Democrats & Liberals Archives

High Gas Prices, a Blessing

I know I will be attacked from all sides for saying that high gas prices are a blessing in disguise. Everbody focuses on rising gas prices and how Saudi Arabia, China and big oil companies are responsible for our woes. Instead of worrying about who is to blame for this turn of events, we should use our current tough situation to mount an all-out effort to develop alternate non-carbon fuels. This way we can hurry the solution of a more important problem than high gas prices: global warming.

The situation is ostensibly pretty bad. Gas prices seem to rise every day. To save money fill up today and don't wait till tomorrow, is everyone's motto. Of course, people are upset, especially the poor who have less money for food and medical bills.

However, if we do not solve the climate-change problem, we'd be more than upset, we would be suffering from stronger hurricanes, tornadoes, floods, coastal city inundation, loss of food, less diversity and other catastrophic conditions. Living in this horrible environment would be miserable - if we could continue living.

So we should use the high price of gasoline as an incentive, not to achieve "energy independence," but to get all Americans making lifestyle changes to mitigate the possible results of climate change. McCain is doing the exact opposite: promoting a gas tax holiday to reduce gas-price impact on the public and recommending more offshore drilling for oil.

We do not need more oil, but less. A simple way of reducing our use of oil is conservation: changing our habits, buying more efficient cars and appliances, living closer to work, insulating our homes - and much more. It has been estimated that we could reduce oil use by a third through conservation.

Conservation can be effective today. To prepare for the future, however, we must replace carbon fuels - oil, coal, natural gas and biomass - with non-carbon fuels: solar, nuclear, wind, hydro, geothermal, batteries and hydrogen. We must encourage development of these alternative fuels and we have little time to do it.

Obama is advocating the latter approach. It seems to hurt more but over the long run it may be the wisest course to follow.

The climate-change problem is not limited to the U.S. It affects the entire world. Not only must we reduce our own oil use, but we must get other countries to do so as well. If you are looking for the most important and most complex foreign affairs problem, reducing the world's use of oil is it.

High gas prices are a boon because they encourage people to do with less gas. This is indeed a blessing in disguise.

Posted by Paul Siegel at June 25, 2008 2:41 PM
Comments
Comment #256738

You won’t find an argument from me, Paul. It sucks, but it’s the biggest motivator we’ve ever had.

I often found that the easiest way to get employees to adhere to policy was to hit them in the wallet, short of firing them, of course.

I would usually hold a meeting discussing the problem of compliance we were having and announce some sort of punitive measure for failure to comply. Typically, it was a fine or reduction in hours. It worked every time.

Posted by: googlumpugus at June 25, 2008 3:24 PM
Comment #256748

Paul,
Good post - while I get furious every time I fill up a gas tank and see my hard earned dollars go up in smoke and then look at Exxon and the fact that those bastards are selling off all of their gas stations because they charge them so much for the gas they sell that they don’t make a profit. We need a kick in the butt to do anything about it and the threat of $5/gal gas is certainly that impetus.

One of the difficult things about living in a more or less free society (less lately) is that people tend to do whatever they want to do until forced to do otherwise. It’s was a pain to recycle until they started giving everybody those blue bins and made it convenient; no one did anything about the depleted ozone layer until the government regulated freon in air conditioners. Likewise, until people are forced to not drive hummers by either government action or rising gas prices it wouldn’t happen. So yes, it sucks to pay so much for gas but I do think you’re right that it might be the only thing to push us to do something about it.

Posted by: tcsned at June 25, 2008 5:04 PM
Comment #256749

This is an email I received this morning….interesting.

If it’s supply and demand then………Are you sure we aren’t getting screwed????

df


June 25, 2008

Low Mexican Gas Prices Draw Americans

By ADAM B. ELLICK

CIUDAD JUÁREZ, Mexico — When George Terrazas was mugged at gunpoint in this Mexican border city several months ago, he vowed never to return.

That, however, was before gasoline hit $4 a gallon in his hometown, El Paso, just across the border.

On Saturday, Mr. Terrazas was back in Ciudad Juárez, wooed by its irresistibly low-priced gasoline — around $2.66 a gallon — even if not quite unfazed by the indiscriminate gunfire from dueling drug cartels that has contributed to a 2008 average of three killings a day in the city.

“I don’t feel comfortable here,” he said, “but I can’t even fill the tank on the U.S. side.”

Mr. Terrazas, a 48-year-old maintenance worker, is among a flow of American “gas tourists” who, Mexican service stations near the border with El Paso estimate, account for a 50 percent surge in gasoline sales here over the last several months. (Similar increases are reported along the border all the way to Tijuana.) Even the Mexico Tourism Board is promoting the journey.

At the Servicio Herrera service station here, the manager, Jorge Salinas, estimated that Americans were now 30 percent of his customers. They arrive at all hours, Mr. Salinas said, from 6 a.m. to midnight.

On his visit Saturday, Mr. Terrazas saved about $20 filling his 1990 Oldsmobile Cutlass Ciera. He said that when he returned to El Paso, he would monitor the bridge traffic from his house, and that once it waned, he would come back to fill his other vehicle, an S.U.V., for an even bigger saving.

And while here he would pick up six-packs of Tecate beer and produce like passion fruit, and even visit an orthodontist. In all, he expected to save $200. The border, he said, flashing a mouthful of braces, is “our advantage.”

The low gasoline and diesel prices that draw Americans here are a result of subsidies provided by the Mexican government to curb inflation and make fuel affordable to the poor.

The moment may not last. Severe gasoline and diesel shortages, caused by the increased demand from Americans and delivery problems as well, have been reported from here to Mexico’s border with California. (On Friday the government-owned monopoly oil company, Petróleos Mexicanos, or Pemex, said that it would provide a one-time allotment of an extra 300,000 barrels of diesel fuel to meet increased demand along the border.)

Moreover, experts question how long the government can continue providing gasoline subsidies, which will amount to more than $20 billion this year.

For now, though, many South Texans are buying all the fuel they can south of the border, and little wonder. Four of the seven poorest urbanized counties in the United States are along the Texas border, including El Paso, according to a 2006 Census Bureau report.

El Pasoan desperation shows in the leathery face of Jimmy Gann, 57. Mr. Gann’s employer, a family trucking business, is on the verge of bankruptcy, he said, and to help the owners stay afloat, he makes three 32-mile round-trip sprints across the border each day. Once here, he fills a 100-gallon tank with diesel — which is going for $2.20 a gallon on this side, compared with $4.55 on the other — then returns north, unloads the tank at his employer’s business and does it all over again.

One Texan in the trucking industry, who declined to give his name for fear of being prosecuted for tax evasion, said he saved $12,000 a month by fueling his four-truck fleet in Mexico.

On the El Paso side, service station employees say business is down about 40 percent, even at a Chevron station that may have the best deal in town: gasoline at $3.89 a gallon. Just two months ago, stations on the Texas side attracted many Mexicans, who crossed to buy what they considered higher-quality gasoline that was more expensive but still affordable.

“We keep saying, ‘Have you seen so-and-so?’ and the answer is always no,” said Rocio Salazar, 30, a station attendant in El Paso. “It used to be like rush hour on the freeway in here.”

The drop in business has made all the worse along the Texas border what were already hard times for many owners of American service stations. The spike in gasoline’s price has caused many customers to cut back, and that, coupled with increased fees of credit card companies, has “put an increasing number of retailers on the brink of bankruptcy,” says the National Association of Convenience Stores, which represents convenience and petroleum retailers in the United States.

Jose Alfredo has worked at a Chevron station in El Paso for 18 years. With no convenience store to cushion a 50 percent drop in business, the station has laid off five of its eight employees.

“Everyone knows Mexican gas is watered down, but customers don’t care anymore,” Mr. Alfredo said with a shrug.

Managers of Mexican stations deny that accusation. They also say that most of the gasoline they sell is refined in the United States. But one American oil executive noted that the sulfur content allowed in gasoline by the Mexican government was higher than what is allowed in the United States, and said that over time, the higher level could compromise vehicle emissions systems. In addition, Mexican refineries lack a capacity to produce low-sulfur diesel, which is standard in the United States.

The Mexican diesel is “not a good thing for the air, but it’s a good thing for people who want to save money,” said Tom Kloza, a chief analyst at Oil Price Information Service.

Edith Marquez is one American who has so far resisted buying Mexican gasoline, citing quality concerns. But she visits Juárez every Saturday for the $15 saving at a weight control doctor, whose office is attached to a Pemex station. “I’m afraid for my car, but I’ll let the doctor here put vitamins in me,” Ms. Marquez said with a laugh.

For gas station attendants in Mexico, who earn $100 a week, the surge in sales has meant extra money to tuck into the pockets of their olive green overalls. To tip attendants is the custom here, and one of them, Alejandro Jurado, flashing a brick-size wad of pesos and dollars, said, “Americans tip better.”

Posted by: janedoe at June 25, 2008 5:18 PM
Comment #256763

“I would usually hold a meeting discussing the problem of compliance we were having and announce some sort of punitive measure for failure to comply. Typically, it was a fine or reduction in hours. It worked every time.”
Posted by: googlumpugus at June 25, 2008 03:24 PM

Oh yeah goog, Fear Management is a great technique when you’re the boss. Extrapolating your experience to government should work well for the liberals as fear has always been their mainstay along with punishment for failure to comply (as in the cigarette tax) and a myriad of other punishment based rules, regulations and taxes.

This same technique will be employed should we ever be unfortunate enough to have mandated and government managed national health care.

Loose 20 pounds or loose your coverage sounds about right and pay a $100 fine for every excess pound for good measure. Does that fit with your management style?

Posted by: Jim M at June 25, 2008 8:08 PM
Comment #256771
Loose 20 pounds or loose your coverage sounds about right and pay a $100 fine for every excess pound for good measure. Does that fit with your management style?

If that gets me affordable healthcare, then that sounds good to me.

over the long run it may be the wisest course to follow.

“May be?” How about, “is.” Interesting article, Paul. If the blockheads over on the red side hadn’t been so dead set against energy conservation for so long, we wouldn’t even be in this mess right now.

Posted by: American Pundit at June 25, 2008 9:33 PM
Comment #256772

I agree that we need to find more alternatives to our energy problems. But in the mean time we need to be energy independent or make our reliance on foreign sources to the bare minimum. The high cost of energy has had some advantages but also a lot of disadvantages and IMO the disadvantages are overriding the advantages. The high cost of food is one of the disadvantages, the airline industry is another. When the dems took over congress the minimum wage was raised, but what good is it now, most of that raise goes into the gas tanks so those who get minimum wage can get to their jobs so they can earn more to put in the gas tank. Those on fixed incomes are really in a bind. IMO we need to find ways to lower fuel costs not raise them more. If it takes offshore drilling or opening up our reserves SO BE IT!!!

Posted by: KAP at June 25, 2008 9:38 PM
Comment #256774


According to a recent LA Times/Bloomburg poll, 51% of the people polled want drilling for oil in costal regions and wilderness areas with proper oversite to prevent or minimize environmental damage. And, 13% say to hell with the environment, drill, drill, drill.

This poll seems to suggest that what a majority of the people really want is a quick, cheap anything to put in their tanks. There not going to get that in the short run and if they are relying on the two parties and the corporations to get it done, they are probably not going to get the least expensive best solution for many years.

The people have been consistently encouraged to consume, not conserve, by capitalist interests. It is going to take continued high prices and more hardship to break that mindset.

This is going to have to be approached in a carrot and stick fashion. The market prices are providing the sticks. The government needs to provide the carrots. Those carrots must be well thought out and taylored to achieve short term solutions as well as a long term one.

For me, the long term solution is an electric society and I believe, I know that with a concerted effort, we could achieve the majority of that in 15 years or less. This means that the bulk of the investment moneys has to go towards achieving that goal. We need to invest in a new and improved electrical grid, more efficient appliances and the research, development and mass production of electric cars.

IMO, it makes no sense to rely on huge corporate owned utility ventures who will sell us electricity at a premium price.

The model that we should be looking at is the Rural Electric Co-ops. They have a proven record of being more efficient and less costly than large corporate owned utility interests as well as having higher customer satisfaction. The primary reason for this is that they are owned by their customers, the means to respond in an emergency is more localized and the number of customers in a given area is less. This system could easily be adapted to metropolitan and suburban communities.

IMO, if there were a way to fully inform and educate the people, they would choose the co-op option. If we rely on our elected politicians, this option will never see the light of day.

I believe we should replace Many of our elecric generating plants with clean coal plants. They are probably the least expensive alternative. If we begin converting to an electric society, we will cut our CO2 emmisions by at least half once we have converted most of our transportation system to electric. It is not inconceivable that we could build the connection routes and utilize existing, no longer needed gas and oil pipelines to move the CO2 to areas where it can be sequestered underground. In this manner, we could reduce our CO2 emissions to near preindustrial levels in twenty years or less. If enough of us can’t agree on this, the politicians and corporations will tell us what we want.

In addition to decentralizing much of the electric production by utilizing the co-op method, I would like to expand the Tennessee Valley Authority and have it build large solar farms, wind farms, hydro and geothermal plants. But it will never happen if the politicians and the corporations have their way.

More efficent electric appliances should be the responsibility of the corporations that manufacture them. I believe they have made good progress in this area and will continue to do so.

Electric vehicles can and will be built by the auto manufactures if the demand is there. I would encourage the government to help in this effort.

Electric cars are being built today. Two years from now they will be significantly improved. With government encouragement and cooperation, the models produced five years from would be ready for mass production.

How do we encourage the people to buy electric cars? What if we allowed them to deduct the cost of the car off their taxes over a 3 to 5 year period. How about low or possibly no interest loans.

It seems reasonable to assume that as the auto manufactures produce more models of electric powered cars and ever increasing quantities, the price of internal combustion cars will rise. Adding higher taxes to the purchase, and fuel taxes, should encourage more people to go electric.

Posted by: jlw at June 25, 2008 9:57 PM
Comment #256775
IMO we need to find ways to lower fuel costs not raise them more. If it takes offshore drilling or opening up our reserves SO BE IT!!!

The problem is, new drilling won’t have an effect on gasoline prices until the 2030’s — and even then it will be pennies.

Posted by: American Pundit at June 25, 2008 10:45 PM
Comment #256783

””” quote he fills a 100-gallon tank with diesel — which is going for $2.20 a gallon on this side, compared with $4.55 on the other — then returns north, unloads the tank at his employer’s business and does it all over again.”“”” YES don’t bring gas cans or other objects to hold the fuel the fuel must go in a functioning tank hooked up to the vehicle or when you cross the border the guards will confiscate it..

Posted by: Rodney Brown at June 26, 2008 1:24 AM
Comment #256795

Paul, I couldn’t agree more with your opening paragraph. We are limiting our spending choices and travel choices to keep our budget functional. And I don’t mind a bit if it leads to my 17 year old daughter seeing in her lifetime virtually free and low cost energy sources, and a vastly cleaner and healthier environment for water, air, and food, as a result.

Yes, we Can!

Posted by: David R. Remer at June 26, 2008 3:06 AM
Comment #256808

Paul, You do make some good points; learning to conserve and become less dependent on oil will be good for us in the long run. I think your theory however is fundamentally flawed in that it takes issues like the Enron loophole and corporate greed out of the equation. The loophole not only allows oil companies to speculate on their own product, but all energy companies. And by leaving the loophole open, we only encourage future abuses by energy companies. Also, the issue of corporate greed does need to be addressed. For a long time, the oil companies said the rising prices were due to decreased refining capacity. Yet, did they build or refurbish even one refinery with their tens of billions of windfall profits? Tens of billions go into into their coffers every quarter while Americans struggle to afford the gas it takes to get to work.. millions of whom have no health insurance and are lucky just to feed and house their families. There is something fundamentally wrong in our country and by first laying the blame on the consumer, and turning down another road, we ignore the problems that continue to fester.

Posted by: Errol at June 26, 2008 9:03 AM
Comment #256824

Jim M,

Sorry you don’t like my management style. I’ve run across managers in my same business who responded to the same problems by hiring more people then firing the non-compliant ones. My fines were nominal, simply to get their attention. I suppose firing them would be less punitive. They always had the option of quitting. I always tried jaw boning first, but frequently that gets ignored. I rarely fired people, perhaps you might have been one I would have.

As a boss once told me, most things are habits, they can be good habits or bad. In fact, I recollect Ben Franklin saying something like that.

Posted by: googlumpugus at June 26, 2008 11:40 AM
Comment #256825


As far as I am concerned, the drilling issue is a hoax, prepetrated by the big gas and oil corps and propagandized by the Republicans. It seems to be working.

In the last 5 years, the government has issued many leases and 80% of them are not being drilled. The corporations are using this crisis to try and force the government to issue all the leases now, giving them carte blanche.

If we do start pumping the oil out of America in large quantities, where will we ship it to get it refined? What effect will that have on the price of gasoline?

All you here from the oil companies is we want those leases and we want them now. How many of them have applied for permits to build more refining capacity?

Posted by: jlw at June 26, 2008 11:42 AM
Comment #256835

I don’t know how relevant this is, but my family had several acres of land in Arkansas for many years. Over the years as family members have died off, the land has passed down the line of survivors, and my dad sold off a few acres 15 years or so ago. Just three months ago my brother and I were notified that since we survived our dad, we were to recive “royalties” on a couple of sections of land, since we inherited the 99 year mineral rights. Two different companies are beginning the process to survey, analyze and then perhaps drill on parts of those sections of land.
Guess the only reason for this post is that there is at least, some level of intent to search for viable deposits of oil in more than the more commonly known areas…..and we would have known nothing of it unless we didn’t have to get paid for them to do it. ;)

Posted by: janedoe at June 26, 2008 1:06 PM
Comment #256840

” Loose 20 pounds or loose your coverage sounds about right and pay a $100 fine for every excess pound for good measure. Does that fit with your management style?

If that gets me affordable healthcare, then that sounds good to me.” Posted by American Pundit.

I appreciate your honest response AP. For some, it is all about “me”, not freedom, self reliance or liberty.

Posted by: Jim M at June 26, 2008 1:43 PM
Comment #256844

“When the dems took over congress the minimum wage was raised, but what good is it now, most of that raise goes into the gas tanks so those who get minimum wage can get to their jobs so they can earn more to put in the gas tank. Those on fixed incomes are really in a bind. IMO we need to find ways to lower fuel costs not raise them more. If it takes offshore drilling or opening up our reserves SO BE IT!!!”
Posted by: KAP at June 25, 2008 09:38 PM

KAP, that is an excellent point and one I hadn’t thought about. All the arguments used to increase the minimum wage are now just thrown away by many of these same people. Where is the compassion now? I have heard candidate Obama use the word “fair” many times. Apparently fair is meaningless to him and his lemmings and merely a campaign slogan like “change”.

Posted by: Jim M at June 26, 2008 1:51 PM
Comment #256853

I heard a news report on my way home from work today that oil topped $140.00 a barrel and may top $150.00 before long. IMO, BHO and his dem congress better do something soon or us working class people will vote them all out of a job. That includes some republicans to.

Posted by: KAP at June 26, 2008 4:37 PM
Comment #256854
Loose 20 pounds or loose your coverage sounds about right and pay a $100 fine for every excess pound for good measure. Does that fit with your management style?

This would actually be cheaper than most are paying now…. Not me however, since I can’t afford any coverage, I am probably paying the least, for the moment, and hopefully no ones health in my family changes for the worse anytime soon.

Quite frankly, this country should be focusing more on weight issues than say, smokers. Weight plays a bigger factor in our health care costs than most other issues, (if not all other issues) smoking included.

As for oil, I am driving as little as possible, and considering getting myself a bus pass when the kids school starts up again.

Posted by: Kc at June 26, 2008 4:41 PM
Comment #256857

The latest Rasmussen and Zogby polls show overwhelming support by Republican’s, Democrat’s and Independents to Drill here, Drill now, Pay less…in the short term and long term.

Find out why oil companies leasing 41 million acres are only drilling on 10.2 million acres, a question posed by many writers on this blog.

Go here for the full story; http://newt.org/tabid/102/articleType/ArticleView/articleId/3538/Default.aspx

Posted by: Jim M at June 26, 2008 5:01 PM
Comment #256882

Paul,

It is not necessary to drive oil prices higher. Many alternative energy sources are already profitable at this stage, it is merely an issue of productive capacity. If you research many solar energy or wind power companies (you need to know what you are looking for for wind companies), you will see that there are tremendous backlogs.

The demand is there, the profitability to sell is there, it is just taking time to get factories up and running.

To put more upward pressure on oil prices is unnecessary from more or less any stand point you could care to take and would have many undesirable short term consequences.

Posted by: Zeek at June 27, 2008 1:20 AM
Comment #256925

last year, T. Boone Pickens predicted that oil would go to $150 per barrel. He then went out and bought himself a wind farm.

Posted by: jlw at June 27, 2008 1:57 PM
Comment #256951


Jim T: the American people are scared and that makes them mad. It also makes them susceptable to oil corporation and Republican propaganda.

Newt Gingrich? What, Carl Rove doesn’t have a article like this on his web site?

“First, when federal lands are leased to energy companies, the first step is to explore for oil.”

First, before energy companies start buying leases, they send geologist out to explore the region. Before you buy a lease, you would like to have a high expectation of finding oil and or gas there. Like wise, the government issues leases for exploration in those areas for the same reason.

“Most of the acres leased for oil end up being determined not to hold enough oil or gas to make it profitable”

How do they know that is true? Do they have a lot of dry holes as evidence of this? Most of those leased areas haven’t been touched.

How do the oil companies know that the above isn’t true for the areas off our coasts and Anwar? If they don’t know that, why are they promising huge amounts of oil, 160 years or more worth, and a quick fix to high energy costs?

Posted by: jlw at June 27, 2008 6:05 PM
Comment #256994

After reading all the comments and responses to those comments here I have come to the conclusion that we as an energy reliant nation are torn between a quick fix or long term independence. The realities of the past decade with regard to rising fossil fuel costs says that we will not again see what we consider to be cheap prices for that commodity. At least that is how I perceive the situation. The fossil industry has been gradually conditioning us as consumers to accept higher prices. They have been searching for that breaking point between consumer acceptance of cost and rebellion against cost. They have found it. They now are using the results of that breaking point as fodder to obtain support of change in drilling rights. They are promoting drilling in areas currently off limit in an effort to ease our worries. They are promoting themselves as the answer to a situation they have created. They realize that the world is reliant on fossil energy and out of desperation might bend to what I see as a form of energy blackmail.

In any event they are at least short term winners. If they get their way with further drilling rights they may be insuring that they will be long term winners. They are gambling that we will succumb to the thirst for cheaper fossil fuel, or at least a sustained flat rate, rather than putting all our efforts into clean, renewable alternatives which would greatly eat into fossil profits. The only thing that will ever make fossil fuels cheap again is a lack of demand. Of course the irony is that, that very lack of demand will insure that eventually fossil fueled automobiles will become extinct. Therein lies the nexus of the strategy behind the current rate of fossil fuel costs. It is an industry making huge not entirely ethical moves to insure its dominance in our energy reliant world. It is all about sustained long term profits and who gets to shape the energy model. They quite simply want to be “the man” well into the future.

Posted by: RickIL at June 28, 2008 11:32 AM
Comment #257000

RickIL, the response below to David on the Red Side is also appropriate for your comments.

David Remer said, “Jim M thinks the Oil companies are like fisherman, flocking in a herd to where someone else has found oil. Jim M, therefore, CAN’T explain why the Big Oil corp.s STUPIDLY bid hard cold cash and paid it to the government for drilling rights over areas where JIM M says there ain’t no oil.”

David along with many writing on this blog fail to understand the difference between leasing and owning land for the production of oil and gas.

Briefly, both competitive and non-competitive leases are for a 10 year duration which can be extended if actual drilling or production is taking place. If not the lease is ended.

A royalty of at least 12.5% is paid to the federal and state on all production. Successful lease-holders pay a minimum of $2.00 per acre leased with the same (of lessor) amount being paid annually for as long as the lease is held along with a fee per parcel leased.

David failed to understand my fishing analogy which is observable to anyone who cares to look. Just as you will find the successful fishermen in certain productive areas of a lake, you will find oil drilling and producing rigs gathered together in the landscape. A drive thru Texas, Oklahoma or other area producing oil or natural gas will prove to be a revelation to Daivd and perhaps others.

Finally, David appears to believe these leases are held in perpetuity and thus the oil companies want more so they can lock up the oil and gas resources for some time in the distant future.

They’re wrong, if the lease isn’t productive within the ten year time frame the leaseholder looses the lease with no return of royalty or lease charge.

It’s a very simple concept David, use it or loose it. No hoarding allowed. And, if you believe it is a slam-dunk deal for the oil companies to make huge profits why don’t you bid on some oil and gas leases?

Posted by: Jim M at June 28, 2008 12:49 PM
Comment #257015

Jim M

I understand the concept of leasing land for exploration. I also understand the reasoning behind drilling companies flocking to proven areas. Still your reasoning here does not explain why they need more unproven land rights if they have millions of acres currently leased which have not been thoroughly explored or not explored at all. At this point they can not guarantee any better results off shore or in ANWR. Their claims are based on unproven speculation. The math does not add up. I can not believe that they lease land knowing that they will never be able to explore it. That is not in keeping with good business practice.

If you are suggesting that I should just accept that the oil industry is an honorable and well meaning industry with my best interests in mind, well I suggest you look for another sucker. I will not support an industry which seeks to guarantee my reliance on its product when there are better choices just around the corner.

There is huge, huge money at stake here. The world is being reshaped as we speak simply because of the need and desire for energy. My money is on alternatives. Just how fast the industry takes off is totally dependent on what actions our legislators take once we are beyond this election year and which party gains control. If I were an investor I believe it would do me well to invest in non-fossil based energy sources. Of course the big question is just which ones will be the big winners. I think we will find out within the next few years.

Posted by: RickIL at June 28, 2008 3:42 PM
Comment #257016

Dear Sirs,

For over 20 years I have worked in R&D in Chemical Engineering in the field of petroleum technology and I am very surprised about the sudden increase in oil prices. The reason for my surprise comes from the fact that tar sands technology for developing heavy crude oil was projected to be cost effective only when the crude oil price exceeded $30/barrel. Now the crude oil prices exceeded $130/barrel and we didn’t see much of an increase in the production of crude oil from tar sands. One would say, oh this is because the tar sands are limited in quantity, and very costly to extract, and I will say, no there are only 3 trillion barrels of them in Canada and Venezuela to a lesser extent in the US, particularly in Utah. Then if the prices of crude oils were really market driven, one would see a dramatic increase in investments to extract tar sands from the sure reserves in Canada and to a lesser extent in Utah. However, surprise, surprise, nothing of this happened. The answer is quite simple. Yes there are people and interests that control the flow of the crude oil and its investment. Most of the research and development of renewable and unconventional crude oil alternatives are and will be controlled by the oil conglomerates. The Department of Energy even gave tax dollars in the form of research funds to these very companies to develop new and alternative energy sources and they spent the money and kept the findings for themselves. The Department of Energy is not to be blamed though, because they have given these funs in good faith willing to get some advancements in the way we extract oil and gas.

I used to work in the University as an Assistant Research Professor before working in the Industry. I was involved in a research project aiming at the use of compressed CO2 in extraction processes. I was able to find a new process by which we can use environmentally benign solvent extraction of tar sands instead of the less inefficient and environmentally polluting hot water method currently used. My research proved the ability to extract the tar sands and recycle the solvent completely by the use of compressed carbon dioxide which separates the extracted material from the solvent and recovers the solvent completely to be used for further extractions in a continuous process. The carbon dioxide would be recycled and recompressed for the next batch and so on. A complete energy consumption and capital investment study was made (in 2003) and the process proved to be economically feasible even when the barrel of crude was ~$30 or higher. The process is patented and the University owns the right to the patent, when it is granted. Now, this is a technology that needs capital investment to be implemented. No petroleum company is willing to take this technology into action because they really do not want to increase the production of crude oil and decrease the prices. The question is who then would do it? I would say, this is the turn for our government to take it’s role and invest in this national security technology. It is a matter of survival and national security to produce oil from these new and proven technology. If we wait for the oil companies to do it, they have no interest in doing it now, or ever.

If anyone can tell me how can my new technology be promoted/implemented for the public interest, I would more than happy to help.


Posted by: Nael Zaki at June 28, 2008 3:43 PM
Comment #257027

Paul:

Very nice article. I have to agree with you when you say that the high gas prices are a blessing in disguise. But only IF it is enough for America to wake up and put PARTY politics aside and address the problem in three phases…short, intermediate and long term needs. Quite frankly, neither PARTY’s canidate’s are willing to show the courage to actually solve the problem. In stead we get the “solutions” of a windfall profits tax or drilling. Both in and of themselves are counter productive unless used in a solution that encompasses short, intermediate and long term solutions. IMHO, the windfall profits tax is both a misnomer and has no real redeaming qualities other than political expediancy.

At this point, I question your inclusion to this debate the issue of global warming. Excuse me in the fact that I am not sold on “global warming”, but it is irrelevant to the oil crisis. I say this because IMHO if we deal with the oil crisis it its totality, we will move away from fossil fuels, and IF the “global warming” belief is correct the solution will be addressed in a more timely fashion, without mudding the political waters. If the “global warming” issue turns out to not be man made, then the issue is dead also. I am not intending to turn this debate into a “global warming” discussion, but am just trying to point out that your arguement would have been just as sound without the mention of “global warming”.

IMHO conservation alone does nothing to address the problem. Let us assume that we are able to consume 25% less oil as a country in the next five years. that would be great, and I am not argueing that we should not try to achieve that goal. But then what? Given the increased consumption rate of China and India, not to mention other countries that may choose to develope, IMHO at best we would be barely treading water. Probably not even that. But if that alone is the proposed “solution”, at best we tread water, at worst we drown.

IMHO drilling in ANWAR and offshore alone is not the solution. Unless we can guarantee that we can produce more oil than the WORLD needs, and can increase production to continiously meet the rising needs, then it also is an exercise in futility. What good will increasing supply less than the increasing demand do us? The only way that drilling solves our crisis is if we produce more than we consume and we do not sale our oil on the open market to others. This would lead us to be a country that is strong only as long as we have a finite resource. Drilling alone cannot solve our crisis, especially when we have not the refining capacity to convert the oil to the many specialty blends of gasoline that are called for today.

If we all had electric cars, the problem would be solved!! Zero emissions!! Examine that for a minute. If today the government provided us all with electric cars, what would happen when we got home from work and plugged them in to recharge? Our electric grid cannot handle heat pumps in hot weather right now. Does anyone think it could handle 100 million cars on charge?

Ethanol? Congress mandated a higher rate of ethanol inclusion to fuels all the while paying subsidizes for people to NOT grow the crops. The results are visible now in food shortages and inflated food prices.

Nuclear power? It has a lot in common with drilling and a ” Mahattan Priject” for alternative fuels as it will take at least a decade to see any effect on energy supply. At this point I would like to point out that our President vetoed a bill that would have provided more oil and this happened more than a decade ago, when we could have had more oil on line NOW, reducing prices. Also, a few decades ago environmentalist extremists confused the issues of nuclear weapons and power, and defeated the efforts of nuclear power in the process. Again, this was energy that would be on line now, reducing the need for coal and oil fired electrical plants.

Windfall profits tax? IMHO this idea is the most counter productive of all “solutions”. It has been tried in the 1970’s and, well here we are. It would not add one drop of oil/energy to the supply line and would only decrease demand raising prices so that the “working man” could not afford it.

IMHO most of the above proposed have some merit, but when they are used as single issue PARTY election issues, they fail. And we fail by allowing both PARTIES to manipulate us for their own power. We need to wise up, determine if we are in a crisis and if we are, develope a long term plan that addresses our needs in the short, intermediate and long terms. Does this mean that we will have to hold our noses while parts of the plan goes against our quest for political power? Does this mean that the mean oil companies get their hands on more oil? Does it mean that more nuclear plants be built in my back yard? Does this mean that the government gets to put tighter mandates on energy use and production? Absolutly.

IMHO we need at least the following to address our energy needs:

1. Short term:
A. Conservation measures including a plan to reduce oil usage for both gasoline and electricity.
B. Increased oil exploration.
C. A plan that will include increasing clean coal and nuclear usage while decreasing oil usage.
D. A plan to increase domestic oil output and refinary capacity.
E. An honest discussion and plan to encourage alternative energy sources. I would like to say that trying to force the oil companies to solve this equasion is, well silly, IMHO. Even if taxes are levied to do this, it would increase the cost of gasoline. Also I would ask what would be your reaction if the government came into your workplace and mandated that you provide a solution that would eventually destroy the core buisness of your company? There would be a lot less…let me say resistance if other companies threatened the core buisness models of big oil.
F. Federal, state and local governments reduce their profit margins through fuel taxes to that of the oil companies. Nothing will make government act as much as loss of revenues.

2. Intermediate:
A. More fossil fuel and nuclear energy sources come on line, reducing the price of electricity and make oil a less viable source of energy.
B. Research and developement investments start to pay dividends and make alternative energy technologies viable.

3. Long:
A. The government is able to enact further mandates that ween us off of fossil fuels using sound logic that is not detrimental to the food supply, the economy nor to the average American Citizen.
B. We will not be locked into one technology. Whichever technology proves out, we can adapt to.

My fear is that until we are able to put PARTY politics aside and demand that our Congress and President look past the next election for solutions, AND hold them accountable for long term issues as opposed to the short term ones we currently enjoy, the whole debate is moot. Sir, you correctly stated,” I know I will be attacked from all sides for saying that high gas prices are a blessing in disguise. Everbody focuses on rising gas prices and how Saudi Arabia, China and big oil companies are responsible for our woes. Instead of worrying about who is to blame for this turn of events, we should use our current tough situation to mount an all-out effort to develop alternate non-carbon fuels.”, with which I could not more agree. People that propose solutions that either just limit or unbridle capitalism or government alone will not be satisified that the long and intermediate solutions are found in both. The solution is neither single ideology nor single PARTY. Unless We THE PEOPLE can muster the will to hold our government to account for their failings on votes that effect generations in the stead of our “hot buttons”, a solution will never be reached. And until that day comes, we deserve what we get, including the waste of the promise that free men may be governed justly and the demise of our country.

It seems to me that we had these same problems a few decades ago and settled for sound bite solutions. IMHO that led to the crisis we are confronted with today, except today the problems are more severe. Unless politically something fundamentally changes, we cannot expect anything other what we did in the 1970’s. God help our chlidren, please.

Posted by: submarinesforever at June 28, 2008 6:52 PM
Comment #257028

RickIL

“If I were an investor I believe it would do me well to invest in non-fossil based energy sources. Of course the big question is just which ones will be the big winners. I think we will find out within the next few years.”

The future is now, Rick. The “big winners” in alternative energy are already emerging, and to be quite honest it does not seem like they need government help at all. Their growth is explosive and their profitability is huge. I think people are still going on about government subsidies because they do not realize that this has already gotten into full swing. It is only a matter of time, but the following years will bring some exciting changes regardless of whether or not the government does anything.

Posted by: Zeek at June 28, 2008 7:25 PM
Comment #257034

Zeek

I am very much aware that it is happening at this moment. And to be honest I find it very exciting. But then that is mostly the technology geek in me coming out. One of the biggest obstacles to a full fledged coming out of alternatives resides within our congress. Some of these industries need new laws allowing necessary infrastructure changes to take place in order that they can go full scale. Unfortunately the influences that be seem to somehow always manage to convince our legislators to put up road blocks. I find it very sad that corporate power brokers have so much influence in legislation.

Posted by: RickIL at June 28, 2008 11:19 PM
Comment #257037

RickIL, even if Congress did nothing then most of the businesses that are really showing promise in the alternative energy sector would still be able to find a way to get their products and services out to average citizens. I would be concerned about Congress putting up road blocks, but I have not seen any examples of that lately given soaring energy prices.

Maybe I overlooked something since I mainly look at the financial side of the news. Did you have any examples you could share? I would be interested to know what Congressmen are doing that would impede alternative energy.

Posted by: Zeek at June 28, 2008 11:53 PM
Comment #257072

Zeek

The capability and plans to build a solar heat capturing plant somewhere in the deserts of the southwest have been made. The plant would be very large, if I remember correctly about 75 miles on a side. It would essentially use fresnel mirrors to direct heat onto flowing water which would feed into huge underground storage areas and from there it would use steam power to drive above ground turbines. At full capacity it would be capable of operating 24/7 and providing energy, totally free of fossil fuels, to every home in the US at a rate commensurate with current levels. It has the necessary investors but has been unsuccessful in attempts to get congress to pass necessary legislation to get underway with transmission lines. With no capability to deliver they are dead in the water. Smaller plants are already popping up in California and I believe other areas of the southwest. The last one I read about was going to or maybe is supplying energy to about 70,000 homes and businesses in southern California.

I did a quick google on solar energy and this one popped up right away. Bush administration halts solar energy projects on federal lands It seems a bit hypocritical to me that they can push for drilling which guarantees carbon concerns and at the same time has the potential for devastating environmental impacts. Yet we have to forestall clean renewable alternatives when we need them the most. This one concept alone has the potential to totally change the impact of fossils in our country and others that are willing to adopt it. It will not happen overnight. But I think like natural gas it will over time creep into most if not all of the US providing it is allowed to happen. NPR had an excellent program on this I think back in March. I am too lazy and busy at the moment to do more research. However you can get the jist of where I am headed here. I should also mention that obstacles also reside at he local and state levels in the form of changing building codes etc. Of course there is opposition from trade unions etc that also have a vested interest in the way we build in this country. I think it is quite obvious that while republicans talk about renewables, in reality they are fighting them all the way. Their way of thinking is more in the form of cleaner coal and more drilling. The fossil industry owns their asses. Talk about environmentally, and economically challenged people. But then this only leads credence to the fact they operate strictly out of a short term frame of mind. They have little ability or want to think long term. Everyhting for them is about profiting today with little concern for tomorrow.

Posted by: RickIL at June 29, 2008 12:07 PM
Comment #257164

It is devastating to the economy, the middle and lower classes and the American way of life. It leads to higher food prices, lower jobs, fewer roads, an eroding tax base and a host of other problems. And without a shred of proof that any of this changes global climate change one iota.

Posted by: David M. Huntwork at July 26, 2008 10:17 AM
Post a comment