Will conservation efforts have an effect?
Posted by Yankee on November 14, 2005 - 11:52am
Well, this is a thorny question, isn't it? It underscores a fundamental problem: should we be able to keep using (all types of) energy at the same levels that we do now? Or should we try to decrease our energy use as much as we can while still maintaining a reasonably comfortable lifestyle?
I'm not sure I want to get into it here, but I will at least recognize that the concept of "comfortable lifestyle" is a contentious issue. Right now, I believe that many middle-class and upper-class Americans behave excessively: constantly air conditioning their houses in the summer, driving SUVs instead of fuel efficient cars, keeping the thermostat at 70 in the winter. There must be an acceptable middle ground between our behaviors now and having houses with no heating or air conditioning, but defining what that is will be a difficult task.
In examining San Diego households during the California electricity crisis of 2000 and 2001, they found that use of electricity dropped surprisingly fast. In the summer of 2000, within 60 days of seeing monthly electric bills rise by about $60 - an increase of 130 percent - the average household cut its use of electricity by 12 percent.Furthermore, the article points out that public service information campaigns have an important effect on encouraging people to change their behavior.That kind of drop requires a big change in behavior. The authors found that households had turned off air-conditioners in the middle of summer and had invested in new energy-efficient appliances, among other things.
In February 2001, with electricity prices capped, the state of California began a campaign to have households conserve electricity. It worked. "It was clear by about six months into 2001 that public appeals were having a big impact," Professor White said. Such campaigns can have significant effects on consumer behavior, he said, if they offer a clear explanation of what people can do and how it will make a difference.This kind of response is why I firmly believe that the government is going to play a very big role when peak oil brings us to crisis levels. Unfortunately, it seems inevitable that the government is going to drag their feet until it's too late, but even so, I feel that people aren't going to do anything until the government tells them to. That's why I think it's critical to push the government on energy issues now.
Finally, Amory Lovins has an interesting proposal for getting people to conserve electricity:
In the case of electricity, waste is glaringly apparent. About 5 percent of the electricity consumed in United States households is simply lost to computers, televisions and other appliances that are turned off but still plugged in. The savings from using electricity more efficiently could be even larger than those from oil, Mr. Lovins says. Rate structures in most states, he says, still reward utilities for selling more electricity. One solution is to decouple the profits of utilities from their sales volumes, and to let utilities keep as profit some of the savings they achieve for their customers.Between public service campaigns and conservation incentives for both businesses and utilites, we should be able to make some headway, shouldn't we?
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Then there are things like this. So much for the free market.
In the long run, it gets more complicated. "Diminishing returns" rears its head pretty quickly when your strategy is conservation. We already made many of the easy fixes back in the '70s (though we've since slacked off on some of them, like the 55 mph speed limit). You reach a point where further improvements are very difficult and costly.
There are also the economic factors to consider. A lot of our economy depends on people continuing to consume the way they always have. One city cutting back temporarily is one thing; the whole nation cutting back steeply is something else again.
If, say, gas goes to $20/gallon, we won't switch to Priuses and continue on our merry way. Many people won't be able to afford that, and will give up driving. Homes way out in the suburbs will lose value, perhaps precipitously, while real estate in the city or along public transportation lines will become more valuable. And once not everyone can afford to drive, there will be more resistance to paying for it. Fewer people will be paying gas taxes, and few will be keen on raising other taxes to make up for it. So even people who can afford to keep driving will find it less and less useful, because they need the rest of us to help pay for the highway system. Bill Gates' limo is no use to him if there's no highway to drive it on.
This is really the part that I just don't understand. What if it simply isn't possible to continue our economy in a world where fossil fuels are difficult to obtain? The economists aren't doing their job if they stubbornly stick to the present economy as being the only possible one that they should be modeling. Economic growth just can't be the only scenario that's possible in our future, and if it's not, then shouldn't we know how to deal with economic shrinkage? Alternatively, wouldn't it make sense to come up with an economic model that still leads to growth without such heavy reliance on fossil fuels? Isn't that at least in the realm of possibility?
Trying to re-imagine our economy is a job for anthropologists or perhaps science fiction writers, I think. It has more in common with the classic "utopia" novel than with current economic theory.
Jared Diamond's Collapse doesn't just talk about societies that failed, but also those that succeeded. And it's fascinating. What it takes to become a successful sustainable society is often brutal by our standards. Population control is critical; zero population is the ideal. This is achieved not only via abortion and birth control, but by encouraging infanticide, warfare, and suicide. One of the societies studied in the book has a hard population cap; the king sends away people each year, to keep under the cap.
One incident that stuck in my mind was the way one society dealt with the pig problem. Pigs are often a problem. They aren't very sustainable. They are tempting, because they turn plant matter into meat more efficiently than just about any other critter. But meat production really isn't efficient, even at best, and pigs do not provide milk or eggs or wool or transportation, as other animals do. And they eat only food people can eat. So societies declare them unclean, as in the Middle East, or put taboos on them that allow only certain people to eat them (as in ancient Hawaii).
One society Diamond studied went a step further. They decided to exterminate every pig on the island. The pigs were getting into the gardens and eating food people needed, and only the elite ever got to eat pork. So they decided to eliminate every pig on the island, and did. (Must have been a heck of a barbecue!)
I just can't see us ever agreeing to anything like that. We believe that if you can afford it, you can have it, regardless of the cost to society. I don't think we have it in us to make the hard choices. At least, not yet.
3 vegetarians can be fed by one acre,
7 vegans can eat from one acre
consider how much oil goes into agriculture, pesticides, ferilizers, transportation of grain and cereals to feed the animals, transporting the animals.
refigeration of meats.
cooking meats.
I really envy americans you have a far greater ratio of arable land per person than any of us europeans.
it takes many kilos of cereal to create one kilo of meat.
and meat isnt very good for you, the health implications also make for a less sustainable society.
go on
go vegan
for life
http://www.alternet.org/story/12162
http://www.beyondveg.com/cordain-l/grains-leg/grains-legumes-1a.shtml
http://www.tbkfitness.org/TBKdiet.html
http://www.mercola.com/article/insulin.htm
http://www.beyondveg.com/cordain-l/grains-leg/grains-legumes-1a
Consequently, the human genome is most ideally adapted to those foods which were available to pre-agricultural man, namely lean muscle meats, limited fatty organ meats, and wild fruits and vegetables--but, significantly, not grains, legumes, dairy products, or the very high-fat carcasses of modern domesticated animals
meat and dairy products have been consitently linked to heart attack and cancer (also partly due to steroids, hormones and I suspect antibiotics that industrialised animals are fed) as outlined in your second link
http://www.tbkfitness.org/TBKdiet.html
Most of us today follow a diet containing a large amount of food which is not readily available in nature, and that must be highly processed to become edible. Our bodies were not made to handle such foods, and thus we suffer by dying of heart attacks, strokes, cancer, and complications from diabetes and osteoporosis.
http://www.mercola.com/article/insulin.htm
reads very much like the atkins diet and he is trying to sell his book.
however i agree cereals and legumes should not be the basis of a diet, you would definetly get malnutrition.
I advocate a BALANCED vegan diet for optimum health and using less resources
nuts, seeds, berries, fruits, vegetables and some legumes, root vegatables and rice if you can get it
a potato based diet is not good, but that is not to say potatos are bad for you.
as an aside britains oldest man was vegan lived till 111, cycled to work till he was 100 and retired at 104.
if you would like to know more about the free organic food that is available to you then go to
www.pfaf.org
they have a database of 7000 plants that are edible
happy foraging.
But then mabye millions of people dieing from a pandemic is just what we need to save resources so we can carry on eating meat??
and drive suvs.
sorry thats a totally unfounded conspiracy theory I composed after watching "twelve monkeys" recently...
its not serious :)
And then bashing grains? You sound like a raw fooder, lol!
If grain-based diets caused chronic disease then the incidence of western ilnesses like heart disease/cancer should be HUGE in the poor populations of the world that base their diets on grains. Instead, these diseases are nearly unheard of in these populations, which make up a major part of world population - clearly a glaring contradiction.
The book noted below is yet another elucidation of the unhealthiness of meat. Even tiny amounts (by western standards) showed negative consequences. 5000 people in the US drop dead every day from artery diseases clogged and ruptured by what, rice and vegetables? The head of The Framingham Heart Study, the grand prix of heart studies,
says they have never seen a case of heart disease from a person with a cholesterol lower than 150. Guess what level cholesterol drops to when you stop eating meat and dairy? under 150.
The China Study : The Most Comprehensive Study of Nutrition Ever Conducted and the Startling Implications for Diet, Weight Loss and Long-Term Health -- by T. Colin Campbell,
It's important to keep an open mind, but not so open your brain falls out. (Carl Sagan?) In my unpopular opinion, if you believe meat is healthy then your brain is flopping around on the ground, waiting to be picked up.
Hmmm. Didn't Lenin (Trotsky? Stalin?) define a liberal as someone whose mind is so open that his brains fall out?
In most "traditional" cultures meat was considered a flavoring.
Best to limit all highly refined substances in one's diet, be they pastas or pepperonis.
This is really at the heart of the issue. The world's economy has grown, on average, for centuries, and our fossil fuel consumption has increased in lockstep with it. We can get one-time efficiencies, and be more productive. But can we, as a world economy, grow long-term without using more energy? I doubt it, but I don't think anybody really anybody knows the answer yet.
Could we continue to grow by substituting other forms of energy for oil or natural gas? Sure, if they are available in enough quantity, at an acceptable price, and in usable forms. But the physics, economics, and logistics of pulling this off are unbelievably enormous.
The problem with substitutes
If you look at any aspect of the energy problem, it looks like a house of cards. Half the homes in America heat with natural gas. No gas? Electricity is a substitute heating technology that is feasible and commercialized and ready to go--a best case substitution scenario. Call the contractor, put in a heat pump.
It works fine for one home-expensive, but otherwise quick and fairly easy. But consider scalability. If a large number of people convert, transmission lines overload. Remember the East Coast blackout? So we need to tool up to manufacture a lot of heatpumps, and rebuild the lines, and the substations, and then we need to put in more electricity.
But where do we get the electricity? Can't burn more natural gas, 'cause there isn't any more. So we need to build new power plants using other fuels or renewables of your choice, which takes years, and raises lots of other issues.
We need substitutes, but it's a process that will take decades to do. In the meantime, economies will suffer. We simply do not know how to manage a steady-state economy, or how to manage economic shrinkage in a humane way. There is a lot to learn.
Geothermal. Geothermal heating of houses is the only real way to go. Burn wood/pellets? Everyone? Lots of dirty chimneys dumping carbon and soot into the air. Gas is going to get evermore expensive and NEVER come back down. Electricity? One of the worst ways of heating a home there is - really wasteful and merely transfers the pollution/fuel use upstream to electricity generating plants.
The only valid way to properly heat AND cool a house in the coming problematic times will be, for the middle and poorer strata will passive earth - buried or partially buried housing that thermoregulates from the ground. For those that can afford more elaborate systems is geothermal - drilling deep and laying pipe to transfer cooling/heat from the ground.
I'd LOVE to go geothermal but to retrofit a house with geothermal heating/cooling is extremely expensive. As it is, I'm rural and my house uses propane and a woodburning stove for heat. I've been looking into solar heating, at least for water. It is too expensive to retrofit for solar home heating as well as water heating.
Passive geothermal or deep geothermal are the easiest. You could try to sell people on it by tapping into the Lord of the Rings movies: homes and communities built along the lines of Hobbitown.
But... this is a very long-term undertaking. Roughly speaking, 50% of the US population lives in the suburbs and 25% lives in urban areas. Buried housing is impractical for much of that — there is no buried equivalent that matches the density of high-rise housing (or even three-story tall "garden" apartments), and while it might be possible in the suburbs it would require complete replacement of the existing housing stock.
I only use the geothermal heating as back up if I'm going to be away and I don't want the pipes to freeze. For the time being (while I can still afford it) I use the system for cooling in summer when the temperature gets into the truly unbearable range. I recognize that it's a luxury though, and that I'll probably have to do without it in the future. If I was looking for a home again, I'd do as you suggest and build a hobbit-hole.
www.earthship.org
this house doesnt need heating!!
and is made from recycled materials
http://breakingnews.iol.ie/news/story.asp?j=162495078&p=y6z495784
The CHP plant makes the sawmill site self-sufficient in electricity, saving over £1 million a year, with the surplus electricity sold to the Northern Ireland grid.
In addition it powers the largest bio fuel pellet production facility in the British Isles.
The plant produces 50,000 tonnes of high-energy fuel pellets - displacing fossil fuels and the 200,000 tonnes of carbon dioxide which would otherwise have been released into the atmosphere.
Your system was not sized properly. Can you go after the contractor?
I wanted a ground source heat pump system but municipal code precludes drilling and my lot is too small for the other trenching method.
Perhaps newer models are more efficient, but the cost of replacing it would be too high. Of course if my house were newer, better insulated and had a lower surface area to volume ratio, the geothermal system I already have would cost less to run and would keep my house warmer. I should have built a hobbit-hole when I had the chance!
Your heating scenario is overly simple. Let me suggest another: 40% of the homes convert to heat pumps, and the other 60% swap furnaces for gas-burning cogenerators. When the mercury falls, the homes burning gas get their heat from the cooling jackets and exhausts of the generators, while the homes with heat pumps get their electricity largely from the surplus of the cogenerators. If the cogenerators had 30% electric efficiency and 95% overall efficiency, and the heat pumps had a CoP of 3.5, you'd multiply the effective heat by about 1.8 and cut 45% off the gas demand without any less heat.
This system works great with extra generation. If you can supply wind up to the limits of the wires, the heat-pump users could run on it and the cogenerator users could buy the surplus at minimal rates to use as resistance heat.
The US builds what, 13 million cars a year? We should be able to build at least that many cogenerators a year, maybe in the same engine plants. At 13 million a year, retrofitting the gas-heated fraction of our 80 million households should be doable in just a few years. (Other considerations would prevent it happening that fast, but I think I've made my point.)
Your heating scenario is overly simple.
My heating scenario could actually occur. We need vision, and hope, but we also need reality. I think our only real hope for the next decade or more is off-the-shelf solutions that fit with established habits, practices, and infrastructure.
From the American Housing Survey, I estimated that less than half the homes would be good candidates for heat pumps, based on the severity of winters (determined by heating degree days), but no other criteria, such as fuel availability.
Not that the government might feel limited in any way, but doesn't NAFTA imply the USA can't block energy exports to Canada and Mexico?
People get used to prices and they keep driving. At some point, behaviour will change, but not at these prices it would seem...
From Today's EIA release:
Ignoring questions about the likelihood of such a utopia there are great problems ramping up the installation of alternatives to oil that have a low energy returned to energy invested ratio. Wind energy and photovoltaic energy do have a greater than unity ratio (despite some claims to the contrary) but it is not that much greater than unity. This is also true of tar sands, oil shale and nuclear power. The payback period, the time to generate energy equivalent to the energy to manufacture and install the plant, is often several years.
This may be acceptable in a static situation but when you are rapidly ramping up the installed capacity the energy required to produce the new installation can equal or exceed the energy produced by the existing installations. Putting figures to this produces some frightening answers. The rate of expansion that will completely cancel out the energy production for various payback periods and the number of years to get a hundred fold expansion at that rate are as follows:-
payback expansion 100-fold
period rate expansion
(years) (%) time (yrs)
3 39.5 13.75
4 28.4 18.5
5 22.1 23
6 18.1 27.5
Thus if world wide photovoltaic generation is 1.2GW peak rating giving about 1.2TWh per year (about a tenth of one large fossil fuel power station) and we want to raise it to 120GW to replace 10 fossil power stations and the energy payback period is four years, we need to expand the installed base at 28.4% per year from now until early 2023 during which time we will gain zero net energy benefit.
Faster expansion will have negative energy benefit during expansion.
This is not a argument against renewable energy sources of which I am strong advocate but a plea to start investing now while we still have reasonable oil supplies even though if it has no, or even negative immediate benefit. If we wait until we are desperately short of oil we are sunk.
It is not posted yet online, but it should appear on the "Recent Executive Orders Search" at the below link within the next day or two:
http://www.myflorida.com/myflorida/government/laws/index.html
Here is the text copied from the order:
STATE OF FLORIDA
OFFICE OF THE GOVERNOR
EXECUTIVE ORDER NUMBER 05-241
WHEREAS, according to a 2001 study by the United States Energy Information Administration, Florida ranks fifth nationally in the amount of energy consumed per capita and third in total energy consumption; and
WHEREAS, Florida's need for electrical generation is expected to grow by approximately 58 percent between 2002 and 2020; and
WHEREAS, Florida uses 8.6 billion gallons of gasoline per year, and consumption is growing by 300 million gallons per year; and
WHEREAS, less than one percent of Floridians own automobiles that use alternative fuels; and
WHEREAS, Florida has one of the nation's fastest growing populations with an average of 980 new residents arriving per day and approximately 80 million visitors arriving per year, thereby increasing the demand on Florida's energy supply; and
WHEREAS, current trends indicate Florida's dependence on natural gas to generate electricity will continue to increase; and
WHEREAS, Florida annually produces less than one percent of crude oil production and depends almost exclusively on other states and countries for supplies of oil; and
WHEREAS, catastrophic hurricane seasons in 2004 and 2005 have underscored Florida's vulnerability to disruptions in energy supply and the resulting impacts to Florida's economy, environment, and quality of life; and
WHEREAS, a long-term commitment to energy conservation in conjunction with an adequate, reliable, diverse, efficient, and affordable energy supply is vital to Florida's population growth, economic expansion and security; and
WHEREAS, the Governor's Office and the Governor's executive agencies are leading Florida's conservation efforts by adopting multi-phased, event based, cost-effective, efficient practices, which include, but are not limited to, replacing some traditional motor vehicles with hybrid vehicles, eliminating the use of non-essential equipment and appliances, turning off all lights, computers, and office equipment while not in use, and adjusting thermostats in state buildings;
NOW, THEREFORE, I, JEB BUSH, Governor of Florida, by virtue of the authority vested in me by the constitution and laws of the State of Florida, do hereby promulgate the following executive order:
Section 1. Energy Conservation.
The Governor's Office and the Governor's executive agencies are hereby directed to continue their energy conservation efforts to reduce the demand for energy in Florida and are further encouraged to develop innovative conservation initiatives to serve as a model for all Floridians. In addition, all other departments and agencies of state government, as well as all local governments, are hereby encouraged to develop and implement long-term conservation initiatives. For example, state and local governments should invest in energy efficient equipment and hybrid electric or alternative fuel vehicles.
Section 2. Energy Supply.
The State of Florida, through the Secretary of the Department of Environmental Protection shall develop a comprehensive energy plan by evaluating Florida's current and future energy supply and demand. This evaluation shall include an analysis of the following sectors: utility providers; petroleum companies; automobile manufacturers; fuel suppliers; technology companies; environmental organizations; researchers; the United States Department of Energy; members of the Florida Public Service Commission; members of the Florida Energy 2020 Study Commission; and consumers.
To assist with developing the State's energy plan, the Secretary of the Department of Environmental Protection shall host the 2005 Florida Energy Forum before December 31, 2005, in Tallahassee, Florida and serve as chairperson for the Forum. Forum participants shall address the diversification of Florida's energy supplies, energy generation, transmission, distribution, conservation and energy security, as well as discuss the barriers presented by government and potential incentives that may be offered to help Florida's future energy needs.
The State's energy plan shall consider all relevant topics, including, but not limited to the following:
A. Florida's current and projected energy needs.
B. A review of Florida's efforts to meet its current energy needs, including, but not limited to, laws, regulations, executive orders, Florida's Building Code, alternative energy investments through the Office of Tourism Trade and Economic Development, Florida's Energy 2020 Study Commission, Florida's Energy Future: Opportunities for Our Economy, Environment and Security Report, and conservation plans implemented by the state.
C. Florida's ability to generate, transmit and distribute electric power.
- Florida's current and projected electric generating capacity for natural gas, liquefied natural gas, oil, coal, nuclear power, alternative and renewable energy sources (hydrogen, solar, biomass, wind and landfill methane), and other emerging energy technologies.
- Florida's current and projected infrastructure needs for the production and supply of natural gas, liquefied natural gas, oil, coal, nuclear power, alternative and renewable energy sources (hydrogen, solar, biomass, wind and landfill methane), and other emerging energy technologies.
- Florida's current and projected consumer costs of natural gas, liquefied natural gas, coal, nuclear power, alternative and renewable energy sources (hydrogen, solar, biomass, wind and landfill methane), and other emerging energy technologies.
- Current regulatory oversight, both state and federal, of natural gas, liquefied natural gas, coal, nuclear power, alternative and renewable energy sources (hydrogen, solar, biomass, wind and landfill methane), and other emerging energy technologies.
- A review of Florida's successes in achieving energy efficiency.
- Goals, both public and private, for the diversification of Florida's electric power supply.
D. Florida's ability to generate, store and distribute fuel.- Florida's current and projected capacity for gasoline, diesel fuel, ethanol, biodiesel, hydrogen and natural gas.
- Florida's current and projected infrastructure needs for the production and supply of gasoline, diesel fuel, ethanol, biodiesel, hydrogen and natural gas.
- Florida's current and projected consumer costs of gasoline, diesel fuel, ethanol, biodiesel, hydrogen and natural gas.
- Current regulatory oversight, both state and federal, of gasoline, diesel fuel, ethanol, biodiesel, hydrogen and natural gas.
- A review of Florida's successes in achieving energy efficiency.
- Goals, both public and private, for the diversification of Florida's fuel supply.
E. Traditional and alternative fuel vehicles, consumer access to alternative fuels, the current and projected costs to consumers for traditional and alternative fuels, and the current and projected infrastructure needs for the production and supply of alternative fuel vehicles and the relative costs and benefits of any said alternatives.F. Methods by which Florida can protect its energy supplies during an emergency.
G. Methods by which the State can reduce barriers and provide incentives to increase energy efficiency in power and fuel consumption.
At the conclusion of the 2005 Florida Energy Forum, the Governor's Office and the Department of Environmental Protection will issue an updated energy strategy by no later than January 17, 2006.
H. All agencies under the control of the Governor are directed, and all other agencies are requested, to render assistance and cooperation to the 2005 Florida Energy Forum.
J. The Department of Environmental Protection shall provide all funds and administrative support necessary to implement the provisions of this Executive Order.
IN TESTIMONY WHEREOF, I have hereunto set my hand and have caused the Great Seal of the State of Florida to be affixed at Tallahassee, The Capitol, this 10th day of November, 2005.
Now, realistically, a terawatt is 10^12 watts. A fair-sized turbine would be probably 10 megawatts (10^6 watts). This means it would take about 100,000 turbines to generate one terawatt. That's a lot of turbines!
I am not against the idea of underwater turbines (I actually like it, along with tidal power and geothermal power), but this would require a massive effort. I don't see America doing that. It's easier to invade some place with too much sand.
However, new facilities are an altogether other matter. When you are able to design state-of-the-art energy saving technology right into the new facility, the potential for major energy savings is far greater. And it is not just a matter of desiging energy-saving measures. Sometimes, there is the opportunity to go with an entirely different process that is inherently less energy-intensive. Just compare the unit energy usage of a modern Japanese steel mill to one of the old 'rust-belt' mills (if any are still left in the US).
The discouraging aspect to all this is that the US no longer builds much in the way of major green-field manufacturing facilities in the traditional energy-intensive industries. That fraction of our metals and heavy manufactured goods that we now get from China and elsewhere no longer shows up as US energy usage, but it obviously shows up on somebody eles's energy usage.
In my opinion, we need a sharply higher gasoline/diesel tax--in terms of several dollars per gallon. What I think makes sense is to use a higher gasoline tax to replace the payroll tax, which except for the Medicare part, is paid, either directly or indirectly, exclusively by middle income and lower income taxpayers--starting with their first dollar of income.
A gasoline tax is unusual in that it is a highly beneficial tax, regardless of where the proceeds go, but for some taxpayers, replacing the payroll tax with a higher gasoline tax would virtually eliminate all taxes on income. This would also provide an enormous incentive to reduce one's commute to and from work to as close to zero as possible.
Note that country with the highest standard of living in the world--Norway--has the highest gasoline prices in the world (because of taxes). Prior to the hurricanes, they were paying about $6.70 per gallon. As a consequence of high gasoline taxes, the level of car ownership in Norway is half of what we have in the U.S.
Jeffrey Brown
Asia/Pacific: Bursting of Oil Bubble Revives Growth Expectations
He's a smart guy, not your usual knee-jerk economist. He's not so knowledgeable about oil issues per se, but knows what's up in China. He argues that China has upped its capacity for electrical energy production, displacing a lot of the oil demand. He says Chinese oil demand is flattening and that there is now plentiful oil supplies. This will, he insists, take the air out of the investment bubble that's driven oil prices up: "Rising interest rates and a supply glut in 2006 create the environment for an oil price collapse, in my view. The oil prices could drop below US$40/bbl in the coming months."
Could he be right in the short run at least?
So, the falling price currently may not actually reflect any increasing supply having been made available to the market.
Personally, I think Andy Xie's idea that speculators can drive up the price of oil (at or near the time of delivery) by trading paper contracts is questionable at best. Oil would not seem to be a paper asset like a stock or even a physical good like gold that investors can create a bubble in. [Simmons argues that hoarding by consumers created shortages of oil in the 70's, but that changed physical demand. Here you are talking paper barrels.] Speculation could drive up the price out many months but the near month futures contract will be driven by the spot price of the physical liquid.
And Andy has been wrong for a while about China. He keeps saying that the Chinese economy is overheating, but then we see continued growth like the most recent 9% quarter. As for $40 oil, it sure would seem possible if overall Chinese demand were to fall by say 500K bpd as a result of reducing fuel oil use, but with an economy growing at 9% per year this doesn't seem very likely, does it?
This correction has run its course; I'm covering my short position and going long crude oil if the price breaks back above $60 this week or next.
I agree that there is a need for higher fuel taxes in the US, but let's be careful about the implications.
A gasoline tax is unusual in that it is a highly beneficial tax, regardless of where the proceeds go, ...
Gas taxes are highly regressive: they hit the poor hardest, probably even after you rebate their meager taxes. (You could restructure to correct this, but since the poor don't have a lot of congressional support, it's doubtful.)
Even if the tax is revenue-neutral, it will finally kill off GM and Ford. They simply don't know how to make good small cars at a profit. I'm no fan of these companies, but if they go down, there are going to be huge economic disruptions that follow in the wake.
does that include a larger military budget?
from todays financial times
http://news.ft.com/cms/s/69af5fd8-555f-11da-8a74-00000e25118c.html
Scaling up international assistance beyond debt relief and humanitarian aid would take "a lot of imagination", he said.
He warned that current African growth of about 5 per cent a year was insufficient to reduce poverty. Outside oil and gas producing states, the rate was more like 3-4 per cent, barely enough to offset population expansion. Sustained growth of 7-8 per cent a year over 15 years was needed simply to return much of Africa to where it was in the 1960s.
He expressed concern that next month's World Trade Organisation talks in Hong Kong should at least keep momentum going towards improving market access and dismantling rich-country subsidies. "We absolutely can't afford a breakdown. We can't even afford a stalemate."
You just know that this increase revenue will be squandered on all sort of dubious spending and that little if any of it will go toward alternative energy or in reducing our deficit. It will be wasted.
Regardless of what sort of tax rebates or deductions you devise, it is very hard to counter, in a uniformly fair way, the inherent regressive nature of such a tax.
I would rather the government offer incentives for long-term energy conservation measures than to impose penalties for energy usage in the form of yet another regressive tax. I rather the carrot than the stick.
There has got to be a better way to save energy than pumping more money into an already bloated federal government. It only encourages them.
On the other hand, if the government offered rebates for a person to sell his gas-guzzling SUV or full-size pickup and buy a hybrid, then that would be something I'd be more enthusiastic about.
In 2004, the US transport sector used 11,646,000 barrels of gasoline and diesel per day. Call this 179 billion gallons/year. The average person driving 15,000 miles per year in a 22-mpg vehicle burns 682 gallons/year. There are what, 200 million wage-earners in the US? If the US added an extra $1/gallon tax and rebated it on Social Security taxes, you'd pay $682 extra but get $895 back and have $213 in your pocket. (Both of these numbers would go up if taxes also applied to heating oil, natural gas and jet fuel.)
Paying people to buy hybrid vehicles may not be the best way to cut fuel use; many folks might have better ways to do this, like buying produce at the local farmer's market instead of food trucked across the continent at the Super Wal-Mart. It may be smarter to put new windows in the house. If the price of fuel goes up, all you have to do is look for ways to save money and it takes care of itself.
I see no way that a high gasoline tax will be anything but regressive, regardless of what cosmetics are spread over it. So, that in and of itself is probably a reason why it will eventually come to be. Poor people have little political clout.
Yes, making people poorer will reduce energy consumption, but is this the best way?
Wearing my philosopher hat, I would say that killing off GM and Ford is clearly the right thing to happen. All the jobs involved are jobs that do not need to be done. A hypothetical philosopher-king would have no hesitation in restructuring the economy to put all those people to work doing things that are actually productive.
In the grim world of political reality, the outcome is likely to be much worse.
1. I think (without any data to support it whatsoever), that the conservation efforts that would really have a significant effect will require large investments in infrastructure. This would include major efforts at rail transportation, replacing most of our automobile fleet, turning subdivisions and sprawl into actual communities (with local facilities and commerce), replacement of many home-heating systems. These things will in turn require government funding - I just don't believe it will happen purely through economic pressure, as it will be too late by the time that pressure build sufficiently.
2. Most industrial buildings are big, cheap pieces of crap. They have 18' ceilings so you can sell them as wherehouses if your business goes under. The heating systems are on the roof, trying to blow hot air down to the floor. Ever climb up to the top inside one of these? It's hot up there. Steel roof with stone piled up on top - I have no idea what the R-value of it is. Add replacing these things to infrastructure list above.
3. This constant growth thing is a concept that seems ingrained in our culture. I don't know what the roots are, it would be interesting to get the views of a historian or anthropologist. It's probably part of many cultures, but not all, but Americans have certainly taken it to heart. Our entire history is one of Europeans "discovering" a new continent of vast size and resources, and then going bananas and trying to take and use up everything as fast as possible. Having done a pretty good job of that, we'd really like to get everyone else's now too. I cannot imagine that such an ingrained pattern of thought will be changed without having it proved beyond any shred of doubt that it didn't work. And you can only imagine what that would (will?) take.
4. I just returned from round trip drive from the Allentown area to New Haven & back. What a miserable drive through congested, populated areas. Why in the hell we cannot just drive to town and get on a train (with likely a changeover), and get off in New Haven is beyond me. If the trains and stations were safe, clean, and reliable, it would be such a much nicer way to travel. We used to have this, and I believe it is one of the projects that the federal government could work on that would have the best chances of success. If you want to raise a gas tax, spend it on something like this.
Investing in rail or converting automobile plants to produce small co-generation systems would help the country a lot but the government i.e. the corporations, won't do that. It would be interfering in the market. They prefer to protect the financial sector.
THE FED ANNOUNCES IT WILL HIDE M-3
TO KEEP YOU FROM KNOWING WHAT?
http://www.financialsense.com/fsu/editorials/mchugh/2005/1114.html
The timing is actually quite undertandable. In March Iran launches the Euro-based Oil Bourse and if all other attempts by the US fail to stop this going ahead, then they are probably going to want to use the "nuke 'em" strategy. That sort of war would have huge implications to the financial sector.
So, America, are you worried yet?
The bottom line is that it would push us toward where we are ultimately going anyway, to more localized living; to more localized commerce and to more localized food production.
If we did replace the payroll tax with a higher gasoline tax, it would address the regressive issue. Also, it would tax all of the undocumented aliens in the country that today don't pay the payroll tax.
A very educating fact, showing what indeed to expect will happen in the future, occured here in GA during the Katrina gas crisis. The local government took 2 notably profound and long-horizon measures to counter the problem:
- Stopped all school buses for 2 days thus saving our thin consumption the astounding number of 200 000 gallons of diesel fuel. Wonder what those millions of drivers commuting 50-60 miles each day thought about it.
- Removed (temporarily) the state tax on gas. So to save those precious 10 cents on the "expensive" gas we pay. For years before I've been payng 3-4$ per gallon while earning in the vicinity of 300$. Seeing this happening here left me speechless - I thought such stupidity and short-sightness were achievable only by the ex-socialist governments. Wrong again - it seems that all governments tend to do same things over time.
In short do not expect rationality during the storm which is coming. We seem that we are not even able to handle the first gentle winds.