Fixing oil ? What's your approach?

[KrazyHorse]

Originally posted by Japher
I always make that mistake... still, at least my point about hybrids makes more sense

Not really.

OPEC reduces supply in times of lowered demand in order to support the price of oil, but the price of oil still goes down with a reduction in demand. Just not as much as if OPEC wasn't playing the cartel game.

[Kidlicious]

Re: The cost structure

Most of the oil consumed is produced very cheaply, but now some of it is produced expensively because of the increase in demand and the limit of cheap oil. Unfortunately the price of cheaply produced oil and expensively produced oil is the same. That's why ExxonMobil is making so much profit.

Possibly the supply curve for oil is stepwise. The only way to decrease the price of oil in a market is to keep consumption below the second step, that is to only consume light sweet crude. Unfortunately that would mean decreasing consumption since we are already past that point. Conservation may slow the growth in demand, but I can't see it reducing it within the next few decades. So I have to say that there is no way to reduce the price of oil, not even controls on price, unless we wanted shortages.

[Dinner]

My policies would be as follows:

1) Fuel milage for cars in the US peaked in 1987 and has declined every year since. These days both Japan and the EU average 25%-33% better mpg then cars in the US do so we can easily increase CAFE 25% without resorting to any new technology and just using existing technology. This must be done.

2) E85 is 85% domestic (and up to 100% if domestically produced oil is used) so that means we import much less oil. Currently a very high percentage of cars sold in the US can run on E85 but there are no E85 stations so no one buys E85. E85 should become a tax free item to encourage people to make it, sell it, and use it. Every service station needs to offer it as a condition of being in business. Period.

3) Next power plants powered by fuel oil use almost entirely foreign sourced fuel. This must end and they must be replaced with nongreen house gas creating nuclear power plants. In fact we should be replacing the coal and natural gas fired power plants while we are at it.

4) Urban planning is a mess because it is currently designed for low density sprawl. People like having their own little piece of suburbia but now we've gotten to the point where 2-3 hour commutes each way are common. We need to design towards density corridors which have enough people living along them to support light rail service. Anything else will just make the already horrible traffic worse and that wastes lots of gas because cars are just idealing on the freeway.

5) Much of the country is currently suitable for mass transit but it doesn't have mass transit because the government hasn't made an effort to build it. That has to change because trains are a much more efficent way to move people about and every person on a train is a car off of the road.

6) Next cars need to get a whole lot more expensive. Registration fees, gas taxes, safety inspections, and all the rest need to rise to reflect the true cost of car ownership. That means they'll have to pay for more of the roads which cars use (instead of the fraction they currently pay while the Feds and state subsidize the rest), they need to pay more for fuel because they cause most of the air pollution and are the big drivers (pun intended) of global warming.

7) Lastly, SUVs should no longer get the massive break in CAFE standards they currently get. Trucks and SUVs are driven like cars and treated like cars so it is a fiction to pretend that family farmers depend upon their trucks to raise crops. The family farm is dead but the subsidies for SUV owners and builders continues. That must stop and they have to be included in the CAFE standards which cars must follow.

[Flubber]

Originally posted by Kidicious


With a normal supply curve the costs increase exponentially compared to the quantity. I'm don't know what the particular supply curve looks like though. I'm assuming that a small amount of oil is produced at the very high cost.

Actually on a world basis I don't think there is ever a point where it gets exponential. There are many protential sources of new supply. Lets look at one (admittedly smaller source). .. Older and watered out wells . A watered well might be producing say 20 barrells of water for every barrell of oil. There is a price point where that well is economic. The same for wells that average 1 barrell on 30, 1 on 5 or 1 on 100. There are literally thousands of such wells in mature areas. For each one that still has existing reserves, there will be a price point where it makes sense to pay the costs asscoiated with transporting and disposiing of all that wastewater.

Other wells may be producing economically but recover could be boosted greatly by a recompletion, a chemical injection, drillling a new injection well or maybe even a whole new production well. All of these thousands of little decisions will have price points at which the presumes results will be economic . They also all have risks since oil reservoirs oftebn act diffrerently than predicted.

So for most of the realistsic price points I know there will be some additional production and the curve might be even somewhat linear for stretches. But I suspect that you will reach a point where higher prices can bring very little more production. I don't think 300 dollar oil would trigger much more production than 200 dollar for instance. I do know that 50 dollar oil makes a whole bunch of stuff feasible that simply is not when oil is at 35.

[Imran Siddiqui]

Originally posted by Oerdin
My policies would be as follows:

1) Fuel milage for cars in the US peaked in 1987 and has declined every year since. These days both Japan and the US average 25%-33% better mpg then cars in the US do so we can easily increase CAFE 25% without resorting to any new technology and just using existing technology. This must be done.

2) E85 is 85% domestic (and up to 100% if domestically produced oil is used) so that means we import much less oil. Currently a very high percentage of cars sold in the US can run on E85 but there are no E85 stations so no one buys E85. E85 should become a tax free item to incourage people to make it, sell it, and use it. Every service station needs to offer it as a condition of being in business. Period.

3) Next power plants powered by fuel oil use almost entirely foreign sourced fuel. This must end and they must be replaced with nongreen house gas creating nuclear power plants. In fact we should be replacing the coal and natural gas fired power plants

4) Urban playing is a mess because it is currently designed for low density sprawl. People like having their little piece of suburbia but now we've gotten to the point where 2-3 hour commutes each way are common. We need to design towards density corridors which have enough people living along them to support light rail service. Anything else will just make the already horrible traffic worse and that wastes lots of gas because cars are just idealing on the freeway.

5) Much of the country is currently suitable for mass transit but it doesn't have mass transite because the government hasn't made an effort to build it. That has to change because trains are a much more efficent way to move people about and every person on a train is a car off of the road.

6) Next cars need to get a whole lot more expensive. Registration fees, gas taxes, safety inspections, and all the rest need to rise to reflect the true cost of car ownership. That means they'll have to pay for more of the roads which cars use (instead of the fraction they currently pay while the Feds and state subsidize the rest), they need to pay more for fuel because they cause most of the air pollution and are the big drivers (pun intended) of global warming.

7) Lastly, SUVs should no longer get the massive break in CAFE standards they currently get. Trucks and SUVs are driven like cars and treated like cars so it is a fiction to pretend that family farmers depend upon their trucks to raise crops. The family farm is dead but the subsidies for SUV owners and builders continues. That must stop and they have to be included in the CAFE standards which cars must follow.

I'll agree with all aside from #6. Higher fees for cars will hit the poor REALLY hard. Mass trasit will lessen the burden on them somewhat, but it'll be a while before the benefits of that are widespread.

[Kidlicious]

Originally posted by Flubber
I do know that 50 dollar oil makes a whole bunch of stuff feasible that simply is not when oil is at 35.

Then there is a steep part between 35 and 50.

[Flubber]

Originally posted by Kidicious


Then there is a steep part between 35 and 50.

Its just so variable. If a field of 200 million barrells in the Canadian offshore offshore is economic if the oil is sold at an average of 35 dollars, a field of 180 million barrells may not be economic unless it gets 38 bucks and field of 150 million barrells may need a price of 43. Why? Because the offshore facility required makes up the bulk of the project cost.


IN almost every jurisdiction there are fields that have been discovered but were of a size that was nowhere near economic. With the new price reality, oil companies are beginning to look at these more closely and in some cases are working to delineate them further. The reality is that no matter how much work is done, every estimate will be incorrect.

[Adam Smith]

Originally posted by Oerdin
My policies would be as follows:

1) Fuel milage for cars in the US peaked in 1987 and has declined every year since. These days both Japan and the EU average 25%-33% better mpg then cars in the US do so we can easily increase CAFE 25% without resorting to any new technology and just using existing technology. This must be done.

Resources for the Future and others have concluded that increaseing CAFE does not help much. When fuel economy increases, the cost of driving declines, and people drive more. The net effect is almost totally a wash.

Originally posted by Oerdin 2) E85 is 85% domestic (and up to 100% if domestically produced oil is used) so that means we import much less oil. Currently a very high percentage of cars sold in the US can run on E85 but there are no E85 stations so no one buys E85. E85 should become a tax free item to encourage people to make it, sell it, and use it. Every service station needs to offer it as a condition of being in business. Period.

There is lots of ethanol about to move into California

http://www.uprr.com/customers/ag-prod/ethanol.shtml

However, just a couple of days ago NPR reported on a Cornell University indicating that once you take into account the farm energy to grow, harvest and transport corn, ethanol does not really save much energy.

http://www.npr.org/templates/story/story.php?storyId=5173420

Originally posted by Oerdin 3) Next power plants powered by fuel oil use almost entirely foreign sourced fuel. This must end and they must be replaced with nongreen house gas creating nuclear power plants. In fact we should be replacing the coal and natural gas fired power plants while we are at it.

Got to solve the liability and storage problems first. At present the federal government pays for any liability due to nuclear power accidents under the Price Anderson Act. This amounts to a subsidy to nuclear power.

Originally posted by Oerdin 4) Urban planning is a mess because it is currently designed for low density sprawl. People like having their own little piece of suburbia but now we've gotten to the point where 2-3 hour commutes each way are common. We need to design towards density corridors which have enough people living along them to support light rail service. Anything else will just make the already horrible traffic worse and that wastes lots of gas because cars are just idealing on the freeway.

Raising the gas tax in 10 cent per gallon increments in each of the next five years would start to solve this problem, but it would take a long time since many of the existing locational and investment decisions involve sunk costs.

Originally posted by Oerdin 5) Much of the country is currently suitable for mass transit but it doesn't have mass transit because the government hasn't made an effort to build it. That has to change because trains are a much more efficent way to move people about and every person on a train is a car off of the road.

Not as great a remedy as it sounds, since only about one quarter of all trips are trips to or from work, and only a fraction of those are in high-volume corridors. Again, a long-run fix.

Originally posted by Oerdin 6) Next cars need to get a whole lot more expensive. Registration fees, gas taxes, safety inspections, and all the rest need to rise to reflect the true cost of car ownership. That means they'll have to pay for more of the roads which cars use (instead of the fraction they currently pay while the Feds and state subsidize the rest), they need to pay more for fuel because they cause most of the air pollution and are the big drivers (pun intended) of global warming.

Car ownership does not have to get more expensive. Car usage has to get relatively more expensive. e.g. gas tax.

Originally posted by Oerdin 7) Lastly, SUVs should no longer get the massive break in CAFE standards they currently get. Trucks and SUVs are driven like cars and treated like cars so it is a fiction to pretend that family farmers depend upon their trucks to raise crops. The family farm is dead but the subsidies for SUV owners and builders continues. That must stop and they have to be included in the CAFE standards which cars must follow.

Absolutely. And we should certainly stop listing Hummers as a business expense, which, through business tax deductions, knocks 30 percent off the price.

Also, need to find ways to reduce commercial and industrial use, not just transportation and power generation uses.


edit: typos

[Dinner]

Originally posted by Adam Smith

Resources for the Future and others have concluded that increaseing CAFE does not help much. When fuel economy increases, the cost of driving declines, and people drive more. The net effect is almost totally a wash.

People are going to drive more any way as urban sprawl continues to grow so the greater effiency does help. To get the maximium out of it though you do need to raise the price of fuel.

However, just a couple of days ago NPR reported on a Cornell University indicating that once you take into account the farm energy to grow, harvest and transport corn, ethanol does not really save much energy.

http://www.npr.org/templates/story/story.php?storyId=5173420

They're assuming the ethanol is made from corn but using waste cellulose, like corn or wheat stocks, you get much greater efficiency. Why? Because the farmers are growing the corn for sale anyway so counting things like fertilzers as an energy imput is a lie. Instead the stocks which would other wise be left in the field are used to make ethanol. This would be a new source of revenue for farmers and we'd be using a domestic energy source which otherwise goes to waste.

Got to solve the liability and storage problems first. At present the federal government pays for any liability due to nuclear power accidents under the Price Anderson Act. This amounts to a subsidy to nuclear power.

Do you think the coal, oil, or even hydro power industries don't recieve equal subsidies? Also the long term solution is breeder reactors which recycle the fuel rods instead of burying them. A spent fuel rod still has around 97% of it's total energy still in them but currently they aren't recycled because it is maginally cheaper and easier to get new uranium (or stronium or what ever material is being used as fuel) instead of recycling. Mandating recycling would solve with problem and solve the modest waste issue. It would cost slightly more but in the long run it would be worth it.

Raising the gas tax in 10 cent per gallon increments in each of the next five years would start to solve this problem, but it would take a long time since many of the existing locational and investment decisions involve sunk costs.

Agreed but it needs to be done in order to encourage efficency in usage and in urban design. Either that or we give up on solving our oil addiction and accept that we will always be giving money to people who want to kill us and destroy our way of life. This is a national security issue which needs decisive action.

[Dinner]

Also we should really push coal gasification. Currently there are commercially profitable coal gasification plants (which heat coal in order to turn it into much cleaner burning natural gas as well as producing heating grade oil) but it is still cheaper to just burn coal. Coal is absolutely the dirtiest and most polluting energy source available however the US has ungodly amounts of coal, far more coal then anyone else, so we need to tap this domestic fuel source. We need to mandate that coal be turned into a cleaner and less polluting energy source though and gasification does that.

Industry won't switch unless they're forced to and, unfortunately, the Bush administration has made it's EPA bypass it's own rules in this matter. The EPA rules passed by Congress in the 1970's require electric power companies to produce power based upon the best technology available and just about everyone in academia agrees that for coal that best technology is gasification but that would mean taking a bit out of industry profits so the Bush administration has written a memo saying power companies can build new coal power plants using 60 year old technology instead of the modern gasification methods. The sad thing is coal gasification isn't new and 100 year ago just about every city in the western world had a gas works which turned coal into natural gas. What is new is the technolgy which makes the process much more efficent. This would be a major step in reducing our dependence upon foreign energy, it would help spur domestic industry, and it would be better for the environment then just burning plain old coal. It won't help with global warming but since we're not improving in that area anyway then we're no worse off.

[Dinner]

Originally posted by Adam Smith

Also, need to find ways to reduce commercial and industrial use, not just transportation and power generation uses.

I agree though I'm not sure how to do it. The only thing I can think of would be a consumption tax since that would encourage industry to consume less and be more efficent in packaging, distribution, and production.

[Whoha]

Re: Fixing oil ? What's your approach?

Originally posted by Flubber
If your solutions involve changing the entire world order, creating a socialist or communist utopia, nationalizing the resource or otherwise radically altering the world as we know it, please feel free to share those as well.

Now, saying something is terrible or whatever is easy. Solutions are hard.

** For the purposes of this thread please stick to oil. Things like gasoline and natural gas prices are a separate (but obviously linked) issue

build more infrastructure first off, 75 new refineries in the US minimum. unify the various state gasoline standards in a federal standard so the refineries can all focus on that.

Once thats done the only thing left is to aquire the natural resources. Realistically, the only way the US won't be dependent on foreign interests is to go to dirtier fuel, though perhaps that will change by the end of the century.

[Dinner]

Re: Re: Fixing oil ? What's your approach?

Originally posted by Whoha

build more infrastructure first off, 75 new refineries in the US minimum. unify the various state gasoline standards in a federal standard so the refineries can all focus on that.

Not counting the various ethanol blends which no one uses in significant quantities I can only think of four blends currently in use in the US. There is the winter and summer blends used in the colder northern states, California's smog reducing blend, and then the low sulfur version which California and several northeastern states have agreed to start mandating. In California's case it is the same low smog blend except the allowable sulfur content is much lower. That low sulfur blend is being phased in and will eventually replace the others meaning we'll be back to three blends (summer, winter, and California's).

[Whoha]

"3) Next power plants powered by fuel oil use almost entirely foreign sourced fuel. This must end and they must be replaced with nongreen house gas creating nuclear power plants. In fact we should be replacing the coal and natural gas fired power plants while we are at it."

A minor nit about this, water vapor, which nuclear plants release a lot of, is the most prevalent greenhouse gas you earth murderer

[KrazyHorse]

Water vapour is a far less effective greenhouse gas than is CO2 (by a factor of 100?)

Plus the turnover in water vapour is much higher than is the turnover in CO2, so excess production tends to be rectified much more quickly.