September 8, 201014 yr "I think this is what happened in the Gulf, BP inadvertently tapped into such a "reactor"." Oh, nevermind.
September 9, 201014 yr Our cruisers will create a perimeter, while our fighters fly into the superstructure, and attempt to knock out the main ... ... wait, sorry, having an out-of-species experience. Carry on, then.
September 9, 201014 yr Wow.... I think that the Earth's core is also where they make "the Kool Aid." "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
September 9, 201014 yr Our cruisers will create a perimeter, while our fighters fly into the superstructure, and attempt to knock out the main ... ... wait, sorry, having an out-of-species experience. Carry on, then. "It's a Trap!!" The Old Miss Admiral Ackbar commercial has been on my mind recently and thats all I can think of. Surprisingly that quote feels like it is actually on topic for the conversation.
October 5, 201014 yr Still think it was due to futures contract speculation? BTW, while FSU production is at record highs, OPEC production is collapsing, resulting in oil prices well above $80/barrel in the past week. Ever wonder why the Middle East is spending its oil riches on mass transit and alternative energy? Also, please note these are NET exports -- ie: after the oil-producing country has used its own production for its own purposes. So no American production is shown because it uses what it produces (and then some!!!)... Edit: sorry one more.... "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 5, 201014 yr I almost missed these articles... 09/01/2010 'Peak Oil' and the German Government Military Study Warns of a Potentially Drastic Oil Crisis By Stefan Schultz A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis. The term "peak oil" is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges. The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term "peak oil" at all. But a military study currently circulating on the German blogosphere goes even further. READ MORE AT: http://www.spiegel.de/international/germany/0,1518,715138,00.html Goldman Sachs predicts oil price jump Posted by ali on October 15, 2010 in Business Global investment firm, Goldman Sachs Group, says oil prices will “substantially” rise in the second half of 2011 and 2012, as global inventory surplus is exhausted. “We believe that forward price levels offer good hedging opportunities for calendar 2011/2012 for consumers despite the recent rally,” analysts with the firm said in a note to clients on Thursday. “We expect the supply-demand balance to continue to tighten in the fourth quarter of 2010 as continued global economic growth, albeit likely at a slower pace than in the first half continues to strengthen demand,” the note said. READ MORE AT: http://dailymessenger.com.pk/business/2010/10/15/goldman-sachs-predicts-oil-price-jump/ Alaska's untapped oil reserves estimate lowered by about 90 percent October 27, 2010|By the CNN Wire Staff The U.S. Geological Survey says a revised estimate for the amount of conventional, undiscovered oil in the National Petroleum Reserve in Alaska is a fraction of a previous estimate. The group estimates about 896 million barrels of such oil are in the reserve, about 90 percent less than a 2002 estimate of 10.6 billion barrels. The new estimate is mainly due to the incorporation of new data from recent exploration drilling revealing gas occurrence rather than oil in much of the area, the geological survey said. READ MORE AT: http://articles.cnn.com/2010-10-27/us/alaska.oil.reserves_1_undiscovered-oil-national-petroleum-reserve-exploration-wells?_s=PM:US "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 5, 201014 yr Oh, and one more ingredient that is akin to spiking an already dangerous drug.... 2010 October 10 Sunday QE2 To Cause Oil Price Surge That Suffocates Economy? If QE2 is enough to cause a large oil price spike then a real economic recovery will cause an even larger price spike. When I look at trends in global production and Asian consumption growth I do not see where the US can get the oil needed for economic growth. US oil consumption may already have peaked several years ahead of the global oil production peak (which Charley Maxwell expects in the 2015-2020 time frame with a slowing in production growth leading up to the final peak plateau). Well, economic growth with highly expensive oil and flat or declining consumption is going to be very hard and slow at best. Quite possibly economic growth might not be possible for a couple of decades. I find the bigger context of sustained economic stagnation very important. Tyler Cowen argues that America needs continuing economic growth in order to buy off interest groups. Take away that economic growth and the social fabric will tear apart. Just what will that look like? ...Suppose economic stagnation continues. The US is already in the biggest economic downturn since the Great Depression. Buy off interest groups? Revenue collapses at local governments are so severe that many cities are in the process of un-buying off interest groups. These revenue collapses mean most of the big state spending cuts still lie in the future. After pretending to produce a balanced budget the California legislature just passed a budget with a 11% deficit. Lots of states are at risk of default with California and Illinois the biggest fiscal basket cases. With huge unfunded retirement liabilities their problems are going to grow much larger even if the economy eventually recovers for a few years. Even without considering the effects of Peak Oil Northwestern U economist Robert Gordon is already predicting very slow growth thru 2027. READ MORE AT: http://www.parapundit.com/archives/007562.html "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 5, 201014 yr US military warns oil output may dip causing massive shortages by 2015 Terry Macalister guardian.co.uk, Sunday 11 April 2010 18.47 BST The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact. The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel. READ MORE AT: http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 5, 201014 yr KJP, right now all of the new wells are going to be coming online in Brazil and between Indonesia and Austrailia. \ To be honest, I don't know the amount of oil contained in these deposits, but the way the people in the know are talking, its quite a bit. The gulf of Mexico still has most of its oil untapped, due to the fact the sea floor is so deep. I don't have a dog in this fight, I am happy to weld together water and natural gas pipe. I am just saying that with all the new wells coming online in the next 5 years, I can't see a massive oil "shock" shortage any time soon.
November 5, 201014 yr Punch, the projected shortfall of 10 million barrels per day (that's more than 10 percent of the globe's supply) by 2015 takes into account oil production from new and projected discoveries, such as those in Brazil. As for Australia and Indonesia, they consume more oil than they produce... AUSTRALIA SOURCE: http://www.eia.doe.gov/cabs/Australia/Oil.html BRAZIL SOURCE: http://www.eia.doe.gov/cabs/Brazil/Oil.html INDONESIA SOURCE: http://www.eia.doe.gov/cabs/Indonesia/Oil.html "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 5, 201014 yr The scariest thing to me is thinking about the amount of oil we're going to use in the coming decades. From what I'm seeing the average increase in oil demand year to year is about 2%. That means in the next 35 years we'll use more oil than we have used in all of human history. That's a ridiculously large amount of oil. Where the heck are we going to find it all.
November 5, 201014 yr Oh, and by the way, oil is nearing $90 per barrel for next month's delivery. The August 2011 contracts are already above $90. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 6, 201014 yr I'm guessing that has more to do with the weakness of the dollar than an anticipated surge in demand.
November 6, 201014 yr Yep. To me, the point is that it's better for the U.S. economy to have a stronger dollar heading into an oil supply/demand problem. I think the Fed's QE2 policy just made us even more vulnerable to an oil price shock. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 6, 201014 yr To add to what I said in my prior posting, this is not wholly supply related. But it puts the price launching point at a much higher level when supply issues do become more prevalent... Gas prices in Ohio could climb to more than $3 in 48 hours Refinery fire adds to increase Posted: 11/05/2010 By: WEWS News Staff CLEVELAND - Gas prices could climb to more than $3 a gallon in the next 48 hours. A small fire at a Chicago-area refinery and a key move by the Federal Reserve has resulted in a large increase in wholesale gasoline prices, gasbuddy.com reported. Since the beginning of the week, gas stations have seen their wholesale cost rise as much as 35 cents per gallon across several Midwest states. READ MORE AT: http://www.newsnet5.com/dpp/money/gas-prices-in-ohio-could-climb-to-more-than-$3-in-48-hours "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 7, 201014 yr Yeah, I saw it at $2.89 last week. It doesn't affect me (and, I'm guessing, many on these boards) as much as most, because I walk to work and have a generally low-mileage lifestyle (and I've got a reasonably fuel-efficient car, though it's ten years old now). Still, I do like to travel to Cleveland and out to places in the suburbs and the countryside for entertainment, so it's annoying, and I don't like what this bodes for other commodity prices.
November 8, 201014 yr Published Nov 8 2010 by The Oil Drum, Archived Nov 8 2010 Jeff Rubin: Oil and the end of globalization by Jeff Rubin Conventional wisdom, as espoused by central bankers, finance ministers, and the pundits that you watch on TV would have you believe that the recession that we are still feeling here in America, and, indeed, throughout the world, was all about a financial crisis, whose roots lie in the failed sub-prime mortgage market in the United States. In other words, a whole bunch of boarded up, repossessed unsalable houses and depressed property markets in places like Cleveland, all financed with easy credit and subprime mortgages, hit financial markets like some toxic hydrogen bomb, and then all of a sudden, a property market crash in the United States, somehow morphed into a deep, global recession. Gee, I never knew that Cleveland was that big. No one has to tell me about the impact of the subprime mortgage market on financial markets. Why do you think I am an author now? But there is a big difference between blowing up the bonus pools of investment banks, and blowing up Wall Street, and what happened. READ MORE AT: http://www.theoildrum.com/node/7095 "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 9, 201014 yr Published Nov 8 2010 by The Oil Drum, Archived Nov 8 2010 Jeff Rubin: Oil and the end of globalization by Jeff Rubin That's a fantastic article. It's very much in line with what James Howard Kunstler has been saying. I only wish he would've added another two or three paragraphs on what he thinks a post peak oil America will look like.
November 10, 201014 yr Even though I'm very much a skeptic of peak oil alarmists, I actually don't see too much to criticize within Rubin's speech because he's not directly responding with calls for intrusive economic regulation in order to bring about the change that he believes will happen organically. At least, if he does espouse such views, he's quiet about it here.
November 10, 201014 yr My concern is that organic change will be devastatingly abrupt -- I would prefer that government and industry work together to soften that transition over a longer period of time. We saw such economic devastation when geopolitical forces reduced global oil supplies by 5% for a few months in 1973 and again in 1979. Forecasts suggest that global oil supplies could drop 10% over several years starting in 2012. Future declines beyond 2015 are too difficult to predict at this time, but could result in a staging process of economic powerdown to some lesser level that technologies and natural resources can sustain over the longer term. But that predicted 10 percent drop (barring some secondary global economic collapse beforehand or the magical discovery of oil reserves the size of five or six Saudi Arabias) isn't what scares me. It's who is predicting it. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 10, 201014 yr A couple of things to keep in mind about such predictions: (1) It's difficult to make predictions, especially about the future. (2) The U.S. is a much stronger country now than it was in the 1970s, even with the damage to our fiscal and monetary house that the last few feckless Congresses (Republican and Democrat) have produced. In particular, our technological base is better, which can soften the blow of genuinely declining oil supplies when they materialize. However, our financial base is correspondingly sounder as well--its improvement has been somewhat choppier than our technological leaps forward, but it is nevertheless impressive to see where we've come since 1980. (3) Generations of technological advancement have been getting successively shorter. (This is one central insight of Ray Kurzweil's technological prognostications.) In other words, predictions about how long substitutes will take to develop that are premised on the rates of technological development from 1970 are likely to vastly overestimate the speed at which we could adapt today--let alone ten or twenty years from now. In addition, because this development is a paradigm that for the moment favors oil-consuming but technologically-advanced nations (including the U.S., Japan, Israel, South Korea, and most of the EU), it *is* actually rational, not merely convenient or expedient, to delay the "day of reckoning," to coin an inapt cliche (inapt because it will not be a day, but an extended period).
November 10, 201014 yr It's not just a question of developing a technological advancement that is the primary problem. It's scaling the solution up to be impactful on our economy that matters.
November 10, 201014 yr Agreed. I consider that part and parcel of the development process, but I'll not argue against subdividing them in order to call attention to the fact that scalability is important.
November 10, 201014 yr Funny. I see America as weaker than in the 1970s.... ++ Our federal budget and personal finances are debt-ridden. ++ Our cities have sprawled so far outward and our vehicle-miles of driving has skyrocketed that we actually use much more oil today than we did 40 years ago. ++ Our manufacturing capacity is significantly reduced as we import so much of our finished products. ++ The average distance that food travels to the supermarket today is 1,000 miles, far higher than more locally grown and distributed foods of 40 years ago. Those make us more vulnerable to an oil supply decline, not less. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 10, 201014 yr Funny. I see America as weaker than in the 1970s.... ++ Our federal budget and personal finances are debt-ridden. ++ Our cities have sprawled so far outward and our vehicle-miles of driving has skyrocketed that we actually use much more oil today than we did 40 years ago. ++ Our manufacturing capacity is significantly reduced as we import so much of our finished products. ++ The average distance that food travels to the supermarket today is 1,000 miles, far higher than more locally grown and distributed foods of 40 years ago. Those make us more vulnerable to an oil supply decline, not less. I think point 2 could be becoming more moot by the day. There are a large number of companies that are actively encouraging their employees to work from home. With the amount of work that is done on computer's these days there are very few reasons to actually go to, or have a physical office. The concept of "hoteling" for office workers is becoming more and more wide spread. I believe this is what Key is doing with their renovation of the Higbee building.
November 10, 201014 yr I think point 2 could be becoming more moot by the day. There are a large number of companies that are actively encouraging their employees to work from home. With the amount of work that is done on computer's these days there are very few reasons to actually go to, or have a physical office. The concept of "hoteling" for office workers is becoming more and more wide spread. I believe this is what Key is doing with their renovation of the Higbee building. True, but that hasn't shown up in vehicle-miles traveled data yet. VMTs have flattened out. To have a meaningful impact on global oil consumption (American motorists comprise 10 percent of global oil use), driving in America would have to drop by some incredible amount -- like 25 or 50 percent. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 10, 201014 yr (2) The U.S. is a much stronger country now than it was in the 1970s...our financial base is correspondingly sounder as well--its improvement has been somewhat choppier than our technological leaps forward, but it is nevertheless impressive to see where we've come since 1980. Do you really believe that? We went from the biggest creditor/saving nation in the 1970s to the biggest debtor nation in the 80s, and we've only been getting more and more into debt since. We hemorrhaged manufacturing jobs and replaced them with low-paying service jobs, while more recently outsourcing even better paying jobs. With the exception of the top tier income groups, people are making less money now than they did (just look at how many dual-income households there are now compared to 30 years ago), and most of what they buy is now foreign-made, so what little money we have left is going overseas and not supporting our own economy. What's left of our economy was propped up briefly by the dot com bubble and after that burst the housing bubble. We haven't had any real growth in our economy for the last 20 years, it's all been speculation and debt financing. The middle and lower classes are being squeezed ever harder to make ends meet in the face of rising energy prices and flat wages, while the rest of the wealth is concentrated in the top. 10 years ago I might have agreed that we were a strong nation, even if it wasn't necessarily true, but right now the USA is in a very shaky position. We are the Roman Empire of the 21st century, bloated and corrupt, decadent and wasteful, and unable to adjust our way of life to the realities of the world. Our economy's susceptibility to rising oil prices shows just how weak we really are, because we're such a one-trick pony. Everything we do is based on cheap oil, as we've spent the last 80-some years retooling our economy around it. We're already seeing with the massive bailouts of the car companies, of the Highway Trust Fund, and financial institutions, that we're making the stupid decision to try to keep our economy going just like it has been, without planning for the reality of a more expensive energy future. We're trying to sustain the unsustainable, and there's a very high price to pay for that, but we're already broke to begin with!
November 10, 201014 yr Well said, jjakucyk. Couldn't have said it better. Back in the 1980s I was pretty optimistic about America's future. I think the was the last time I was so optimistic (maybe for a while in the mid-90s). "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 11, 201014 yr I think point 2 could be becoming more moot by the day. There are a large number of companies that are actively encouraging their employees to work from home. With the amount of work that is done on computer's these days there are very few reasons to actually go to, or have a physical office. The concept of "hoteling" for office workers is becoming more and more wide spread. I believe this is what Key is doing with their renovation of the Higbee building. True, but that hasn't shown up in vehicle-miles traveled data yet. VMTs have flattened out. To have a meaningful impact on global oil consumption (American motorists comprise 10 percent of global oil use), driving in America would have to drop by some incredible amount -- like 25 or 50 percent. I don't see low VMTs as an indicator of national strength. (2) The U.S. is a much stronger country now than it was in the 1970s...our financial base is correspondingly sounder as well--its improvement has been somewhat choppier than our technological leaps forward, but it is nevertheless impressive to see where we've come since 1980. Do you really believe that? Yes. We went from the biggest creditor/saving nation in the 1970s to the biggest debtor nation in the 80s, and we've only been getting more and more into debt since. We hemorrhaged manufacturing jobs and replaced them with low-paying service jobs, while more recently outsourcing even better paying jobs. The switch from being a creditor nation to a debtor one is definitely concerning. I won't argue about that. That said, our economy is stronger than it was in the 1970s, when "stagflation" entered the national lexicon. Our industries are more diversified, and manufacturing is no longer a ticket to national greatness. People mourn its passing as a major employer far too much. In addition, manufacturing output in America continued to grow even as employment in the sector declined; it simply doesn't take as many people to make most industrial products today as it did thirty years ago, let alone sixty. With the exception of the top tier income groups, people are making less money now than they did (just look at how many dual-income households there are now compared to 30 years ago), and most of what they buy is now foreign-made, so what little money we have left is going overseas and not supporting our own economy. A good deal is still made in the USA; it just takes fewer American workers to make it, as I noted above. Check your monthly outlays at some point and see how much really is going directly overseas, or even overseas within two transactions of leaving your checking account. My rent stays here. My utilities stay here. My health care bills (insurance and direct cash outlays) stay here. The vast majority of my food money stays here, including both groceries and restaurant bills. The money I spend at Bed Bath & Beyond or Wal-Mart may move overseas eventually, but American companies get their hands on it first. I doubt that my spending patterns are particularly atypical. What's left of our economy was propped up briefly by the dot com bubble and after that burst the housing bubble. We haven't had any real growth in our economy for the last 20 years, it's all been speculation and debt financing. The middle and lower classes are being squeezed ever harder to make ends meet in the face of rising energy prices and flat wages, while the rest of the wealth is concentrated in the top. Even after the growth of the Internet, the iEverything, Netflix, etc., you still believe that? How many companies currently in the Fortune 500 were there thirty years ago? We have grown immensely in the past generation. Most of the financial wealth created in the past generation has gone to the upper income echelons, true, but the benefits of the real standard of living advances (i.e., increases in quality and quantity of products offered to the American market) have been far more widely distributed. Even someone in the 20th-40th percentile of the American income spectrum today likely enjoys a number of luxuries that would have rendered someone in the same quintile thirty years ago awestruck. 10 years ago I might have agreed that we were a strong nation, even if it wasn't necessarily true, but right now the USA is in a very shaky position. We are the Roman Empire of the 21st century, bloated and corrupt, decadent and wasteful, and unable to adjust our way of life to the realities of the world. Our economy's susceptibility to rising oil prices shows just how weak we really are, because we're such a one-trick pony. Everything we do is based on cheap oil, as we've spent the last 80-some years retooling our economy around it. We're already seeing with the massive bailouts of the car companies, of the Highway Trust Fund, and financial institutions, that we're making the stupid decision to try to keep our economy going just like it has been, without planning for the reality of a more expensive energy future. We're trying to sustain the unsustainable, and there's a very high price to pay for that, but we're already broke to begin with! People have been foretelling America's demise for some 234+ years now. The "inevitable" cause of doom keeps changing each time the last inevitable cause of America's decline and fall fizzles out. Also, you're begging the question: You can't argue that the economy's susceptibility to rising oil prices is one of the reasons that our economy is too weak to withstand future rises in oil prices. We are not a "one-trick pony." China is much more a one-trick pony than we are. For that matter, almost every other country on the planet is much more a one-trick pony than we are. We have the most diversified economy in the world, including the lion's share of the high-tech, knowledge-economy companies that are likely to flourish in a world in which a high-mileage lifestyle becomes less viable. You're not only doing America a disservice if you sell her short, you're doing yourself one as well. The transition into an oil-scarce future will be stressful for most of the West, including us, but I'm not losing sleep over our ability to weather it. I don't deny that oil will become more scarce (and I've held long positions in oil stocks for a few years now because of that). I just have a lot more faith in the private sector of 2020 to deal with it than the public sector of 2010, so I cringe at all these calls for "planning" and a "national strategy" and all those other codewords for more government.
November 11, 201014 yr I don't see low VMTs as an indicator of national strength. When our cars run on an energy source of which two-thirds is imported and we're running a huge trade deficit, I do. I'd rather keep more of America's wealth in America. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 11, 201014 yr Piling on, I would also argue that by employing fewer people to actually make things, there are (1) fewer people employed, and (2) more people underemployed (part-time and retail wages). This means that there are fewer people available to buy goods and services. Companies aren't hiring because not enough people are buying what the company is selling. Even though our economy is more diverse, we rely on cheap oil to provide cheap transportation to bring us from the suburbs in to work (we all have to drive because there is no mass transit in the 'burbs, no way to even get to the grocery without our own car) and to bring us cheap goods from China. Those transportation costs weren't there or were much smaller in 1970. Individually they aren't much, but it adds up quick.
November 11, 201014 yr Note; This latest spike in gas prices has less to do with supply and demand, and the effects of a speculative commidity market than it does with the fact that the dollar is currently weak, weak, weak. Oil is priced in $US so that means it takes more $US to buy it when converting to other currencies thus driving the cost up. Voinovich is proposing a penny a month hike in the federal gas tax for the next 25 months. See the article on Cleveland.com, the comments are painful as usual. http://www.cleveland.com/open/index.ssf/2010/11/sen_george_voinovich_suggests.html
November 12, 201014 yr I don't see low VMTs as an indicator of national strength.When our cars run on an energy source of which two-thirds is imported and we're running a huge trade deficit, I do. I'd rather keep more of America's wealth in America. So would I. But the link between petroleum and transportation is not inseverable, and the costs of keeping that wealth here at the moment would be steep, too, if we're talking about trying to force VMTs downward. Mobility is an asset, but obviously it comes with a cost. I'm all for reducing the cost, but I don't like the amount of dismissiveness of the value of the asset I see on these boards. I'd rather shift gradually to an electrified transportation sector and let VMTs go where they will. You are using VMTs as a proxy for a different measurable statistic (consumption-type expenditures that go to capital outflows to foreign countries). Skip straight to the real statistic rather than tainting a benign stat by using it as a proxy for something of more import. Otherwise, your words lead to an agenda of restricting mobility, not reducing oil consumption.
November 12, 201014 yr Note; This latest spike in gas prices has less to do with supply and demand, and the effects of a speculative commidity market than it does with the fact that the dollar is currently weak, weak, weak. Oil is priced in $US so that means it takes more $US to buy it when converting to other currencies thus driving the cost up. I think that speculation in the commodity markets and the weakness of the dollar are highly linked, so I think that you're slightly off-mark by saying that commodity speculation isn't driving the recent spike. It's helping to drive the recent spike because the dollar is weak. (It was certainly a reason I invested in oil holdings in 2008 and am glad that I kept them through now.) People shift into commodities when they perceive weakness or impending weakness in fiat paper currencies because commodities are things with so-called "intrinsic" value that cannot be diluted by government action. Gold is the obvious one, but oil is a popular one, too. Rare earths, another commodity (though it's really a set of commodities, of course) have seen an even larger spike. I'd be curious as to the price trends in agricultural commodities; I don't know if wheat, corn, soybeans, etc. are spiking upward, too.
November 12, 201014 yr Piling on, I would also argue that by employing fewer people to actually make things, there are (1) fewer people employed, This assumes that there are people out there for whom the only employment option is the manufacturing sector--that decreased manufacturing employment is the end of the line. To the extent that's true, it is a poor argument for deliberately trying to make the manufacturing sector less efficient in order to preserve overstaffed assembly lines with massive personnel costs. and (2) more people underemployed (part-time and retail wages). This means that there are fewer people available to buy goods and services. Companies aren't hiring because not enough people are buying what the company is selling. Then those companies should lower their prices or find new product mixes. You can't have an economy with trillions circulating in it without someone having money, and contrary to popular belief, it has not simply gone all into the pockets of the upper classes. There aren't that many people out there making seven-figure paychecks. Even though our economy is more diverse, we rely on cheap oil to provide cheap transportation to bring us from the suburbs in to work (we all have to drive because there is no mass transit in the 'burbs, no way to even get to the grocery without our own car) and to bring us cheap goods from China. Those transportation costs weren't there or were much smaller in 1970. Individually they aren't much, but it adds up quick. So what? That does not mean that our country is somehow weaker than it was in 1970. We are paying more, but we are earning even more--and we are more mobile, which is an independently valuable thing. The fact that this status quo won't last forever does not mean that it's a bad status quo for the time being; there is no such thing as a sustainable status quo. The agriculture-heavy status quo of the 19th century was not sustainable. The manufacturing-heavy status quo of the 20th century was not sustainable. There is much about our current status quo that is also not sustainable, including our oil consumption--but so long as our economy and technology are both growing, and as long as we have enough humility to realize that we cannot know the future as well as those who are actually living in it will know it, there is no reason to try to enact drastic oil consumption reduction measures today.
November 12, 201014 yr Market volatility is also a big factor in commodity prices. The shenanigans China is pulling against Japan re. rare earth metals is no doubt sending that market into a frenzy. I wouldn't be surprised if we see much more of this kind of thing in the future, with food, oil, minerals, etc. I doubt various agricultural embargoes would affect us here in the US much, but it certainly could happen. While we do still produce more food than we consume, it's not entirely in balance. We import a lot of off-season produce from South America, and some processed ingredients from China and other places. We haven't disassembled much of our agricultural base like we have our manufacturing base, so we could more easily ramp up more domestic production of various foods. The drawback would be less availability those off-season or tropical fruits and vegetables. The real challenge though would be in bringing back more variety to farming. Much of our agricultural production has been shifted to producing corn for animal (mostly cow) feed. Combine that with the horrendous licensing issues by Monsanto for their Roundup-ready seeds, the huge monoculture of crops and its associated risks, the fact that livestock needs to be fed enormous amounts of antibiotics and hormones to survive on corn feed, and that meat is still expensive, we may see that system implode on its own, without the help of high oil (and thus fertilizer and pesticide and machinery) prices. That would open the door to more local produce for actual human consumption, reopening canneries and other nearby processing facilities, bringing back orchards, vineyards, and other farm landscapes that have been lost to vast expanses of corn and little else.
November 12, 201014 yr You are using VMTs as a proxy for a different measurable statistic (consumption-type expenditures that go to capital outflows to foreign countries). Skip straight to the real statistic rather than tainting a benign stat by using it as a proxy for something of more import. Otherwise, your words lead to an agenda of restricting mobility, not reducing oil consumption. I am using American VMTs because it is the single-largest source of petroleum consumption on the planet. And it's the result of our public-sector land use and transportation policies that rely on outdated Keynesian models that externalize the users' costs and create tremenous economic inefficiencies for the public and private sectors. I would have hoped this is where conservatives and conservationists might actually find some common ground. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 12, 201014 yr That doesn't change the fact that VMTs are not inherently bad. They are probably closer to being inherently good, since they tend to reflect both flowing commerce and people confident enough to take long vacations. They are linked to something that we would want to reduce, but that can be reduced without reducing VMTs. Incremental reductions can be achieved by greater fuel efficiency. More serious reductions can be achieved by transitioning to an electrified transportation sector, as I said above. Conservatives and conservationists can find some common ground, but it depends on which conservationist issue you're talking about. There are conservationists who want to reduce oil consumption; many conservatives very much want the same, though perhaps for different primary reasons. There are also conservationists who want to effective plow the suburbs back into forests and meadows and crowd everyone back into higher-density areas. Conservatives (and, when you get down to it, a great many suburban liberals) are going to fight that every step of the way, and with reason.
November 12, 201014 yr That's fine. The amount of VMTs should be determined by the free market by making motorists pay the full costs they incur. To me, the best way to do that is two-fold: 1. Sell all limited-access roads (interstates, divided highways with interchanges, or infrequent intersections, etc) to the private sector. 2. Pass a constitutional restriction that says roads and their support facilities (traffic signals, storm sewers, driveway aprons, etc.) can be funded only by user fees. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 12, 201014 yr (1) How do you measure the per-person "usage" of a storm sewer? (2) Most limited access roads don't have traffic signals. Or driveway aprons. Or storm sewers, for that matter. (3) How do you solve the free-rider problem for municipal streets that aren't limited-access?
November 12, 201014 yr Note; This latest spike in gas prices has less to do with supply and demand, and the effects of a speculative commidity market than it does with the fact that the dollar is currently weak, weak, weak. Oil is priced in $US so that means it takes more $US to buy it when converting to other currencies thus driving the cost up. I think that speculation in the commodity markets and the weakness of the dollar are highly linked, so I think that you're slightly off-mark by saying that commodity speculation isn't driving the recent spike. It's helping to drive the recent spike because the dollar is weak. (It was certainly a reason I invested in oil holdings in 2008 and am glad that I kept them through now.) People shift into commodities when they perceive weakness or impending weakness in fiat paper currencies because commodities are things with so-called "intrinsic" value that cannot be diluted by government action. Gold is the obvious one, but oil is a popular one, too. Rare earths, another commodity (though it's really a set of commodities, of course) have seen an even larger spike. I'd be curious as to the price trends in agricultural commodities; I don't know if wheat, corn, soybeans, etc. are spiking upward, too. Acknowledged that everything is linked. I just talking about the effects on prices caused by market speculation on future supply and demand, in addition the actual "real-time" effect of supply and demand on the cost of oil/gas. My main point is the main cause for the spike is not because markets are predicting something like tigher emmision regulations that will force refineries to shut down and tighten supply, or that the economy is going to boom in the 1st quarter of 2011 and demand will outpace supply.
November 12, 201014 yr (1) How do you measure the per-person "usage" of a storm sewer? (2) Most limited access roads don't have traffic signals. Or driveway aprons. Or storm sewers, for that matter. (3) How do you solve the free-rider problem for municipal streets that aren't limited-access? Let me rephrase. In my opinion, there are two classes of roads out there: 1. those that can likely be privatized because of their limited access right of way; 2. those that cannot because of their extensive access points or because they simply aren't used enough to be privatized cost effectively. So in the case of public roads (including their support systems of traffic lights, sewers, aprons etc), they would be funded by public agencies as they are now but not divided among multiple pots of money. These include user and non-user funded accounts. They would be combined into a single user-funded account, so that roads, sewers, aprons, etc. are no longer funded by Issue 2 funds, property tax levies and the like. In the case of the privately owned limited-access highway, you would have to pay a toll to use them. The roads themselves would receive no public funding. Instead they would get their funding through the private marketplace and be responsible for paying property taxes, liability insurance, traffic control and emergency services as another privately owned competitor does -- the nation's rail system. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 12, 201014 yr I could easily support a transition to a user-fee-based system for federal highways (state and local roads present more of a problem IMO), while retaining those assets under federal control. I could also see it leased to private parties. I don't know if I could support selling it to private parties outright. I think a VMT fee collected at each new registration wouldn't be particularly logistically complex to sort out, assuming the federalism issues could be resolved (state authorities collecting a federal tax).
November 12, 201014 yr It's also important to realize just how little of the gas tax actually goes to most of the road network. Even if you take out the earmarks for transit, policing, and non-road uses (and this is for both Federal and State gas taxes), it still only pays for 2/3 of highway costs. With all those other things, the number goes down to 1/2. The important thing to realize however, and this is not dealt with in most analyses, so the public is even more misinformed about it, is that this is just for HIGHWAYS. That is interstates, US highways, and state routes. I'm not sure how or if county roads fit into the paradigm. The point is that in any built-up area, unless a road has a numbered interstate/US/state shield, then it's not getting any gas tax money at all. Some local roads do fit this definition, such as Linwood Avenue, Montgomery Road, Reading Road, Hamilton Avenue, and Glenway Avenue here in Cincinnati, but the vast majority of surface streets are entirely the responsibility of the local municipality. If they don't collect their own additional gas tax or neighborhood parking fees, then all the money is coming from the city's/county's/township's general fund. That's something most people don't understand about just how massively subsidized the road network is. Of course, local streets serve much more uses than limited access freeways. They're for driving and parking cars yes, but they're also for pedestrians, bicycles, buses, freight trucks, deliveries, trash removal, emergency access, utility rights-of-way, drainage, neighborhood block parties and parades, and even open space. Most of these uses were around before cars and trucks, of course. However, since their introduction, the cost of maintaining such roads has still grown a lot. Since dirt or even brick paving is not generally adequate anymore, we've greatly increased not only the cost of building and maintaining the road surface, but also for additional sewer capacity and pollution. I don't want to get too much deeper into it right now, but suffice it to say that there's a huge amount of the road network that's not anywhere close to being user funded. In this case it might be ok because there's so many disparate uses, but it also means we shouldn't preference one particular use without making it bear a proportionate amount of the costs.
November 15, 201014 yr "Behind us" = not good. November 14, 2010, 8:47 am Is ‘Peak Oil’ Behind Us? By JOHN COLLINS RUDOLF Peak oil is not just here — it’s behind us already. That’s the conclusion of the International Energy Agency, the Paris-based organization that provides energy analysis to 28 industrialized nations. According to a projection in the agency’s latest annual report, released last week, production of conventional crude oil — the black liquid stuff that rigs pump out of the ground — probably topped out for good in 2006, at about 70 million barrels per day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests. READ MORE AT: http://green.blogs.nytimes.com/2010/11/14/is-peak-oil-behind-us/ "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 21, 201014 yr China's biggest oil refiner stops diesel exports The Associated Press November 20, 2010, 4:27AM ET BEIJING China's largest oil refiner has suspended diesel exports as the country fights rising inflation, official media reported Saturday. The decision by state-owned Sinopec will help meet domestic shortages blamed on a government conservation campaign and possible hoarding by state oil companies. Sinopec and China's other major state-owned oil company, PetroChina, plan to import diesel to help meet demand, the Xinhua News Agency said. READ MORE AT: http://www.businessweek.com/ap/financialnews/D9JJP9200.htm "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
November 22, 201014 yr ... local streets ... they're also for pedestrians, bicycles, buses, freight trucks, deliveries, trash removal, emergency access, utility rights-of-way, drainage, neighborhood block parties and parades, and even open space. Dogs like to run down the streets, too! The Bowles/Simpson commission said that the federal gas tax should increase from 18c/gal to 33c/gallon so that the "highway trust fund" does not draw from general receipts. I think Ohio gasoline taxes should be increased to pay for the highway patrol and even to fund local streets. We could reduce property taxes. We could increase gasoline taxes and soak the out of state travelers in return for lowering property taxes.
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