Are PHEV

If GM and other companies have the smarts and the guts to build the Volt and other cars that can run electricty, hydrogen, or any other exotic and new technology that might come along. And if the public has the smarts and the will to buy these cars in large numbers, then OPEC will have to respond in one of two ways:

Drop the price of oil to compete.
Face internal unrest that will break the carel's hold on the world.

3. sell oil to china and india who's industrial revolutions will eat up any surplus capacity for the forseable future

I think, more importantly than, being concerned about OPEC's state one should ask questions about the longevity and affect on american refineries and drilling companies and other upstream and downstream industries. The effects of a diminished oil industry with hurt how many hundreds of thousands of people? There seems to be great disenfranchisement with "Big Oil" but that industry employs hundreds of thousands of people in refineries, drilling outfits, pipeline companies, drilling equipment manufacturers and gas stations.

Albeit, any sort of en-masse adoption of electric vehicles will take time but how will so many jobs in America be replaced?

I doubt there would be much effect on the domestic oil production, as we will still need the oil and refineries for plastics, asphalt, jet fuel, heating oil, and diesel production. They would of course have to modify the refineries for a different mix of outputs, and some refineries may need to close. However, I have heard that a part of why gas is so pricey is that we do not have enough refineries, so probably not too many refineries have to close. Natural gas production and use would probably not be changed at all. Since China and India would probably soak up the unneeded oil, the prices would most likely not collapse. And all this would take at least a decade, giving people and companies plenty of time to adjust.

Mr. Oil man meet Mr. Solar man. The jobs will just shift to renewable sources of energy. Don't worry, there is plenty of work to get us out of our current mess. It might even be an all-hands-on-deck scenario.

If GM and other companies have the smarts and the guts to build the Volt and other cars that can run electricty, hydrogen, or any other exotic and new technology that might come along. And if the public has the smarts and the will to buy these cars in large numbers, then OPEC will have to respond in one of two ways:

Drop the price of oil to compete.
Face internal unrest that will break the carel's hold on the world.


We seem to forget that the price of crude oil is artificially controlled by OPEC. Refineries may have a limitation, but at $100 a barrel, over $2 per gallon just goes for the crude oil ($700 million per day). There is enough oil in production right now to flood the market and drop crude oil to $10 a barrel if they all pumped at full capacity. So, you can be sure that if the consumer market and the US Federal government demanded a transition from oil (thru CAFE standards, R&D funding in NASA-like proportions, tax incentives for early adopters and producers or a real sensible step - TAXING the *#$@@*! out of oil imports) then OPEC will control the price right back down to the point that everyone loses interest and backs off from the "electrification of vehicles".

This is a real problem, but the only real problem is in public reaction. If gas is suddenly cheap again, will the U.S. consumer and taxpayer withdraw the pressure for technology change? It is certainly demonstrable that cars with electric drivetrains are cleaner, require less maintenance and use less fuel so once we can produce the new technologies efficiently there would be no reason to go back to cars that are dirty and use more fuel (regardless of how cheap the fuel might be)?

So timing is everything; once OPEC is convinced that vehicle technology is "going electric" they have to act before that technology is fully developed and becomes efficient, affordable and routine. Based on this scenario I agree that at some point they will drop those prices so fast that our immediate problem will be a rapid rate of monetary Deflation. Furthermore, a realistic production program like the Volt is just what is needed to convince them, so we may see that price drop very soon. But if we are prepared for their tactics it could quickly work out for the good; then all we have to fight against is the tendency to "take the bait" and go back to the status quo.

Dr Mark

With all the cash on hand, they just start buying up all the electrical generating facilities, wind farms, photovoltaic manufacturers, and the one that scares me the most, the Li-Ion battery manufacturers...

Then what do we do????

Jim, I'm also slightly worried. Huge oil profits are used to buy up the alternative technologies. They can then set the price of these technologies just high enough so huge change can't happen. My other concern is that they drop the price of oil to kill the electrification movement for another decade.

I'm comforted because I don't think they have the power they once did to stop the perfect storm. They don't have the excess capacity to flood the market with cheap oil for too long and workable battery technologies are very close (and not just one formula). Once the cat is out of the proverbial bag it will be nearly impossible to put it back in. The masses will be outside the doors of these companies with torches! People are far more informed these days (thank you Mr. Internet) and are hopefully not going to be pacified like they were in the 80's. <holding breath slightly>

Besides, if they get to upity, we can just invade another opec member. </snark>

I know they will continue to sell to say... India. They are about to make a 4,000 car, and I'm sure at that cost the emissions aren't going to be impressive. What I wouldn't be surprised by is another calculated "LOWERING" of the price of oil. It would sure convince people who are only doing this for money to purchase something else.

With all the cash on hand, they just start buying up all the electrical generating facilities, wind farms, photovoltaic manufacturers, and the one that scares me the most, the Li-Ion battery manufacturers...

Then what do we do????

Well, they did buy up the NiMH batteries... I mean even the battery in my Prius is sold production as a .. (I think) 1.3kwh? battery... that is all the size that I guess Toyota could bargain for, or pay for the rights for. It's really tired and I don't feel like researching it, but forgive me if my info is a little off.

Another thing to remember, and I hope that they have learned their lesson, but GM originally bought a lot of these patents and then sold them to companies like chevron and texaco. Now they are really sorry because they cannot use the patents they once possessed.

I will be first in line to buy a VOLT, but I do have trust issues with GM. The Rendezvous they sold me was crap. Also, locally... they, in combination with I what I believe is a tire manufacturing company bought up the trollies in St. Louis. Now there are congestion and pollution problems. They did succeed at selling more vehicles, and tires though!

Let's hope that Pennor1 is correct. I will buy a Volt just to kick the gas habit. But will the $30,000 price tag be a deterrant. You can drive a long way on $10,000 worth of gas. And there may be those out there that have it all figured out. Like, I buy a Volt, don't use gas, the gas price drops and they drive a cheap gas car. They win, I lose.
I spent the money, they didn't, I save the supply they don't.


OPEC will have to respond in one of two ways:
Drop the price of oil to compete.
Face internal unrest that will break the carel's hold on the world.

Well, OPEC and "Honest" together in the same sentence is the classic oxymoron if there ever were one, but here's the problem: OPEC controls the price of oil via it's self imposed production mechanism. Basically a group of 12 mostly middle eastern countries get together once a quarter in plush offices in Vienna Austria and they put a supply/demand/price chart up on the screen. They then say, "What do we want to make for a barrel of oil this quarter?" Once that's decided, they trace up the production scale and the number they land on dictates how much they produce for that given period of time.

If this were to happen in the US (as happened with Standard Oil in the 50's that lead to the Sherman antitrust act), it would be illegal and the participants of such a scheme would all be hauled off to jail. The fact that OPEC openly conducts in price fixing is a testament to the international power they wield due to our addictive reliance on their petro.

The only way to prevent them from lowering the price to level that makes alternatives unviable from an economic perspective, is to put a floor on the price of oil equal to the point at which alternatives can exist and flourish. This would effectively negate any attempt by OPEC to lower the price (as they did following the 70's oil crisis) to kill off alternatives.

I agree that the U.S. Government needs to put policies in place that make it impossible for OPEC to "Kill the Electric Car" (Again?!?!?). Here's one.

It would be political suicide in today's environment for any politician to propose a huge gasoline tax, but maybe with enough public education and guarantees by the GAO that every cent would be distributed to taxpayers as rebates (like this year's economic stimulus payments), it JUST MIGHT FLY.

Remember, production costs are not currently controlling the price of gasoline; whether crude or refined product, it's SUPPLY AND DEMAND. So if the government takes 50-80 cents off the top, the selling price will still be $3.00+ since that's what it takes to limit demand to the right level. BUT we could offset personal income taxes by BILLIONS (does that mean that all these years the Europeans were brilliant and we've been ignorant slugs!!)! Of course this is reaching right into the Oil Companies pockets, so you have to be VERY careful where your candidate's campaign funds are coming from.

And to address the ILLEGAL nature of OPECs price-fixing, we should slap an import tax on every barrel shipped from those countries. In addition we need to ensure that domestic production, like the Bakken oil fields in North Dakota, remain profitable (i.e. keep the price of IMPORTED crude above $50/barrel).

If we had a presidential candidate with the testicular fortitude to make this policy I'd vote for him/her in a heartbeat; and I'd even buy him/her the highest-tech flack jacket I could find.

Dr Mark


Well, OPEC and "Honest" together in the same sentence is the classic oxymoron if there ever were one, but here's the problem: OPEC controls the price of oil via it's self imposed production mechanism. Basically a group of 12 mostly middle eastern countries get together once a quarter in plush offices in Vienna Austria and they put a supply/demand/price chart up on the screen. They then say, "What do we want to make for a barrel of oil this quarter?" Once that's decided, they trace up the production scale and the number they land on dictates how much they produce for that given period of time.

If this were to happen in the US (as happened with Standard Oil in the 50's that lead to the Sherman antitrust act), it would be illegal and the participants of such a scheme would all be hauled off to jail. The fact that OPEC openly conducts in price fixing is a testament to the international power they wield due to our addictive reliance on their petro.

The only way to prevent them from lowering the price to level that makes alternatives unviable from an economic perspective, is to put a floor on the price of oil equal to the point at which alternatives can exist and flourish. This would effectively negate any attempt by OPEC to lower the price (as they did following the 70's oil crisis) to kill off alternatives.

They will lower the prices and, as other user has posted, sell the surplus to China and India. Either way, their GDP will see a reduction and that will hurt those economies that relied solely on oil revenue.

I think what is more important is to gauge how the US and other western consumers will react to a very significant price drop for fuel. Will they throw away PHEV, HEV or flex fuel cars to buy high performance, gas guzzlers V8 and V12 cars?

I think they will not. Expect heavy resistance from OPEC, oil companies and even car manufacturers (they make more money from selling parts and maintenance than from new car sales) but now there are other facts to consider:
- climate change (hype or not, regardless of reasons, people are concerned)
- dependency on Middle Eastern countries and other unreliable and/or hostile governments
- crude oil reserves at their peak
- wars to secure remaining reserves

In more pragmatical terms, let's assume GM Volt and similar PHEV vehicles have been sold for 5-10 years. OPEC lowers the price of crude to the point that the price at the pump in US is $1/gallon. As a consumer, would I buy a gasoline powered gas guzzler (even a Toyota Matrix would be a gas guzzler compared with an EV or PHEV)? No, for several reasons:
- I still remember that wars can start to secure oil reserves
- I still don't trust Middle Eastern countries
- relying on the oppressive Saudi regime still upsets me
- not willing to contribute to record profits of oil companies
- global warming

and

- I like how quiet an electric vehicle drives
- I like the instant torque of an electric engine
- I like that I rarely have to stop to fill up
- I like that I can use biofuel to power the generator
- I like that I don't spend that much on oil changes and maintenance
- I like that I can use electricity generated by my solar panels and wind turbine to charge the batteries and drive for free
- I like that Exxon-Mobil, Shell, BP, Chevron, ConocoPhillips, Valero and others are either bankrupt or focused on sustainable energy sources
- I like that nobody will have to die for my right to fill up my fuel tank

3. sell oil to china and india who's industrial revolutions will eat up any surplus capacity for the forseable future


Exactly what I would expect to happen. So no need to worry about the cost of gas dropping if enough people buy a Volt.

A lot of good point here. I will say this though, yes, the car companies are going to be very hesitant about introducing an all-electric car. There's no money in it for them after the sale. I think the serial hybrids like the Volt are going to be the norm, which is fine by me. The car companies will like them because there's still an ICE that will still need oil changes, tune-ups, air filters, and the like. I honestly think that's why they shy away from a diesel ICE for these cars. Much less required routine maintenance on them. They should make them not just E85 capable, but also E100.

There are some good points here.

Think about this: You can make and store your own energy for free with the sun. Besides your initial cost, there will be nothing to stop you from freeing up a huge amount of money that used to go into someone elses pocket. If you really think about that in perspective - it would be a huge cash injection into the economy. Spread around. Not simply in big oils pocket.

I also agree that a diesel should be used as the other engine. A SIMPLE diesel engine. Running on biofuel. That technology exists today and there isn't a good reason not to use it.

However, I think it would be foolish to think we will save money hand over fist though..

I think consumers will be in for a shock once the warranty has expired on the electric cars.

#1.) You will be paying all the regular cost of an ICE
#2.) You will be paying unforseen expenses of the electric components.

But - that being as it is, even if it costs me the same amount to drive my electric car, the benefit to the environment would be worth the cost.

You do bring up a valid point about the upkeep after warranty. However, the ICE upkeep would be extremely minimal. If the ICE is a Gas/E85 flex, then you would be looking at air filter every 12k, oil change every 10k with filter, fuel filter every 60k, longer if you burn strictly E85, spark plugs would probably last 100k. So not a whole lot of upkeep. The constant RPM really cuts down the wear and tear on an ICE. If you run a diesel/biodiesel engine, you're probably looking at more frequent fuel filters, but everything else will stay the same, sans spark plugs. As for the electrical components, the motors are no big worry, but who knows about everything else and how much it will cost. Chances are most people won't keep their volt for long after the warranty expires. There will more than likely be a HUGE market for used PHEVs, thus allowing you to get a good resale or trade for a new generation.

#2.) You will be paying unforseen expenses of the electric components.

Like what? It's not like I'm going to be changing oil or and filters or having vacuum leaks or ideling problems, or leaks, or anything like that from the electric motor portion of the car, even when it gets old. Quite frankly, the only wearing parts that I can think of for the electric vehicle part of the car might be the battery fans and maybe if you put a couple of hundred thousand miles on the car the motor bearings might need to be replaced, or something. Since the Volt will have a AC motor there won't even be motor brushes to be replaced.

And to address the ILLEGAL nature of OPECs price-fixing, we should slap an import tax on every barrel shipped from those countries. In addition we need to ensure that domestic production, like the Bakken oil fields in North Dakota, remain profitable (i.e. keep the price of IMPORTED crude above $50/barrel).

If we had a presidential candidate with the testicular fortitude to make this policy I'd vote for him/her in a heartbeat; and I'd even buy him/her the highest-tech flack jacket I could find.

Dr Mark

I couldn't agree with this comment any more. To ensure we develop alternatives to petroleum, the US Gov't should set a floor on the price of a barrel of oil -- use the authority of the Sherman Antitrust Act. OPEC is manipulating the market via supply. I'd start by setting the floor at $60/bbl. Why?!? To spur investment in alternative fuels. A big impediment at the moment is fear that OPEC will open the flood gates again and drive the price of a bbl of oil below the cost of any serious threat—especially if these alternates enter the market and begin reducing demand of oil. The net effect would create additional excess production capacity in OPEC which would only serve to make it easier for them to flood the market in oil and drive down the price. We need options and substitutes to have a real market, and right now we have market whereby supply is controlled by a cartel.

Oh yeah...and keep investing it solar, wind, batteries technology...etc, anything that decreases demand for fossil fuels. This is not a zero sum game.

Dr. Mark said, "And to address the ILLEGAL nature of OPECs price-fixing, we should slap an import tax on every barrel shipped from those countries."

While the US has laws to prevent price fixing (Sherman Anti-trust), I'm not aware of any such law for international commerce. Is there such a law or are you extrapolating based on US law?

I agree with the premise of putting a bottom on the price of oil. However, the energy problem is of our own creation, not OPEC. Who could have guessed that the Arab Oil embargo of the 1970s showed just how "dependent" we are on OPEC? The often disparaged Jimmy Carter figured it out way back then but every president since, starting with Reagan, hasn't had a clue or has bowed to political pressure from Big Oil.

OPEC just exploits are stupidity. Seems very compatible with American capitalism to me.

Dr. Mark said, "And to address the ILLEGAL nature of OPECs price-fixing, we should slap an import tax on every barrel shipped from those countries."

While the US has laws to prevent price fixing (Sherman Anti-trust), I'm not aware of any such law for international commerce. Is there such a law or are you extrapolating based on US law?

I agree with the premise of putting a bottom on the price of oil. However, the energy problem is of our own creation, not OPEC. Who could have guessed that the Arab Oil embargo of the 1970s showed just how "dependent" we are on OPEC? The often disparaged Jimmy Carter figured it out way back then but every president since, starting with Reagan, hasn't had a clue or has bowed to political pressure from Big Oil.

OPEC just exploits are stupidity. Seems very compatible with American capitalism to me.

I'm extrapolating of course, but oil is different because it is a national security issue. So I would think an argument could be made that market manipulation by OPEC falls under Sherman in the United States -- period.

To me the underlying question is, "Is $130/bbl oil the result of peaking oil production, or supply manipulation?" It matters because alternative energy investors ask how long will $100/bbl oil last? Most of the alternative energy fuels that I'm aware of can compete and make a profit (critical to raising capital) when oil is at $60/bbl, but can not when it is at $45-50/bbl or below. So the point is to take away OPEC's ability to manipulate the market to their advantage. If oil is peaking, a "$ floor" on a bbl of oil will be irrelevant, but if this is a result of market manipulation, as in the 70's, then we need this to protect a nascent alternative energy market. In essence, this would be risk management to encourage investment in alternative energy.

The Fed Gov’t doesn’t produce energy, they are a consumer. In my opinion, we need the market to bring as many alternative energy solutions forward as possible, then let the market and consumers sort them out. That will happen if investors believe there is money to be made.

I'm extrapolating of course, but oil is different because it is a national security issue. So I would think an argument could be made that market manipulation by OPEC falls under Sherman in the United States -- period.

I agree with exercising price supports to prevent OPEC from manipulating our energy policy (BTW, we don't really have one). However, it scares me when people talk about it as a "national security issue." Yes, it is a national security issue but that doesn't mean we can invade, destroy and occupy OPEC countries.

We should solve our energy problems with new technology, conservation and sacrifice. When I say sacrifice, I mean sacrificing SUVs, not Americans dying in Iraq.

I agree with exercising price supports to prevent OPEC from manipulating our energy policy (BTW, we don't really have one). However, it scares me when people talk about it as a "national security issue." Yes, it is a national security issue but that doesn't mean we can invade, destroy and occupy OPEC countries.

We should solve our energy problems with new technology, conservation and sacrifice. When I say sacrifice, I mean sacrificing SUVs, not Americans dying in Iraq.

I agree, the National Security aspect of energy should be used as justification for a floor on the price of a brl of oil, not invasion – but the reality is energy equals nation security; it is a fact of modern life. Fortunately, technology exists to today to get us off oil, but we have to create the right environment to encourage investment. A floor on oil would help facilitate that environment. We need a global response using science, not force.

I agree, the National Security aspect of energy should be used as justification for a floor on the price of a brl of oil, not invasion – but the reality is energy equals nation security; it is a fact of modern life. Fortunately, technology exists to today to get us off oil, but we have to create the right environment to encourage investment. A floor on oil would help facilitate that environment. We need a global response using science, not force.

We agree. The Bush administration's energy policy is based on war and drilling in pristine environments (everywhere except in Jeb's back yard). Oh, did I forget begging for more production for Saudi royals?

In November we will have a new direction. Obama and McCain both understand that sending $18 billion a month to the Middle East has been a disaster for our national security, our economy and our future.

We should have an energy policy that focuses on conservation, technology for renewable energy, and trade policy that discourages commerce with countries that ignore international efforts to reduce greenhouse gases (did I say China?).

We should have an energy policy that focuses on conservation, technology for renewable energy, and trade policy that discourages commerce with countries that ignore international efforts to reduce greenhouse gases (did I say China?).


Um, we ignore them as well (Kyoto). That's besides the point. I mostly agree with what you said. Of course the solution seems so easy that a child could come up with something better than what we have been doing. There can only be one reason for this. It's because we don't fully understand the intentions of those in power. Nobody could be making such bad decisions in the face of so much information. Thus insert your favorite conspiracy theory here. Is the US afraid of our global debt and that we cannot allow the Euro to be used for oil transactions? Are we slowly building up our bases around the world in preparation for the inevitable fighting over the remaining supplies and that the US already knows this is coming? Who knows. All I know is that there is no real efforts being made for developing alternatives. The amount of money put into research makes it look like Energy is ranked about 25th on the importance list. A person could go crazy (As we have seen may people do) trying to defend their theory but I like to think there is a large meeting room somewhere that has the best minds in the world figuring out what is the best path to take. Is that being overly optimistic? Or am I actually just watching a train bearing down on a stalled car with the driver locked inside?

The amount of money put into research makes it look like Energy is ranked about 25th on the importance list. A person could go crazy (As we have seen may people do) trying to defend their theory but I like to think there is a large meeting room somewhere that has the best minds in the world figuring out what is the best path to take. Is that being overly optimistic? Or am I actually just watching a train bearing down on a stalled car with the driver locked inside?

The reality is government (DoD and DoE) use their research money to leverage the commercial market. DoD and DoE don't build anything; they issue RFPs (requests for proposals) to commercial firms. Same philosophy applies to energy. The research going on right now is a leverage investment -- and I agree there isn't enough money being spent on the energy problem. The research that is being funded is jealously guarded by both the researchers and lobbyists. With oil above $120/bbl there is a tidal wave of new energy technology coming forward requesting funds, but funding a new technology on a fixed budget means you have to reduce funding on another project, terminate funding on another project, or defer funding the new technology until a current project completes. The government can not fund everything, and picking winners and losers is a judgment call that isn’t always correct.

Fortunately, we have the most efficient & fair free market system in the world – venture capitalist make these determinations every day and provide the necessary funds when they believe there will be a positve return on investment – our IRAs and 401K plans depend on it. However, it is not perfect either, there are some problems associated with venture capitalism:



1. Investors are generally risk adverse when they have been burned before under the same scenario (the early 1980’s) – thus my argument for a $60 floor on barrel of oil.


2. The patent holders of some of the most promising technology often don’t want to go the venture capital route because it can mean losing control. Instead they choose to lobby the government to fund prototyping so they can prove the technology and maintain control. As I mentioned before, the government doesn’t have enough money to fund them all, and government researchers (the smart scientists) are usually busy jealously guarding the funding they do have, and often view new technology as a threat to their research.


There is no conspiracy; it is a difficult chicken and egg problem constrained by limited resources. Texas there is no BOGSAT (Bunch Of Guys Sitting Around a Table) determining the energy route for this county. Ultimately it will be the commercial market (consumers) who will determine the winners and losers. That determination will be based on price and convenience, as it should be. It is the role of govenrment to ensure a fair marketplace -- the purpose behind the Sherman Act.

We agree. The Bush administration's energy policy is based on war and drilling in pristine environments (everywhere except in Jeb's back yard). Oh, did I forget begging for more production for Saudi royals?

In November we will have a new direction. Obama and McCain both understand that sending $18 billion a month to the Middle East has been a disaster for our national security, our economy and our future.

We should have an energy policy that focuses on conservation, technology for renewable energy, and trade policy that discourages commerce with countries that ignore international efforts to reduce greenhouse gases (did I say China?).

Greenman,

We agree only that military force is not the way out of the high prices we are paying fpr energy . Not every issue involving national security requires military force, most often the best answer is cooperation and collaboration. I think energy is clearly one of those issues -- we have much more to gain through cooperation and collaboration than conflict. That said, I don't share your critique of the present Administration's energy policy and will simply leave it at that.

Nobody could be making such bad decisions in the face of so much information. Thus insert your favorite conspiracy theory here.

No conspiracy or theory here. Bush is a total moron and a disaster of monumental proportions. If you look at his record, you shouldn't be surprised.

America desperately needs new leadership. When 911 happened, Bush's response was for Americans to go to the mall and shop. He said nothing about accelerating research on alternative energy, conserving energy, or changing buying habits (SUVs, McMansions, pickup trucks, etc.). In fact, there was nothing about sacrifice in any of his messages to America while our troops made all the sacrifices (dying, permanent disabilities, mental illness, divorce, suicide, economic hardship).

Anybody but Bush.

Well, soon he will be gone and you can blame the next guy for the world's problems. It's easy and you can then get a good night's sleep. No need to actually do things that would help change the situation. Have a good night!

Well, soon he will be gone and you can blame the next guy for the world's problems. It's easy and you can then get a good night's sleep. No need to actually do things that would help change the situation. Have a good night!

I am simply stating a position. I'm optimistic that we are emerging from the Bush Dark Ages to a new awareness. We can blog all we want on GM-Volt.com but the reality is that LEADERSHIP in Washington can and will make the difference.

I have two cars that get 30+ mpg. One is a Prius and it is an engineering marvel. I am dissappointed that I don't have 10-20 choices of cars that get 100-150 mpg.

The technology makes it possible today. It is LEADERSHIP that we lack. Bush is out. Obama will lead us forward. McCain will have a harder time resisting the GOP special interests.

The only obstacle I see is Big Oil with profits of tens, if not hundreds, of billions of dollars. That is a lot of influence and provides an ability to manipulate energy markets, technology, car companies, and legislators. Big Oil will fight to the death. It takes more than good bloggers to fight this battle.

The technology makes it possible today. It is LEADERSHIP that we lack. Bush is out. Obama will lead us forward. McCain will have a harder time resisting the GOP special interests.

The only obstacle I see is Big Oil with profits of tens, if not hundreds, of billions of dollars. That is a lot of influence and provides an ability to manipulate energy markets, technology, car companies, and legislators. Big Oil will fight to the death. It takes more than good bloggers to fight this battle.

I couldn't disagree with you more. You feel that our government leaders have the power to change things where I feel the only way the government can change things is if we tell them to. Thus, the perfect blogger that can reach the hearts and minds of every voting citizen would be far more powerful than Bush. You should understand that. You see, "Big Oil" can fight all they want but if "We the People" decide not to buy their products then there is nothing they can do. We are drug addicts that bitch about our drug dealers and then a few hours later beg (yes, I said beg - Bush in Saudi Arabia) for another hit.

So in the future it might be more constructive to educate people to make the right decisions rather than curse the government. It might make you feel better to blame one man for the world's problems and if that's the case, enjoy!

So as I understand some of the positions expressed in this thread: we should sue OEC for indirectly manipulating the price of oil by deciding how much of their finite, non-renewable resource to pump AND to impose an artificial price floor of $80 per barrel on OUR end? Shouldn't they be suing US? Maybe we aren't planting enough corn to meet the world's needs - another lawsuit. Worse, maybe we'd have the timerity to use corn for fuel for cars rather than fuel for people! Obviously, I don't think that American farmers should do that, but they are FARMERS , not the USA. Neither OPEC, nor any other country, has the right to dictate, or legally intimidate our farmers into producing what those countries decide that they need. OPEC owns their oil. In fact almost 80% of the world's oil is owned BY COUNTRIES, not companies (can I hear a shout out there of BIG OIL)! It's countries that control the oil. Period. We need to increase OUR country's supply of oil and it's alternatives and quit witching about countries over whom we have absolutely no control.

I couldn't disagree with you more. You feel that our government leaders have the power to change things where I feel the only way the government can change things is if we tell them to.

I guess I was wrong because I assumed that government does respond to the people who vote, sort of like a democracy should work! The problem is that people have been distracted by fear (exploitation of 911, in particular), educated by entertainment news (re: cable talking heads), and fooled by an incredible flow of money into the process from special interests.

I appreciate your point about the power of the people and the blog. However, I maintain that LEADERSHIP from government, where power is derived from ordinary voters, will ultimately be necessary to fight the special interests.

So as I understand some of the positions expressed in this thread: we should sue OEC for indirectly manipulating the price of oil by deciding how much of their finite, non-renewable resource to pump AND to impose an artificial price floor of $80 per barrel on OUR end? Shouldn't they be suing US? Maybe we aren't planting enough corn to meet the world's needs - another lawsuit. Worse, maybe we'd have the timerity to use corn for fuel for cars rather than fuel for people! Obviously, I don't think that American farmers should do that, but they are FARMERS , not the USA. Neither OPEC, nor any other country, has the right to dictate, or legally intimidate our farmers into producing what those countries decide that they need. OPEC owns their oil. In fact almost 80% of the world's oil is owned BY COUNTRIES, not companies (can I hear a shout out there of BIG OIL)! It's countries that control the oil. Period. We need to increase OUR country's supply of oil and it's alternatives and quit witching about countries over whom we have absolutely no control.

Tagmet,

I can’t speak for the others, but I'm not advocating suing OPEC countries in the WTO. However, I do believe we can and should set a floor on the price of a barrel of oil -- around $50-$60/barrel not $80/Barrel. My rational is exactly for the reasons you stated.

1) 80% of the oil is owned by Countries that control its production – thus they can manipulate the market since oil consumption is relatively inelastic over the short and near term

2) We need alternatives to oil so we have substitutes to help keep price in check – take a look a Brazil and their ethanol production for a case study on how it can be done. (For the record, I believe there are better alternatives than ethanol)

Setting a floor on a barrel of oil would help alternative fuel producers get access to funds that are necessary to establish a foothold without the fear of the price for a barrel of oil crashing – which could happen again if substitute fuels combined with higher efficiency automobiles like the Volt begin to decrease the demand for oil. Remember the late 70's and early 80's? Remember all the expert predictions about peaking and the future cost of oil back then? Investors began building CTL (coal to liquid) plants, and consumers began purchasing smaller and more efficiency cars. Once demand for oil began to reduce, the price crashed. Consequently, the CTL producers went bankrupt because they could not complete with oil at $20/barrel. OPEC can still make a profit at that price, the CTL producers could not – and they weren’t concerned with C02 sequestration back then (added cost). (BTW, I'm using CTL as an example, if you don't like that alternative then substitute E85, Algae, Hydrogen or even Solar -- whatever floats your boat)

So applying risk management to eliminate this possibility from happening again in the future, we could chose to set a floor on the price of a barrel of oil. If the OPEC cartel can limit production and drive up the price of oil, why can't the United States set a floor price for a barrel of oil to encourage an environment for competition to help keep price in check?

Just my 2 cents worth...Cheers!

If you remember the 70's and 80's, then you're familiar with the term "price controls". They were an absolute disaster. Our gov't is already "fixing" the price of ethanol with a 54 cent/gal import tax. In broad brushstrokes, gov't intervention in the marketplace is a terrible idea. If you MUST spend our taxes, there have to be dozens of other (better) ways. It's likely a moot point anyway, because we ain't gonna see cheap imported oil anytime soon. Demand will assure that.
Just my .10 (that includes an 8 cent floor)
Tag

Not sure how to implement a "floor", but I don't think it has to involve taxes. It would, hopefully, keep prices higher than an "open" market might dictate but I roughly confident that is Rooster's idea. Sure would take the fun out of oil futures trading, though;) Since I was too young to fully appreciate the '70's "price controls", could you elaborate a little. Sometimes it's possible to learn from mistakes to do things better (smarter), we have to get close to the stove again sometime if we want to eat. The dynamics are also much different today.

My vote would be for $80 floor if it could be done sensibly, no sensless OPEC suing, no childish Oil profit witch hunts.

The price controls in the 70's were actually price ceilings. Putting an artificial "cap" on how much gas cost at the pump led to LOOOOONG lines at the pump just to get the 10 gallons allowed per car. Fist fights broke out at gas stations when someone tried to cut in line, or more often, when the "sold out" sign came out after people had waited in line for an hour. Inflation was ~18%! Too many dollars chasing too few goods. Too few goods because the incentive to produce was capped with the price. Just look to the USSR's economy for an excellent example of failed policy.
I know that this is just the opposite as is being suggested here (a price floor), but the same sites describing the failed economic policies of the 70's also address "floors" as just as dangerous (if not moreso).
If you'd like to read about the economics, this site has some good links:
http://freedomkeys.com/pricecontrols.htm
Gov't intervention is NOT the answer.
HTH,
Tag

Sorry, my memory of inflation was flawed (probably due to the trauma)
Year Inflation Rate
(percent) Unemployment
Rate (percent)
1973 6.2 4.8
1974 11.0 5.5
1975 9.1 8.3
1976 5.8 7.6
1977 6.5 6.9
1978 7.7 6.0
1979 11.3 5.8
1980 13.5 7.0
Source: Statistical Abstract of the United States

All I know is that there is no real efforts being made for developing alternatives. The amount of money put into research makes it look like Energy is ranked about 25th on the importance list. A person could go crazy (As we have seen may people do) trying to defend their theory but I like to think there is a large meeting room somewhere that has the best minds in the world figuring out what is the best path to take.

Americans are beginning to get it but most aren't willing to make a personal sacrifice. This is a perfect storm of win/win/win: national security, economic well being (trade imbalance) and the environment. Some people seem to believe in one, but no one seems to believe all three. Then again, most people don't pay attention.

In any change - and a new energy policy is a change of monstrous proportions - there are winners and losers. Other than government which has been ineffective to date, we have Big Oil, Big Auto, and Big Utility. Big Oil loves the status quo. Big Auto wants to continue selling high-margin SUVs. Big Utility is interested in centralized generation of power, not off-grid alternatives. This is not a conspiracy. This is a fact of life.

Real change will require someone to take on these massive interests. It must be government that leads, supported by the people.

Greenman,

That said, I don't share your critique of the present Administration's energy policy and will simply leave it at that.

What energy policy would that be? Going to Saudi Arabia to plead for them to pump more oil?

What energy policy would that be? Going to Saudi Arabia to plead for them to pump more oil?

No, that energy policy would be:

(1) The 2005 Energy Policy Act signed into law on August 8, 2005; and
(2) The Energy Independence and Security Act (EISA) of 2007, signed into law on December 19, 2007

The highlights of each can be read at the links below:

2005 Energy Policy Act: http://www.thompsonhine.com/publications/publication123.html

2007 Energy Independency and Security Act (EISA): http://www.thompsonhine.com/publications/publication1326.html


Both bills are not perfect and are the result of compromise, but they do move the country in the right direction and that is the key. The road to energy independence will be a long one. I choose to view these two acts as the first two milestones on that journey, they will not be the last. More will follow as the path forward becomes clearer with time.

The price controls in the 70's were actually price ceilings. Putting an artificial "cap" on how much gas cost at the pump led to LOOOOONG lines at the pump just to get the 10 gallons allowed per car. Fist fights broke out at gas stations when someone tried to cut in line, or more often, when the "sold out" sign came out after people had waited in line for an hour. Inflation was ~18%! Too many dollars chasing too few goods. Too few goods because the incentive to produce was capped with the price. Just look to the USSR's economy for an excellent example of failed policy.
I know that this is just the opposite as is being suggested here (a price floor), but the same sites describing the failed economic policies of the 70's also address "floors" as just as dangerous (if not moreso).
If you'd like to read about the economics, this site has some good links:
http://freedomkeys.com/pricecontrols.htm
Gov't intervention is NOT the answer.
HTH,
Tag

Tagamet,

I couldn't agree more on price ceilings...I'm not advocating that for a second. A price ceiling set below the free-market price causes shortages -- period. The more pertinent question is, what is the side effect of a price floor set above the free-market equilibrium price?

From Wikipedia, http://en.wikipedia.org/wiki/Price_floor. A price floor is a government or group imposed limit on how low a price can be charged for a product. For a price floor to be effective, it must be greater than the equilibrium price.

A price floor can be set below the free-market equilibrium price. In this case, the floor has no practical effect. The government has mandated a minimum price, but the market already bears a higher price. In contrast, a price floor can be set above the free-market price. In this case, the price floor has a measurable impact (side effect) on the market. Consumers find they must pay a higher price for the product than they otherwise would. As a result, they reduce their purchases or drop out of the market entirely (i.e., they choose a lower cost substitute). Meanwhile, suppliers find they are guaranteed a new, higher price than they would otherwise be charging. As a result, they increase production. Taken together, these effects mean there is now an excess supply of the product in the market.

In order to maintain the price floor over the long term, the government must take action to remove that supply. The Governments in this case would be the major oil producing nations -- Saudi Arabia, Iran, Iraq, Russia, Nigeria, Venezuela. Most of these countries belong to OPEC, and OPEC already takes action to remove supply by setting productions limits.

Bottom-line, price floors set above equilibrium market price cause surpluses; if they are set below the equilibrium market price they have no effect. From a national security point of view, a world surplus in oil caused by an artificially high price that encourages efficiency and lower cost alternatives is bad because?!? Seriously, maybe there's a consequence I'm not considering?

Philip Gordon of the Brookings Institution makes the case for a price floor on oil in an article he wrote two years ago titled An Improbable Cure for Oil Addiction. http://www.brookings.edu/opinions/2006/0512globalenvironment_gordon.aspx


"May 12, 2006 - With public anger rising at gas prices that now exceed $3 per gallon, American politicians are predictably rushing forward with proposals designed to show that they are "doing something" about the problem.

"Democrats are investigating oil companies and proposing a 60-day suspension of the federal gas tax while Republicans are clamouring to start drilling in the Arctic National Wildlife Reserve, having withdrawn their initial proposal for a $100 "holiday rebate" in the face of public ridicule. These measures may make some politicians feel good but they will provide little relief to consumers. Their only impact on what President George W. Bush called America's "addiction to oil" would be to subsidise it.

"Instead of supporting politically cynical palliatives, Mr Bush should take the opportunity created by high oil prices to ask Congress to impose a "price floor" on a barrel of oil. The mechanism would be very simple. The government would announce that, as part of a comprehensive energy strategy, it will henceforth not allow the price of oil to fall below a particular floor of, say, $60 per barrel. If high oil prices continue, the proposal would have little impact and cost nothing, either politically or financially.

"But if prices fall below that level - as they might well do once the impact of recent prices on demand and investment in alternative energy sources work their way through the world economy - the government would intervene to keep the price stable, with the difference between the floor and the market price reverting to the state as revenue.

"If consumers and industry knew that the price of a barrel of oil would never again fall below $60 per barrel - the level around which US-produced corn-based ethanol fuel becomes economically viable - they could make long-term investment and consumption decisions in a way that makes little economic sense so long as price stability is not guaranteed. Americans will not take long-term decisions to buy fuel-efficient automobiles, create distribution networks for alternative fuels, or invest in technologies like hydrogen fuel cells, flex-fuel vehicles or wind power unless they know that a future sharp fall in oil prices will not undercut them.

"To make the proposal even more palatable politically, Washington could promise to spend the money on education, healthcare, homeland security and even tax cuts rather than use if for deficit reduction, a noble purpose but one that rarely excites voters. Senator Richard Lugar, an influential leader in the energy policy debate, has already come out in favour of a modest, revenue-neutral oil price floor.

"It is difficult to overstate the costs of relying so extensively on expensive, imported oil, not only for the obvious economic and environmental reasons. It also imposes serious constraints on our foreign policies. With oil near $70 per barrel, we have little leverage on Russia as it erodes democracy at home, bullies its neighbours and drags its feet on nuclear non-proliferation. Iran feels emboldened to defy the international community and continue its suspected nuclear weapons programme, human rights abuses and support for terrorists. China protects energy producers such as Sudan, standing in the way of United Nations Security Council action, while Venezuela uses its oil revenues to pursue an arms buildup and promote anti-American movements in Latin America.

"Perversely, our oil dependence is not only bad for us, it is bad for the oil exporters themselves. Countless studies have shown the relationship between rentier economies that live off a single natural resource export and the tendency toward undemocratic rule. It is not a coincidence that many of the world's big oil exporters - Saudi Arabia, Iran, Iraq, Russia, Nigeria, Venezuela - are authoritarian regimes or worse.

"Perhaps most importantly, our failure to move decisively away from a dependence on oil and the subsequent high oil prices that failure produces means that we are funding both sides in the war on terror. Many of the extra dollars we spend on energy goes to countries such as Saudi Arabia, which funds the Madrassas that teach extremist Islam in Pakistan, and Iran, which finances Hezbollah. Even friendly Qatar is giving $50m out of the oil revenues it received from us to Hamas.

"An oil price floor can not alone deal with our oil addiction and unless other measures to curb consumption and promote alternatives are adopted it might never even come into effect. But direct taxes on oil and gasoline are politically difficult and most of the current proposals for dealing with the crisis are marginal or counterproductive. In the longer run only by knowing that the need for an alternative to oil is permanent will Americans change their habits. If Mr Bush really wants to go down in history as a president who changed the country in positive ways, weaning Americans off oil should be at the top of his agenda."

Rooster,
OY, what a headache I got reading that. I agree with the LAST sentence. No offence intended, but it sounds like the farthest thing from free market possible. I'm haunted by the term Double Speak.
Instead of artificially fooling with the market, why not just DO EVERYTHING:
DO all renewables
DO increase supply. If China can drill off Fla, we should be able to too.
DO electrify transportation
DO Nuclear
DO protect natural treasures.
I just don't see any government intervention that either been efficient or effective. I know, that's too sweeping, but you seem to be over reaching in the other direction (smile).
Maybe I'm just a child of the 60's.
Be well,
Tag

No, that energy policy would be:

(1) The 2005 Energy Policy Act signed into law on August 8, 2005; and
(2) The Energy Independence and Security Act (EISA) of 2007, signed into law on December 19, 2007


The Energy Independence and Security Act would never have happened if Republicans hadn't been ousted in large numbers in 2006.

These two acts in 2005 and 2007 do not constitute an energy policy for the 7 1/2 miserable years of this administration. Bush was happy to spend $1 trillion on destroying Iraq and creating a civil war, not to mention further destabilizing the Middle East.

Energy policy? Sounds more like a war policy.

:)
Rooster,
OY, what a headache I got reading that. I agree with the LAST sentence. No offence intended, but it sounds like the farthest thing from free market possible. I'm haunted by the term Double Speak.
Instead of artificially fooling with the market, why not just DO EVERYTHING:
DO all renewables
DO increase supply. If China can drill off Fla, we should be able to too.
DO electrify transportation
DO Nuclear
DO protect natural treasures.
I just don't see any government intervention that either been efficient or effective. I know, that's too sweeping, but you seem to be over reaching in the other direction (smile).
Maybe I'm just a child of the 60's.
Be well,
Tag

Tagamet,

Laughing...yeah that was a lot text and I do understand what you are saying. I must admit I’m not a huge fan of government intervention in the market either – price ceilings were a disaster. So maybe I am over reaching, but my instinct tells me otherwise. I don’t like monopolies because they are anticompetitive and I’m a firm believer that competition is good for consumers -- sometimes intervention is a necessary evil.

I’m hung up on the question, “is the current price spike the result of peaking oil or supply manipulation by OPEC?” I believe that the most probable answer is intentional supply manipulation by OPEC, and the lesser possibility is peaking oil. If I’m correct, my next question would be is government intervention necessary to correct it, and if yes, what is the most effective and least disruptive form of intervention?

If oil is peaking, the price will stay high and substitutes will enter the market to bring price back into equilibrium (in the form of energy efficiency & substitute energy products that are less expensive). The market will work, and I agree no intervention is necessary. I also agree we need to DO EVERYTHING and let the market sort it all out, but who is going to pay for the cost to DO EVERYTHING? It won’t be the government; it will be private industry and investors. Thus to DO EVERYTHING investors will want some reassurance they will get a return on that investment.

Here is my concern and why I believe government intervention is a necessary evil in the form of a price floor. If the current price spike is a result of supply manipulation for political purposes by OPEC, as in the 1970’s, then we are setting ourselves up for repeat of the early 1980’s. Demand for oil will eventually drop as more energy efficient products and substitute energy sources enter the market. OPEC will eventually find themselves with a surplus as demand begins to drop faster than supply, and the price of oil will crash again. Consequently the alternative energy start-ups (the DO EVERYTHING folks) will go bankrupt once oil drops below their cost. With cheap oil available, consumers will once again lose interest in efficiency and more expensive alternatives. History has a tendency to be cyclic.

At the core of the market is competition, so to me it is analogous to sport. In modern society organized sport involves rules that are enforced by referees to keep the “game” fair. Violations of the rules are a judgment call by the referees. I’m of the opinion OPEC is "cheating", they can manipulate supply as a result of their monopoly. Thus it is time for the referees to call the foul and impose a price floor to encourage competition with staying power.

If you (or anyone else) have some examples of how a price floor could be counter productive in the case of oil, I would sincerely like to hear it. I will always reserve the right to change my mind if someone can convince me I’m missing the obvious. After all, I’m a firm believer that if everyone agrees, no one is thinking.

OK...enough thinking for me, time to go work in the yard!

Cheers!

Rooster,
It's Saturday, so I hadn't planned on thinking today. I'll keep this reply short and reply at length later.
Given the sports analogy, if my little league team knew that we have no HOPE of beating your team, your solution is to guarantee our team 10 runs just for showing up. Doesn't seem fair.
The element that I think you haven't addressed is the level of ANGER now, that wasn't present the last time around. In the USA, we're admittedly spoiled by low gas prices, but just like a spoiled child who has been punished, I believe we're ready to recognize the need for renewables and support them in the private market. Once a tipping point is reached they will "take off" without any govt welfare. If the Green Movement has any value, it's at least made it cool to reduce, reuse, recycle, and reject all things oil.
More later.
Be well,
T

Rooster,
It's Saturday, so I hadn't planned on thinking today. I'll keep this reply short and reply at length later.
Given the sports analogy, if my little league team knew that we have no HOPE of beating your team, your solution is to guarantee our team 10 runs just for showing up. Doesn't seem fair.
T

I'd say a floor on the price of a barrel of oil is more analogous to a golf handicap. As you gain experience and your score improves, your handicap reduces until it is no longer needed.

I'd say a floor on the price of a barrel of oil is more analogous to a golf handicap. As you gain experience and your score improves, your handicap reduces until it is no longer needed.

So what criteria would you use to determine the amount of pain at the pump that you'd like? Unemployment?

For anyone who says the price of oil can not fall below $60/brl ever again, would you be willing to bet your retirement account on it? Food for thought.


1,238 Billion Barrels of Oil Reserves: Is This an Oil Price Bubble?
by: Mark Perry posted on: June 12, 2008

http://seekingalpha.com/article/81063-1-238-billion-barrels-of-oil-reserves-is-this-an-oil-price-bubble

"That's 1.238 trillion barrels of known oil reserves, or 1,238,00,000,000 barrels. And reserves have actually been growing, by 107.8 billion barrels since 2001, and 168.5 billion barrels, or 14%, over the last decade. Global reserves have risen by 36% since 1987 (map/chart above shows how the 1.23 trillion barrels of oil reserves are distributed globally).

These stats are from the "Statistical Review of World Energy 2008," released yesterday by BP (BP), and reported by The Economist:

We're not running out of hydrocarbons,” insists Tony Hayward, the boss of BP, one of the world’s biggest oil firms. To back up this view, he cites various comforting figures from the latest edition of the firm’s “Statistical Review of World Energy," released today.

Enough oil has already been discovered around the world, Hayward says, to maintain consumption at current levels for another 42 years. As he put it, humanity has guzzled through 1 trillion barrels, but has its next trillion already lined up, and could probably unearth a third trillion if it really applied itself.

Why then, are oil prices hovering over $130 a barrel?

Mr. Hayward blames poor policy-making or, in his florid phrase, “the madness of men." Some 80% of the world’s oil reserves, he says, are in the hands of state-owned oil firms, which tend to allow firms like his only limited access. He believes that if these riches were fully exploited, the world could easily produce 100m barrels a day or more, a big increase on last year’s figure of 82m barrels per day.

MP: What about all of the attention on rising demand for energy in China and India, and how that contributes to rising oil prices? Well, according to the report's statistical tables, India's share of global oil consumption in 2007 was only 3.3%, not much more than Canada's 2.6% share or Mexico's 2.3% share, and India's oil consumption has grown less than 3% annually during this decade. And India and China's 12.6% combined share of world consumption is still only about half of America's 24%.

In fact, total global oil demand increased by only 1.1% in both 2006 and 2007, roughly the same rate as the increase in world population, and about half the 2.03% average annual growth in oil demand during the 2002-2005 period.

What's going on? Increasing world oil reserves, and relatively weak growth in world oil demand, and oil prices have now doubled in the last year? Is this an oil bubble?

So what criteria would you use to determine the amount of pain at the pump that you'd like? Unemployment?

No, around $50 -$60 a barrel. Just slightly above break even point for the majority of alternative energy substitutes for petroleum. The idea is to get petroleum substitutes into the market as fast a possible. That can only happen by raising the necessary capital through the market. The capital will come if investors believe they have a reasonable chance of getting a return. They are hesitant to expend the capital if they fear the cost of oil could plummet (by increasing supply) and get below any alternative’s cost point.

Are you seriously quoting BP???? Not like they'd benefit from Gov't intervention. I thought people were trying to grab windfall profits back from the oil companies. ALLLLLL of the Dem's solutions are based on using less and developing alternatives. , but not increasing supply. God forbid we should park a rig next to the Chinese oil platforms on the continental shelf. Personally, I'd like us to do EVERYTHING to both increase supply AND develop alternatives.
Any program that fears the market isn't a program I'd invest in.
BTW, I DO worry about my pension, but aside from that, I'm in conservative (on so many levels)mutual funds.
So basically, I've thought about it.
Be well,
Tag

No, around $50 -$60 a barrel. Just slightly above break even point for the majority of alternative energy substitutes for petroleum. The idea is to get petroleum substitutes into the market as fast a possible. That can only happen by raising the necessary capital through the market. The capital will come if investors believe they have a reasonable chance of getting a return. They are hesitant to expend the capital if they fear the cost of oil could plummet (by increasing supply) and get below any alternative’s cost point.


This is why "Fortune favors the bold". Sometimes investment capital is lost, sometimes it's a huge win. The system works, until we fool with it.

If we are waiting for Congress to act, we could be waing a LONG time. I experienced the oil embargo of the seventies when gas tripled from 25 cents to 75 cents (gasp) a gallon. Price caps don't work, neither will a floor. I have seen plans for a hydrogen generator from a website and heard on NBC Nightly News of a small company in Kentucky installing same for 2 Grand. Its a simple plastic pipe holding water which is given a jolt of electricity from the car's battery increased with a capacitor from Radio Shack. Hydrogen gas is produced and pumped into the tank, doubling gas mileage. GM has bought a patent on this and may use it on the Volt. You could run a Volt for a month on about a liter of H2o. As far as oil is concerned, its on the way out. I have heard that Americans are unwilling to make sacrifices in this crisis. Huh? I traded in my Chevy S10 for an Aveo. I combine my trips. I changed jobs to cut my commute in less than half. I use my bike, motorcycle and feet whenever possible. But, I'm not the ONLY one doing this.My friends, neighbors and coworkers are cutting back on gas every day. We Americans can and are sacrificing to get off oil. It gets me angry when Americans are characterized as wasteful and uncaring. Through education and a little perserverance we WILL beat the oil monster and the world will be a better place for our kids and grandkids.

Hi John,
Hear Hear! I sat in those same gas lines. What a mess. And yes, a lot of us are trying to do what we can.
I feel for the people in the mid-west floods, but I know that they'll come back. It's what we do.
Be well,
Tag

Personally, I'd like us to do EVERYTHING to both increase supply AND develop alternatives.
Any program that fears the market isn't a program I'd invest in.
BTW, I DO worry about my pension, but aside from that, I'm in conservative (on so many levels)mutual funds.
So basically, I've thought about it.
Be well,
Tag

Precisely the point, if you want the market to develop alternatives to petroleum, then the alternative better be able to make a positive return with oil selling below $50-60/brl, because OPEC can. My reason for posting the BP article was to point out that according to BP, we are not peaking as a result of the lack of global oil reserves. Rather OPEC countries are limiting production and limiting supply. These states are not investing to increase production capacity. That could change, and if it does, the price of oil will drop as market supply increases.

I don't like market manipulation either, but it's the OPEC countries that are manipulating the global oil market to their advantage. Their manipulation can go both ways, they can limit supply, or they could choose to increase supply if it served their interests.

The reason people are complaining is because gas is selling at $4/gallon, and it hurts. I'm not driving my family around in our SUV anymore, I drive my Honda Civic. I can afford $4.00 gallon and a 34 MPG average better that $4.35/gallon gas and a 19.8 MPG average. (My SUV burns premium – ouch) If gas was selling below $2.50 gallon again, I believe the majority of people would stop complaining.

Hypothetical question -- if synthetic fuel made from algae, methane, switch grass (name your poison) is selling at $2.50/gallon because they can't make a profit below that price point, but petroleum fuel is selling at $1.70 gallon because the market is flush with oil and it’s trading at $40 barrel again, do you really think consumers will continue to buy synthetic? I do not, I believe our society has a short memory. I'm personally convinced that is going to happen again (BTW, I may be the only one), and I like to see a strategy to deal with it when (if) it occurs.

If oil is selling at $40/ barrel, a $60 floor in the US would cause gas to sell around $2.50/gallon. Thus both petroleum and alternatives would reach equilibrium around $2.50/gallon -- and prices would stabilize. That would take away OPEC's ability to manipulate the oil market. If OPEC tries to limit production, and cause oil prices to spike, then people would just purchase synthetic.

Yes, in this example $2.50/gallon for gas is more than $1.70, and it is a $.70 per gallon price premium (tax) that consumers must pay as a direct result of my hypothetical floor, but the overall effect is to stabilize price. When gas was selling at $2.50 gallon it did not have a significant impact on our quality of life. I think most of us agree that this is not the case with gas selling north of $4.00 a gallon. We are beginning to see the tale-tale signs of stagflation.

I'd like to see us find a way to stop the drastic price fluctuations at the pump – and I believe the present spike is a direct result of OPEC limiting production, not because we are running out of oil. The only realistic way I see to check OPEC’s ability to manipulate the petroleum market is if we develop alternatives to oil, and I think we all agree on that. Where we differ is on the future cost of a barrel of oil. You think is will remain above $60 a barrel, I do not. I also think any synthetic fuel new start will not able to compete (i.e., make money and return a dividend to investors) unless petroleum stays at or above $50-60 a barrel.

Bottom-line, the US government sets Policy, they don’t refine oil. They also won’t produce alternative energy products or build the necessary infrastructure to support them. That’s the job of capital markets. US Government Energy Labs invest in energy research to leverage the capital markets. That is, they prototype technology to prove to the market that it is viable. If it is, then it is the market that invests the capital that is necessary to make it a reality. The market is not cash constrained as long as investors are convinced their will be a positive return on their investment. That is how change (progress) can happen so rapidly in a market economy.

OK, that's enough "Rooster Philosophy" for one day, time for more important endeavors like spending time with family.

Happy Father Day's to all!


Cheers!

Does any one have the link for the Hydrogen generator that one of the members mentioned????

If we are waiting for Congress to act, we could be waing a LONG time. I experienced the oil embargo of the seventies when gas tripled from 25 cents to 75 cents (gasp) a gallon. Price caps don't work, neither will a floor.

John,

I agree with you whole heartedly on price caps. All they do is limit supply and cause shortages, as occured in the 70s. However, I would be curious to know why you would be against a $50-$60 price floor on a barrel of oil. If you assume the floor is set at $60 a barrel, and the price of oil on the world market stays above $60/barrel as folks predict, it will have zero impact. It would only kick in if oil falls below $60/barrel on the world market.

So what specifically do you think would happen if the price of oil fell below $60 a barrel, and the price cap then kicked in? What market havoc to you foresee it causing? All I see it doing is limiting demand for oil by keeping the price for gas between $2.00 and $2.50 a gallon, which will help the alternatives gain a foothold in the market. So what do you think I'm missing?

Sorry for the delayed reply.
One tease on the Sunday news today said "you pay $2 for gas and we (the Dems) will pay the rest". It immediately reminded me of you, somehow (g). The "problem" as I see it (and I may be alone) is that the "we" is you and me. It sounds like you have some support in Congress, but God willing, we won't come to that. As to whether or not it's a good idea, all I can say is that the two people who were on supporting the idea, actually said "just call it a tax cut or a stimulus package" like DubYuh would ( I put in the DubYuh part). Every single one of the business guys/gal stridently said it was a "horrible" idea and they are actually a very diverse group as far as their politics go.
The MIT Modern Technology blog posts every weekday on the latest advances, and almost daily, one of the posts say "so the inventor has started his own company....." It's great to be an American.
I guess we'll have to agree to disagree, because I don't see either of us changing our opinion. We'll see how it turns out after Nov.
Be well Bud,

Tag

John,

I agree with you whole heartedly on price caps. All they do is limit supply and cause shortages, as occured in the 70s. However, I would be curious to know why you would be against a $50-$60 price floor on a barrel of oil. If you assume the floor is set at $60 a barrel, and the price of oil on the world market stays above $60/barrel as folks predict, it will have zero impact. It would only kick in if oil falls below $60/barrel on the world market.

So what specifically do you think would happen if the price of oil fell below $60 a barrel, and the price cap then kicked in? What market havoc to you foresee it causing? All I see it doing is limiting demand for oil by keeping the price for gas between $2.00 and $2.50 a gallon, which will help the alternatives gain a foothold in the market. So what do you think I'm missing?


Rooster,

In theory, your price floor might have the desired effect on the consumer of directing them to more economical vehicles, but I think you are considering the effects in a static/clean environment where nothing else is changing and there are no other pressures on the market/oil companies. In essence, we already have your "price floor", you just don't see it. We are already providing subsidies to oil and automotive companies in the billions of dollars. Take a look at http://www.ilsr.org/carbo/costs/truecosts1.html. This is a 1996 study on incentives given to oil companies. The tax law is so convoluted, an actual amount of subsidy can not be penned down. In the intervening 12 years, I doubt that the subsidies have decreased at all. Here is another one: http://www.lightparty.com/Energy/PriceOfGas.html. Back in 1996 it quotes the "real" price of gas betwen $5 and $15 dollars.

Sure the data is out of date, but it illustrates a simple point that Tagamet has been attempting to make, if the government simply gets out of the way, the market will take care of it. Creating an artificial price floor is nothing more than providing an already over subsidized industry with more subsidies. We would already be off of petroleum as a main source of fuel, if we weren't subsidizing it.

Many of the previously posted concerns are well taken based on the notion that there is plenty of oil and that OPEC is in a position to simply increase production in order to lower the price per barrel. This of course is based on the faulty premise that there actually is MORE oil. Most experts agree, we are running out of oil and that the oil that is still available is becoming increasingly more difficult and expensive to get at. OPEC will not be in a position to undercut our efforts. And even if they were, what about climate change secondary to fossile fuel burning? We simply need to get off the oil tit, and fast.
Tim

Just today OPEC "decided" to start helping the supply side of the gas equation. We obviously need to get off oil, but I don't think that "peak oil" is the best reason. The Bakken pool is untapped and those states ARE going to tap it. If we could drill off our own continental shelf, it'd increase supply too. If not, we can always buy it from China (who is already drilling there).
Come on Volt. We need you.

Dr. Mark said, "And to address the ILLEGAL nature of OPECs price-fixing, we should slap an import tax on every barrel shipped from those countries."

While the US has laws to prevent price fixing (Sherman Anti-trust), I'm not aware of any such law for international commerce. Is there such a law or are you extrapolating based on US law?

I agree with the premise of putting a bottom on the price of oil. However, the energy problem is of our own creation, not OPEC. Who could have guessed that the Arab Oil embargo of the 1970s showed just how "dependent" we are on OPEC? The often disparaged Jimmy Carter figured it out way back then but every president since, starting with Reagan, hasn't had a clue or has bowed to political pressure from Big Oil.

OPEC just exploits are stupidity. Seems very compatible with American capitalism to me.

I felt I had to justify proposing a protective tariff, but you are right, we could do this at any time we thought it would be good for our economy, environment, national security, or even just 'cause we felt better about it. Since I believe in Michael Porter's "Competitive Advantage of Nations" anything that thwarts Free Trade is less than ideal, but in this case an oil tariff just restores the balance that absolute Free Trade is supposed to achieve. Either way, it's a good idea, and under the circumstances no other country has any basis to object to a protective tariff.

Several alternative fuels are economically viable at >$50/brl, so the government could accomplish ALOT by enacting a price guarantee at $80/brl and would probably never collect a dime on it. They could actually do NOTHING and still benefit the country. It's a no-brainer.

Remember for the last three years of WWII Hitler ran his whole country on gas processed from coal, and thanks to Jimmy Carter's Syn-Fuels program we built several coal-gasefication plants in the early 1980's and established the competitve price (break even point) at about $40/brl. As soon as OPEC saw that price, crude dropped from $38/brl to $22 in less than 6 months. Another interesting fact is that crude was under $25/brl on 9-11. You can guess that the next time we get attacked it will be with MORE EXPENSIVE weapons.

Jet Blue recently tried to build a coal-gasefication plant to get their jetfuel prices down and got so tied up in Federal red-tape that they've gotten nowhere to date. If our Government won't do anything to help we have to at least get them out of the way !!

Hitler took less than a year to get his military completely off oil, and that's what we need right now. The U.S. government could start the ball rolling by producing their own oil for military and government vehicles; then it would be cheaper for Jet Blue and others to follow suit.

Of course, it's more economical and CAN BE much less polluting (including CO2) to generate electricity directly from the coal and drive our Chevy Volts around on it, but E-Flex won't have a real impact on oil consumption for another 5-10 years and we can't wait that long. There are 240 million vehicles in the U.S. that burn liquid fuel and even at 10 million Plug-in Hybrids a year, that's 24 years.

I felt I had to justify proposing a protective tariff, but you are right, we could do this at any time we thought it would be good for our economy, environment, national security, or even just 'cause we felt better about it. Since I believe in Michael Porter's "Competitive Advantage of Nations" anything that thwarts Free Trade is less than ideal, but in this case an oil tariff just restores the balance that absolute Free Trade is supposed to achieve. Either way, it's a good idea, and under the circumstances no other country has any basis to object to a protective tariff.

Several alternative fuels are economically viable at >$50/brl, so the government could accomplish ALOT by enacting a price guarantee at $80/brl and would probably never collect a dime on it. They could actually do NOTHING and still benefit the country. It's a no-brainer.

Remember for the last three years of WWII Hitler ran his whole country on gas processed from coal, and thanks to Jimmy Carter's Syn-Fuels program we built several coal-gasefication plants in the early 1980's and established the competitve price (break even point) at about $40/brl. As soon as OPEC saw that price, crude dropped from $38/brl to $22 in less than 6 months. Another interesting fact is that crude was under $25/brl on 9-11. You can guess that the next time we get attacked it will be with MORE EXPENSIVE weapons.

Jet Blue recently tried to build a coal-gasefication plant to get their jetfuel prices down and got so tied up in Federal red-tape that they've gotten nowhere to date. If our Government won't do anything to help we have to at least get them out of the way !!

Hitler took less than a year to get his military completely off oil, and that's what we need right now. The U.S. government could start the ball rolling by producing their own oil for military and government vehicles; then it would be cheaper for Jet Blue and others to follow suit.

Of course, it's more economical and CAN BE much less polluting (including CO2) to generate electricity directly from the coal and drive our Chevy Volts around on it, but E-Flex won't have a real impact on oil consumption for another 5-10 years and we can't wait that long. There are 240 million vehicles in the U.S. that burn liquid fuel and even at 10 million Plug-in Hybrids a year, that's 24 years.


Yes, we can get off of foreign oil by using coal-to-gas technology. We can also do it with plug-in hybrids and BEVs. Throw in 2nd generation biofuels and there are quite a few ways to get it done.

With that said we are not doing it because our economy is tied up in the global oil market. If we destroy that market it will hurt us much worse than importing oil. Just Google the petrol dollar and you will get a good handle on how oil is intertwined with our economy.

I have always said that there are many solutions that would make us independent and the very fact that we are not doing them in a huge way speaks volumes. It speaks of the actual complexities of the global market we are caught up in. We need a great energy plan that gets us to a much more stable financial situation that deals with not only the technical issues but the equally important geopolitical ones. Let's start the Apollo Energy Plan project. Everything else is a silly joke. When I listen to all the ridiculous things that people are talking about like drilling ANWAR or tax holidays I just shake my head. Absolute waste of valuable time that will only increase the coming pain. I have resolved myself to the fact that not only is this pain coming but it’s required for significant change. Hold on to your hats.

Yes, we can get off of foreign oil by using coal-to-gas technology. We can also do it with plug-in hybrids and BEVs. Throw in 2nd generation biofuels and there are quite a few ways to get it done.

Solar thermal, off-grid solar photovoltaic, PHEV, wind and cellulosic ethanol could make a huge difference.

But this would take government leadership (not likely under Republican rule), not just free market forces. Remember, the vested interests that oppose the free market are deeply invested and entrenched. I prefer free market when it has a chance but we would be stupid to trust the oil companies, coal companies, car companies and energy utilities to endorse a free market. They have everything to lose. I am amazed at the amount of cellulose rotting in my yard.

From Wikipedia on cellulosic ethanol:
"The raw material is plentiful. Cellulose is present in every plant, in the form of straw, grass, and wood. Most of these "bio-mass" products are currently discarded. It is estimated that 323 million tons of cellulose containing raw materials that could be used to create ethanol are thrown away each year. This includes 36.8 million dry tons of urban wood wastes, 90.5 million dry tons of primary mill residues, 45 million dry tons of forest residues, and 150.7 million dry tons of corn stover & wheat straw. Transforming them into ethanol using efficient and cost effective hemi(cellulase) enzymes or other processes might provide as much as 30% of the current fuel consumption in the United States — and probably similar figures in other oil-importing regions like China or Europe."

Does any one have the link for the Hydrogen generator that one of the members mentioned????

Mythbusters tried it. It did nothing to help. I will say that it COULD work if the electronics powering the generator were correct. The people that know have been killed or bought off.

Solar thermal, off-grid solar photovoltaic, PHEV, wind and cellulosic ethanol could make a huge difference.

But this would take government leadership (not likely under Republican rule), not just free market forces. Remember, the vested interests that oppose the free market are deeply invested and entrenched. I prefer free market when it has a chance but we would be stupid to trust the oil companies, coal companies, car companies and energy utilities to endorse a free market. They have everything to lose. I am amazed at the amount of cellulose rotting in my yard.

From Wikipedia on cellulosic ethanol:
"The raw material is plentiful. Cellulose is present in every plant, in the form of straw, grass, and wood. Most of these "bio-mass" products are currently discarded. It is estimated that 323 million tons of cellulose containing raw materials that could be used to create ethanol are thrown away each year. This includes 36.8 million dry tons of urban wood wastes, 90.5 million dry tons of primary mill residues, 45 million dry tons of forest residues, and 150.7 million dry tons of corn stover & wheat straw. Transforming them into ethanol using efficient and cost effective hemi(cellulase) enzymes or other processes might provide as much as 30% of the current fuel consumption in the United States — and probably similar figures in other oil-importing regions like China or Europe."

The only fuel shown there that can be used in the 240 million cars we already have is cellulose ethanol, so adding gasified coal would help. An interesting tidbit I discovered last week, ethanol is 130 octane, and E85 (85% ethanol) is 105 octane. We need to get even the Volt's generator engine optimized for high compression to make use of the high octane.

We all agree that the ideal would be a 300 mile EV that recharges in 10 minutes, but due to battery size, weight, cost and performance limitations we need to compromise somewhere and GM has picked that point right on the money. A 40-mile range plug-in series hybrid can charge effectively on 115V 20A circuits, the weight in NiMH or Lithium-ion is about one large to obese person and doesn't kill the performance of a reasonable sized car, and the battery cost is about $5000 vs. over $20k.

So, a 40-mile PHEV still uses gas, at about a 70% reduction, which if phased in over 20 years (meaning we can't build 200 million PHEVs in one year) would keep oil consumption manageable as India and China move from bicycles to mopeds, to superbikes, to small cars, to SUVs. When 3 billion people are consuming as much fuel as 300 million Americans are, you need to drop consumption 90% just to break even. We can ride this curve down gracefully, and the oil companies won't go out of business. So one can hope that just maybe they know that the time has come to let the PHEVs bring about this controlled reduction in demand. Otherwise we WILL go to biofuels and coal gasification which could shut them down completely.

The only fuel shown there that can be used in the 240 million cars we already have is cellulose ethanol, so adding gasified coal would help. An interesting tidbit I discovered last week, ethanol is 130 octane, and E85 (85% ethanol) is 105 octane. We need to get even the Volt's generator engine optimized for high compression to make use of the high octane.


How about butanol? It does not need an E85 modified engine, it can be made from anything ethanol is made from and yields 42% more energy. One of the byproducts is even hydrogen which should keep the fuel cell freaks happy.

Where did you get your figures for the octane rating of ethanol? The rating I have seen was 92.

Are PHEV
Hopefully with the sounds of gasping for air. Only not to find it!:)

How about butanol? It does not need an E85 modified engine, it can be made from anything ethanol is made from and yields 42% more energy. One of the byproducts is even hydrogen which should keep the fuel cell freaks happy.

Where did you get your figures for the octane rating of ethanol? The rating I have seen was 92.

Wikipedia for one shows (R+M/2) octane of 116 for Ethanol (87 for n-butanol), but RON (the R number) Octane which applies to controlled engine conditions like a generator would have is 129. Lots of references are made to WWII when the U.S. made 130+ octane Avgas with ethanol (and other enhancers), and octane booster kits of course claim their ethanol injection systems deliver 130 octane.

The point I was trying to make (and didn't state very well) is that much more efficiency can be squeezed out of a genset engine due to running under very controlled conditions. So especially with new fuels like E85 readily available we should be modifying existing engines to take advantage of this. At the very least the compresson ratio can be increased. I believe the Volt is a turbo-diesel setup, yes? This is good.

So, not only can the on-board genset always operate at the ideal efficiency point, but because it runs under controlled conditions the parameters can be pushed without generating knocking or unwanted emmissions. If we could get to 45% efficient on-board electricity generation; this would decrease the motivation to buy and carry alot of batteries, since electric power plants are about 50% efficient. A typical car in average use gets about 12-15% efficiency; so the biggest benefit of the series-hybrid may be it's gasoline powered efficiency, even more than its ability to use grid power.

Wikipedia for one shows (R+M/2) octane of 116 for Ethanol (87 for n-butanol), but RON (the R number) Octane which applies to controlled engine conditions like a generator would have is 129. Lots of references are made to WWII when the U.S. made 130+ octane Avgas with ethanol (and other enhancers), and octane booster kits of course claim their ethanol injection systems deliver 130 octane.

The point I was trying to make (and didn't state very well) is that much more efficiency can be squeezed out of a genset engine due to running under very controlled conditions. So especially with new fuels like E85 readily available we should be modifying existing engines to take advantage of this. At the very least the compresson ratio can be increased. I believe the Volt is a turbo-diesel setup, yes? This is good.

So, not only can the on-board genset always operate at the ideal efficiency point, but because it runs under controlled conditions the parameters can be pushed without generating knocking or unwanted emmissions. If we could get to 45% efficient on-board electricity generation; this would decrease the motivation to buy and carry alot of batteries, since electric power plants are about 50% efficient. A typical car in average use gets about 12-15% efficiency; so the biggest benefit of the series-hybrid may be it's gasoline powered efficiency, even more than its ability to use grid power.

For now, I'll go with your octane rating, but the BTU rating is lower. That is why you take a 20% hit in fuel economy with E85 vs gas.

The proposed engine is an E85 modified gas not diesel engine. By increasing compression to optimize for E85, you will preclude the option of NOT using E85 which is unacceptable since E85 is not available everywhere. It must still run on regular gas as well as E85. The fact is that it will run on 100% butanol when it becomes available as well. In fact, I use butanol about half the time in my lawnmower to help clean the deposits left by the gasoline. It is expensive, but lawnmowers don't use much anyway and I have to have it for other things as well as fuel.

How will OPEC react to a PHEV?

Like the guy on the right:

http://www.officefun.com/Images/ProductsImages/GW8103_zm.jpg

Hopefully they will reply with bankruptcy filings. Then go back to eating sand.

Ha ha, China and India's demand for oil alone will make any of the US's oil conservation efforts look like a pimple. Besides that, Mexico, one of the US's main oil suppliers peaked about 10 years ago and in the next 7 or 8 years will no longer have any surplus to export. This is the trend almost everywhere but a few OPEC countries.

Besides that, only about half of the oil we consume is going into cars. The rest is for heating, plastics, aircraft, heavy equipment and long haul trucks.

OPEC is set for a very very long time.

The only real hope for making OPEC go back to eating sand is a breakthrough in cellulosic bio fuels allowing us to make $2 (real cost, without subsidies)/gallon (ethanol, methanol, butanol, or something liquid we can put in our ICE engines) almost anywhere in the world, hopefully on a decentralized basis, in large scale (like unimaginably massively large).

Wildcats & Tigers

http://www.theoildrum.com/node/2523

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Wildcats & Tigers
http://www.theoildrum.com/node/2523

That's pretty funny:

...their ultimate aim is to lock-down a secure share of oil for their own domestic consumption. Sullivan documents their willingness to pay a premium beyond what a rational market actor would pay to secure these equity interests to ensure their future supply at the expense of others.
"Rational market actor".
He wrote this in July 2006, when the price of oil was in the $60's, and "experts" were saying it was bound to drop back down to the $30's and $40's as higher prices caused more production.
Two years later, the price of oil hit $147.27
Who's the rational market actor now, Major ? Care to wager on oil prices for the next 30 years ?

China is also busy locking in natural gas supplies for decades to come:

China's oil giant Sinopec Group has signed a US$70 billion oil and natural gas agreement with Iran, which is China's biggest energy deal with the No. 2 OPEC producer. Under a memorandum of understanding signed Thursday, Sinopec Group will buy 250 million tons of liquefied natural gas over 30 years from Iran and develop the giant Yadavaran field. Iran is also committed to export 150,000 barrels per day of crude oil to China for 25 years at market prices after commissioning of the field. Iran's oil Minister Bijan Zanganeh, who is on a two-day visit to Beijing pursuing closer ties, said Iran is China's biggest oil supplier and wants to be its long-term business partner.
http://www.chinadaily.com.cn/english/doc/2004-10/31/content_387140.htm


If the U.S. or Israel ever invade Iran, they might have to face the wrath of China. Can you say "dump $2 trillion U.S dollars" ? They could destroy the U.S. economy and restructure the global economy in one month. Cheney and Netanyahu didn't believe it/didn't care, but many others did. Plus, the Persians can pretty much destroy anything within the Persian Gulf...