Countdown to $200 oil (3) - no gas tax needed...erm, right...

This story is part of my new Countdown to $200 oil series, which is the successor of my earlier, and now terminated by reality, Countdown to $100 Oil series.

As in previous years, I got my ass whipped in my latest attempt to suggest on Daily Kos that gas taxes should be increased, despite the fact that the place is completly dominated by Obama fans and Obama's solid stance against the gas-tax holiday.. Some commenters kindly called me a "rich elitist f*ck from Europe" (guilty on all counts, of course) for wanting to bankrupt poor Americans who cannot do without gasoline, preferably cheap, and are already struggling mightily.....

And that was despite my acknowledging upfront that a gas tax increase is politically deadly, and highly regressive, and my corresponding suggestion to make it part of a plan to (i) directly support those hardest hit by revenue transfers and (ii) use the money raised to invest in alternatives (public transport, renewable energy)

Of course, the fact that oil prices are reaching new highs almost every day these days might have given them pause for thought. As might this, which further underlines that this is not a short term phenomenon:

Oil moves above $120 mark

The entire WTI futures curve is trading well above the $100-a-barrel level with the longest dated contract for December 2016 up $1.57 to $110.55 a barrel on Monday, signalling the market’s consensus that $100 oil is here to stay.

Oil prices are going in one direction only, and there's a very simple reason for that: market forces.

Market forces say that when demand is growing, prices will go up, which will encourage new supply to be provided, and some demand to be discouraged. But oil is a very atypical market right now:

  • demand is growing in China and other places, as lots of people reach the income level that makes it possible for them to afford cars;
  • demand is growing in oil-producing countries, as the oil bonanza of the recent few years brings them prosperity and massive growth in car ownership and economic activity;
  • a number of countries, including those oil-producing countries that just have to dip in their production to fulfill demand, and many countries that try to support their citizens, further encourage oil demand via price controls or subsidies (their consumers are not subject to market prices and thus are directly unaffacted by them, even if their government are);
  • meanwhile, supply growth, which used to be the easiest way to balance the market in the presence of strong demand growth, is no longer happening. Production has been flat for the past 3 years and there are increasing doubts that it can increase in the coming years. Whether this is because of peak oil, because of lack of investment, or because of political games by oil-rich countries is essentially irrelevant: the fact is that supply is not responding to increasing prices.

With growing, and largely price insensitive, demand on one side, and flat supply on the other, something has to give. Price increases are not the only consequence: they have to bring about market equilibrium. And given the above constraints, it can happen only by causing demand to shrink elsewhere, ie in the US, Europe and the non-emerging parts of the Third World.

Oil importing countries in the poorer parts of the world are suffering mightily from higher prices, and limiting their consumption, but the overall volumes are too small to make a big difference. Letting Africa slowly die is not going to be enough,

Thus Europe and the US have to bear the brunt of demand reduction. But here's the problem: our demand is not very elastic either, and we either have to do without our cars, or be willing to pay a lot more than now for the convenience of driving them. But demand must shrink. So what happens?

Well, it's simple: prices have to go high enough to destroy demand. Given that we really don't want to do without our cars, the pain has to be bad enough to actually cause (undesired at lower prices) changes in behavior. Thus, VERY high prices.

One would expect such high prices to also bring online a lot of new supply, including from unexpected sources. It is happening a bit (biofuels being one exemple, coal-to-liquids another), but nowhere near the scale it's needed. It appears that demand destruction in the West is still, at current prices, the easiest way to actually balance the oil market, however unlikely that may seem, and however painful it is for us.

But given that Chinese demand is growing by 5-10% per year, and that Saudi, Iranian or Russian exports are dropping (as their production stagnates and their domestic demand continues to jump), we need to destroy yet more demand each year.

Thus, higher prices will happen. It's inevitable.

Well, there is an alternative, actually: shortages and rationing. Maybe that will create the urgency that the current situation seems unable to create yet.

And maybe we'll start having an energy policy that works, rather than one that does nothing and lets the poor gets slowly squeezed with no hope of any solution in sight.

Reducing demand by increasing taxes is an obvious part of the solution to any thinking person, however suggest it to Joe Shmoe while he is filling up his SUV at the gas station and you may get a black eye. Unfortunately your post does not condense well into a 30 second commercial, so it is political suicide for our polititians to suggest. How do we get chapter one of Econ 101 accross to the masses?

Europe has very high taxes.

The U.S. has very Low taxes.

The U.S. is heading pell-mell toward biofuels, and hybrids.

Europe is dithering around and doing Nothing.

Jes Sayin


Europe doesn't have to do a lot, they have been living without cars for centuries, They have rail and walkable urban areas. Since their energy consumption is 1/2 what a North American uses they have a decent head start, German is building renewables hand over fist, this I would not call dithering, most of the "Hybrids" produced in the US are stock models with beefed up starter motors, a purely cynical move. Europe has legal electric vehicles on the roads, and did I mention rail?


Germany's working on "renewable," yes, but not in the area of private transportation.

The high taxes masked market signals, and now Europe is locked into diesel engines. Looked good last year; still looks okay; but, give it a couple of years, and the fact that you can get much less diesel from a barrel of oil than you can gasoline, and it's going to start to bite.

You see, with our lower taxes that increase in the cost of oil has translated into a huge "percentage" increase in our price of gasoline. This translates out as "time to do something."

With the enormous taxes on European fuel, the increase in the price of oil has translated into a much smaller "percentage" increase. As a result, it was much easier for the oil companies to kill biofuels. I don't have a clue why hybrids aren't taking off there.

Fun Fact kids! did you know if you harvested and processed corn using ethanol, that 7 out of every 9 acres would be used just to harvest and process all 9. Also to offset 20% of US gasoline consumption you would have to plant every inch of arable land in the US with corn and then you would still need 30 million acres. Oh my...

Well, that was certainly "Fun;" but, when do we get to the facts?

After allowing for the distillers grains, it takes about 8 gallons of ethanol to farm an acre of corn (about 675 gallons of ethanol.) That's what? 0.012 gallons (1,300 btus) of farm input per gallon?

As you can see from This Link,

the total btus used by the mill can be as little as 17,706 (nat gas plus electricity.)

Add in 6,500 btus for fertilizer, and drying the seed corn, and you get, what? 1,300 + 17,706 + 6,500 = 25,506 btus to produce a gallon of ethanol which can, within one percent, replace a 116,000 btu gallong of gasoline.

Looks more like a 4.5:1 deal to me.

And, no, I Don't have any farming, or ethanol company connections. And, I'm Not an Engineer. I just know how to read, and do simple math.

The math does not work out for me, sorry.

It takes 8 gallons of diesel to farm 1 acre, which is equivalent of 13 gallons of ethanol.

the ethanol yield provided per bushel in your link is around 2.8 gallons per bushel.

Average US corn crop yield per acre is around 130 bushels/acre.

so the average acre of corn yields 364 gallons of ethanol. It takes 13/364 = .036 gallons of ethanol to farm a gallons worth.
According to your info the average dry-mill uses 31,070 btu's per gallon, Thats from table 9 of your link..

I'll go ahead and use your fertilizer cost of 6,500 btus.

76000 btu per gallon of ethanol/ ( 31,070+(.036*76000)+6,500) ) == 1.88 EROI, also I'm sure this corn and ethanol is transported to a filling station somehow.

Also the average fuel economy of a midsize car in the united states is around 21 mpg and the average distance to a gas station is somewhere around 1 mile. so 1/21 * 124,000 Btu so 5904 btus are spent on getting to the gas station...

if you include that the ratio would be something like 1.64 and if you included those transportation cost it would be even lower.

How'd you get 4.5 to 1?

How'd you get 4.5 to 1?

Without auditing your calculations or following the links, it looks like:

(a) kdolliso is using best-in-class process energy efficiency, you are using average. This is legitimately arguable - technology only ever gets better, but not so quickly for a mature process with a large installed capital base, like distillation.
(b) He is blandly asserting that one gallon of ethanol exactly replaces one gallon of gasoline, which is Just Plain Wrong and always will be.
(c) Your driving-to-the-gas-station term is questionable - maybe I just drive past it on the way to work or some other value-adding activity. But it's a relatively small term in your calculation.




Plucky Underdog (below) has it exactly right. If you will notice my link shows at least one refinery (corn plus, in Winnebago, Mn, I believe it is) uses only 17,706 btus of nat gas, and electricity to produce one gallon of ethanol.

The average yield in the U.S. last year was 151 bushels of corn/acre. Remember, corn is cattle feed; and, anywhere from 33% to 40% of that livestock feeding ability is returned in the form of distillers grains. I used 33% to match the corn plus plant.

This gave me 675 gall/acre. I, also, used this number to calculate the amount of seed, and fertilizer that went into the ethanol.

I don't do Anything blandly. The below link is a test the State of Minnesota did using 40 identical pairs of cars. The bottom line was their cars only lost 1.6% mileage using a 20% blend of ethanol. The DOE states that you will, on average, lose 0.5% mileage using a 10% mixture. The New cars will do even better.

Yes, cars get more efficient but that has nothing to do the eroi of corn ethanol. Also keep in mind the average life of a car in the US is about 16 years. Isn't that what they refer to as a red herring?

I don't understand your cattle feed calculation.?

the average yield last year of 151 bushels * 2.8 the gallons of ethanol per bushel = 422.8, far short of 675 gallons.. I don't know how you got this? could you elaborate.

New cars will do better with gasoline too, Also we never included the transportation cost of the ethanol from the farm and too the plant and from the plant to the refinery?

All this considered I still don't get 4.5 to 1?

If you could show me this id be glad to listen

Strewth! If you guys can't agree, what hope do we mere mortals have?

Sure, keep in mind: this is a real-world, for all practical purposes type calculation.

First: I used 2.96 gallons/bu. If you noticed in my link some refineries are reaching this level. I'm sure many, many more will be in the future.

Now, to the "Cattle Feed." Remember, almost 90% of all field corn goes to feed livestock, mostly cattle. This is a very important concept to keep in mind.

When you process a bushel of corn you get back 17.5 lbs of distillers grains. This is, for all practical purposes, corn with the starch, and CO2 removed. All of the vitamins, nutrients, and protein is still there. A ration that's 65% corn, and 30% dgs will actually yield 10% More weight on a cow than a ration with 95% corn.

For that reason, I, normally, figure that we've used 60% of the corn to realize our 2.96 gallons of ethanol, and retained 40% - .30 + .33(.30) of our cattle feeding ability.

*in the above calculation I used 33% instead of 40% because I knew that 17,706 btus signified that it was the Corn Plus Plant, and that they gassified some of their "syrup" thus cutting back, slightly, on the "feed" returned.

Anyway, let's take 3 gal/by (it's easier than using 2.96) and multiply by 3/2 (remember, we only used 2/3 of our corn for the ethanol) to get 4.5 gal/bu. Now, we'll multiply that by 150 bu/acre, and come out with 675 gal/acre.

Now, I adjust the tilling, planting, harvesting, and fertilizer production, and seed drying inputs accordingly; but I don't mess with the Refinery inputs since that process would never be undertaken absent the need to make ethanol.

Here's where I, really, take a "Liberty." I've given several links of real, honest to goodness, real-world tests that show that ethanol in ten, twenty, or thirty percent blends are basically mileage-neutral compared to gasoline. So, for a little "shock" value I used the 116,000 btu content of gasoline, not the 76,000 btus of ethanol. It's shady, of course; but, it's also "real-world" accurate, inasmuch as ethanol's 30% Higher Octane compensates where it really matters - at the gas pump.

Hi kdolliso,

PUD: He is blandly asserting that one gallon of ethanol exactly replaces one gallon of gasoline, which is Just Plain Wrong...

k: I don't do Anything blandly.

Calorific values at this link. You need to use the lower calorific value, i.e. with water remaining as vapor, to get the heat available to an internal combustion cycle (you're welcome). Multiply by density to get volumetric energy density. Strictly speaking you should adjust to exhaust temperature, but that's not going to make much difference. I don't know the mixing volume loss for gasoline/ethanol blends - anyone?

Ethanol=28.9, Gasoline=44.4 MJ/kg

I'd be interested in your comments. Hint: "irrelevant" won't cut it. As SwordsOfDamocles says (paraphrasing), there's probably a lot of efficiency improvement to be made in mass-market IC engines, irrespective of fuel type, but those numbers aren't going to change.

Two questions. Is the electricity that is included in the 17.7kBTU energy input that you quote fully-burdened with generation cycle efficiency?

And, just out of curiosity - as a teenager, did you get whacked upside the head with a copy of Atlas Shrugged?



Hey, PUD

Read it when I was young; don't remember much about it.

I'm just interested in the "Real" World. BTUs don't mean a thang if you can't get the energy out. In the Real World you need Octane. Ethanol has gobs of it. 113 - 116, depending on how you measure.

Throw some compression to it, and you can knock gasoline's socks off. At low to medium blends you don't need too much compression to equal gasoline's performance. Two Links: First one on "Efficiency," Second on on EPA cycle test using midlevel blends.

Again, a Hershy Bar has a thousand btus, or so; but you can't burn it in an ICE. BTUs, without considering Octane, is a worthless metric. In the "Real" world you can do as much work with ethanol as with gasoline.

Octane number, and therefore compression ratio, certainly affects thermodynamic efficiency, but if you aren't putting the energy in you aren't going to get it out. So ethanol is starting off at a disadvantage.

(Idle speculation) I bet you could dissolve Hershey Bars in fuel oil and run 'em through a Wartsila-Sulzer RTA-96. Which the manufacturer claims to be the most efficient non-combined-cycle prime mover ever made (almost 50%). Would probably need a total rebuild afterwards though. And it wouldn't fit in a car - 1820 litres per cylinder, up to 14 cylinders.



To support your argument, I have said elsewhere on this post that the compression ratio/efficiency curve is pretty flat by the time 10:1 is reached. At 10:1 its about 60%, at 14:1 its about 65%. The additional load on the piston rings and the shearing loss in the oil film of the crankshaft bearings, imposed by the the additional load, mean some of this thermal efficiency gain is lost through increased friction. No amount of compression ratio increase will make up for the reduced calorific value of ethanol, period.

If you're going to do ethanol and do it right I think this is how it gets done:

There has to be a practical method to produce ammonia using variable electricity sources. I think enough of Dr. John Holbrook's solid state ammonia synthesis that I filed a $952k grant application to Iowa's Power Fund and that same paperwork is being updated for use with the Massachusetts Technology Collaborative. This process takes in whatever water you've got handy and whatever electricity that can be spared and produces anhydrous ammonia, directly usable as a fertilizer or more likely being evolved to UAN for easier handling.

Boil ground corn in ethanol and what do you get? About six gallons of corn oil from the corn that'll go on to produce a hundred gallons of ethanol - they call this "fractionation". The corn oil biodiesel needs methanol ...

Ethanol production produces nearly perfect carbon dioxide - room temperature, room pressure, and no contaminants. There is a way to make methanol from CO2 and variable sources of electricity ... this I know because I can dial the phone of the inventor of the process from memory. Oh, another grant request to be written here now that May has rolled around - I'm trying to do one per month - drip, drip, drip - IPF has to fund something sooner or later :-)

If you can evolve methanol that is a good fuel in and of itself in addition to its use in biodiesel, but with small changes you can directly make ethanol from CO2 using similar methods to the methanol production. Increased yield is a good thing, goes double if you can use a variable source of electricity in the process.

Not addressed in this post are food security concerns (yikes!) the strong probability that cellulostic ethanol could entirely replace grain based systems, the straight up use of ammonia as a liquid fuel, the need for electrified rail to dramatically cut our overall driving, and the use of grain as livestock feed with the capture of waste and evolution of methane for fuel via biological processes, skipping the slow moving and fragile fermentation process.

It may also be possible to recycle some of the nitrogen, as well as potassium and phosphorus, in the cattle wastes.

CAFOS as currently configured may not be ideal for a return to the old manure pile, but perhaps something could be done, thus reducing the electricity or natural gas necessary to produce that N that corn loves so well. In addition, recycling P & K locally saves transportation and processing energy tied up in yearly shipments of those nutrients.

Very interesting point. It seems that states (governments) may be more prone to "get it wrong", and with wider consequences, with their top-down policies (e.g., US govt. subsidizing of ethanol, German govt. pushing solar given their relatively poor insolation), than bottom-up, grassroots efforts with tighter feedback loops on what works or doesn't locally. Europe's much higher gas taxes mean solutions are more in the hands of states; if they get it right, great. If not, wider problems.

Regardless of what Germany is doing with respect to "renewable" fuels, it does not matter a great deal because they have a decent public transportation system to fall back on. So, they are in a much better position than the U.S. to soldier on in the face of declining use of the automobile.

In the U.S., we are basically screwed as we are almost completely dependent upon the automobile.

When I lived in Germany, the car was, in certain circumstances, a convenience, but in no circumstances, a necessity. I spent my last two years there without a car and prospered mobility wise and financially.

Jes - biofuels are route one to self destruction. And in Europe we drive turbo diesels - I don't know what % - which do about 50 mpgs, 0 to 60 in 8 secs, and are already more efficient than hybrids.

And we pay huge tax on fuel - which personally I'd increase even more, but which in all probability will be reduced to combat escalating fuel costs.

I remember seeing somewhere that the majority of new cars are diesels, which probably means somewhere in the 30-50% region for diesels in the EU fleet.

Most seem to be able to do at least 50mpg on the combined cycle. Still waiting to see serial diesel hybrids which are probably the sweet spot in acceptability, if not price.

Is the move to diesel scalable? Isn't the ratio of diesel to gasoline from refining a barrel of crude more or less fixed? We are already getting diesel fuel much more expensive than gasoline. We may find that only a fixed percentage of transportation energy can be supplied by diesel. We have probably already reached that percentage.

Its a good point. I think that with oil production moving to heavier grades it might be possible to tune the crackers to produce more diesel relative to gasoline. Need to check with RR on this point.

Shell are promoting heavily their GTL technology that makes diesel from nat gas. Only problem is they do this in Qatar - and there as so many calls on that wee puff of gas it just won't last.

You could tune your cracker, but you are still pretty limited on the diesel. There are a number of steps you can take to increase diesel yields, but in a small range. The biggest factor in making diesel is in the crudes you choose to run through your refinery; some make a lot of diesel and some make a lot of gasoline.

In theory, you could build a refinery that produced a lot more diesel - at the expense of gasoline. You could run all the ligher molecules throught an FT reactor and build the chains. It wouldn't be very efficient, and it would be expensive, but in theory it's doable.

And in Europe we drive turbo diesels - I don't know what %

53% and rising, compared with less than 3% hybrids in the U.S.

Hybrids have benefitted from monumental hype in recent years (and don't get me wrong, I love hybrids and they're important step to PHEVs and EVs) but they have had next to zero impact on reducing oil consumption or reducing CO2 emissions. Diesels on the other hand, have made a huge impact in Europe.

"And we pay huge tax on fuel - which personally I'd increase even more, but which in all probability will be reduced to combat escalating fuel costs."

So Europe will lower taxes in an attempt to avoid destroying demand. Good luck with that.

We drove turbo diesels... Now common rail is doing the trick. Efficiency depends on driving patterns. In general hybrids make more sense with lower speeds & lots of congestion and comfort is better. Emission control for Diesel engines quite complex at Euro 5 / 6 level.

Full hybrids are a very complex and expensive in production. Scalability of production is a siginificant issue. Even Toyota is beginning to switch to mild hybrids (less weight and still reap most of the gains). Diesel-hybrids are not on the road (yet) and their efficiency in real world driving remains to be seen. (Diesel heavier than Otto & better performance at low rpms not necessary with hybrid). The Prius uses a Stirling engine running at optimal efficiency level and the electrical component ensures that the petrol engine is working at that level.

Good to have several options - but unless we bring weight down by at least 50% we will not be making significant headway.


I think you are a little confused. Common rail refers to the fuel injection method ie a high pressure (2000 bar) fuel line with electronic injectors. The conventional method was a distributor pump running at about 900 bar for the bosch VP30 pump. Turbo charging can be (and these days usually is) applied to any diesel engine, regardless of the injection system. The advantage of the diesel engine is high part load efficiency due to no throttling losses and very high air fuel ratios. I don't think the stirling engine is used in the Prius. The Stirling engine uses expensive helium as the working fluid and reqires expensive nimonic alloys for its construction.

efficiency of diesel is caused by the higher compression ratio.

efficiency of diesel is caused by the higher compression ratio.

To some degree true. The higher compression ratio contributes but the efficiency curve is pretty flat even at 10:1 compression ratio. Spark ignition engines have to operate close to stoichiometric so have to throttle the intake. This causes a significant loss in part load efficiency. At full load, viz wide open throttle, the efficiency of a petrol and diesel are not that far apart.
Indirect injection engines such as the Peugeot XUD series have a compression ratio of 24:1. The Austin Rover Direct injection engine had a compression ratio of 17:1 in the turbo version and was 20% more efficient. The reason, thermal and pumping loss in the Peugeot's indirect injection engine versus the Austin Rover's direct injection. All modern diesels are now direct injection and operate at about 19.5:1 compression ratio. All are more efficient than Indirect injection engines operating at 24:1. The reason is direct injection has less pumping and heat loss. Inceasing the compression ratio also increases friction between the top piston ring and the bore, which is claimed to be about 70% of the mechanical loss within an engine.

Euan, I agree that biofuels - except sugarcane ethanol - have the potential of starving at least hundreds of millions. However, you should not equate using diesel with no biofuels: remember biodiesel. I give the following points certainly not to encourage the move to biodiesel but to show that the incentives to produce it are there.

- Soybean biodiesel has a more robust EROEI than corn ethanol.

- Soybean has lower fertilizer and pesticide requirements than corn, in absolute terms and even more when taking EROEI into account. "Per unit of energy gained, biodiesel requires just 2 percent of the N and 8 percent of the P needed for corn ethanol. Pesticide use per NEB differs similarly." (Quoted from the National Academy of Sciences recent report titled "Water Implications of Biofuel Production in the United States" at .)

- Anywhere, diesel's availability is more critical than gasoline's. No gasoline means it will be a pain to get to the supermarket, but no diesel means there will be no goods in the supermarket.

- I remember reading that the investment costs for a corn ethanol distillation plant are three times higher than those for a biodiesel plant of similar capacity (no reference at hand).

Europe has higher taxes on gasoline than diesel. As a result the US exports diesel to Europe and Europe's excess gasoline gets exported to the United States. So the US now ends up having much cheaper gasoline than diesel.

China's demand for diesel is also driving up diesel prices in the US.

The problem with a shift of the US toward diesel: Where is the diesel supposed to come from? It is my impression that there are limits on how much of a barrel of oil can go toward creating diesel fuel. The US has to drive gasoline powered cars so Europeans can drive diesels.

If someone can correct me with authoritative information to the contrary I'd like to hear about it.

It doesnt matter what Obama / Clinton /McCain will try to do regarding tax holidays.

The tax is so little that, even if permanently reduced to zero, the raw cost burden will be directly passed on to US drivers to such an extent that the the price at the pump will swamp the tax reduction within months.

There is no way around this fact. The only thing US citizens can do is alter vehicle types , driving patterns and commutes as best they can while they still can afford to. Assuming that some can still afford to.

In certain respects, America is in fact more flexible and can switch quite quickley - look how unfashionable second hand SUVs have become.

In Europe, the tax is significant and so at least in theory, modulated reductions in tax take could be used as a tool to lessen the shock and after pressure from the UKpop on UKGov as seen last week this may happen. - If not outright reductions, then freezing the tax take as it stands.

Our respective societies will try our own different methods in our own different ways.

The question is: Will any attempts at mitigation be timely enough? Two years ago, we were just discussing this as if it were 'some time in the future'.

Now we are upt to our knees in the future...

The UK government and all European governments are utterly dependent on fuel and vehicle tax.
There is no way they can reduce rates, even as a proportion of total price, without going bankrupt or having to make absolutely huge increases elsewhere.
US taxes are different, and a cessation of them would mean that the already very poor condition of the highways would deteriorate further, as that is what pays for maintenance.
In any case, since the taxes are I believe in absolute dollar terms rather than proportional, falling mileage due to rising prices will mean that there is even less money to spend on maintenance.
You can guess how a tax increase to pay for adequate maintenance would go down.

Of the 40 billions raised from UK Motorists, only between 8 and 10 billion go onto road maintenance.
The tax is not hypothecated and just goes into the general coffers.

The problem is as always : wriggle room.

There is not enough because we are pretty good at blowing tax revenues on wasteful things. Mostly public sector types who are a client of this government and other things and people as well.

So, the ability to tweak pump prices is there in theory, but this will impinge on general taxation and the ability to fund the Client payroll of the UKGov.

So. Yes, you a right, but it will be to the UK's overall detriment in the medium term.

Now, if Fuel Duty and Road Fund Licence were to be hypothecated into a national rail and bus infrastucture revival, then life may be different. But pigs will sprout wings first.

But we have blown it all.

I got my ass whipped in my latest attempt to suggest on Daily Kos that gas taxes should be increased, despite the fact that the place is completly dominated by Obama fans and Obama's solid stance against the gas-tax holiday.


The tax is so little that, even if permanently reduced to zero, the raw cost burden will be directly passed on to US drivers to such an extent that the the price at the pump will swamp the tax reduction within months.

The addiction to prosperity crosses party lines. Malik, the Common Ground Collective, those rebuilding NOLA from the ground up speak of how it seems to be the biggest obstacle. The want to restore the wetlands - environmental restoration is part of their community rebuilding effort. Very sharp. The typical rank and file Democrat on dKos isn't there - not even anywhere close. I wonder sometimes if they are even on the same planet. 3/4 of them will turn fascist torturer when they can't find gas for their Outback.

Cutting the gas tax interests me because of the social effects. Cutting the tax isn't going to stop the degradation of bridges, roads and transportation infrastructure. In Maine, the funding has been shifted to some bonding and fees - primarily increased license and registration fees - but only on personal vehicles, not on the commercial vehicles where weight limits keep getting increased. Heavier trucks, less people driving them, less goods to move, wrong people paying the price, increase inequality, etc.... Everything makes that damned prosperity addiction worse.

And bonding/borrowing - ooops. Anyone reading Automatic Earth of late? It's like we've spent the capital on our balance sheet and now to maintain our current operations we are going to borrow. How far into negative equity can we go personally, collectively and environmentally? The dKos readership thinks we merely need to shuffle the CEO to get our prosperity back.

cfm in Gray, ME

I support higher gas taxes. And always have. That includes prior to any knowledge about peak oil. What I most am interested in today is the 'stick' applied to motorist to drive less (reducing ghg's and congestion) and the new revenue possible to support infrastructure improvements for alternative transportation.

As an SUV owner... a fill up for me is 15-17 gallons. Assuming an additional 10 cents per gallon over existing... the financial impact to me is $1.50 to $1.70 per fill up. That is nothing.

Based on how much I drive, which is approximately 6,000 miles per year of city driving... okay, I am getting only 12 mpg or so... the financial impact is only $50 per year. Or, about $4 per month (rounded). Even if someone drove x3 as many miles at the same level of fuel mileage... $150 per year or $15 per month is still very very small.

I wish there were politicians out there with the cahoonies to forward such an idea... a media not starving for sound bites from the public... and a public that was no so adverse to the smallest change.

I greatly fear rationing is in our future. Perhaps rationing could be introduced in concert with taxes. People could be alloted x amount of fuel, and that ration would decrease every year (I would base the reduction on twice the amount supplies decreased). However they could buy more if they paid some very high taxes (say 100%). I am very much in favor of giving the taxes back to those who invest in the infrastructure (say solar panels) needed to end our reliance on oil [as previously suggested here on the oil drum]. While not palatable, this would ease into taxes (especially if the initial ration was pretty high).

"I greatly fear rationing is in our future. "

I agree. If higher prices do not curb demand/consumption then shortages and rationing are next.


Hi shasta and alaska,

Do either of you think the advent of rationing might be tied to the price of oil?

And, if so, at what price do you expect rationing to begin?

It's going to get ugly in the US. For over a century professional politicians have made careers out of pandering to the populace and telling them what they want to hear. Many good ideas have been stillborn because they represented political suicide to any politician who might espouse them.

The "politics as usual" infrastructure is not prepared for what happens when the old ways pass away due to reality's incursion into the status quo. It's going to get big-time ugly because there are no palatable solutions. What's needed is leadership and elected officials willing to tell the truth and present the alternatives honestly, with the country's best interests at heart and not their own careers. The chances of those kinds of leaders emerging are somewhere between zero and none. Sometimes I think I'm not cynical enough. The next 10 years should take care of that.

The US political system is dysfunctional, irreparable, and not up to the challenges that will be facing us. I dread thinking about it, but I see an authoritarian govt as the inevitable outcome of this very sorry story.

The US is increasingly becomming just another, corrupt, misgoverned 3rd world country. And the jingle keeps playing in the back of my mind: "Sooner or later, you'll have Generals"

WNC Observer "...I see an authoritarian govt as the inevitable outcome..."

Authoritarian governments require huge amounts of capital. Who was it that said: "Deficits don't matter"? I believe they do.

National Politicians are going to make a lot of noise but in the long run they will matter less and less. We need to quit looking to Big Brother for answers.

The question I'm asking is: How will we live in an economy that quits growing?

Actually, authoritarian governments dont always need huge amounts of capital.

Sudan, Zimbabwe, Burmah are good examples of low cost genocide and repression.

To make sure that low cost authoritarianism is possible:

1. 'Tribalise' - us vs them , black vs white, proles vs toffs (insert preferred enemy here)

2. Disarm enemy: Right to carry arms? -gone. Gun clubs / rifle ranges ? Gone. Ciizen Militia/ State or National Guard? - gone.

3. Kill enemy.

When asked why Japan did not invade California after Pearl Harbour, the prime minister of Japan retorted We would have been mad to invade a country where every man was armed with a rifle.

You can do low cost Authoritarianism. You just need to disarm your population in easy steps like the UK.

Mudlogger "You can do low cost Authoritarianism."

True but the U.S model of Global hegemony is expensive. All of the countries you talked about are local in the nature of their repressive activities. The U.S. likes to do things in a global way. Overthrowing and invading other sovereign countries is a big deal. Occupation is even pricier. Can't do that on the cheap.

We thought invading Iraq would be cheap.

Gee whiz? Who'd a figured!

If you are really lucky, you might get someone as good as Fidel Castro to run the place for the next 50 years. You might just learn to stay at home, look after your own people, and stop f**king with the rest of the world.

HI Merv,

Though it's probably too late and no one's reading...

I just wanted to say, my observation is that most US citizens don't realize just how much interfering (for lack of wanting to repeat the word) the US has done in the past or continues to do now.

They just don't know about and wouldn't believe it.

For over a century professional politicians have made careers out of pandering to the populace and telling them what they want to hear.

Cryptex- It might seem like a century, but I believe Ronald Reagan took office on January 20, 1981.

Thanks for the reasonable editorial, Jerome!
I have been called "rich elitist 'merican f*ck" for displaying a carbon tax auto decal

"It's not that the genie is out of the bottle -- it's that 100 genies are out of the bottle," said Daniel Yergin, chairman of Cambridge Energy Research Associates. Normally known for optimistic forecasts of lowering oil prices, Mr. Yergin's firm now says the price could rise to $150 a barrel this year.

In the face of impeccable logic; and not a little tenacity from TOD and host of lesser organs, CERA have thrown in the towel and admitted all the stuff they have published to date is garbage.

'Paid for' garbage at that.

Have you got a link foir that quote?
I'd love to see it.

Reuters via Energy Bulletin today:

The rest of what he said is BS though.......

It's looking better and better for Simmons every day in his bet with Mr. Tierney.

I remember a lot of speculation from friends, acquaintences, etc. on how high gas prices would have to get before things would change. Most people said $3 or $4 a gallon. But I now believe people will buy oil as long as they can afford it, even if it is significantly painful. It's simply going to have to be unaffordable to destroy demand, and that means the price of oil is going up a lot more. You could easily have labeled the post countdown to $500 oil, or $1000 oil.

It's freaking me out - soothing myself with assurances that the rise in oil prices will be gradual is getting harder to sustain.

I agree that people will just go on paying for the moment. Remember we in the UK already pay over 8 dollars per US gallon. There may be some fall in demand elsewhere in the world but the price will have to go up a lot more before we in the west curb our driving based on the price. One of my work colleagues said yesterday, it is costing him 15 pounds a day to drive to work - but he is not going to stop.

There was a news item on the local TV news about petrol and diesel prices as bus fares are going up. One woman interviewed said she would stop using the bus and drive into Reading as the car park cost was now less than the bus fare - no understanding of the extra it is costing her to drive, she just did not make the connection.

At least I am no longer scorned as a Jeremiah when I say that I think prices are going to keep rising until there is a global recession.

Remember we in the UK already pay over 8 dollars per US gallon.

But how many miles? Seems that the total expenditure would be about equal. I.e., if Europeans drive half of what Americans do, the effect on budget is equal. Any rise in the US would then actually be a larger net drain in the US.

So, what's the mileage differential?


Well UK average mileage per private car in 2006 was 8190 miles, from Transport Statistics 2007:
AA usually quotes 9000 miles per car average mileage.

Best I can do for US is 2001 EIA statistics where private car mileage is given as 11400:
Maybe a bit higher including minivans etc but cars are far the largest number.

UK mileage per car has actually been falling, as the total number has increased, total is now about 25 million (statistics show higher than this but some of these are company owned)

Average UK fuel consumption is usually taken as 30 mpg (25 mpg US) by the AA motoring trust, US average about 20 mpg US?

So not a huge mileage differential, 35-40% higher in the US say? Also higher per capita ownership in the US, but lower average income in the UK. I reckon this still means fuel is quite a bit higher as percentage of household income in the UK.

It's freaking me out - soothing myself with assurances that the rise in oil prices will be gradual is getting harder to sustain.

Its seems gradual from my point of view in Sweden:

The statistics is in year 2007 inflation adjusted SEK, top bar is tax, middle bar is petrol production cost and bottom bar is manned gas station revenue. The litre price recently passed 13 SEK / litre, a little more then $8 per gallon. (If I used the right gallon, I hate those funny units. )

The US and Europe, at the end of the Second World War, took radically different courses on energy prices. US, low taxes, Europe, high taxes. As a consequence, total energy consumption per capita in the US is twice what it is in the EU, and the EU, IMO, is better equipped to outbid the US for oil exports. It is interesting to see how crowded the roads are in Italy, with prices for fuel in the $10 per gallon range.

The logical trade in the US is an energy consumption tax, to be used for Social Security and Medicare, and some mass transit, offset by eliminating the highly regressive Payroll Tax. Both Boone Pickens and Al Gore have come out in support of some form of this idea (Pickens supported it before Gore).


I find it interesting that the main "bullish" indicator is the shortage of diesel, I have a gut feeling that the Chinese might stocking up for the Olympics. This is not to say that the supply is so tight that the merest event seems to have large price consequences.

I also reckon if you chucked an Economist of a forty story building and interviewed them when they passing the fifth it would go like this "Nice petunia's on the 4th balcony I passed, almost clipped a railing ten balconies back but other than that there are no indications that we won't be fine for another 10"



From where I am in the UK, the US customer can easily outbid the EU customer for oil products. This is where low taxes help you.

The 'disadvantage' of the US is the low pop density/distances.

You guys need these sort of transition cars:

These are high [upright like an SUV/truckdriver], tiny [smaller than the photo appears], cheap.

Probably handle like a shopping cart though..

Nah, it's gonna be more like this.

The 'disadvantage' of the US is the low pop density/distances.

This is also an advantage when you look at it. With lower pop density per arable acre than Europe we are much less dependent on long distance transportation to eat.

The flip side is that a lot of people will be working in agriculture in 10 years that wouldn't know which end of a cow to milk today.

r4, I believe we've reached PEAK BOVINE at the moment, better to know in 10 years how to plant soy with a no till drill 1/2" deep

The US and Europe aren´t that different. For instance Germany uses per capita roughly the same amount of IMPORTED oil as the US.

Germany imports the whole of its consumption, the US has its sizable domestic production capacity.

So I'd say they are quite different.

The main (sound) objection to replacing the FICA tax with a carbon tax (tax shifting) is that once fossil fuel use is reduced, the revenue goes away and the stability of social security is endangered. Since social security is under constant political attack from the right, it would be better to leave it alone.

To me, rationing makes much more sense. If the rations are tradable, it is also anti-regressive. If one is concerned about FICA being regressive, it is always possible to increase the earned income credit. You need to look at the whole income tax to decide if it is regressive or not.


mdsolar "...the stability of social security is endangered..."

Are you serious? If you think that the only thing Peak Oil is going to hamstring is our ability to continue the American Suburban Drive-in Utopia then you need to take a long hard look at the National Debt. The U.S. with the loss of the economic growth paradigm is insolvent. Like any other Pyramid Scheme - When the players at the bottom of the Pyramid stop joining it is:

Game Over! Tilt! Thanks for playing! Better Luck Next Time!

If you take the premise that Social Security will not survive* Peak Oil (among most other social programs) what do we do in the absence of Social Security and Medicare?

*Of course you have the option of being optimistic and keep putting quarters in the machine just on the chance that it could pay off. I worked in the gaming industry long enough to realize that without a steady supply of fools we would have been out of business in a week.

Social Security + Medicare, as well as any other pension program in the world, mean basically that the working generations give part of the goods and services they produce to the retired generations. Because these programs do not create wealth, just move it around.

And since the working generations are the children and grandchildren of the retired generations, you can look at the underlying fundamentals just by thinking that there is no Social Security and Medicare and that retired people live from what their children and grandchildren provide them with, and asking, in that context, what you and your wife will be able to provide for your parents and grandparents after Peak Oil.

The main (sound) objection to replacing the FICA tax with a carbon tax (tax shifting) is that once fossil fuel use is reduced, the revenue goes away and the stability of social security is endangered.

This is a generic problem with governments and taxation.

There is a built-in conflict of interest - minimising the "bad" behaviour that they are taxing vs maximising the tax revenue.

To my cynical eye it appears that the latter always takes precedence.


Sin taxes do have that difficulty. One way to do it is to be sure that whatever the revenue is needed for is no longer needed when the revenue dries up. So, if a tax on drinkable ethanol is put towards free health care for liver disease then there might be a balance.

Taxes to support things like the common defense, social security, infrastructure held in common and such should not be sin taxes since it leads to the conflict you raise.


WT "eliminating the highly regressive Payroll Tax"

Energy consumption tax. If you are a low wage worker getting to work and around town is a large percentage of your income already. If you raise taxes on gasopline useage rich people don't care because even at $10 per gallon it is a small percentage of their income. But someone of modest means who is forced to drive an older inefficent car (because they con't afford a Prius) and live farther away from employment becuase of economics will be devastated.

In LA in an effort to raise capital they are converting ride sharing lanes to toll lanes. I can already see all of the BMW's passing up the schmucks in Explorers who have to sit there breathing $10.00 a gallon fumes because they can't afford the toll.

IMO any attempt to mitigate the problems will only make the problems worse. Whatever elitist F**ks like Gore and Pickens have to offer is total BullS**t!

You need to check your payroll statement and see how much in payroll taxes (FICA) that you pay. Your employer pays the same amount (up to the cap for Social Security, unlimited for Medicare). In any case, higher energy prices are coming no matter what.

It's a tough gig. Trying to sell higher taxes. We have a fuel tax here in Australia (about US$0.36 per litre) however there is continuous pressure on government to have it reduced. With the pain families are currently experiencing from a number of fronts, I fear that some "bright" politician may attempt to make a name for themselves by publicly advocating the removal of the tax. Such lunacy is the bread and butter of politics.

Family First Senator Fielding has been doing it for a couple of years. I have written to him, but I do not get the courtesy of a reply.

Canberra, by design (like DC in the US) is divorced from reality. Apart from a couple of Greens, nobody, in either of the major parties at a Federal level, has demonstrated a grasp of PO and what it means.

The 2020 BS session didn't even mention energy in the context of constraints - in fact the "sustainability" group was loaded with shills from the coal industry arguing that Australia must increase CO2 emissions!

Nothing will happen until it hits them in the face. Then they will run around like a the bunch of headless chickens cooking up plans to convert cars to LNG and other useless initiatives like Howard did. As we like to copy the US we are also governed only in two modes: complacency and panic.

SailDog "Family First Senator Fielding has been doing it for a couple of years. I have written to him, but I do not get the courtesy of a reply."

Do yourself a huge favor and ignore politicians. When we listen to them it only empowers them. Trust me, those self-serving dead-from-the-neck-up parasites don't have any answers and any notion that they've got a fix for the fix we're in is a huge part of the problem.

The faster the current system collapses the sooner we can get on with the real business of living in a shrinking world.

Living Large In A Nation Of Nitwits

Demand will be destroyed at some point, one way or another. Many of us chose to do our own personal demand destruction years ago. For me, it started in 2002, when I bought my first hybrid. Anyway, as long as demand is going to be destroyed, we can choose to send our dollars to the government or choose to send our dollars to foreign countries, including those in OPEC and others. Instead, we get these insane schemes to lower taxes and, thus, send even more money overseas.

Demand will be destroyed at some point, one way or another.

We're almost there. The Kaiser Family Foundation poll that came out at the end of April listed gas prices as the number one economic concern for people living below the median household income in the U.S.:

Problems Experienced as a Result of Changes in the Economy,
by Household Income

Percent saying each was a “serious problem”

Problems paying for gas:

<$30k, 63%
$30-$75k, 43%
>$75k, 27%

The number one use of George Bush's stimulus check for people living at or below the median is going to be filling the gas tank. The stimulus check will fill up people's gas tanks through the summer, with the caveat that it will also drive up gas prices even further.

Basically, the stimulus check is going right to the oil industry.

You say the stimulus check is going right to the oil companies. That wouldn't be too bad if they were our local investor owned IOCs. But with about 2/3rds of our oil imported, much of the stimulus goes overseas. But I suppose with the continuing collapse of the dollar, and of housing, it will come back in the form of Arabs buying up our realestate at rock bottom prices. Soon we will be paying rent to them.

tstreet Gee...somebody gets it!

This seems like one of the GEICO commercial moments when we need a celebrity to interpret what this actually means.

I have despaired of the current system being reformable. It's not. All of this relentless activity to stave off collapse is only going to make the paradigm shift that much harder.

The sooner the collapse occurs the better for all concerned.

Well, there is an alternative, actually: shortages and rationing. Maybe that will create the urgency that the current situation seems unable to create yet.

I am hoping for shortages. Rationing can price increase can be manged by decision makers to avoid hitting their needs. Shortages hit everyone.

The problem with the price increases of the last 3 years is that policy makers have avoided consequences.

I am recommending that everyone plant a garden. Shortages might escalate beyond control.

We'll have neither.

We Will have quite a bit of price escalation over the next few years. However, we're bringing a new ethanol refinery online every couple of weeks; and, there must be more than a dozen "serious" cellulosic startups going from financing, to pilot, to demonstration plants, as we speak. Also, quite a few outfits are getting closer, and closer to some sort of "workable" Algae/biodiesel process.

Hybrids, with a, what, $3,500.00 tax credit, are now 3% of new auto sales (with a bullet.)

The new "flexfuels" that start coming out this year will be revolutionary in their ability to deliver great mileage, and good fuel economy from very small engines.

Nah, it's not going to work out like some "doomers" think. It's going to work out pretty good, really.

Ethanol in all its forms is deeply unsustainable. It is really just a method to strip mine the top soil. Anyway its energy contribution is very low.

Algae is the only theoretically possible solution, most likely through a BTL process (not biodiesel), however it will not scale very quickly.

Not sure what you mean by flex fuels. Hybrids - life cycle energy costs are too high.

Nah. I think there is a problem.

Saildog, I'm going to try to figure out how to be polite, here; but, if you don't even know what flexfuels are, well . . . dang, man, you've got some reading to do.

See my comment, above, regarding energy inputs, and outputs.

Flexfuels - refers to vehicles, not a type of fuel (I thought that is what you might mean). Red herring.

Not a Red Herring, at all, Saildog.

The new generation coming out with Variable Valve Timing, Direct Injection, and Variable Ratio Turbos will not only not only give more hp when running ethanol, but should be able to suck a little exhaust gas back into the cylinder during the 3rd stroke (thus allowing for higher compression w/o squirting in more fuel) and deliver better mileage with alky vs gas.

This does away with the primary objection to ethanol (ie. that to get good mileage you had to downsize to the point that the engine didn't have sufficient power when running gasoline.

We'll be replacing Over 10% of our gasoline with ethanol in just a couple of years. That will make a Big Difference in our Magnitude of Pain at the Pump.

It's, already, estimated by Iowa State University that we're saving between $0.29, and $0.40/gallon on our fillups.

That's probably between $435.00, and $600.00/Yr for me.

The median age for the US fleet is 16 years. Even if every single vehicle included this technology it would take quite a few years before a difference was even noticable. That is even if it is true. I am not convinced that ethanol has an EROI of greater than 1.1 (1.3 if you count byproducts). That ratio has been calculated many times - some are a little higher, some are even negative. Gasoline has an energy ratio of around 8-10 currently and diesel is higher.

That is not the only problem. The ethanol program has a direct role in the increase in food prices. How much extra are people paying for food because of the ethanol program? More pertininently how many people are going hungry and dying because of the US ethanol program?

Europe already gets double the mileage the US does without ethanol. I drive a VW Golf diesel that gets 50mpg. On top of that it performs better than gas cars. Why would anybody bother with this? There is just too much bad news surrounding ethanol. I personally think it is a scam to buy support in the US midwest by the bankrupt and corrupt politicians you call leaders over there.

I think your number for the median age of the U.S. fleet is wrong. I've heard many times that the half life of the automobile fleet is less than 10 years and declining. Lately, I've heard that it's now close to 8 years. The number of vehicles in operation for a particular year declined exponentially after production, due to collisions and overall wear and tear. While automobile engines can last 150,000 to 200,000 miles, a serious commuter can easily run up 30,000 miles a year. That vehicle would be considered at the end of it's normal life after 4 or 5 years.

Of course, on the tail end of the exponential decay curve, there are still a few cars from the 1970's, 1960's and even the 1950's out there, but I would bet that many of those are kept in garages for occasional weekend jaunts and don't add much to the overall use of fuel. For pre-1976 cars, the present unleaded fuel is destructive to their engines (the lead provided a cushion to their valves) and they may not run well on E10 gasoline/ethanol mix.

E. Swanson

I was quoting the Hirsch report 2005

Actually older engines run fine on no lead. Your description of valve seat recession was a fear that was not realized fortunately because on our farm we have vehicles running fine as old as 1949 and all are just fine, even the tractor and dump truck which get heavy use and are still on their original engines!


It is my experience that the lead issue was overstated. I live in the uk and drove a number of cars on unleaded that had plain cast iron valve seats with no issues. The BMC A series was said to be prone to valve seat recession, I had an old B reg metro and covered some 90,000 miles on unleaded. I had the attitude if it knackered it so what, get another cylinder head. It never did any harm at all, the car fell apart first!

Food Prices? It's China, China, China

The Growth in their appetite for Corn has been Astonishing.

kdolliso "It's China, China, China"

Imagine the gall of those little yellow people...wanting to live like Americans.

Living Large In A Nation Of Nitwits

biofuels are route one to self destruction.

Euan Mearns - above. I personally wouldn't argue for ethanol any further - at least not here. On the other hand in Congress you will find all kinds of support.

It's, already, estimated by Iowa State University that we're saving between $0.29, and $0.40/gallon on our fillups.

Sure ethanol "savings" almost covers the $.51/gallon taxpayer subsidy

No, you didn't read the link. The $0.29 - $0.40 refers to the price of ALL GASOLINE!

According to their figures, we will pay out about $4.5 Billion in Tax Credits ("pay out," really, isn't the right term, since, really, all it is is a foregoing of a tax) AND, Save about $50 Billion at the Pump.

Of course, we, also, are saving $11 Billion in Farm Support Payments. But, that's the subject for a future comment.

The thread demonstrates this is a complex subject. In general terms I am against subsidies, including the hidden subsidy carbon enjoys for non-payment of the externality & pollution costs.

That said, taking the energy yield, the basic problem of using agriculture for food, the logistical problems with distribution etc etc I still think corn and cellulosic ethanol (sp?) are a dead end distraction that will wither when things get tough. Ethanol from sugar cane like in Brazil may be another issue, but even that is fraught with problems.


You are right, and we won't find out whether we can live without the real hidden subsidy, that of fossil fuels, until its too late. The figures are cooked to suit the argument of the moment. I think fossil fuels provide not only an energy subsidy that gets ignored, but a financial subsidy of practically free energy as well.
As I have said many times, new technology may be available but unless its profitable it won't happen. To be profitable it has to be affordable. To be affordable it has to be low cost. To be low cost it needs to be high EROEI like oil used to be. Economists say we will never run out of oil because the price will always cause a supply/demand balance. Ok no problem with that argument, but what happens to the world economy when $1000 a barrel is the price to produce the energy we require, from the moon if necessary?
Time will tell, speculation is just that and economics is a flawed science!

Sorry, but your tongue-in-cheek style of sarcastic humour doesn't work very well on an international blog like this. The issues are just too darn serious, and many people will take your remarks at face value and then get all hot and bothered with lengthy refutations. Sarcasm doesn't translate well across cultural boundaries. In fact, although I am a native english speaker, it has taken me until today to "get" the joke you keep trotting out.

And, what "Joke" would that be?

If I were you I would take Gernos's post as the ultimate insult and stop digging.

We'll have neither.

We Will have quite a bit of price escalation over the next few years. However, we're bringing a new ethanol refinery online every couple of weeks; and, there must be more than a dozen "serious" cellulosic startups going from financing, to pilot, to demonstration plants, as we speak. Also, quite a few outfits are getting closer, and closer to some sort of "workable" Algae/biodiesel process.

I hear we're almost ready with fusion, too.

Hybrids, with a, what, $3,500.00 tax credit, are now 3% of new auto sales (with a bullet.)

In last year's terms that would be about 500k in the US, which may well reach this year, for a total of about 800k HEVs on the road, with about 95 million commuters and 243 million vehicles total. Better go through the roof a little faster!

The new "flexfuels" that start coming out this year will be revolutionary in their ability to deliver great mileage, and good fuel economy from very small engines.

So nix on hybrids? Better decide which pot you're going to shit into/get off of. Maybe we should conduct some EROEI studies to figure out the best way to go? Oh wait, EROEI is junk science/irrelevant.

Nah, it's not going to work out like some "doomers" think. It's going to work out pretty good, really.

Why fund all this funky science when we've got all that Bakken oil to tap into? Only 3% of wells worldwide have had EOR techniques applied on them, too. I read it at so it must be true! Russia’s largest field
is far from depleted


I bought a Prius last July (last quarter to get any tax credit), and got a whooping $375 credit. Some other manufacturers who had sold fewer hybrids still have credits. But as gas prices continue to escalate, thats going to seem to have been a very good decision.

Saildog, kdolliso,

If you look at the government gas mileage figures for all currently available flex-fuel vehicles you will see that they are woefully low - almost without exception.

(Search on Cars that don't use gas)

Most of the FFVs are based on larger vehicles such as SUVs and light trucks, that would likely appeal to the mid-westerner, where there is an adequate supply of filling stations selling E85.

The US auto-industry moves ponderously slowly to adapt to changing market conditions. Their vehicles could hardly be described as innovative. "Dinosaur" comes to mind. Lets see if the recently announced Chevrolet Volt markis a turning point in the design philosophy, aspirations and fortunes of Big Auto USA.

Personally, I drive a 1994 Peugeot diesel that gets 60mpg (imperial gallon).

The high road fuel taxes in the UK mean that our fuel is only 50% more expensive than it was in 2000. Life goes on, without having to fear large and sudden changes to out fuel costs. Oil could rise to perhaps $300 per barrel before we see a significant effect on European motoring habits.


Did you forget to mention something VERY SIGNIFICANT about flexfuel vehicles--not only can they run on bio-ethanol but they can also run on methanol from coal?

As you know the US is the 'Saudi Arabia' of coal(hundreds of billions of tons). Europe is out of coal for all practical purposes.
The process of turning coal into methanol is the same F+T they use to produce ersatz gasoline (a la the Third Reich).

The new generation of CCS power plants (IGCC) can easily be designed to produce methanol, natural gas or electric power from synthesis gas, with the CO2 ending up buried--this could 'replace' the oil refining business and coal fire electricity generation simultaneously. Of course we can produce synthesis gas from petroleum coke as well.

Right now the US is mining 1.1 billion tons of coal per year. To produce the equivalent of 150 billion gallons of gasoline from methanol we would have to double coal production but BAU is clearly not indicated and methanol should be considered a 'bridge' to biofuels not a final solution, which will involve higher efficiency cars and fuel cells. The downside is that consumers will get lower mileage, but I say, better low mileage than no mileage.

Naturally the oil companies don't talk about ethanol because they don't own coal mines(or many oil reserves either).

As I said above, I think coal processing where CO2 is sequestered is the way to go and methanol is just a bridge.

But methanol is far more 'easy' than most of the insanity proposed here(we already have coal mines).

I would also point out that the CO2 released by methanol is lower(1.35#CO2 per pound of methanol) than the CO2 released by octane (3.07#CO2 per pound of octane)(i.e. it is lower CO2 emitting)--although it is roughly the same per BTU).

Methanol and ethanol compliment each other very well in flex fuel vehicles(E85/M85) and can be used in conventional cars up to 15%.

Actually, Obama has been pressing hard for CTL as Illinois has very large reserves of coal. Bushco tried to hurt him by canceling the Future Gen site in Illinois(which also disappointed the Chinese who were looking for free US technology).

(I wish some people at this board showed more insight on energy issues and less dumbass opinion.)


I'm a "little" skeptical of the future of coal/methanol. The Capital Costs of a new plant are very, very high; and, you run into many of the same problems you ran into with MTBEs. Also, the Indy Cars picked up a 30% improvement in fuel mileage when they went from methanol to ethanol (Octane is the same; but there really is quite a bit of difference in btu content.)

Anyway, having said all that: Who knows? It might be a part of the transition. I just want us all to get through this mess we've got coming (incidentally, I think we're plenty smart enough to do it - once we Have to.)

The costs aren't all that high.
Cost(2003) of LPMeOH coal to methanol plant was estimated at
$63000 per daily ton of methanol or ~$22,000 per daily boe in 2003 or $1.5 per yearly gallon; $22,000/360/42=~$1.5

Cost of a new ethanol plant is $2 per gallon per year or $3.33
per gallon boe per year.

Both these are cheaper than traditional F+T plant costs which are around $70000 per daily barrel.

A tar sands syncrude plant costs about $37000 per daily barrel.

As far as MTBE poisoning goes, I agree it is a problem. I believe ethanol is safer, better but the fuel situation is approaching an emergency, right?

As far as the tired old fuel mileage argument goes, just give it up. It's the same argument that the diesel addicts use about ethanol.
In the future ALL fuels will have less power than in the past. People will need gimmicks like hybrids to get that high energy boost.
Besides 'watering' down gasoline with ethanol or methanol shouldn't make a difference over the next 20 years, but elimination the automobile/truck is simply impossible. People will adapt to E85 or M85.
OTH, ethanol is facing some road blocks and isn't a big enough fuel producer to even slow depletion.

In the end ethanol is more likely to depend on methanol than the other way around.

Majorian, we could get into a looooong discussion on the methanol/ethanol meme; but, I agree, the main thing is to do what works.

Slightly O/T, but I just heard on tv that while gasoline (wholesale) has increased 40%, Diesel, wholesale, has increased 100%.

Now, here's the interesting part: When gasoline goes to $4.25 wholesale (up another 40%) what will be the wholesale price of Diesel? About %7.50?

Then, $6.00 gasoline, $15.00 Diesel?

At what point do the Europeans realize they've screwed themselves?


Don't mix too much stuff up here.

The world is trying to digest the new mandates for ultra low sulfur diesel.

Just like the ethanol price spikes the US suffered during the banning of MTBE.

There are also mandates in Europe also requiring 20% bio-diesel from canola or soybeans and these foodstuffs
are getting quite pricey. I don't know of a non-fuel bio-diesel except jatroba.

Also, the refineries are doing turnarounds just now.

Lower ethanol are probably depressing the price of US gasoline.

Europeans are starting go to ethanol over bio-diesel.

It's a confusing picture.

We're all screwed, though some are screwed more than others.
And I don't find that to be comforting.

We all need to work together.

Okay, I'll agree to that; but, it does take a lot more oil to make a gallon of diesel than it does to make a gallon of gasoline.

We have the Chinese Tallow Trees growing wild all over the South. Just as good, if not better, than Jatropha, and, although, not indigenous to the U.S., it's been growing in farmers fields (and, driving them crazy) for over 200 years.

I've got a hunch, though, that biodiesel will be Algae. And, yep, Ethanol is Definitely holding Down the price of Gasoline:

I think you might find coal will not last as long as you think. The real level of reserves is unknown however it is thought the US has also passed Peak Coal (in BTU's mined) some time ago. Also coal mining is at least to some extent dependent on oil.

There was a German report (Energy Watch Group) on this issue a couple of years ago.

"Nah, it's not going to work out like some "doomers" think. It's going to work out pretty good, really."

Unlimited growth CANNOT happen on a finite planet, no matter how much technology you throw at this.


kdolliso "Nah, it's not going to work out like some "doomers" think. It's going to work out pretty good, really."

Can I sell you a nice 3 bedroom 2 bath ranch home in the Escondido area? You seem like the kind of client I've been looking for.

Mantra: "Each day life gets better in every way."

Living Large In A Nation Of Nitwits

throw in a Flexfuel Humvee for him too - TO THE FUTURE AND BEYOND!

man I love being told I'm saved all the time by fools...

what a great post (i'm from europe also) :D. but...

it's too little too late. americans are *cornered*, they have nowhere to go. and just like any human being that has no place to go, the'll just hold on with their teeth on oil, instead of just letting it go
europe has high taxes....but it has 2 decades of high taxes, and very little oil production. america does not have that luxury. america won't build a public transport infrastructure because gues what... operating and fuel cost too much. you just can't budget a good public transport system from one year to another. and everyone knows it doesn't bring much profit, so it's a no-go for cash loving americans

my bet is american cities will just let it's inhabitants figure it out for themselves how to get from A to B.

That'll probably be okay. After all, they do have the highest take-home pay of any large country in the world.

I agree had3z. The US has a patchwork of limited public transport versus a well developed public transit system in Europe. This is due in great part to the difference in taxation of fuel, which Europe heavily taxes those that can afford to drive, using those funds to provide a comprehensive public transit system for those that are less financially capable.

The US took the suburban sprawl approach to living, with many people commuting long distances. Along with higher fuel prices, an economy teetering on recession, debt increasing annually by 500 billion, world oil supply that has been flat for 3 years running, importing 70% of our daily 21 million barrels of oil, the US is in a very poor position to weather the initial downturn of post peak oil.

This country will either have to radically alter it's transportation and energy policies, or launch military strikes to secure foreign oil. Obama will probably seek answers to the former while McCain will seek the latter. You make the call.

It occurs to me, that if Europe has gas taxes like the UK (about 66 %) then to outbid the US for oil, all we need to do is repeal those taxes. We could then afford to pay three or even four times more for oil, but the pump price would be unchanged. Of course, the governments would lose a huge tax take, but in a game of last man standing, I can't see how the US can win. You would be slaughtered in the demand destruction game. Once your economy was in meltdown, demand would drop and our governments could raise taxes again.

I'm not saying it is a good idea, but I suspect it will happen.

that's the good part about high taxes. they really are like a cushion between the real price and what you pay. if need be, europe will lower it's taxes, and keep the price about the same.

but while we're mixed up in this high level planning, public transport and presidential action, we all seem to forget the most important piece: average joe. double the price of gas and europeans will buy from local shops instead of driving to the mall, and take public transport to work. no big changes, except the usual belt-tightening.

double the price of fuel in america, and problems like "eat or heat" appear, "drive or lose my job", "my kid can't go to school". the last two problems are something from another planet here in europe.

a lot of americans are going to be evan more unhappy

Some commenters kindly called me a "rich elitist f*ck from Europe" (guilty on all counts, of course) for wanting to bankrupt poor Americans who cannot do without gasoline, preferably cheap, and are already struggling mightily.....

The thing is, it is correct to say that high prices due to supply shortfalls will ultimately have the same impact as high gas taxes. But there are two very important reasons for favoring the gas tax approach. One, it is manageable and more predictable. This let's people know without doubt that prices are going higher, so they can stop holding on to those gas guzzlers as they plead for relief. Second, by letting the market drive prices higher, that extra money ends up in the hands of OPEC and the oil companies. As a shareholder of ConocoPhillips, that's good for me, but I don't like to see a huge outflow of money from the country. Without managing this, the U.S. economy will struggle mightily to extract itself from this mess.

for favoring the gas tax approach

you make it sound like there is a choice! it's one or both i'm afraid.

RR - Sounds like a good argument for a BIRTH TAX too!

Robert Rapier "two very important reasons for favoring the gas tax approach".

After reading the Oil Drum for the last couple of years I have changed my populist postion on big govt fixes. Therefore I don't agree with a national gas tax. Giving the US Government more revenues only increases their stranglehold on all of us. I look forward to the day when they stop printing (borrowing is more like it)money to cover ever growing deficits. If someone is going broke and they have no reasonable prospect of repaying the debt the last thing you would do is give them more cash.

Hillary, Barrack or McCain makes no difference. They all represent one thing: Big Brother doing for us what we should be doing for ourselves. If what W says is true and we are addicted to oil then like any other junkie the only real solution is cold turkey. Ethanol and biofuels and whatever else they dream up is just methadone.

Paying an identical high price, but in one case a big chunk of it is tax, and in the other price of an imported good, may seem the same to the individual. But when looked at from the perspective of the larger entity (country say), the former case is much less severe than the later. The US approach insures that our national wealth is transferred to foreign ownership. Our problem is that politics can successfully demagog any proposal which isn't intuitively obvious to the lowest common denominator in intellect. If the policy isn't obvious to the Bubba's, then it is "elitist". I've thought for the past few decades, that this would be the downfall of democracy. Any problem for which the solution was counterintuitive could never be solved, but only made worse. A similar thing can happen in foreign policy: a transparently obvious plan to manipulate such a country, can succeed, as the politicians pander to those for whom the plot is too subtle.

You are making the assumption, Jerome, that the increased fuel prices will hit personal road transport first.

I'd suggest there are other areas where increased prices will drive them to the wall before road transport.

We're seeing energy issues in farming in the form of diesel shortages during harvest in some areas along with frightful issues with natural gas derived ammonia. Where else do you foresee trouble striking?

Air transport
Road haulage
Chemical manufacturing

In theory each can put their prices up to cover it. In practice many either have long term agreed contract prices, or have customers who won't pay higher prices. In the case of air transport there are economy of scale issues that suggest a fast downwards spiral. In road haulage trucking companies going to the wall means shortages (there's not much excess capacity as it is). In chemicals we can expect much to move to exporting nations, making exportland even worse.

Rationing is needed, but stupid rationing will actually make things worse (rationland). There is a need to concentrate on killing waste from the system in a sequential timeline - but I don't see those smarts in government plans.

I think there is spot overcapacity in US trucking these days, or they would be able to pass on their fuel charges. Either more freight is going by train (apparently so) or there is less freight overall, due to the recent recession.

In practice, trucks will be parked somewhere until they are needed, which is signaled by truckers able to make a decent profit from their labor and use of capital, whatever fuel prices are.

Rail freight is up a bit, overall economy down sharply, and the truckers are screwed. No more idling for heat or cooling and pretty soon no more trips at all with the prices the way they are.

The resistance to tax increases of any kind in America is a cultural thing as well as economic. Most view taxes as money lost as in a lottery since few experience little real benefit from increased taxes. The money seems to disappear down a black hole of military spending, interest on debt and a bureaucracy that supports mostly the wealthy and powerful.

There is a kind a royalty of the wealthy in the United States. Nearly everyone dreams of joining the top group that owns most of the country even though the chance is as small as winning the lottery.

This is most obviously seen in the bazaar case of the big dollar lotteries . Millions are spent on tickets for a chance at a $200 million prize. Would in not make more sense to have 200 one million dollar prizes so that 200 people would be fixed for life if they win?

But the culture worships the single obscene big winner, even though millions lost in that win. To have 200 winners of a large, but smaller, amount is less acceptable and sells fewer tickets.

The government loves and promotes this attitude. A single big winner is more easily and heavily taxed. The prize is easier to administer. The lottery promotion is a simple sound bite about a single big winner that the public can easily grasp with it's short attention span.

And the single big winner adds only one to the wealthy while making millions poorer. Just what the system wants.

In the case of increased oil taxes, people do not so much resent the oil companies or the oil producers as they resent having to cough up cash right now. What is the difference who gets the money? Americans will not see any benefit of it just as in losing the lottery.

What if taxes on energy replaced taxes on income?

I personally favour a tax on carbon calculated at above USD$100 per ton CO2 to be imposed world wide by agreement (to replace tax on income partially or in full) and charged at the well or pit head or on import according to the grade of oil, coal or gas. Countries that do not agree suffer 100% tax on their exports or $100 per ton duty on embedded carbon; and other sanctions. To the extent this is regressive (and it would be) it can be fixed with social security programs using systems that already exist (tax collection agencies - except that they would start paying people out instead).

If such a system, somehow, was magically in place tomorrow, my guess is the worlds energy and climate change problems would dissappear quite quickly.

Here in Germany there is a small centrist party (OeDP) that has been campaigning for this for about twenty years.
If (and its a very big iff) one could get ALL (non-failed) states in the world to cooperate on such a policy I think we might indeed have a chance of solving both GW and PO in one fell swoop. However since - for reasons that are not entirely clear to me - it doesn't suit the interests of Big Money and the PTB - I fear that this pretty obvious idea will continue to be ignored in favour of totally insane and unworkable scams like carbon trading and biofuels.

rationing works


Temporarily. Then it gets fiddled.

I remember Phil Sharp telling the story of how these printed rations ended up getting burned during the Reagan administration. There is, however, an exisiting ration plan that ought to be brought up-to-date. If we can update invasion plans for Iran, we can do the same for sane policy.


In theory , yes.

Look at the fuel strike 2000.

Emergency Services
Armed Forces
Local Government
Food Distributers

...The hoi poloi. (a poor 6th)

Met a chap a week or so ago who was a squaddie in the 2000 fuel crisis.

He had a HMG Armed Forces ID Card (never leave home without one)

He was very popular. He would take your car, flash his card, fill up your car.

Hey presto!

Regarding gas tax, does the US have a state by state tax?

According to this map prices vary by state. Why?

It delineation doesn't appear to be entirely geographic.


Yes. Fuel taxes are primarily to cover road construction and maintenance. Sometimes income or property taxes are also used so there are different mixes from state to state.


Yes it does, usually higher than the federal tax. US states are more autonomous than provinces...At the rate EU member states are surrendering their sovereignty they'll be about equal in 15 years or so.

Yes, US states decide their own gas taxes:

Some of the price variation also comes from distance to refinery, and some states (CA is the big one) have special requirements on gas formulation.

In 2002 the average tax was 42 cents and 18 cents of this was a Federal (National) Tax. Someone here at the Oil Drum had proposed a % tax and I agree. Currently the federal tax is about 5 %. The tax could be sold by claiming that when gas prices go down people will pay a lower gas tax and many people think the current high prices are temporary. If they are wrong, then as prices rise taxes will rise as well which would help with demand destruction.


Hello everybody,
I just downloaded a time series about the development of refinery margins.(

Can anybody tell me, why "Hydroskimming" margins are almost always negativ and "Cracking" margins being positiv ?

Do those refinerys use different crude streams ?
What refinerys types are more common worldwide( Hydroskimming or Cracking?)

best from Germany


Hydroskimming is your basic distillation refinery plus a few pieces to make gasoline. This kind of simple refinery produces a limited amount of gasoline and a lot of other more unattractive fuels, which explains the low or even negative margin. The more complex refineries use crackers, vac distilation, reforming and coking units to further split and recombine heavy and light ends to increase the high margin fuels yield and reduce the less attractive by products, per barrel of refined oil. Hence the higher margins.

Most refineries are of the more complex type, they have to be to make a decent profit. Try this link - there's a discussion of the Nelson complexity index used to rank refineries.

The US ranks highest in complexity. I suspect the FSU and other formerly state run refineries which did not have to respond to a marketplace for fuels, are probably the simpler refineries in general.

I think it much more likely that the US will go to rationing before it increases fuel taxes to any appreciable extent. Rationing can be sold as a national/homeland security thing - fuel needs to reserved for the military, emergency responders, and other priority users first.

Even so, I expect that the US will be VERY, very late in implementing rationing. I would be surprised to see it any before 2012-2013 or so.

I am planning on ordinary people like myself receiving NO rations by 2018-2020 or so. There just won't be enough left for anyone except those priority users and a few other favored, non-ordinary people.

I vote that the U.S. govt. eliminate the gas tax and subsidize Gas Prices above $2.00 for people who are below a certain income level just to be fair.

Why tax for the maintenance of roads if we're running out of oil?

The sooner we suck up the last remaining drops of easy oil the better...Right?

They should also suspend income taxes for everyone. Lets just borrow what we need and when we run out of creditors so what. We're never going to pay them back anyway. What are they going to do stop selling us oil because we're deadbeats?

That's when we get to find out what all of that global nuclear-military infrastructure that we spent our treasure on is for. Intimidation still works!

Living Large In A Nation Of Nitwits

But Jerome, didn't you know that "the American way of life is non-negotiable"? Dick Cheney is right of course, but not the way he thought when he said it.... Your comment about supposedly the Obama community simply not ready to appreciate the end of the days of cheap energy suggests that his stance on energy independence initiatives might in fact be as substantial as a western town filmset.

But Jerome, didn't you know that "the American way of life is non-negotiable"? Dick Cheney

Dick Cheney didn't say that. If you think otherwise, come back when you can find a reputable source for when and where he said it, not just someone saying that he said it sometime.

The most likely source (hat tip GreyZone) for that saying is from the elder Bush, from when he was president, and in reference to negotiations going on at a specific trade summit in Rio, and is not in reference to the current situation.

I've got Jared Diamond, Jim Kunstler Michael Ruppert, US Media Monitors and have traced the attribution down to a speech on terrorism in October 2001 from a few different sources, but I can't get closer than that to a transcript:

So after a bit of leg work, I can find also published, but unsourced, attributions from 2 books: Michael Ruppert and "Crossing the Rubicon" and Jim Kunstler's "Long Emergency". The implication seems to be that Poppy Bush said it at Rio 1992 and Dick Cheney has since repeated it often. At least Ruppert's book does not provide a documented reference (nor does Kunstler). So, you may be correct that no transcript exists of actual quotation by Cheney. There's even one book that attributes it to Donald Rumsfeld!

So I can concede that there seems to be no attributable source for Dick Cheney, but neither is Sourcewatch (a wiki) a satisfactory source for Poppy Bush at Rio, 1992. As for Donald Rumsfeld? I have no clue where that came from.

All this aside, I think that US foreign policy as exercised by the Bush Administration is clearly guided by such a ntion - do we agree there? So was your comment a friendly challenge to accuracy or is "gotcha" your game?

It doesn't matter who said it in public, what matters is that it accurately reflects what a lot of powerful people think in private.

And not just powerful people in private judging by Jerome's reception by the Kossacks...

Interesting headliner in today's USA Today (how odd to find a useful article there for once) about changes in behaviour and reaction to oil prices....

78% of Americans see a "permanent" change in gasoline prices now, compared to 33% in 2003.

Instead of talking about raising the tax to pay for alternative energy, you should be talking about raising the tax while at the same time knocking the lower tax brackets down.

In my dictatorship, income taxes would be for the rich, like you and me. The poor would pay a gas tax.

I think we have a good chance of seeing rationing before any obvious gas tax in the US that will work effectively. Heavy taxes just goes against the grain on their national way of thinking.

OTOH gasoline rationing doesn't jibe with the present right wing orientation of the USA-even struggling Americans at this point would vote for higher prices instead of rationing. The country has changed dramatically in 30 years-I think it might be too far right for rationing. Also, with gasoline rationing huge sections of American Suburbia are literally dead for everyone, not just those struggling. How many cities and areas in the USA are viable if you can only drive e.g. 2000 miles a year.

True. Thinking is, I've made it; it' my choice; it's my money; it's my SUV. If YOU can't afford the gas, then walk. (Sort of reminds one of the old eat and cake bit, doesn't it?) Every declining society shows the same attitudes amongst the rich and powerful. Skim Gibbon, if you haven't already, and see how people haven't really changed...

I pretty much agree with you, except that if rationing can be justified from a national security/homeland security basis (reserving enough fuel for the military, emergency responders, etc.) then they will jump on it.

I'd like to make a point about the USA and Europe. Anyone who thinks Europe is not in a vastly superior position in regards to transportation is kidding themselves, and it has to do with city design, land use planning, and a commitment to electric rail transport.

Using the 2005 BP Statistical Review of World Energy and 2005 World Bank development indicators, I created a chart of GDP produced per Tonne of oil consumed, using the Purchasing Power Parity (PPP) approach to GDP.

Think of this as, how much economic activity is yielded by consuming a ton of oil?

Saudi Arabia: $3,578
Canada: $9,816
Russia: $10,938
Mexico: $11,558
USA: $12,430
Japan: $15,671
Sweden: $17,365
Italy: $18,273
Norway: $18,395
France: $18,623
Germany: $18,826
Denmark: $18,907
Ireland: $19,164
Switzerland: $20,491
UK: $22,596
China: $23,052
India: $28,562

In short, as is usually the case, the USA's miserable economic efficiency per barrel of oil is similar to that of the producing nations (exception Norway). It should give US leadership pause that most developed European nations which have standards of living that match the US create 50% more GDP per unit of oil consumed.

Is that oil, or energy used in oil equivalents?
The figure for Japan looks way high - off the top of my head I thought that they used around 8tons pp per year, versus around 27 for the US

Oil itself, not oil equivalents. If you want to re-create the table, go to and get the 2004 Tonnes of oil consumed data and the 2005 GDP(PPP) data. I got both per capita and then pulled out population figures to make the comparison. This is also available at

The thing is that the US does produce half it's oil. So with a big increase in efficancy it can largely ride out a failure in imported oil supplies. Europe and Japan have little oil of their own and less scope to increase efficiancy. So they will be hit really hard.

"with a big increase in efficancy it can largely ride out a failure in imported oil supplies". Weatherman, are you really the yankee goldilocks Lawrence Kudlow?

what i mean is it can ride out the crisis a lot better than Europe or Japan. They have little oil in the case of Europe and non in the case of Japan. All the easy efficiancy gains have been made already, as oil consumption per capita is half that of the US.

The US does have great scope to inrease efficiancy and does produce a lot of oil. Europe has less scope to increase efficancy and and has little oil. The US is in a happier position.

Why do you say Europe has little oil? The UK and Norway are still major producers, and Denmark has it's smaller slice of the North Sea. I believe the ratio of production to consumption in Europe and the US is pretty similar, around 1:3 in each case.

The United States produces just over 5 million barrels per day. The United States consumes just under 21 million barrels per day.

That is not half, sir.

The assumption too is that the oil produced in the US stays in the US. The oil that is stuck in a tanker in Valdez could just as easily end up in Shanghai or Yokohama as Anacortes or LA - that's the global market, sports fans.

The phrase "we must reduce dependence on *foreign oil*" is a fallacy. All oil is "foreign" if the buyer wishes to pay the transport and the seller agrees the price.... that's why Venezuela can send it to China and why Alaskan crude could end up in Japan.

The United States produces just over 5 million barrels per day. The United States consumes just under 21 million barrels per day.

It's a little more complicated than that.

The US consumed 20.7Mb/d, imported 12.3Mb/d, and produced 8.5Mb/d in 2007.

Of that 8.5Mb/d of production, roughly speaking, 5.1Mb/d was C+C, 1.8Mb/d was NGL, 1.0Mb/d was refinery gain (refinery outputs - inputs), and 0.4Mb/d was ethanol. One might reasonably apportion the refinery gain to the C+C it came from, which would count 2/3 of it as imported. That would make the final result 13.0Mb/d imported vs. 7.8Mb/d domestic, or roughly 2:1.

In general, though, it's misleading to directly compare an all-liquids number (consumption) with a C+C-only number (your production value).

Excellent comparison that clearly drives home the idea of efficiency, or lack thereof. Time for the U.S. to wake up.

So many good comments to such a timely article. The comment by "X" was particularly poignant commenting on the cultural proclivity of we americans to vote and act contrary to our economic interests as well as the idea that we can get something for nothing, the mentality of Atlantic City and Vegas. This has been well covered in books like "What's the matter with Kansas?". There is a terrible concatenation of factors in the US all pointing to collapse of our suburban living/ transportation lifestyle and it is happening so much faster than even we TODers thought possible.Some of the factors right off the top of my head are (1)the level of debt (from joe sixpack's Visa card and home equity to corporate paper to state and federal levels), which will IMO will never be serviced), (2)the deregulation or should I say partial deregulation of practically everything, (3)the outsourcing of our manufacturing overseas resulting in the destruction of our middle class and the concentration of power and money in just a few hands,(4) increasing inflation with the US government deliberately lying about all the pertinent economic statistics, (5) the destruction of the currency, (6) the disappearance of a responsible press. There are certainly other factors but the real story which is Peak Oil has been ignored by all our leaders and god help this country if we don't get a leader soon to show us how we can find ways to ameliorate this collapse. At what level will there be demand destruction in oil consumption? Certainly not $200 or even $300 which would translate into $10 or $11 gas, which is close to European prices. The real story is our personal auto transport model is doomed except in the densely settled areas. Taxing fuel to build an electrified mass transport network is the obvious answer but it would only be done at least initially in the urban corridors and If what Gail the Actuary says is correct, our electrical grid may not support the build out anyway. Land and house values in the distant commuter suburbs are certain to fall and in fact it's happening right now in places like Washington DC with distant suburbs falling and close in prices climbing. Most of our auto and truck fleet will have to be scrapped long before it reaches its service life. There is no reason to expand or improve airport terminals and large sections of our road network. There needs to be a rational national dialog about this with all parties at the table and not run the way Hillary Clinton and Dick Cheney did things in years past.Escalating oil prices should eventually stem demand but how do you tell an entire nation that the party is over and you cannot continue to go on living the way you have? There WILL be a recession or depression in our future. IT is the 2X4 between the eyes that will finally get the attention of the average american. Whether the national recession becomes a global recession is any body's guess but if we in the US don't get good leadership going forwards, the situation will soon be very very grave.

Keep in mind that above a certain amount, roughly $10/bbl, every dollar increase is a 1c to 2c per gallon tax paid to the dictators of Arabia, Africa, and the scoundrels running Mexico, Iran, and Veneseula. The citizens of importing nations are receiving no benefits from these taxes. At current crude prices that's $1 to $2 per gallon tax going to the worst governments in the world.

Don't forget those scoundrels in the UK. We are the world's largest exporter of refined gasoline to the US.

Does anyone know what caused this artificially looking price plunge in mid 2006?


Might I suggest the Untax, as described on

A gas tax increase might be politically viable if the legislation created a trust from the revenues, which would be designated for disbursement back to every American.

A gas untax would increase the cost of gasoline without actually affecting a consumer's finances. This would incentivize an immediate reduction in gasoline usage.

If the first untax refund were paid at the start of the program, as with the current economic stimulus checks, this might just buy the support of the American public.

So why not try a 10% (or more) untax on motor fuels?

It is of course true that gas is way too low at the pump and that taxes on it need to be raised, and raised steadily. But the only way to do this fairly and humanely is to provide means whereby people can live without their cars. The means of doing this are varied: job swaps so almost everyone can live near their jobs, drastically improved public transportation, pooling, subsidies, etc. This is of course only the beginning. In the longer run, our whole way of life needs transforming.

But if the gov't just simply raises the tax without combining it with assistance and leadership (squaring with the public on what's facing us) so that everyone can survive, of course it will blow up. The current gov't isn't about to do that -- it will use the developing rage and try funnel it into war fever.

Oil traded down slightly today, appearing to have found a balance point this past week above 120 a barrel, from which it is fluctuating up and down in small increments. That may be its peak for now, that is until something changes supply or demand.

I have to wonder though if there aren't some very smart people at OPEC tweeking supply to land at a price which is as high as it can go without causing demand destruction, or causing widespread economic recession. A price balance point that provides the maximum profit, yet squeezes the US economy just enough to reduce public sentiment to wage wars.

We don't have an energy problem. I keep meeting folk who believe the "Joe Cell" will save us. All my engineering and science training does not apply any more!

I agree with you, just catch whatever comes out of Wolf Blitzer's mouth and hook it up to a turbine..... problem solved.

/cheap humour off

Again, I read all the above and feel a little depressed. I guess because I'm still pretty new to the notion of A World Without Oil and continue to find it all hard to accept. Worse, that no-one in my personal life shares an interest.

So I ask: Is there any way a collective group of TODsters can knock and kick and scream at the windows of MSM, so that the general public are at least made aware that we COULD be facing the abyss. No doubt, that's what you've been doing, and continue to do. But, can you try harder? Is there anything I can do to help? Some mailbox drops or something? Afterall, Mr Gore seemed to get things up and running in the end. With a slide-show, for Pete's sake.

One of you replied to one of my posts (gripes?) that TOD is a form of therapy. So after six months, why don't I feel any better? No doubt I would feel better if I didn't have to come here, rather that I could chat about PO around the dinner table, with the wife and kids, or with friends and colleagues... Even the next door neighbour.

C'mon. Let's get Britney Spears off the front page. We can do it!

I am a college student and I am putting together a group called OU Peak Oil Awareness based in our campus environmental organizations. We are going to be doing several things next semester to get people aware. Also I am about half-way done with a sideshow I've been working on for weeks that I am going to present to different city councils and at maybe churches and businesses. After having Gail, Nate and Robert look it over I am going to get a guest post and make it free-for people to use off of here. Don't worry the mainstream movement is coming, I fear it might be too late to do much though. Still it will certainly help a lot.

"This is the 18th straight week that analysts have forecast a drop in prices. The oil survey has correctly predicted the direction of futures 50 percent of the time since its introduction in April 2004."

Is Bloomberg a becoming a little cynical?

The single biggest thing we should take from the rush toward $200 per barrel oil is the sociological changes that will happen. Suburbanization of the U.S. is going to reverse. Bedroom communities are going to become ghost towns.
The most important things that Politicians can do is to make this as painless as possible, and removing the gas tax is not going to help. I would say that increasing the gas tax without a plan on how to make this transition work is not going to help much either. I have been consistently disappointed in the "Invisible Hand of the Market" to respond to anything before it's too late. "The Invisible Hand of Industrialists Profit Interests" seems to win in almost any arm-wrestling match with the "Invisible Hand of the Market." We need local politicians, city planners, and zoning commissions that are able to push for more livable industrial cities, ones designed for people and not cars. We need regional, state, and national politicians that give them the support to do this. They will have to do this in direct opposition to those Industrialists who will see this as an attack on their record oil profits. Until there is a push to redesign cities, an increased gas tax is just going to cost people who individually have little or no power a larger amount of their paycheck.
However, if those individuals start to contact their local, state, regional, and national leaders, we may see this happen.
More thoughts at my blog.

As Kurt55 rightly say although right, the content of this article is a political suicide, ergo no politician is going to sponsor it.

The countermeasures for the present energetic crisis can only be taken in democratic countries if the major parties forget about their rivaltry and work together for the good (..or better the survival!) of the Country. Otherwise whenever a restrictive measure is announced somebody will come out promising not to do it, and continue the feast, to capture votes.

A national joint government, will be able to order a few basic measures, which will give benefits in a relatively short time:

- Rationing petrol within a reasonable pro-capita limit
- Triple the price of petrol over the rationing limit (also to curb the illegal trading of rations)
- Use the income to invest in public transport quantity, quality, safety.
- Make clear with citizens and companies that the very logic of growth has to be reconsidered, in view of a qualitative growth rather than quantitative. Car makers will make less cars, but they can transform their industry to build something else. There will be less petrol station, but space and energy can be used for other purposes. The entertainement can be made more local. Etc. etc.
- Start a serious birth control policy, which includes the immigration in the equations. Make clear that the wellbeing of a newborn child is "in primis" responsibility of the parents, not of the society. The irresponsible parents of ten starving/ineducated/hopeless/miserable children have only themselves to blame. Birth control methods have been widely available in the last 40 years.

This will be painful, but far less painful that what we will have to face because of the cowardy of the democratic governemnts, kept at ransom by the multinational corporations. The big companies CEO's will escape the disaster, at the expenses of everybody's else. The third world will die, the industrialised world will decline back to pre-industry.

And to the ones who believe that some new discovery will magically solve the problem, I suggest to think to the statement "the stone ages did not end for lack of stones". The technological changes do not follow the great rearrangements of the society: they cause them.