Oil and the American way of life - Page 3

**leejo** · 03-22-2006, 11:24 AM

My father-in-law is CEO of a petroleum company. He sees good times (financially, for the industry) for the next five years, and then he thinks regulation and the sort of taxes Cing mentioned will kick in to curb profits.

He does not see a looming production shortfall, and rejects out of hand as "crackpot" the theories that Iraq is really about oil, etc. He does complain that the bottleneck is refining capacity. We need more refineries.

So take that for what you will, but that's how somone who earns a living working in the industry thinks.

Edit: I forgot the "not" in the looming production shortfall sentence.

xTYBALTx · 03-22-2006, 11:29 AM

Oil won't need to be replaced for manufacturing purposes overnight because the world will never run out of it. As oil becomes more expensive to the point that other sources of energy are cheaper, we will begin switching. Eventually it will become so expensive that very few people will have a use for it and extraction will drop considerably. There is no reason to believe this will be an untidy process. It will be a long process, as the price of oil increases bit by bit over decades. Nuclear power has been around for decades and provides one perfectly viable alternative, let alone the myriad other options.

ScratchMonkey · 03-22-2006, 11:44 AM

Quote:

Originally Posted by CingularDuality

Why do you say this?

Sorry, it was an instance of my sordid exposure to American culture. The reference is to Back to the Future, where driving an atomic-powered car faster than 88 MPH causes you to time travel. I'm all for nuclear power, BTW.

Now back to the discussion in progress....

ScratchMonkey · 03-22-2006, 11:48 AM

I'm not a fan of raising taxes on anything, because inevitably the tax revenue gets misappropriated for some unrelated government boondoggle. Leave it with the oil companies, where they can use it to hire more people (ie. create jobs) or buy more stuff (ie. allow their vendors to hire more people and create jobs). The only additional tax I see as valid is one to pay for protecting their oil fields, provided that it's earmarked for specific military operations to keep it from being diverted to pork.

**CingularDuality** · 03-22-2006, 01:49 PM

Quote:

Originally Posted by ScratchMonkey

I'm not a fan of raising taxes on anything, because inevitably the tax revenue gets misappropriated for some unrelated government boondoggle. Leave it with the oil companies, where they can use it to hire more people (ie. create jobs) or buy more stuff (ie. allow their vendors to hire more people and create jobs). The only additional tax I see as valid is one to pay for protecting their oil fields, provided that it's earmarked for specific military operations to keep it from being diverted to pork.

The tax revenue can be used for whatever the gov't needs it for. The purpose isn't to provide income, but rather to stabilize the economy in the unlikely event that oil jumps in price quicker than our economy could handle it; by being able to lower the taxes and, therefore, reducing the practical cost of gasoline on the end users.

I'm waiting for the battery/capacitor combo that can produce 1.21 jigawatts of energy before I buy a hybrid car, BTW...

**leejo** · 03-22-2006, 02:11 PM

I think your idea is misguided Cing. Do you really think a gas tax would be used to stabalize the economy or to build bridges in Alaska, for example?

I would support lifting some of the tax credits that purchasers of gas-guzzling SUVs receive, but I wouldn't want to see a new tax that attempts to engineer my consumption habits.

IMO the market is a much better, more nimble, and less corruptable method of changing what people consume and how they consume it.

**CingularDuality** · 03-22-2006, 02:27 PM

Quote:

Originally Posted by leejo

I think your idea is misguided Cing. Do you really think a gas tax would be used to stabalize the economy or to build bridges in Alaska, for example?

I would support lifting some of the tax credits that purchasers of gas-guzzling SUVs receive, but I wouldn't want to see a new tax that attempts to engineer my consumption habits.

IMO the market is a much better, more nimble, and less corruptable method of changing what people consume and how they consume it.

In general, I agree. But is it possible that, at some point in the future, oil prices will increase faster than our economy can adapt?

**leejo** · 03-22-2006, 02:37 PM

I don't think so, no. That's the neat thing about markets. First the people tasked with thinking 5-10 years down the road will start converting their fleets to hybrid vehicles, and making their corporate buildings more green. That will drive demand, production, innovation, and competition.

We've been through all this before. After the oil embargoes in the 70's a lot of us had to ride around in little 4-cylinder boxes that sputtered for about 90 seconds after you turned them off. Then we got all fat and happy again in the 90's and decided it was cool to ride around in vehicles formerly reserved for monster truck competitors. Now things are swinging back the other way. Meanwhile all the oil executives say production isn't the problem, it's refining and distribution.

So my point is that this strikes me more as a fashion issue than a real crisis. Trucks get big, trucks get small. Hem lines go up, hem lines go down. The market reacts and delivers what the consumers want.

aeroripper · 03-22-2006, 08:43 PM

I think people give to much optimistic credit to the market function of supply and demand accomodating a sudden drop of worldwide supply of oil, especially when it relates to the US economy :-/.

Quote:

Oil won't need to be replaced for manufacturing purposes overnight because the world will never run out of it. As oil becomes more expensive to the point that other sources of energy are cheaper, we will begin switching. Eventually it will become so expensive that very few people will have a use for it and extraction will drop considerably. There is no reason to believe this will be an untidy process. It will be a long process, as the price of oil increases bit by bit over decades. Nuclear power has been around for decades and provides one perfectly viable alternative, let alone the myriad other options.

The world is running out of a cheap supply of Uranium-235 needed for nuclear power. Don't forget about nuclear waste. Nuclear power is not the answer either. Ideally cold fusion would be best possible energy would could discover, but I doubt that's going to happen anytime soon.

**leejo** · 03-22-2006, 08:47 PM

The only reason why nuclear waste is an issue at all is because of treaties we formed with the former USSR that forbid nuclear material in space. Othewise, shove that junk on a rocket and adios.

Nuclear power would do nicely.

I think the people who think the market isn't the correct solution are far too optimistic about government's chances at solving the problem. But if you think that having the goverment take my money by force to forward your agenda is a better solution than allowing the market to dictate the price of the commodity, you've lost my vote.

aeroripper · 03-22-2006, 08:54 PM

Quote:

Originally Posted by leejo

I think the people who think the market isn't the correct solution are far too optimistic about government's chances at solving the problem. But if you think that having the goverment take my money by force to forward your agenda is a better solution than allowing the market to dictate the price of the commodity, you've lost my vote.

Woah easy there, your assuming a little to much about what I meant. I'm not saying the government would be able to handle it any better, and probably less so. I'm saying that the impact is still going to be a massive hit on the economy and market forces won't be able to shield consumers from it. Over time though once they recover, things will pick up again. I honestly doubt it will be a smooth transition from oil to alternative energies like a lot of people believe. Then again, maybe I'm just a pessimist.

Steeler · 03-22-2006, 09:01 PM

Quote:

Originally Posted by leejo

The only reason why nuclear waste is an issue at all is because of treaties we formed with the former USSR that forbid nuclear material in space. Othewise, shove that junk on a rocket and adios.

That, and the fact that rocket programs that can escape the Earth's gravitational pull are a relatively expensive disposal method. Plus, you get one bum booster and you risk contaminating several thousand square miles of planet Earth with radioactive material. Boom. It's not something you can, or WANT to do on the cheap.

Quote:

I think the people who think the market isn't the correct solution are far too optimistic about government's chances at solving the problem. But if you think that having the goverment take my money by force to forward your agenda is a better solution than allowing the market to dictate the price of the commodity, you've lost my vote.

I'm not in favor of overt market manipulation in hopes of cushioning a crash that may never come, but I would like to see heavier oversight of fuel technology and efficiency. It would also be nice if they did more than pay lip service to alternative fuel research. Something like an Apollo program for energy, properly managed, could really accelerate our technology track. I don't trust the free market to anticipate problems far in advance - they are good at reacting to immediate conditions for maximum profit, but they are notoriously slow for long-term changes. Too much self interest and not enough community interest. That's why we have a government, after all.

Too bad it is currently mismanaged.

**leejo** · 03-22-2006, 09:12 PM

I meant the universal "you". Sorry.

Let's look at what's happened lately. War in the middle east, combined with a nutbar taking power in Venezuela, combined with China and India's economies moving into the industrial age have driven the price of oil up to levels we haven't seen since....1973-1975 and remain well below the levels from '77 through '85, once you adjust for inflation. In other words, the price of oil is still relatively cheap.

http://www.wtrg.com/oil_graphs/oilprice1947.gif

And, in other words, the Asian economies and political turbulence has already adjusted the market such that the American consumer is feeling pain and adjusting behavior. http://www.autonews.com/apps/pbcs.dl.../1078&refsect=

We are well below historical highs, and yet the average consumer is deciding that $100/week at the pump is a drag. Hybrids are selling fairly well, the industry is clearly pumping marketing dollars into the hybrids, corporations are looking to lower their energy bills. I see the market anticipating and adjusting.

ScratchMonkey · 03-23-2006, 10:01 PM

I can understand the desire for some kind of economic cushion but I think a tax is the last thing you want to use for that. Taxes are notorious for getting usurped for pork. Just look at our favorite national savings game, Social Insecurity. There's nothing in the bank. Congress borrowed it all and left an IOU behind.

**CingularDuality** · 03-24-2006, 07:59 AM

Quote:

Originally Posted by ScratchMonkey

I can understand the desire for some kind of economic cushion but I think a tax is the last thing you want to use for that. Taxes are notorious for getting usurped for pork.

Pork is a seperate issue. The fact is that our government NEEDS to collect taxes. Whether they increase your income taxes next year, or levy a new gasoline tax matters how? Either way, you're paying the taxes. But acclimating people to higher gas prices will begin the social shift that would be necessary should "peak oil" become a serious problem.

03-22-2006, 11:24 AM	#31 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,839	Re: Oil and the American way of life My father-in-law is CEO of a petroleum company. He sees good times (financially, for the industry) for the next five years, and then he thinks regulation and the sort of taxes Cing mentioned will kick in to curb profits. He does not see a looming production shortfall, and rejects out of hand as "crackpot" the theories that Iraq is really about oil, etc. He does complain that the bottleneck is refining capacity. We need more refineries. So take that for what you will, but that's how somone who earns a living working in the industry thinks. Edit: I forgot the "not" in the looming production shortfall sentence.

03-22-2006, 11:29 AM	#32 (permalink)
xTYBALTx Join Date: Aug 2005 Posts: 3,919	Re: Oil and the American way of life Oil won't need to be replaced for manufacturing purposes overnight because the world will never run out of it. As oil becomes more expensive to the point that other sources of energy are cheaper, we will begin switching. Eventually it will become so expensive that very few people will have a use for it and extraction will drop considerably. There is no reason to believe this will be an untidy process. It will be a long process, as the price of oil increases bit by bit over decades. Nuclear power has been around for decades and provides one perfectly viable alternative, let alone the myriad other options. __________________ A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek "$250,000 a year won't get me to Central Park West."

03-22-2006, 11:48 AM	#34 (permalink)
ScratchMonkey Join Date: Aug 2005 Location: San Pablo, California Posts: 4,565	Re: Oil and the American way of life I'm not a fan of raising taxes on anything, because inevitably the tax revenue gets misappropriated for some unrelated government boondoggle. Leave it with the oil companies, where they can use it to hire more people (ie. create jobs) or buy more stuff (ie. allow their vendors to hire more people and create jobs). The only additional tax I see as valid is one to pay for protecting their oil fields, provided that it's earmarked for specific military operations to keep it from being diverted to pork. __________________

03-22-2006, 02:11 PM	#36 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,839	Re: Oil and the American way of life I think your idea is misguided Cing. Do you really think a gas tax would be used to stabalize the economy or to build bridges in Alaska, for example? I would support lifting some of the tax credits that purchasers of gas-guzzling SUVs receive, but I wouldn't want to see a new tax that attempts to engineer my consumption habits. IMO the market is a much better, more nimble, and less corruptable method of changing what people consume and how they consume it.

03-22-2006, 02:37 PM	#38 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,839	Re: Oil and the American way of life I don't think so, no. That's the neat thing about markets. First the people tasked with thinking 5-10 years down the road will start converting their fleets to hybrid vehicles, and making their corporate buildings more green. That will drive demand, production, innovation, and competition. We've been through all this before. After the oil embargoes in the 70's a lot of us had to ride around in little 4-cylinder boxes that sputtered for about 90 seconds after you turned them off. Then we got all fat and happy again in the 90's and decided it was cool to ride around in vehicles formerly reserved for monster truck competitors. Now things are swinging back the other way. Meanwhile all the oil executives say production isn't the problem, it's refining and distribution. So my point is that this strikes me more as a fashion issue than a real crisis. Trucks get big, trucks get small. Hem lines go up, hem lines go down. The market reacts and delivers what the consumers want.

03-22-2006, 08:47 PM	#40 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,839	Re: Oil and the American way of life The only reason why nuclear waste is an issue at all is because of treaties we formed with the former USSR that forbid nuclear material in space. Othewise, shove that junk on a rocket and adios. Nuclear power would do nicely. I think the people who think the market isn't the correct solution are far too optimistic about government's chances at solving the problem. But if you think that having the goverment take my money by force to forward your agenda is a better solution than allowing the market to dictate the price of the commodity, you've lost my vote.

03-22-2006, 09:12 PM	#43 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,839	Re: Oil and the American way of life I meant the universal "you". Sorry. Let's look at what's happened lately. War in the middle east, combined with a nutbar taking power in Venezuela, combined with China and India's economies moving into the industrial age have driven the price of oil up to levels we haven't seen since....1973-1975 and remain well below the levels from '77 through '85, once you adjust for inflation. In other words, the price of oil is still relatively cheap. http://www.wtrg.com/oil_graphs/oilprice1947.gif And, in other words, the Asian economies and political turbulence has already adjusted the market such that the American consumer is feeling pain and adjusting behavior. http://www.autonews.com/apps/pbcs.dl.../1078&refsect= We are well below historical highs, and yet the average consumer is deciding that $100/week at the pump is a drag. Hybrids are selling fairly well, the industry is clearly pumping marketing dollars into the hybrids, corporations are looking to lower their energy bills. I see the market anticipating and adjusting.

03-23-2006, 10:01 PM	#44 (permalink)
ScratchMonkey Join Date: Aug 2005 Location: San Pablo, California Posts: 4,565	Re: Oil and the American way of life I can understand the desire for some kind of economic cushion but I think a tax is the last thing you want to use for that. Taxes are notorious for getting usurped for pork. Just look at our favorite national savings game, Social Insecurity. There's nothing in the bank. Congress borrowed it all and left an IOU behind. __________________

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