Hurray for High Gas Prices!

[Aeson]

Higher oil prices aren't that great a thing. It hurts the people who can't afford it most, and helps those who are already stupid rich. It means higher everything prices (good and bad) and a slowing economy (bad, especially right now). A slower economy means less capacity to build renewable energy plants, among a great many other things.

If we wanted to solve our pollution and energy problems, we could do so for cheaper than we do a whole lot of useless ****. We just chose not to do it because of extremely out-of-whack cost analysis where our health is worth less than shiny toys or the capacity to drop explosives on some poor bastard in a third world country. Where saving a few birds, or creating radioactive waste, is myopically focused on, even though much larger damage is caused by what it would replace.

It's not like higher gas prices are going to make our collective idiocy into genius.

[Victor Galis]

Originally posted by Wezil

Good point. Let's extend that shall we? I think Quebec should stop receiving transfer payments from the wealthier Cdn provinces year after year after year. If the Quebec economy sucks move to where there are jobs and prospects and quit relying on federal handouts. Otherwise, suck it up and lie in the beds you've made.

Er... no, those transfer payments are uh... a subsidy for producing less carbon emissions by doing nothing! Meh, I'll probably be leaving in September anyway unless I find a job where I don't have to deal with too many of the Frenchies.

What is this "choice...to some extent" crap anyway? You either have a choice or you don't.

Not at all true. Sometimes the choice is easy, sometimes you have to give up a lot to move. Right before you start a family is a lot easier than when your kids are in school already.

I don't see how it's so easy for someone with minimal time and zero money to just pack up, move to a more dense area, and hope they find a new job before their kids get hungry. There's no shortage of people who are quite literally locked down to wherever they happened to be born.

I was unaware that we still had serfdom There's a time before you have kids when you're freer to try to move somewhere else. I agree that some people are stuck. I have friends who can't move because they can't sell their houses on the current market even at a loss. They did, however, choose to buy those houses and live far from the city center.

A slower economy means less capacity to build renewable energy plants, among a great many other things.

But also a higher incentive to build those instead of continueing the current paradigm. It also means decreased emissions from reduced economic activity.

We just chose not to do it because of extremely out-of-whack cost analysis where our health is worth less than shiny toys or the capacity to drop explosives on some poor bastard in a third world country.

Which is why higher oil prices are a good thing. In an ideal world, there'd be a carbon tax to make the true cost apparent. We don't live in that world.

[Imran Siddiqui]

Which is why higher oil prices are a good thing.

It's a nudge towards better action. Incentives are the only way to get people to stop acting like idiots (even if they still are).

[Rufus T. Firefly]

Originally posted by Imran Siddiqui

Which is why higher oil prices are a good thing.

It's a nudge towards better action. Incentives are the only way to get people to stop acting like idiots (even if they still are).

But, again, the problem is that people live in spaces that were designed (by idiots) to be negotiated entirely by car. So even if people want to stop acting like idiots, they may find themselves trapped in structures that make that extremely difficult.

For example, you've got folks living in ex-urbs with 40+ mile commutes to work. When they bought their houses, gas may well have been <$1/gal, so opting for the commute was an overall rational economic choice, not idiocy. But now they're screwed, unless they want to either move or find a new job during an economic downturn (and that would be idiocy).

My point is that this isn't just the fault of idiotic individuals. We have, as a nation and at the level of public policy, behaved as if driving were always the best answer and cheap gas would last forever -- and we have spent the commonweal acordingly. Now individuals are going to be stranded in the lanscape created by that political short-sightedness. That sucks, even if higher gas prices are a good thing overall (and I agree that they are).

[Imran Siddiqui]

My point is that this isn't just the fault of idiotic individuals. We have, as a nation and at the level of public policy, behaved as if driving were always the best answer and cheap gas would last forever -- and we have spent the commonweal acordingly. Now individuals are going to be stranded in the lanscape created by that political short-sightedness. That sucks, even if higher gas prices are a good thing overall (and I agree that they are).

Well, of course, but it is necessary. Some people will get the short end of the stick. That, though, has to happen to move forward. Not doing anything because some individuals will suffer... well, that's just not smart for us as a society.

And at some level, thinking <$1 gas would last forever was a bit silly. Especially if people stopped to think where most of the oil comes from.

[Aeson]

Originally posted by Victor Galis
I was unaware that we still had serfdom There's a time before you have kids when you're freer to try to move somewhere else.

Where the hell do you think your food comes from? Potted plants on condo terraces?

But also a higher incentive to build those instead of continueing the current paradigm. It also means decreased emissions from reduced economic activity.

That paradigm will exist until the cost of retrieving oil is greater than other (acceptable) energy sources. We're still going to use the oil until then. $130/barrel isn't going to change that. Otherwise, if supply starts backing up, the price will just come down again. Higher priced oil actually makes drilling for less readily usable oil reserves (more) economically feasible.

Oil prices affect virtually all prices. Ramping up the cost may make already installed alternate energy sources more cost efficient, but they already existed. The creation of new alternate energy sources will increase with the cost of oil (and other fossil fuels).

The solution is to just decide to do it. It's not like costs are keeping us from going with nuclear power anyways.

In an ideal world, there'd be a carbon tax to make the true cost apparent.

No, in an ideal world you wouldn't need a carbon tax to make it more apparent. Unless your "ideal" world really sucks

In our situation a price increase in the form of tax would be fine, the proceeds could go towards funding alternate energy (though it's more likely going to go to something stupid). Giving the money to big oil doesn't accomplish much of anything.

Poor people go hungry due to increased food prices while big oil rolls in money... increased oil prices are a good thing, right?

[Aeson]

Originally posted by Imran Siddiqui
It's a nudge towards better action. Incentives are the only way to get people to stop acting like idiots (even if they still are).

The nudge needs to come from somewhere which doesn't undermine people's ability to actually do something about it.

Taking away people's livelihoods isn't going to help them make changes towards more ecologically sound (and more expensive) solutions. For instance, most homes in the Southern US can be energy neutral with ~$30k investment into solar panels. But you need to be able to:

A. have the home
B. have the $30k to spare
C. have an economy that can support the ramp up in production of those products (which will drop the cost of B)
D. have the will to do it

Higher priced oil may help a bit with D, but it screws A, B, and C, as well as increase the price of B to do so. It's not a good solution.

Also, hybrid cars still have quite a premium, and electric cars even more. Destroying what's left of America's middle-class disposable income isn't going to help, even if it "nudges" in the right direction, it's making it less possible to take that direction on an individual basis for a great many people.

[Imran Siddiqui]

Who said anything about hybrids? A Corolla can get you some great mpg, but people would rather buy gas inefficient SUVs because gas is cheap enough so that their crap mileage doesn't matter.

People aren't doing $30k investment into solar panels in their homes anyway. Even if we were giving away the solar panels, it is likely that people wouldn't want to do it (aesthetic reasons mostly). Perhaps higher energy prices would help more people decide they need to spend a lot of money now so they can save a lot in the long run.

Tough times now (well, maybe after economic recovery from the upcoming recession), for better times later. Not saying it won't be more difficult, but it's not going to turn everyone into beggers either.

[Aeson]

Originally posted by Imran Siddiqui
Who said anything about hybrids? A Corolla can get you some great mpg, but people would rather buy gas inefficient SUVs because gas is cheap enough so that their crap mileage doesn't matter.

You can't just look at people trading in their SUV's for better gas mileage cars in a vacuum. You are ignoring that your method for "forcing" people to do so is also disallowing other people to make their own improvements. I am simply pointing out what you are not considering.

People aren't doing $30k investment into solar panels in their homes anyway.

Slowing the economy will not help people do so. And there are some who would (like to) do so. Again, showing how your preferred method doesn't really lead to the solution(s), and can actually hamper the solution(s).

Even if we were giving away the solar panels, it is likely that people wouldn't want to do it (aesthetic reasons mostly).

A good insight as to why it's not really an economic phenomenon. We need to change what is "cool", not what is economically feasible. There are people who couldn't afford huge houses or shiny toys... and it didn't stop them from trying anyways.

We just need alternative energy to reach such status. Making it so the rich and famous are the only ones who can afford the shiny toys isn't going to help much in that department. It may actually entrench the notion even further.

Perhaps higher energy prices would help more people decide they need to spend a lot of money now so they can save a lot in the long run.

It's going to increase the cost of alternate energy as well. While undermining the average person's ability to pay for it. A double whammy.

Tough times now (well, maybe after economic recovery from the upcoming recession), for better times later. Not saying it won't be more difficult, but it's not going to turn everyone into beggers either.

It's very bad timing. A recession, which is looking like it would be an "L shaped" one already, is bad enough. But adding commodity inflation into it, and while technically you're correct that not everyone will be beggars... certainly a lot more economic slowdown will occur than would have happened otherwise.

And plenty of people are already feeling the effects to the extent they go hungry. Not in this country yet, but other people do matter still. If oil continues to ramp, we could see our own depression. Our economy just is too reliant on it right now.

[snoopy369]

I think an important thing to understand here is that there are two disparate elements of the gas price increase:

1. Increasing costs to drive -> less driving
2. Increasing costs to drive -> more expensive driving

Some people fall into 1., and some into 2.

1. clearly is the good element of the increasing prices, while 2. is the bad. (Note that the other end is irrelevant to this discussion; we are discussing prices, not profits. That is a separate element; the effect of $4/gallon gas is the same whether it is $2 in profit or $2 in tax.)

The question is twofold: First, to what extent are 1. and 2. factors, second, how much of 2. are we willing to accept to gain 1. , and third, to what extent can we ameliorate 2. ?

First: Clearly more data is needed for this, but my gut feeling says that 2. is not as bad as it looks. Even at $4/gallon, the cost of driving to and from work at 40m/d (a reasonable average) is, at a reasonable 20mpg estimate, $8 per day. If you don't get 20mpg, go get a car that does, there are lots of them. $8 per day is, at 250 working days per year, $2000 per year. Not a small amount of money, admittedly, but not the END OF THE WORLD, either.

Also, some of this can be dealt with via driving-reducing measures, even for the people you are describing here (poor, live where no transit is available). Carpools save you a ton, for example, directly reducing driving AND cost by a huge factor (a carpool of 2 people reduces that $2000 to $1000 - and a full carpool of 4, say, reduces it to $500). As stated before, a more gas-efficient car is always a choice - perhaps you have to take a cheaper car to do it, but it is a choice, economically-speaking.

Second is a policy question, I suppose, requiring data and such.

Third, there are plenty of things we can do:
* Encourage carpooling and provide ways to organize carpools
* Invest in more public transit
* Tax rebates (for having an economic car, for spending money on gas in the poorer brackets, etc.)
* Encourage different urban patterns

Basically, I think the positives of high gas prices outweigh the negatives; we just don't think enough on how to counter the negatives.

[lightblue]

20mpg? My Skoda does 65mpg (diesel). As a nation you just have to downsize to more "european" sized cars.

[Victor Galis]

Originally posted by Rufus T. Firefly


But, again, the problem is that people live in spaces that were designed (by idiots) to be negotiated entirely by car. So even if people want to stop acting like idiots, they may find themselves trapped in structures that make that extremely difficult.

That's true, but if people now want to stop living in such spaces there will be a demand for other types of housing which will cause the developers to provide for that demand. It's far better that this demand be caused by $4/gal. gasoline than it arise completely suddenly when the oil runs out. There will be adjustment costs, it's better to pay them now and get it over with.

For example, you've got folks living in ex-urbs with 40+ mile commutes to work. When they bought their houses, gas may well have been <$1/gal, so opting for the commute was an overall rational economic choice, not idiocy. But now they're screwed, unless they want to either move or find a new job during an economic downturn (and that would be idiocy).

I have trouble feeling any sort of sympathy for those folks because I hate the suburbs and everything they stand for (and doubly so for the exurbs).

My point is that this isn't just the fault of idiotic individuals. We have, as a nation and at the level of public policy, behaved as if driving were always the best answer and cheap gas would last forever -- and we have spent the commonweal acordingly. Now individuals are going to be stranded in the lanscape created by that political short-sightedness. That sucks, even if higher gas prices are a good thing overall (and I agree that they are).

Then perhaps we should work to ease the transition back to more dense urban living rather than trying to squeeze out a few more years of the current lifestyle. Doing things to make gas cheaper in the short run isn't going to ease the transition, it's just going to lull people back into complacency.

Where the hell do you think your food comes from? Potted plants on condo terraces?

What does that have to do with mobility though? Yes, someone has to live out in the middle of nowhere and farm. That someone doesn't have to there because they were born there. Besides with the current commodity price boom, I sincerely doubt affording a bit of gas is a huge problem for farmers.

That paradigm will exist until the cost of retrieving oil is greater than other (acceptable) energy sources. We're still going to use the oil until then. $130/barrel isn't going to change that. Otherwise, if supply starts backing up, the price will just come down again. Higher priced oil actually makes drilling for less readily usable oil reserves (more) economically feasible.

And that's why taxes are needed. They would transfer income from the drillers to the government (and indirectly back to all of us). This makes drilling less worthwhile at every given price.

The creation of new alternate energy sources will increase with the cost of oil (and other fossil fuels).

But not that much. People grossly overstate the impact of higher oil prices on things. Our economies are much more efficient than they were in the 70s; the last time a shock like this happened.

The solution is to just decide to do it. It's not like costs are keeping us from going with nuclear power anyways.

Maybe in some fantasy world where people aren't idiots! (Or some dystopian future where a dictator tells us what to do, and isn't an idiot.)

In our situation a price increase in the form of tax would be fine, the proceeds could go towards funding alternate energy (though it's more likely going to go to something stupid). Giving the money to big oil doesn't accomplish much of anything.

Honestly, I'd probably just cut income taxes with it (and not mostly at the top Republican-style). Shift some of the tax burden from earning money onto doing things with negative externalities.

1. clearly is the good element of the increasing prices, while 2. is the bad. (Note that the other end is irrelevant to this discussion; we are discussing prices, not profits. That is a separate element; the effect of $4/gallon gas is the same whether it is $2 in profit or $2 in tax.)

Not at all. If your governments aren't incompetent (not necessarily a safe assumption), that $2 in tax ends up being spent on something that benefits you. That $2 in oil company profits probably doesn't. Taxing gas then refunding some income tax with it would offset some of the cost of living rises, while still disincentivizing driving relative to other uses of money.

[Wezil]

Originally posted by Kuciwalker


Why ? I don't see any reason to be sarcastic about that.

Oh relax. It's the Cdn thing to pick at the Quebec scab. VG took it the right way.

My point is that made by Rufus. While it may be nice to have everyone live in a heavy metro centre with decent urban transit that simply can't be. Not everyone in Quebec can move to downtown Montreal (just as everyone in Quebec can't move elsewhere in the country despite their best efforts).

[Aeson]

Originally posted by Victor Galis
What does that have to do with mobility though? Yes, someone has to live out in the middle of nowhere and farm. That someone doesn't have to there because they were born there. Besides with the current commodity price boom, I sincerely doubt affording a bit of gas is a huge problem for farmers.

You don't seem to understand rural communities. Farmers don't just exist in a void. They are reliant on various other industries providing goods and services at their location. ("At their location" often being "within 100 miles".)

The people who make money off of food production are very often not the farmers, and almost always not the ones actually doing the work. If wages were going up with commodities, you'd have a point, but wages are not keeping pace. It's the people who can least afford the increases who are getting hit hardest. The cost of their transportation is going up. The cost of their goods are going up. Their wages are going down, and their jobs are being lost.

As for "have to be there", someone does. Usually that ends up being "because they were born there" since that is the path of least resistance (both ways). Doesn't matter who it is though, we'd all starve if farmers weren't there. Your concept that costs are irrelevant because people can just move away ignores that if everyone moves away, just about everyone starves in rather short order.

And that's why taxes are needed. They would transfer income from the drillers to the government (and indirectly back to all of us). This makes drilling less worthwhile at every given price.

As I said, taxes are different than just an increase in oil prices.

But not that much. People grossly overstate the impact of higher oil prices on things.

For some industries the impact is almost instant. Airlines and trucking for instance are already being hit hard, and have been for some time now. Other less directly related industries will take time to show their price increases.

Our economies are much more efficient than they were in the 70s; the last time a shock like this happened.

We are actually worse off in that regard, since globalization had lead to vast distances between the collection of resources, production/labor, and consumer. Those distances are bridged by transportation, transportation fueled by oil.

Also the products we consume these days consist more of petroleum based materials.

Maybe in some fantasy world where people aren't idiots! (Or some dystopian future where a dictator tells us what to do, and isn't an idiot.)

There are lots of ways to get there. Higher oil prices is one way, but a way with more drawbacks than pluses.

Hybrid cars were starting to make a dent in the market. For that to accelerate, they needed to become more affordable, not less. Yet prices are now going up while consumer spending goes down. Not a good environment for a transition. The Tesla roadster is even further in that direction, both in regard to cost and potential to impact consumer views on alternative energy in our transportation.

[Victor Galis]

Originally posted by Aeson

The people who make money off of food production are very often not the farmers, and almost always not the ones actually doing the work. If wages were going up with commodities, you'd have a point, but wages are not keeping pace. It's the people who can least afford the increases who are getting hit hardest. The cost of their transportation is going up. The cost of their goods are going up. Their wages are going down, and their jobs are being lost.

Well if they can't afford to work those jobs anymore then the available labour pool will shrink until wages rise. Or really until the farm lobby does something about it.

Your concept that costs are irrelevant because people can just move away ignores that if everyone moves away, just about everyone starves in rather short order.

Not really. If some move away, the incomes of those who stay shoot up. Everyone obviously can't move away at the same time. As you said individiuals don't exist in a vacuum.

We are actually worse off in that regard, since globalization had lead to vast distances between the collection of resources, production/labor, and consumer. Those distances are bridged by transportation, transportation fueled by oil.

On the contrary, it will lead to production being located where it's easiest and cheapest including transport costs.

Hybrid cars were starting to make a dent in the market. For that to accelerate, they needed to become more affordable, not less.

When you factor in the fuel savings they're getting more affordable.

Yet prices are now going up while consumer spending goes down. Not a good environment for a transition.

Part of that is the incredibly terrible value of the dollar.