6!

^ It's the new economics: inelastic demand means available resources expand to meet need. Where ya been?

[Edited on May 14, 2008 at 1:55 PM. Reason : %!]

5/14/2008 1:54:29 PM

the idea of switching to hybrids and all that won't really help for a very long time. yes you're saving some change at the pump. fact is a load of people just aren't going to be able to switch so quickly. even if half the country managed to roll in a prius, the other half would be starving just to get that gallon to get em to work in the old jalopy they're still stuck with.

5/14/2008 2:14:37 PM

*chants*

Mixed use development! Mixed use development! Mixed use development!

So people could, if they wanted to, live closer to their work and closer to shops than they do now.

It's probably the most sustainable, scalable development idea in the long run.

As for gas prices, well, I'm glad I don't live that far from school, that far from where I expect to work (waiting to hear back on research jobs is annoying), and not even that far from my family. Everybody who fell for the urban sprawl growth we had going on in the past few years (i.e. people who bought a plastic house in a new development in the middle of nowhere) is going to hate themselves as the prices go up.

I'm just annoyed that the market is filled with enough assholes (speculators and suppliers) that the price is being kept at such a high level for a barrel of oil. I'm also annoyed that politicians have lobbied for solutions that aren't viable in the long term, but that make it sound like they really give a shit about the situation. Corn-based ethanol sure was exciting for all of what... The 2-3 years of hype it was able to sustain? I wonder what will be next...

5/14/2008 3:47:53 PM

I'd love nothing more than to be able to ride a bike to work (whenever the weather's fair enough). But between how unfriendly roads are and the lack of changing facilities where I work shit ain't happening.

5/14/2008 3:51:04 PM

Quote :

"Fat chance of polar bears going on the endangered species list, considering that they are flourishing right now."

Oh wow Prawn Star, I believe what you say.

http://www.cnn.com/2008/TECH/science/05/14/polar.bears.listing/index.html

5/14/2008 3:52:38 PM

Quote :

"I'm not so sure about Nuclear power playing a larger role. Nuclear plants are now being estimated to cost somewhere between $9-13 billion. Thats a huge investment. I've read that wind power is getting a huge push from McCain. I believe he's looking at increasing the percent that wind power contributes to our overall energy supply from 1% to 20% (same amount as nuclear contributes currently) by 2015."

if mccain is really going to do this he is a fucktard

how the hell is wind going to provide the necessary base load?

and besides, O&M for a nuclear plant is pennies compared to the capital investment and the only reason that we are seeing billions is because of material costs...steel isnt cheap anymore

5/14/2008 4:36:43 PM

http://www.yahoo.com/s/882175

didnt read the article but the headline is saudi arabia sees no reason to increase oil production

Quote :

"When Bush first ran for president in 2000, he criticized the Clinton administration for high fuel prices and said the president must "jawbone" oil producing nations and persuade them to drop rates. At that time, oil was nearing $28 a barrel — less than a quarter what it is now."

lol

[Edited on May 16, 2008 at 5:08 PM. Reason : .]

5/16/2008 4:53:43 PM

one of bill oreillys solutions is to not buy gas on mondays...what a goon

5/28/2008 8:16:10 PM

Quote :

"didnt read the article but the headline is saudi arabia sees no reason to increase oil production"

Well, ANWR alone could match current Saudi Arabian production for two decades. That is probably why they don't see a reason to increase production: it would just be more production they need to hold back to maintain cartel pricing.

5/29/2008 12:00:55 AM

You don't know that for sure. No one does. Potential oil reserves in the Alaskan Wildlife Refuge is simply an estimate. Losing pristine habitat for a threatened species is not worth a guess.

5/29/2008 12:05:34 AM

it pisses me off beyond belief that we dont drill for our own damn oil

sign the petition, its Newt Gingrinchs site

http://www.americansolutions.com/actioncenter/petitions/?Guid=54ec6e43-75a8-445b-aa7b-346a1e096659

[Edited on May 29, 2008 at 12:07 AM. Reason : .]

5/29/2008 12:06:07 AM

in hs i asked my teacher why we didnt drill more and he said in the US we like to use other peoples shit before we use our own...plus if everyone else runs out and price goes sky high, then the US could sell it to others for top dollar


also if one dollar equaled one euro how much would prices change?

[Edited on May 29, 2008 at 12:11 AM. Reason : djkndf]

5/29/2008 12:08:03 AM

^^^^ If you assume a proportional decrease in the price of oil that would be of the total world production, that would buy us about $1 less /gallon. Which means for a whole year, we'd be paying cheaper gas (assuming gas prices rises another dollar in that year).

That doesn't seem like a worthwhile proposition to me. I think it'd be better if we left that wilderness alone, and put the billions of dollars or so that would cost to put a new oil drilling operation there in to alternative energy infrastructure and/or research. Imagine how many solar panels to run grid-powered cars a couple of billion dollars could help to install.


[Edited on May 29, 2008 at 12:09 AM. Reason : ]

5/29/2008 12:08:56 AM

^^^ O rly?

Quote :

"Countries Exporting Less Than 80% of Their Oil Production America uses most of the fuel that it drills at home, as show by the low percentage for exported U.S. oil. 1. United States … 12.6% of domestic oil production was exported 2. Russia … 51.5% 3. Mexico … 59.9% 4. Iran … 60.7% 5. Canada … 73.5% 6. Kazakhstan … 74.7% 7. Libya … 77.1% 8. Venezuela … 78.6% 9. Iraq … 79.1%."

http://import-export.suite101.com/article.cfm/leading_oil_export_countries

5/29/2008 12:11:18 AM

Quote :

"^^^^ If you assume a proportional decrease in the price of oil that would be of the total world production, that would buy us about $1 less /gallon."

That would be moronic. The price of oil does not move proportionally because both demand and supply have very inellastic curves. That is usually the first thing people learn when they join the punditry crowd.

As such, throwing an extra million barrels a day on the market today would cause oil prices to collapse to $20 a barrel, a drop of over 80% for a proportional increase of only a few percentage points.

Quote :

"That doesn't seem like a worthwhile proposition to me. I think it'd be better if we left that wilderness alone, and put the billions of dollars or so that would cost to put a new oil drilling operation there in to alternative energy infrastructure and/or research. Imagine how many solar panels to run grid-powered cars a couple of billion dollars could help to install."

Why? Development would not harm the wilderness one bit. The animals don't care, and less than 1% of the plants would care. And while that billion invested in developing a pressurized oil field in ANWR would produce light-sweet crude at a cost of less than $10 a barrel, that same billion invested in solar panels wouldn't produce a drop of oil, as electricity is a poor substitute for liquid fuel.

5/29/2008 12:29:41 AM

Quote :

"As such, throwing an extra million barrels a day on the market today would cause oil prices to collapse to $20 a barrel, a drop of over 80% for a proportional increase of only a few percentage points."

I'm sorry, but that's just wrong. Demand for oil is down this year. If another million barrels a day came onto the market, prices would probably go down to like $70 at best and demand would simply pick up again because we'd start selling SUVs and driving around like no one gives a fuck again.

I'm not trying to be disrespectful or anything because I don't know you at all, but why do people in TSB put so much faith in what you say about the economy? If it's part of your job or something I could understand, but I just don't know.

5/29/2008 12:57:15 AM

Well, the immediate impact on gas prices wouldn't be there. As you might have noticed, the price of oil can shoot up rapidly, say 30% in a month, and the price of gasoline will only go up about 10% in that same time period, but it will go up 10% consistently for the following months. Something like that. More or less what I'm getting at is that there's a delay (a sizeable one) between extracting the oil, transporting it, refining it, and selling it at the market. It tends to have a stabilizing effect on gas prices, so that gas prices might actually continue to rise for a short while after the price of oil drops, before starting to slowly reduce down as people begin replenishing their gasoline stocks with gasoline sold at a time when the oil refined into gasoline was cheaper...

Yeah, anyway, it would go back up, but there would still be some momentum to reduce oil consumption and some price momentum that would allow the price of oil to drop even more. People who have sold their SUV's and changed their daily routines will probably stick to their new routines and their newer, higher-efficiency cars even if oil suddenly drops down to $70 or $50 or even $30 a barrel. Part of it has to do with people being risk-averse, part of it has to do with the fact that people can't afford to go and swap cars back on such short notice.

What you said would probably be correct in a short-term situation where the oil market is shocked with reduced supply and constant demand which merits a sharp, sudden price increase. Take katrina for example, that had gas prices here at about $3/gallon in some spots (which was shocking at the time) and over $4/gallon as you went farther south. Demand for gasoline in that time period shrank a small amount, when it was expected to increase. Once they got everything working again (setting up generators to get the oil moving again, ramping up production at other refineries that weren't knocked offline) oil prices eased a bit, gasoline prices eased up a lot, and demand resumed. What we're dealing with right now is a much bigger event as far as price spikes go, and there's a lot more inertia around an event like this. It's taking time, but people are recognizing that they have to change their ways to maintain their quality of life within their given budget, so you're seeing individuals and industries changing how they do business and how they live their lives in order to reduce their reliance upon gasoline. If gas prices rebound sharply from this event after a significant event like an economic failure in china or a shift in production from OPEC ( with gas falling down to $2.50/gallon or lower, with oil being $60/barrel, let's say), you'll notice a reversal in this trend of industry and individuals reducing their consumption. A lot of people will still reduce consumption for a while, fearing price increases in the future, which will be a diminishing trend as gas prices stabilize at lower prices. I'd guess it would take about 4-6 months of oil prices really dropping down in order to get the market interested in using more oil again. Of course, there will be industries that decide they don't want to use more oil (cutting business flights and promoting the use of new, realistic high-resolution teleconferencing setups to allow for meetings), and there will be people who decide they don't want to use more oil (people who just sold their SUV's for something more efficient, people who are cheering on the current movement towards low-carbon green technologies, and people who are risk averse and satisfied with their lives without a desire to consume more oil).

I dunno, I hope that explanation helps a bit. I'm sure some of that is the reasoning behind what lonesnark said. It's just a pain in the ass to type that out every time you make a statement in some crappy thread on TWW.

[Edited on May 29, 2008 at 1:23 AM. Reason : I'm talking about gas & oil somewhat interchangeably here, just for the sake of the argument.]

5/29/2008 1:19:29 AM

I think it's gotten to the point where people are actually changing their habits. ie, driving less, driving more efficiently. If oil went down and gas went down people would pretty much be like, fuck it I'm driving how I want to again, making longer trips more often, driving faster, thus increasing oil demand.

I'm not arguing anything really other than the price of oil is not going to go down soon (unless OPEC produces more, which ain't gonna happen) and it's definitely never going down to $20 again unless we get to the point where we are mostly free from using oil and it's simply used in plastics and stuff like that. That was mostly what I was trying to say.

5/29/2008 1:29:12 AM

Quote :

"I'm not arguing anything really other than the price of oil is not going to go down soon ... and it's definitely never going down to $20 again unless we get to the point where we are mostly free from using oil and it's simply used in plastics and stuff like that. That was mostly what I was trying to say."

PROFOUND...I NEVER THOUGHT OF IT LIKE THAT

5/29/2008 1:31:39 AM

Quote :

"I'm sorry, but that's just wrong. Demand for oil is down this year. If another million barrels a day came onto the market, prices would probably go down to like $70 at best and demand would simply pick up again because we'd start selling SUVs and driving around like no one gives a fuck again."

I'm sorry, but that's just wrong. Prices have gone up substantially and oil consumption is down only a few percentage points. Yes, highway use data shows some of that is people taking fewer long-range trips. The fact is, oil at current prices is still cheap, so we do not currently see much activity to reduce consumption. As such, cheaper prices would not influence demand much, since we have not seen demand slacken much. People would resume long trips, but their curtailment has not saved anything near a million barrels a day. The fact is, at current prices people would like to get smaller cars, but they are not in a hurry to get rid of their SUVs. The rate of retirement of the SUV fleet has increased, but not much. Not to mention that industry is still producing them. To eat up the same proportion of disposable income as we experienced in the 1980s gasoline would need to reach $8 a gallon.

But, if prices do reach significant highs, then this has all happened before. In 1979 oil prices reached absurd levels and, during the following recession, the U.S. economy re-organized. People bought Japanese cars, Ford introduced the Fiesta, industry switched to natural gas, the power industry switched to nuclear and coal, and oil consumption fell 23%. In 1986 the price of oil collapsed 80% when Saudi Arabia dumped an extra two million barrels on the market (in efforts to restore market share). U.S. oil consumption barely budged, increasing five hundred thousand barrels a day; nothing compared to the four million barrels a day drop that occured from 1979 to 1983. It was only after two decades of cheap oil that consumption returned to the previous highs.

[Edited on May 29, 2008 at 9:41 AM. Reason : .,.]

5/29/2008 9:29:35 AM

If it's dropped a few percentage points, that's pretty close to a million barrels right there. Don't we use something like 25 million barrels a day? A 4% drop would equal that. And that's assuming that we would be the only ones trying to get that excess oil. China would be going after that as well as India and every other country in the world. A million extra barrels would be a drop in the bucket and it would not send prices crashing down. 2 million barrels might have done it back in the day, but nowadays we'd probably need something like 8-10 million extra barrels to have the same effect.

And I could argue that we're much more dependent on oil today because we've already made the easy cutbacks back in the late 70s. We don't have that extra room to be able to switch from oil to coal or nuclear. It'd be easy to cut back on oil if we were still using it in power plants and stuff but now we use it mostly for cars. The only way to get off oil in that regard is to switch to electric or something else which is going to be hard to do because the power grid isn't really prepared for that. We're just stuck on oil right now. We have the technology to get off of it, but we got caught with our pants down this time and it's gonna take awhile to pull them back up.

5/29/2008 1:04:44 PM

Quote :

"To eat up the same proportion of disposable income as we experienced in the 1980s gasoline would need to reach $8 a gallon. "

this is key....i wish i could find that graph that showed the price of oil as a percentage of disposable income from like the 50's to now

5/29/2008 1:11:18 PM

Does it really matter what it is? We're a consumer economy. If we spend more money on oil then we're going to be spending less money on other things. If we're spending less money on other things then they stop making them, people get layed off, GDP goes down, we go into a recession. Now, if we were smart and we had been saving all our money before oil went crazy then we could just start using the money we had been putting into savings to offset the higher cost. But we didn't. We spent. We spent so much that we were actually in debt. And when inflation is as high as it is (from everything including oil and food... because we still have to buy those things) and so many people are in debt it wreaks havoc on the economy.

5/29/2008 1:23:00 PM

I'm sorry, but that is just plain wrong. The money spent paying more for oil does not vanish, it goes into someone's pocket and then they spend it. As such, there is no net effect upon agrigate production: every dollar consumers do not spend at Walmart is instead spent by oil companies to buy fancy cars and company jets. As such, GDP does not drop, workers layed off from Walmart suppliers find jobs at Rolls and Lear.

Recessions, and the unemployment they bring, are not caused by shocks; they are caused when investors on wallstreet become convinced that other investors are going to stop investing, so they stop investing (self fulfilling prophecy). Taking money out of wallstreet and throwing it into a vault somewhere does cause GDP to drop, decreasing profitability, causing unemployment. But, short of a rash of pessimism, high oil prices would simply cause people to stop investing in Walmart, choosing instead to walk there money over and invest in luxury goods manufacturers.

Or, of course, in-so-far as the recipients of high oil prices is foreigners, workers will seek employment at, and investors will seek to invest in, export oriented companies.

5/29/2008 4:14:20 PM

Quote :

"Or, of course, in-so-far as the recipients of high oil prices is foreigners, workers will seek employment at, and investors will seek to invest in, export oriented companies."

So workers will seek employment overseas? Most of the money for increases in oil goes to other countries. That's why places like Dubai and Saudi Arabia are so rich right now. I fail to see how dollars going abroad is anything but bad for GDP.

5/29/2008 4:29:13 PM

No, I said exactly where they will seek employment, you even quoted it for God's sake: "workers will seek employment at, and investors will seek to invest in, export oriented companies."

Which is, of course, not the whole story. Foreigners do not enjoy sitting upon the money we give them. While some do keep the money in sock drawers, just as some Americans do, the vast majority of that money comes back to the U.S. in two forms. As money is only as valuable as what you can buy with it because paper money tastes bad and makes a poor building material, forigners buy American made goods and services which we export. Conversely, foreigners can take that money we gave them for oil and invest it in the U.S. equity markets (where shares are, oddly enough, priced in dollars). The point is, dollars do not leave the country for long, they invariably make their way back in one form or another. Be it "they gave us oil and we gave them grain" (export grain) or "they gave us oil and we gave them shares in ADM" (exporting companies) the effect is the same: no negative effect upon GDP or employment.

5/29/2008 4:38:21 PM

The falling value of the dollar and the rising price of oil mean that there is no possible way that all those dollars are coming back to us. They're either being converted into other currency of the amount of grain that we used to buy oil today can't buy the same amount it bought yesterday. I'm sure you're aware that we have over $200 billion trade deficit. There is definitely money leaving the country that isn't coming back and that's not really a good thing when the value of our money is plummeting.

5/29/2008 6:16:41 PM

With respect to the dollar's value vis-a-vis currencies of oil-exporting countries, most oil-exporting countries peg their currency to the dollar, requiring them to sell their currency and buy dollars in order to maintain their peg in this weak-dollar environment. A large portion of these dollars do get sent back to the U.S., often via the purchase of treasuries. While I don't have any source on hand, I would doubt it is a one-to-one relationship, however.

Regarding the trade deficit, it can't simply be explained by our importation of crude (although its share of overall imports is growing). The other side of us having a trade deficit, is that we have a capital surplus. The long-term effects of a sustained current account deficit/capital account surplus are still empirically unclear. Insofar as we obtain higher rates of return on the capital provided to us than the cost of that capital, the capital account surplus does not lead to deteriorating long-term wealth.

5/29/2008 7:49:54 PM

IMStoned420, what are you suggesting? That they will give us oil for paper money and then never spend it? If so then you are right, GDP would be negatively impacted; that is, until the FRB prints money to replace it, problem solved (over simplification).

[Edited on May 29, 2008 at 11:49 PM. Reason : .,.]

5/29/2008 11:47:14 PM

http://news.yahoo.com/s/ap/20080614/ap_on_bi_ge/saudi_oil;_ylt=Amd_c_VLed1DwgaxSMceSg6s0NUE

supposedly SA gonna up production by 500k barrels

6/14/2008 1:32:53 PM

Quote :

"^^^ O rly? Quote : "Countries Exporting Less Than 80% of Their Oil Production America uses most of the fuel that it drills at home, as show by the low percentage for exported U.S. oil. 1. United States … 12.6% of domestic oil production was exported 2. Russia … 51.5% 3. Mexico … 59.9% 4. Iran … 60.7% 5. Canada … 73.5% 6. Kazakhstan … 74.7% 7. Libya … 77.1% 8. Venezuela … 78.6% 9. Iraq … 79.1%." "

that does not refute his claim.

yes, we use most of what we drill at home, but we import a huge % of our oil rather than drilling for it domestically. in other words, we are using everyone else's oil before really tapping our own resources.

6/14/2008 1:52:24 PM

Actually, it does.

Claim: it pisses me off beyond belief that we dont drill for our own damn oil

Clearly we do drill for "our own damn oil." What we manage to pump out doesn't satisfy half of our nation's ungodly appetite for it, but we do keep over 87% of what we supply. The fact we import oil from other countries to fill this gap doesn't mean we're not busy drilling oil for ourselves, too.

In fact, we produce nearly the same amount of crude that we import from OPEC.

6/14/2008 2:07:16 PM

http://biz.yahoo.com/ap/080615/saudi_oil.html


rofl...only 200k more...so thats 500k total they've increased *jerk off motion*

6/15/2008 5:13:18 PM

^^ you are so full of shit. we choose to buy much of our oil from other nations instead of tapping our own oil reserves, mainly due to namby-pamby environmentalists who complain about what will happen to those poor baby seals.

6/15/2008 5:28:10 PM

What exactly is "namby-pamby" about an environmentalist?

6/15/2008 5:58:25 PM

well, for starters, pretty much everything

6/15/2008 6:08:47 PM

Good answer. The depth of your knowledge (or rather lack thereof) is profound.

[Edited on June 15, 2008 at 6:23 PM. Reason : Thanks Webster Jr. ]

6/15/2008 6:11:10 PM

the depth of your grammar is also quite astounding

6/15/2008 6:20:26 PM

hockeyroman wins lol

6/15/2008 6:20:53 PM

I agree with aaronburro.

last time I was in Mexico City I really loved the air quality and enjoyed the drinking water.

6/15/2008 7:25:13 PM

i'm not an expert on this, but i don't think it's time to go all-out with our ace-in-the-hole domestic oil reserves. Maybe tap them slightly to (a) give some slight immediate relief, and (b) to send a signal to OPEC that they'd better not fuck around too much, or they'll awaken the sleeping giant.

but the situation is not dire enough yet to warrant opening the floodgates, and oil is not yet expensive enough to really justify the cost of doing some of that stuff.

6/16/2008 12:54:37 AM

i feel the same way duke does. i don't want to just destroy half our land for some oil, but i don't see anything wrong with making carefully planned use of the resources that are known.

6/16/2008 1:55:42 AM

sounds basically like the status quo to me...not that i'm against that

6/16/2008 1:58:50 AM

That shit would really come in handy if there was another war or something. As long as the price of oil keeps climbing, that shit just becomes more and more valuable. It's basically like being able to pump money out of the ground at a later point. To tap it inherently lessens it's value.

6/16/2008 2:08:06 AM

Quote :

"To tap it inherently lessens it's value."

Hence the predicament: if foreign states really wanted to free up their state oil companies to boost production they would, but like you just said, such behavior is silly from a political standpoint in a world of high oil prices.

But, as history has shown, the high prices do not last and once they go everyone is eager to drill as much oil as possible, whatever the cost. This is why many economists call the world's oil producers pro-cyclical. Foreign oil companies were free to drill in Venezuela once oil dropped below $30 and lost their freedom once it rose above $60. The U.S. never came closer to openning up its offshore oil reserves than it did in 1997 when oil was less than $20.

Of course, it explains why even oil producing nations are poor: they produce when prices are low and curtail when prices are high. Of course, this means that if the U.S. does not open up our reserves now, when oil is over $100, we are most likely to do so in 15 years when oil is $20.

6/16/2008 8:20:26 AM

Oil is not ever going to be $20 again. Ever.

6/16/2008 12:35:15 PM

Someone in 1980 said that exact same phrase.

$20 oil is just one sudden sharp economic contagion striking China away. While the Chinese government is doing a great job wasting capital and curtailing growth, but even this perverse behavior will not work forever. Recessions happen, and when oil consumption goes from 12% growth every year to a sudden 20% drop, the inellasticity of production will produce irrational price movements similar to 1998 when oil was selling for less than $10 a barrel (that was just 10 years ago!).

You need to remember, while in America industrial oil use is dwarved by transportation use, that is not yet the case in China, and industrial demand is far more cyclical than transportation. One good deep recession in China and everyone will be wondering what all the fuss was about.

6/16/2008 1:29:57 PM

http://nodakafp.files.wordpress.com/2007/11/north-dakota-oil-production-vs-oil-price-per-barrel-graph.jpg

Looking at that graph, it seems EXTREMELY optimistic to me to say that oil barrels will go back down to $20 at some point. It would take a fantastical series of events for that to happen.

6/16/2008 1:38:57 PM

The very fact that the dollar is becoming more worthless every day with no real end in sight makes me believe that oil will never ever go back down to $20. You're sporting some hooksaw-esque economic optimism here, LoneSnark.

6/16/2008 2:05:55 PM

Moron, yes it would. And it just so happens that human beings are very creative when it comes to conjuring up "fantastical series of events".

IMStoned420, you are predicting that the way things are going will continue forever... Now, which of us is being optimistic? The future is nothing if not unpredictable, otherwise recessions and wars would never occur.

[Edited on June 16, 2008 at 2:13 PM. Reason : .,.]

6/16/2008 2:13:10 PM