companies were paraded in front of congressmen and senators and questioned about why "they" raised the price of oil so much. None of the government officials seemed to understand that all of those companies combined only accounted for about 15% of total US oil usage. The other 85% comes from state controlled enterprises such as Saudi-Aramco who set their own prices, who were not present, and who are beyond the reach of the scapegoaters. More recently, the new Democratic congress decided to "help" by increasing taxes on oil companies by $14billion. Do you think that will increase energy supplies? I would presume that companies such as Exxon-Mobil will continue to pay dividends and interest to investors instead of defaulting, and will continue to pay other expenses of running the business. The tax increase will most likely be handled by decreasing the budget for exploration for and production of new energy. Thank you, congress, problem solved. Even where regulation is a given, it could be more intelligent. For example, SUVs consume vast amounts of petroleum products compared to the most fuel efficient vehicles currently on the market. Yet, they are regulated as trucks even though they are obviously passenger vehicles to side-step the fuel economy standards. So even where we have regulation, it is unintelligent in the sense that it doesn't move us closer to the goal. There probably are industries where regulation improves reliability and access. Energy probably isn't one of them. It requires an entrepreneurial mindset and availability of risk capital. Even the alternative energy sources everyone wants to see developed will require innovation and technical breakthroughs well beyond anything that can be engineered from Washington, DC. If the politicians can't bring themselves to get out of the way, perhaps the least damaging thing they can do would be to put a simple import tarriff on oil and use the proceeds to fund whatever schemes will get them elected. At least this won't be as disruptive. The direct punishing of companies in the industry is only going to make the problem worse. Politicians are incapable of understanding that the function of "profit" in a free market is to attract additional capital to increase supply. Profit isn't good and it isn't evil. It's just a market mechanism. Once you blunt that signal, it begins an economic chain reaction that ends with shortages. This is what I believe is going to happen, and I also expect the excuses from the collectivists to be very pursuasive that it wasn't really their fault. So you should be happy. I fully expect your side to win the energy debate regardless of how little economic sense it makes.

 

I couldnt agree more cloudsweeper...

When oil companies make huge profits they are brought in front of congress, when a pizza chain makes huge profits they are just good business (the only difference being the pizza companies arent keeping society from going back to the middle ages)...,People dont realize a huge chunk of the profits that these oil companies make go right back into exploration, research and development, drilling new wells, and filtering the money down to the smaller companies that were laying off 10 years ago because of the non-activity....CEOs made a lot and you dont like it? Well ALL cEOs make a lot...period. If you are against large salaries for CEOs then you just dont like the freemarket system.

Huge amounts of those profits also go into researching alternative energy...of which, in america, the enrgy companies are in the forefront. I went to the alternative energy conference in San Fransico...held by oil companies...if its not oil companies doing the research themselves, they are funding the other companies that are also doing it....purely selfish of course, they want to be on the ground floor...but all the same...they are doing it.

Thing is, you dont see so many people crying about energy when they have cheap gas and the larger oil companies arent making big profits...where were the tax payers when baker hughes was laying off thousnds of employees because there wasnt enough activity in the market? Its funny so many people vilify the compamies that employ so many people and prop society up and make it possible for us to have the things we have...we all use it from the gas in our cars to the everyday items we take for granted but somehow they are the enemy.

There are few things I would ever advocate more taxes for, the US pays far too much tax already, I love Norway, great people, great place, and they like that, it wont work in the US...and I will almost always say no to more taxes.

 

A free market?? Are you Joking?

If it REALLY was a free market, then I would agree that market forces might be able to solve the problem of energy. But it's not... it's very close to an oligopoly and small entrpreneurs are forced out or not allowed in by the big players. For instance... if I were to want to get into the power generation business in the United States and help save the world by putting up thousands of solar panels and wind turbines... I would quickly find that the existing power utilities would be able to deny me the right to sell power via their monopoly on transmission lines. In states with net-metering laws the utility would be obligated to accept my power to the grid, though not obligated to pay me for it. If I were in Denmark by contrast, not only would I be encouraged to become a green energy entrepreneur, but the utility would be willing to pay the RETAIL power rate for my energy input intot the grid in order to offset the need for them to invest in the upgrading of generation and transmission capacity. So let's not fall for the fiction that there exists any kind of free market here in the US as there does exist in the social democracies of Europe. "Freedom" in America is a joke, and a bad joke at that.

Added to that, our situation has become grave due to the increasing population and interdependance of people... that is, the energy problem is no longer one of simple convenience or luxury. Gasoline and electricity and natural gas have become literally the lifeblood of society. We can no longer fall back on everybody cutting wood and pasturing horses for their energy needs (at least... not without a reduction of at least 70% in population). Anytime a process or institution becomes so central to society that it is literally a matter of survival it becomes necessary for government to oversee the situation so that market forces are not perverted by the powerful for the subjugation and exploitation of people. For instance... few would argue that market forces should dictate military policy. (No wait... sorry... that is in fact the NeoConservative agenda!) Also... market forces necessarily function on SHORT time scales, while what is needed here are long terms planning strategies. I submit to you that Adam Smith's free market is not only incapable and incompetent to do this... but is actually functioning CONTRARY to the common good.

Oil is a one shot deal. We get so much and no more. The oil supplies of the world are a form of solar energy that has been collected and stored by capricious natural processes. It is as if we are a child and mom has baked a batch of cookies which sit upon the counter in a jar. We did not bake the cookies so they have no "cost" to us. Our only cost in acquiring the cookies is the effort of dragging a chair over to the counter and sticking our hand in the jar. To us then... those cookies are very cheap. And we love them... in fact we love them so much that we gorge ourselves sick on them, gobbling them and spewing crumbs all over the floor. In other words, market forces cannot function correctly when costs are externalized and time scales are too short. The true value of oil is given by its REPLACEMENT cost... which means the cost of sysnthesizing those chemical from solar energy and raw minerals. I have not calculated what that cost would be... but it's high... probably $15 to $20 per gallon. If the product is undervalued because of the externalization of costs... then the price will be artificially low and the supply artificially high.

At least.... right up until you reach the bottom of the cookie jar.

Another and perhaps better economic analogy is one that equates energy and money. A certain young man has received notice that a wealthy uncle has left him an inheritance. The solicitor informs him that the inheritance consists of one million dollars in cash, deposted in a nearby bank, plus a daily allowance of one thousand dollars in the form of traveller's checks, which arrive in a post office box and have to be countersigned. Now... most of us would quickly realize that the responsible way to manage this bounty would be to invest the cash, and live on the daily allowance... in fact we'd probably manage to squirrel away a goodly part of that too. But our young man spurns the allowance and instead goes upon a wild spending spree, piddling away the million in cash on yachts and condos, fast cars and fast women... while he never even bothers to go pick up the daily checks. As we can all imagine... he is due for a day of reckoning.

Well folks, that's us... we're spending that inheritance like there's no tomorrow while scarcely even bothering to tap our allowance. We could be spending that inheritance of stored energy to build up an infrastructure of solar power that could carry us beyond the end of oil... but we don't. We could be investing the oil inheritance by using it for high-value inputs (such as the synthesis of plastics), but we just burn it up. We could be using our allowance (solar income) for a large fraction of our needs... but we just let it bounce away unused. The externalization of costs convinces us erroneously that those alternatives are all "too expensive" as we blindly march to the edge of the cliff with the lemmings.

 

Tom,

I don't think that the fact that the energy business requires large capital investments means that it isn't a free market. It isn't a mom and pop business, but there are a large number of exploration and production companies making most of the new discoveries and advances in recovery techniques. It is hardly a monopoly or oligopoly, even at the national level. Even OPEC has failed in controlling the price to keep it within the bands that it sets. "Free market" becomes a matter of definition, and we can agree to disagree.

You are partly correct that oil is a one shot deal. Of course, the size of the shot depends on how much of it we find, and the private sector tends to be better at this than the public sector. Regarding the "higher use" issue, I have read, but cannot confirm firsthand, that about 60% of world-wide energy production is used in the growing, harvesting, and delivering of food supplies. Until someone invents "solar fertilizer" and "solar railroads" to move it, a large and growing amount of petroleum production will probably continue to be devoted to food. This is a pretty high and necessary use.

Like it or not, the amount of energy concentrated in oil and natural gas compared to the amount of energy it takes to produce it makes it the energy of choice for the next few decades. Things like ethanol just don't cut it because it takes more than 1 btu of energy to produce 1 btu of ethanol. Good for corn farmers, but unsound economics. It isn't encouraging that governments are throwing money at projects that aren't even sound physics, but it is also not surprising. Solar and wind don't have the efficiency yet and many projects around the world don't even come close to their rated energy output. A lot of work needs to be done on this, and will be done as long as there is money to be made.

You are correct that it isn't unlimited, but it is a necessary bridge to get the 6+ billion people in the world from where we are to the future that must be created, probably by private enterprise. I doubt that government is up to the task. The alternative is to let the governments of the world engineer an "energy downsizing" that could easily turn into the most massive die-off in human history if mistakes are made along the way. Lets hope that when they choose who will live and who will die, our names are on the correct list. Many people are willing to bet the lives of billions that governments won't make mistakes. Many of us aren't so sure.

I guess it comes down to, "WHO DECIDES?" and that also determines whether we live in a free society or a totalitarian one, however benevolent the intent. Control of energy brings with it enormous power over people, which part of me believes is the real reason why governments are getting involved. Some of us trust market forces more than bureaucrats.

Anyway, I just wanted to present food for thought because the discussion was pretty one-sided with a collectivist slant. Everyone will decide for themselves, but they deserve to know all of the alternatives.

 

I agree that the free market is usually the best method for solving such large scale problems but this isn't the case with the oil market. We seem to be capitulting to the oil industry by offering them huge tax breaks to explore for oil while at the same time their profits set records and our gas prices are higher than ever. So what have all the government subsidies the oil industry has been given done for us? Now that the Democratic congress have removed those subsities, you call it a tax increase of 14 billion on the oil companies. That is an unusual twist of logic in my opinion.

If the past is any indicator of the effectiveness of giving the oil industry more tax breaks so that they can explore for more sources of oil, we will be paying 5 dollars a gallon in no time and they will be breaking even more profit records. If they only represent 15% of our supply anyway, it seems like a pretty bad investment of our tax money and just a gimme for the already rich frinds of George and Dick.

Profit is a good thing, excess profit and gouging hurts the economy, hurts working families, and prevents alternatives from coming to market. I don't know how you can say that there is no monopoly. When was the last time a new oil company came into existence? I'd go as far as saying it is a monopoly rife with collusion. We could be world leaders in alternatives and lessen the impact on the environment if we could develop the courage to move beyond oil usage. I doubt it will happen though until every last dollar has been squeezed out of the oil market. When money is the objective people are just numbers in a capitalistic society.