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« Team player | Main | Alternate realities »

Apr 30, 2008


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Dave Ribar


You're right that it's a crowded legacy of failure, though it will be tough to nudge the Iraq debacle out of the top spot.

It's hard to say what's guiding policy now, but it's very clear that early on, our two oilmen in charge were focused on increasing supplies and access to oil (which undoubtedly contributed to the focus on Iraq) while maintaining profits for energy companies. You'll recall the Vice President saying, "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy."


...and the era before GW Bush, and the one before that, and the one before that, and the one before that, and the one before that, and the one after GW Bush....


Apparently, the gas tax suspension would knock 18 cents a gallon off the price for three months. So.... yesterday I saw regular going for 3.63 in Chapel Hill. The cut would push it to 3.45. Joy.

Just how would this cut get the oil companies to stop jacking up the price at a nickel a day rate?

Clinton says she would cover the costs with a windfall profits tax. Harumph. She couldn't get it passed until and unless the Dems have a filibuster-proof majority in the Senate. Ain't no way the GOP is gonna change its current bellyup posture vis-a-vis big oil.


This is a prime example of the market supposedly taking care of everything. However, when a government favors one type of energy over another, then it is just old fashioned favoritism and has nothing to do with the market.
Gas prices were artificially low for several years and now that they are skyrocketing people are screaming like little piggies, but they are also finally forced to do what should have been urged a long time ago by our "leaders".
And Bush blames Congress.

Undercover Urbanist

The debate over a gas tax holiday is evidence of how profoundly un-serious the USA is about energy challenges. Our energy policy can roughly be described as:

1. Do anything to keep all the cars running and avoid asking Americans to change their behavior in any way.

2. Use green-washing to pretend the food-crop-to-fuel industry produces more energy than it consumes, and as long as nobody notices, you have a rural economic development strategy that you can pretend is an energy policy.

Gasoline is going up $0.50 every 15 months. It is actually time to RAISE the gas tax. Before you call me crazy, hear me out.

NC has no major domestic fuel industry to speak of. Biofuels is a tiny niche right now, less than 2% of consumption in NC. When gas prices rise, there is no industry in NC reaping rewards. Houston and Louisiana make money, so do oil-exporting nations like Norway, Venezuela, Nigeria, and most of the Middle East.

If we raise the gas tax by 50 cents in NC, we could spend that money developing more energy-efficient transportation throughout the state. I'm talking about massive expansions in passenger rail and freight rail, intercity buses, and transit, as well as bike and pedestrian improvements. We could also rebate some of those gas taxes to those most dependent on fuel in our rural areas, farmers in particular.

But that would kill the economy, one might say! It's $3.60 already today! Well, at $0.50 every 15 months, gas prices in NC will reach an average of $4.10 by August 2009. Assuming we do not raise the gas tax, all that incremental money goes to Houston, Louisiana, and OPEC. I'd rather reach $4.10 with some investments in our infrastructure that give us greater choice in transportation, including energy-efficient choices.

But we should drill in ANWR, a dull President might say! Well, if you take the most optimistic output of ANWR, you get 6 months of present USA oil consumption. Of course, that 6 months of oil gets pumped out of the ground over 20 years. A 3-month or 2-month supply is the more likely output of ANWR, again, released over 20 years.

Imagine you won a lottery prize of 6 months of your salary. You'd feel pretty good, yes? But suppose you had to spend a good bit of money (though still less than the prize) to get it out of the bank. Still feeling good? Now, if you had to take delivery over 20 years, would you feel ANY change to your standard of living from this "windfall?" This is the false promise of ANWR.

Laura James

We should socialize transportation and health care -- along with all the other essential services that keep society running smoothly. Turn the free hand of the market loose to make widgets and tvs and consumer goods and nonessential services.

But keep the private sector out of essential services like energy, defense, education, health, transportation, police and fire, food safety etc. -- because it always leads to crisis and disaster and democracy and individual well-being suffer for it.


Re: "We have no energy strategy...when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production."

Well, let us cry heigh-ho for a bad idea avoided amid the ethanol fixation of that bill and the 2005 energy bill. (Say, let's make fuel out of a staple food!)

I agree that energy policy ideas have been non-serious. When we start talking about building more nuclear reactors, then we will have become serious.

Ged Maheux

"I agree that energy policy ideas have been non-serious. When we start talking about building more nuclear reactors, then we will have become serious."

Until plug-in hybrids come along more nuclear reactors won't help us reduce our dependency on foreign oil. Sorry to say it Jon, but it's the truth.

I saw an interview with an OPEC chairman on PBS the other day and he said something which no one talks about. The main reason gas prices are so high right now is not because of supply and demand. It's because of the ever weakening dollar. For every 1% the dollar drops, gas prices rise by about .40 cents. Until the economy strengthens and we can get back some spending power, oil rich nations will inflate prices to make up for the hit they are taking on our currency.

Fact, pure and simple.


Well said Ged. Several "little" factors conspire to make it so there is no quick fix. Just as several "little" factors must come together so we can move forward with alernate energies, conservation, better MPG, etc.

As a country we must come together and get this done.


Ged, I was writing under the presumption that mentions of wind and solar energy were not in reference to motor fuels. Our averred dependence upon foreign oil is not limited to automobile consumption of fuel.

The newly Keynesian Fed's policies are weakening the dollar, and that is as you said definitely contributing to the rise in energy futures.

Ed Cone

The connection between oil and the weak dollar may be underdiscussed, but I wouldn't say no one is talking about it.


The most immediate thing we can do to lower gas prices is to buy less gas. However, it's questionable if the oil market really is enough of a free market that it would respond to lower demand by dropping prices.

In the long term, unless plug-in hybrids or something similar replace gas-powered cars at the same price levels, suburban lifestyles and suburban housing patterns are of doubful viability. If we think the housing market has hit a rough spell recently, wait until people need to sell their homes because they quite literally can't afford to buy enough gas to get to and from work.

Dave Ribar


There are several relatively simple and inexpensive things that each of us can do to cut gas consumption and bring down prices. These include driving the speed limit and driving sensibly to avoid quick starts and unnecessary braking. The Dept. of Energy has other fuel economy tips.

Combined, these two steps would cut the country's gas consumption by about an eighth. They would also have benefits in terms of increased safety and reduced pollution. They also don't require any government intervention whatsoever.



I agree that we can, and should, cut gas consumption. Whether the oil industry would respond to that reduced demand by dropping prices is, I think, a very good question. Even if they did, would they roll back the pricec to what it was pre-Bush?

I expect we will see oil prices continue to increase. Not on a steady upward curve, but as a series of steep spikes, with each spike followed by a small rollback that does not equal the latest increase, followed by a plateauing at that price level for some months, followed by a new spike to another record high... rinse and repeat.

So, cutting consumption is an excellent thing to do on an individual level, but it isn't an end-game solution. Oil won't be part of that solution.

Dave Ribar


A substantial decrease in demand would prompt a price response, whether that would be offset by other developments such as a further decline in the dollar is anybody's guess.

I'm old enough to remember people predicting ever-ending price increases in the late 1970s and early 1980s; they were wrong.

And actually, if oil isn't part of the long-run solution, it must mean that we cut consumption at some point, no?


Dave, what I'm getting at is that the production side of the oil market varies enough from the classical model of a free market to likely be able to raise prices, not lower them, in response to a drop in demand. If the oil market was a free and open market, we would have seen any number of new firms entering the market recently to take advantage of our ever-increasing thirst.

I remember the seventies' oil embargo, too. Accounting for inflation, gas costs are higher now then then, i don't see them dropping back.

Regardless of debate about how much is left to be discovered, oil is a scarce resource. Behaving as if we can maintain an oil-based society in perpetuity is delusional. At some TBD date, oil will disappear. Long before that, it will cost far too much to be considered a usable source of energy.

America's society, economy, and infrastructure have for a century been built on the assumption that people will drive to get where they want to go. If we do not find a replacement for the internal combustion engine, in terms of performance and cost, then we are in for, as the wonks might say, serious dislocations.


"The main reason gas prices are so high right now is not because of supply and demand."

Not true, OPEC is lying SURPRISE!

"the bottomline is that the exchange rate has shown to only effect the price of oil on average by about 3%? So then what makes up the 97%? Supply mostly ?

From theoildrum.com eastender's
within the drumbeat thread of Sunday April 27.

One, if not THE best, net source for oil depletion news.

5 years from now think bask to this day.

Changes are coming can you adapt ?


"Below is an article confirming what we all found out today, that the price for a barrel of oil is based on solid fundamentals, those being supply and demand. Not market speculators or just the dollar losing value. The fact that the price oil went back up today also eliminates the idea that the rising price was a huge bubble about to burst. Once it started down it quickly stopped and started heading back up."

The previous quote was by another poster on another board. Yes, it's a repeat of my earlier post, but thought I should include it as part of the context to linking to a professional (paid) journo's opinion.

Jim Cramer

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