http://money.cnn.com/2008/10/24/markets/oil/index.htm?postversion=2008102415

Quote :

"(OPEC) had a chance here to either help the world economy, or help themselves, and they did neither," said Peter Beutel, oil analyst with Cameron Hanover. OPEC cut: OPEC said the cut was necessary because the global financial crisis has caused oil demand and prices to plummet. "The financial crisis is ... dampening the demand for energy, in general, and oil in particular," said OPEC in a statement released after the meeting concluded. "Oil prices have witnessed a dramatic collapse - unprecedented in speed and magnitude.""

A time like this and they want oil prices to go back up. If shit gets worst, I think OPEC itself will cease to be. Oil production will go back to being managed by each independent country.

10/24/2008 6:56:49 PM

OPEC is a cartel that is out to protect it's own interests. No surprises that they are trying to raise prices. What is surprising is that prices fell despite a 1.5 million barrel-per-day cut they agreed upon.

Iran, Venezuela and UAE will likely be the hardest hit from these falling oil prices. Ultimately, they will lead to the ouster of Ahmadinejad and Chavez, since their economies were already in the shitter even when oil was at $150 / barrel.

Cheaper gas + declining influence of our enemies = good for the US

[Edited on October 24, 2008 at 7:02 PM. Reason : 2]

10/24/2008 7:01:17 PM

Quote :

"What is surprising is that prices fell despite a 1.5 million barrel-per-day cut they agreed upon."

Not at all. Traders simply did not find the cut credible. Venezuela and some others are going to be under immense pressure from their budget shortfalls to cheat on the quota. Meanwhile, Saudi Arabia and some others do not believe the high prices can be sustained anyway and therefore want to both take advantage while they last and push prices down to halt demand destruction. And when a few bad apples cheat, the other members become insensed and angry that their responsible production cuts are being taken advantage of.

Afterall, we have been through this all before. The severe 1981 recession cut worldwide oil demand sharply and most OPEC members cheated on their quota. Saudi Arabia alone suffered the dramatic cuts necessary to keep the price high. By 1986 U.S. oil consumption was down 22% and due to the low quota required to keep prices high Saudi Arabia was on its way to no longer being a major oil exporter. As such, Saudi Arabia gave up, abandoned its own quota, flooded the world with cheap oil, and spawned the SUV, killed the electric car, and bankrupted the world's oil producers.

Let us see how things going this time. I doubt it would go the same way this time thanks to China/etc, but most of OPEC is scared stiff of repeating the 80s and might act accordingly, restoring low oil prices sooner rather than the many years it took last time.

10/27/2008 2:51:05 AM

Dear OPEC,

Please cut production. And please hold it down. We just... don't need you any more.

10/27/2008 10:18:43 AM

^ No thx. In times like these we need some cheap energy.

If you really want to keep the cost of fossil fuels high in order to help transition over to nuclear / renewables / energy efficiency measures, you should advocate higher gas taxes or carbon taxes. Taxing gas to reflect it's externalities would form a more efficient market and create revenue, whereas restricting supply would funnel more money into oil-exporting countries that we don't get along with.

10/27/2008 10:35:30 AM

There was a blog post by that same guy that talked about the conspiracy theory in the "Impressive U.S. Economy" thread (he was some well-respected professor of geology or something) that said a production cut will only send prices even lower because we demand is on the way down and that just proves that they are capable of producing that oil should demand go back up (or something like that). It's basically speculation that works positively this time.

I also have to give LoneSnark credit on calling that oil prices would plummet. I thought that we wouldn't see anything below $70 a barrel until oil was no longer relevant, but it came crashing down through $70 even quicker than it shot up to $140. It's just a shame that it had to come at the expense of world economic growth.

^ That's actually a pretty insightful post. It hits a lot of concepts I'm studying in my environmental economics class right now.

[Edited on October 27, 2008 at 10:42 AM. Reason : ]

10/27/2008 10:40:22 AM

^Thanks. Some people on here were pretty shocked when I, a free-market guy, came out in favor of higher taxes on gas. But the reality is that we spend hundreds of billions of dollars in "energy security" costs, basically keeping the oil flowing in volatile regions and forming uneasy alliances with terrorist breeding grounds like Saudi Arabia. And of course there are environmental costs to consider, which are difficult to put a number on.

Taxing a basic commodity like gas is never a political winner, in this country or otherwise. Obama's way around that is to tax profits, which IMO is the wrong way to go. Besides, oil company profits are gonna dry up in the next few years as prices drop. He'll have to pay for his "green economy" initiatives somehow. It'll be interesting to see where he gets the revenue. The obvious choice would be at the pump.

10/27/2008 10:50:25 AM

Quote :

"But the reality is that we spend hundreds of billions of dollars in "energy security" costs"

If that was how the money was spent then they were idiots. No one had to invade Iraq to get Sadam to export oil. All one had to do was lift the embargo. As such, while you and those in charge may feel like the massive outlays in the middle east are buying oil security, it does not make it so.

10/27/2008 10:54:10 AM

As politically suicidal as a higher gas tax would be at the moment, I would support a politician with the bravery to push something like this because it IS needed. Obviously that means I'd be willing to pay a slightly higher tax. We've already weathered the storm of $4.00/gal gas. The government could hike the gas tax and provide funds for a lot of things we need right now.

As long as the money was going to something useful, that is. Something like a subsidy to develop a revolutionary electric car (maybe help GM put the Volt into production ASAP) or to update the nation's power grid to be able to transport electricity from one part of the country to another more efficiently. There's so many things the government could be doing to help with this energy problem and drilling is one of the last solutions I want to see put in place. It's a short term solution to a long term problem.

10/27/2008 10:59:48 AM

Quote :

"If that was how the money was spent then they were idiots."

I see that you in fact are aware of who has been running the country for the last 8 years.

10/27/2008 11:09:12 AM

Quote :

"^ No thx. In times like these we need some cheap energy. If you really want to keep the cost of fossil fuels high in order to help transition over to nuclear / renewables / energy efficiency measures, you should advocate higher gas taxes or carbon taxes. Taxing gas to reflect it's externalities would form a more efficient market and create revenue, whereas restricting supply would funnel more money into oil-exporting countries that we don't get along with."

I completely agree. My comment was more so just tailored to the topic of this thread.

If I was the president of the US + EU + Japan + all our other allies, then I would immediately implement a schedule for an across-the-board gas tax that ramps up over time that is basically so severe that it renders gasoline economically useless by 2030.

But hell, if our leaders are so shallow that they can't manage something like that (they can't), then let OPEC embargo us.

Algae, here we come!

10/27/2008 11:14:57 AM

A subsidy for GM? GM has burned through its own cash, why would you like them to do it some more with our cash? And if you know of some power grid problem, why don't you build it?

While I support a higher gas tax, I strongly reject your ideas on how to use it. Here is a much better idea: use the money from an economy wide carbon tax to eliminate the most regressive tax in history, the payroll tax. You cannot fix this problem by further canibalising the private economy. How are people supposed to invest in more power lines or buy electric cars if all the money that could do it at a profit is taxed away to be wasted on teacup museums?

10/27/2008 11:15:21 AM

A $7,500 rebate has already been proposed by Obama for plug-in hybrids. That's probably as far as his administration will go in terms of subsidizing electric cars.

I really hope our government doesn't try to get involved in R&D of green technology. That has [FAIL] written all over it. However, they can help by investing in the infrastructure of maturing technologies such as a more efficient electrical grid or new nuclear power plant construction.

I'd love to see the payroll tax go away, but lets be realistic. This "Green Economy" stuff is a centerpiece of Obama's campaign. Expect some Keynesian deficit spending in green tech and infrastructure over the next few years as we fight our way out of a recession. If you are a public works contractor specializing in renewable energy, you'll probably cash in over the next few years.


[Edited on October 27, 2008 at 11:29 AM. Reason : 2]

10/27/2008 11:21:39 AM

A subsidy provided to GM specifically and only to hurry production on the Volt (which will be revolutionary at some point in the future) would decrease the nation's dependence on foreign oil (possibly 100% since we already produce half the oil we consume), reduce the deficit, make the car more affordable to consumers faster than GM could do alone, reduce environmental costs on an epic scale, and probably a lot of other things that I can't even fathom. This car, if people legitimately go for it, is capable of being the first revolutionary machine of the 21st century.

Updating the power grid to allow electricity to go from one part of the country to another would provide more economical distribution of energy, more reliable energy in the event of catastrophe, allow implementation of wind farms in the Plains states (which would also provide jobs), among other positives.

I think you're underestimating the phenomenal boon to the economy that comes alongside adoption of independent and renewable energy. It would create domestic jobs, reduce national security costs while simultaneously increasing national security, decrease our massive trade deficit and possibly create a trade surplus, reduce harm to the environment, and create the opportunity for long-term sustainable growth. We need to clamp down and create a Manhattan Project focused on energy. We can do it, but the longer we wait, the more we'll have to pay.

10/27/2008 11:29:04 AM

Quote :

"I think you're underestimating the phenomenal boon to the economy that comes alongside adoption of independent and renewable energy. It would create domestic jobs, reduce national security costs while simultaneously increasing national security, decrease our massive trade deficit and possibly create a trade surplus, reduce harm to the environment, and create the opportunity for long-term sustainable growth. We need to clamp down and create a Manhattan Project focused on energy. We can do it, but the longer we wait, the more we'll have to pay."

This sounds like a talking point from the Obama campaign. Be careful and look at history as a guide. The government is simply not as efficient as the free market when it comes to allocating resources and picking winners. What you'll see if we try this green "Manhattan Project" is lots of money thrown at a bunch of pet projects from powerful Senators. If we tried this back in the '90s, the government would have thrown billions of dollars into hydrogen fuel cells, back when they were all the rage. That would have been wasted money because fuel cells and particularly hydrogen as a mobile fuel source is simply not viable.

When the government gets in the position of picking emerging technologies and investing in them, there is a near-certainty of waste and corruption. You don't want to go that route.

10/27/2008 11:37:57 AM

Quote :

"because fuel cells and particularly hydrogen as a mobile fuel source is simply not viable"

Oh not this argument again. Its already been discussed thoroughly in several threads that hydrogen is on the cusp of being viable. Fuel cells are becoming more advanced especially with the implementation of nano technology in housing the gas tanks.

10/27/2008 11:42:42 AM

yeah yeah yeah, I've heard that before. Lets see... 10 years ago? 15? It's always the same: 'Just around the corner'. bullshit. We can only hope that no other congressmen buy into that hype. Not to derail this thread, but hydrogen is a joke as a mobile fuel source. It's too difficult to store, too expensive to produce, too tough to transport, and to top it off it has a terrible energy density.

[Edited on October 27, 2008 at 11:47 AM. Reason : 2]

10/27/2008 11:47:18 AM

Quote :

"And if you know of some power grid problem, why don't you build it? "

Sadly he (and major energy companies) are not able to spend the massive amounts of capital that would be required to update the power grid.

It's a sad case of an overabundance of federal and (mainly) state regulations on the project that makes it no longer feasible. Building it would allow the transfer of energy from the great plain states to the coasts where the vast majority of the population lives. Currently the OC of building it remains too high not because of it's future market value but due to the burden of regulations.

10/27/2008 12:14:14 PM

Quote :

"While I support a higher gas tax, I strongly reject your ideas on how to use it. Here is a much better idea: use the money from an economy wide carbon tax to eliminate the most regressive tax in history, the payroll tax."

Gore plan.

Tax what you burn, not what you earn.

10/27/2008 12:51:01 PM

Quote :

"I really hope our government doesn't try to get involved in R&D of green technology. That has [FAIL] written all over it."

why?

10/27/2008 12:53:55 PM

^

Quote :

"Be careful and look at history as a guide. The government is simply not as efficient as the free market when it comes to allocating resources and picking winners. What you'll see if we try this green "Manhattan Project" is lots of money thrown at a bunch of pet projects from powerful Senators."

You're gonna see a lot of wasteful spending by the government. Solar power plants in areas where it's not feasible, methane digesting trash dumps that really just digest billions of dollars in tax money, geothermal pilot plants that go nowhere, etc. That's just how the government operates, particularly when you have a bunch of old congressmen who don't really have much of an idea of the realities of renewable energy but all have their own pet projects they "need" to fund.

10/27/2008 1:02:07 PM

I think at this point, the market has failed us as far as valuing the costs goes and now it's been left up to the government to step in. Private companies, like oil companies, just have too much clout over any type of start-up. GE has been doing a good job with wind power and other alternative energies, but it's not enough. At this point, we NEED the government to step in because they're the only entity large enough to have the type of impact that we need. If a couple billion gets misspent, then so be it. But we stand to gain much more by getting on this problem and revolutionizing the way we view energy.

[Edited on October 27, 2008 at 1:06 PM. Reason : ]

10/27/2008 1:05:12 PM

The gov. was pretty terrible in developing nuclear technology, and the space craft too.

10/27/2008 1:17:03 PM

Actually, the government did a fairly good job of developing nuclear technology back in the 50s. It just never became a viable market alternative because fossil fuels have always been so cheap in comparison.

They also did a good job developing the first spacecraft back when NASA was properly funded and the space shuttle has performed its function for the most part. Anytime you're doing cutting edge stuff like they've been doing, there are going to be failures at some point. NASA has gotten too ambitious for its budget though and that's why the Orion spacecraft is falling on its face.

10/27/2008 1:25:06 PM

Moron was being sarcastic.

Its funny how private companies like Virgin Galactic can get payloads and people into space for much cheaper than NASA. Same with private nuclear power plants being more cost-efficient than state-owned ones.

I can understand the imperative to develop alternative energy sources, but we don't even know which ones are gonna win out in the marketplace. At least with nuclear power and space exploration, we had a common vision and set goal. Throwing money and resources at the problem isn't the answer if we don't even know which technologies to fund.

10/27/2008 1:37:34 PM

Quote :

" We need to clamp down and create a Manhattan Project focused on energy. We can do it, but the longer we wait, the more we'll have to pay. "

This is exactly what we need to get the ball rolling

But more specifically, Solar energy

Solar energy is the only renewable resource that can potentially provide the energy needed to run the world and help reduce CO2 emmisions.

Quote :

"I really hope our government doesn't try to get involved in R&D of green technology. That has [FAIL] written all over it. However, they can help by investing in the infrastructure of maturing technologies such as a more efficient electrical grid or new nuclear power plant construction."

We need the governments money because there is not enough of it to get to where we need to be with renewable resources. Research/spending on renewable energy is 30 Million a year, which is pathetic. That is chump change to what health care (Billions and Billions) is getting.

We need energy to progress in every other facet of research, as well as, living in general. Look at africa as an example of a country with very little energy.

Quote :

"This sounds like a talking point from the Obama campaign. Be careful and look at history as a guide. The government is simply not as efficient as the free market when it comes to allocating resources and picking winners. What you'll see if we try this green "Manhattan Project" is lots of money thrown at a bunch of pet projects from powerful Senators. If we tried this back in the '90s, the government would have thrown billions of dollars into hydrogen fuel cells, back when they were all the rage. That would have been wasted money because fuel cells and particularly hydrogen as a mobile fuel source is simply not viable. When the government gets in the position of picking emerging technologies and investing in them, there is a near-certainty of waste and corruption. You don't want to go that route. "

You basically described research, in that not every idea is going to work. To quote Nathan lewis, you need 100 bad ideas just to get the 1 good idea that works. i.e. research

I agree completely about the little pet projects of senators. Everyone's got alterior motives when that much money is on the line. hydrogen cells are crap, ethanol from corn is crap, every single renewable resource is crap (in supplying the world with a constant source of energy and keeping CO2 emmisions down) except for solar energy.

10/27/2008 1:38:50 PM

I thought he might have been sarcastic, but I felt like it was important to point out that he was wrong either way in case someone actually thought he was serious.

Virgin Galactic does sub-orbital space rides for rich people. If this was what NASA limited itself to, there would be no space program because we wouldn't even be able to launch rockets away from the planet. As for nuclear power plants, they can work in certain areas. The government probably built them in places where the market wouldn't allow (which is stupid in its own right) so it's only natural that they would be less cost efficient (why would the state run one if a private company thought it could do better?)

While I agree with you that the government is not the most efficient way to develop new technologies, it is the best way to develop technology quickly. And there are several technologies that will have a high probability of working in the near future. These include wind power and electric cars among others. Wind power could be one of the greatest resources available to our country if we choose to harvest it. The electric car is the car of tomorrow. It's still early in development, but already has the capability to impact the way we commute everyday. MagLev trains could replace air travel for cheaper and faster long distance travel if we choose to use it.

The point is there are technologies that MAY be revolutionary and there are technologies that ARE going to be revolutionary. If we fail to move on the ones that we KNOW will have a huge impact, it will only cost more in the future. There's no reason to not do some things now.

10/27/2008 1:50:05 PM

Here's another reason why the government needs to assist in the development of green energy:


The private market doesn't care about the environment. The market cares about money. Using fossil fuels will likely be cheaper than developing green technology for a long time.

After all, a coal power plant is cheaper than a nuclear plant, wind farm, or hydroelectric dam.

10/27/2008 2:16:10 PM

^Thats an argument for a carbon tax, not governmental R&D into green tech.

As you said, fossil fuels will likely be cheaper than green tech for a long time. Why would the government want to spend money on a losing proposition?

Raise the price of fossil fuels to reflect the environmental and security costs. Then the free market will find the most viable alternative. It's a tried and true method. If we need the Govt to spend some loot on infrastructure such as a new grid or LNG pipelines, fine. But they don't need to be in the business of building electric cars. thats crazy talk.

10/27/2008 2:24:10 PM

^^^Wind isnt that great of renewable resource on a global scale

It may be good to supplying energy to a small town or farm but it is not good enough to run the entire country on it.



[Edited on October 27, 2008 at 2:28 PM. Reason : ^]

10/27/2008 2:27:40 PM

But there are already viable alternatives. They just need initial investment in order to come to market. This is where the cost to enter the market is too high and subsidies could work. As soon as they're brought to market and start generating profit, they'll not only increase exponentially, but they'll also become more efficient, further lowering the cost of investment.

10/27/2008 2:29:26 PM

^Exactly

If we come up with a way to generate sustainable energy from a renewable resource, then we can market it to the rest of the world.

Quote :

"As you said, fossil fuels will likely be cheaper than green tech for a long time. Why would the government want to spend money on a losing proposition? "

Who says its a losing proposition?

With the little money that is provided for alternative energy, they have come a long way. It's taken 20+ years to come up with some of this stuff but thats because of the lack of funding.

Something has to change or we are going to be up shits creek without a paddle in 30-40 years.

Change costs money

[Edited on October 27, 2008 at 2:31 PM. Reason : asd]

10/27/2008 2:30:52 PM

The government never attempted to build a land-based power reactor. So they never had the chance to do this efficiently or inefficiently.

The reactors they ran for Pu production have no good metric for how well they were ran, and if they did, we wouldn't know it. The government, however, did extremely effectively build dozens upon dozens of naval nuclear reactors that, despite smaller issues and their own bath of criticisms, have had no major accident. Comparing such applications to the commercial nuclear power industry is completely useless, as the objective was completely different. Both cases (naval and the nuclear industry) were very successful with respect to their own objectives.

Could the government have built electric grid power generating reactors? They could have. Cost effective? I would say no.

The commercialization of space has only just begun, and while we don't currently have any commercial orbital people flights, we will have them soon enough and at a lower cost than what it took NASA.

Also...

You have not SEEN inefficiency until you put have together pork barrel Democrats with disperse intermittent power sources. Oh for the love of God, let's just pay lobbyists to burn Greenbacks.

10/27/2008 2:31:28 PM

^^^ Please name an alternative energy source where an initial investment will start generating profit and increase exponentially. I would like to invest in this technology, and so would just about everybody else on Wall Street.

^^

Quote :

"Who says its a losing proposition?"

Reality says it's a losing proposition right now. You said it's a losing proposition, with the cost of fossil fuels being so low. Lack of funding my ass. BILLIONS and BILLIONS of dollars have been invested in solar, wind, geothermal, hydroelectric, biofuels, etc. You name it, it has been researched and found not competitive with fossil fuels except in niche applications.

10/27/2008 2:36:39 PM

See, I just think Obama will control the Democrats better than that. Part of the reason we've seen so much corruption is because Bush is a weak leader. There was no oversight from Congress on him, and there was no oversight from the executive branch on Congress. He's smart enough to know that if Dems start piddling around with pork, they're gonna get burned in the next election... hard. Not that this will keep all corruption out, but before the economy imploded, government accountability was one of his core issues. I don't see much reason for that to change.

There's absolutely no reason the government couldn't lead the world on energy.

^ I'm telling you... wind power. GE has completely sold out its wind turbines through like 2010 or something. The only reason they're not producing more is because it's physically impossible. If the government stepped in with some funding, production could be ramped up, resulting in more sales, resulting in more profits, resulting in more production, etc...

Besides, you're looking at it solely from the corporate perspective. You're completely neglecting the impact this will have on the average Americans wallet through lower energy costs. We'll actually save money by not having to pay as much over the long term.

[Edited on October 27, 2008 at 2:42 PM. Reason : ]

10/27/2008 2:39:03 PM

Quote :

"Besides, you're looking at it solely from the corporate perspective. You're completely neglecting the impact this will have on the average Americans wallet through lower energy costs. We'll actually save money by not having to pay as much over the long term."

On the contrary, you're looking at this from a Socialistic perspective. You are completely neglecting the reality of the situation when you assume that the government can somehow fix our energy problems. If it was as simple as dumping more money into turbines, investors would have ponied up already. Having a bureaucrat decide what and who to fund is a recipe for disaster.

10/27/2008 2:52:26 PM

Quote :

"^ I'm telling you... wind power. GE has completely sold out its wind turbines through like 2010 or something. The only reason they're not producing more is because it's physically impossible. If the government stepped in with some funding, production could be ramped up, resulting in more sales, resulting in more profits, resulting in more production, etc..."

There are so many things wrong with this. GE is worth some 200 billion $. If that extra production was profitable, I think they might be able to figure out some funding scheme.

10/27/2008 3:02:19 PM

^^ I won't deny that I'm taking a slightly socialistic point of view, but that doesn't discredit the argument. Many people from both sides agree that energy independence is something we critically need. The government has the power and scope to put us on the right track and to do it quicker than the market would do it.

The market is only efficient when information is perfect. At the current time, information has been skewed very, very, very far in favor of maintaining corporate profits. It has failed to take into account costs to the environment, consumers, and basically anything not directly related to that corporations bottom line. While not knowing the exact costs of the path we've been taking, anyone who is not biased would admit that the costs to society we have been incurring have not been accurately represented. Having the government move on something this large would do a great deal to correct this misrepresentation and start us on the path to constant and sustainable growth. The markets have failed us in this regard and so the job is left to the government, however imperfect it may be, to correct this imbalance. It IS socialism, but it is socialism that is direly needed.

^ Once again, you're taking a corporate perspective on the situation. Currently, the marginal cost of producing additional wind turbines is greater than the marginal benefit TO THE COMPANY. That does not necessarily mean there is no demand for them or that there would be no use for them. It simply means that GE, as a corporate entity, is not willing to spend more money to produce them.

It is entirely possible for a good to be of more benefit to society than it is to a private corporation. This is where classical economics fails in comparison to environmental economics. Environmental economics takes into account the benefit to society. I have no problem calling this "socialized economics," which is basically what it is. It's a more complete study of economics because it includes costs and benefits to society and not just individual entities.

[Edited on October 27, 2008 at 3:14 PM. Reason : ]

10/27/2008 3:07:50 PM

Quote :

"Reality says it's a losing proposition right now. You said it's a losing proposition, with the cost of fossil fuels being so low. Lack of funding my ass. BILLIONS and BILLIONS of dollars have been invested in solar, wind, geothermal, hydroelectric, biofuels, etc. You name it, it has been researched and found not competitive with fossil fuels except in niche applications. "

It's not a losing proposition in my eyes, research and development takes time and money. I think either you or someone else mentioned in this thread that there needs to be environmentally driven carbon taxes. That will help in the short term. In order for renewables to compete with fossil fuels, we need a major breakthrough in either efficiency of conversion or overall costs (more than likely both to really make a difference).

Despite what you think, there is a huge lack of funding. Pharmaceutical companies usually set aside 10% of their budget to R&D. If the goverment subsidizes well over 100 billion a year on health care while energy research gets 30 million. 30 million a year is nothing.

"The disparity between what is needed and what can be done without pain becomes more acute as the global economy grows," Hoffert added. "Therefore, what is needed now is political will, targeted research and development and international cooperation."

Here is a good article by one of the leading experts on energy alternatives
http://www.eurekalert.org/pub_releases/2002-10/nyu-stt102802.php


Those "BILLIONS and BILLIONS of dollars" have gone into exploratory research. We now have a better understanding of what needs to be done and where the research needs to be directed too.

10/27/2008 3:11:19 PM

IMStoned420, listen to what you are saying. If only the government gave a truckload of money to GE then GE could make turbines at a profit.

You are completely ignoring the truckload of money. GE is not going to pay back the government by selling the turbines. You are ripping off 99% of the country to give free money to 1% in hopes that they will sell cheaper turbines in the future to the 99%. Well, if there was profit to be had in the exchange then someone would have already done it. But, it just so happens that this scheme will never repay the initial investment plus interest, otherwise GE would just borrow the money.

But why should anyone invest their own money when you are so eager to give investment to them for free? This is the perverse incentives created by government involvement. Once you have government running around with free money, business suddenly has an incentive to shun real investors in hopes of getting help from the free-money government later on. What this creates is a sudden vacume of activity where it only seems like the government is doing anything, because in fact the government is the only one doing anything. Everyone else is hiding their own money elsewhere in hopes of being able to play the free-money game.

It is the same with the current bail-out. Early on banks liquidated their bad loans and took the loss. But once someone said the word bailout all liquidations stopped in hopes of being able to unload them on uncle same at a huge markup.

10/27/2008 3:13:35 PM

The reason why not that much is being done with GE and the turbines is that its not a viable solution to the global energy problem.

Like prawn star said, only viable in niche markets


Also you cant just stick a turbine in your backyard and expect it to generate tons of power. They have to be placed in wind zones greater than class 3. Of which only a small percentage is actually suitable for said turbines

10/27/2008 3:19:10 PM

Quote :

"It is entirely possible for a good to be of more benefit to society than it is to a private corporation."

^^ This is where your argument breaks down. In a quest for return on investment and profit, an individual will neglect the net benefit to society. However, if the net benefit to society is greater than the cost of doing it, why not do it?

In this situation, the government would be subsidizing production of wind turbines or electric cars or whatever. The benefits of doing so are energy independence, increased national security, domestic job growth, reduced trade deficit, etc. All of these benefits are not taken into account by GE when producing turbines, or GM when producing electric cars. Because they are not taken into account, products that could provide benefit to society are not created because they do not benefit their corporate creator.

This is where an entity larger than the market itself (the government) has the power and, it could be argued, moral obligation to step in and correct the situation. This approach still takes economics into account, and it's never wise to simply throw money at a problem, but it's possible to do calculations (based on imperfect information albeit) to find a suitable investment by the government acting on behalf of society as a whole. It's basically giving up privatized profits (while not erasing them completely) in exchange for socialized profits (which benefit society as a whole).

Quote :

"Also you cant just stick a turbine in your backyard and expect it to generate tons of power. They have to be placed in wind zones greater than class 3. Of which only a small percentage is actually suitable for said turbines"

I'm simply using this as an example. It can be applied to any number of policy ideas.

[Edited on October 27, 2008 at 3:33 PM. Reason : ]

10/27/2008 3:31:30 PM

^Ahh then yea I agree with you

10/27/2008 4:03:51 PM

Quote :

"It is entirely possible for a good to be of more benefit to society than it is to a private corporation. This is where classical economics fails in comparison to environmental economics. Environmental economics takes into account the benefit to society. I have no problem calling this "socialized economics," which is basically what it is. It's a more complete study of economics because it includes costs and benefits to society and not just individual entities."

THINK ABOUT WHAT YOU'RE PROPOSING!!!1

I wouldn't call this approach terrible, I would call it outright disastrous! Let's start from what we agree with: environmental economics. Our political-economic system IS DESIGNED TO DEAL WITH THIS. We have dealt with it before and done well with it. It's called economic externalities. If coal causes HUGE environmental damage (global warming included), then you can tax it to smithereens, and the market will find alternatives.

Why do you think you must find them for the market?

Think about this: Mr. Joe Schmoe Kites for Power LLC. is an up and coming venture capital company. You run your plan to inject capital into GE and wind turbine makers - it goes through the DOE, the SEC, and they draft conditions for which companies are eligible for the capital. Then JSKfP LLC goes under. Why? Because the kind of thing they're developing didn't exactly fit the definition drafted by the policy makers (note, not the law makers). Their idea was radical, to have the wind turbines tethered, and not being in the public conciseness or debate, of course was not written into the law.

In the other case, you tax the climate culprits like a good free market. Overnight the power companies start updating their optimization schedule for meeting power demand, yielding an instant benefit (to our mother Earth). GE still has a strong option of investing in rolling out more conventional wind turbines, while we hold on to the possibility (though possibly faint) that Joe starts a sweeping revolution of the industry.


You can't predict what will happen. It could be that even with your wind turbine capital injection plan, some MIT student comes up with a new way crack biofuels from algae, or a scaled fusion device. Guess what? Someone's going to be mad as hell if you don't stay the course of pissing away tax payer money into huge lobbies. The slippery slope plunges downwards until the entire failure of our economy and our nation. What's more, you never needed such a bonehead idea to begin with. The problem could be much better solved from the beginning by introducing taxes relative to the environmental & health destruction caused and letting the American people deal with the rest.

This idea has been around from day 1 when our country was founded. Why do you all of a sudden think that you've come up with something (terribly complicated) that's better?

[Edited on October 27, 2008 at 7:23 PM. Reason : in fact, why do all of the 'greens' think this?]

10/27/2008 7:21:40 PM

Quote :

"The reason why not that much is being done with GE and the turbines is that its not a viable solution to the global energy problem. "

Can you please educate yourself at least a teeny bit before you go spouting off like some authority?

http://news.cnet.com/8301-11128_3-9918121-54.html

Quote :

"The industrial conglomerate said in its conference call with analysts last Friday that the backlog of wind turbines--i.e. orders that have booked but can't ship--has grown to $12 billion. That's up from $11 billion in the fourth quarter and more than twice the size of the backlog in the first quarter a year ago. "

10/27/2008 7:35:56 PM

^^ I honestly can't find a coherent message in that entire post. It might be there, but you seem to go off on a lot of tangents and don't really address the idea I proposed. I'd respond but I honestly have no idea what you're trying to communicate across to me.

10/27/2008 8:13:50 PM

^^Ooooo they are backordered....big whoop, that doesnt tell me anything about wind energy being a viable renewable resource that can produce enough energy for to sustain the worlds energy use. And I dont get where you think Im spouting off like some "authority". Just relaying facts to continue the intellectual discussion.

It may be a short term solution but not even close to being the end all, be all.


THis is a slide from Nathan Lewis lecture that he gives to universities and government peeps


You can listen to the his whole talk (this one may be dated) here
http://online.itp.ucsb.edu/online/colloq/lewis1/

we basically need 10TW of power generated a year to supply the world with enough energy to live on. There isnt nearly enough suitable land in windy places to put the turbines.

If the country/world decides to use a number of different non-CO2 emitting renewable resources, then wind energy will/should be included. THe homerun device/breakthrough will more than likely come from solar based off the off of the potential amount of energy that can be harvested from the sun.

10/27/2008 9:31:30 PM

^you know, if just 2% of the Sahara desert (it might actually be much less) were covered in solar panels it could satisfy the energy demands of the entire world.

Quote :

"(maybe help GM put the Volt into production ASAP)"

While we're all looking forward to the production of the Volt, you need to be realistic with how the automotive cycle works. At this point in development all they're waiting for is government testing to be completed, and in this case the possibility of superior battery technology. Its not going to get here any faster.

[Edited on October 27, 2008 at 9:40 PM. Reason : k]

10/27/2008 9:39:00 PM

I think it's supposed to debut in 2010, but I was referring more to increasing production.

No model starts off at full production capacity right from the start. They debut it, take in some revenue, then expand the production capability. I was saying use subsidies to expand the production from the get-go.

[Edited on October 27, 2008 at 9:42 PM. Reason : ]

10/27/2008 9:41:15 PM

Quote :

"^^ I honestly can't find a coherent message in that entire post. It might be there, but you seem to go off on a lot of tangents and don't really address the idea I proposed. I'd respond but I honestly have no idea what you're trying to communicate across to me."

Your proposal was to use government money to increase GE's production capability of wind turbines, and I would rationally assume this would include other key players in the market.

My response was that your proposal is grimly disastrous, and furthermore, the alternative is not a 'new idea', but the time tested concept of proportionally taxing industries for the damage they do to others.


If I am allowed to 'tangent' further, I would note that the Greens all seem to have a similar mentality. That is, the free market will not solve our energy problems, so instead of directing the free market by typical means of taxation, we need to evolve a bureaucratic pseudo socialistic energy-industrial complex that will solve all of our problems and do it cheap. It will not do these things.

[Edited on October 27, 2008 at 9:44 PM. Reason : ]

10/27/2008 9:43:58 PM