Gas price "fixes"

[Sisyphus]

In an op-ed today in the New York Times (here, Tom Friedman criticizes the short-term gas tax holiday proposed by both Clinton and McCain as deeply cynical and destructive in the long term for the economy, national security, and the environment, and applauds Obama for being the "bad guy" and calling them both out on it. All of this I agree with.

 

What he proposes, however, and what he implies all the candidates secretly know is the best solution, is to actually keep gas prices high intentionally, noting that the current prices, for all the short-term individual woes they've caused, have also forced the market to respond in a very positive way. People drive less, energy efficiency has become a huge selling point, and investment in non-petroleum-based energy technologies is soaring. All of these things bring us closer to the eventual goal - breaking petroleum addiction - that would curtail our most serious environmental problems, insulate our economy from the inherent instability of petroleum ("gas prices" would be a thing of the past), and end the need to prop up dangerous regimes just for oil.

 

All of this sounds great, and is something I've thought for a long time... which is why I'm suspicious of it. What are the downsides I'm not seeing here? Artificially maintaining prices often seem to have unintended negative effects on the rest of the economy, right? Europeans have very high fuel taxes, right? What problems are caused over there that we don't have in America?

[swansont]

I think Pangloss pointed out one problem is another thread — you damage the economy if this happens too drastically, too quickly. The transition to more fuel-efficient cars will take time. It's also unpopular, so you'd need politicians with spines, and they are in short supply.

 

You could further mitigate the regressive nature of it if the proceeds were used to subsidize public transportation, and you could also subsidize clean energy systems and high-efficiency autos while production ramps up, to make them cost-competitive now rather than later.

 

But we're there already, so the idea of a gas-price floor is interesting. What surprises me is there's leverage here with "oil money finances terrorism" that isn't being used. Why is congress futzing around with a one- or two-year extension on solar power, when it could be played up as a replacement for oil, bolstering development of a decent electric car? (could it be that oil money finances a lot of politicians?)

[Phi for All]

What surprises me is there's leverage here with "oil money finances terrorism" that isn't being used. Why is congress futzing around with a one- or two-year extension on solar power, when it could be played up as a replacement for oil, bolstering development of a decent electric car? (could it be that oil money finances a lot of politicians?)

I think you'll see a lot of things that don't make sense as the supply of oil dwindles. Remember that the oil companies are in a prime profit spot, where all their R&D has been recouped long ago and prices are high and getting higher. This is that gray time when the oil boys are unwilling to leap to new technologies because they haven't wrung the last drop of profit from the old one yet. It will be interesting to see when they'll stop suppressing the technology that hurts their oil profits.

 

All the fixes I can envision rely on electricity (electric cars, maglev trains, etc) so clean ways to create it are going to be a must. I'm glad to see initiatives like LEED being embraced at the same time as this shortage is going on. If we can replace oil with something much cleaner maybe we can gain efficiency AND environmental responsibility in the same stroke.

[Pangloss]

The floor idea is interesting.

 

This is mainly for the older members, but: Wouldn't it be amazing if the current trend towards higher-MPG cars turned out to be a permanent one, this time around?

[Phi for All]

This is mainly for the older members, but: Wouldn't it be amazing if the current trend towards higher-MPG cars turned out to be a permanent one, this time around?

I was mentioning this to my wife the other day. One of the reasons compacts get a bad rap is safety. The argument is that small cars get crunched too badly by the bigger cars.

 

But when the majority are driving compacts and Smart Cars and motorcycles, doesn't that argument go away? Or will the big rigs and heavy transports always make that an issue?

 

Side note: At the gas station the other day I heard some very un-ladylike swearing coming from the next bay. A good-looking soccer mom was staring open-mouthed at the $112 total on her pump. It seems the 10mpg H2 she was so proud of getting last year now costs her about $5 per round trip to come down from the hills into town... to get gas.

[Saryctos]

It's an interesting take on the situation. I can agree that high gas prices are changing things faster than people simply demanding change. One thing to think about is if(for instance if solar became a large amount of energy production) the solar tycoons would start being abrasive to newer techs once they start development? Is the problem with the technology or the framework in which they operate?

 

I see a problem surrounding the whole energy situation. There's little innovation in the field. Simply regurgitating old technology but slightly more efficient per each iteration is only going to work for so long. We need to start long term investments in the "final solution" to energy needs. Finding the ultimate goal instead of just the next quick fix.

Won't it be great when people are talking of cutting our addiction to electricity once organic power sources get figured out?

[Phi for All]

We need to start long term investments in the "final solution" to energy needs. Finding the ultimate goal instead of just the next quick fix.

Oh, aye. Absolutely.

 

So do you think the ultimate goal is going to come from some brand new source, rather than a refinement of the old? God, I remember seeing Joesph Newman on the old Johnny Carson show. He claimed he combined an electromagnet with a gyroscope and could produce an EM field so huge it could run a generator that would produce more electricity than it took to run the system. He was talking about completely free electricity.

 

I was so heartbroken when he turned out to be a fraud. I always figured that some new energy source would be found by doing things in a way no one had ever done them before.

[Rev Blair]

I doubt there's anything completely new on the horizon. I think there'll be huge improvements in solar and wind technology. I think well figure hydrogen out too. It's not going to be cheap or easy though.

 

I think you'll see a lot of things that don't make sense as the supply of oil dwindles. Remember that the oil companies are in a prime profit spot, where all their R&D has been recouped long ago and prices are high and getting higher. This is that gray time when the oil boys are unwilling to leap to new technologies because they haven't wrung the last drop of profit from the old one yet. It will be interesting to see when they'll stop suppressing the technology that hurts their oil profits.

 

They'll fight like hell to hang onto that for aas long as possible too. As oil becomes rarer, their profits rise, and the only thing that will change that is alternative sources of energy.

 

I was mentioning this to my wife the other day. One of the reasons compacts get a bad rap is safety. The argument is that small cars get crunched too badly by the bigger cars.

 

Not a recommended learning experience, but roll a small car, and then roll a 3/4 ton truck. The car protects you much better.

 

The safety factor of cars is way better than that of trucks and SUVs.

[ecoli]

Not a recommended learning experience, but roll a small car, and then roll a 3/4 ton truck. The car protects you much better.

 

The safety factor of cars is way better than that of trucks and SUVs.

yeah, but crash an SUV into a car and see what happens. I expect crashes are more common and more of a problem then losing your center of gravity and rolling.

[Rev Blair]

Interesting thing about SUVs, pick-up trucks, and other full-framed vehicles...a lot of them (not all) allow the floor to fold up in a crash, so you get more leg and foot injuries. They also don't absorb the impact as well, so internal injuries due to your organs sloshing around in your body are more common.

 

That being said, in low-speed crashes, the heavier vehicle tends to crush the lighter vehicle. Most low-speed crashes result in fairly light injuries anyway though.

 

Something that really bothers me about the prevalence of really big trucks (3/4 ton and bigger) on the roads now is that the people who drive them don't seem able to understand what they are driving and that they have a certain responsibility as a result.

 

On a separate, but related note...the original body stampings, for all of those little British cars are available, except for the MGB, which some Chinese company bought. It seems to me that somebody should bring back the entire Triumph line etc.

 

They were great little vehicles...small and quick and easy to drive. Most were convertibles. They went forever on a tank of gas. They are kind of minimalist, but I think that could sell pretty well.

 

Why isn't somebody building them with an updated drive train and selling them cheap? They'd go like hotcakes, I think, between the nostalgia thing and the high gas prices. They are the ultimate commuter cars.

 

If I could get a reliable, updated version of a Triumph Spitfire, I know I'd snap it up pretty quick. I had a 1976 Spitfire, and it remains my favourite out of all the vehicles I've owned.

 

If those Chinese MGBs start showing up in Canada, I'm certainly going to have a look, but the Spitfire (and the rest of the TRs) are cooler.

[iNow]

Is the problem with the technology or the framework in which they operate?

Yes. Unfortunately, treating that as an "either/or" offers a false dichotomy. It truly is both.

 

 

 

I doubt there's anything completely new on the horizon. I think there'll be huge improvements in solar and wind technology. I think well figure hydrogen out too.

For the time being, I am absolutely in agreement with you here. However, nobody can predict the "next great discovery," nor how profound that may be.

 

Much the same way that the discovery of plastics revolutionized our entire culture, an energy innovation could do much the same.

 

 

Argg... Plastics. This has just reminded me of the tremendous amount of products we use which rely on oils. It's more than running out of "stuff to wastefully burn in our autos and homes," but also running out of stuff to make the countless scores of other things we all use collectively every single day of our lives.

 

http://www.anwr.org/features/oiluses.htm

 

 

 

Back to the OP, as much as it would pain me financially if price floors were set, I cannot help but see the good in such a decision... IF (that's a gigantic jumbo jet of an if) that decision was being followed through with preparations that were meaningful, strategic, and avoided croneyism.

[ParanoiA]

They'll fight like hell to hang onto that for aas long as possible too. As oil becomes rarer, their profits rise, and the only thing that will change that is alternative sources of energy.

 

Exactly. The market needs to drive it. These guys are in the oil business. It's silly to grill them like little children asking them why they won't commit to alternative fuels. That's not their business. I'm not going to be shamed from my cabinet building side business into building coffee tables instead. I'm in the cabinet business. Buy your coffee table from someone in the coffee table business.

 

Turn about is fair play. Remember their insignificance and what put them there when you invest your money in the guys that DO alternative fuels. When the oil businessmen start whining about profits, remind them what business they're in, and the freedom of pursuit that they squandered by squeezing oil profits rather than investing in their own future.

 

I don't see any reason to expect them to invest in alternative fuels. Likewise, I don't see any reason why they wouldn't invest in alternative fuels to stay relevant in the energy market. Let them reap what they sow. I already can't wait to go solar for my home, just somebody give me something I can drive that doesn't require oil for fuel - that I can afford.

[Pangloss]

The problem is speculation. All customers are receiving all the oil they need -- supply isn't a problem (yet). What we need is downward pressure on the price of oil.

 

You could remove oil from the commodities exchange and fix its price at a certain amount, but that would probably CAUSE shortages in countries with less cash on hand, and you'd still be facing potential shortages caused by demand as China and India continue to grow.

 

So what's really needed more than anything else is a way to get speculators out of the market. Some method of causing downward pressure on the price of the barrel.

 

Like perhaps regulation requiring 40 mpg on all vehicles by 2010.

 

Of course that would have other drastic economic consequences, but given how fast the price of oil is flying upwards, I wonder if that cost would actually be lower than doing nothing.

[ParanoiA]

Dare I say ask this on a science site....how about drilling in ANWR?

 

Would that do anything for the short term?

[iNow]

IMO, that would be a bit like trying to use a band-aid to treat a heart attack.

[swansont]

Dare I say ask this on a science site....how about drilling in ANWR?

 

Would that do anything for the short term?

 

http://www.msnbc.msn.com/id/4542853/

 

I think there's about a year's worth of oil there (US consumption), give or take, depending on which estimate you use, and it would take a few years before it would start to become available. Not really a huge impact.

[Phi for All]

On a separate, but related note...the original body stampings, for all of those little British cars are available, except for the MGB, which some Chinese company bought. It seems to me that somebody should bring back the entire Triumph line etc.

 

They were great little vehicles...small and quick and easy to drive. Most were convertibles. They went forever on a tank of gas. They are kind of minimalist, but I think that could sell pretty well.

 

Why isn't somebody building them with an updated drive train and selling them cheap? They'd go like hotcakes, I think, between the nostalgia thing and the high gas prices. They are the ultimate commuter cars.

I wondered about that several years ago myself. I thought the car makers were missing out on baby boom nostalgia by not bringing back some of the cool body styles, like the original Mustang, or the '57 Chevy Bel-air, but with everything else updated.

 

It seemed like a no-brainer since they already had the body stampings. Somebody must have felt it would hurt the sales of newer models.

[tvp45]

Dare I say ask this on a science site....how about drilling in ANWR?

 

Would that do anything for the short term?

 

Senator Ted Stevens of Alaska asked the Department of Energy to look at that. Stevens is no tree-hugger and generally favors any development that will benefit Alaska. The report was released this month. Bottom line is that (using rosiest estimates) ANWR will provide perhaps 1-2% of our oil within 10 years. If OPEC does not drop production to match that (they've used that model in the past), it will lower the price of crude about $0.40 per barrel. No help for gas prices or shortages there although it does keep that much money in the American economy rather than send it to Saudi Arabia.

Addendum: The report may be found at DOE Information Department.

Edited May 30, 2008 by tvp45
adding source

[ParanoiA]

Senator Ted Stevens of Alaska asked the Department of Energy to look at that. Stevens is no tree-hugger and generally favors any development that will benefit Alaska. The report was released this month. Bottom line is that (using rosiest estimates) ANWR will provide perhaps 1-2% of our oil within 10 years. If OPEC does not drop production to match that (they've used that model in the past), it will lower the price of crude about $0.40 per barrel. No help for gas prices or shortages there although it does keep that much money in the American economy rather than send it to Saudi Arabia.

Addendum: The report may be found at DOE Information Department.

 

Well, so much for that idea...

 

 

I wondered about that several years ago myself. I thought the car makers were missing out on baby boom nostalgia by not bringing back some of the cool body styles' date=' like the original Mustang, or the '57 Chevy Bel-air, but with everything else updated.

 

It seemed like a no-brainer since they already had the body stampings. Somebody must have felt it would hurt the sales of newer models. [/quote']

 

 

Same here, only at the time gas was reasonable and I was thinking about the '67 Chevy Truck model. Or even an old Outlaw body style would be sweet.

[john5746]

In an op-ed today in the New York Times (here, Tom Friedman criticizes the short-term gas tax holiday proposed by both Clinton and McCain as deeply cynical and destructive in the long term for the economy, national security, and the environment, and applauds Obama for being the "bad guy" and calling them both out on it. All of this I agree with.

 

Looks like Obama has changed his mind.

 

http://ap.google.com/article/ALeqM5isOFwdbq0tsqatW6vJpkDRTI1gMgD92BIKK00

[Pangloss]

Oh god, not Obama too. Yeesh. Just yesterday -- YESTERDAY! -- he was talking about how we can't drill our way out of the problem, and there are no quick fixes.

 

I don't think he realizes how badly he's being hit amongst uncommitted, moderate-conservative voters on the "flip-flopper" issue.

[ParanoiA]

I don't think he realizes how badly he's being hit amongst uncommitted, moderate-conservative voters on the "flip-flopper" issue.

 

Yeah, but it might be worse than the "energy policy = no to everything" that the right is labeling him with, (like Gingrich and his domestic energy agenda), so maybe this muffles some of that rhetoric.

[Sisyphus]

He didn't actually change his mind about the subject of this thread (a gas tax holiday), but yeah, it's still a reversal. I guess it depends on how much he would release. A "quick fix" to dramatically lower gas prices would do more harm than good in the long run, but releasing just enough to smooth out the spikes, slow the increase and give the economy time to adjust would probably be worth doing, as long as it doesn't let the strategic reserves get too low and/or lack a plan to replace what was lost.

 

Also, the linked article says, "releasing light oil from the emergency oil stockpile now and replacing it later with heavier crude more suited to the country's long-term needs." Does anyone know what the deal is with this sentence? All I can find about light vs. heavy crude is that heavy is more viscous and thus more difficult to refine.

[Pangloss]

Personally I like his ability to rethink issues and listen to what people tell him. But that sort of thing should come at the behest of experts and scientists, not political operatives. This is a political choice because it's a populist, illogical move, and he will hardly be able to complain when it has political consequences.

 

I don't see how releasing oil from the reserve will have any impact anywho, but I do realize that much of what happens is due to speculation on the trading market, and THAT can be impacted by releasing oil from the reserve. So I guess there's SOME logic there, if deeply flawed.