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10 Ways Obama Could Reduce Gasoline Prices Now

I'll hold my breath.

By: Steve Maley (Diary)  |  February 25th, 2012 at 02:00 PM  | 

RESIZE: AAA

Tulsa World headline:

Obama: No magic bullet to lower gas prices

WASHINGTON — President Barack Obama says there is no easy answer to the problem of rising energy prices, dismissing Republican plans to address the problem as little more than gimmicks.

“We know there’s no silver bullet that will bring down gas prices or reduce our dependence on foreign oil overnight,” Obama said Saturday in his weekly radio and Internet address.  …

Obama said Republicans have one answer to the oil pinch: Drill.

“You know that’s not a plan, especially since we’re already drilling,” Obama said, echoing his remarks earlier in the week. “It’s a bumper sticker.”

Speaking of bumper stickers, remember “Yes We Can”, Mr. President? No one understands the concept better than the oil and gas industry. The main thing holding domestic energy companies back from making a stronger commitment to future domestic supplies is uncertainty. Capital hates uncertainty, avoids it like the plague. Your rhetoric may appease your doctrinaire base, but it makes domestic energy producers hold back, fearful that you will punish their success, or that you will change the rules on them in the middle of the game.

Erasing uncertainty is the #1 thing you can do as a national leader if you truly desire to lower gasoline prices. Not only could it change the psychology of energy investing, there is still time for companies to change their 2012 investment plans.

Below the fold is my humble 10-point plan: Things President Obama could (but won’t) do to reduce domestic gasoline prices by November 2012.

1.  Commit to a strategic goal of North American energy security. That includes reasonable and responsible domestic drilling. That includes taking the lead on the Keystone XL Pipeline; we could find a way to make it happen while addressing the legitimate environmental concerns of Nebraskans. It includes a commitment to maintaining the Trans-Alaska Pipeline System and opening ANWR.
2.  Ditch the anti-industry, anti-capitalist rhetoric. It is not the President’s or the government’s place to decide when an industry’s profitability is “high enough”. High oil company profits fund more drilling; more drilling means more future supply and lower prices. Besides, American oil companies are not owned by a cabal of wealthy executives, but by America’s pension funds, mutual funds and private investment accounts. “They” are “us”.
3.  Stop targeting the oil industry for punitive tax treatment. States such as Texas and Louisiana have production tax abatement programs that have successfully encouraged new drilling. If you don’t believe that the threat of increased taxes discourages drilling, just ask Governor Perry or Governor Jindal.
4.  Realize that Uncle Sam is in the energy business and is a partner in industry’s success. Oil and gas royalties are the federal government’s #2 source of revenue, after the income tax. Offshore slowdowns hurt not only industry and jobs, but government revenue.
5.  Recognize that industry does not need to be led by government; industry needs to be unleashed and encouraged to innovate. The resurgence of the domestic energy sector was rooted in the private sector, not matter how much President Obama and Dr. Chu would like to take credit for it. The growth in North Dakota, Pennsylvania and Texas happened in spite of the federal government, not because of it.
6.  Trust that no oil operator wants to be the “next BP”. The BP spill cost that company something on the order of $40 billion. Industry safety and environmental commitment is motivated more out of self-interest and less out of fear of the government. When it comes to federal regulation, the nation would be better served by Sheriff Taylor, not Barney Fife.
7.  Return offshore permitting to the pre-Macondo pace.  Your overreaction to the BP Spill has cost on the order of 500,000 barrels per day of domestic oil production from the Gulf of Mexico. The ridiculous “Worst Case Discharge” calculation as a routine part of offshore permitting is engineering malpractice, in my humble opinion. The professional staff of the Bureau of Safety and Environmental Enforcement is capable of reasoned regulation, but they currently operate in fear of their political masters.
8.  Declare hydraulic fracturing & well design to be the regulatory domain of the states, not the EPA. Geology and environment vary widely; Pennsylvania is not Louisiana is not North Dakota is not California. It is insanity to think that one broadly-applied set of rules can be applied to regulate industry without suffocating development.
9.  Rescind the recently-enacted royalty rate increase for new onshore Federal oil and gas leases. Secretary Salazar’s stated rationale for increasing the government’s take by a whopping 50% – from 12.5% to 18.75% of gross production – was to equate onshore royalties with the offshore royalty rate. That makes no sense. Higher royalties mean less drilling, poorer economics of production and premature abandonment of wells. Besides, an IHS-CERA Study recently showed that the federal government’s total take of offshore cash flows makes the Gulf of Mexico the second-most punitive fiscal regime in the world, after Hugo Chavez’s Venezuela. [Update: In keeping with the First Rule of Holes, rolling back the royalty rate increase may be the first thing the government should do if it is serious about reducing energy prices. - Ed.]
10. Encourage development of a nationwide distribution system of natural gas as a transportation fuel. Natural gas is clean, abundant and nearly 100% domestic. Its potential as a transportation fuel has scarcely been tapped.

Bonus #11: Get real about the promise of alternative fuels. Recently you said: “You’ve got a bunch of algae out there; If we can figure out how to make energy out of that, we’ll be doing alright.” Maybe so, but I will stick my neck out and say it ain’t gonna happen, at least not in my lifetime, not on a scale that will impact pump prices.

Energy policy will be a President Obama’s key vulnerability in November. His goal has always been to encourage alternative fuels by raising conventional energy prices. Alternative energy may poll well, but the average voter who fills his tank with $4+ gas on the way to the ballot box will certainly “Hope for Change”.

Cross-posted at stevemaley.com.


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COMMENTS

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  • Locked and Loaded

    But Mr. Becker’s sig line has the only real solution.

    • msherf

      full of algae that I will sell him.

  • renl57

    Obama might well implement all of your recommendations–if you or the Koch brothers will pay him $1 billion.

    Obama needs $1 billion for his re-election campaign. Currently he plans to raise that money from Hollywood leftists, environmentalists, and college professors and students–all of whom are committed to fighting global warming by phasing out oil and telling Americans to walk to work instead. And they made the cancellation of Keystone XL and further restrictions on oil drilling a litmus test in exchange for their campaign contributions.

    But if we could get Obama $1 billion ourselves, he wouldn’t need those bundlers and contributors anymore.

    • YnotNOW

      a candidate to REPLACE Obama? That would have a higher chance of success.

      (can you imagine how quickly Obama would flip after he won re-election and did not have to answer to voters any more?)

    • citizenkh

      cannot be replaced by present domestic crude sources without the waste of significant refining capital investment, or significant revitalization of PEMEX Mayan crude production OR deposing of Chavez and revitalization of PDVSA’s economic woes and 35% decline in production over the last decade.

      The refineries (and only those) capable and refining Mayan/PDVSA crude will be able to process Canadian Syncrude. Our ONLY source of equivalent crude is around Bakersfield, CA.

      Additionally, without significant quantities of heavy crude (20 API or less), the U.S. will tumble from being the overwhelmingly dominant producer of fuel and anode grade petroleum coke. China would love that role as it now imports this commodity from the U.S.

  • retrocon87

    nailed it

  • Stan(ley) Pruss

    I believe the EPA requires special blends of gasoline for different areas of the country. Loosen regulations, including ethanol requirement and the gasoline price could go down quickly.

    • smblues

      Granted I hate the ethanol mandates, but the EPA rules for blends are not completely arbitrary. They are designed to try to lessen smog issues which means cleaner air and better health for us all.

      • ihateliberals

        The EPA set abitray rules and regulations bypassing the people. And by that I mean these aren’t laws that our Congress passed yet a very small minority agency has the power of Goliath. That is not how this country was founded nor should it operate that way at all. Again when you take the innovation out of the equation you implement government control which is slow to react to market changes. With the proper incentives on private industry all of the EPA rules could be achieved and possibly exceeded. For example: Instead of taxing a company to death how about awarding its success in creating a new energy source that is available and cheap. maybe provide a tax break for “X: number of years. There are many ways of doing this that might work. Forcing rules and regulations stifles competition and cuts the profit margin. Two things that drive any industry. Giving grants to industry based on the succes of developing a concept or product. There are just so many wys to spend our money that benefits us and the economy rather thanto continue to support an agency that produces nothing! It is pure economy draining Cost with no return on investment.

      • harmonicman

        I am looking at a truck that will run on E85. Instructions: “Expect a 30% reduction in fuel mileage. Change oil every 3000 miles.” (instead of every 6000 for gasoline.) Why? because ethanol provides less energy than gasoline on a gallon basis. And ethanol, containing oxygen in the molecule, produces compounds in the exhaust , when it burns, called aldehydes which are far worse for people than smog.

        While on the topic of smog, modern computer-controlled engines produce less than 1% of the smog-causing chemicals that older engines did. It will cost as much to get rid of that last 1% as it did to get reduction of the first 99%, How about removing ethanol entirely from gasoline and using corn to feed people. The change in smog production would be negligible with new cars. (To say nothing about the reduction in food costs.)Special blends are thinking from the 80′s and ignore technological improvements in engines made since then. Let’s bring our government (especially the EPA) into the 21st century. Let’s get real about solving air pollution and energy supplies.

        • citizenkh

          we have had unleaded fuel base for some time now.

          Second, ethanol is the replacement for MTBE which was crucified in a sham argument by CA and envirowhackos. These are oxygenators to lower ozone levels (mainly in urban areas).

          Living in Baton Rouge, we are under a mandate for ethanol and boutique fuel due have exceeded the ozone levels for a few days annually, during the early part of this past decade. We’ve been able to keep it low (mainly due petrochem plants having lowered emissions) but cannot seem to become delisted.

  • izoneguy

    Fire Obama in November

  • paulrobert

    Your recommended policies and general approaches may be desirable (for jobs, for balance of trade, for tax revenues, etc.), but you are incorrect that such policies would have any significant impact on gasoline prices.

    Simply put, there just isn’t nearly enough oil, to the best of anyone’s knowledge or estimates, in the OCS for even completely open drilling opportunities to make a dent in gasoline prices even a couple of decades from now, let alone in the near future. Oil prices are set mainly in a global market, based on global demand and global supply, and OCS oil is too close to a drop in the global bucket for expanded drilling to make much of a difference even through 2030 (the time horizon EIA projected). It seems the same applies re: ANWR

    Some related reports:
    http://www.eia.gov/oiaf/aeo/otheranalysis/ongr.html

    http://www.eia.gov/oiaf/aeo/otheranalysis/aeo_2009analysispapers/aongr.html

    http://205.254.135.7/oiaf/servicerpt/anwr/results.html

    • quill67

      First, you are also making a common mistake that non-economists (and even some economists make) You seem to believe that just because adding additional oil sources might only had 1% more supply, you seem to think that this will only mean a 1% drop in price. Well, do you remember the runup in prices in 2008 when oil prices doubled? Economist estimate this was caused by a 1% difference in oil demand. One percent!!! A One percent (1%) increase in demand caused oil prices to increase over 200%.

      The point is even small changes in supply can make huge differences in prices. So any additional supplies that are brought on the market (or taken off) can have tremendous impact on market prices.

      Second, I hate that you fell for the liberal BS dressed up as scientific reports. New analysis shows that we have oil that we can extract at today’s prices (or lower) that exceed all of Saudi Arabia. In fact, Bill O’Rilley is all upset about how much gasoline we are exporting.

      http://republicmainstreet.wordpress.com/2011/12/29/the-us-has-more-oil-than-all-the-middle-east-put-together/

      Add to this supply, our domestic supply of natural gas which exceeds all the energy content of the Middle East and extracting and drilling in the US can make a big difference in oil prices.

      • renl57

        Natural gas and oil are not interchangeable.

        Even if more natural gas is brought on-line, it’s not going to result in more gasoline or home heating oil.

        • duanej

          But it will result in more of an avaible energy fuel that is currently very cheap and virtually untapped. Invest today in lpg or lng fueled vehicles and infrastructure as well as heating appliances will result in increased demand by consumers for this cheaper alternative fuel. This will reduce the consumption of gas and oil which also has the same effect of driving down the price of gas.

          Just because there are not vehicles today that are powered by these fuels does not mean the day will never come.

      • Common_Cents

        about price being directly proportional to supply: gas prices have more than doubled since obama got elected. So the supply has been cut in half? NOT.

        Well, obama is trying to kill production that much….killing gulf drilling/exploration, killing land/shallow water drilling-exploration. Deep water is more risky but that’s all the energy companies have left, thanks to Obama.

        If the next President (R) merely announced in his innauguration address that we will have an aggressive energy production plan, that alone will deflate gas prices all by itself. What speculator is going to go long against that?

        Obama is just saying things don’t matter because he isn’t doing anything to increase production, but rather destroy it. Obama is using the worn out blame game while he ruins America in his quest of getting gas prices to Euro levels.

    • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

      anything the US does to make it more likely that we would exploit our known reserves would have a downward effect on prices. Speculators would factor it in NOW.

      This is fundamental econ 101.

    • greyeagle

      Those events would affect oil futures and will good sources becoming available, the price should go down. Just changing the so called designer gasoline into one composition, would bring prices down.

    • http://MichaelHarrington.org creinstein

      Did you ever watch that “Black Gold” series on cable?

      We can drill an incredible number of wells if we desired to.

      Additionally we could build refineries.

      The United States has more oil in the form of heavy crude, lightsweet crude,tar oil, shale oil and coal (coal to oil conversion) than the REST OF THE WORLD COMBINED!

      Those numbers are real. And we can get at it if we truly desired.

    • gaudium

      I’m sick of this liberal line of crap that is based on facts stated on MSNBC, why not get a life and try FOX for awhile.

    • duanej

      and likely other things…

      The Bakken oil field alone has as much as 500 billion barrels of oil, 200 billion of which is considered technically recoverable.

      http://www.nd.gov/ndic/ic-press/bakken-form-06.pdf

      Existence of oil is NOT the problem. DISTRIBUTION IS. Beyond the Bakken, there is the oil that could be delivered to gulf states — via a pipeline — cheaply, efficiently, and cleanly, from Canada that is currently landlocked. To get that oil to our refineries, it has to cross the rockies, transpported to the coast, loaded onto oil tankers, and shipped, through the panama canal to make it to the gulf coast where it can be refined and then exported to fuel consumers both domestically and abroad.

      Distribution is the biggest concern to and threat to our fuel costs, not the supply of it. The problem right now is that the largest producers of oil, ON WHOM WE CURRENTLY DEPEND, are countries with regimes who don’t like us very much. I don’t honestly care if they like us or not. Appeasement is not a viable option for someone who wants to kill you, but soak you first. The straights of Hormuz is a dangerous area of the world and whatever the current nightmare is dictates the flow of oil from those mideast countries that hate us.

      Canada is a good neighbor and friend of the US. They have lifestyles and values very similar to our own. They have plenty of oil on which we could depend for a long long long time without ever worrying that they were planning to build nukes or blow up Isreal or some such.

      The US is the largest consumer of oil and therefore the largest customer of these 3rd world regimes who currently have us by the short and curlies. Imagine if the world’s largest customer of foreign oil suddenly decided “eh, we’ll just depend on Canadian and US oil for the next hundred years or so”? There would suddenly be a worldwide glut of oil with no port to ship it to. Hmmmm. Supply/Demand. Think…think… what happens when you have increasing stockpiles of a commodity sitting in tankers with no destination port? What happens? Ummmmm….. THE FREAKING BOTTOM OF THE PRICE OF THAT COMMODITY FALLS OUT!!1

      Oh. So you mean we get cheap oil? Oh. Well, that’s where we wanted to be anyway, right? Cheap and secure oil? And, oh, did you also know that the US, despite having the oldest oil refineries in the world, is still capable of out producing any other 5 countries combined. And did you also know that Iran, among other countries who hate us, have to import 100% of their fuel despite being awash in oil?

      Yeah. That’s right. We would then hold all the cards. Iran would not have enough money to continue funding Nukes and we could easily just say “you know, until the Ayatollahs decide to step down and allow for free elections in Iran, we’re going to embargo gas imports from your country. Oh, sure, you can get gas somewhere else, but the US will not sell you a single barrel of gas or fuel oil.” Since we can do it more cheaply, this means that Iranians, not US citizens, would be paying $5/gallon or more to fill their cars. It would cripple any military industrial complex in a country like Iran and we would be free to sell not only gas, but oil as well to other emerging nations, such as, oh I don’t know, CHINA?

      How quickly, then, do you suppose the middle east would suddenly become our very best friends?

    • edintexas

      Besides all the technical issues others have pointed out, you forgot the basic psychology of simply committing to something POSITIVE. If Dear Leader would announce that the Administration would henceforth strongly support increased North American oil supply, it would immediately result in some reduction in price. Actual increase in supply would result in greater decreases.

    • citizenkh

      Would provide a low API gravity crude of 20. This would provide a replacement for the drastically declined Mayan crude from PEMEX as well as the significant imports of very heavy crude from Venezuela.

      While I do know what the recent data is, historically such refineries (there are only 11 of them capable economically to process it) have import crude from PEMEX with a 17 to 20 API gravity and from Venezuela in the 10 to 14 API gravity range.

      Such refineries also produce a lot of petroleum coke and they also have contracts to supply certain quantities of this refined product. They have invested quite SIGNIFICANT capital into the required process units to enable them to do so. One reason is to capitalize on the lower per barrel price fetched by such heavy crude with a limited refining capacity WORLDWIDE with the capability to refine such feedstock efficiently and economically.

      eia completely misses the point even in this article as to why the scramble to replace Venezuelan crude with Mayan back in the 2003 PDVSA strike.

      http://www.eia.gov/pub/oil_gas/petroleum/feature_articles/2003/venezuelan/vzimpacts.htm

      One of the problem faced to today is that we rely on economist, who have absolutely no knowledge of engineering and operations to pass judgement on matters they actually have no capacity to understand, or so it seems.

  • http://pocketchangeproductions.net/ anotherindyfilmguy

    Want to lower prices…

  • paulrobert

    [Sorry, for some reason I'm unable to use the "Reply To This" button]

    quill, I’m making no such mistake. I’m referring to the expert analyses to which I linked. And yes, as long as I don’t have a good reason to think the experts in question are insincerely presenting grossly invalid conclusions (which I don’t), I’ll take expert analysis over Bill O’Reilly’s rants regarding the degree to which expanded drilling is likely to impact gasoline prices.

    But by all means, if you have some expert analysis (preferably non-partisan) with different conclusions, please share. Do you have any such analysis that concludes that expanding domestic drilling would have a significant impact on gas prices either in the near future or even decades from now?

    • quill67

      Even small changes in oil supplies have very large changes in prices. Therefore, even if your estimates are correct (which they are not), bringing those supplies on-line would have a very large impact on price because in the oil industry small changes in supply cause large changes in prices. Also, as Gamecock correctly points out, the increase in potential supply would also limit any price changes caused by speculators.

      • paulrobert

        You keep responding as if all I’ve presented were expert analyses that concluded that the percent expansion of supply would be small. But if you pay attention to what I’m saying and if you actually read those brief reports, you will see that I’m referring to their conclusions regarding effects on prices, not just their conclusions regarding effect on supply.

        I am leaving the analysis up to those experts, letting them factor in effect on supply and anything else and do whatever calculations they do to reach conclusions regarding effect on prices. That’s how I’ve approached it.

        Again — do you have a link to any expert analysis or stated conclusion (preferably from a non-partisan source) that conflicts with what I’m saying?

        Posted by 74.73.163.104 via http://webwarper.net, created by AlgART: http://algart.net/
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        • http://stevemaley.com Steve Maley

          You put a lot of stock in the opinions of “experts”.

          They may have well-informed opinions that are based on all of the available data, but in many cases that data is sparse.

          We have drilled a mere handful of wells off the US east coast, as one example. The seismic database there is ancient, nowhere near state-of-the-art. Scientific extrapolations of potential are based on the nearest analogy — offshore Mauritania (look it up).

          Ten years ago, none of the experts perceived, much less quantified, the potential in the Bakken shale, the Haynesville, the Eagleford, the Marcellus, the Utica, the Fayetteville, the Woodford, the Niobrara, the Monterrey … shall I go on?

          • paulrobert

            ok, yes, I realize that the experts are not omniscient and that they can only speculate on what is out there to be drilled.

            But I’m still left with their best effort to project and estimate the effect on oil and gasoline prices under one policy scenario (no restriction on drilling) vs. the other, and their conclusion is that there wouldn’t be a significant difference.

            Is your argument simply that there could be much more out there than they are assuming — and that I should assume that they are probably so, so far off that it dramatically changes the whole picture such that global supply would be expanded enough to significantly reduce gasoline prices?

            Directional arguments can obviously be made, as can anecdotal arguments. But this comes down to analysis and calculation of magnitude of effect. But I’ll request again: Can you share with me a link or two to an expert analysis or quote that supports the contention that gasoline prices could be significantly lower in the near future (or even longer term) if domestic drilling were opened up? Or even that plus the other policy changes and general approaches that you list in your diary?

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          • Common_Cents

            Are you saying we should not go all out on production because it is futile in the end anyway? It’s a defeatist attitude.

            So obama’s policy of killing production is going to help? How?

          • paulrobert

            There are reasons to drill more — jobs, tax revenues, balance of trade.

            But it’s silly to call an analytical point a “defeatist attitude”. I may be incorrect or correct in my point that (based mainly on the reports I’ve read and provided URLs for on this thread) more open domestic drilling would not significantly impact gasoline prices, but if I’m right that’s just facing reality, not being defeatist. I don’t shape my assumptions and conclusions to fit what I wish were reality. I try to sort out as best I can what assumptions and conclusions fit reality, and then advocate policies with that in mind.

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          • duanej

            http://www.nd.gov/ndic/ic-press/bakken-form-06.pdf

            http://www.rand.org/content/dam/rand/pubs/monographs/2005/RAND_MG414.pdf

            You are WRONG. Demonstrably so. The oil is here in the US and EVERYONE knows it, even if they choose not to admit it. If the oil was not here, the Bakken oil reserve would just lay there untouched, yet it is showing itself to be one of the largest oil plays in the entire world.

            It isn’t supply that is the problem. It is distribution. It is the fact that the entire world depends on the exports of a few countries whose leadership hates the US, Isreal, or other countries/religions/whatever.

            We currently get 25% of our oil today from Canada, our neighbors to the north. The other 75% comes to us from Iraq, Saudi Arabia, Venezuela, and so on. We are these other countries primary customer of oil they produce. We are not the only customer, but we are their biggest.

            What happens to the global market for oil, Paul, when the US finally commits to domestic and friendly oil supplies only? Well, Saudi Arabia, et al, lose a ginormous customer. Their stock piles begin to, well, stock pile. On the day after our next president commits the full resources of the US to domestic and friendly government countries only, oil prices will begin to fall, just as they did when Bush lifted the presidential moratoreum on offshore drilling in the fall of 2007 There was still a congressional moratoreum in place at the time. In the fall of 2008, congress lifted its ban. The price of oil hit a low of $39/barrel. That was just on the announcement of the end of the moaratorems.

            Currently Saudi Arabial exports 17% of its oil to the US. Imagine Saudi Arabia losing 17% of its business over night. What would that look like? They suddenly would have 17% of their oil they could no longer move. It would just sit there.

            The cheif factors for oil prices right now are the stabililty of the area of the word where the oil comes from and the relationship the US has with those countries. The area where oil is produced and exported is politically unstable and they clearly hate us. If we suddenly commit to domestic and politically friendly consumption of oil, these other countries would dry up economically — OVER NIGHT. You could expect light sweet crude to trade somewhere below $39/barrel until we commit again to consumption of foreign oil.

            Doing this would also create a stronger dollar here in the US, so $39/barrel of oil would look more like the 1990 dollar vs today’s dollar. You would also see Iran drop its intentions for creating nuclear weapons simply because it could no longer afford to do so.

            If you want peace in the middle east, turn on US domestic drilling and build the Keystone pipeline and suddenly, you will have it.

          • citizenkh

            Thus Brent crude is priced FOB tanker in the North Sea as one example. Transportation and handling charges must be tacked on to get a complete picture of the price of a barrel of crude delivered to a refinery.

            Then there is also a transportation and handling charge to get it to the pump (for vehicular fuel).

            Then there are other profit centers such a naphtha sales to olefins cracker units, heavy fuel oil sales (much of it is exported), etc…

          • curlygirlconservative

            I believe, is if you want to win these arguments with liberals (or anybody) it behooves us to come up with some analytical data behind it… Liberals are famous for making their points in multiple paragraphs with lots of charts and graphs. “If you can’t dazzle them with brilliance, bafflet them with bullsh*t”. – unknown (to me)

          • poillini

            Try any edition, 1948 to date, of Economics by Dr. Paul A. Samuelson for an explanation of supply and demand even you can understand. His credentials–the first American to win the Nobel Memorial Prize in Economic Sciences.

          • edintexas

            I think we are feeding a Troll A very good Troll, but still a Troll with a 2 day history of posts. And prior to this thread, he had exactly 3 posts, and only 2 posts on the 24th.

            I could be mistaken, but I’ll bet he will never be mistaken (in his mind).

            Ed

          • http://stevemaley.com Steve Maley

            Not for challenging me, but for being a retread.

          • funwithknives

            On the other side of the planet look to the south end of Cyprus, and similar.Projections are ab-so-lutely stunning, for Oil, Gas and Oil Equivalents.The Greeks get the benefits and Israel is their partner and protector.
            to Paulrobert: Check out ‘oilonline.com’ /’ Offshore Engineer’ for some backround you will find informative. I do, every month.

  • paulrobert

    Speculators speculate about expected short-term shifts in global supply and/or related costs (e.g., war in the Persian Gulf disrupting supplies and/or raising insurance costs of shipping), and/or global demand (e.g., expecting global recession vs. expansion).

    I don’t think speculators respond much, if at all, to a change in expectation regarding a very tiny potential percentage of global drilling output years from now.

    • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

      If the US government were to adopt policies that were an all out push to increase domestic supply and speculators were convinced that the push was real and would be sustained, it would have an effect on even short term speculation because some of the policies would cause more supply to be available in the short term,, especially policies that brought back more Gulf oil drilling.

      • paulrobert

        Mike (or do you prefer to be called “gamecock”?),

        Obviously DIRECTIONALLY anything that increases supply will eventually lower prices, other things equal. But we are talking about whether or not the policies in question — opening up domestic drilling much more — would have a SIGNIFICANT impact on gas prices, either now or in the foreseeable future. The expert analyses I’ve linked to apparently say “No”. Do you have any expert analysis that says “Yes”?

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        • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

          in those.

          I answer to

          Mike
          DeVine Law
          gamecock
          rooster
          Oh Great One and
          Cockstradamus

          • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

            t

        • duanej

          Just the mention of removing the presidential moratoreum on offshore drilling by Bush in 2007, followed by a congressional lifting of the same forced oil prices down to $39/barrel within a 1 month period. What followed for us here at home was $1.89 average gallon of gas price here domestically.

          That was just on the news of the lifting of the OCS ban.

          The problem is you don’t know very much.

    • http://stevemaley.com Steve Maley

      Prices are stable when about 1-2 million barrels a day of excess production overhang the market. That’s enough to cover for minor regional distribution disruptions, etc.

      When that overhang goes away, refiners and other users bid up the value of the commodity. They have to have it to maintain operations. As we have seen recently, the price can shoot up dramatically.

      Conversely, when there’s a little too much excess production, or when economic conditions cause demand to fall out from under supply, prices fall precipitously. Even though the excess production is, say, 500,000 barrels a day, it costs money to store.

      Bottom line, the supply/demand thingy is balanced on a knife edge and the demand is inelastic.

      • paulrobert

        So:

        (1) What is your argument that expanding domestic drilling (or other policies and general approaches you advocate) would lower gas prices in the short term, or even longer term?

        (2) What expert analysis or quotes of commentary (etc.) can you offer to support your argument, as opposed to simply equating your DIRECTIONAL argument (that, other things equal, such policies would favor lower prices) with an argument that there would be a SIGNIFICANT difference in gas prices?

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    • duanej

      your profound ignorance of the topic of oil futures. You obviously haven’t a clue about proven oil reserves here in the US, nor do you have any clear understanding of where our oil comes from right now. Go buy a book, learn a few things, then address us from an educated standpoint, not a liberal “head in the sand” stance.

  • renl57

    …is to force Iran to abandon its nuclear ambitions.

    Speculators are driving up the price of oil due to all the saber-rattling going on in the Middle East. Analysts are in near-universal agreement on that.

    And war between Israel and Iran would send oil prices through the roof. Nothing we could do in ANWR or Keystone XL could even begin to compensate for a cutoff of shipping through the Persian Gulf.

    So you want to do something about high oil prices? Do something about the saber-rattling in the Middle East.

    • paulrobert

      Yes, forcing Iran to abandon its nuclear ambitions would be the best of both worlds, but I wouldn’t want to abandon the “saber-rattling” for the sake of oil prices if that meant also abandoning the pressure needed to have a chance at getting Iran to stop it’s march toward nuclear weapons. I’d rather live in a world — temporarily, or even longer term — with significantly higher oil prices than live with a nuclear-armed Iran.

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      • quill67

        I assume Paulrobert, that you mean higher oil prices in the US (not world-wide) that would cause US to either develop our own oil or alternative sources of energy–Thus driving down oil prices to such an extent that Middle East countries do not have the resources to build up a war machine.

        The problem with this approach is that other countries around the world will still buy unless we come up with a new technology that is cheaper than oil. Second, dictators will let their people starve to continue their weapons programs so even if world oil prices are driven down, they will take what money they get to develop weapons.

        • paulrobert

          I don’t follow your argument as a response to my comment.

          I was just saying that I wouldn’t want to remove the threat of attacking Iran (or actually doing so) for the sake of lower oil prices. I’d rather have higher oil prices than a nuclear-armed Iran. I don’t see how your reply is responding to that point.

          I also don’t know what you mean re: “higher oil prices in the US (not world-wide)”. Oil is essentially priced in a global market, although ultimate consumer prices can be affected by taxation, distribution, price controls, refining capacity/efficiency, and local spikes in demand (I assume), etc.

          But yes, key to reducing revenues going to bad regimes would be reducing global oil demand. Of course, US demand is a key component of global demand.

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          • quill67

            First, I agree that if attacking Iran meant higher oil prices that would be a fair price to pay if it kept them from going nuclear.

            A domestic tax only increases the price of oil in the US (after tax) but has less impact on world.

            And while it would be nice to reduce revenues to the middle east with big customers of oil in China, India, etc. simply reducing our demand for oil is not enough. To be effective we need a lower cost of energy that makes oil obsolete.

          • paulrobert

            Re: A domestic tax only increases the price of oil in the US (after tax) but has less impact on world.

            True, but US demand is a large portion of global demand, so reducing US demand substantially can mean a significant reduction in global demand.

            Plus, higher after-tax gas and oil prices could stimulate development (in terms of technology and scale) of alternative technologies, which would then be more competitive globally, thus affecting global demand from that angle as well.

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          • quill67

            But so far it is not. There are some hopeful reports but nothing has yet made a breakthrough. Some alternative energy source might be developed tomorrow, but it seems more likely that it will take more than a decade.

          • paulrobert

            And again, I favor free markets, but where there are significant negative externalities, I think Pigouvian taxes are in order to address the cost to society that is not reflected otherwise in the market price.

            For example, if I bought the premise that smokers cost society heavily (due to health problems), I’d support heavy tobacco taxes. It so happens that I think that premise is dubious because I’ve seen reports that indicate smokers actually save taxpayers in the long run by dying younger and consuming less in retirement benefits, but I’m just making the point re: negative externalities and Pigouvian taxation.

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          • sulmak

            Especially when you factor in the extra water and flood control it provides.

            But it was made non-cost effective by environmental protections. Mainly the more obscure provisions of the Endangered Species Act that makes populations that might, but probably won’t, become a species in millions of years, and also the Wild and Scenic Rivers Act.

            I would be willing to bet that a geothermal plant built in Yellowstone National Park would be cost effective, but greenies wouldn’t have that either.

            The main impediment to wind and solar, other than the already mediocre power output, is that their power output is incredibly variable. They thus rely on either other power plants or a storage medium. The problem is that it takes energy to spin up the turbines on traditional power plants, a the Netherlands found that their wind plants caused a net loss because of this. Thus you need a good storage medium, the only proven storage medium is in fact, hydro, in what is called a pump storage facility, basically a hydro dam that can be pumped backwards to store and later release. But these, though built here profitably in the ’70s, have been set back by the environmental laws mentioned above.

          • paulrobert

            [nt]

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      • duanej

        Iran can march towards nuclear armament so long as they have the money to do so. When they no longer have the money to do so, they will stop. But how, duanej, can we stop them from getting the money? That’s a great question and I’m glad you asked. You simply turn US policy on its head and commit to domestic and friendly government only consumption. Will that actually happen over night? Of course not. But you will have to build the Keystone pipeline and you will have to drill domestically. The NEWS of just the commitment, though, will send shock waves through the commodities market.

        The middle east oil producing nations will be under bidding each other to offload their excesses before their biggest customer walks away. Though Iran does not export here to the US, they will lose money on their existing stock piles and will be hard pressed to continue drilling with the price of oil at record lows. They will be defunded and defanged.

        Once the balance of power shifts to the US, we can simply stop the sale of any gasoline or fuel oil to Iran until they bend — did I forget to mention that they buy almost all of their gas and fuel oil from us? Oops.

  • paulrobert

    One of the smartest things we could do re: energy (and fiscal) policy is to impose a substantial carbon tax.

    This is NOT a lefty idea. Many conservative economists and other conservatives support it. One of the major proponents is Greg Mankiw, former Chairman of W Bush’s Council of Economic Advisors, and Romney adviser in 2008 and again now. Please see Mankiw’s argument (in this case, specifically for a gasoline tax, although he supports a carbon tax more broadly) http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html published also in the WSJ (Mankiw is a regular contributor at WSJ).

    Yes, I know, anything with the word “tax” in it generates a reflexive hostile response from some, and my ideal is small government and commensurate low taxation, and little government interference in markets, BUT the reason for an exception here is what economists call “negative externalities”, meaning the price of oil and gas that is paid does not reflect the true total cost to us.

    1. For one thing, the true cost of oil and related products is actually even higher than the prices we pay, because a significant amount of our military spending is necessitated by the need to keep Middle East oil supply secure (to keep oil prices under control to some degree). And occasionally, this vital interest makes the difference between committing troops or not, meaning it costs the lives of some of our bravest, most patriotic Americans. Such a carbon tax would reduce our (and our friends’ and allies’) dependence on oil and thus and enable us to reduce Defense spending without reducing our physical or economic security, and to be less likely to put our troops at risk.

    2. Oil revenues go to a great degree to bad regimes, most notably Iran, providing them revenues to threaten and harm America and our friends and allies.

    3. Yes, I will include climate change, despite what I think is the popular view here. When the vast majority of climate scientists agree on something, I’m generally deferential on that matter, at least as a matter of probability. Reducing carbon consumption would likely slow climate change (I don’t claim to know how much). Additionally, air pollution would be reduced.

    4. A substantial carbon tax would reduce consumption, which would partly offset the effect of the tax, and moreover would stimulate alternative energy development (in terms of technological advances and larger-scale deployment and related economies of scale to bring down prices).

    5. It would generate needed revenue. Yes, I know, we should focus on reducing projected spending (at least) as the primary means of reducing projected deficits and debt. But it is only politically realistic to realize that higher taxes are a very real possibility, and such a carbon tax would be less growth-inhibiting over time than would higher tax rates, which would reduce incentives to work and invest.

    6. Reducing consumption would also improve our balance of trade.

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    • http://www.nighttwister.com NightTwister

      1. We aren’t in the Middle East for oil. Only Ron Paul and the KOS kids think that.

      2. Buying from our friends (e.g. Keystone pipeline) and opening up our own areas to exploration would prevent this.

      3. Do you defer the liars who created data out of thin air to support their conclusions? How about hacking to get info on opponents? The vast majority don’t agree, only the ones making a profit off of it.

      4. Reducing consumption isn’t the American Way. It’s the North Korean way.

      5. Draconian taxes on businesses and consumers don’t generate revenue, they decrease it by stifling investment.

      6. Only if we continue to prevent buying from ourselves and friends.

      • quill67

        The other point I’ll make is that it is funny that the EPA regulates fuel economy. Their are two assumptions they make

        1) Fuel economy and emissions are directly related. They are not. For example, an SUV might actually emit less CO per mile than a compact car (This was true even as recently as 2000. I have not checked lately)

        2) That increased fuel economy will result in less fuel use. But since cars that are more efficient are cheaper to drive—people drive them more! This means that they actually might us more gas because they drive more miles!

        • YnotNOW

          Which has two major problems that he hasn’t factored in:
          1) Reduced furel use is a reflection of less economic activity – meaning that it causes (or reflects) us all being poorer.

          2) Reduced total fuel use does NOT necesarily mean less production & money for the OPEC nations, because they are (largely) the low-cost suppliers. Reduced production would come first from the higher-cost sources, such as US Outer Continental Shelf platforms, that cannot compete in the smaller market with tighter profit margins. Higher-cost sources would be disproportionately hurt, and revenue to the Saudi’s and others would be only marginally hurt.

          Neither of the above are what I would call “desirable”.

      • paulrobert

        1. Seriously, it’s dumb and offensive for you to associate what I said with that idiot “non-interventionist” Ron Paul. But it’s simply naive of you to think that our military objectives, commitments, related spending, and occasional loss of lives of our troops (and others) is unrelated to our vital interest in securing stable oil supply to the world market.

        2. You apparently don’t understand that oil prices are set in a global market, and as I’ve pointed out, expansion of domestic drilling apparently wouldn’t significantly affect global supply. I’m assuming that neither would Keystone, even if it is desirable.

        3. I think you are the one letting your bias affect your assessment of the relative credibility of sources.

        4. That’s silly. Although perhaps that mentality explains the obesity problem we have.

        5. You’re missing my point. To collect a given amount of revenue, I’d rather the taxation be less growth-inhibiting, and a carbon tax (like consumption taxes generally) would be less growth-inhibiting over time than would an increase in income tax rates (on labor income or investment income).

        6. I don’t think we’re going to be self-sufficient re: oil anytime soon. And imports from Canada and Mexico or other “friends” still factor into our balance of trade.

        So you’re 0 for 6. Sorry.

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        • http://www.nighttwister.com NightTwister

          1. Our interests go beyond the price of oil. Stability in the world is our interest and it goes way beyond that. I see no perceivable difference between your position and that of Ron Paul. In other words, “I calls ‘em like I sees ‘em”.

          2. If we buy from ourselves and our friends, we control the price that we have to pay. If we meet demand here, we don’t have to buy from terrorists.

          3. I think you’re letting your bias affect your assessment of the relative credibility of sources.

          4. Obesity is a personal responsibility problem, not a government control problem.

          5. Carbon tax is extremely growth-inhibiting. It stifles business investment which is the vehicle to create jobs and spur on other investments.

          6. We could easily be self-sufficient in a very short time, and between now and then we should take advantage of every opportunity to stop buying from terrorists.

          Looks like you’re 0 for 6. Not really sure what you’re doing here. Doesn’t Obama have another site working for his re-election?

          • paulrobert

            It is difficult trying to reason with you, but I’ll give it another shot.

            1. Don’t be ridiculous. Ron Paul is a non-interventionist. I am very much an interventionist. I WANT us to protect our vital interest in global oil supply, including Persian Gulf oil (although I’d like to see our allies shoulder more of the burden). And I supported both wars against Iraq (and would again today), including the first one, which I think was largely related to securing stable oil (deterring future aggression in the region generally, and preventing Saddam from concentrating more control over supply and perhaps at some point threatening other Gulf oil-producers), or as James Baker put it at the time “It’s about jobs”. We have vital economic interests. We SHOULD protect them, including militarily, as long as we also have “right” on our side as well as “might”, and we generally do, because we are a good nation as well as a great nation. And I said on this thread earlier that I wouldn’t want to remove the threat of striking Iran (or actually doing so) even for the sake of lower oil prices. And you see no difference between me and Ron Paul??? You’ve got to be kidding.

            2. What is it about “global market” that you can’t understand?

            [skipping #3]

            4. I was being flip re: “obesity”, because your argument (for lack of a better word) re: consumption (“North Korea”) was just silly.

            5. I was very clear that I was speaking in relative terms. A carbon tax — and consumption taxes generally — would be less growth-inhibiting than increases in tax rates on work and investment. Please pay attention.

            6. Have some supporting evidence of that contention that “We could easily be self-sufficient in a very short time” or did you just pull that out of [body part] because you thought it would sound good? Also, re: “stop buying from terrorists”, again, you’re not getting the global market thing. If we buy less from bad nations, others will buy more from them. It’s largely fungible.

            Re: Not really sure what you?re doing here. Doesn?t Obama have another site working for his re-election?

            That’s just lame. Obama is a crappy president and I’ll support the R nominee, even though I’m not thrilled with any of them. I have made just two points on this thread: (1) the limits on drilling (and other policies and rhetoric from Obama) are not responsible for the current high price of gasoline (which is just my understanding of the facts, and a desire to correct what I think was a misrepresentation of the facts, not reflective of any desire on my part to shill for Obama), and (2) a carbon tax would be smart policy (which, as I’ve pointed out, is a policy idea championed by Greg Mankiw among other conservatives), and which I favor in part because tax rate increases would be much worse for our economy, and in part because the increased revenue and the Defense savings could reduce projected deficits over the medium/long-term and thus help us turn away from our current fiscal course, which is headed for disaster.

            If you’re reaction to what I’ve said is to accuse me of being an Obama shill, or even an Obama supporter (or for that matter even someone who isn’t opposed to Obama), then you’re being a lame baby, and hopefully not representative of others here.

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          • http://www.nighttwister.com NightTwister

            Yeah, not the first time I’ve heard that.

            1. If you don’t want to be compared to Ron Paul, don’t sound like him. Be careful how you state things. We aren’t involved in the Middle East for oil. Is it part of why we’re there? Sure. But it’s not the reason.

            2. What is it about “energy security” that you cannot understand?

            3. Good choice.

            4. It’s not silly. It goes to the heart of who we are as individuals and as a nation. We have an individual, entrepreneurial spirit that dares to dream big and find solutions rather than settle for mediocrity. There is a solution that would allow us to continue to increase consumption and stop buying oil from terrorists. We just need to get the government out of the way so that can happen.

            5. Taxes are growth-inhibiting. Period. Please pay attention. More or less doesn’t matter. Perhaps you’ve just arrived here in this world and are unaware of its financial condition. Or perhaps you’re a resurrected John Keynes and want to have one more go at it.

            6. Where other people buy their oil from is their concern. If we produce more oil here, it is added to the global market, dropping prices everywhere. That means less money for terrorists. Yeah….global market. I get it.

            Lowering the cost of delivery for goods brings down prices and improves the bottom line for businesses. This creates jobs. Increasing energy exploration and production creates jobs. It also increases tax revenue because these people are now contributing to the system rather than taking from it.

            More than anything, you seem simply unable to understand that money in the hands of investors is much more effective than money in the hands of government. A carbon tax would take money out of the system and make things worse, not better (see stimulus). I see no difference between your ideas and Obama’s. You don’t like that? Not my problem.

        • aesthete

          US policymaking vis a vis Iraqi oil has been to push the Kurds towards sharing their oil with the rest of Iraq as an attempt to produce a more stable Iraq, and one with a more “equitable” system of revenue sharing through either partial or complete state control of the oil industry. Access to Iraq’s oil was a tertiary concern; we broke off established and more or less stable agreements between oil corps and the more or less autonomous Iraqi Kurds as an attempt to make Iraq politically stable. Certainly, France’s Iraq policy prior to OIF got them much more oil at much less cost than our policy has done in the later years. This notion that the actions in OIF were a cost-effective way to meet the needs of oil corps, much less the primary motivator behind our policy in the region, is simply absurd.

          Reducing consumption in response to real-world lack is reasonable. Doing so at the behest of our political masters? Less so.

          Additionally, I have no idea what problem you have with Canada and Mexico such that the “balance of trade” is My guess is that it will be populist, protectionist pablum of the sort not supported by our understanding of economics or common sense.

          • paulrobert

            Apparently you think my perspective is quite different from what it actually is.

            First of all, it’s laughable for you to say that I have a “problem” with trade with Canada or Mexico and to “guess” that I’m a populist protectionist, when I am quite the opposite. I’m a free trader. I’m strongly inclined toward free markets internationally and domestically. I was responding to someone else’s point. I had pointed out that reducing our demand for oil would improve our balance of trade. His/her reply included a reference to importing from our “friends”, so I merely pointed out that importing from friends adds to a trade deficit just as would importing from anyone else. That’s all. And I do think we would benefit from improving our balance of trade, but not by government obstructing/limiting trade (I oppose tariffs, import quotas, etc.). So please don’t let your imagination run wild and start throwing around insulting characterizations without any basis.

            As for our Defense objectives, commitments, related spending, and occasional war, as I said before it would be unrealistic to think that they are detached from our vital interest in ensuring a stable supply of oil to the global market. I’m NOT saying we go to war to take other nations’ oil. We don’t. If we wanted to, we could have, but we are not an imperial power that conquers other nations and extracts their resources. We have higher moral standards, and that’s part of what makes us the greatest nation in history — we don’t use our power to squeeze all we can out of other nations and peoples even though we have that capacity. But we have vital economic interests, and probably foremost among them is ensuring a stable supply of oil to the global market. And we plan our military resources and operations and our strategic relationships, etc. with that objective in mind. And I’m glad we do. I think it is naive to think we don’t.

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          • aesthete

            and apologies for mischaracterising your position — I didn’t catch the balance of trade discussion above.

          • paulrobert

            (nt)

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    • btpull

      First of all gasoline consumption in the US has declined every year for the last 5 years, which tells you that our consumption is not driving world wide prices; otherwise the price of oil would have declined with the our decline in consumption.

      Second the weak dollar and alter-low interest rate policies of the Fed and Obama administration along with the printing of trillions of dollars has contributed significantly to high oil prices simply because oil is traded in US dollars.

      Third economically it makes no sense to switch to an less efficient energy source.

      Fourth people still have to drive to work. Take kids to practice, go to the store, etc. There is a limit to how much consumption can decline.

      A carbon tax even if it decreased consumption in the US would not have a significant impact on world price of oil, it would hit consumers in the pocket book, and put more negative pressure on the US economy at a time when the economy is trying to get back to a normal level of economic growth.

      • paulrobert

        You write:
        First of all gasoline consumption in the US has declined every year for the last 5 years, which tells you that our consumption is not driving world wide prices; otherwise the price of oil would have declined with the our decline in consumption.

        If you’re going to call someone else’s argument “stupid”, you shouldn’t ironically say something so obviously illogical. That was an obvious non sequitur. No, it would not follow that declining US consumption would lead to declining prices if consumption were a factor. First, global demand is a key factor, not just domestic consumption. Lower US demand is a significant factor in global demand, but that doesn’t mean that a decline in US demand necessarily means a decline in global demand. Second, supply is a factor. And there are other factors. Suffice to say that your logic doesn’t hold up. Other things equal, substantially lower US demand for oil and related products (vs. whatever reference point as the baseline scenario) means lower prices.

        Re: economically it makes no sense to switch to an less efficient energy source.

        Apparently you missed my whole point re: negative externalities.

        Re: people still have to drive to work. Take kids to practice, go to the store, etc. There is a limit to how much consumption can decline.

        If the after-tax price were higher, people would find ways to conserve, and also alternatives energy sources would become more price-competitive (not just due to the higher price of carbon-based fuels, but also because the alternatives advance faster in technology and also gain economies of scale.)

        Re: A carbon tax even if it decreased consumption in the US would not have a significant impact on world price of oil

        The US is a significant portion of global demand, so it makes sense that, other things equal, significantly lower US consumption (either vs. today or vs. a projected baseline) would mean significantly lower global demand and thus lower prices. That doesn’t make sense to you?

        Re: would…put more negative pressure on the US economy at a time when the economy is trying to get back to a normal level of economic growth.

        That’s an argument for not imposing this tax now (and I concur), not that it would be bad policy after further economic revovery.

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        • btpull

          Ironically you counter with “other things are equal” then point out other things are not equal. Face it the US consumer is not the driving force behind oil prices. Placing a punitive tax on the middle class would only increase out-of-pocket costs for millions.

          Only half of a barrel of oil ends up in gasoline. Other portions go to asphalt, bunker fuel, jet fuel, heating oil, light gases, plastics, manufacturing chemicals, medicine, etc. A carbon tax would increase costs for virtually everything in the economy. How many of these non-gasoline uses have a “green alternative”?

          As far as externalities those pushing “green” tend to discount or forget about the externalilites associated with green technology. Look at ethanol and food prices; solar panels and river beds; solar panel farms and the eco-system in the desert; wind-farms and the California Condor; home solar panels and the disposal of 10 of millions of batteries; etc.

          • paulrobert

            I guess you aren’t familiar with the concept of ceteris paribus (“other things equal”) which is a fundamental concept in economics.

            I am strongly opposed to corn ethanol subsidies. Corn ethanol is a joke. It’s inefficient from every perspective, and it’s a ripoff of the taxpayers, and yes, diverts corn from food and thus drives up food prices. Meanwhile, at least last I checked we had import quotas (limits) on imported sugar ethanol from Brazil that is much more efficient in terms of energy in vs. energy out and would be cheaper. Yet Grover Norquist defends ethanol subsidies simply because they are provided through the tax code. The are subsidies, and even worse than most.

            As for externalities of alternative energy sources, you are absolutely right that would should consider them, and some people overlook them. But the fact that there are some such externalities doesn’t mean that the externalities in each case are worse, as bad, or not as bad as those with carbon consumption. And if a particular alternative energy has very high negative externalities, then Pigouvian taxation is appropriate there too, until either that externality is sufficiently mitigated or a better alternative emerges via market forces on a playing field adjusted for such negative externalities.

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          • onemovoter

            are an artificial input to the private economy. Your call for a tax on carbon is really to counter one artificial input with another. Right now we are suffering from an inflated credit bubble economy barely afloat by the pumping of the Federal Reserve. The devaluation of the US Dollar has in turned increased the dollar amount needed to buy oil.

            To put a tax on that oil only serves to soak up the dollars out in the economy back to the government, which was the source of the inflated dollar amount. However this attacks the wrong source of the inflated money supply, and punishes the consumer in the middle.

            It’s the same thing we suffered from in the late 70′s with stagflation. We solved it by lowering taxes, lowering the printing of money, and higher interest rates to soak excess money back to the banks. We should be doing the same again.

            To the point of alternative energy sources, the entire energy field should be left alone across the board. All energy fields should be treated as equal as possible with no subsidies or special deals. Let them all compete on their own, and eventually something better will come along. Let market forces chose.

          • btpull

            Yes; simplifying assumptions are great for teaching concepts and are very useful in the academic world, but they rarely hold-up in the real world.

          • paulrobert

            You are confusing the concept of ceteris paribus for the purpose of establishing directional effect (and magnitude in some cases) with the assumption (which no one makes) that all things truly are equal. If you don’t understand the difference, I don’t know if I can help you. Perhaps you could read a bit at http://en.wikipedia.org/wiki/Ceteris_paribus

            I can assure you that, whether you realize it or not, you apply the concept of ceteris paribus many times every day in your own life, as we all do. You choose to do something because you think that, although you don’t know if you’re life will be better or worse subsequently, you assume that it will be better if you do that thing than if you don’t — meaning you’ll be better off, other things equal (ceteris paribus).

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    • Common_Cents

      by any new taxation. Carbon tax is just another beach head in which the govt displaces savings/investment.

      Carbon tax is text book theoretical fantasy and will do nothing but cause trouble. Especially when applied to one country. To think you can get global agreement is another fantasy, look at the UN for your answer. Even if it was possible, putting more and more money and control in govt hands is disastrous no matter what the issue.

      • Common_Cents

        That would go a long way to solve almost all of our problems.

        • paulrobert

          …considering they are generally pro-tax.

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        • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

          tea

    • http://stevemaley.com Steve Maley

      /

      • Bill S

        His kind doesn’t accept anyone else’s opinion. I would mention that you are providing the “expert analysis” that he seems so desperate to see, but he’d never listen. Best thing to do is Hinz him.

        • paulrobert

          Surely any expert (A) is not the only expert, and (B) is usually well-equipped to supply links to analyses and quotes of (other) experts supporting his assertion, and that’s what I’ve asked him for, given that I’ve supplied links to analyses that seem to reach a conclusion that conflicts with his assertion.

          Is that so unreasonable of me? Does that in any way indicate that I don’t listen to others? On the contrary, I’m asking for information that could potentially cast doubt on what I’ve said or even change my mind (re: whether or not expanding drilling would likely significantly affect gas prices in the near term or even later).

          I’m very far from an expert on this subject. I’m just a guy who looks to experts to try to find answers to questions that require expertise that I (and most people) lack. Long ago I saw those analysis to which I linked, so when I saw Steve implying something to the contrary, I made that point and asked for something that should make me doubt it. I just haven’t gotten anything of that sort — some link to some analysis or (non-partisan) expert conclusion stating that expanded drilling would have a significant impact on gas prices sometime soon or even later.

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          • paulrobert

            I Googled a bit looking for expert analysis or quotes on this question of whether or not expanded domestic drilling would likely significantly affect the price of gasoline in the near future or later.

            I’ve mostly come across partisan non-experts, along with references by others to the same studies I have provided from EIA. But FWIW, here’s a commentary from a fellow at the Council on Foreign Relations, referring at least in part to one of those EIA studies: http://www.cfr.org/united-states/new-offshore-drilling-yield/p21784

            He states:
            The potential impact on oil prices and volumes of opening more of the Outer Continental Shelf (OCS) has been exhaustively (and exhaustingly) studied. Last year, the U.S. Energy Information Administration (EIA) estimated that reversing President George W. Bush’s decision to open up much of the OCS to exploration and production would increase oil prices by 11 cents per barrel in 2020 and $1.33 per barrel in 2030, which would raise gasoline prices by less than a tenth of a penny per gallon in 2020 and by only three cents per gallon after a decade more.

            As a note, he also points out that there are OTHER reasons why it could be a good idea:
            The broader economic impacts are potentially more significant. One 2008 study put the potential revenues from opening up all off-limits OCS at $1.1 trillion and the direct costs at around $200 billion, for a net direct benefit of about $900 billion.

            I also saw this piece by the same guy, which seems to be an even-handed (no partisan axe to grind) explanation of 5 myths (from both “sides”) re: the Keystone Pipeline http://www.cfr.org/energyenvironment/five-myths-keystone-xl-pipeline/p27099

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      • SoFiMil

        Sing it! : )

    • Repair_Man_Jack

      If you’re smart enough to recognize that equation w/o the integral sign, than you are also smart enough to ignore any further contributions that Paul Robert has on energy policy.

    • johninohio

      You’re assuming that if you raise the cost of oil products that this will result in an immediate switch to “alternative” energy sources, when all the evidence says it would take decades to accomplish this, if EVER.

      Well, so what, right? Who cares how long it takes? The problem is that a nation runs on energy. If there is a sudden decline in consumption, whether from taxes or any other reason, the economy tanks. Businesses close, jobs are lost, and the government loses revenue, which then forces them to borrow more from the Chinese.

      If a transition is to occur, it must occur over a long period of time if the alternative sources aren’t already developed to the point where the transition can be made seamlessly. It is way too early to assume that wind, solar, geothermal or any other energy source has the potential, singly or in combination, to replace oil to a significant degree.

  • CarolT

    Obama and his energy secretary wasn’t high oil prices, if you remember he said that he d like a gradual increase and our electric costs to skyrocket. The surest way to lower prices is to fire Obama.
    In 2008 when they were very high, Bush opened unite a few new areas to drill, gas prices went down as soon as he signed it into law.
    Getting rid of Obama should be our number one priority. I know it is hard to beat an incumbent especially when many of us are unhappy with our current candidates.

  • CarolT

    I replaced my old Dell laptop with a Mad book and need more time to get used to it. Please excuse my typos.Thank you.

  • quill67

    I personally think an energy tax would be a rather dumb idea. Liberals keep advocating a higher gas tax to match the rate in europe. But we are not europe. We are not surrounded by seas which allow for very low energy transport of goods. In the US we ship a very large amount of goods by truck and so higher energy taxes (or carbon taxes) would kill America’s ability to produce. In other words, a tax on energy would be very damaging to US economy.

    If you wish to tax externalities (and you do not believe global warming) then the tax should only be on the CO produced not on total carbon which includes CO2. CO2 is not harmful to human health. So policies that tax all carbon might actually cause produers to switch to technologies that lower total carbon but actually increase CO!

    Taxes on energy use would encourage even more producers to locate in countries without those taxes.

  • onemovoter

    Seems everyone is focusing on the production side of oil and gasoline products. That’s fine and all, but in the end it’s not the real reason why oil and gasoline have been going up in price.

    Oil is traded across the world in US Dollars. The price of oil did go up during the 2006-07 years because of REAL demand around the world. This high oil price causes inflation throughout the US economy and the rest of the world which helped tip us and others into a big recession. At the same time demand for oil crashed along with it’s price. The demand for oil has never returned to the demand levels of even 2006. It’s actually been going down further.

    What is then the reason for the slow steady rise in oil prices? Who here remembers the Federal Reserve pumping trillions back into the economy? After 8 trillion pumped in, the value of the US Dollar has taken a dive, which in turn has pushed the price of oil up over time.

    The problem we have is that most of the first world governments have been inflating their money supply to keep their economies afloat. Seems like some kind of sick competition to see who can devalue their currency faster.

    Once we get off this printing of the dollar, and back to normal fiscal and economic policies, the faster the price of oil will go back to normal. That’s the real solution here.

    • quill67

      Correct. There are three factors that will influence gasoline prices

      1) Strength of the economy. As strength increases, gas price increases.
      2) Amount of Money in Economy. As money declines, gas prices decline.
      3) Speculation regarding what is going to happen to our money supply in future. As faith in our currency improves, gas prices decline.

      So if we re-establish faith in our currency, speculators will have more faith in our currency, driving gas prices downward, and if the amount of money in economy declines (or at least rate of growth slows), gas prices should decline. BUT…as economy improves gasoline use will increase and this could cause gasoline prices to increase even though the other factors are causing them to decline.

      Gold prices, on the other hand, will (once we become responsible again regarding our currency) fall along with other commodities. This was the pattern after the inflation of the late 1970s/early 80s.

  • paulrobert

    I always wonder when we’ll find a way to harness the enormous energy in ocean currents for consumable energy.

    About a year ago I Googled a bit and came across very little (see below), I assume because not much progress has been made technologically and thus in the economics of it:
    2009 BBC article: http://news.bbc.co.uk/2/hi/science/nature/8400441.stm

    Just Googled again and found this http://ocsenergy.anl.gov/guide/current/index.cfm

    And for tidal power: http://www.energysavers.gov/renewable_energy/ocean/index.cfm/mytopic=50008

    I suppose it’s a long way off, but seems like an enormous untapped source of energy, whenever it becomes practical to tap.

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    • Dave_A

      Ocean currents, tidal power, hydroelectric… Fine…

      We’ve also got nuclear, to make electricity…

      But since electricity is worthless as a way to move cars & planes, it won’t help with the gas price issue….

      • acat

        until G.M. bought off City Hall and persuaded ‘em to go with busses instead.

        Electric, zero-emissions, expensive to put in a new route, hard to change routes in the event of accident or weather or protestors … but they do work…

        B’sides, the goal isn’t shifting electric to transportation, the goal is replacing non-electric fixed-location stuff – like heating your office building or home – to electric, freeing up oil and natural gas to be used for transportation.

        Mew

        • http://www.nighttwister.com NightTwister

          Not unless your source of creating the electricity is, which at this point is time is a very small percentage of production in the U.S.

          • acat

            Please note, cat is still in the shadow of Chicago… highest electricity cost in the country because we have, IIRC, the highest number of nuclear reactor-based generators in the country…

            Please also note that there’s a serious plan afoot to build a couple large-scale coal power plants midstate – and send the power north to Chicago via high-tension lines…. the benefit being the emissions will be out where “only the corn farmers” will have to deal with ‘em.

            Mew

        • Dave_A

          Ideally, if we had sense, we’d use gas and electric for home heat, not oil – most of the country generally does, too – oil seems to only be popular in the northeast…

          That said, mass transit is the Dem solution to people complaining about gas prices… It’s something we need to defund, not advocate…..

          • acat

            in urban environments than everyone owning a private car. Everyone owning a rickshaw or sedan chair might work out better… plenty of jobs, too … but we’re not there… yet.

            I have, perhaps. less of a problem with mass-transit systems – provided those paying the bill live inside the service area – than others here. Your mileage, of course, may vary.

            Mew

          • Dave_A

            Is that the majority of Americans don’t want to use it, and it diverts money from the infastructure needed for what we DO want to use – cars.

            Now, in places like NYC, there’s a culture of cab & subway use… But for most of the ‘average-sized’ cities in the country, folks would just rather drive, and are willing to pay the extra personal costs of car ownership.

            The problem, is that urban politicians are constantly trying to social-engineer mass-transit usage, resulting in the diversion of money from freeway construction & upkeep, and congestion-mitigation to mass-transit & ‘HOV’ projects…

            I tend to be of the opinion that infastructure projects should follow citizen-demand, not be based on ‘if you build it, they will use’ or ‘good citizens should live this way, so we won’t fund anything else’….

  • drfredc

    The quickest way to get more bang for the buck in everyone’s gas tanks would be to declare an economic emergency and eliminate all EPA ethanol blending rules for gasoline. It wouldn’t take long before we’d all be burning clean, powerful gasoline again…

    REAL gasoline doesn’t have alcohol in it and delivers a significant boost in MPG and performance over ethanol blends that we’ve be forced by the EPA to use.

    Using REAL gasoline, folks would IMMEDIATELY see a significant increase in how far their cars go between fill ups. AND, without the need to waste oil energy to produce ethanol, there would be more gasoline around — more supply equates to lower prices in a classic supply/demand marketplace scenario.

    Then in the long term, tell (don’t ask, don’t pussy foot around, just demand) the EPA give full recognition to the ecological disaster that cornahol is creating in the Gulf of Mexico with an ever expanding dead zone related to the excessive fertilizer needed to for cornahol washing out into the Gulf and sucking oxygen out of the water, killing life for many square miles…

    This is for starters… There’s plenty of other eco-disasters related to the EPA cornahol mandate nonsense, as well as other eco-nonsense, that if properly and positively utilized to promote energy supply would reverse a lot of the marketplace damage the EPA has done to gasoline prices and energy in general.

    • circlegranch

      suggestions to help beat high gas prices: get your car in for a ‘tune up’ and make sure your tires are properly inflated. !!

      Busting up the EPA would, in fact, get things back in line as far as affordable gas so our fossil fueled economy could hum again.

      Everything is about to skyrocket (just as the president happily predicted):

      Groceries will go higher, costs for any goods and services that involve the use of fuel to transport will go up (everything we use and consume).

      Jobs will be lost. As small businesses try to cope with the increased cost of production or services, the obvious and quick reduction in their overhead will be to let someone go.

      Algae ‘exploration’ and subsidies and electric cars are not the answer. Government is not the answer. Failed ‘green’ and Obama policies are not the answer. Bowing to the Saudi’s and Middle East countries that hate us is not the answer. We, the People, and our ideas and innovation and common sense ARE the answers.

  • norris

    Reduce the deficit spending ,the value of the dollar will rise and the price of crude will go down.

    • Dave_A

      This isn’t inflation, it’s a supply shortage (Again). And cutting deficit spending isn’t going to change the money supply significantly.

      Besides, a rising dollar would be bad for the overwhelming majority of Americans, who are up to their eyeballs in debt.

      The answer to economic problems is NEVER to deflate the money supply – maybe slow it’s growth, but never actually reduce it.

      • tommyfrisco

        From what I read, some refineries are at 95% capacity while others are at a much lower capacity. The gasoline demand continues to be at historical lows because this economy is much worse than what this admnistration would have us believe. Some refineries have, in fact, closed because they can’t make a profit.

        This issue is always confusing because most people lump the oil/gas drilling industry in with the gasoline refinery business. The main reason for the high gasoline costs is because of the mountain of regulation that is imposed at the refinery level and the taxes at the pump. The government gets a bigger cut, on a gallon of gasoline, than what the business owners do.

        Higher prices in this country, for any product or service, are almost always the result of government intrusion. Yet, they are always able to convince us that it is the greedy businesses that are the problem.

        • Dave_A

          With a good deal of ‘it has to go up, it will always go up’ irrational investing piling on…

          What it absolutely is not, is any form of inflation, since gas tends to initially move independently of other commodities in the market.

          If you’re looking for inflation, then look at the prices of everything – when they all (or almost all) move the same direction by the same proportion, that’s inflation…

          When one thing – especially a traditionally volatile thing like gold or fuel – spikes, it’s either a supply shortage or a bubble.

  • Marcus_Traianus

    That’s odd, all of a sudden Mr. Obama has no power? High gas prices are somehow the…Republican’s fault? If that appeal was not so pathetic, it would be laughable.

    Republican’s have spent years trying to bring more production online. Whether through more offshore drilling, the Arctic, XL pipeline or cutting down the permitting process- especially the environmental part which the Democrats have built into a subterfuge to delay and decrease new production.

    The fact is that under the Bush Administration all the moves were made to bring more domestic production online, which is happening now. Yet Mr. Obama takes credit for the increase? Oh so I get it; economy- Bush’s fault, increased oil production as the result of Bush’s policies- Obama takes credit. Got it.

    These are all good suggestions. But the simple fact is that the faster we bring more domestic sources online, the lower the price will be. More importantly, the less exposed we will be to the whims, dangers and resulting swings due to heavy imports from a very unpredictable part of the world.

    It’s really not that complicated.

    Given my aforementioned recitation- any voter believing Mr. Obama has no control and is therefore not responsible in any way for today’s prices- I’ve got an electric car, a slightly used windmill and some extra solar panels to sell you.

  • la2000

    I wish it were as easy as that. It’s not.

    The only one I straight up agree with is number 10. We need to diversify our transportation fuel infrastructure to diffuse the effect of sudden shocks and shortages on our economy. Natural gas is a good start, but we need to go beyond two choices.

    Right now, the republicans are picking winners and losers. By singularly encouraging gasoline and fossil fuel dependency to the exclusion of all other alternatives, the republican policy is declaring fossil fuels the “winners” when we know that prices will continue to climb and that shortages are inevitable. We should be dealing with this crisis like it was a war and the government should be fostering competition.

    During World War II, we never would have acquired the bomb if the US government had simply sat around and waited for private industry to figure it out. When national security and prosperity are on the line, it is incumbent upon the government to act to encourage the development of credible fuel alternatives and to foster the growth of those alternatives into technological maturity. Once the ideas have matured, the end result, be it batteries, hydrogen fuel cells, or what have you, should be spun off into private companies with the taxpayers receiving back their r&d investment. THEN let the marketplace sort it out.

    • duanej

      wishing doesn’t make it so. What you are advocating is for the government to decide what product we are all going to use. Its one thing for the government to defend us. It is something else for it to dictate what commodities we will use.

      You could spend trillions and trillions on fairy dust. Wishing some imaginary fuel will spring forth from a cash sink hole will not force it to occur.

      How is it that oil became our lifeblood? Did the government demand that oil be produced from the ground? No. Industry (the free market) demanded it. That’s how oil became our lifeblood. Not through some bureacratic nightmare.

      We have plenty of oil. If and when the time comes that we no longer have access to oil, a new technology will be created. Necessity is the mother of invention. Invention is NOT the mother of necessity.

      You can spend all your money and time inventing magic fairy dust, but don’t ask me to pay for it when we already have a cheap, abundant resource already available. Natural gas is very likely the next oil. Natural gas will likely fuel our cars in 40 or 50 years. But we have enough oil to fill our needs for the next 100 years, so spending money on alternatives is a fanciful wish, but wishing for it won’t make it so.

  • http://stevemaley.com Steve Maley

    The Manhattan Project didn’t have to succeed economically. The replacement for fossil fuels has to be scalable and a net energy gain. The marketplace is the best place to fugire that out.

    I might add that the Republicans support an “all of the above” approach. That would include nukes as well as nonconventional fuels. Admittedly, the current price of natural gas makes it an uphill battle for new sources.

    • http://www.nighttwister.com NightTwister

      Sorry…I just couldn’t resist. :-)

      • http://stevemaley.com Steve Maley

        j/k

  • tommyfrisco

    is that our Government should be fostering competition. In case you didn’t take the time to follow Steve’s link, here is the conclusion to the IHS-CERA study.

    “IHS-CERA?s conclusion is that when compared properly with the royalty and tax systems of 29 other nations, only Venezuela extracts a higher take from oil and gas production than the United States.”

    How is that fostering competition?

    As for your claim that “the republicans are picking winners and losers.” It is typical for liberal to take our arguments and throw them back at us. Oil, gas, and coal are the least expensive energy sources available. Choosing those sources of energy is the only sensible thing to do. Our country mired in debt! We do not have the money to be subsidizing alternate sources of energy that have proven to be much more expensive than fossil fuels.

    Everything this administration has done has raised the cost of things we buy. That’s where the problem is.

    • la2000

      Tommy, I realize that if anyone disagrees with standard party talking points, it is incumbent upon party loyalists to brand them a traitor, call them a liberal, and force them to recant. Mao would be proud. But sad to say for you that I have been a registered republican for nearly 30 years and it is the gap between what I believe and what you believe that pretty much delineates the reason that the republicans will continue to lose. You can’t win with fewer voters, Tommy.

      Frankly, given our massive deficits, I have no problem with the current royalty rate. It certainly hasn’t stopped the oil companies from being vastly profitable, and the very idea that we would discount that royalty rate knowing that the difference would simply get slipped into the massive money pile and not be passed on in lower prices makes this idea a nonstarter. There is no reason that the most profitable industry in the history of mankind needs government subsidies, handouts, preferences, welfare, or discounts. To suggest so strikes at the very core of free market principle. After all, if the oil industry, given all its success, can’t find a way to make their business model work without begging a favor from US taxpayers then how in the world would you think that the rest of the capitalist economy would be able to muddle through without a hand from Uncle Sam. If you want small government and you want it to stick, then the first industries that should be cut off from the welfare are the vastly profitable ones. And make no mistake: decreasing the royalty rate for an industry that has more than enough money to pay that rate, is an anti-capitalistic government subsidy.

      On the issues of “low priced energy”, we know that oil, gas, and coal will only be “cheap” in the short term. No one is suggesting that we abandon it wholesale, but your idea of using government resources and discounts to create artificially lower prices is anti-capitalistic. If government has a role in this, it should be to foster competing technologies that have the capacity to stabilize, if not lower, energy prices and to allow consumers a choice in the types of energy they consume. We need to diffuse our energy resources across a wide range of choices and allow those choices to compete with one another. In the very near term, these technologies will not be cheaper. But they will never be cheaper if we don’t make the effort to develop them to maturity.

      This is our generations “Manhattan Project.” Our most forceful weapon has never been our armies or our nuclear arsenal, it has been our vastly powerful economy. Our dependence on limited and increasingly unstable energy resources is placing that advantage at risk. Now is the time to address this problem.

      • tommyfrisco

        You seem to be reading some things in my first reply to you that I did not intend to communicate. Please allow me to re-write so you can fully understand my positions:

        1. I have never done anything to make Mao proud. I have voted a straight Republican ticket for nearly 40 years and I’m just about as conservative as a person can reasonably be. I don’t possibly see how my views could be harmful to the Republican party. I do, however, disagree with the GOP establishment, and you apprently, that we must think like moderates in order to win elections.

        2. I never said that I thought the royalty rate should be discounted. I agree with Steve’s #9 point stating that it should not be raised.

        3. I never said that the oil companies “need government subsidies, handouts, preferences, welfare, or discounts.” I don’t think they’re getting any now and don’t think that they should except maybe in the case of a true national emergency.

        4. I never said that we should use “government resources and discounts to create artificially lower prices. I don’t believe the government should be setting price controls of any kind.

        To sum, you said you disagreed with all of Steve’s ten point energy plan except with #10. I agree with all of them. I also feel that you truly are a liberal because of you’re so concerned about oil company profits. People like you don’t seem to care how much profit companies like Google earn as long as they are supporing left-wing causes. And as a liberal, you think only the Federal Government can do something as bold as the Manhattan Project. Yet, you think I should be held responsible if the Republicans don’t win this November? As I said earlier, you sure like to turn arguments around, don’t you?

      • http://stevemaley.com Steve Maley

        First of all, you describe the oil companies as ‘vastly profitable’. Only to the extent that the companies themselves are vast. On any standard measure of profitability, O&G is in the middle of the pack compared to other industries.

        Have you checked Apple Computer’s profitability lately?

        O&G is a uniquely risky industry. Its tax treatment reflects that, but the features that the President wishes to revise are neither unique to O&G nor properly characterized as ‘handouts’ or ‘subsidies’.

        And regardless whether you think that the current tax treatment is justified, by changing it you will increase the gov’t's take of current and future cash flows. That means less money to reinvest now, and a less favorable return when you invest it. That will lead to fewer wells being drilled.

        The same goes for changing royalties. Maybe it is justified. But it’s hard to argue that it is a move in the direction of expanding supply. Fewer wells will be drilled, it’s just a question of how many fewer.

        • http://stevemaley.com Steve Maley

          ‘The American people aren’t stupid,” thundered President Obama yesterday in Miami, ridiculing Republicans who are blaming him for rising gasoline prices. Let’s hope he’s right, because not even Forrest Gump could believe the logic of what Mr. Obama is trying to sell.

          To wit, that a) gasoline prices are beyond his control, but b) to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c) higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. Where to begin?

          Link.

  • tommyfrisco

    I must express my concern about many conservatives who argue for forcing the oil companies and gasoline refineries to provide us with their domestically produced products instead of placing them on the open market. Some even suggest export taxes.

    Newt Gingrich was criticized heavily as being anti-capitalist for questioning some of Bain Capital’s business practices, especially those involving the failed businesses Bain was involved in. Some conservatives, apparently, seem to think that we own the oil companies and can control where they sell their products just because they are headquartered here in the U.S.. That is much more anti-capitalistic than anything Gingrich was guilty of.

    Yes, we benefit from domestically produced oil and gasoline, but that is mostly because of lower shipping costs, royalties, and jobs. It is good for our economy and can provide trillions of dollars that can go toward paying off our massive debt.

  • joeyjojoshabadoo79

    They all sound great in principle (most anyway). But theyre mid to long term solutions. And its disingenuous to encourage government to “get into the energy business” and then not expect it to meddle. Cant have it both ways im afraid.

    • http://stevemaley.com Steve Maley

      Things could turn around pretty fast in the deepwater OCS. And more w.ells could be drilled onshore if operators felt like they had a political regime in the US that would not be hostile to their success.

      But the most important change I’m talking about here is psychological. If we send a message to the traders and the other oil producing countries that the US is no longer going to be passive and prostrate, but is instead set on a strategy of helping ourselves, we would see a near-term change in the way the commodity is traded.

      Re: your comment below — I hope that wasn’t directed at me, because nowhere did I name a particular candidate. I do think that Obama is the anti-energy candidate, and that will be a key vulnerability in Nov.

      • acat

        able to, for near-shore deposits, reach the same .. pool? .. of oil that we’re currently reaching with off-shore platforms?

        If so, I’m wondering a bit why we’re not seeing more of that along the gulf coast.
        (and that we’re not seeing it makes me think I’m missing something … you’re dead right, the free market will do what makes the most sense)

        Mew

        • http://stevemaley.com Steve Maley

          …was first developed to drill deposits in CA that extended offshore.

          If I’m not mistaken there is a field in the UK that has been developed as you suggest. The reach is on the order of 5-6 miles, IIRC. Google Wytch Farm.

          That record may have been eclipsed.

          Offshore, probably 90-95% of wells are drilled directionally. Either the wells are drilled from a platform, or they are designed to penetrate targets that are not vertically aligned.

          • Dave_A

            But the state of MI banned it.

    • johnhandel

      Most all of these would generate some very real sort-term impacts, too. It isn’t just the actual benefit of a measurable increase in domestic supply and having a real, stable, energy policy. (Yes, all 10 would result in a VERY measurable increase in domestic energy supply, both oil and otherwise.)

      One very real way this will impact short-term prices is simply by quickly generating more competition in the market. One of the ways this will drive prices down in the short term is that the market will have two choices then. Drive prices up, which will increase their earnings but GREATLY increase the rate of competition entering the market (Econ 101), or drive the prices down hoping to make opportunity cost too high for the expected return. Since the second option is the one that reduces the chances of competitors in a field with high entry and investment cost (even high growth costs for already-successful companies). Of course, a long-term investor will understand that they will only keep prices down until the threat of competition is gone, and will commit to a short-term loss for long-term gain.

      Of course, the government doesn’t want to have energy prices go down. From Gasoline, for example, once you deduct the cost of the crude oil, government makes more money off the price of gas than any other interested parties. (The combined state/federal gas tax is, in some places, higher than the amount earned by everyone else making money on the sale of gas, and the gas sales are also subject to sales tax and those involved parties are paying income taxes on the pennies-per-gallon they are allowed to keep.) With the national average being around 45 cents of every gallon of gas being direct gasoline taxes (and sales and income taxes on top of that), it can add up to 60 or even 75 cents of every gallon going to the government with a national average of over $1 per gallon not directly going to the cost of oil. Actually, once you cross a certain threshold on gallons sold, income taxes could push it above 90 cents of every gallon earnings.

  • joeyjojoshabadoo79

    nt

  • sophillyjimmy

    With this present administration violating every law and the constitution and daring anyone to stop them these 10 ways to reduce gas prices are all valid but useless, this guy in the White House is “Large And In Charge” so the only way to reduce gas prices and become a democracy again is to vote him out of office come November, we all know he will use intimidation at the polls so since we still have the right to bear arms flood your local police administration buildings with permits to conceal and carry then pack when you go to vote this Communist Dictator our of office.

  • repubnut

    Everyone will soon be forced out of gasoline for cars–Obama, G.E. ,Al Gore and “YES”all of his buddies that have invested in electricity will follow each other to the banks in Switzerland–Wake-up America before we are completely DESTROYED !!

  • http://somethoughtsonfreedom.blogspot.com/ somethoughtsonfreedom

    I agree with every one of the above listed points, especially the part where we stop persecuting successful companies for being good at the game of American Capitalism. Where do the candidates in the GOP field stand on each of these ideas?

  • gaudium

    Electric power and heating. 55% comes from coal, 20% from nuclear, nearly 17% from NG and everything else makes up the rest. We have something like 250 years of reserves of NG in the mainland at current levels and we haven?t built a nuclear power plant in 35 years.

    Nuclear pays off with about 3 cents per kwh, as opposed to solar shingles and windmills which are at 23 cents per kwh. The windmills are like the Chevy volt. Only the rich tree huggers can afford them. Power from windmills and shingles will bankrupt the poor and middle class and won?t move a single car or truck.

    Private industry is standing in line to finance nuclear power plants and more NG production which can also be used to fuel cars and trucks, at less than 50% of CO2 emissions. Nuclear is zero CO2. All of this energy production can be done with American investment with American labor with American products and without taxpayer money. Guess who is standing in the way?

  • tommyfrisco

    Obama’s regulatory, go around Congress, method of imposing cap and trade is having on today’s gasoline prices? How about in the coming years if those regulations are not repealed? BTW, I do not believe CO2 is harmful and I don’t believe in man-made global warming so I strongly oppose any form of Cap and Trade.

    How much is the ethanol mandate affecting the cost of gasoline today? How about in the coming years? BTW, I am strongly opposed to ethanol mandates since it is not cost-effective. Mostly, I do not believe our energy sources should be coming from the same place as our food supplies. That is a recipe for a huge disaster.

    The Dems are successful at blaming the big oil companies for high gasoline prices. It would be helpful if consumers were more aware of how much the Government influences the cost of gasoline, through regulations, taxes, and mandates. The cost of taxation should more than just the taxes at the pump. I’d like to know how the Government affects cost of gasoline through the entire process, in other words, I’d like to know how the Government affects the cost of doing business for the refineries.

  • renny

    is a major driver of price and speculation. People EXPECT negatives when they are constantly told the situation is bad and will only get worse.
    Running around on History, A&E, History2, the Green Channel, and all the others are decades of anti-oil, pro-global warming propaganda as science with profs trotted out in show after show announcing that we are running out of oil, we can expect less, the sky is falling.
    None mention tar sands oil or Canada and the pipeline is not an issue. But the constant drum, of which the o has been one for years, that we are in crisis, we have no choice, living standards must drop, the US is greedy and uses too much energy are all combined to make a downward pushing attitude, which creates a self-fulfilling prophecy.
    Of course, gasoline and other prices will rise under those pressures, plus Benanke has been flooding the world with worthless dollars that now it takes more of to buy most of everything–these ec. would naturally work against low gas prices.
    But if gasoline prices are going to be the straw that breaks o’s back, I do not want them to be any less until after Nov., 2012.

  • mutantone

    Tap into the strategic Reserves like he has now planed to do a short term result for the elections after that he does not care what happens.

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