Because the use of gasoline is, like NG & electricity, in many instances not a luxury or option but a necessity, what about, at least partially, changing the status of gasoline production to that of a public utility?
Agree! The reason we are having $130 oil today is PRECISELY because oil production in most of the world is in the hands of GOVERNMENT OIL COMPANIES!
This weekend there was a rare editorial written in the paper by an oil company executive. He reiterated what we discussed on this forum, that oil should be trading at $60-$70 per barrel or so if these government oil companies knew how to develop and pump oil efficiently! Over 75% of the world's reserves are in their hands, and most of their production is FALLING! The extra money oil sells for is the fear factor and insecurity factor of future supplies. The executive said his company would be very happy with $60 oil and unlimited OPPORTUNITY to drill and develop!!
So, the US government can do EXACTLY NOTHING to improve gas pump prices, since the price of crude oil is set on the international market. If the government took over refining and marketing, prices would probably be HIGHER than they are now, unless they subsidized it with tax dollars.
Agree! The reason we are having $130 oil today is PRECISELY because oil production in most of the world is in the hands of GOVERNMENT OIL COMPANIES!
The above statement is absolutely correct. I have yet to see anything that a government does accomplished in an effecient manner. The most recent example is the World Relief effort offered to the Burmese Government. The leaders took the relief goods and put their namers on the boxes when they came from foreign countries like the US. Now that's government effeciency for you!
We need less government and more private enterprise and competition to replace the ineffeciency of government. Government needs to get out of the way and allow the free market to work in its venues to provide the best goods and services to those willing to buy them.
"We need less government and more private enterprise and competition to replace the ineffeciency of government. Government needs to get out of the way and allow the free market to work in its venues to provide the best goods and services to those willing to buy them."
Please, the govt. is you and I...it manufactures nothing but uses private enterprise exclusively for all of it's goods. The govt. is suppose to work for us; if it doesn't, use the ballot box. But privatizing w/o accountability gets you Halliburton and private contractors that cost the tax payer 10x the military expditures per cap.
National defense, police, fire dept. etc in the hands of private enterprise ? PLEASE no. I don't want a profit motivation to decide if and when the fire dept. is going to save my burning house or protect me from crime.
Free market w/o constraints is dishonest, and corrupt with no accountablility. With govt. constraints and regulations, it's the best there is.
I think we all agree you can't have a government in bed with the energy industry. President Eisenhower warned against the "military-industrial complex", and its influence on goverment policy. Starting a war is good for the arms business.
Every country needs a coherent energy policy that adresses supply, security, cost and environment. It also has to lay down the overall operating rules for energy companies; rules that are feasible and in the public interest.
With the current administration (with the fantasy of cheap and available Middle East oil still on the brain), the tail is wagging the dog, and neither the economy or the public is benefiting from it.
Norway, for instance, is a large oil exporter and it has a tough domestic fuel consumption policy that conserves energy, supports its oil company (Statoil) prepares citizens for the future when supplies run down and has made investments in carbon sequestration, renewable energy such as wind and solar.
In another post DoctorMike, who has worked in Norway felt sorry for these people living in sensible-sized houses, driving modest cars and having free health care and university education for their children!! Well, to each his own!
Right now it is the private sector in the name of maxing profits that have held back tech. developement. We are in line with the exponential growth rate in technology for converting the sun's energy to electricity cheaply within the next 7 to 14 years. Many scientist are very optomistic....with solar farms throughout the US within twenty years. I choose to believe them and feel that present day energy comps. are just hording $$$$ while they can.
By the way....the wastefulness preceived in govt. function is usually directly attributed to the funding structure. The "spend it or loose it" mentality without a capital long term account "breeds" it. Private corps. are allowed more freedom in the tax code for investments than govt. allows itself. The nature of the beast.
You can bet that the military has hybrid power and all electric vehicles long before the comsumer will ever see them...all in the name of defense.
Short sited, as IMO providing it to the consumer NOW is a national defense issue.
I choose to believe them and feel that present day energy comps. are just hording $$$$ while they can.
That is a very reasonable hypothesis. Solar has made leaps and bounds in just the past 10 years. Solar panels have more then doubled their output in the past 10 years...and at the same time become drastically cheaper. New Nano technology may have the breakthrough to put out 10-20 times more watts for the same size panel...and keep the cost the same or even cheaper. I hope it's true...and then we can tell the oil companies to kiss our *ss.
Mike, smart oil & gas companies will become "energy companies" and handle all kinds of energy, which we will need in he future. The future will not be an either/or fossil or renewable; it will be everything!
A recently published book by an energy economist who does hot have a vested interest (he's a college professor) is called "Sustainable Fossil Fuels", and it projects energy and population demands out 100 years, much farther than anyone else dares to.
The book adresses the need for hydro, solar, wind, geothermal, nuclear, even wave energy to supplement the present biomass, coal, oil, and gas resources. Those fossil fuels will be cleaned up and the CO2 sequestrated down deep wells.
The nice thing about his treatment of the subject is that we simply cannot do without fossil fuels and have the whole world attain a reasonable standard of living and provide for more population growth.
The author, Marc Jaccard, has been an advisor to various government departments, including Arnold Schwartzenegger of California.
In terms of resources the world has more coal than anything else, and it can be made into anything you want at a price. Also, for every barrel of conventional light crude oil, there are 3 barrels worldwide in the form of heavy, sticky and hard to produce oil. But it's oil.
The president of Total Petroleum said this morning that the floor price for oil is about $80 a barrel; this is the cost to Total of developing new and expensive reserves. So, if we had a worldwide recession, and speculative investment disappears, oil could fall to that level, but it's not very likely. Eventually oil will reach the price of renewables, such as solar, and that's very high today, but falling.
Mike, smart oil & gas companies will become "energy companies" and handle all kinds of energy, which we will need in he future. The future will not be an either/or fossil or renewable; it will be everything!
I know my statement was unrealistic (at least in my lifetime)...But I can dream can't I.
It's NOT too far fetched to have a house completely off the grid. And to have a electric car that runs off the electricity produced at your house. There are houses today that very very close to being completely independent...right up in Maine. I use to work with a guy who lived on an island off the coast of Maine. He had to generate his own electricity. A combination of solar panels and two wind turbines supplied enough for his 4500sq/ft house....BUT...he had a gas oven, dryer and refrigerator/Freezer. No phone (close enough to shore for cell coverage...only 1/2 mile off shore).
I know those are just personal items...and you still can't get away from utility companies...the food you buy used trucks to deliver to stores....etc..etc...But I like to dream.
However, at the moment it is still cheaper to pay $0.10/kW-hr (or whatever I'm paying these days) to the local utility company. When that cost gets to $0.30/kW-hr (and there are significant tax credits in place), I might crunch the numbers.
It's ALMOST to the point where solar panels may actually be worth the investment. Right now the payback is close to 20 years. But if the trend goes......we can see a payback in just 5 years....Panels are getting better and cheaper.
Hopefully we will see more solar capacity sooner than later, we need all the help we can get. Personally, I don't see solar contributing more than a couple percent peak load anytime soon, but we should take whatever we can get.
I agree completely, these are no longer "oil companies," they are energy companies. They have the infrastructure to deliver just about any type of energy product we are likely to be using. Obviously, fossil fuel are not going away; at best we are talking about reducing the rate that consumption increases by providing alternatives (in the short/middle term).
I still think we will end up doubling the cost of oil before most renewable sources actually become cost competitive. At that point, the consumption of oil should level off and the renewable will start ramping up, maybe a 20-40 year timeframe to see a significant reduction in U.S. energy imports (if the price cooperates and keeps rising). If oil prices fall below about $100, the interest in renewable energy will disappear (again). The only other variable I can see is the proposed carbon tax, that may artificially push fossil fuel prices high enough to accelerate the process.
That reminds me of something funny: I was driving across KY a few weeks ago (I know, don't ask) and saw billboards for coal, stating it was "carbon neutral." I guess that's true if you take the very long view (10,000 years?), or ignore the difference between terrestrial carbon and atmospheric carbon. Anyway, it was the silliest thing I saw all day and I still don't understand what point they thought they were making.
Yes, as Mr. Obvious stated, there is a bubble due to speculation. However, the real question is how much of the current price is bubble, how much is due to the devalued dollar, and how much is "real." When this bubble bursts (and it will), I'm guessing that the price will only fall about $10-20 per barrel. I would be very surprised to see it fall below $100 anytime soon, and if it did I would expect to see OPEC respond immediately to push the price back up to the $100+ level. There is more going on here than just a bubble.
You're right Craig; the drivers behind the price levels are:
1. The long term depletion of reservoirs; we are taking more out of the cupboard than we are putting back in. State oil companies, as mentioned elsewhere, with some exceptions, are by and large not replacing their reserves.
2. The US has been living wildly beyond its means for some years now, not just in energy matters. When you do that, the value of your currency drops. Since oil and other commodities are priced in US dollars, there is an upward pressure in the oil price.
3. The cost of replacing light oil reserves, which are running out, with heavy and unconventional oil is about $60-$80 per barrel. The floor price of anything is the cost of its replacement. Never mind that the current "lifting cost" in Saudi Arabia is still less than $1/barrel. It's the marginal costs of tarsands oil in Canada and super deep oil from Brazil and the Gulf of mexico that determines the price.
4. Institutional investors now see long term commodity investments as secure; this has never happened before where employee pension plans invest in commodities.
5. Because of political instability in the world, there is a supply disruption fear factor at play.
In summary, if the world was at peace, there were no terrorists, everyone loved America, state oil companies explored like crazy instead of buying Rolls Royces, we would ow have $60-$80 oil. So draw your own concluisons and the $100 level is a reasonable figure for forecasting purposes.
In summary, if the world was at peace, there were no terrorists, everyone loved America, state oil companies explored like crazy instead of buying Rolls Royces, we would now have $60-$80 oil.
Well said, that pretty much defines the "best case scenario," doesn't it.
Yes, all leading banks have economists on their staff, and most have petroleum economists as well. I've read forecasts of 5 banks now and they range fron $225 within 5 years, to $150 within 2 years, to $240 in today's money being the cost at which alternatives (whatever they may be) will seriously cut into oil use. No one forecasts a retreat to $40 or so oil.
Banks have always been very conservative, but they can't see any forces driving down the price of oil below the marginal cost ($60-80) of non-light crude.
MikeinNH feels very strong about solar, but it won't propel our cars anytime soon, but will back heating oil out of the NE market. At least the natural gas supply is relatively healthy with huge foreign deposits coming on stream, and the US building many LNG terminals. Compressed natural gas, CNG is a good fuel already in Northern Italy, New Zealand, Malaysia and a few other areas. It's quite competitive with gasoline and you could buy a captive compressor to fill up at home.
06/03/2008 4:03:44 PM
