Fixing oil ? What's your approach?

[Kidlicious]

Originally posted by Oerdin
I don't want lower prices. I want less GHG output and I want national energy independence. Low prices only encourage frivolous use of oil and keep us dependent upon energy from people who want to kill us. The government has a obligation to stop sending money to those nations which continue to support terrorism against us. Even in "friendly" muslim like Saudi Arabia the majority of the citizens support funding of terrorism and the majority of terrorist money comes from these people.

National security demands we find ways to stop giving money to deranged people who are evil and seek to kill innocent people.

I don't buy into the idea that we can nations like SA poor. That's just a hopeless cause. The best we can do is try to work with them and try to keep our economy functioning as well as it can.

[lord of the mark]

Originally posted by KrazyHorse
I think the railing against supposed profiteering by the oil companies is based on a misunderstanding of marginal pricing. There's only one price for oil (ignoring the variations due to transportation costs and oil quality), so as demand (and therefore price and supply) climb, the profit margin on the additional supply might remain the same as the profit margin was previously on the most expensive supply (so now the most expensive oil being drilled costs 65$ per barrel to extract and is being sold for 67 dpb, while previously the most expensive supply cost 20 dpb to extract and was being sold for 22 dpb), but now all of that less expensive supply has a higher profit margin associated with it...

David Ricardo

[lord of the mark]

Originally posted by Flubber


Less GHG is possible but I don't see the US with national energy independence. The US is so dependent on Canadian oil and gas that I can't really see that changing any time soon.

If you look at TOTAL US energy consumption, including coal, hydro, nuke, alt, as well as oil and Nat Gas, I wonder what % is imported? (note to self - we also import hydro generated electric from Canada)

[lord of the mark]

Originally posted by Brachy-Pride
Isnt ethanol that thing made with Sugar cane, I think brazil is a world leader in that.

It may even help quite a few tropical third world countries.

It can be made from any number of different sources. In the US advocates talk in terms of corn, in Brazil they use sugarcane. I was told that palm oil is actually the most economical source.

[lord of the mark]

Originally posted by Sandman
High-speed intercity rail links are nice, but it's the everyday commuter stuff which is more important. And more unlikely for America.

actually id say a big increase in commuter mass transit is far more likely than a large scale switch to intercity passenger rail (though the latter is quite feasible, and probably likely in certain select corridors)

[TCO]

Yes...I'm very well aware that it peaked in the 70s or whatever. Also aware that US production and the threat of it helped crack the cartel. This is not about the actual amount of oil produced but about taking enough actions to fracture the cartel. It's a game theory thing...

[KrazyHorse]

GP, check out my current account deficit thread on page 2 or 3. Want to see what you think about it...

[TCO]

Ok...btw, the cartel-cracking here may not be sufficient...but I want to change how people think. I think there is a huge dynamic here of cartel behavior rather than simple demand growth versus reseource exhaustion.

Speculation on other methods (short of plundering SA) to crack the cartel are welcome.

[KrazyHorse]

No need to crack cartel. The natural rise in prices over time for increasing demand of a diminishing resource (oil at cheap extraction price) has finally caught up to artificial scarcity. Breaking OPEC wide open immediately might drop prices significantly, but there's no going back to prices of the 80s...

[TCO]

Well that is the point in contention, Kitty. If the price is a cartel price or a free competition one. There have been some (decent but not great) arguments over at JDHs blog on this issue. I don't know that I have the clear answer here. Have seen some arguments either way, but none compelling.

There is some issue of confounding here, since the more dire the real situation, the easier it is for the cartel to hang together (and vice versa). Then after that we can dige deep into the game theory and the recent approaches of OPEC (limiting builds of pumping capacity rather than pumping). IOW, their efforts to create structures which made the cheating less present.

Looking in hindsight (70s/80s), it is clear that there have been periods where the cartel was the cause of price increase and where the cartel was successfully cracked. I would at least want to wrestle down to the ground (do the investigation) to see if there was a chance that we could crack it again and solve our problem in that manner.

Another minor issue is that Cheney and Bush are not as much into cartel-cracking as Reagan was. Cheney even made a remark that said that "variability" was the issue. A clear remark of a trust lover.

Also, it would help if we were understated about this (but doing it anyway) since this is a clear area where the worlds gain is the trust's loss (and the arab people's loss.)

[DanS]

Cracking the cartel is easy. Have the Russkiis do it. But they've been preoccupied in fvcking up their energy industry lately.

[TCO]

They have an incentive not to crack it. So does Cheney.

[DanS]

Their market position dictates that they sell all they can and let the Saudis defend the cartel by cutting production.

Edit: By the way, the WSJ had an interesting podcast with Daniel Yergin regarding the oil market at the beginning of this year.

[TCO]

Yes. So they benefit from having the cartel intact (as any cheater does). And even more than the cartel members themselves. This is classic.

That said...my point remains...they have no interest in the cartel cracking.

Transcript?

[DanS]

No transcript. Searched for it. Couldn't find it.

Yergin speaking truth to the people. Chinese demand not growing for the past year, according to his observations. Lots of oil capacity coming on line soon. Prices headed down. Etc.