Love Those High Gas Prices

What is something worth? Exactly what somebody will pay for it in a free exchange. Price ensures efficient distribution of resources, informs everyone of relative scarcities and contains predictions of future supplies and demands. No planners, academics or government agencies have ever been able to understand the complexities of price. And no legislature has been able to repeal the law of supply and demand. The smart ones don’t try. They just try to figure out how best the take advantage of the power of the market. Price will “solve” the energy crisis.

To see how, let's first go to a place where price didn't matter. In the old Soviet Union, resources were distributed by government fiat. This led to shortages, waste and long lines. The fiat system survived the demise of the evil empire in the form of energy prices. Russia, the big energy producer, for a time continued to charge non market prices in Russia and some former Soviet clients. The result was phenomenal waste of energy.

For example, apartment blocks were centrally heated. The heat came on at a certain date and went off on a certain date w/o reference to the weather. Individuals regulated the heat by opening and closing windows. Even when it was 10 below zero, many homes and offices left their windows open. It was even worse in industry. Soviet factories continued to use equipment that you could not even find in museums in the West. Why? Artificially low energy costs and no price structures gave no incentive to replace old, inefficient and polluting machines.

That was the past, but not the very distant past. Even today places like Russia and the Ukraine use more than twice as much energy per unit of GDP as does the U.S. or W. Europe. In fact, if the countries of the Warsaw Pact reached Western efficiency, it would reduce WORLD ENGERGY DEMAND by 7.2% and, BTW, reduce pollution even more.

Recently Russia raised the price of energy to Ukraine to a more market rate. Suddenly, the old industries are in trouble. The WSJ features an article about a Ukrainian steel plant still using open hearth furnaces. These are the things you sometimes see in old movies, but they are long gone in the West. From 1931 (when the furnaces were installed) until now nobody thought a change was in order. Now with the higher prices, new furnaces are on the way. They will cut metal waste by 20% and cut energy costs per ton by 55%. The refitted plant will also cut pollution. A win all around and ALL because of market pricing.

We Americans are not as inefficient as these poor guys suffering under the legacy of communism, but we could do much better. It costs us .22 a ton of oil equivalent energy for each $1000 of GDP. For comparison, Germany can do the same for .17. The relative price of energy has a lot to do with this. Higher prices are something the Euros do better than we do. So let's let price do its work for us too.

We will never run out of oil. We may run out of $40/barrel oil, but there is still plenty of $70/barrel oil and a real big supply of $100/barrel oil. Running out of oil is a bogus problem. But a valid question is, "How much do you want to pay and what are the consequences of using oil?" At around $60 alternatives make a lot more sense and so does conservation. Let's take the proper steps and encourage our leaders to do NOTHING to lower energy prices for American consumers. That is the best energy policy we can have.

Posted by Jack at May 8, 2006 5:16 PM
Comments
Comment #146308

Jack,

I am confused by Congress. They created a federal tax so that it would cause us to conserve. I believe that was the stated goal. Now that they got their wish, everyone of them was in front of a gas station last week holding a press conference with their plan to lower prices.

Posted by: JimmyRay at May 8, 2006 5:29 PM
Comment #146315

Jack,

When the price of my business goes up, do yu really expect me to raise my prices accordingly?

This will be a bookeeper’s nightmare.

You mentioned in another article that people you know are adapting to the price of gas by taking mass transit.
Frankly, I can’t see taking all my tools and an 8’ ladder on the bus with me.

Posted by: Rocky at May 8, 2006 5:51 PM
Comment #146323

I think what jack is referring to is that the market will force everyone to look at how we can be more efficient and less wasteful.

you think if car manufactureres start seeing a huge drop in demand for SUV’s that they arent going to address that? Auto Mfgs used to get around government regulations on minimum MPG standards by making one or two cars in their lineup be super efficient, and then the rest of their cars/trucks could be the normal gas hogs. This worked out well when gas was cheap. nobody 5 years ago thought about how much it would cost to fill up every month when they went to go purchase a car (gas was under a dollar less than 10 years ago). Now, if you are going to drop 200-300$ per onth on gas, well hell, that is like another car payment. auto mfgs know this, and will address it somehow.

Posted by: b0mbay at May 8, 2006 6:42 PM
Comment #146325

Jack, your article ignores the complicity of the Republicans in undermining supply and demand by the corporate subsidies they profer and their support of monopolization in the form of oligarchies.

Gasoline prices are only modestly higher based on actual increases of crude production, but, higher still based on the futures markets of speculators and higher yet due to the total lack of oil companies reinvesting profits into new refinery capacity.

Now if there was real world competition between oil companies, instead of cooperation, winks and nods, and jointly successful lobbying efforts, there would be a race to increase refinery capacity to meet the growing demand. But, instead, Republicans are continuing to subsidize the oil companies with tax dollars and giving them a pass on pocketing profits instead of increasing supply. Now any capitalist worth their salt would not kill the goose that laid the golden egg, so oil companies are content to keep supply restrictive, allowing demand to drive prices and their profits up, and take the tax handouts from Republicans in return for campaign contributions to get them reelected.

Nowhere in this scenario, is supply and demand free to govern, thanks to the cozy incestuous relationship between the GOP and the Oil Cartels.

Posted by: David R. Remer at May 8, 2006 6:50 PM
Comment #146327

b0mbay,

“you think if car manufactureres start seeing a huge drop in demand for SUV’s that they arent going to address that? Auto Mfgs used to get around government regulations on minimum MPG standards by making one or two cars in their lineup be super efficient, and then the rest of their cars/trucks could be the normal gas hogs.”

You’d of thought that the Detroit would have gotten the message in the ’70s.

Anybody that thought fuel was going to be cheap forever deserves whatever happens to them.

And that includes Detroit.

Posted by: Rocky at May 8, 2006 6:58 PM
Comment #146333

The GOP’s response to making vehicles more efficient is evident in their panel hearings in the House last week. They seek stratified CAFE, or fuel economy approach, that would allow the wealthy to continue to buy super heavy safe vehicles with lower CAFE standards, while the the middle class and poor are forced to buy the lower cost vehicles with higher CAFE standards while sacrificing safety through reduced weight which is the Auto Manufacturer’s solution to increasing fuel efficiency.

All of this ignores some simple truths about reducing fuel consumption in vehicles. The tear drop is the most aerodynamic shape in the physical universe. So where are the tear drop shaped vehicles? Hybrids are not yet less expensive than straight gasoline vehicles because battery replacement every 100,000 miles costs $4000 and have hidden environmental costs associated with their recycling and disposal. The incentive to design safer driving environments is replaced by creating heavier reinforced vehicles. How DUMB is that?

I don’t know what Democrats answers are on this, but, but some Progressive ideas are for more mass transit, far more enforcement of our traffic laws, ending “NO FAULT” insurance policies and holding faulty drivers accountable for the accidents they create by revoking their licenses for multiple accidents in a given time period, far more frequent driver testing for the young and elderly, and biometric keys to vehicles so that those who aren’t supposed to be driving CAN’T. All of these and more will address real fuel savings and safer driving environments.

Too complicated for Democrats and Republicans though.

Posted by: David R. Remer at May 8, 2006 7:06 PM
Comment #146338

David

Is the current administration really at fault for lack of refining capacity? For the last 30 years pressure from environmental lobbies has made new refineries impossible. Yes the oil companies have invested in expanding capacity but only on the land they already have, no new footprints for refineries. Folks have been screaming for investigations of the oil companies through both republican and democratic administrations since the 70’s. You have to believe that one or two politicians or reporters wanting to make a name for themselves would have come up with something by now. Gas prices here are nowhere near what they pay in the UK or Netherlands, are our friends across the pond less likely than us to cry conspiracy? When it comes down to money in folks pockets it’s always easier to blame big corporations - easier than explaining market forces, Chinese & India’s economic growth etc.

Posted by: JR at May 8, 2006 7:33 PM
Comment #146340

JR, or is that Republicans relaxed environmental standards across the board have fueled even greater NIMBY sentiment? Refineries can be made clean, they will cost more. If Oil companies have any intent to build new refineries, (why should they, lack of supply means greater profits) the time to do it is before 2008 when perhaps, their friendly subsidizing Republican Party won’t have control anymore.

Posted by: David R. Remer at May 8, 2006 7:37 PM
Comment #146347

David,

“If Oil companies have any intent to build new refineries, (why should they, lack of supply means greater profits) the time to do it is before 2008 when perhaps, their friendly subsidizing Republican Party won’t have control anymore.”

Why should the oil companies invest billions into technology that will be obsolete in 10-15 years.

Better that the profits should go into the stockholders pockets now while the getting is good and the squares are ripe for the picking.

Posted by: Rocky at May 8, 2006 7:47 PM
Comment #146349

Rocky,
“When the price of my business goes up, do yu really expect me to raise my prices accordingly?”


Uh, you mispelled “you”; we can’t take you seriously now…

:o)

Posted by: rahdigly at May 8, 2006 7:48 PM
Comment #146350

The time was 1996 when President Clinton vetoed an opportunity to get ahead of the curve in terms of supply. As a progressive you will never be convinced and we will continue to be on opposite sides of the debate,but where was the outrage when oil companies folded as oil slipped to @ $10? Profits don’t make a company guilty, they make it healthy enough to employ thousands of workers. Would your wrath have been kindled if gas was $1.50 with a $1.00 federal tax? Dem’s have wanted high prices to curtail use for years, now because oil companies make .08 cents a gallon they are evil?

Posted by: JR at May 8, 2006 7:54 PM
Comment #146351

rahdigly,

“Uh, you mispelled “you”; we can’t take you seriously now…”

I have never found a reason to take you seriously.

Posted by: Rocky at May 8, 2006 8:00 PM
Comment #146352

JR, they are not evil, they are greedy and selfish, failing to realize that protecting, supporting, and investing in this nation’s future energy independence is in the best interest of this nation. They live in a governmental environment that asks nothing of them except to pad campaign coffers and investor annual returns partially because of their success in padding those campaign coffers. The evil ones are the politicians who take the donations and lobby bribes in lieu of legislating for our nation’s future.

Hence the Republican poll numbers nose dive.

Posted by: David R. Remer at May 8, 2006 8:00 PM
Comment #146358

It’s funny how Jack and others who think like he does ignores exactly what makes the supply/demand/price functions work:

Perfect competition

Econ 101 tells us that supply and demand intersect at an equilibrium price only when there is free entry in and out of the market - the reason price is the equilibrium of supply and demand is the logic that, if one supplier is overcharging, a new supplier can come in and undercut that price.

Of course, the oil market today is a textbook case of market failure - oligopolistic competition.

Please, take some econ.

Posted by: Arr-squared at May 8, 2006 8:29 PM
Comment #146359

Jack-
Oh, geez, and I just wrote this article about how we should dictate energy prices by fiat…

Seriously, I think you’re misreading Democrat intentions. Our problem isn’t with legitimately determined prices. Our problem is with the artificially raised kind. Just as we should not see inefficient energy usage be supported by subsidy and government fiat, we should not see prices illegitimately raised by industrial misbehavior.

I mean, you’ve suggested on occasion that we raise taxes on gasoline liberally, no pun intended, so that people abandon fossil fuels. But isn’t that just a form of market manipulation itself? This is of concern because making gasoline artificially more inefficient adds inefficiencies of the economy and tolerance for comparatively inefficient alternatives. Take Ethanol- it’s actually produced at a loss, which we taxpayers foot the bill for.

I don’t think prices should be raised or lowered by government fiat. I think that we are better off simply raising the minimum efficiency standards for new vehicles gradually, and letting the market choose more economically efficient means to match those standards.

Legislation should be less aimed at the abstract world of finances and taxation, and more at producing real world results. Funding research would be one way of doing that. Raising different standards would be another way.

JR-
You’re only counting the gasoline. Who do you think produces the crude, which creates the bulk of the costs of that gallon of gas? You’re buying the company lines- they are spinning their oil profits by pointing to their gas profits. That’s like a farmer saying his profit off a cow is only what he’s getting for the hide. The truth is, that farmer’s getting stuff for the meat, the bone, and everything inbetween.

Well? first, the oil companies are selling folks the crude. Sometimes themselves. Then they’re processing that into different parts, chemical feedstocks and fuels, which themselves are sold. Gasoline is one part of that, and the bulk of the cost is coming from the price of the crude.

You’re not looking close enough at your friend’s claims. I’m not the only person figuring this stuff out.

Posted by: Stephen Daugherty at May 8, 2006 8:33 PM
Comment #146362

David
The poll numbers were bad in 2000, 2002, 2004 as well, the only poll that matters is election results. Because they don’t protect and invest in our energy independence? How can they when they can’t drill where the oil is? When do we stop giving up OUR resources? When can we drill off the coast of California? When can we drill off the coast of Florida? When can we drill in ANWR? When do we protect ourselves by allowing “big oil” to get to the reserves we have at hand? What about the low sulphur coal put off limits by President Clinton in the Grande Escalante region? The wind farms that can’t be built because Senator Kennedy doesn’t want his ocean view disturbed? Again, we could have begun this exercise in 1996. Will you protest China if they get into the Gulf of Mexico, how about Cuba? Do you believe those state sponsored companies will give a good gosh darn about environmental issues? Get out of the way and American business will find a way to keep us in the lead in exploration, drilling technology, refining and delivery and continue to care for the environment in far better manner than a leftist socialist government ever could or would.

Posted by: JR at May 8, 2006 8:37 PM
Comment #146366

JR,

“When can we drill off the coast of California? When can we drill off the coast of Florida? When can we drill in ANWR?”

Eminent Domain!

Yeah, Eminent Domain, that’s the ticket

Posted by: Rocky at May 8, 2006 8:49 PM
Comment #146377

While I don’t ant to deny anyone even the oil companies a profit, I think that gas prices are out of control. OK the cost has gone up to produce a gallon of gas. But has it really gone up that much? And gas isn’t the only product that comes from a barrel of oil. Have the prices of these products gone sky high too? I haven’t heard of it it they have.
Gas prices right now are dropping. We just lowered our prices 7 cents a gallon today. How far down they’re going to go is anyone’s guess. And even then there is no gaurentee they won’t go back up.
All this just reinforces the need for research of alternatives fuels.

Posted by: Ron Brown at May 8, 2006 9:18 PM
Comment #146378
What is something worth? Exactly what somebody will pay for it in a free exchange.

Jack, what happens when all of a sudden, the less fortunate half of America can’t afford gas, oil, plastic products, and food (fertilizer, pesticides, processing, and transportation all use oil)?

It’s absolutely irresponsible for Republicans to advocate high gas prices without an alternative in place. You guys are going to kill the little guy.

What a great “let them eat cake” article that clearly demonstrates Republican thinking, Jack. Please keep posting these.

Posted by: American Pundit at May 8, 2006 9:19 PM
Comment #146384

Here’s what I like Jack,

Bush lays the blame at our feet for the oil prices—golly it’s us that are addicted to it. Well no f’n shit sherlock! Yes and we have all of our trucking and commerce balasting on it too. Wow we must all be junkies then—what a load of horsecrap. Our dollar isn’t worth dick, our industries are running on borrowed money and we have an exchange rate internetionally that makes foreign oil really expensive. Golly gee what dependent junkies we are.

No wait we need more refineries—that’s it, yeah! More bullsh*t! Oh wait we can switch to Ethanol and biodeisels, well Bush hasn’t done anything on that one has he? Aaaaand guess what kids he doesn’t intend to, the Bush family is an oil family and the sheiks in Saudi Arabia are all Bush family friends. Including the Bin Ladens who Bush let out of the country on September eleventh, god forbid they be questioned on anything! Cram the 100 dollar rebate sideways! Get our treasury back in order and cull back that deficit—there’s an idea!

Are Republicans so stupid they buy Bush’s superficial answers on anything??? WE have a relatively good economy based on fiat and loans. Yes interest rates are reasonable now that’s it. But profit margins are still jiggling in the magic 8-ball. Our consumerism is undermined by these higher fuel prices and won’t come down until we pay off our insurmountable debts (to China no less. All government contracts cost more and all that with a war to fight, a keynesian war with the wrong country based on vitriolic assuptions and what amounts to no less than conjecture.

Okay higher prices are good, stepping in dogsh*t might be good too, if you’re an idiot.

Posted by: Novenge at May 8, 2006 9:40 PM
Comment #146388

All

Higher prices will help us develop alternatives to oil, conserve fuel and reduce traffic congestion. U.S. gas prices - even at today’s levels - are low compared to other major industrial countries. They are also low not that high adjusted for inflation.

Those of you who complained that the President rejected Kyoto cannot complain about higher prices. Those of you who want to reduce our dependence on oil cannot complain about high prices.

The prices are accomplishing the goals so long and loudly proclaimed by liberals, environmentalists and nationalists. They will help get us off our oil addiction. They will discourage SUVs and excessive driving. They will encourage mass transit. The list goes on and on.

So what is the response? People on the right are scrambling to lower prices. Lefties teaming up in an unholy alliance with the likes of Bill O’Reily want to tax oil companies more.

I have been in favor of higher prices since I saw how well they worked to end the last energy crisis and how well they reduced consumption.

People talk about conserving. They talk about alternatives. They are usually lying. If you really want to conserve and you really want to use alternatives, you should have no trouble with higher prices. Cut your driving in half or buy a car that gets twice the mileage and your gasoline bill will remain the same even if prices double.

It wouldn’t hurt for most people to walk a little more either. Nor would it be a bad thing if urban sprawl wasn’t subsidized by low gas prices.

Keep the prices high to encourage alternatives and conservation. THe proposed government programs will try to do the samee things with alot more trouble and expense. We should have learned from the 1970s.

AP

If not now, when. You talk about global warming. How do we counter that? Use less fuel and develop alternatives. How are we going to do that if our price structure encourages us to use more and makes alternatives more expensive than oil.

Posted by: Jack at May 8, 2006 9:59 PM
Comment #146389

Jack,

I am by no means a socialist, I tend to take a utilitarian view of most issues, and I think that free markets are the most efficient systems generally speaking. However, I don’t think markets are inherently better in certain circumstances. In this case, our economy is entirely dependent on cheap oil. Our infrastructure is built around oil, and a price shock could potentially damage the longevity of our economy irreparably. We also spend a great deal of money and influence maintaining oil pumping governments which are oppresive and unstable, but which we depend on for a supply of cheap oil (think of our base in Saudi Arabia, protecting their oil fields in case Saddam attacked them). This is why I advocate our government taking an active role in promoting replacement of oil, because it is a liability for society as a whole, and by the time it becomes cost prohibitive (which could be rapid, because if peak oil is correct, production will start to slump, right as China and India start to rapidly increase consumption), the transition will be too late and the economic damage will be done. Can we really handle another depression? While I think it would be a chastening experience and would teach us important lessons, I think avoiding economic depression should be our government’s primary goal.

So, I agree with you, lowering the cost of oil does nothing but exasterbate the problem, we should be looking for solutions in the private and public sectors. Flex fuel vehicles (all diesel vehicles and the ethanol capable ones) are not that much more expensive to produce (making an engine ethanol capable is MUCH cheaper than, say, a hybrid), and can both take advantage of cheap gasoline while it is here, and other fuels when they become cheaper.

Posted by: iandanger at May 8, 2006 10:10 PM
Comment #146390

JR,

Yes we are acually advocating candles and horsedrawn buggies, you like it?

The real reason we don’t get those American mules a’pumpin’ is because it is too expensive to pump domestically whereas we can get foreign oil (Mideast, South America) at a price that befits our commerce needs. Are you advocating we pay five dollars a gallon or five and change? Then I guess you are on Jack’s side of the table. If we could afford to drill here for substantive reserves we would have done so a long time ago. The reason we don’t is because we can’t afford to absorb the labor costs.

Biodeisels are the way out but we have to get multiple companies (10 to 20) refining it so that through competition prices come down and we can support our trucking needs. Bush BTW has no intention on doing anything smart or helpful but help his friends and family in big oil rake it in at our expense.

Posted by: Novenge at May 8, 2006 10:16 PM
Comment #146391

BTW

If history is any guide, the price of oil will drop again. You can call me crazy just like you would have called me crazy in 1980 (when oil was REALLY at an all time high) if I told you that oil would be down to $10 a barrel in 1998. But it will. WHEN that happens, we need to tax the price back up. We should never again allow the price of oil to drop below $50/barell in today’s dollars.

The system works like this. The price of oil rises and we all pay big money to despots and potentates world wide. We start to develop alternatives. We start to drive more efficient vehicles. As soon as alternative begin to take off, the price of oil falls through the floor. Alternative energy producers are bankrupted. People buy bigger cars. They move farther away from town. They drive more miles. Then the price rises again leaving the circle unbroken.

WE can break the circle. Never again let oil be cheap. If we want to succeed, we have to be willing the pay the price. Those unwilling to pay the price are part of the problem, not the solution.

Posted by: Jack at May 8, 2006 10:19 PM
Comment #146392

Jack, the only way the price of crude will ever drop precipitously again is if there is another world wide recession which reduces demand. As long as the emerging nations are growing their industrial, domestic consumer, and export markets, there will not be a large drop in the price of crude again.

Well, there is one other exception. If global warming melts a glacier which was plugging a huge pressurized oil deposit no one knew anything about. But, how likely is that, eh? :-)

Posted by: David R. Remer at May 8, 2006 10:35 PM
Comment #146394

Jack—seriously?

I know you want to support the Bushster through thick and thin but when did the right EVER, EVER have an ecological agenda until now. THINK ABOUT IT. Bush is screwing up and instead of facing facts you are playing the devil’s advocate to the point where you need to take a nonpartisan breather and reflect on what you are saying.

THE REPUBLICAN READING RAINBOW says alot of things but c’mon now the Republicans, NOW, all of a frickin’ sudden have a greenpeace and ecological bent? They are now avidly trying to save the O-zone and the rain forest? Well Kumbiyah to you too but it’s pure bovine fecal matter. Bush is screwing up and screwing you too I suspect as you might also be a vehicle owner of some form that is reliant on oil. Don’t apologize to the man robbing you and don’t make excuses as to why a robber does what he does.

JACK If you support individual responsibility and people taking personal responsibility then by all means let Bush take personal responsibility for what he is doing to us now. He doesn’t need your apologism, let him take responsibility for his administrations actions.

If you really feel eco-friendly plant a damn tree, don’t try to pull over some stupid yet entirely transparent fast one on us. Republicans have no eco-friendly side—and never have. With exception to outdoorsmen and you, by appearance atleast, don’t sound terribly woodsy.

Thanks for the Republican Reading Rainbow though but it’s apologism for a scoundrel that can take responsibility for his own actions and those of his cronies.

Posted by: Novenge at May 8, 2006 10:48 PM
Comment #146395

David

In 1980 nobody ever thought to see the end of high priced oil. The price of oil began to drop in the early 1980s and hit an all time low (adjusted for inflation) in 1998.

Even today it is not a that high compared to other things.

In the 1950s you could get a cup of coffee for a nickle and buy a gallon of gas for a quarter. Now coffee is about a dollar and a half, so gas should be up to about $7.50.

We should probably complain about the high price of coffee and investigate Starbucks.

Posted by: Jack at May 8, 2006 10:50 PM
Comment #146397

Novenge

I am sure that the Bush team would disavow just about everything I wrote here. In fact, I bet few people are on my side on this.

But I have an environmental agenda. The difference between mine and most others is that mine does something useful.

If you are really worried about global warming and you want a rapid reduction in oil consumption, price is the way to go.

In fact isn’t that precisely what the carbon tax folks proposed?

We are getting what so many of environmentalists claimed they wanted for so long. Enjoy. I am.

Posted by: Jack at May 8, 2006 10:58 PM
Comment #146399

Ironically, Starbucks coffee costs so much because they have an AMAZING healthcare coverage plan. They insure most all of their employees, and its more expensive than coffee.

Not to get off track, but coffee sure would be cheaper with a single payer healthcare system.

I’m of course kidding, but it’s on the square.

Posted by: iandanger at May 8, 2006 11:00 PM
Comment #146400

Maybe I should invest in horsefeed too and maybe a company that does barn raisings then.

JACK…that’s our trucking industry Jack. All retailers are dependent on trucking Jack. Our entire economy is on the back of trucking Jack. It’s not all moms taking their kids to soccer practice. What about freight trains? What do you think they run on? Food manufacturing is reliant on refrigeration. Electricity from oil and you don’t think you absorb those costs too? Higher oil prices mean higher prices in other places.

The whole alternative fuel thing that Bush is proposing, what has resulted from the three years Bush has been supposedly advocating it? Nada, Zilch and nuthin’ so far. Three years, nothing to show but wasted airtime. The alternative fuel revolution Bush is advocating is nonsense or he would have done something, right? Three years or more is ample time one would think.

Posted by: Novenge at May 8, 2006 11:15 PM
Comment #146410

Jack, the price of Starbucks coffee does not raise the cost of all other consumer products. Don’t like the price of Starbucks, don’t walk in. Oil is in the cost of everything and if it was not having an impact on Americans and all of their consumer staples cost inflation, Republicans and Democrats alike would not be out photo-op’ing at gas stations vowing to do something about it.

What is needed is wage growth that keeps pace with consumer staples inflation. But that trend has been in reverse gear for decades as our current minimum wage reflects the purchasing power of wages 50 years ago.

Posted by: David R. Remer at May 8, 2006 11:57 PM
Comment #146411
Keep the prices high to encourage alternatives and conservation.

Jack, you’re forgetting the social aspect. How do average Americans survive between the time when petrolium product prices get so high we can’t afford them and when market forces finally kick in?

You’re advocating social upheaval just to dogmatically stick to market principles.

The answer is to obviously short circuit the market and develop an alternative energy economy RIGHT NOW, even though the market isn’t dictating it, so that America has an easy transition when it does.

It’s irresponsible for free market Republicans to dogmatically advocate adherence to market dictates at the expense of economic hardship and social upheaval in America. It doesn’t have to be that way.

Posted by: American Pundit at May 9, 2006 12:00 AM
Comment #146417

Jack here’s a scenario,

You take your wife (or signigfigant other) out to eat. The last time you went there a surf and turf platter was $16.00, now it’s $20.00. Your assumption—gee must be good for the restaranteur, correct? Wrong he just has more costs bringing that food to your plate. He makes out the same. Now imagine everything in your environment has that price hike. Now if your wages aren’t going up then what happens to your own quality of lifestyle?

Is eating out less good for the environment? Is not going on a weekend trip good for the environment? It’s about lifestyle and we Americans want a good one, if not the best possible. What about airtravel? we have to save longer to take that trip to whatever destination?

the frst thing to go in manufacturing is labor costs and overhead, so outsourcing would be a by product of such an environment. that is essentially what has been happening. Kerry was wrong when he called companies benedict Arnolds when they outsource. Outsourcing is a byproduct of higher costs to the manufacturer and the first casualty is often labor.

Here’s another scenario, the housing market. A one hundred and fifty thousand dollar house is now on the market for three hundred thousand. Now let’s say that owner turns that house into rental apartments. The rent will inevitably be higher correct? Now if wages aren’t going up then that is a real cramp on the American dream, wouldn’t you say? Now is that the quality of life we want for ourselves as Americans, a landscape where there are no good deals, no steals, no bargains anywhere?

So busy just surviving that we can’t ever have the fruits of our labor?

You said in reference to gas prices: Even today it is not that high as compared to other things.

the point is it impacts other things that is the problem. Whether that is in creating outsourcing to compensate for labor or raising the costs on everything around us, it is all connected.

The economy is doing well due to lending rates but that also creates massive debts fot the company too, and debts that have to be compensated for in cost to the consumer. Such as with the automotive industry. Believe it or not if our dollar was worth more cars would be cheaper. Why? because of all the parts that are bought overseas. The greater our monetary value the cheaper the cars are to produce because they get more for that dollar value in their overseas bulk purchase. Anyway the problem is unforseen cost hikes that get carried over to the consumer when we want a better quality of life for ourselves as Americans.

And oil prices impact other things not just what you are putting in your tank but what you are putting in your mouth and the whole lifestyle you want to have for yourself with what you earn. Maybe you are a single mother or parent and want to create the best life possible for your kids. To be able to afford extra carricular activities or summer camp and have to put it off to pay the bills and fill the tank. Do you see who it screws up?

The republican answer: A faith based organization can do it all. That’s what we are left with nonsensical answers for big and very demanding problems.

Destroying people’s quality of life—great answer.

Posted by: Novenge at May 9, 2006 12:26 AM
Comment #146419

Jack-
Your argument seems to be a rather confused attempt to make the best out of having a leader with a bad energy policy. It’s like the flypaper strategy, only it’s adapted to an energy crisis rather than a security breakdown.

You’re arguing that the rise in gas prices is a good thing because it means that alternative energy sources will become more popular. You propose taxes then to artificially raise the price beyond the current market values. Then you specifically decry the government doing central planning or economic decisions by fiat.

Those points directly contradict each other: a tax intentionally meant to undercut the competitiveness of gasoline as a fuel, imposed by the government from on high, and sharp antagonism towards central planning and market interference form the top.

Me? I say hike the efficiency requirments and let the best technology win. Your approach not only contradicts your stated beliefs, it also creates or continues a precedent for the government choosing the best technology, instead of people actually trying it out and working out the kinks.

Posted by: Stephen Daugherty at May 9, 2006 12:39 AM
Comment #146423

The major reason for the decline in oil prices in the 80’s and 90’s was the discovery of major oil fields in the North Sea and the North Slope of Alaska.

From what I’ve been reading from various oil geologists, discoveries of that magnitude are over. In addition, its beginning to be uncovered that the Saudis (for various political and economic reasons) have been overestimating their oil reserves. Their largest oil field is pumping more sea water than oil now, the sure sign that the field is on the verge of playing out.

Bring online the insatiable oil hunger of India, China and Japan, and the cheery belief that the market will ‘fix’ this one is unrealistic at one end, and Jiminy Crickitt stuff on the other—a trait neocons and Repubs are constantly bashing the Left for. I guess we all wish upon a star—it’s a human failing when things get scary.

Posted by: Tim Crow at May 9, 2006 1:24 AM
Comment #146432

Jack,

Price will “solve” the energy crisis.

Even if I globally agreed with your position here, your “free market will fix it automagically” mantra seems to ignore the social impact this “magic” could have on the poorest parts of the world. Think about Africa for a minute. Oil prices are the same worldwide. Time will come very shortly when African nations could not anymore buy ANY oil. Their already very slow and (for some) negative development rate will worse very fast due to this energy crisis… and these africans nations will collapse soon, in deadly wars. Again.

Sure, most probably our rich nations will get over this crisis and, most probably too, will be the first ones to make huge profit on The Next Energy source(s). But the free market have, by definition, no ampathy for anybody. Humans will die due to this energy crisis, one could bet.

Because, beside free market oil pricing, a huge (-60% ?) decrease of human world population could *also* “solve” us from the energy crisis. Yeah, I know, no ampathy in genocides… but, hey, problem solved!

It’s not because something will resolve itself while going for the worst that its always *that* great for everyone.

Posted by: Philippe Houdoin at May 9, 2006 4:57 AM
Comment #146434

Jack,

The system works like this. The price of oil rises and we all pay big money to despots and potentates world wide. We start to develop alternatives. We start to drive more efficient vehicles. As soon as alternative begin to take off, the price of oil falls through the floor. Alternative energy producers are bankrupted. People buy bigger cars. They move farther away from town. They drive more miles. Then the price rises again leaving the circle unbroken.

Oh, so now you’re telling us that oil price *alone* can’t solve the energy crisis, but that someone should enforce high price?!?
Quite the opposite of your topic post introduction point, no?

Posted by: Philippe Houdoin at May 9, 2006 5:44 AM
Comment #146437

American Pundit,

The answer is to obviously short circuit the market and develop an alternative energy economy RIGHT NOW, even though the market isn’t dictating it, so that America has an easy transition when it does.

It’s irresponsible for free market Republicans to dogmatically advocate adherence to market dictates at the expense of economic hardship and social upheaval in America. It doesn’t have to be that way.

Exactly what I would have said if my english skills was yours.
Except that I would have replaced “in America” by “worldwide”, as energy crisis is a world crisis.
And I guess we can already talk about a World Energy War. And victims, like in all wars.

Posted by: Philippe Houdoin at May 9, 2006 5:53 AM
Comment #146455

Novenge

We have a choice among suboptimal alternatives.

We cannot have cheap energy as we have in the past unless we are willing to create lots more CO2 and pollution generally. Even then, we probably could not pull it off. Alternatives cost more than oil. That is why we use oil. It is cheap and easy to obtain. If you want to stop using oil, you have to have higher priced energy.

Governments can propose all the alternatives they want, but what makes them work is price. Everybody brags about Brazil right now. Brazil has been working on this problem for nearly 30 years and it is only now breaking even BECAUSE OF THE HIGH PRICE. If oil is $10/barrel, as it was in 1998, the sugar cane ethanol costs more than the oil “alternative”.

My prescription has been higher oil prices and more nuclear power. We now have the one and must work on the second.

To you second posting, I don’t see an alternative to this action. You cannot have cheap oil and develop alternatives or conserve energy. Look at my post-Soviet example in the original post. The rise in prices will sure be hard on the people and firms mentioned - at first. So do you continue to subsidize the waste, or do you put an end to it?

David

I only chose the price of coffee as a comparison. The price of gas is not a bigger part of most household budgets today than it was 30 years ago.

Re minimum wage, only 2% of experienced workers over 25 make minimum wage. Minimum wage is for entry-level people w/o skills. They are getting paid what they are worth to the employer. Since we are talking prices, take this simple example. If I can get someone to cut my grass for $5 a week, I may hire him. If it costs more I will either not mow my lawn so often or do it myself, or maybe buy some kind of machine. If you push the grass mowing price above $5, we just don’t hire anybody.

If you don’t think this works in the real world consider the milkshake. You may recall McD used to have a guy who did nothing but make milkshakes. Labor cost too much, so that invented that machine you see today.

AP

IF we could develop alternatives that cost less than oil, we would do it. Actually at $70/barrel some alternatives ARE cheaper than oil. So I guess we have already accomplished your goal. Remember the synfuels debacle? Or even the successful Brazilian ethanol program (see above).

Price is the real solution. Other things are just talk that creates hot air and probably contributes to global warming.

Stephen

I don’t propose raising taxes now. I propose raising them WHEN the price of oil falls (as it did after the other crises) I thought liberals liked taxes, especially on “big oil”.

If you let the best alternative win, you get oil. Oil HAS won. That is why we use it. It is cheap. BUT oil has its own set of problems, from CO2 to insecure sources. These are external costs. A tax would equalize some of the externalities. The price hikes efficiency requirements. The market would decide which of the various technologies worked best after that. It is government interference, but it is the least intrusive kind.

Tim

At today’s prices oil sands become economically viable. There is as much oil there as in Saudi Arabia, just harder to get. There is no such thing as an oil supply. There is only an oil supply at a certain price. After the new source is developed, prices decline again. That is bad.

Philippe

See above to Stephen but YES the price ALONE will not solve the problem, or more precisely the price will not stay at the level to solve the problem w/o a push. This BTW was the whole principle people ostensibly fought for under Kyoto. This one is just less complex and less corrupted.

Oil had external costs not reflected in the price and they are really big. W/o oil, the whole Middle East would be as important as Zimbabwe and we would not have all the associated dangers. And of course we have the CO2 and other sorts of pollution.

Posted by: Jack at May 9, 2006 9:09 AM
Comment #146457

I really can not go with all this stuff on better fuel efficiency by the car industry, yes it would be nice to have a car with 50 a mpg average, all industries involved with traval would love it, we have a problem with the people selling us the fuel and building palaces with their profits, we have a problem with our government going along with it, we have a problem with the tree huggers stopping us from having our own fuel supply, and we have a problem with a company like EXXON who is not ashamed of declaring profits that put the number one leader in the world Wal-Mart back to 2nd place. It’s greed and there is no other answer to it.

Posted by: Roy at May 9, 2006 9:25 AM
Comment #146464

a few words about supply and demand:

The diamond market.

Hopefully every one knows the story of diamonds. They are a rather common mineral. Industrial grade diamonds are relatively cheap. And now with zirconiums, even less valuable. The gemstone market is controled by a few players who manipulate the market. It’s a marketing marvel based on a myth. They sell a myth.

The problem I have with many free marketers is they bow to the free market god without opening their eyes to reality.

I’ve heard a lot of people talk about supply and demand of oil to explain the rise in gasoline prices. The supply and demand for oil has not fluctuated recently. Why has the price?

The oil market is led by speculators and hedgers. A Few market makers. Long term they cannot move a market that is free. This assumes that oil is afree trade item, It is not. OPEC is not a
freemarket organization.

There have bee several oil company mergers in recent history. It is well documented that Exxon and other companies discussed gasoline excess capacity prior to shutting down refineries in the US. They are not motivated to produce “excess” capacity. It diminishes their profits.

This is a highly manipulated market. Why was standard oil broken up?

I’m all for free markets. Please, let’s not confuse economics with political babble.

Posted by: gergle at May 9, 2006 10:05 AM
Comment #146465

Oh, Jack, you are in sore need of an education on petro byproducts. Medicines, plastics, medical equipment and replacement parts, refined lubricants, all manner of building products, new road surfacings, glues, eyeglasses, food wrappers, the explosion in garden and small farm and lawn care products, pesticides, herbicides, fertilizers, computers and electronics, paints…all these and thousands more that weren’t around 30 years ago.

Seriously, look it up, petroleum products are everywhere and deliver everything consumable and manufacturable.

Posted by: David R. Remer at May 9, 2006 10:06 AM
Comment #146467

David

I know about petro byproducts, but are we agreed we need to consume less oil? If not we can agree that all these global warming guys are wrong and we don’t care about the problem.

Are we also agreed that oil use comes with many external costs, not least of which is a volatile Middle East that should be addressed?

If both those conditions are met, higher prices are what you get.

We cannot conserve or develop oil alternatives if oil IS the cheapest alternative.

If you are not interested in alternatives or conservation, push for lower oil prices and forget about my tax proposal.

Posted by: Jack at May 9, 2006 10:26 AM
Comment #146468

Gergle

The supply of oil has increased over the last few years, but demand increased even faster. The oil market is not a free market in the sense we usually talk about them, but it does respond to changes in supply and demand. IF oil firms could always charge high prices, why did they only get $10 a barrel and charge 95 cents for gas back in 1998?

Posted by: Jack at May 9, 2006 10:29 AM
Comment #146470

Another issue on this site that I am bothered by is the global warming one.

I am not opposed to reducing our carbon profile. I believe air pollution based on using fossil fuels is much more insidious than most believe, but then so is stress from living in high density population centers.

My problem with the global warming issue isn’t the belief that it is occuring or that we contribute to CO2, it is the extrapolation of a small temperature rise in recent time and a small rise in CO2 being used to talk about climate change. Climate is a long term, poorly understood phenomenon. While it is not out of the possiblitities that we are affecting climate, The giant effects of nature on climate are likely too. The science does not comment on climate change, only tempeature rise.

I think we should reduce cabon profiles for mostly economic and political reasons (i.e. war).

I offer this:

click on thumbnail to enlarge

Posted by: gergle at May 9, 2006 10:31 AM
Comment #146472

Jack, I agree.

But that isn’t the current context of the debate. The reason oil was so low was because China wasn’t in the picture and OPEC was in disarray. As I stated, market makers can’t manipulate the price long term, but they can make a lot of money short term. This isn’t free market forces.

Gas prices have nothing to do with either. Gasoline is a refinery product, refining and distribution is the major cost involved. Our US price is still relatively low compared with many industrial economies. My point is that it still is not a free market commodity, largely because a few people control the supply.

I agree that the higher prices are a good thing long term here.

Posted by: gergle at May 9, 2006 10:45 AM
Comment #146473

Another fundamental economics mistake:

“We should probably complain about the high price of coffee and investigate Starbucks.”

I’ll assume you’re serious in the comparison, though perhaps I shouldn’t be.

I’ll simply talk about supply and production, because I haven’t the patience to present a discussion of elasticity of demand.

Pretty much every developing nation in the world produces coffee. I found a good map of coffee production at sovrana.com/prodmap.htm. The coffee market, therefore, is one where supply is virtually unlimited, and competition among growers and distributors is high.

Coffee, of course, is not what makes the world’s economy move. Coffee production is also not controlled by a cartel.

In fact, it’s fair to say that a true free market in coffee exists, more or less. This is, again, not the case for oil.

It’s getting harder and harder to conclude that you’re a serious writer, Jack. You certainly don’t have any grasp of economics.

Posted by: Arr-squared at May 9, 2006 10:46 AM
Comment #146487

Arr

You can conclude what you want. I am not so smart maybe (I don’t know how I got through my MBA), but I am lucky so my stupid economic decisions make money for me. BTW I bought Starbucks at $3.53 a share (adjusted for splits etc). If you look at today’s price, you can call me stupid if you want. It is better to be lucky than smart, I guess.

My comparison to coffee had nothing to do with the underlying supplies. I am simply talking about ratios. Coffee and lots of other things used to be cheaper compared to gas than they are today. The price of gas, adjusted for inflation (an economic term I believe I understand) is not that high.

I am also not making any comments about the structure of supplies. Here is simply what I am saying:

- the price of gas in the U.S. is not very high by our own historical standards or by world standards.

- the higher price for gas is a good thing in that it encourages conservation and alternatives.

- The price of gas is very much related to the price of oil. The price of oil will decline sometime in the future. WHEN it does I think we should tax it back up to maintain the benefits mentioned in the second point.

- At prices under about $60/barrel, oil is the least expensive alternative. You cannot replace oil with alternatives unless the price is higher.

- YOu cannot have conservation and alternatives AND cheap oil.

Which of these statements do you dispute.

Posted by: Jack at May 9, 2006 11:49 AM
Comment #146497

Jack asked: “IF oil firms could always charge high prices, why did they only get $10 a barrel and charge 95 cents for gas back in 1998?”

That’s easy. Because all of the members of the OPEC cartel would not play ball, they undercut each other by cheating on the quotas of production on the belief that smaller profits percentages would be outweighed by larger shipments.

Took them awhile to get their cartel act together. Appears Venezuela is about to breach the cartel again.

As for your reply to me. I am all for higher oil prices, but, we must have higher wages to compensate, or far too many Americans will suffer further degradation of quality of life including less health care, education for their children, and even more limits on job opportunities due to the cost of travel.

I was also trying to point out your implied inconsistency- coffee is not oil though it leaves an oil residue in my coffee cup.

Posted by: David R. Remer at May 9, 2006 12:02 PM
Comment #146501

Arr-squared, you can say you don’t like Jack’s writing. You can say you don’t think Jack understands economics. That’s within our policy. But, the fact is that Jack is one of WatchBlog’s very successful writers and has been read by 100’s of thousands visits to WatchBlog with interest and much complimentary feedback.

If perfection of thought and word are what you seek, perhaps religious icon would be more fulfilling. I have yet to find a writer on any subject whatsoever that I did not disagree with on some points or another. That hardly says to me that they are not serious writers.

I don’t agree with all of Jack’s conclusions or even some of his premises when it comes to economics, but, I find it more appropriate to debate those conclusions and premises than to just dismiss Jack as an influential writer at WatchBlog. I know he is influential, I have been influenced by his writings on several points.

Posted by: David R. Remer at May 9, 2006 12:11 PM
Comment #146503

David

If higher prices are matched by higher wages all we have is inflation. We need to make oil relatively more expensive than other things. This will inevitably cause changes and unhappiness, but people have options.

Consider. In the short term - you can drive less and consolidate trips. You can car pool. In some places you have options to telecommute or take public transportation, or even walk of bike (I do that 17 miles to work in decent weather)

In the medium & long term - you can get a more fuel efficient car. Develop alternatives to driving. Choose a house closer to where you work or choose a job closer to home. Not to mention look for alternative fuels.

Cheap gas - and it has always been cheap - has created work and social patterns that make it difficult to conserve or look for alternatives. You can blame lots of thing on cheap gas, to some extent including the destruction of the central cities, juvenile crime and even obesity. Not to mention how much pollution and CO2 our car centered lifestyles create. I don’t mourn the loss of cheap gas and prefer those days DO NOT return.

Re other petro products you mention, there are also alternatives to those BUT higher fuel costs would not necessarily impact them anyway. It might, in fact, make them more cheaply available. If you don’t burn it, you can make plastic cups, if that is what you want.

Posted by: Jack at May 9, 2006 12:16 PM
Comment #146506

David

BTW thanks, but don’t worry, I have been called worse.

I think of what Oscar Wilde said, “It is better to be talked about than not talked about.”

Posted by: Jack at May 9, 2006 12:19 PM
Comment #146515

Jack I agree with the thrust of your argument about the tentacles of oil and choices. But where you and I will never meet, is where you so casually let slip from your tongue: “In the short term - you can drive less and consolidate trips. You can car pool. In some places you have options to telecommute or take public transportation, or even walk of bike (I do that 17 miles to work in decent weather)”

Mc Donald’s doesn’t offer carpooling, for the poor, driving to the park or a vacation to a national park for camping may be the one luxury they could afford until oil went up and wages didn’t. Low paying jobs don’t telecommute, ask any illegal immigrant why they are not telecommuting from Mexico. Ever try to ride bicycle in the winter up North, or in the Summer in the south and keep your business appearance up upon arrival?

You talk like a wealthy person who hasn’t a clue what it is like to be poor raising a family. No, on this issue I doubt we will ever have a meeting of the values.

Posted by: David R. Remer at May 9, 2006 12:37 PM
Comment #146528

Well, first of all, I didn’t CALL Jack anything, did I? I said it’s harder and harder for me to take him seriously - is it not my right to evaluate his arguments on the merits and draw my own conclusions?

Neither did I call for perfection - I pointed to mistakes in his reasoning that directly undermine his arguments. If you are writing about the economics of energy, and you consistently misapply very basic economic principles, that’s a real problem.

So, are either of you (Jack & Mr. Remer) going to speak to the substance of my 2 posts; that the market for oil is far from perfectly competitive and that comparing the coffee and oil markets is fundamentally flawed?

I really get the feeling that neither of you read my replies; I never said Jack wasn’t intelligent or that he wasn’t widely-read.

Your (Jack’s) comparison to coffee doesn’t take into account the underlying markets for oil or coffee - that makes it seem like a throwaway rhetorical jab meant to score “points,” so I can discard it.

If you want to convince me that it’s legit to make economic arguments that misapply economics, please go ahead.

But please acknowledge, Mr. Remer, that I didn’t call Jack anything. Straw men, hyperbole, and mischaracterization - par for the course.

Posted by: Arr-squared at May 9, 2006 1:30 PM
Comment #146530

I ride my bike in Virginia summers. It is not that bad. And you can camp in the local state park and forgo the drive to Yellowstone until you have saved a little more money.

So let me not simply slip the tough but tell you plain that you are probably right re our difference concerning the poor.

I have been poor in income sense and lived under to poverty line for about six years. (In fact my median income over my working life is still less than the U.S. average, although I expect to break into positive territory in 2007). I didn’t like it, but I adapted and figured out ways to stop being poor.

My idea is that EVERYTHING will impact the poor more than the not poor and the reasons are more complex than money or lack thereof. People are poor because they either are very unlucky or because the make bad choices. I am not saying this to assign BLAME. My father consistently made bad economic choices because he didn’t seem to know any better, so even at a given level of money, he was poorer than you or I would be. He had trouble adapting to change and also had trouble anticipating events, so he was rarely prepared for them. There was nothing anyone could do about it even when someone like me took a personal interest in helping him. He was poor in money and in judgment about money.

If you are to make any sort of change, it will hurt the poor since they are less able to adapt for both money reasons and the judgment reasons I mention above. On the other hand, they may benefit more when the change has taken place. A poor person, for example, may be better off living in a denser community closer to services, so he doesn’t have to plan as much ahead, so if economic circumstances force him there, initially against his will, he will be better off. I know that this paradigm will provoke a firestorm. But I think that all our experience since we declared war on poverty in the 1960s indicates that poverty is more about habits and behavior than about money.

Let me be clear that I am talking about people who are really poor, not those who simply have less than average incomes or assets.

Anyway, if you cannot take any action that will disproportionally affect the poor, and the poor are practically by definition disproportionally affected by anything, you cannot take any action at all.

We need higher prices on oil to reduce our dependence. That is the truth. The alternatives are not possible until oil is not the cheapest alternative and conservation is unlikely as long as it doesn’t pay.

Posted by: Jack at May 9, 2006 1:42 PM
Comment #146535

Arr

The market for oil is not a free market. Most of the price of oil is determined by governments acting for despotic reasons or by fear of price spikes. The big oil firms are less the dominant players than the big government cartels, but they still can have a big influence. I agree with you about this. I just don’t care. This is why.

I want to price to be higher exactly BECAUSE oil is a troublesome commodity. No matter why the price is high, it will (and has) lead to alternatives and conservation. OPEC knows this, which is why they work to lower prices every once in a while. It destroys alternatives (see my comments above). That is why I want a tax in the case that oil drops below around $50 a gallon in today’s dollars.

I will say again, my comment on coffee was to show relative prices. How those prices came about was not my concern. But the price will (and has) affect demand. And higher prices for oil will (and have) produce beneficial effects on the environment and eventually on politics.

It was God’s big joke to put most of the world’s oil under the worst run places, or maybe they are poorly run BECAUSE of the oil, but in either case it is better is we don’t depend as much on them.

Posted by: Jack at May 9, 2006 1:51 PM
Comment #146537

Jack,

You mentioned that the “Cartel” is more responsible for prices than “Big Oil” companies; which is true. Yet, one of the biggest indicators of price is the future’s market. If those investors get shaky or uncertain, then the price per barrel goes up.

Posted by: rahdigly at May 9, 2006 2:03 PM
Comment #146540

Jack-
Three characteristics would mark the best successor to gasoline as an energy source:

1)Gasoline is a superb concentrator of chemical energy. The new source must be comparable in the amount of energy it provides in such a compact area.

2)Gasoline is relatively economical to produce. The new energy source must be comparable in the eventual (ten or twenty years) efficiency of the system of its production.

3)The new fuel or energy source should create less greenhouse emissions, or (if it’s possible) should create none at all. Our inventors in turn of the century America and Europe cannot be blamed for choosing a fuel nobody knew would create climate change with its emissions. In terms of all we have learned, we would, however, deserve great amounts of blame for settling on such a fuel.

I think everybody would agree here, for the most part, that we need energy sources capable of shouldering the burden that fossil fuels now support. Economically speaking, the alternative is decline.

We don’t need other energy sources to seem competitive with gasoline, we need them to actually be competitive. We need them to be approaching the relative cheapness of fossil fuels, we need their production to be similarly economical, given development, and we need them not to add to our climate difficulties, because that would be a sad, stupid thing, for us to do, knowing what we know. Adding artificial inefficiencies to gasoline prices will deprive alternative fuel-makers of the competition needed to ensure optimum market pressures.

You’re not really thinking systematically. For one thing, you’re claiming that raising wages will only raise inflation. How do you know that? Prices do not necessarily go up when people have more money. People can be cheap on things when they have a lot of money. Also, having more people in the market for certain products can mean prices go down. After all, you don’t need to charge as much if your product is more popular.

The Health of the economy is as much in the flow of money as the level of the prices. inflation occurs when you artificially accelerate that flow and goods and services are pushed through the system at excessive speeds. The market should correct for itself on the matter of wages.

Most of our troubles with inflation resulted from our ill-advised experiment in running a deficit to pay for a war. I think we are in greater danger of seeing inflation from that than from raising people’s pay. The trouble is, though, today’s businessmen have been taught to be ferocious, risk-averse misers, who unfortunately consider their obligations to their own fortunes superior to that of their company. These are also many of the same people who ask for these unaffordable tax cuts.

This is the big problem with the Republicans. As much as they like to say they’re free marketeers, they have no qualms in manipulating the economy and the budget in the attempt to create artificial rises in economic fortune.

I think, instead, we should be concentrated on creating real economic benefits for our economy- that is, getting better at delivering goods and services of varying kinds to the world than everybody else is, and using the expertise and brainpower within our borders to that end.

Our economy doesn’t begin and end with taxes, AMEX, NASDAQ, and DJIA indexes. We’ve forgotten that it takes more to do good business than clever accounting and penny-pinching.

Posted by: Stephen Daugherty at May 9, 2006 2:13 PM
Comment #146541

Rahdigly

Yeah. It is a complex interaction. I am just acknowleging that it is not a free market, so that Arr knows that I know. I am also saying that it doesn’t not particularly matter. The causes may be different, but our response is the same: welcome higher prices and make sure they stay that way.

There are lots of things we don’t understand. We don’t need to as long as we can make them work.

Posted by: Jack at May 9, 2006 2:13 PM
Comment #146544

Stephen

I said that if we raise prices AND raise wages it will just be inflation and that is just what it is by definition.

We can raise wages in real terms if productivity increases. That has been the cause for all real wage growth. It is a good thing. Productivity has been rising very well in the last couple of years. Wage growth lags productivity grow, but I think we will see real wage increases this year. BTW - we have not seen it so far also because of globalization and immigration, which has put downward pressure on lower skilled wages.

Re energy, you need not produce a source as cheap as oil. We just need to have the source and our improved energy efficiency in balance. If you double your energy efficiency, anything less than double the price of energy leaves you ahead.

We have long absorbed higher energy prices to achieve other goals. If we just wanted cheap energy, we would burn coal and not pay much attention to the environment. We have chosen NOT to use some of the very cheapest source because of the cost of externalities. I propose to do the same for oil.

I think you may misinterpret my motivations. I don’t respect anybody who doesn’t work for what he has, whether that is the poor welfare recipient or the rich heiress. I would no sooner reward the idle rich than the idle poor. I want to create an opportunity and ownership society and I propose what I think are workable ways to do that. Where you and I probably part company is that equality of results concerns me very little.

Posted by: Jack at May 9, 2006 2:29 PM
Comment #146545

Jack, if the only point you wanted to make was that high energy costs promote efficiency and the search for alternatives, you picked a very interesting way to go about it.

5 out of the 7 paragrpahs of your post extol the virtues of the free market and the magic of supply and demand - information that has no real bearing on the price of oil. As you acknowledge, the market for oil is about as unfree as you can get.

If all you want to say is that oil producers and distributors have Jane Citizen bent over a barrel (pun partially intended) and the only silver lining is that now, finally, there’s an economic incentive to move away from fossil fuels, then there’s no need for the tortuous and ultimately false market lecture and belabored rationale thereinafter.

And last, and maybe more productively, do you really think that we’ll “never” run out of oil? I mean, it is a finite commodity, isn’t it?

Posted by: Arr-squared at May 9, 2006 2:35 PM
Comment #146547

Jack-
If you think Virginia summers are bad, do try Houston summers. I actually have been biking to the bus station, a distance of about 10 miles in one direction. It takes about 45 minutes, though, and it can only be done in good weather.

It also necessitates carrying a change of clothes, carrying around water to rehydrate, and taking away good energy that I might direct to work and using it on what might turn out to be an hour-and-a-half round trip.

Do I regret that I do this? No, not really. But shouldn’t it be my choice that I do this?

I really believe that we should start presenting the cultural message: We can either try to be free by beating our heads against the wall of the limitations of the real world, or we can start making choices that loosen those bonds by enabling us to do more with less, and by escaping the current system to one that has more plentiful or powerful resources to back it.

I don’t mind nuclear, for example, as long as we’re not mindless of the problems and the dangers of that kind of energy source. If we make such an transition unwisely, we could escape the lion’s den only to be snapped up by a dragon. Research should be put into effective disposal and into the cleaner nuclear variant of fusion.

We cannot continue to act as if we can make our choices with the simplicity we imagine our forefathers made them with. We must acknowledge that the next decision we make might be an mistake we’ll then have to correct. We can either fight the fact we’re imperfect, or allow for it in the openness of our minds to what’s going on around us.

Posted by: Stephen Daugherty at May 9, 2006 2:39 PM
Comment #146552

Arr

We never run out of anything. It just that the price rises until we find alternatives. In the case of oil, the price has not really risen very much adjusted for inflation. So we will never run out of oil, but the time will come when we no longer use it for very much.

Re market prices, the market price for gas is still what gas is worth. That is my point. The competition for oil firms includes not only other oil firms, but also makers of other forms of energy, mass transit providers, even conservation. People have choices if they don’t want to buy gas. If they still choose to buy at $3 a gallon, that is what it is worth to them.

The reason I mention it is to preclude all those silly arguments about the true price. There is no true price, only what someone will pay for it.

Stephen

But your winters are warmer, so you can still bike comfortably in December.

I also have to keep clothes at the office and we have a shower I can use. I don’t believe in this rehydrating thing for my short distance, but I drink a lot when I get back. But your hotter drier climate requires different preparations.

I think we can make SIMPLE decisions. It is just that sometimes they are hard ones. The price of gas includes a lot of factors. If we let the market work it will usually be okay. I don’t think the market includes enough of the externalities, hence my call to tax gas when it drops too low.

Posted by: Jack at May 9, 2006 2:53 PM
Comment #146560

Jack, the textbook definition of inflation is: ” Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.”

Now you attempt to redefine that defintion by including increased wages into the definition, which is only partially accurate. To the degree that wage increases become increases in service costs by employers for labor, they are inflationary. But, there is a corallary that is being ignored. Increased wages also increase demand for goods and services which is desirable by employers and consumers alike. In addition the increased consumerism that accompanies wage increases stimulates economic growth and activity, which increases government revenues on its static tax rates if the economic activity generated exceeds the limiting factor on business expansion from increased wages, which is usually the case in an otherwise healthy static (point in time) economic scenario as we have now.

Increased wages only become inflationary when the additional demand they create exceeds capacity to supply that demand. On the whole basket of goods and services the wage increases inflationary effect woudl negligible, with the exception of refined oil products. We are facing around 2.5% growth rate the latter half of this year and wage increases would boost that number by boosting consumer driven economic activity in the same way tax cuts do, but without adding deficits and national debt.

The price of refined oil is inflationary because it is resulting from demand exceeding supply. Wage increases would increase demand for refined oil products whose supply is unlikely to increase and be inflationary with regard to the price of refined oil products which is the result both you and I want to see.

So, I don’t understand your objection to raising the minimum wage.

Posted by: David R. Remer at May 9, 2006 3:07 PM
Comment #146577

I don’t think we need to raise the minimum wage for various reasons, chief among them is that few people get minimum even now except teenagers or new workers who probably are paid what they are worth. Where I live the teenagers get $6-7 an hour for their first jobs, so you could raise the minimum here to about that amount and change nothing. However in some other places $7 an hour would price some people out of the labor market.

But the point re wages and gas is just a simple one to one correlation. I want to make gas more expensive. If you raise the price of gas by x and then you raise wages by a compensating amount you have done nothing except revaluate the transaction.

I suppose you could argue that we would give the guy more money, but at the higher price he would choose to spend the increase on something other than gas. I would not have a problem with that formulation, but then we are no longer talking about compensating, but rather a general increase.

Posted by: Jack at May 9, 2006 4:05 PM
Comment #146579

Arr

BTW Starbucks is down 81 cents today. People keep predicting its decline. Some days they are right. Most of the time not. Some day they will be right more often.

Posted by: Jack at May 9, 2006 4:09 PM
Comment #146588

Jack,

No offense, but I’m not at all interested in your Starbucks stock, except to say that I hope you and yours are able to lead comfortable lives.

And just when we were starting to agree, I feel like you’re being tricky again. You say, “the market price for gas is still what gas is worth.” That’s true, because you define “worth” as “the market price.” That’s both circular and disingenuous.

The market price of gas does not include indirect costs, like taxpayer subsidies to oil company R&D. Also, the market price of gas is not set in a competitive situation; it is set by the oligopoly of gasoline producers. In a real market situation, competing companies would cut gas prices until the marginal cost equalled the marginal gain. Under oligopolistic competition, the gas-selling cartel can agree to fix prices at any profit level, because there is no real competition.

Unless you’re telling me that the 5 big oil companies have exactly the same production costs, but you wouldn’t try to do that, would you?

You say we have choices about gas, and there I agree. However, our choices are not unlimited. I cannot, for example, choose to buy my electricity from a nuclear power plant - utilities are granted monopolies over geographical areas. I also can’t choose my cable TV provider, but I will save that rant for another time.

I can choose to bike to work, or walk, but in my area, I cannot choose to take public transportation, because it does not exist. I can choose to move to an area where there is public transportation, but that would entail a variety of massive costs as well.

Conservation does not compete with the price of energy. I cannot buy conservation and use it in my car, or to heat my home. The US Department of Energy, in fact, states that 45% of US petroleum use goes to gasoline used for transportation. That’s a lot, but still less than half of our petroleum use.

Again, if all you want to say is that high energy prices are good because they provide an economic incentive to move toward alternatives, that’s fine. But to cloak that argument in terms of the natural benevolence of the free market is disingenuous.

And we’ve never run out of anything? How about dinosaurs, or dodo birds? Aren’t we all out of them? Are you seriously saying there can never come a time where there is not a drop of pumpable oil left in the world?

Posted by: Arr-squared at May 9, 2006 4:29 PM
Comment #146595

Jack, your reply is one dimensional. Refer back to the discussion about how gas prices permeate the subsistence consumable pricing. The wage increase would DECREASE the loss of purchasing power by the poor and lower middle classes. And, raising the minimum wage would entice more Americans to fill jobs now held by illegal immigrants if your sides argument that they do work Americans won’t for the same pay, is valid.

Its not a wash. Not by a long shot. Someone on the House Floor this week quoted CBO or OMB regarding the purchase power of lower middle class wages today as being half that of 30 years ago. There is a reason consumers are setting all time records for personal debt, and all time lows for savings, and that is one of the biggest by far.

Posted by: David R. Remer at May 9, 2006 4:55 PM
Comment #146605

Arr

For all practical purposes we will never run out of oil. I know this is kind of a technical point. I only say it because we often get the false implication that on some morning we will wake up and find the oil tank empty. Long before that happens, the price will rise high enough that we have embraced alternatives and it will happen gradually.

The oil price is not a pure market by any stretch of the imagination, but it still is subject to market forces. The price of gas in high because the price of oil, which makes up most of the price of a gallon of gas, is high. Oil is high because of increased demand from China and India and a robust economy in the U.S. If our economy falters, the prices will drop. Gasoline in particular is also high because we lack refinery capacity AND because the government mandated ethanol as an additive in place of methyl tertiary butyl ether (MTBE) as an oxygenate in gasoline. This created shortages on the coasts. Ethanol is cannot be transported in the same infrastructure as oil and most of it comes from the Midwest. There are other reasons. But the price clearly affects supply and demand. When the prices go up, people figure out alternatives. If the market was not working, the price could be set anywhere. It obviously can’t. These are all market forces.

All those non-market factors we mentioned we present when gas was selling for 98 cents and they were present when it was $3.15. So at least in the rage of .98-3.15 we can thank (or blame) market forces for the variation.

Conservation does compete with gas. It is the zero option. It any negotiation (and price setting is a negotiation) the zero option, choosing not to participate is always possible. If you think you are better off by doing nothing, you will do nothing. You can choose to alter your lifestyle in such a way as to require less gas, so conservation is a real competitive factor in the price of gas. If the big oil companies tried to raise the price of gas to $5 a gallon tomorrow, what would bring it back down would be conservation.

David

Few people make minimum wage now. Read about who actually earns minimum wage. Minimum wage workers tend to be young. About half of all hourly-paid workers earning $5.15 or less were under age 25, and about one-fourth were age 16-19. Among teenagers, about 9 percent earned $5.15 or less. About 2 percent of workers age 25 and over earned the minimum wage or less. Among those age 65 and over, the proportion was 4 percent. We don’t need to rip off teens, but it is unlikely that many of them are supporting families and most are probably actually being supported by their parents. The other big group is people over 65. Most of these guys are probably collecting SS checks. In both cases, it might be that is all they are worth to the employer and if they had to pay more, they would just forget it and buy a machine or let the job go unfilled.

Posted by: Jack at May 9, 2006 5:38 PM
Comment #146607

Jack,

Maybe your trying to over think this.

I have stated that I am for raising the price of oil.

That said, the price of everything, EVERY THING, from alphabet soup to zircons, depends on the price of oil.
We have built this society on the price of oil.
Right or wrong, that’s the way it is.

I agree that oil has had it’s run as a primary energy source, however, we as a nation, cannot assume that even the middle class will be able to afford the transition from oil to whatever.

Now, you have stated that alternatives energy sources are expensive compared to oil.
Is that because of the real time price?
Or is it because no one has yet found the key to unlocking cheap energy?

I’m not talking pie in the sky.

Other than nuclear, all of the alternative sources of energy before us are cheap or free. It is the technology to harvest them that is expensive.

Posted by: Rocky at May 9, 2006 5:56 PM
Comment #146619

Jack, you are missing the point once again. Minimum wage increases also raise wages above it over time, and given the 50% drop in purchasing power of lower middle class wages over the last 3 decades, we are talking here about restoring the waning middle class, or the lower half of it anyway. Parents can’t provide the American dream to their children on $8 an hour either.

Posted by: David R. Remer at May 9, 2006 7:10 PM
Comment #146634

Rocky

I just don’t know that we have a choice. We do it now and pay a price or do it later and pay a bigger price.

David

I think we have had a discontinuity in the labor markets that happened around 1972. The new factors were the momentous immigration since the reform Act of 1965 and globalization, plus a general automation of manual labor. Immigration and globalization tended to devalue low skill American labor by providing low cost competition. As you know, I own a forest in Virginia. The other day I was talking to some old guys about how things used to be. They told me that it used to be hard to get good help. They used to have to hire local “no accounts” who tended to be unreliable and drunk. Now they use immigrant labor, which is cheaper and drinks less. BUT they don’t even need so many of them, since big machines have replaced workers. Iit used to take three guys to cut a tree. You used to have dozens of unskilled or semi skilled guys cutting and moving logs. Now you have one skilled guy running a machine and a few unskilled one helping out.

It gets worse. I was a longshoreman in my youth. Many longshoremen were drunks. They would work a couple days a week and then disappear until they ran out of money. Then they came back. In the middle 1970s they containerized cargoes. That wiped out a lot of longshoremen. First, you didn’t need as many. Second, none could be drunks, since they now had to operate heavy machines and could not have the shakes and third, containers made it a lot harder to steal cargo, which had provided a lucrative second income for some of the boys. Men who formerly could support themselves and a family, but could not hold down a job that required their sober presence five days a week were out of luck.

This happened all over. Drunks used to be amusing characters; now they were just pathethetic.

Anyway, a long way around to my point, the WORLD economy has changed. We have less and less need for unskilled labor. The premium paid for skills and training has increased at the expense of less skilled or educated. If we raise the price of unskilled labor, employers will just figure out ways to do without it.

Posted by: jack at May 9, 2006 8:29 PM
Comment #146657

“For all practical purposes we will never run out of oil…Long before that happens, the price will rise high enough that we have embraced alternatives and it will happen gradually.”

Man, this is a heck of an assumption, and a truly painful one to consider, as the least fortunate will bear the bulk of the transition costs. Right now, there’s certainly nothing resembling a serious alternative, and there is none on the horizon.

“Conservation does compete with gas. It is the zero option. It any negotiation (and price setting is a negotiation) the zero option, choosing not to participate is always possible.”

Ok, so…people have the choice not to use electricity, or buy things made of plastic, or buy produce that’s trucked into the supermarket? Not even to mention driving. The farmers in my area have the option to choose to plant and harvest their acreage by hand? Do you not see how ridiculous this sounds?

You don’t see it. You just blithely invoke this choice/free market mumbo-jumbo that you don’t even attempt to understand and doesn’t have any real connection to the empirical world.

It must be nice to live in your world.

Posted by: Arr-squared at May 9, 2006 9:48 PM
Comment #146675

I wonder how we could harness the energy buzzing around Jack’s attackers? :)

Posted by: gergle at May 9, 2006 10:26 PM
Comment #146683

Arr

People have choices. All choices are constrained, but they are choices.

I know that we are talking past each other, but I don’t know what we disagreeing about.

We can influence prices and supplies through our behavior. Prices and supplies will provide various incentives to do so. The higher prices will have the beneificial effects people (mostly on the left) talk about all the time. What is the problem?

I have adjusted my own behavior to the price structure. I bet you have too. So have many Americans - enough to influence demand for gas back during the Katrina aftermath and in recent weeks. If you can walk to work or telecommute one day a week, you can reduce your consumption by maybe 20%. How is that different from using an alternative to replace 20% of your fuel needs?

Let’s take the pragamatic approach. We have higher prices. They are reducing demand and encouraging alternatives. Good right? What do you propose to DO? Do you want to lower prices for oil and gas? If so, what do you think the lower price will accomplish?

Posted by: Jack at May 9, 2006 10:35 PM
Comment #146741

Jack, all well said. But the converse of your comments is that there is only one way to sustain this new global base of lower and lower wage workers, increase populations of them to compensate for the reducing purchasing power. You are a very bright guy, and we both know where constant upward pressure on population numbers to support consumption and profits leads. Social, political, and economic upheaval, unrest, and even war.

That is in essence the conflict between raging on Capital Hill as we speak about immigration, wages, education, deficits and entitlements, all of which are being influenced and effected by this continual erosion of consumptive power by the average workers. If left unchecked, the very wealthy will have to live in large security reinforced estates with their children schooled inside the estate, and internet shopping from home and venturing out only under guard as the divide between capitalist wealth and worker struggle to maintain clash with greater and greater fervor.

What do Republicans such as yourself propose to do to halt the descent into civil unrest due to vast inequities of consumer power which leaves growing numbers of Americans unable to sustain the quality of life their parents enjoyed? I don’t think convincing them of the virtues of doing without is an effective strategy, do you?

Posted by: David R. Remer at May 10, 2006 1:00 AM
Comment #146743

P.S. I agree with you that globalization, automation, and immigration are all pushing America toward a modern form of feudalism. What answer do Republicans have to address that future? So, far, all I hear from the GOP is work harder, for less, and be damn glad we let you or your parents into this country in the first place. Not very satisfactory for the 47 million without health insurance, the millions without jobs, the millions facing worry and insecurity in retirement years after a lifetime of work and promise that the golden years would be the best of times. And what of those who have to watch their parents suffer and die disappointed and penniless for their lifetime of honest work and productivity?

Posted by: David R. Remer at May 10, 2006 1:07 AM
Comment #146793

David, woah there.

Fuedalism? When did you revoke the vote and the redistribution of wealth that would occur by a population tired of being preyed upon?

Roosevelt was elected because of Hooverism and his Laissez Faire policies. We might be headed there, but Feudalism?

Posted by: gergle at May 10, 2006 10:15 AM
Comment #146814

David,

I’m thinking it’s more like the caste system.

Posted by: Rocky at May 10, 2006 10:40 AM
Comment #146849

Jack, I agree with you that current energy prices should stimulate alternative sources of energy, and that’s a good thing.

But, this is where the economist in me butts heads with the human being. I live in a low-income, rural area. I see folks hit hard, and as a member of this community, that bothers me. Part of the pain folks feel is due to their own choices. I don’t have a lot of sympathy with the city-dweller who chose to buy a huge pickup truck with big wheels to sport around town in - that was a bad choice.

I do, however, feel bad for the non-traditional student of mine who lives 45 minutes from campus who let me know that her class attendance has been sporadic because it’s tough for them to afford the gas for her to get to campus and back a couple times a week. I feel bad for the farmers in my area whom energy costs hit twice; in the cost to plow/plant/harvest, and then in the cost to transport goods to market.

I have a couple of broad ideas that I readily admit are not original, but I think are steps in the right direction.

I think nuclear energy’s time might be here, though there are huge unresolved issues about waste disposal. Nuclear also addresses the related issue of global warming - a potential two-fer.

I would really like to see a new “space race” regarding energy. Provide incentives for the private sector to innovate, experiment, and compete - also a potential two-fer, since a well-executed program could stimulate science, math, and engineering education.

I support raising and clarifying fuel-efficiency standards by government regulation, and the elimination of the “Hummer deduction” in the tax code.

I know you probably won’t support the regulations, but I believe that one of the few instances where government intervention in the private sector is warranted and justified is to try to correct instances of market failure, which we agree characterizes the oil market.

So let’s not have government give big oil hundreds of billions of dollars to subsidize drilling in ANWR - it’s not worth it in the short, medium, or long term. Let’s devote funding to stimulating competition to develop viable alternatives instead.

Not perfect, not original, but steps in the right direction, says I.

Posted by: Arr-squared at May 10, 2006 11:58 AM
Comment #147003

Jack,

I haven’t read every reply…only your post.

So, in your mind this is nothing more than Ketchup? When it gets too expensive stop buying it?

I’ve got news for you…we can stop consuming ketchup and still get to work to pay the mortgage and feed the kids. We can’t necessarily stop buying fuel….it’s what gets us to our jobs.

But, hell, let’s go ahead and let it get to $100 per barrel. It’s capitalism at its best. To hell with the consequences. There are millions upon millions of middle class people that live paycheck to paycheck that will disagree with your so-called “compasionate” conservatism.

We from the middle and the left have been begging the far right government to raise fuel standards and push alternative fuels….but, of course, according to the far right we are only tree hugging wackos.

Think this through, Jack. This ain’t Ketchup.

Posted by: Tom L at May 10, 2006 6:23 PM
Comment #147050

Tom L

The left supported Kyoto, which would have driven up prices much more.

You guys are looking for a free lunch. You all call for alternatives and better fuel standards. I agree. The tool, the best tool, to accomplish this is price. The other things you are advocating will also lead to high prices just less efficiently.

Posted by: Jack at May 10, 2006 8:55 PM
Comment #147088

I did not mention Kyoto.

As an engineer I know a little about some alternatives such as the fuel cell, which holds the most promise. Yes, they are currently expensive…just as automobiles where when they first became available. In addition, we’ve all been handcuffed by little to no choice for hybrid vehicles. Exactly how do these things lead to higher prices in fuel?

We should have been advocating these alternatives over the last decade or longer via tax incentives and fuel standards. I’m not blaming the whole thing on one administration (although they have completely ignored the problem). In fact, it was president Carter that first warned Americans that our reliance on oil was a “clear and present danger”.

Then again, as you’ve clearly demonstrated I am only a tree hugging liberal that don’t know what I’m talking about. So, let’s stay the course (pardon the pun) and let these high fuel prices affect our economy and families before we react…it’s the American way. It’s the free market (like there’s no oil cartel or Bush war that has affected the prices).

Posted by: Tom L at May 10, 2006 10:26 PM
Comment #147089

supply and demand my a@@!

Posted by: Tom L at May 10, 2006 10:27 PM
Comment #147379

Tom L

As an engineer who knows about fuel cells, you probably know that there has been no shortage of investment in the firms working to develop them. You also must know that particualar technologies become viable at particular prices. Can you make a workable fuel cell now? Of course you can. Can it compete with oil on price? Which price?

I believe you called yourself a tree hugger. Nothing wrong with loving nature. But the best way to do that is through prices.

Posted by: Jack at May 11, 2006 8:03 PM
Comment #272380

car manufacturers nowadays are making hybrid and electric vehicles as an alternative vehicle to fuel dependent cars with its latest gas engine fuel saver, isn’t it great?

Posted by: gmc parts at December 19, 2008 1:14 AM
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