Boom And Bust
Daniel Yergin in his book about the oil business called “The Prize” discusses at length the “boom and bust” nature of the oil business. That “boom and bust” cycle has been there ever since Col. Drake stuck oil in Titusville. Check out this link:
EIA - Short-Term Energy Outlook - Real Petroleum Prices In particular see the top graph entitled “Real Gasoline Pump Price: Annual Average 1919-2009.” That will give you a ninety-year overview of the cyclical nature of gas prices with all the local/short-term noise filtered out. We see a peak in real gas prices in the middle of the Great Depression followed by a thirty-five year decline. It kicked up again in the late 70s then declined again for another couple decades. Now we have another peak and it certainly looks like another sustained decline is in the cards. If you slice off the late 70s peaks the long term real price has been declining at a very steady rate for nearly seventy years. Of course, this long-term decline is the major factor militating against alternative energy sources. The wise old head says “Don’t panic. Ride out the peak. The price will drop off again.” We hear about “peak oil,” but that sounds a lot like that little slogan we hear before every economic bubble bursts: “But it’s different this time.” But it never really is different. Fischer-Tropsch process synthetic fuels are not competitive when the price of crude drops under $80/bbl. Algal biofuel (if perfected) will need the price of crude to be about $50 or more to be competitive. Environmental regulations make investment in US energy infrastructure a slow and costly thing. Given that regulatory straitjacket and the long-term decline in the real price of fuels, alternatives are always at a disadvantage. |
Gotta think that given: a)finite resource and b)incredible consumption, sooner or later it comes to a halt.
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If we happen to find more oil like we did during the last few booms, perhaps we will go through another complete cycle. But I'll put my money on us not finding said oil. ;) But one thing is for sure, this cycle will end. Perhaps not this time, or even the next, but it will end at some point. And that is a point that confounds and baffles me. The GW worshippers want us to cut back on our emissions, but then turn right around and restrict a lot of area's from having any kind of wind or solar generation on them. :confused: |
Eventually oil will no longer be feasable. When? Will it wreck the planet first? What price are we willing to pay? Are we willing to switch to alternatives before that point?
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It all depends on whether alternatives will run your car.
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Great point Clev.
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The rest of the Top 10 don't have any active majority or governmental animosity towards us. The countries that really don't like us have primarily have Oil trade with Russia. |
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Regardless of their official "friendliness" status, Saudi Arabia has a large, growing and.. ahem.. active minority animosity towards us, and their government tolerates, if not encourages, terrorist training camps (unlike, say, Iraq.) The Nigerian government certainly is doing no good to its people with the money we send it, and I think we already send enough money and jobs to Mexico. And those average 652,000 barrels a day we import from Iraq, those are free, right? The war's paying for itself with free oil like I was promised, right? |
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Then you have to remember that oil is oil, and oil's bought and sold in a world market. The fact that much of the oil the US uses actually comes from Canada or Venezuela, while most of Europe's comes from the Arab world, is just because the shipping distances are shorter that way. US consumption still props up the world price, |
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The guys on Car Talk a couple of weeks ago suggested a 50 cent per gallon federal gas tax. According to them, it would drive people back toward conservation (I've noticed that freeway speeds are back up to where they were before the spike), and would generate $100 billion per year that could be put into alternative energy development and research. I would go even further and say that you could peg gasoline at a minimum of, say, $2.50 per gallon without hurting people too badly (maybe below a certain income level, people could apply for an offsetting tax credit). At the current California price of about $1.75/gallon, that would generate about $150 billion per year. Just a thought. |
The wise old head knows the price will go down, and come back up, and go down, and come back up, etc…that’s the boom-and-bust cycle in action.
Obviously it is still of value to minimize fuel usage, so that each oscillation affects one to a minimum, It is tough when the EPA slaps high-MPG types in the face with Tier II. Also, any increase in taxation, for any reason is unacceptable. If you want to raise the gas tax, you must reduce income taxation accordingly. |
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Subsidies are only good at wasting money better spent for other things, or lining the pockets of a clever few.
Raising the price of one option doesn't make the alternatives "cheaper". That's a very broken argument string. You have to keep in mind that the options are not interchangeable either. To switch from one to the other will always require an investment. If you want alternatives to become cheaper, demand for those alternatives needs to be encouraged to increase at a consumer level. Income tax incentives, tax incentives for real estate developers and businesses to offer designated charging stations/parking spots, and so on. Quote:
If you want to enact change in foreign affairs, then you should be writing letters to ambassadors. Actively working to deny specific countries of an extra two dollars each year won't really affect those people you disagree with. In all likelihood they don't get any money from oil anyways. I certainly don't get any dividends from the US steel industry. |
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I'm happy to see less money leave this country, period. And as was mentioned before, reducing consumption reduces worldwide prices, sending fewer dollars to those countries. However, today I sent $50 to a Canadian company for an MPGuino kit that will help me send LESS money to Canada in the future. :) |
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The point I was trying to make is that I object to all of these. Sure, I don't like seeing my gas money going to fund the jihadists' terrorist training camps, but I also don't want to support the spread of Islam in any way, even if it's something ostensibly peaceful. |
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