Oil Policies Running On Empty

[hatrack]

EDIT

"But "high prices" at the pump are all relative, and compared with much of the civilized world, we're enjoying a relative fire sale. However, among all the other rollbacks on civil liberties in the interest of avoiding Terror, we still haven't lost our constitutional right to bitch - and in an election year, people are going to be paying very close attention to a concentration of bitching on any one subject.

If anyone from Western Europe - where gas tends to run in the $4-6 per gallon range - could hear Bob Taxpayer from Portland whining about paying $1.95, they would probably be pressed not to start laughing hard enough to accidentally drive their diesel Peugeot off the side of an Alp. Compared to red-blooded Amurricans, they're much more used to paying high taxes on gasoline and driving small, fuel-efficient cars. But people here, in the country that is the largest consumer of oil on the face of the earth, always seem to have an inexplicably difficult time coming to terms with the idea that they don't have infinite access to a finite resource. Well, now it's wake-up time. Again.

The per-barrel price of oil just hit an all-time record on Friday and came within fifty cents of it again on Monday. This isn't simply because of antics at the national casino on Wall Street that are beyond the understanding of anyone without an economics degree and a lot of letters after their name.

EDIT

Nobody wants to risk political paralysis and suggest it, but I suspect there might be only one real fix and that's slapping a big European-style tax on gas. As I mentioned before, there's no point in pining for a reprieve on the supply. Jacking the price up that much would actually be enough to make a sizable dent in demand. Otherwise, prices will reach Euro levels on their own much sooner than anyone would like to believe."

EDIT/END

[TX-RAT]

1. So your answer is to raise the price so high

That people can't afford it?
Who wins in that scenario?
The oil company's still get their markup, and the consumer pays triple the price, their paying now.

[phantom power]

2. Well, why not? Seems like it's working in Europe

[TX-RAT]

3. Seems like it's working in Europe"?

Define working.
Do they have a choice?

[phantom power]

4. By "working", I mean their economy functions, and has

adjusted itself to expensive fuel. With the result that machines are generally more fuel-efficient there.

They must have a choice. Since most of their fuel expense is in the form of taxes, it's almost by definition their choice: they could choose to lower those taxes and make their fuel cheaper.

Just like we've chosen to keep fuel cheap, by *not* imposing large taxes on it.

[TX-RAT]

5. By "working", I mean their economy functions, and has

(adjusted itself to expensive fuel.)
Gas hits 5.00 barrel in the US, will that shut down the economy?
No, we will adjust. But it's not because we want to.

(They must have a choice. Since most of their fuel expense is in the form of taxes)
Given the opportunity to pay 2.00 a gallon or 5.00 a gallon, what do you think the General population would choose?

(Just like we've chosen to keep fuel cheap, by *not* imposing large taxes on it?)
Wonder what a gallon of gas would cost in the US without any tax's attached to it. Might surprise you.

[phantom power]

6. I'm not following you

Sure we tax gas, but our gas-taxes are far, far smaller than in Europe. Europeans pay more in taxes per gallon than we pay in total.

Regarding choices and taxes, you seem to be suggesting that Europeans are being taxed against their will, which doesn't seem likely in a democratic country.

If we suddenly decided to charge an additional $3 of tax per gallon here in the US, it would surely disrupt our economy. If we phased in that much tax more gradually, the disruption might be less. Much would depend on what we did with that money. If we used it to offset against other taxes, then maybe it would have little impact. If we used it to upgrade our energy infrastructure,or fund universal health-care, the disruption might be worth it. If we use it for something wasteful, like funding more oil-wars in the middle east, then it's a lose-lose scenario.

[TX-RAT]

8. Europeans pay more in taxes per gallon than we pay in total.

And thats a good thing?

(If we used it to offset against other taxes, then maybe it would have little impact.)
OK, as long as we discontinue the other taxes. Otherwise theres no benefit.

(If we use it for something wasteful, like funding more oil-wars in the middle east, then it's a lose-lose scenario.)
On that i totally agree.

I pay enough in taxes as it is, on fuel, on feed, on vet bills, on grocery's, equipment. The tax bill on my place alone, is enormous, I've got 3 sections.

[snowFLAKE]

10. What if the Gas Tax was used to provide Universal Health Care

Something the Europeans happen to have, BTW.

Even if you don't give a damn about the Unfortunate Scum who don't have health insurance (after everybody knows the poor are poor because they're so Damn Lazy) - that would reduce the costs to employers, and more jobs would likely be created. Also, perhaps you could sell your SUV, buy a Prius, and end up paying the same for your monthly Gasoline Bill. Plus, you wouldn't have to pay the $872.34/month for Decent Health Insurance. Some would see all this as a Win-Win Scenario. The other 97.9% of Americans would just up their Moaning and Groaning level and increase their Weeping and Wailing and Gnashing of Teeth about the freaking huge Tax Increase.

As Red Foreman would say, What a Bunch of Dumbasses.

[TX-RAT]

11. Please note post #9

[phantom power]

12. I perceive two general issues regarding a very high gas-tax

The first is, what would we do with this extra tax revenue. As you say, if our gas-tax goes way up, but all our other taxes stay the same, it's going to hurt. If we use the revenue to allow a reduction in other taxes, it hurts less. If we use it to fund the large, difficult transition to a sustainable energy system here in the US, it may hurt, but at least it will be performing a very important function.

The second is, does a higher gas-tax better represent the "true" cost of using lots of gasoline. The "cheap" oil that we enjoy has many costs that aren't well represented by the amount of money we immediately pay for it. It costs in terms of environmental damage, it costs in terms of requiring us to fund foreign occupations: we maintain military presence all over the world, to try and maintain security of our oil supply. Nobody talks much about it, but we have troops in South America to secure that oil, as well.

Just to throw in a couple others, there's the cost of health problems in major metropolitan areas, and eventually, the cost of the disruption that's going to occur when the oil starts to run out.

So, I kind of like the European model, not because I'm dying to pay $5/gallon at the pump, but because in some sense we already *are* paying that much for gas, but we hide it by a sort of institutional denial. The Europeans more directly try to represent the true cost, right at the pump.

And, since they all see more immediately this true cost, their cars are more efficient.

This is a case of government action helping the market to work more effectively. Our system interferes with market economy, by providing false information to the consumer: we think our gasoline is cheaper than it really is, and so we make bad decisions.

[NNadir]

7. Why don't we just make gasoline free and kill anyone who opposes that.

I mean after all the general population, at least that part consisting wholly of immoral fools, would prefer that.

[TX-RAT]

9. Why don't we drop the sarcasm and have a legitimate discussion?

[NNadir]

13. No sarcasm intended.

It's a pefectly reasonable response to the logical extension of the argument made.

Measured by its external costs, one of which involves killing human beings, the price of oil is subsidized highly by our oil obsessed government. If it were priced at what it actually costs, we would not be using it. In a thinking and educated society (and conversations like this one make me recognize that we are not such a society) this would be a fairly trivial matter; we would simply replace oil.

[TX-RAT]

14. So many questions

(Measured by its external costs, one of which involves killing human beings,)
How is that?

( it were priced at what it actually costs, we would not be using it.)
The actually costs would be?

(In a thinking and educated society (and conversations like this one make me recognize that we are not such a society)
Could it be due, to your lack of knowledge about oil?

[NNadir]

15. This topic of the external cost of oil is covered here at DU.

I put together a thread on the topic referencing the EU study of the subject of external costs of oil and other forms of energy, comparing them to each other, one of the most extensive studies ever conducted on the subject.

Typically I bump that thread up for the benefit of those who are abysmally ignorant of energy issues, but I don't have time to do so now. If I have a chance I'll find it and bump it up for your benefit.

The rough conclusions are that wind and nuclear power are the cheapest and safest forms of energy. Fossil fuels in general are the most expensive.

[TX-RAT]

16. Wind energy?

(The rough conclusions are that wind and nuclear power are the cheapest and safest forms of energy. Fossil fuels in general are the most expensive.)
No argument from me on nuclear energy.
I do question the actually cost of wind generated energy.
About 7 to 8 years ago, a wind farm was put on the ranch just north of mine. One thing i remember about that, was the fact that it would take 25 years to pay off the original cost of the purchase and installation of the windmills,( which were manufactured in Sweden by the way). Since the install there have been 3 complete replacements and a untold number of break downs and lightning strikes. This in turn lengthens the payback time. With the break down rate as is, theres no way they will ever cover the cost of the original purchase and install.
I might also add, these wind farms would never have been built without considerable funding by the Government.

Maybe you can answer this?
Have there been any private wind farms constructed any where that hasn't received federal funding.

[phantom power]

17. Good question (I bet NNadir knows). But I have a related question:

has there ever been an oil/gas/coal company that hasn't benefitted from federal tax-breaks? Or the mineral rights to federal lands, sold at bargain-basement prices?

I think it's legitimate to consider the costs of subsidies for renewables, but all the subsidies given to oil/gas are too-often ignored, when making these comparisons.

And, any "external" costs of fossil-fuels that aren't included in the price we pay for them (which is most of them) are also essentially subsidies. We pay those costs (or, we will eventually pay them), but the fossil-fuel companies don't. They are subsidies.

One of the many missed opportunities of the 2000 election was during the VP debate between Cheney and Lieberman. Cheney tossed off some comment about how he had "never benefitted from govt support". Which was a bald-faced lie. Lieberman never called him on it. But it's completely typical of the double standard that is applied to fossil-fuel companies. They receive billions of dollars of benefits each year from the govt, but they repeatedly get away with projecting their image as mighty engines of capitalism, completely independent of the government.

[TX-RAT]

21. Not that familiar with federal lands.

Are they actually sold or are the drawn?

(but all the subsidies given to oil/gas are too-often ignored, when making these comparisons.)
Not aware of any subsidies given to local oil company's.

(And, any of fossil-fuels that aren't included in the price we pay for them (which is most of them) are also essentially subsidies. We pay those costs (or, we will eventually pay them), but the fossil-fuel companies don't. They are subsidies.)

"external" costs? what would those be?

[phantom power]

22. I believe they are actually sold. I'd have to verify.

Regarding subsidies, I suppose it depends on whether you consider tax breaks to be subsidies. Each year, Congress votes on some level of tax breaks for fossil fuel companies. As I understand it, this happens reliably each year.

Regrettably, I don't save the links to news items that I'm basing my comments on, so I'm stuck on giving you more specific info.

[TX-RAT]

23. suppose it depends on whether you consider tax breaks to be subsidies

Actually i see subsidies as tax's, And the consumer foots the bill. Kinda like the CRP programs, where local farmers are payed 40.00 per acre not to farm their land. Thats just another tax on the people. I've got 1,920 acres, with only 120 acres in cultivation. If i choose to apply, i would get 4800 dollars a year not to plant that 120 acres. Some farmers here, have several thousand acres in CRP, imagine what that costs us.

[TX-RAT]

24. Did a little checking, they are bid on by the company's.

[phantom power]

25. Does the highest bidder own them?

[TX-RAT]

26. They bid on the lease, with royalties payed to the Gov.

4.9 billion payed in 96, couldn't find 03 or 04 numbers.
Didn't see what the term limits were.

[NNadir]

18. First of all, we are talking fully loaded cost, not subsidized cost.

I don't think you know what a fully loaded cost is, but it includes both external and internal costs.

Internal costs include fuel, facility (capital construction and maintenance), salary and benefit, and amortization costs. Sometimes you hear people say "solar energy is free" because they are only paying attention to fuel costs. This is equivalent to "nuclear power is too cheap to meter," the remark made famously in the 1950's by a government hack. On a fuel basis, nuclear power is indeed "too cheap to meter," but when one includes infrastructure it is quite a different matter.

The facility cost is a very important variable and is very much dependent on design. French nuclear power is very cheap because the French relied on proven, reliable and standardized design. Some American Nuclear plants on the other hand were financial disasters because of poor design and the need for retrofitting to address absurd demands on the part of a very poorly educated public.

The cost of fuel is very dependent on location. There are places on earth where the fully loaded cost of natural gas, internal and external, is actually lower than nuclear power, because the plants are next to natural gas fields. There are places on earth where because of the necessity of pipelines that natural gas is prohibitively expensive. The same situation applies to coal, coal plants near mines have internal costs that match or exceed nuclear.

Another factor in cost is load utilization. When nuclear plants were running at 70% capacity, as they were in the 1970's, they were very uncompetitive. Now that most nuclear plants run at 90+% capacity, they are very cheap to run. In the nuclear case, this has to do with experience in operations and technological advances in fuel loading.

The same considerations apply to wind energy. Some plants (windmills) have better design than others. This area, windmill design, as been the primary reason that the cost of wind generated electricity has fallen so precipitously in the last decades. The internal cost of a wind plant is extraordinarily high where the wind blows infrequently of course.

The external cost of energy is generally what is NOT charged by the supplier, but is paid by the public at large in health costs and in the financial and aesthetic costs of environmental degradation, which can be extraordinary. Coal is roughly competitive with wind and nuclear if one ignores these costs. If one includes them, as one should, coal is far too expensive too be employed by rational beings.

External costs are also a function of design. The Chernobyl graphite moderated RBMK reactor had a very high external cost. The average French pressurized water reactor has an extremely low external cost. This is an issue of design. If one builds a reactor with a positive void coefficient, one has a high probability of raising external cost, but most people have not chosen to build such monstrosities. It is worth noting that the nuclear industry is the ONLY energy industry that internalizes external costs. In the wind industry, external costs are mostly trivial.

Wind energy is not the same cost everywhere, but globalized it is in fact the lowest cost energy on a fully loaded basis.

[NNadir]

19. Oh, and BTW, it is not true that all wind facilities are gov't subsidized.

[TX-RAT]

20. Good response ,thank you

(I don't think you know what a fully loaded cost is, but it includes both external and internal costs.) True, I'm more familiar with the oil business. But the original plan, when these went in stated a 25yr payoff. In the oil business the payoff is much sooner, some times in less than a year. At the rate of breakdown with these units i see now way of recovery.

[NNadir]

27. In any energy scheme of a particular type, some installations run better

than others.

From the evidence, I'd say you don't know very much about wind power. You might want to work a bit on your knowledge of the oil business as well.

[TX-RAT]

28. You work on oil, I'll work on wind.

I watch 4 banks of wind generators every day. On any given day at least 10 are not operating due to some type of failure. At that rate they simply cannot pay themselves off.


(You might want to work a bit on your knowledge of the oil business as well.)
Really.
And just how have you determined that, especially when we haven't discussed the oil business, or my knowledge of it.

[NNadir]

29. Maybe I looked at the analysis of the oil industry that began with

a statement that the price of oil should be tied to what people are willing to pay for it, and not what it actually costs.

To me this indicates a pretty poor understanding of the oil in my estimation.

I also find it very dubious when someone goes from the specific case and wants to generalize it because "they saw it with their own eyes." Maybe you happen to live next to a bunch of incompetant wind generator operators. That says nothing about other wind operations in other places, most of which are profitable.


Some people live close to Chernobyl. Living close to Chernobyl, irrespective of what people may wish to tell you, doesn't tell you anything about nuclear power as a whole. What it tells you is that one plant was badly designed and badly run. There are over four hundred operating nuclear plants that have not exploded in decades of operation.

Of course people seek to generalize their own experience, but this is myopia, not thinking. My father-in-law will probably vote Republican, but this doesn't mean that everyone's father-in-law will vote Republican. I would not be well served in a campaign of denigrating fathers-in-law everywhere because my father-in-law happens to vote Republican.

There are citizens of Cerritos, California who once had jet aircraft fall on their towns. This does not qualify the citizens of Cerritos to announce that aircraft are not profitable or that aircraft are too dangerous to use.

Even if, however, every wind farm on the planet required a subsidy to remain profitable, it would hardly be different case than oil. The oil subsidy of course, is one we pay in health costs related to air pollution, lost productivity from years of life lost off our citizenry from breathing petroleum related products or drinking them in contaminated water, the economic costs of decimated fisheries like those in coastal France and Prince William Sound, the cost of the machinery of war in Iraq and other places not to mention the cost of caring for the wounded and the dead and rebuilding the destroyed, the need to station troops in places like Saudi Arabia (where they enrage the local population into committing acts of expensive terrorism), the cost greenhouse warming related events which are only now becoming apparent, acid rain, etc, etc... A subsidy is a subsidy is a subsidy and since you have in your posts on this thread expressed mystification as to what the oil subsidy is, I conclude that you are largely ignorant of the oil industry. That's my opinion, and I stand by it.


How is it, by the way, that you watch four banks of wind generators of which ten are not operating at any given time? Are six of them in a neighboring dimension? Or is it that 6 banks of wind generators in California stop operating in sympathy with the four that are not operating in Texas because you are watching them?

[TX-RAT]

30. So many accusations

Don't confuse sarcasm with knowledge. When you want to have a serious conversation about oil we'll talk. Your responses have been nothing but environmental rage.


(How is it, by the way, that you watch four banks of wind generators of which ten are not operating at any given time? Are six of them in a neighboring dimension? Or is it that 6 banks of wind generators in California stop operating in sympathy with the four that are not operating in Texas because you are watching them?)
Is there a reading comprehension problem?
1 bank = 15 generators
4 banks = 60 generators
As for the 6 banks in California, we don't need sympathy. Ours break down enough as is.

[NNadir]

31. No reading comprehension problem.

Just poor grammar in the original statement which ignores the antecedents.

I've had lots of serious conversations about oil. I just haven't had any with you. This is hardly a surprise, and not one, I'd bet, that would be likely to change under forseeable circumstances.

As for environmental rage, yeah, you bet I'm experiencing environmental rage. I have young children. It's the appropriate emotion under the circumstances.