This Week's Debate: Gasoline Prices

As oil refineries undergo spring maintenance, the temporary capacity reduction has helped push gas prices up to around $2.50 nationally for regular unleaded. Media reports quote economists and assorted experts predicting $3 a gallon "this summer."

It's not time to panic yet, says the Free Market Project, noting that the media's dire warnings regarding gas prices don't always pan out. That said, more factors are at work here that just the standard seasonal uptick.

For one, gasoline additive MTBE is out and ethanol is in, throwing another variable into the production timetable. On the international scene, the U.N. standoff with Iran sparks fears that crude shipments from the oil-rich country could be disrupted.

Also not helping: The fact that nearly 23 percent of petroleum production in the Gulf region remains offline after last year's brutal hurricane season.

Some economists say that the "sticker shock" of the post-Katrina price spike has worn off, leaving consumers more accepting of $3 per gallon gasoline, although another unexpected jump could have a deep impact on discretionary spending, leading to an economic slowdown.

This week, we'll talk about the consequences of rising gas prices -- on our national and individual financial health, on small businesses, on SUV sales, on travel and more. We will debate ethanol and alternative fuels and examine the trends of American gas prices over the years, plus we'll compare what we're paying at the pump to what people in other countries are forking over. (Hint: except for a few oil-producing nations, we still have just about the cheapest gas around.)

Debaters, your initial thoughts? Are we headed for $3 a gallon gas this summer? If so, are you ready for it?

Next week, if all goes according to plan (and how often does that happen?) we'll broaden the Debate to discuss U.S. oil consumption, foreign oil dependence and just who exactly is getting the proceeds of what President Bush dubbed America's addiction to oil.

By Emily Messner |  April 3, 2006; 5:17 AM ET  | Category:  This Week's Issue
Previous: Immigration Policies Around the World | Next: The Facts: Gasoline Prices

Comments

Please email us to report offensive comments.



Obviously we need to pursue energy independence forthwith. An interesting perspective to consider is Brazil's which was in dire straits in 2001 but has made remarkable progress since. I'm not saying their experience can be replicated here but perhaps we could learning something from reviewing their innovations.

http://www.intrepidliberaljournal.blogspot.com

Posted by: Intrepid Liberal Journal | April 3, 2006 06:10 AM

Bad timing, as folks want to debate the immigration issue instead.

MSM wants to shift the debate into something else (riot control?), even though the public wants the border issue settled -- along with the ILLEGAL immigrant problem.

Once again, out of touch with the public. When will the MSM understand they no longer shape the public debates??

SandyK

Posted by: SandyK | April 3, 2006 07:04 AM

SandyK, there is no law saying "This is the One Issue" that must be covered to the exclusion of all others.

That tactic is frequently used by partisans to keep focus on their single issue fixation - for example - "HOW DARE you cover health care when men and innocent brown babies are dying in Iraq thanks to Bush's lies!!"

We live in a complex world full of issues and problems and we simply can't afford to ignore issues and problems until they reach "crisis proportions". And we really spend too much time on trivial matters like the "suspense" of the exceptionally well-qualified John Roberts appointment to the Supreme Court with 55 Republican Senators, or the latest flap by the bigoted, deranged Congressperson Cynthia McKinney. Where is Natalie Holloway?? (the missing coed got more TV news coverage than immigration, energy prices, Sudan, and outsourcing put together)

**********************

Now on gasoline prices. For starters, it's a global market and Rising China, America's immigrant population explosion assure that prices will stay high for a scarce resource, and because it is a global market...banning SUVs in America would only reduce demand 4%...a pittance compared to the rising global demand of 8% a year. Only high prices can check global demand.

America was energy independent back when we had 170 milliom. Thanks to Open Borders and cavilier legal immigration, we will be at 363 million by 2030. There is no way all the pet environmentalist projects like recycling plastic bottles, conservation, and "alternate" solar, biomass, windmill power will have any appreciable effect on oil energy demand or prices. (Especially when all drilling is knee-jerk opposed and practical aternatives like coal, LNG, and nuclear are instantly rejected.)

The hard numbers are 107 Quads of energy are needed in America today, and 120 Quads needed by 2030 - even factoring in improvements in conservation and "alternate" sources environmentalists appove of - unless they are proposed to be sited in the environmentalists back yard like windmill power...

We use 40 Quads of oil. Higher CAFE vehicle standards will reduce demand by 5 Quads, but unchecked immigration and it's driving our population growth means we still need 48 Quads of oil by 2030. Even if we stop Mexico from dumping it's surplus population on us, and stop other countries, Rising China will want more oil and have trillions in hard currency to pay for it.

********************

Long-term, we are screwed.

In the short term, we can likely squeeze a few dimes off oil price by reducing the speculator's cut...the middlemen who are jacking prices up on any terror rumor and who have foisted a 10% "terror premium" on oil since 9/11. We can also get gas prices lowered if we would end state laws that insist on "boutique blends" the refiners must shut down, regear and reformulate by regions and by seasons. And of course, the ability to get past mindless environmentalist opposition to drilling for oil and natural gas in Alaska and off our costs would give us breathing room until the Age of Oil ends, allow us to reduce payments to Islamic nations and bad actors like Chavez, and achieve a little price reduction and also have huge impact on creating high-paying US jobs and help our balance of payments so we can use oil profits to make the investments we must start making to prepare for a post-Oil economy. Oil price spikes are best dealt with by adding refinery capacity and pusuing anti-trust action against the global oil speculator and trader industry. Oil companies themselves should be allowed to go after oil exploration with their profits or create substitutes backed with sound national policy ...and only hit with windfall profit taxes if they fail to reinvest an agreed-to amount of their profit on adding to available energy resources.

Ethanol might lower demand, but it is taxpayer subsidized and it's cost is still exhorbitantly high.

Synthetic oil, derived from coal, uses huge amounts of scarce Western water now destined for the toilets of Mexican immigrants and to Agribiz high value crops, and costs about 80 bucks a barrel, vs. natural oils 64 bucks a gallon. Oil from oil shale is even higher in cost. Canadian or Venezuelan oil from tar sands is cheaper, but the quantities don't even cover the increased American demand that immigration is driving us towards - and China is using it's vast horde of WalMart dollars to buy up those Canadian and Venezuelan oil sand reserves for it's own exploding energy needs and production of export products...

As much as we would like an easy fix, like a "SUV law" or defeating the Evil Bush-Hitler to solve all our oil woes and energy independence problems, no easy fix is achievable. Or likely in the short term. Ultimately, our long term answer is invest and retooling America for synthetic fuel, tons more nuclear reactors that breed new fuel, and using lots more LNG and coal.

We have "immigrated" ourselves past what our resources once allowed us to have energy independence when we had 170 million Americans, to double that population. Now we are close to running out of water in many Western states and on the edge in electric generation and highway capacity - so things will get uglier.

And the oil shortage is global and is driven by factors outside US control - like Islamofascism, Peak Oil Passing, 3 billion people led by Rising China entering the global economy and quite oil-thirsty.

Posted by: Chris Ford | April 3, 2006 09:10 AM

SandyK,

You've always got to find something to complain about. Is your life really that empty, and are you really such a bitter person? Does ANYTHING make you happy?

If we were still talking about immigration two weeks from now, you'd be criticizing Emily for being a one-trick pony.

Your complaint is brilliantly handled by Chris Ford.

Excuse me - gotta go meditate and coax back some positive energy and good karma. lol :)

Derek.

Posted by: Derek | April 3, 2006 09:57 AM

Remember the old saying: "Everybody complains about the weather, but nobody ever does anything about it"? Well, our debates about energy seem to take on the same tiresome quality.

We--the American people, the consumers of energy--are the only ones who can really do anything about this problem. I say that from my isolated little perch out here in red state Utah where I see my neighbors--most often, stay at home soccer moms--daily hopping into their gas guzzling SUVs and pickup trucks to drive two blocks around the corner and up the street to the Post Office to pick up their mail.

Having done that, mom returns home to her five bedroom McMansion with a full basement and all of the latest modern electronic gadgets, big screen TVs, Bose Wave radios and High Speed Internet service wherein they are wired into all of the popular political talk shows where fat, sweaty hosts convince them that all of this excess is some Constitutionally protected right.

Hubby of course is no less a poor steward of our energy resources, having eschewed any suggestion that he carpool. Instead, he jumps into the second vehicle--typically another SUV or Hummer--and drives himself towork, listening to Rush Limbaugh or Bill O'Reilly on the way explaining to him that he is exercising a basic God-given American freedom.

Look. We could make a few simple changes in our scandalously wasteful lifestyles and it would reap astonishing benefits. But, we spend too much time listening to political hustlers on talk radio and television who carry water for big oil and for the right wing politicians who do their bidding.

It is time to stop complaining and take matters into our own hands by really cutting down on the amount of energy we use.

Posted by: Jaxas | April 3, 2006 10:01 AM

Oil tax. After Katrina and Rita consumers proved themselves remarkably price conscious in vehicle purchases. We could also use the revenue since we are facing half a trillion dollars in debt.

Also, and it is a long shot, perhaps a few choice Middle Eastern countries would remedy their Anti-American indoctrinization when they realized that profits are directly tied to their ability to combat terror in word and deed.

Posted by: Will | April 3, 2006 10:57 AM

Jaxas - Why don't you tell us all the " simple changes" that you claim will reap us "astonishing benefits"??

Then I can explain why each of your "simple changes" will have no effect on the price of a gallon of gasoline.

Posted by: Chris Ford | April 3, 2006 10:57 AM

Correction: half a trillion dollars in deficits this year.

Posted by: Will | April 3, 2006 11:00 AM

During the last election here in Northern Virginia I remember the republican political ads screaming that their opponents had voted for higher gasoline taxes. (This was when prices were soaring after Katrina.) Long-term planning in this country means until the next election. Given that the ruling elite has no interest in lowering fuel prices, the politicians certainly won't have the courage to raise taxes to discourage consumption, and Mr. & Mrs. SUV definitely won't change their lifestyle until the economy has crashed, I'd have to agree with Chris Ford. We screwed.

As to personal conservation, I have a 16 mile round trip commute in my 10-year old Cavalier. The bus stops about a mile and a half away from work, and I've got RA; I can't walk it. No one at work lives close enough to share the commute. At home I do all the conservation tricks: lower the temp on the water heater, keep heat low and ac high, etc. The only thing I've seen making a difference is changing all the incandesent light bulbs to florescent.

I'm open to any suggestions to change the present state of affairs, personally and nationally.

Posted by: wiccan | April 3, 2006 12:57 PM

Most people will accept $3/gal. Unacceptable is the soaring outrageous profits being reaped by big oil. If anyone believes that less consumption will lower gas prices, I have beachfront property in N. Dakota for sale.

Posted by: paul | April 3, 2006 01:32 PM

Way back when Carter was in the White House and America was facing gas lines, Senate Republican Minority leader Bob Dole posed the possibility of nationalizing the oil industry. Coming from a conservative, the message got heard loud and clear, America won't stand for getting screwed by big oil. Nobody would have given the idea a second thought if it come from anyone else. With the message coming from Dole there seemed to be a sudden "discovery" of oil. Lines shrank and disappeared, prices dropped. Let John McCain or George Allen utter the "nationalization" word and see how fast things change.

Posted by: Jay | April 3, 2006 01:48 PM

Chris Ford wrote,

"We have "immigrated" ourselves past what our resources once allowed us to have energy independence when we had 170 million Americans, to double that population. Now we are close to running out of water in many Western states and on the edge in electric generation and highway capacity - so things will get uglier."

Look at the bright side, the highway capacity problem will go away when the oil runs out.

Posted by: | April 3, 2006 01:52 PM

it means far less to us than you might imagine....


IF we pursued an energy policy that reflected the needs of a nation rather than the needs of a


few selfish people that want to make as much money as possible from a scarce resource because their families and their friends around the world

are invested in it...


we wouldn't have an oil problem and we sure as hell wouldn't be in Iraq...


primarily we're there for that reason, the secondary reason is that the government...at least the black part of it, that answers to no one and makes no excuses to anyone,


is of the we have a screwdriver and everything looks like a screw mentallity...

.

Posted by: regarding oil and what it means to us... | April 3, 2006 02:37 PM

Does anyone recall what nixion did about raising oil prices and opeck ?
He ordered the speed limits lowered to 55 miles per hour & gas prices tumbled down ! To all of those that own them gas guzzling vehicles they would go bananas if they were forced to drive slower to conserve .
Yes , we are the reason for high gas prices ! god help the low wage earner (which are many ) that cannot afford more than enough to get back and forth to work each week .
As a senior citizen i find myself staying home and not taking that sunday drive .Does that help our economy ? i don't think so . It time my fellow americans to wake up ! How many times have i not seen on a sweltering day people driving to a 7/11 leaving the car running while they go in for a pack of smokes!

Posted by: eugene lemmons | April 3, 2006 02:42 PM

then you do that,

you make urban living more attractive as a policy, a legislative thing, laws, incentives, tax breaks....


remove the commuter class as an attractive life-style.


anyone that lives in Washington DC already feels that commuting is _unattractive_

you _inhibit_ suburban sprawl...they're doing some of that in Portland, Oregon.

you look at European models, they have city, then countryside, very little suburbia....

city planning at a federal level, using incentives...

you talk about National Security because 3,500 people died....for some reason...and ignore commuter deaths...gun laws and so on...

the other obvious thing is let people work from home, as a mandate,


bring back the customer service jobs from INDIA, and give them to the disenfranchised blue collar factory workers...a lot of whom are female....overnight the economy has more money and there's less people driving.


metro rails for everyone.


gas prices need to rise to prohibitive levels with taxes, and those taxes need to be used to solve infrastructure problems, using trains, barges, passenger lanes for trucking...alternative fuels explored, incentives for using solar on homes and piping it back into the grid...wind turbines...


I saw a program on television where someone was running a VW bug, old style, on used fryer oil from a McDonalds...

arrest people that keep us addicted to oil because it serves their families and they just have to have more money, and happen to be your effing leaders....


.

.

Posted by: DO YOU WANT TO SOLVE THE GASOLINE _PROBLEM_ ? | April 3, 2006 02:46 PM

Dear Alexandria Virgina...hello...


thanks so much for sharing your concocted tale of what it is like to be an illegal...


I think the focus should be on making those that _hire_ illegals into criminals, felony criminals...


I think congress people should be _less_ exempt from getting away from commiting crimes...


the reason congress people should be not at all exempt from being prosecuted for crimes, _any_ crimes is that they handle laws...


how can we be assured that the congress people are acting in _our_ best interests IF they don't adhere to the laws that they pass...


I think it's time to arrest a few congress people.


I like the idea that Rudy Guilliani had in New York City, they were knee deep in murder, flagrant robbery, rape, assault, and so on...New York City was a CRIME CAPITAL....


then he pressed the New York City Cops to arrest anyone commiting a crime, scofflaws, subway vandals, what-have-you...


turns out crime went to zero.


the reason being, the people that think nothing about

not paying for lunch
not paying a parking ticket
not reporting honestly on their taxes
hiring illegals
shop lifting
not paying for a subway pass/jumping the turnstile

were the same ones murdering, raping, assaulting and what not


if you arrest congress people for their daily inability to simply follow the law of the land, then you won't be troubled by the ones that they are passing to

rape you of your rights as a citizen.


prosecute fully for hiring illegals...

.

thanks so much.

good luck and good night.

.

Posted by: a really smart guy posted this on the column about immigration and I just wanted to share this with | April 3, 2006 02:51 PM

Plain and simple: we're being had. Price escalation has been largly driven by speculation and not by supply or increases in production costs. In addition, with 30 years of warning, the U. S. has done virtually nothing to reduce usage of natural gas or crude oil. And the Republican governments that have held the executive for the majority of that time have conducted wars, military expansions, and countless other actions that have tended to make the circumstances more acute. Prices will rise. Alternatives will come, but they will generally be controlled by the same powers that today control most oil and gas supplies. We're the sheep and we'll keep our heads down and do what we're told.

Posted by: Jazzman | April 3, 2006 02:53 PM

One word, just one word: scooters!

These things will be our saviour. All young people should ride them to work (if they don't take mass transit). I hate to say it, but sooner rather than later, we will be looking like Saigon at rush hour!

Of course, people 50 and over should be able to drive whatever they want. Goes with being old. Grandfathed in, you know. :)

Posted by: johnnyg in NE DC | April 3, 2006 02:56 PM

The cost of gas is secondary to the question: Is the sharp rise really necessary? The amount of profit by oil companies suggest to me that gas could come down to a more managable level if the oil companies had less of a profit margin. All the reasons I have read for justifying the rise in oil prices are self-serving. There are reasons for the rise in gas to consumers, but not to the extent we are being charged at the pump.

Posted by: BLF | April 3, 2006 02:57 PM

is repulsive, when there are so many out of work...or working temp jobs when they used to work construction....


or working at WalMart when they used to run a computer project group...


it may not seem like it but there is a

corporate _greed_

at work, that will sell you what you don't need because of emotional needs that aren't being met, without trying to fullfil you as a person...


I mean, _the outdoors_, freedom, sexy women

and you're working 60 hours a week, and you have enough money to buy _that_ SUV and splurge on gas...


how about responsible corporations that address what people need not what they can talk them into...


you could make it cool to have a hybrid car..

but they don't, really.


we could have retooled the factories 30 years ago, to make really good cars...

we didn't, there is a lack of corporate responsibility to handling the environment and their impact on the peoples that they sell to....


you can buy cigarettes cheaper in Bali or Bangkok...and advertise too

China is one of the biggest consumer of cigarettes, American now...

AK-47's watch the movie "Lords of War" with Nicolas Cage...


your country, corporations and congress people could actually do something to make the place a little bit happier that you call home...


why don't you ask them to do that, and tell them to get their hands out of your pants??????

OTAY?

.

Posted by: the idea of someone driving a huge effing "looks like a secret service" SUV | April 3, 2006 03:00 PM

if the excess _profit_


isn't being banked to solve the problem of oil addiction...

.

and someone isn't being prosecuted for using the government to play the futures market...


investigate Cheyney and Bush families and friends regarding investment in oil...

after all Poppie got his start with Zapata Oil...and what did that have to do with Kennedy, Castro and the Mafia?

.

Posted by: the sharp rise is completely unnecessary... | April 3, 2006 03:04 PM

"I mean, _the outdoors_, freedom, sexy women"

Yeah man, nothing like a sexy babe holding on tight when you are two-wheeling! Get a scooter now. Do it for your country (and the Italians who make them).

Posted by: johnnyg in NE DC | April 3, 2006 03:05 PM

nothing like a spring day and going down by the Potomoc, walking along M Street, sitting outside at Dean and DeLuca...

going up to the bookstore on Wisconsin...

getting on the scooter and heading home to Adams Morgan, or that nice condo off of Arizona..

talk about some good Spanikopita..

.

Posted by: Yeah, those Vespa's... | April 3, 2006 03:10 PM

Well atleast you have someone who works in the petroleum industry, I have worked for the oil companies, 3rd party inspection companies, Uncle Sam, and now I work in the petroleum lab for an aerospace firm, so I do know quite a bit about the subject of petroleum.
If you all remember after Katrina and the price spikes, our elected leaders held hearings on Capitol Hill with the CEO's of the 5 major oil companies. Because of lobbiests soft cash that goes into election campaign funds paid for by big oil not one serious question was asked. In fact they treated the CEO's with kid gloves. One lawmaker who hadn't received very much in his coffer started asking a couple of tough questions and the chairman of the hearing silenced him. I to hate to admit Chris Ford is right on something, but he is when it comes to scare profits. The brokers that speculate on oil futures, at the slightest whiff of trouble in any oil producing region, start bidding up prices. You figure a barrel (44 U.S. Gallons @ 60/60 F) that is how it is adjusted to temprature, of light sweet crude will yeild between 38-40 gallons of gasoline grade Naptha. The refineries do not need to shut down to allow for the different blends as basically winter blend has more light ends than summer stock. What the requirements that are placed on different blends of gasoline is in the different additives to raise octane rating, & reduce different emmissions (NO, NO2, NOx, CO, CO2, And oxides of what little remaining sulfer remains in the gasoline. So if they are paying $60.00 a barrel delivered price, a gallon costs $1.50 a gallon, the labor, equipment, additives, etc. add about $0.12. So all the rest that gets added to a gallon of gas is taxes and profit.
With Cheney holding energy policy meetings in secret and inviting oil company exec. to the meeting and this administration not increasing mandatory MPG limits on all vehicles sold in the U.S. or granting exceptions for SUV's and Pick-up Trucks, auto makers aren't going to invest in research and technology to increase milage on their own.
A suggestion to these SUV, Hummer, And no valid use for a pick-up truck owners, Place an energy use tax, and make it so it makes buyers of these vehicles think twice about purchasing these vehicles. Make it so that this tax is also implimented into their motor vehicle tags, so that it hits them continually, year after year. I bet you would see a major drop in sales on these gas guzzlers, and also the ones who have purchased them already would be clammering to trade them in.
We need to make nuclear plants a more viable option. Technology has increased drastically since 3 Mile Island. Any time an energy company proposes a nuclear plant all these people driving these gas guzzlers start protesting "Not in my backyard" Granted we need discussion on where to place a nuclear waste site and place the proper safegards in place where material cannot be stolen. The Government owns millions of acres of land in the Nevada desert where they conducted atomic weapons tests during the cold war, what's wrong with storing it at one of these facilities?
This administration has cut funding for alternative energy projects, also they have cut money for college loans and grants, where do they think the new technologies will come from. In areas where solar power is feasible they need to provide incentives and major tax breaks for homeowners to impliment this technology into their homes and businesses. Shortly they need to figure what energy source will power the future vehicles and work on getting an infastructure in place so we can move away from petroleum powered vehicles. These are just a few ideas. I'm sure others can be made and cases for them also.

Posted by: Lab Rat | April 3, 2006 03:21 PM

points towards something...


the current government and administration has made up it's mind to handle the OIL

?problem?

with military force,

not with intellgence.


there are multiple ways of solving our ?crisis...


but we're not addressing the issues, we're addressing their redirection...or mental delusions, projection


having a fiscally sound country with intelligent and informed citizens _is_ a matter of National Security...

Posted by: I think this last comment form Lab Rat... | April 3, 2006 03:28 PM

Exxon-Mobil just bumped Walmart from the leading position in the Fortune 500 with profits of $38 billion. Three other oil giants are among the top five. If these companies are paying $66.00 a barrel, and their profit margin is comparable to previous years, how can this be true unless there is considerable "gouging?" Wake up, people---we are being had. I know that congress had a hearing on this issue, but none of Bush's buddies in the oil industry who testified were under oath. More sham concern by our illustrious Republican leaders.

Posted by: gshand | April 3, 2006 04:11 PM

Exxon-Mobil just bumped Walmart from the leading position in the Fortune 500 with profits of $38 billion. Three other oil giants are among the top five. If these companies are paying $66.00 a barrel, and their profit margin is comparable to previous years, how can this be true unless there is considerable "gouging?" Wake up, people---we are being had. I know that congress had a hearing on this issue, but none of Bush's buddies in the oil industry who testified were under oath. More sham concern by our illustrious Republican leaders.

Posted by: gshand | April 3, 2006 04:12 PM

issues?

military being used instead of brains?

here's three months worth of stories, and maybe a few arrests.

want to make some money, make some effing news...


make a difference in your own tawdry little

"I'm just trying to be nice....sick lives...

.

Posted by: whyisn't the Washington Post reporting on these | April 3, 2006 04:14 PM

The Bush Admin has just proposed raising the minimum fuel economy of SUV's to 21 mpg in something like 3-5 years. Detroit HAS the technology to make it 30 mpg next year! Far fewer SUV's and/or much higher prices for them? OK - how many of us really need personal tanks?

What to do? Hint: November is only 7 months away.

Posted by: JUDGITO | April 3, 2006 04:36 PM

To start on the path towards energy sanity we need the proper natural incentive. A natural incentive is one that directly effects the behavior needing modified, is relatively easy to implement, is easy to monitor, isn't affected by the change in behavior and directly aids the transformation to a better behavior.

A steady but modulated increase in a federal gas tax, that reaches set monthly parameters without regard to market/supply side economics is the key. The current pump price is highly subsidized by our taxes.

Americans need to see what the true cost of oil is everytime they fill up. This should happen over a period of ten or so years to give industries and individuals time to adjust to the new reality.

The extra money generated should be used for two carefully accounted for purposes only. The majority of funds goes to the R&D of renewable energy sources with a portion to go towards the conservation technologies of non-renewable sources.

The minority of funds goes to paying down the national debt coupled with a sane, minimal pork allowed budget.

We will start to become much more energy efficient, safer, and have a federal budget where spending is mostly for improving and then maintaining quality of life, not waging warfare to keep the unsustainable fleetingly within our grasp.

This, of course, would require intelligent choices by the public and their political representitives. I hope this isn't the Catch-22 fly in ointment. Change starts with the individual who is not satisfied with the present and looks with hope to the future of humankind and planet Earth.

Posted by: Joe B | April 3, 2006 04:40 PM

BLF - "The cost of gas is secondary to the question: Is the sharp rise really necessary? The amount of profit by oil companies suggest to me that gas could come down to a more managable level if the oil companies had less of a profit margin. All the reasons I have read for justifying the rise in oil prices are self-serving. There are reasons for the rise in gas to consumers, but not to the extent we are being charged at the pump.."

The global commodity market doesn't work that way. Price is not set by American "oil companies" but by OPEC economists setting benchmark prices, market forces, and speculators buying long and short contracts.

It's best to analogize it to another global commodity with limited suppliers, an essential commodity, with no easy substitutions. Say platinum. Russia, Brazil, Canada, and S Africa have 85% of the reserves, the US has 4%. S Africa with 38% of the total. If the two deep S. African mines close due to civil strife, as has been close before, the global price platinum goes through the roof. Meanwhile, the US mines produce at a higher profit. They are minor players with no control over platinum price. If it had gone the other way and Russia began dumping platinum stock to get hard currency to fund some critical project, the US mines would be not swimming in money, but in the red for months or years.

It is global price that drives profit, not the other way around. And the US has little enough influence over OPEC these days, or Russia. And frankly, we want the oil companies to have profits as long as the bulk are reinvested in locating or developing new or alternate energy sources and can afford to be as aggressive as Rising China is these days in R&D, exploration investment, buying reserves, and new sources.

Rising China just sealed a deal with Australia to get most of Australia's uranium production. Australia has 40% of the world's reserves. China has also purchased much of the Canadian and Albertan oil sands reserves, and locked up new Indonesian natural gas fields, Sudanese oil, and just closed a deal to get all of Iran's expanded production with a 100 billion cash and weapons deal. China has 850 billion in WalMart dollar reserves to throw around. It will be good to have US energy companies in good financial health fighting China for America's future energy needs and resources.

And, sad to say, the only thing that will discourage American waste and gashog buying is sharply increased prices - not the "wisdom and conscience of the American consumer." Gas prices fall, the consumers will buy the 3 MPG powerboat cruiser or the 11 MPG SUV "Ultimate Behemoth" - same as they always have.

Posted by: Chris Ford | April 3, 2006 06:11 PM

I find it interesting how so many people are jumping on the E85 Ethanol bandwagon as the "instant miracle" to our energy supply woes.

Consider the following:

* USA Domestic gasoline consumption (2005): 140 billion gallons

Implication:
with zero growth, a full conversion to E85 will require ~119 billion gallons of Ethanol to be produced domestically, which would then be combined with ~21 billion gallons of gasoline to yield 140 billion total.

Starting with that as our starting point, can we do it?

Let's consider some facts:

* An acre of U.S. corn reportedly yields about 7,110 pounds of corn for processing into 328 gallons of ethanol.

* Brutally straightforward Math:
(119,000,000,000 gallons needed) divided by (328 gallons/acre), and divided by (640 acres per square mile)

Conclusion:
= 566,883 square miles of *fully productive* landmass is needed.

* Total area of the USA's "Lower 48":
3,537,441 - 656,425 - 10,932
= 2,870,084 square miles

* Percentage of All "Lower 48" Landmass needed for producing Ethanol: 566,883 / 2,870,084 = ~20%

Doesn't sound like a lot, until you realize that nothing is going to be 100% efficient. Assuming a high 80% utilization rate (since we can't grow corn on rivers, mountains, highways or cities), we need at least 566,883/0.80 = roughly 709,000 square miles of land:

The Area of Texas: 268,601 square miles
+ Wyoming: 97,818
+ Area of Kansas: 82,282
+ Area of Nebraska: 77,358
+ Area of South Dakota: 77,121
+ North Dakota: 70,704
+ Area of Iowa: 56,276

Total = 730,160 square miles.

Are there any easy alternatives? such as chopping down all our forests? Well, there's only roughly 100,000 square miles of forest, it barely puts a dent: we still would need to come up with well over a half million square miles of land.

And A Bigger Question: if we are able to successfully convert 100% of TX, WY, KS, NB, SD, ND, & IA into Ethanol-producers, where do we then grow the foodstuffs that are currently being produced there?

FWIW, I've used the classical 'cornbelt' states as my example of how much of our country would be gobbled up by an Ethanol for fuel program. If you prefer an alternative, consider this one:

"There's 26 States that are East of the Mississippi, the landmass required would be ALL OF THEM, except for Florida, Missouri, and Michigan.

Sure, Ethanol helps us cut back on imports, but most likely, it will be to shift our imports to Brasil. Since that's still an import, we haven't solved the basic problem of energy independence.


-hh

Posted by: -hh | April 3, 2006 06:17 PM

looked at or included in your rebuttal references to things that can happen immediately regarding shifting emphasis on how we manage from

a single resource, which you're talking about


away from

a multifaceted response, or was that purpose full eh twit?

.

.

Posted by: I find it interesting to note that you've not | April 3, 2006 06:48 PM

Labrat, congrats for a fairly informative post. Especially agree on your conclusions about nuclear power, having worked in that energy field as well as in oil...and biomass...and...well...oil to plastics and pharmaceuticals...

Just two exceptions.

1. A fund from oil profits for the almighty "renewable" energy sources so beloved by enviroweenies doesn't have the potential to do squat. First, of the 107 Quads of energy, the 128 needed in 25 years, solar currently provides 0.063 Quad. Windpower only 0.13 Quad. Biomass is 5 but it mostly trash to electricity or heavily taxpayer subsidized ethanol. All except ethanol do nothing to help the specific Transportation industry requirements for vehicles running off petro or natural gas. Boosting electric power from windmills to address an oil shortage is like boosting cement production to address a water drought in Kansas. It does nothing. We don't generate electricity from oil. Solely electric vehicles have been found to have horrible effeciencies, in energy - to - motion analysis.

2. Second, your analysis of an oil barrel price to gallon of gas cost is badly amiss. You write: " So if they are paying $60.00 a barrel delivered price, a gallon costs $1.50 a gallon, the labor, equipment, additives, etc. add about $0.12. So all the rest that gets added to a gallon of gas is taxes and profit."

In 2004, when gas was 1.85 a gallon average and oil was at 36.97 a barrel annual cost...the price to that gallon of gas was 47% crude oil cost, 18% refining and transportation, 23% taxes, and 12% marketing and distribution.

87 cents of that is crude oil cost.
33.3 cents refining and transportation
43 cents state and Fed taxes
22 cents marketing and dist

Hardly "just 12 cents" added today to gas costs..with the balance taxes and profit.

With oil 30 dollars a barrel higher, the taxes and marketing & dist costs are the same, refining up slightly due to hurricanes and us having no excess capacity, and the rest is from the rise in oil cost and the incredible prices ethanol is getting these days because even with taxpayer subsidies, they can't make enough...and everyone in the multistep corn to ethanol at the refinery process is taking nice chunks of profit.

But the rise in oil price is no more the "fault" of oil companies as the 40% increase in the value of your real estate over the last 5 years is your "fault" even your doing. (Care to give that "excess profit" up so the government can invest in subsea Katrina housing stock??)

You are paying more because China has Arisen, along with 2 billion other oil-thirsty folk...which has caused a massive tightening in supply. You are paying more because of a 10-15 dollar a barrel "terror premium" brokers are tacking on their contract bids. You are paying for Bush's corporate cronies obscene ethanol scams.

At 66 dollars a barrel, with 40 gallons of 42 being able to be made into gas or similar value product, that's 1.65 a gallon crude oil value.

Add 43 cents taxes
Add 22 cents marketing and dist costs
Add 36 cents refining and transportation costs (slightly more due to obscene ethanol prices and additional terror security for ships, tanks, pipelines, and terminals adding a few cents)

2.66 a gallon total for gas, price likely to go to 3.00 soon. Price all driven by short supply from ME conflict, Nigerian labor troubles, Venezuela scaring traders, Russia still stumbling along on increasing Caspian production. Short supply in relation to Rising China, 3 million new Juans and Pedros arriving each year in Estados Unidos wantingv their own F-150 pickup truck, and 2 billion other people wanting to fly jets or get a car..

Posted by: Chris Ford | April 3, 2006 07:04 PM

Here i am on the tail end of the discussion,and truth be told I cannot but extol the wisdom of all who have commented here.
There is no fix for rising energy prices. Speculation, exceberated by the internet has taken that far beyond our poor power to do so.
How does one explain the 10% to 20% differetial twixt PA and NJ? outsales tax is relative as is our fuel tax.
In europe the price of fuel has always been high due to the taxes imposed on the stuff.I don't know what it costs today, but it it is still higher than whay we pay today.
What does that mean? Two things, first, there has always been more tax money put into the roadways of our european brothers than has ever,(given the scope and population) been given to our national defence system.
What does this mean for you and me?
Well I am making 70th percentile with a low mortgage and nought but the neccesary connections to the world, and I find that it hurts. I can't go on, but please reread jazzman, scooters,jaxas and chris ford. Nothing expressed in this/these missives are new. we knew this when I was 23, gosh. Carry on now, I can't do it. Bri

Posted by: tinyirisfarm@yahoo | April 3, 2006 07:17 PM

As much as I distrust big oil and wonder about US competition in refining/distributing, I don't think they're the culprits - hell, any capitalist would earn that $38b if s/he could. They'll charge what you'll pay, unless your price is less than their cost.

With China and India industrializing, energy demand from all sources (hyrocarbon, nuclear, solar, wind) is likely to continue to grow dramatically - if supplies don't - and they haven't much lately ... we'll be wistfully remembering when gas was only $6 a gallon sooner than you think.

Among hydrocarbon sources, growing it versus using existing coal/oil/gas has complications, noted by hh and also a local (Mn) biology professor in the mpls StarTribune today:

http://www.startribune.com/562/story/343991.html

i suspect that we'll see increased coal dependency in the short run in the US if:

1- we want to move away from oil controlled by dictators and the unstable elsewhere

2- world energy demand increasingly outstrips supply

3- we fail to make dramatic technological breakthroughs in either production, or how we use energy.

I believe we can live as well and use much less energy than we do now

we're only 6% of the world population, but 20-something % of world energy consumers (a curse on Hummer drivers!)

how much of that 6%/20% gap is because we live better, and how much is because we live wastefully? let's try EVERY avenue practical to reduce the wasteful part before $10/gallon gas forces us to focus, with more pain due to our lethargy

Posted by: Mill_of_Mn | April 3, 2006 07:25 PM

Oh MiGoshplease don't pin this on the Juan/Pedros, they, if anyone, are suffering at least as much as my guys.
Turn off the cellphones and obey the speed limits on 35mph roads you pigs.
Sorry, only mean that to you non locals who pass my "house by the side of the road" at 60 in a 35mph zone. Even Bruce George don't do that. And turn off your damn cellphones, pigs. Bri

Posted by: tinyirisfarm | April 3, 2006 07:37 PM

Given what happened with natural gas prices in the past year, $4 gas by labor day is not beyond reasonable probability.

Gas prices are just one commonly-shared part of a larger unstable structure. There is so little room for discretionary spending in many households to support growth. Importing 8th grade labor is certainly no sign that we are generating a new wave of productivity growth. I cannot recall my source, but information I got was that $2 trillion in mortgages will reset inside the next fifteen months.

But I think the gas-price related event that will catch the most news attention will be a collapse in the value of the dollar. The cost of our war adding to huge imbalances in federal budgeting have set the stage. Expect the standard wisdom/blaming theme, broadcast to the world, to be that the only way America can pay for oil is to issue more debt. The world's money managers know this, but have publicly ignored it.

A gas crisis along with a tapped-out consumer, and a busted Treasury, are going to flush the dollar down the toilet. Then there'll be the beginning of some real decision making about sustainable ways of living. Something better than Mad Max I trust.

Posted by: On the plantation | April 3, 2006 09:04 PM

Chris,
Is there any underlying reality to all this noise about the old German process for converting coal to diesel? The one that cowboy governor from Montana keeps harping about?

Posted by: Cayambe | April 3, 2006 11:02 PM

It is not possible to produce all that is needed by a country internally. You are going to need some kind of import to fully get everything that is needed. Being as much as independent as you can is allways the best way to go

Posted by: Dr.Q | April 4, 2006 12:30 AM

as I understand it we ship our Alaskan oil to Japan...

we could curtail our use dramatically, by doing a little planning for the future...


Raise oil prices to 3.50 a gallon, I think you might see some changes in cars produced...

I believe European gas prices were that high about 10 years ago...and have risen since that..

.

Posted by: dear dr. Q | April 4, 2006 12:47 AM

There's a very real chance that the world's ability supply oil is about to get eclipsed by demand, and when that happens, cutting back on SUV's, car pooling, driving Priuses, it will all be like shooting a spitball at the asteroid from "Armageddon".
It's hard to see this ending any other way in the short term than with third world countries just having no petroleum imports whatsoever. This is already starting to happen in Africa, and one wonders what the long term fallout from such a divide might look like.

Posted by: Steven | April 4, 2006 12:48 AM

By reading this, am I supposed to forget the HOW MANY BILLION DOLLAR PROFIT Exxon had last year??? If the Fuel Manufactorers like Exxon, THe Big guys don'e stop there greed and quit raping this nation, they will single handedly cause a collapse of the economy of the United States of AMerica. Then in there greed where will they get there riches..Hey President Bush I know all you care about is making your Good Ol' Boys richer but if you don't curb it there will be no economy to get rich.

I lived in the State of Nevada for many years while Organized Crime ran the state. Then lived in it after the "bad guys" control was broken ( at least publicly) and you know what I learned....????!!! At least the Professional Crooks like the mob cared more about the little guy than you Amature Crooks do. THey at least understood that if the little guy does not make anything, then there is nothing for them to sheer you of. THey at least let us Sheep grow our wool back.
Such a sad thing, when the bad guys can run it better than the "good" guys.

Wake up, if you keep raping this nation OIL Conglomerates, not the ARABS will dystroy this nation. where we will be then??????

Posted by: Linda | April 4, 2006 03:32 AM

During the time of the Katrina crisis, we were forcused on helping the Katrina victims as well as expressing outrage for the gas prices. Now the immigration issues have taken our minds off of the Katrina victims as well as gas prices. Therefore, gas prices are creeping up slowly, the consumers are dealing with the immigration issues and before long the gas price will be where it was going - $3.00 to $5.00 a gallon. It's called the "element of distraction."

Posted by: G. Bonita Franklin | April 4, 2006 11:28 AM

I continue to be astonished at the simplemindedness of some of the posters on this blog. Chris Ford questions my notion that simple lifestyle changges can have enormous consequences on the supply of energy. Yet, any economist will tell you how extremely sensitive the price of gasoline is to the spikes and valleys of gasoline availability. Even the hint that some refineries are going to cut capacity sends prices into the stratosphere. Imagine then what would happen if millions of people across this country reduced their individual usage of this commoditiy.

Another poster scoffs that reducing usage can produce such changes. I can only assume that Chris and his gas guzzling friends do not believe in the law of supply and demand.

It is just incredible how silly some of you people can be.

Posted by: Jaxas | April 4, 2006 11:28 AM

I hope everyone read "First Warning" today. We're in the start of an oil crisis and our government is blowing it up in the middle of Nevada. God bless the military.

Posted by: Jeff | April 4, 2006 12:37 PM

Steven wrote:
"There's a very real chance that the world's ability supply oil is about to get eclipsed by demand,..."

There is a lot of oil left but the problem is that some oil is cheaper to get to or easier to refine than others. As the price of oil gets higher, these other oil sources will open up because it is economically feasible to do so. Canada will be the next giant oil supplier. So oil will be around a long time, but it will get more expensive as the supplies of easy to get/refine oil are used up.

But the problem with oil prices today is not whether there is any oil left in the ground, its not even supply and demand. Oil is a commodity that is traded like stocks or bonds. People buy hoping the value will rise. Now oil value only rises because future supplies will decrease, or might decrease. Why would they decrease? Oh, maybe a threat to Iran to lay waste to their country, which might affect their ability to move oil. Maybe invading Iraq and shutting down its oil production (oh, too late to warn about that!.

So oil is not high today because supplies are low, or even expected to go low. They are high because there is enough doubt about the future of the middle east to move oil that speculators are grabbing all they can. Only when stability returns to the middle east will oil prices go down and Bush is doing his best to make sure that is a long way off.

Posted by: Sully | April 4, 2006 12:48 PM

Cayambe writes:

"Chris,
Is there any underlying reality to all this noise about the old German process for converting coal to diesel? The one that cowboy governor from Montana keeps harping about?"

Yes. Germany had a robust syn-fuel program in WWII and S Afica built a bunch of plants during their Apartheid embargo/sanctions period.

We could theoretically go on a national program to make oil from coal and achieve energy independence. But we haven't and won't unless we are forced to. Because of three big problems:

1. Syn-fuel can cost between 60 and 80 dollars a barrel. If America went with it while other economies ran off cheaper energy sources, we would be at a major competitive disadvantage - as if todays globalization with free flow of capital and technology chasing cheap, skilled 3rd World labor isn't already destroying middle class and working poor America.

2. The process involves enormous use of water. You steam blanket heated coal and then build the carbon monoxide and aromatics driven off into more complex hydrocarbons in a high pressure pressure stage process that also relies heavily on thermodynamic temperature differential cycles to drive it. That requires cooling water, and evaporative processes. Doing it in situ at the coal source. All our major coal deposits are out West and water is short and what surplus their is is the enviroweenies "precious pristine" white water rafting rivers and lakes and rivers with lots of fishies that would suffer and make enviroweenies cry nonstop in DC and to lawyers. If the coal was moved to the coasts so we could use ocean water, add 10 bucks or so a barrel to extra transportation costs.

3. Oil from coal also involves lots of strip mining, overburden waste, acid runoff water, possible degradation of acquifers, restored land "not as good" for farming, ranching, or housing America's exploding population on. And the coal residue is always counted on being burned as part of recouping the cost cycle. And that low energy-coal (with the bulk of hydrogen carbon chains extracted) produced far more CO2 per ton for less electricity extracted, than unaltered coal.

Basically Cayambe, the biggest impediment is we are water-resource contrained in much of the West to do syn-fuels, unless we make hard choices that screw the locals and enviroweenies somewhat. Up in Montana and Wyoming, they favor it because they have more water. But it's set aside on Federal land by BLM, which gives enviroweenies in SF, Hollywood, and NYC's Jewish suburbs huge say over it.

Now, one thing I actually liked was El Presidente, Hugo Chavez, has made a proposal to set an OPEC floor price of 50 dollars a barrel, good for ten years. Venezuela has larger deposits of oil than exist in Saudi Arabia, but much is not considered "pumpable oil" because it is heavy bituminous, sulphur-laden gunk thicker than cold molasses. It costs 40 a barrel to extract and refine it to something as useful as Saudi light crude(by cracking the oil into lighter fractions and removing the sulphur and tar residue so it is non-acidic, pumpable and won't gum up a normal refinery it is sent to). Presidente Chavez is proposing this so that he could pump more than Saudi Arabia now is, since OPEC quotas are based on Reserves, and Venezuela would quintuple its reserves if it could count it's heavy bitumen deposits.

Oddly, Chavez could be a savior. The US petroleum industry proposed the same sort of "floor price" deal to Reagan, Bush, and Clinton to ecourage alt fuel development and exploration. 25-30 dollars guaranteed for any new oil barrel equivalent. All 3 US Presidents rejected it..."not tampering with the genius of the market" and all that crap. So for 30 years, America has done essentially nothing, (other than add 10's of millions more resource hungry 3rd Worlders). Because the history was that any time in the past oil spiked and energy companies tried looking for other sources - cheap oil and natural gas returned (sometimes from direct Russian, OPEC manipulation of price to discourage oil exploration elsewhere & substitute technology) and destroyed much of their alt energy or exploration investment.

Chavez's floor price could create more oil supply, make synth-oil plant investment possible, and give the Age of Oil more respite time.

Posted by: Chris Ford | April 4, 2006 01:21 PM

While it should be everyone's responsibility to do their best to reduce their own energy usage, I feel it's really not enough. America's energy usage problem is cultural, not individual. Why are SUV's so popular here and not in Europe or Asia? Because American's are selfish and greedy and love huge cars? No. Cause in other countries, SUV's are subject to different strandards, created by the _government_, so it becomes less desirable to own them. Gas is crazy expensive in Europe (Around 4-7 dollars per gallon), not from supply and demand, but because of huge gas taxes from the _government_. Everyone should do their part, and it's time we get a government that realizes we're ready to do our part and create the cultural atmosphere were it's easy for people to make the environmentally, energy conserving, choices. It's only a matter of time before gas hits 4 dollars a gallon in the US, strictly from market forces. I'd much rather have that extra 1.50 go to the Department of Energy to research alternative energies than to Exon so it can drill tough to reach spots in Canada.

Posted by: Jeff | April 4, 2006 01:22 PM

Jeff, part of the reason that European Governments can charge much more money in taxes is because many of the countries have far superior public transportation systems around the entire country, not just restricted to various cities. In America, larger cities tend to be the only areas with extensive public transportation systems in the form of subways and bus systems. In many parts of Europe public transportation is available more easily nationwide. If not bus systems nearby, then systematically placed park and rides with buses to and from main areas of travel. In general, the American landscape and organization doesn't lend itself to this setup, so it is more necessary to travel yourself.

And your evaluation of why Americans have alrge cars is off. I fully believe it is in part because we are 'greedy.' Part of the American mentality is that one must compete with neighbors, live expensively, and have status symbols. I have met many English, French, and Spanish immigrants that don't understand the SUV concept. If you don't need the space or functions of the car, why pay extra for it like so many Americans do?

Posted by: Geb | April 4, 2006 01:41 PM

Jeff wrote:

"I'd much rather have that extra 1.50 go to the Department of Energy to research alternative energies . . . "
_____________

I'd much rather have the surcharge go to paying $20/hour seasonal wages to American high school and college student to pick tomatoes and strawberrys.

In a fuel-tight world, we don't need to bring on more layers of 8th-grade educated workers. Besides, it might help counter obesity as well as perfect some suntans.

Posted by: On the plantation | April 4, 2006 01:42 PM

I get excercised from hearing conservatives (I am one) rant about our right to consume gasoline as we see fit. At the same time, the same people say oil (meaning energy) is the fuel that drives the economy. From where I sit the economy is fairly important. What is it were water? If we had a net water shortage and imported it? We would drill like hell until we got it right, but meanwhile and henceforth we would CONSERVE. It would be offensive to watch the neighbor water the yard in the rain, and take 6 showers a day. Those rabid "if it feels good consume it" folks would say, go ahead, water and wash...its America!

One effective way to conserve energy and not cut into anyones "fun" would be to promote telecommuting. This would fly in the face of American corporate culture though w/ the possible exception of tech. companies. There are countless jobs that can be done from home, that require the person to drive one hour each way and sit in front of a PC. Corporations just cannot get past trying to put their tentacles into all aspects of employees lives. Telecommuting would free up traffic jams, cut pollution, save energy, and improve worker retention. If the Feds offered a tax incentive for this it could be a huge benefit. But cynically I see corps abusing it the way they do the 10/80 work week, where theoretically every other Fri. is a day off. That ends up being the day when the employee telecommutes...the day off! Ever seen "Office Space" "Well yea, uh, I'm gonna need you here Saturday and Sunday"...funny but it is reality.

Posted by: Chris | April 4, 2006 01:53 PM

Jaxas writes:

"I continue to be astonished at the simplemindedness of some of the posters on this blog."

That is because you are stupid, Jaxas. To a moron, the world must seem full of people doing incomprehensible things and expressing thoughts beyond the moron's ken...which to the moron, appear to be stupidity.

" Chris Ford questions my notion that simple lifestyle changges can have enormous consequences on the supply of energy."

You still haven't grasped that this is a global market, and the ability of one country to dictate to the global market is now gone. It might be more understandable to Jaxas to make it an example of a town that has exploding populations of Arabs, Indians, Chinese, and equal portions of various others (all with rising comparative income) buying along with white Westerners and blacks that now comprise 10% of the customers but still 40% of demand for electricity. The generator is tapped, brownouts happen, and prices per kw-hour are way up, so the high demand people become convinced it is "their fault" and the problem is all under "their control" and nobly resolve to lower their demand, even if it means they are less efficient and their productivity and income falls....but they think it will be worth it for dramatically lower electricity coast and "driving the generating utility to it's knees." But it doesn't happen because more people in the exploding rest of the town add additional electric demand and price actually rises while they sit in darkened houses and wonder why they are not "Masters of the Town's Fate" and able to set price by their minority actions.

Jaxas writes: "Yet, any economist will tell you how extremely sensitive the price of gasoline is to the spikes and valleys of gasoline availability. Even the hint that some refineries are going to cut capacity sends prices into the stratosphere. Imagine then what would happen if millions of people across this country reduced their individual usage of this commoditiy."

You confuse commodity trading, contracts assuring production and planning with consumer demand.

The only time consumer demand factors in and dominates over commodity traders consideration of other risks on delivering the contract is when there is a glut or a shortage. There is no oil glut. 2 billion more people with rising incomes are adding buying pressure in fact. Traders know they can sell every 100K barrel contract they have.

"Another poster scoffs that reducing usage can produce such changes. I can only assume that Chris and his gas guzzling friends do not believe in the law of supply and demand."

No, we believe in supply and demand. Just that we are not ignorant of the supply and demand situation - short and long-term, outside US Borders. Your US-centric notions that we Americans can control global price simply through our wishes is a silly vanity of yours.

"It is just incredible how silly some of you people can be." Posted by: Jaxas

See my previous exposition on how a moron sees others.

Posted by: Chris Ford | April 4, 2006 01:58 PM

Geb-

From my conversations with Europeans, I think you're wrong about a couple things. I knew a couple Finnish guys who were in the US for work/study for 6 months. The first thing they wanted to get when they got over here was a Ford Mustang, cause they thought it was so damn cool. They loved fast cars with big wasteful engines. I asked them why they didn't just buy one in Finland, and they said it was cause gas was the 4$ per liter (~7 per gallon?) so everyone drove 4 cylinders. I said, oh, but people must not drive much in Finland, cause everyone takes transportation. Nope, they said everyone drove, even in the cities.

Look at the countries where SUVs are popular: US, Canada, and Australia. What do they all have in common? SUVs have their own classifications there, and so they don't have strict emission/safety standards. In Europe, they're classified as cars, not trucks, and so have much tougher standards to meet.

SUVs are actually really really cheap for car manufacturers to make. Slap an engine on a frame, put on the body and you're done. No worrying about optimizing the thing for fuel efficiency or safety additions. So, once car makers figured out that the American public bought the stupid things, they start churning them out like nobody's business and running ads on TV about how awesome SUVs are.

Sure, when you talk to people who drive them, they have stupid reasons. But Ford wouldn't even be making the Expedition if it wasn't so damn profitable. The government has a lot of power here to change the culture of car ownership. Tax the SUVs, subsidize the hybrids, and we could have a big shift.

Posted by: Jeff | April 4, 2006 11:52 PM

manufacturers to start making SUV's that get 35 MPG....


it's called an effing "reason" to change...


you can't sell, you change, you can legislate change by hitting them in the wallet...


pretty simple.

.

Posted by: raise gas prices to $4.00 a gallon and see how long it takes for | April 5, 2006 12:33 AM

Ahhhhh Chris Ford, we can always count on you to react with such glittering civilities as "stupid" and "moron".

Let me assure you that I am neither stupid nor am I a moron. And no, I don't hink that our simple lifestyle changes are the last word on how to solve the energy problems we are faced with.

But look Chris, any reasonable debate on this has to include a change in the culture of extravagance, this wallowing in excess that we have become accustomed to. I believe that the American people are wise and rational enough to respond to leadership on this issue that says simply to be more cognizant of how we use energy.

You seem to be in that camp that is suspicious of anything that smacks of consumers taking a bit of control ot their own economic lives by changing their spending and consumption habits.

In the same way that Bill Clinton counsels us to take charge of our own consumption habits in the foods we eat and the sedentary lifestyles we are accustomed to to improve our individual health, we can also change our habits on the energy we use. As for the global nature of the commodoties we buy and consume, the same law of supply and demand operates there as forcefully and preditably as it does at the local and individual level.

Besides, I thought you conservatives were all for personal responsiblilty. I am for both personal and public responsibility and hunger for a leadership in this country that engages in a bit of rational thought about the problems we face rather than political, religious or ideological zeal.

Posted by: Jaxas | April 5, 2006 11:26 AM

Mr. Ford, I happened to notice your extraodinary ability to regurgitate crude unreadable nonsense on a variety of topics. Any relation to the automaker, per chance?

Posted by: Gus Price | April 6, 2006 04:04 PM

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.