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Gas Guzzler Tax, MPG and the fate of the auto - continued from Corvette thread


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#1 meb58

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Posted 29 January 2013 - 15:42

Phoenix101,

From your last reply to me in the Corvette thread, "...pro-poverty argument..." Not sure I understand your perspective. I didn't make a poverty argument...but I may have responded to one. My argument is perception based, as a thought exercise, less so reality. Still...

Edited by meb58, 29 January 2013 - 16:40.


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#2 phoenix101

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Posted 29 January 2013 - 23:59

Phoenix101,

From your last reply to me in the Corvette thread, "...pro-poverty argument..." Not sure I understand your perspective. I didn't make a poverty argument...but I may have responded to one. My argument is perception based, as a thought exercise, less so reality. Still...


The pro-poverty perspective (if you prefer 'perspective' to 'argument') is the notion that oil prices may fall considerably, on news of long-term energy supply growth; therefore, fuel-efficient vehicles may not hold market value. Those sentiments were perpetuated in the 1980s and 1990s for the protection of oil producers, who suffered terrible economic shocks during the American efficiency movement of the early 1980s. By 1986, global oil production had fallen by roughly 15%, and the price of oil had fallen to $8 bbl. We stopped producing oil and we increased importation and consumption.

Unfortunately, the US was eventually caught out by its charitable deed when China and India began to boom. The surging oil prices of the new millennium impoverished our nation. Between 2005 and 2008 alone, the US exported about $1T to buy oil for consumption, and the 2012 numbers suggest similar rates of oil importation.

Despite efficiency's ubiquity in popular culture, efficiency is not often practiced on a macroeconomic scale by policy planners, and that's why doomsday predictions spread like wild fire when supplies tighten. The long boom was started by efficient substitution and efficient energy usage, and the boom was sustained by growing energy supplies and suppressed prices. We can rely on energy efficiency to spark another US economic boom (should be happening as we speak), but the rise of China and India make dependence on cheap oil an unrealistic proposition. Even if prices fall sharply during the next half decade, any Congress worth its salt will pass significant excise tax increases to avoid a repeat of last decade. They may also revise lenient CAFE standards for trucks or US supply may fall as Congress revokes leases on risky drilling projects for safer terrestrial shale plays.

Flirting with a 1980s or 1990s oil price fantasy, merely exposes the US to unnecessary economic risk.

#3 bigleagueslider

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Posted 30 January 2013 - 04:59

......Unfortunately, the US was eventually caught out by its charitable deed when China and India began to boom. The surging oil prices of the new millennium impoverished our nation. Between 2005 and 2008 alone, the US exported about $1T to buy oil for consumption, and the 2012 numbers suggest similar rates of oil importation........Despite efficiency's ubiquity in popular culture, efficiency is not often practiced on a macroeconomic scale by policy planners, and that's why doomsday predictions spread like wild fire when supplies tighten. The long boom was started by efficient substitution and efficient energy usage, and the boom was sustained by growing energy supplies and suppressed prices. We can rely on energy efficiency to spark another US economic boom (should be happening as we speak), but the rise of China and India make dependence on cheap oil an unrealistic proposition. Even if prices fall sharply during the next half decade, any Congress worth its salt will pass significant excise tax increases to avoid a repeat of last decade. They may also revise lenient CAFE standards for trucks or US supply may fall as Congress revokes leases on risky drilling projects for safer terrestrial shale plays........Flirting with a 1980s or 1990s oil price fantasy, merely exposes the US to unnecessary economic risk.


phoenix101- Your post is so full of notions that contradict the basic fundamentals of market economic principles that I don't know where to begin. Commodities like crude oil or NG are fungible in nature, and the global market price at any given time is a function of perceived supply and demand conditions. Once you understand this basic concept, it becomes obvious that such fungible commodities are never actually "cheap" or "expensive", but instead are always fairly priced. When private refiners in the US import their crude oil supplies, they do so because it is more economical than purchasing domestic oil.

And while it is true that depressed crude oil and NG adjusted prices during the mid 90s were at near historic lows, which resulted in a significant drop in domestic production, it doesn't mean those resources are worthless. It just means they will be left in the ground until it becomes profitable to extract them. And thanks to significant technical advances in fracking, within a couple years the US will be a net exporter of crude oil, as well as being the world's largest producer of natural gas.

The most powerful driver of energy efficiency is the free market, and not arbitrary government policies. If you want to see just how much a growing oil economy can benefit society, at the state level, take a look at North Dakota. Within less than 5 years, thanks to oil production, the state economy of North Dakota went from average incomes near the poverty level and 15% unemployment, to unemployment levels of less than 1.5% and average incomes in excess of $50K.


#4 gruntguru

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Posted 30 January 2013 - 05:30

The most powerful driver of energy efficiency is the free market, and not arbitrary government policies.

OTOH appropriately targeted taxation reflecting the hidden costs of fossil energy consumption (degradation of environment and public health etc) should be part of the mix.

#5 Canuck

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Posted 30 January 2013 - 05:37

Both of these responses are amusing via their assertion of "fair" and "efficient". Markets are neither. They operate in herd mentality and they are grossly irrational not to mention absolutely rife with professional psychopaths, thieves and the modern pirate. To suggest that free markets price commodities rationally is simply false. The efficient Market theory may still be the mantra but it clearly doesn't work in the real world, run by irrational, emotional beings with fear and greed and ego like the rest of us.

Calgary was booming in 2002 when we arrived back from the Middle East and oil was mid-$30s, give or take. The oilsands projects were going full tilt and money for anything industry related grew on trees. Within a few years, oil jumped the $100 mark and kept going and we went from booming to insanity. When the price finally started to calm down, suddenly the cry became "we can't make a profit under $80!". I'm not sure what tripled their costs other than perhaps the speed of their own expansion. Illogical.

#6 desmo

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Posted 30 January 2013 - 06:04

Well said Canuck, the putative rationality of markets and the basing of the whole neo-liberal economic fairy tale on the astonishingly naive concept of supply and demand curves magically always at or working towards equilibriums is hardly less delusional than religious doctrine.

#7 phoenix101

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Posted 30 January 2013 - 11:39

phoenix101- Your post is so full of notions that contradict the basic fundamentals of market economic principles that I don't know where to begin. Commodities like crude oil or NG are fungible in nature, and the global market price at any given time is a function of perceived supply and demand conditions. Once you understand this basic concept, it becomes obvious that such fungible commodities are never actually "cheap" or "expensive", but instead are always fairly priced. When private refiners in the US import their crude oil supplies, they do so because it is more economical than purchasing domestic oil.

And while it is true that depressed crude oil and NG adjusted prices during the mid 90s were at near historic lows, which resulted in a significant drop in domestic production, it doesn't mean those resources are worthless. It just means they will be left in the ground until it becomes profitable to extract them. And thanks to significant technical advances in fracking, within a couple years the US will be a net exporter of crude oil, as well as being the world's largest producer of natural gas.

The most powerful driver of energy efficiency is the free market, and not arbitrary government policies. If you want to see just how much a growing oil economy can benefit society, at the state level, take a look at North Dakota. Within less than 5 years, thanks to oil production, the state economy of North Dakota went from average incomes near the poverty level and 15% unemployment, to unemployment levels of less than 1.5% and average incomes in excess of $50K.


My argument was that relatively cheap oil, an observation about historical spot prices in real terms (not the difference between supply-demand bids), is not a realistic future scenario due to the relatively high marginal production costs of global supply. If you think Bakken is a good thing, you want high oil prices b/c Bakken oil is more expensive to produce and transport.

Furthermore, commodities are not nearly as fungible as the benchmarks make them appear to the layperson. Crude is not terribly fungible. Different fields and blends have varying degrees of sweet/sour and light/heavy properties. They require different levels of refinement and treatment, and some blends work best in specialty petrochemical application. Brent Crude and WTI are basically the industry standards, but oil has many benchmarks, like Tapis Crude, Bonny Light, Western Select, Mexican Isthmus, Fi-Dolla (Vietnamese Ho), etc. Plus, OPEC has a basket benchmark as well.

We will be a net exporter of crude oil? We imported roughly 18.5m bbl/day in 2012. We produced about 6.4m bbl/day in 2012. At the moment, oil consumption is roughly averaging 18m bbl/day and production is averaging approximately 7.3m bbl/day. If we are lucky, we will be oil independent by 2030, but that relies on unprecedented oil production growth (which requires high oil prices), and meeting CAFE 2025 requirements about 5 years early.

You obviously didn't understand my post. The pro-poverty perspective is one in which the US requires historically low real oil prices in order to prosper, and American citizens base their consumptive habits on a 1990s oil price paradigm that maximizes US economic exposure by maintaining current levels of oil importation. The market will probably not allow either scenario to transpire, and the US government will almost certain act if it does.

#8 phoenix101

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Posted 30 January 2013 - 12:16

Both of these responses are amusing via their assertion of "fair" and "efficient". Markets are neither. They operate in herd mentality and they are grossly irrational not to mention absolutely rife with professional psychopaths, thieves and the modern pirate. To suggest that free markets price commodities rationally is simply false. The efficient Market theory may still be the mantra but it clearly doesn't work in the real world, run by irrational, emotional beings with fear and greed and ego like the rest of us.

Calgary was booming in 2002 when we arrived back from the Middle East and oil was mid-$30s, give or take. The oilsands projects were going full tilt and money for anything industry related grew on trees. Within a few years, oil jumped the $100 mark and kept going and we went from booming to insanity. When the price finally started to calm down, suddenly the cry became "we can't make a profit under $80!". I'm not sure what tripled their costs other than perhaps the speed of their own expansion. Illogical.


Markets are efficient, and they are the best way to assign price. Oil markets have gotten out of hand for a few reasons.

First, the USO ETF started trading in 2006. The obvious purpose of a hackneyed ETF was to attract weak investors who wanted to speculate the upside of oil, which would have raised the price. The ETF was pegged to the price of oil when it was introduced. The USO ETF now trades for about $35 :lol: It took about 24 months for the real oil traders to lay waste to the fund when a bit of volatility finally hit the markets. Volatility was artificially high in the 2009 era, but speculators ate their own. The reason shorts do not cull the longs in the oil markets more often is related to external factors, not speculator greed. Oil demand is highly inelastic in the short term (most futures contracts), and OPEC manipulate supply to buoy prices. Speculators don't care if they make money going short or long. OPEC have not made any malicious oil plays since '79. The problems with oil price lay squarely at the feet of consumers.

Second, the Canadian oil situation is easy to understand. In 2001-2002 the USD to CAD was about 1:1.6 exchange. We gave you $30 USD, but it was worth $48 Canadian. In 2008, when oil trade imbalance between Canada and the US was at its peak, the USD to CAD was .9:1 exchange. We gave you $80 it was worth $72. A half decade of currency inflation, wage inflation (from an oil boom), commodity price inflation, and rising capital costs due to leverage, could easily explain why the breakeven cost (in USD) changed so drastically between 2002 and 2008. Now that exports have stabilized and Canada has used a bit of proactive monetary policy that break even costs have slid into the mid-60s (last I heard).

#9 Magoo

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Posted 30 January 2013 - 13:44

Of course markets are highly efficient. Here is how economists make that determination: study whatever a market happens to do, which is then defined as efficiency.


#10 meb58

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Posted 30 January 2013 - 15:52

I'm not sure we disagree...I don't think the average Joe cares or even understands why oil prices fluctuate. He only cares about the price at the pump. He may speculate why over a cup of coffee with his buddies but he'll pay the price because he has no choice. If the price is high, and forecast to stay that way, he may purchase a Prius. If prices fall and trend that way, he may go back to his gas guzzling machine - yes we are a more enlightened society these days but we are creatures of opportunity...so at some level the pro-poverty argument holds, I think. It's based upon pain, or lack thereof.

The comparison I made way back, was a surface comparison really; that we humans at times impart our ethics upon others...sometimes as thoughts sometimes with much more courage. I thought my example was simple...one guy (Prius) uses much more fuel during the course of the year than the other guy (Corvette). But his (Prius) do good perception about himself and his purchase in reality ought to be tempered instead of one of self righteousness...since he uses much more fuel than the other guy (Corvette). Another comparison, say we all buy a Corvette and drive only 2,000 miles per year? Unrealistic for sure but its about how much fuel we use, not necessarily what we use to burn it. But if you have to drive 100K miles a year, for example, the Corvette is the wrong tool in my opinion.

I may be missing the connection you are making to a global argument/perspective? I understand supply and demand...it's perfectly simple and along with what others have written, influences the price at the pump. Your argument seems to be on the other side of my simple comparison...but I appreciate the global view and its depth. Why do you feel cheap oil is bad? And why should congress do something about it? I do believe in the supply/demand philosophy and free markets. However, as Canuck pointed out, some of us on the planet are simply here for ourselves; free doesn't preclude manipulation...in fact, it may well foster it.



The pro-poverty perspective (if you prefer 'perspective' to 'argument') is the notion that oil prices may fall considerably, on news of long-term energy supply growth; therefore, fuel-efficient vehicles may not hold market value. Those sentiments were perpetuated in the 1980s and 1990s for the protection of oil producers, who suffered terrible economic shocks during the American efficiency movement of the early 1980s. By 1986, global oil production had fallen by roughly 15%, and the price of oil had fallen to $8 bbl. We stopped producing oil and we increased importation and consumption.

Unfortunately, the US was eventually caught out by its charitable deed when China and India began to boom. The surging oil prices of the new millennium impoverished our nation. Between 2005 and 2008 alone, the US exported about $1T to buy oil for consumption, and the 2012 numbers suggest similar rates of oil importation.

Despite efficiency's ubiquity in popular culture, efficiency is not often practiced on a macroeconomic scale by policy planners, and that's why doomsday predictions spread like wild fire when supplies tighten. The long boom was started by efficient substitution and efficient energy usage, and the boom was sustained by growing energy supplies and suppressed prices. We can rely on energy efficiency to spark another US economic boom (should be happening as we speak), but the rise of China and India make dependence on cheap oil an unrealistic proposition. Even if prices fall sharply during the next half decade, any Congress worth its salt will pass significant excise tax increases to avoid a repeat of last decade. They may also revise lenient CAFE standards for trucks or US supply may fall as Congress revokes leases on risky drilling projects for safer terrestrial shale plays.

Flirting with a 1980s or 1990s oil price fantasy, merely exposes the US to unnecessary economic risk.


Edited by meb58, 30 January 2013 - 17:17.


#11 gruntguru

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Posted 30 January 2013 - 23:55

Are SUVs and light trucks exempt from GG Taxes? In Oz we see much inappropriate application of such vehicles - V8 Landcruisers as everyday urban transport etc.

#12 meb58

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Posted 31 January 2013 - 02:05

From the US Department of Energy. About time I would say.

The Administration also recently finalized the first-ever national fuel efficiency and greenhouse gas emission standards for heavy-duty trucks, vans, and buses spanning model years 2014-2018, which will cut GHG emissions by 270 million metric tons, reduce oil consumption by over 500 barrels during that period, and save truck owners and operators more than $50 billion in fuel costs.

Also just read some interesting tid bits about carbon capturing and storage...my quick cynic says, yet another catchy Green business profiting from Carbophobia!

Edited by meb58, 31 January 2013 - 02:05.


#13 gruntguru

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Posted 31 January 2013 - 02:58

model years 2014-2018, which will cut GHG emissions by 270 million metric tons

I assume that is a 5 year total (2014-2018) since 270 million tons is almost 1% of annual global emissions and about 5% of annual US emissions. A very significant reduction actually.

Edited by gruntguru, 31 January 2013 - 03:17.


#14 phoenix101

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Posted 31 January 2013 - 07:06

I'm not sure we disagree...I don't think the average Joe cares or even understands why oil prices fluctuate. He only cares about the price at the pump. He may speculate why over a cup of coffee with his buddies but he'll pay the price because he has no choice. If the price is high, and forecast to stay that way, he may purchase a Prius. If prices fall and trend that way, he may go back to his gas guzzling machine - yes we are a more enlightened society these days but we are creatures of opportunity...so at some level the pro-poverty argument holds, I think. It's based upon pain, or lack thereof.

Why do you feel cheap oil is bad? And why should congress do something about it?


What I feel is not important. What I know is that US consumers and US governments have spent trillions during the last decade to import oil, stimulate the economy to mitigate manufacturing contraction (partially caused by lack of energy production), and to QE ourselves out of the Great Recession (partially related to trade imbalance for energy). Sadly, we spent all of that money so Democrats could learn that we needed to produce energy and so Republicans could learn that we needed better fleet fuel economy. Why do we need more domestic oil and lower overall consumption? B/c the marginal cost of production has risen and altered the supply function. If oil production is sensitive to demand bid price, not supply (OPEC) manipulation, then it is unlikely that the price of oil will collapse, except in the event of global economic meltdown.

If Congress can figure out that 1980s oil/energy policy is self-destructive (not self-interested) in the modern energy marketplace, consumers can figure it out. Congress should make sure consumers get the memo b/c the globe needs the US to survive to see the next decade, no matter how bent the world may be about US foreign policy, monetary policy, pollution policy, or entitlement policy. About half of our oil imports are squandered as inefficiently burned gasoline. About 20% of our oil imports (diesel) could be replaced by other domestic fuels. About 12% of our oil imports (jet fuel) could also be burned more efficiently with new generation airplanes like the 787. The price of oil is not really a major determinant of our quality of life as consumers, but it makes a big difference to our quality of life as oil producers.



#15 meb58

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Posted 31 January 2013 - 14:20

Considering that more vehicles enter the highways each year, that many old smokers will remain in service.

I assume that is a 5 year total (2014-2018) since 270 million tons is almost 1% of annual global emissions and about 5% of annual US emissions. A very significant reduction actually.



#16 meb58

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Posted 31 January 2013 - 14:53

I am quite unfamiliar with the 1980s oil/energy policy, so I have no back drop...but I'll perform a little research.

I am a big fan of increasing oil production...an equally big fan of nuclear power. And despite my Vette proclivities, I am hopeful that society at large won't squander its future away...however, my quality of life has changed with regard to the cost of oil/gas; I drove 60K miles a year during the past 20 years and the cost of fuel has certainly affected my own bottom line - despite my vehicle choices, it's all relative. The cost of fuel and our job opportunities - where they are - do affect the quality of life of consumers...unless I missed something. 15 years ago it cost $10.00 - $12.00 to fill a car that averaged 38mpg. Today it costs ~$60.00 to fill my tank and I am averaging about 45mpg. That represents a huge burden, if I am even remotely typical, to consumer bottom line. Today I drive 8 miles round trip...I filled up my car 5 weeks ago and still have half a tank left. But many consumers cannot afford to make the change I did and absorb a 25% reduction in pay to maintain my sanity and quality of life. I would like to think that this anecdote resonates as the consumer in general, his struggle with the cost of fuel. Perhaps the old days were pure unconsciousness, a state of nirvana...

As oil producers, I've no idea. If this is your field, I am truly interested in why, I won't make any assumptions.

EDIT: I will add, that during a deep debate about socialism in my family, Exxon profit margins came up - some number from recent past was thrown around the room. One of the folks in the room was a very well off doctor, the other an attorney. I asked them to tell me what they thought their best profit margins were for each of their businesses - they are owners. When I stated that Exxon's net profit margin was ~ 10% they looked a little more sobered. 10% earned on a world-wide network with all of the risks/speculative investment that come with oil production seemingly dominated by governments both friendly and foe. The huge profit in dollars shrank considerably in their minds. I am pretty sure that the ~10% number is correct...or close.

What I feel is not important. What I know is that US consumers and US governments have spent trillions during the last decade to import oil, stimulate the economy to mitigate manufacturing contraction (partially caused by lack of energy production), and to QE ourselves out of the Great Recession (partially related to trade imbalance for energy). Sadly, we spent all of that money so Democrats could learn that we needed to produce energy and so Republicans could learn that we needed better fleet fuel economy. Why do we need more domestic oil and lower overall consumption? B/c the marginal cost of production has risen and altered the supply function. If oil production is sensitive to demand bid price, not supply (OPEC) manipulation, then it is unlikely that the price of oil will collapse, except in the event of global economic meltdown.

If Congress can figure out that 1980s oil/energy policy is self-destructive (not self-interested) in the modern energy marketplace, consumers can figure it out. Congress should make sure consumers get the memo b/c the globe needs the US to survive to see the next decade, no matter how bent the world may be about US foreign policy, monetary policy, pollution policy, or entitlement policy. About half of our oil imports are squandered as inefficiently burned gasoline. About 20% of our oil imports (diesel) could be replaced by other domestic fuels. About 12% of our oil imports (jet fuel) could also be burned more efficiently with new generation airplanes like the 787. The price of oil is not really a major determinant of our quality of life as consumers, but it makes a big difference to our quality of life as oil producers.


Edited by meb58, 31 January 2013 - 15:50.


#17 munks

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Posted 31 January 2013 - 15:35

Are SUVs and light trucks exempt from GG Taxes? In Oz we see much inappropriate application of such vehicles - V8 Landcruisers as everyday urban transport etc.


From the EPA website:
"Congress established Gas Guzzler Tax provisions in the Energy Tax Act of 1978 to discourage the production and purchase of fuel-inefficient vehicles. The Gas Guzzler Tax is assessed on new cars that do not meet required fuel economy levels. These taxes apply only to passenger cars. Trucks, minivans, and sport utility vehicles (SUV) are not covered because these vehicle types were not widely available in 1978 and were rarely used for non-commercial purposes."

I was under the impression that they were looking to close that loophole, but it hasn't happened yet. In any case, GG doesn't apply to anything over 6000 lbs (presumably that means on Earth).

#18 meb58

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Posted 31 January 2013 - 15:38

Check post #12. Curiously SUVs are absent...I've no idea where they fall it this moment.


From the EPA website:
"Congress established Gas Guzzler Tax provisions in the Energy Tax Act of 1978 to discourage the production and purchase of fuel-inefficient vehicles. The Gas Guzzler Tax is assessed on new cars that do not meet required fuel economy levels. These taxes apply only to passenger cars. Trucks, minivans, and sport utility vehicles (SUV) are not covered because these vehicle types were not widely available in 1978 and were rarely used for non-commercial purposes."

I was under the impression that they were looking to close that loophole, but it hasn't happened yet. In any case, GG doesn't apply to anything over 6000 lbs (presumably that means on Earth).


Edited by meb58, 31 January 2013 - 15:39.


#19 phoenix101

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Posted 31 January 2013 - 20:15

I am quite unfamiliar with the 1980s oil/energy policy, so I have no back drop...but I'll perform a little research.

I am a big fan of increasing oil production...an equally big fan of nuclear power. And despite my Vette proclivities, I am hopeful that society at large won't squander its future away...however, my quality of life has changed with regard to the cost of oil/gas; I drove 60K miles a year during the past 20 years and the cost of fuel has certainly affected my own bottom line - despite my vehicle choices, it's all relative. The cost of fuel and our job opportunities - where they are - do affect the quality of life of consumers...unless I missed something. 15 years ago it cost $10.00 - $12.00 to fill a car that averaged 38mpg. Today it costs ~$60.00 to fill my tank and I am averaging about 45mpg. That represents a huge burden, if I am even remotely typical, to consumer bottom line. Today I drive 8 miles round trip...I filled up my car 5 weeks ago and still have half a tank left. But many consumers cannot afford to make the change I did and absorb a 25% reduction in pay to maintain my sanity and quality of life. I would like to think that this anecdote resonates as the consumer in general, his struggle with the cost of fuel. Perhaps the old days were pure unconsciousness, a state of nirvana...

As oil producers, I've no idea. If this is your field, I am truly interested in why, I won't make any assumptions.

EDIT: I will add, that during a deep debate about socialism in my family, Exxon profit margins came up - some number from recent past was thrown around the room. One of the folks in the room was a very well off doctor, the other an attorney. I asked them to tell me what they thought their best profit margins were for each of their businesses - they are owners. When I stated that Exxon's net profit margin was ~ 10% they looked a little more sobered. 10% earned on a world-wide network with all of the risks/speculative investment that come with oil production seemingly dominated by governments both friendly and foe. The huge profit in dollars shrank considerably in their minds. I am pretty sure that the ~10% number is correct...or close.


1980s energy policy can be researched easily by starting with the oil consumption by sector charts.

I understand that fueling costs are a pain, but the changes you've outlined are relatively immaterial compared to a person who was paying $25-$30 to fill up their SUV or truck in the late 1990s. Consumer choice can insulate the populace from economic shocks. But fueling costs are immaterial compared to the increase in the per capita national debt, per capita interest expense, and entitlement COLA, which we all pay or will pay in the future. The self-perpetuating solution of the 1980s became a self-perpetuating problem in the 2000s. In the 1980s, our micro/macro policy made us rich and reduced the price of oil which made us richer. In the 2000s, our macro/micro behavior made us poor and increased the price of oil which made us poorer. We can switch to energy production. We can fix our macro/micro economic issues. We must do both, really.

If we waste oil in massive quantities, and we have trillions of dollars in unexploited oil resources, the benefit of high, stable oil prices is rather obvious. We add 1M bbl/day production, worth about $40B at present prices, and we lose $40B of imports. Efficiency reduces total prices at the pump and reduces imports further. High oil prices also protect natural gas production which stimulates the economy. Coal exports stimulate the economy. Cheaper domestic energy (not oil) stimulates manufacturing. Manufacturing creates jobs and closes the trade deficit. Jobs closes our fiscal deficit by increasing revenues and reducing unemployment/welfare benefits.

The real power play is moving all freight trucks, trains, and ships to natural gas, which opens diesel for passenger car usage. The play is a bit risky b/c natural gas shocks from increased demand could lead to price instability for electricity and transported goods, but when you consider the stimulating effect of shedding about $50B in oil imports, it might be worth it.



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#20 meb58

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Posted 31 January 2013 - 22:08

My quick search was somewhat revealing - to me.

Even in the 80's, consumption out-paced domestic production...transportation is by far the biggest consumer...motor gasoline being the biggest sector. I'm still not linking past policy to present but I'll get there.

You suggest that high oil prices protect natural gas...I can see the advantage if one is selling natural gas. But how does oil feel about this? ...there a prejudice here in terms of stimulation...? Or are you suggesting the natural gas production is a quicker way to independence?

The insulating factor you describe is always relative...I've never driven a big SUV because they are inefficient to my way of thinking in so many ways. But the relative cost increase stays the same. I nearly wrote about a few friends who complain about $150.00 fill ups...their choice...there's an alternative. The logical corollary, the price of fuel, affects manufacturing, no? So I submit, the very cost of a gallon of gasoline, or diesel or JP affects manufacturing. It's taking the consumer and extrapolating his higher incurred cost to a manufacturing level.




1980s energy policy can be researched easily by starting with the oil consumption by sector charts.

I understand that fueling costs are a pain, but the changes you've outlined are relatively immaterial compared to a person who was paying $25-$30 to fill up their SUV or truck in the late 1990s. Consumer choice can insulate the populace from economic shocks. But fueling costs are immaterial compared to the increase in the per capita national debt, per capita interest expense, and entitlement COLA, which we all pay or will pay in the future. The self-perpetuating solution of the 1980s became a self-perpetuating problem in the 2000s. In the 1980s, our micro/macro policy made us rich and reduced the price of oil which made us richer. In the 2000s, our macro/micro behavior made us poor and increased the price of oil which made us poorer. We can switch to energy production. We can fix our macro/micro economic issues. We must do both, really.

If we waste oil in massive quantities, and we have trillions of dollars in unexploited oil resources, the benefit of high, stable oil prices is rather obvious. We add 1M bbl/day production, worth about $40B at present prices, and we lose $40B of imports. Efficiency reduces total prices at the pump and reduces imports further. High oil prices also protect natural gas production which stimulates the economy. Coal exports stimulate the economy. Cheaper domestic energy (not oil) stimulates manufacturing. Manufacturing creates jobs and closes the trade deficit. Jobs closes our fiscal deficit by increasing revenues and reducing unemployment/welfare benefits.

The real power play is moving all freight trucks, trains, and ships to natural gas, which opens diesel for passenger car usage. The play is a bit risky b/c natural gas shocks from increased demand could lead to price instability for electricity and transported goods, but when you consider the stimulating effect of shedding about $50B in oil imports, it might be worth it.



#21 Greg Locock

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Posted 31 January 2013 - 22:46

Anecdote is not data, but 22 years ago a baseline Falcon got about 13 l /100 km, and cost about $26000, and fuel was 60c/l at the pump. 14" wheels, 1412 kg

now the baseline falcon gets about 11 l/100 costs about 35k, and fuel is 135 c/l

The differences between the 2 cars are quite substantial in terms of content and performance, the fuel has scarcely changed (octane went up a bit) 16" wheels 1690 kg.

So, a Falcon used to cost 26000/13/60=333 000 km of fuel, now it is 236 000 km.

On the other hand neither car prices nor cost of fuel per km have tracked wage inflation, ave full time wage has gone to 73k from 30k, so you could drive just under 1/2 a million km a year now, compared with 372000 km in 1990, or buy two and a bit cars instead of one and a bit.


#22 bigleagueslider

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Posted 01 February 2013 - 02:08

My argument was that relatively cheap oil, an observation about historical spot prices in real terms (not the difference between supply-demand bids), is not a realistic future scenario due to the relatively high marginal production costs of global supply. If you think Bakken is a good thing, you want high oil prices b/c Bakken oil is more expensive to produce and transport.


The notion that any particular oil resource is "expensive to produce" ignores the reality of commodity markets. If an oil resource costs more to produce than it will sell for on the open market, then no company would be stupid enough to take a loss doing so. Once you grasp this basic fact, you'll understand that any particular crude oil product is never actually "cheap" or "expensive" (exclusive of short-term spikes/dips). Instead, it is always fairly priced, based on current supply and future demand.

As for Bakken oil, it is obviously currently cheap enough to produce that it is profitable. Otherwise there would be no oil boom in ND. As for transportation costs of Bakken oil, it is far cheaper to transport by pipeline than shipping crude by tanker from South America or the Middle East. It is estimated that Bakken alone will produce over 1.2M bbl/day by 2015, which is an increase of 10X in just 8 years. There are also tens of billions of barrels of economically recoverable oil off the coast of California and in the Gulf of Mexico, and the only thing preventing their use are certain politicians. However, I predict this situation will soon change. The state of California is currently broke, and desperately needs significant new sources of revenue. California already has the highest state tax levels in the nation, so raising taxes is no longer an option. The only option left to generate the billions in additional annual revenues needed is to start drilling for oil. And since politicians crave money more than anything else, California's state politicians will not hesitate to toss the environmental lobby aside and start drilling if it means billions in new revenues.

#23 Lee Nicolle

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Posted 01 February 2013 - 02:13

Anecdote is not data, but 22 years ago a baseline Falcon got about 13 l /100 km, and cost about $26000, and fuel was 60c/l at the pump. 14" wheels, 1412 kg

now the baseline falcon gets about 11 l/100 costs about 35k, and fuel is 135 c/l

The differences between the 2 cars are quite substantial in terms of content and performance, the fuel has scarcely changed (octane went up a bit) 16" wheels 1690 kg.

So, a Falcon used to cost 26000/13/60=333 000 km of fuel, now it is 236 000 km.

On the other hand neither car prices nor cost of fuel per km have tracked wage inflation, ave full time wage has gone to 73k from 30k, so you could drive just under 1/2 a million km a year now, compared with 372000 km in 1990, or buy two and a bit cars instead of one and a bit.

Dont quite know about your pricing, an EB base cost about 20k. FG can be bought for less too.
My current work ute, a 200k 02 AU gets 5-600km around town, often with some load. But highway around 800km on 80 litres. Would be better probably except for all the trucks and caravans to be passed! But load it fully and it drinks quite well. But does the job very competently.
My figures are quite similar to a reps FG and better than anothers early VE. The ute reputedly weighs over 1600k.
Those EB 14" wheels roll out about an inch smaller than the FG 16s.

Edited by Lee Nicolle, 01 February 2013 - 08:21.


#24 phoenix101

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Posted 01 February 2013 - 02:52

My quick search was somewhat revealing - to me.

Even in the 80's, consumption out-paced domestic production...transportation is by far the biggest consumer...motor gasoline being the biggest sector. I'm still not linking past policy to present but I'll get there.


After you look at the dip in US oil consumption by sector, jump over to US per capita oil consumption, vehicle miles traveled, and US industrial output. The US per capita consumption demonstrates that we reduced per capita consumption from 30 bbl per person, but since then, we've never been able to eclipse 26 bbl per person without triggering a recession. If per capita consumption has been relatively static for 30 years, and industrial output has been growing, and vehicle miles traveled has been growing, we are basically growing due to a rising population and higher oil imports (in barrels). We are leveraging the same efficiency and substitution paradigms we developed in the late 1970s and early 1980s.

If the cost structure of oil has changed, now that the globe consumes 90m bbl/day, we can hardly expect to return to an economy that grows by increasing its population and importing more oil. Worse still, we cannot really leave the market to handle the problem b/c the damage of trade deficits is not necessarily borne by the people who waste fuel.

Oil won't care if we exploit natural gas b/c they have become more worried that the world will find an alternative if gasoline prices stay high. Furthermore, switching all trucks, train, buses, and ships to natural gas would reduce our consumption by 4M-5M bbl/day. If it took a decade to do it, global demand growth would exceed US consumption reduction. Even if CAFE is wildly successful, global demand will probably hold firm. Producers seem quite happy with $80-$100 oil.

#25 bigleagueslider

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Posted 01 February 2013 - 04:30

After you look at the dip in US oil consumption by sector, jump over to US per capita oil consumption, vehicle miles traveled, and US industrial output. The US per capita consumption demonstrates that we reduced per capita consumption from 30 bbl per person, but since then, we've never been able to eclipse 26 bbl per person without triggering a recession. If per capita consumption has been relatively static for 30 years, and industrial output has been growing, and vehicle miles traveled has been growing, we are basically growing due to a rising population and higher oil imports (in barrels). We are leveraging the same efficiency and substitution paradigms we developed in the late 1970s and early 1980s.

If the cost structure of oil has changed, now that the globe consumes 90m bbl/day, we can hardly expect to return to an economy that grows by increasing its population and importing more oil. Worse still, we cannot really leave the market to handle the problem b/c the damage of trade deficits is not necessarily borne by the people who waste fuel.

Oil won't care if we exploit natural gas b/c they have become more worried that the world will find an alternative if gasoline prices stay high. Furthermore, switching all trucks, train, buses, and ships to natural gas would reduce our consumption by 4M-5M bbl/day. If it took a decade to do it, global demand growth would exceed US consumption reduction. Even if CAFE is wildly successful, global demand will probably hold firm. Producers seem quite happy with $80-$100 oil.


I think you are confusing cause and effects. There has been a drop in US per capita oil consumption in the last 3-4 years, but this is mostly due to lack of growth in domestic GDP and a significant drop in the average annual household income, and not high gasoline/oil prices. As for industrial output, the US workforce continues to be one of the globe's most productive. While the US has a high per-capita oil/energy consumption rate, the US also has one of the highest per-capita contributions to annual world GDP. This means the US is a very efficient user of energy.

The reason the US imports large amounts of oil is because it is economically advantageous to do so. While we have the world's largest amount of known domestic oil reserves, it is more economically beneficial to leave them in place if we can import oil at lower cost.


#26 gruntguru

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Posted 01 February 2013 - 06:14

Anecdote is not data, but 22 years ago a baseline Falcon got about 13 l /100 km, and cost about $26000, and fuel was 60c/l at the pump. 14" wheels, 1412 kg
now the baseline falcon gets about 11 l/100 costs about 35k, and fuel is 135 c/l
The differences between the 2 cars are quite substantial in terms of content and performance, the fuel has scarcely changed (octane went up a bit) 16" wheels 1690 kg.
So, a Falcon used to cost 26000/13/60=333 000 km of fuel, now it is 236 000 km.
On the other hand neither car prices nor cost of fuel per km have tracked wage inflation, ave full time wage has gone to 73k from 30k, so you could drive just under 1/2 a million km a year now, compared with 372000 km in 1990, or buy two and a bit cars instead of one and a bit.

Nice anecdote! Goes to show that the "outrageously high" fuel prices we are experiencing, are nowhere near high enough to significantly change our habits. I assume these numbers are typical of most markets around the developed world. Of course the developing world (China & India) is experiencing extreme upward pressure on fuel consumption habits!

#27 gruntguru

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Posted 01 February 2013 - 06:25

There are also tens of billions of barrels of economically recoverable oil off the coast of California and in the Gulf of Mexico, and the only thing preventing their use are certain politicians. However, I predict this situation will soon change

You don't suppose any of those politicians might be supported by constituents - including Gulf Coast residents and others affected by the recent disaster?

#28 gruntguru

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Posted 01 February 2013 - 06:35

As for industrial output, the US workforce continues to be one of the globe's most productive. While the US has a high per-capita oil/energy consumption rate, the US also has one of the highest per-capita contributions to annual world GDP. This means the US is a very efficient user of energy.

Perhaps "contribution to world GDP per unit oil/energy consumption" would be the metric to confirm your claim (This means the US is a very efficient user of energy.) The logic you have used to get there certainly doesn't stack up.

#29 phoenix101

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Posted 01 February 2013 - 10:03

I think you are confusing cause and effects. There has been a drop in US per capita oil consumption in the last 3-4 years, but this is mostly due to lack of growth in domestic GDP and a significant drop in the average annual household income, and not high gasoline/oil prices. As for industrial output, the US workforce continues to be one of the globe's most productive. While the US has a high per-capita oil/energy consumption rate, the US also has one of the highest per-capita contributions to annual world GDP. This means the US is a very efficient user of energy.

The reason the US imports large amounts of oil is because it is economically advantageous to do so. While we have the world's largest amount of known domestic oil reserves, it is more economically beneficial to leave them in place if we can import oil at lower cost.


We're talking about the era from 1975-2005. The oil consumption dip in all sectors happened in the early 1980s. The 1980s and 1990s were the first time, since adopting oil as our primary energy source (1948, IIRC), the US economy achieved growth without setting new consumption records. Improving fleet fuel efficiency and closing the import gap with domestic energy substitution were the foundations of the long-boom. After cutting our oil consumption by about 16% and increasing our fleet economy from 13mpg to 23mpg, we stopped pursuing efficiency, and we let our population growth carry us to new oil consumption/import highs as we crossed into the new millennium.

It is not economically advantageous to import oil and then burn 60% of it in freight trucks, ships, and 20mpg passenger cars. Furthermore, the US is not an efficient oil consumer. If you look at other developed countries with similar GDPs (nominal and PPP) you'll see that the US burns a lot more oil, which wouldn't be that big a deal, if we didn't have net imports in excess of $250B. It might not be a big deal if we actually had the world's largest known reserves. Yes, we have 4T barrels of kerogen, and the recoverable amount is estimated to be larger than global proven reserves for conventional oil. Until we have a major breakthrough in production costs and environmental safety, we won't be using oil shale anytime soon.



#30 meb58

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Posted 01 February 2013 - 13:57

In bold...Yes, I think this is highly influential.

I think you are confusing cause and effects. There has been a drop in US per capita oil consumption in the last 3-4 years, but this is mostly due to lack of growth in domestic GDP and a significant drop in the average annual household income, and not high gasoline/oil prices. As for industrial output, the US workforce continues to be one of the globe's most productive. While the US has a high per-capita oil/energy consumption rate, the US also has one of the highest per-capita contributions to annual world GDP. This means the US is a very efficient user of energy.

And from the perspective of hoarders and doomsdayers, lets use their oil and save ours. When theirs is gone, ours is worth more...if we want to sell.

The reason the US imports large amounts of oil is because it is economically advantageous to do so. While we have the world's largest amount of known domestic oil reserves, it is more economically beneficial to leave them in place if we can import oil at lower cost.



#31 meb58

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Posted 01 February 2013 - 14:27

Fuel prices have gone up ~ 400% in the period I described above. 400% of a small number may not be much but if we consider fleet fuel costs the numbers are genuinely scary. On the other hand, there are so many variables to describe individual buying habits. I was brought to up be practical and frugal despite living in a comfortable atmosphere. But there are those who have to portray a different image, ( and that's a big driver in buying habits ) one that far exceeds all practical means. I don't know how high prices have to be. For this group, image is more important than a small modicum of social/environmental restraint.

I suppose I can be accused of wasting fuel while driving on the track...it doesn't get me anywhere practically...it doesn't foster a sense of social responsibility ( a disruptive phrase today)...it's personal and selfish at some level. But, 100 octane ain't cheap! So it's not a habit per se. ...ever more justification for silly actions...

Nice anecdote! Goes to show that the "outrageously high" fuel prices we are experiencing, are nowhere near high enough to significantly change our habits. I assume these numbers are typical of most markets around the developed world. Of course the developing world (China & India) is experiencing extreme upward pressure on fuel consumption habits!


Edited by meb58, 01 February 2013 - 14:30.


#32 phoenix101

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Posted 01 February 2013 - 22:54

Fuel prices have gone up ~ 400% in the period I described above. 400% of a small number may not be much but if we consider fleet fuel costs the numbers are genuinely scary. On the other hand, there are so many variables to describe individual buying habits. I was brought to up be practical and frugal despite living in a comfortable atmosphere. But there are those who have to portray a different image, ( and that's a big driver in buying habits ) one that far exceeds all practical means. I don't know how high prices have to be. For this group, image is more important than a small modicum of social/environmental restraint.

I suppose I can be accused of wasting fuel while driving on the track...it doesn't get me anywhere practically...it doesn't foster a sense of social responsibility ( a disruptive phrase today)...it's personal and selfish at some level. But, 100 octane ain't cheap! So it's not a habit per se. ...ever more justification for silly actions...


Individual behavior and the impact of price on individual behavior is an interesting topic of discussion, but I don't think that domestic over-reliance on oil will ever be solved by examining the microeconomics of negative stimulus. Negative stimulus is often the least accurate way of modifying behavior. Fuel price could rise by another 100%, but if people can't figure out how to avoid the negative outcome or if they fail to perceive a macro solution, they will bring down the nation. Sad, but true in regards to recent history.

Macro energy is an issue of government policy b/c the individual is simply not designed to understand or react to negative macroeconomic trends unless they actively invest. Our regulators are culpable for our current energy woes. As soon as they realized the multi-trillion dollar cost of their policy recommendations, they agreed to a fix in 2 years. The best thing we can do now is just help it along.

Corvette sales are not a problem. A populace that measures prosperity by gas price (not cost per mile) or that misunderstands the importance of fuel-efficiency: those attributes are problems. In the 1970s, Americans increased fleet fuel efficiency by 50% in 5 years. We've managed 20%, which is strange b/c we know how wealthy we will become this time around.

You ask someone if they want a lightweight Corvette that gets better mileage. They emphatically answer 'yes'. You ask someone if they want a more fuel-efficient Covette that will necessarily by much lighter. They emphatically answer 'no'. Strange world we are living in. People are hypersensitive to cultural innuendo and political ideals.

#33 Canuck

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Posted 02 February 2013 - 04:00

That's presentation. In the first example you're highlighting light weight and sliding in mileage. In the latter, it's the use of "economy" and we all remember what happened to the performance cars after the 70's and early 80's drive for economy. 5 litre engines that made imaginary power and pretend torque yet still delivered marginal economy. Of course we run away.

I'd like to introduce you to my supermodel friend - totally hot and cheap on both food and booze. Or, I can introduce you to this freakishly tall woman I know with low self confidence and body issues.

#34 Canuck

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Posted 02 February 2013 - 04:12

Ah - yes. As I was blathering about the price of oil in my previous post, I couldn't help but think the primary issue was the USD/CAD rates of the period. I was buying and selling motorcycles at the time and managed to get burned on one unit that sat on my floor longer than it should have. Still, asserting that the market is efficient and fair does not make it so. It's real history is one of greed and deception and it is a keen consumer of the monies wagered by logical speculators in an arena of human emotion. Everyone with any math skills looked at Bernie Madoff and called him for what he was - a fraud. Yet he swindled old money Euros, US pensions and the guy next door because they were all greedy. We're a fearfully, greedy species prone to self-delusions about our ability to think rationally and weigh facts and act in our own best interests but time and time again (not to mention neuroscience and psychology) our actions have shown otherwise. Sure - on paper the market is efficient and balanced but we don't live on paper.

#35 bigleagueslider

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Posted 03 February 2013 - 03:16

We're talking about the era from 1975-2005. The oil consumption dip in all sectors happened in the early 1980s. The 1980s and 1990s were the first time, since adopting oil as our primary energy source (1948, IIRC), the US economy achieved growth without setting new consumption records.........It is not economically advantageous to import oil and then burn 60% of it in freight trucks, ships, and 20mpg passenger cars. Furthermore, the US is not an efficient oil consumer. If you look at other developed countries with similar GDPs (nominal and PPP) you'll see that the US burns a lot more oil, which wouldn't be that big a deal, if we didn't have net imports in excess of $250B. It might not be a big deal if we actually had the world's largest known reserves. Yes, we have 4T barrels of kerogen, and the recoverable amount is estimated to be larger than global proven reserves for conventional oil. Until we have a major breakthrough in production costs and environmental safety, we won't be using oil shale anytime soon.


Oil is not the primary energy source in the US, coal and NG are. Oil is only the primary source of US transportation fuels, such as gasoline, jet fuel and diesel.

As of 2011, the US economy directly contributed 20% of global GDP, while accounting for around 18% of global energy consumption. There are indeed a few examples of countries with small economic outputs and low energy consumption that have better GDP vs energy consumption metrics, but these are really just statistical outliers. There are no large, industrialized economies (India, China, Russia, Brazil, etc.) that have better energy efficiency metrics than the US.

As for requiring major technological breakthroughs before the US begins producing large amounts of domestic shale oil/gas, this has already happened. The recent US oil/NG boom is entirely due to production of unconventional shale gas/oil resources. There is also massive amounts of heavy crude oil being economically produced from Canadian oil sands. As for the trillions of barrels of shale oil reserves in Wyoming, Utah and Colorado, they will be economically produced when long term crude oil prices stabilize above $50-$60/bbl.

Lastly, we should also consider that the US has some of the world's most stringent emissions regulations when it comes to automobiles or powerplants.


#36 Canuck

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Posted 03 February 2013 - 05:16

I like that "Contribute 20% of global GDP". What does that really mean though? When your GDP (and I mean all of ours, not American specifically) is built on non-exportable services

More than $7 trillion in services was produced in 2011, a whopping 46% of GDP. This is much larger than in the 1960s, when services contributed less than 30% to the economy. A large driver of this growth has been the dramatic increase of the financial services and health care services industries. Most of these services are also consumed domestically, as they are difficult to export.

and funded largely on by money that doesn't exist (credit) what is the actual value? You've used 21% of the world's energy to produce 19% of the world's GDP (Canada 2% GDP, 2.85% Energy) but it's comprised mostly of intangibles bought on credit.

A comparison of GDP / Energy Consumption is not an accurate indicator of energy efficiency in companies with heavy weighting on services / financial / intangible production. I'm not sure what is - Canadians aren't exactly energy-misers, ranking #9 for consumption yet having .5% of the population. US GDP is roughly 10 times Canada's which isn't surprising really given the social similarities with ~10 times the population (3rd largest single country by population). Meh...it's all questionable metrics, none of which provide a particularly comprehensive picture.

#37 phoenix101

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Posted 03 February 2013 - 09:42

Oil is not the primary energy source in the US, coal and NG are. Oil is only the primary source of US transportation fuels, such as gasoline, jet fuel and diesel.

As of 2011, the US economy directly contributed 20% of global GDP, while accounting for around 18% of global energy consumption. There are indeed a few examples of countries with small economic outputs and low energy consumption that have better GDP vs energy consumption metrics, but these are really just statistical outliers. There are no large, industrialized economies (India, China, Russia, Brazil, etc.) that have better energy efficiency metrics than the US.

As for requiring major technological breakthroughs before the US begins producing large amounts of domestic shale oil/gas, this has already happened. The recent US oil/NG boom is entirely due to production of unconventional shale gas/oil resources. There is also massive amounts of heavy crude oil being economically produced from Canadian oil sands. As for the trillions of barrels of shale oil reserves in Wyoming, Utah and Colorado, they will be economically produced when long term crude oil prices stabilize above $50-$60/bbl.

Lastly, we should also consider that the US has some of the world's most stringent emissions regulations when it comes to automobiles or powerplants.


Please stop telling people 'how it is' and go look at some data. Most US energy consumed is from oil. It's been that way for over a half century. The government spends untold sums of money to generate public data so you don't have to guess what fuel the US uses most.

Furthermore, I'm not sure why you are quoting macro economic data that has little direct relevance to US energy policy or the geopolitics of energy. I'm really happy that we generate 20% of the world's economy with 18% of the energy. Unfortunately, that isn't good enough b/c we've imported $2T of oil in the last decade. Fleet fuel efficiency declined between 1986 and 1999, and we only just eclipsed 1986 fuel economy in 2010. In 1993 (IIRC), we began importing more than we produced. Between 1984-2008 our economy made almost no efficiency gains, and we twice managed to spark a recession with a minute 4% increase in per capita oil consumption (25bbl-->26bbl).

I'm not interested in the cultural BS. Honestly, I don't care if we continue burning oil, nor do I endorse starting WWIII over carbon-emissions compliance. However, I'm keen to see the US regain all of the ground it lost over the last 15 years, when our aimless energy bureaucracy steered the ship aground. The rest of the world is predicated on a strong dollar so they haven't been particularly enthusiastic about US policy either.

We consume 18.5M bbl/day, and without fuel economy regs, we'd consume closer to 21M bbl/day when the economy recovers. That's 300% of our current production figures. Even if we could be energy independent at 21M bbl/day, and we assume unrealistic recoverable reserves of 200B bbl (8x higher than USGS official numbers), we'd exhaust our oil supplies in 25 years.

Anyway, I'm not sure why I'm trying to convince you. Congress have already acted, and we are drilling/fracking everything in sight, and we've enacted CAFE 2025. First signs of intelligent life in 30 years. If we move trucks, ships, and trains to LNG and CNG, we'll be even better off.

Edited by phoenix101, 03 February 2013 - 09:45.


#38 gruntguru

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Posted 04 February 2013 - 03:30

We consume 18.5M bbl/day, and without fuel economy regs, we'd consume closer to 21M bbl/day when the economy recovers. That's 300% of our current production figures. Even if we could be energy independent at 21M bbl/day, and we assume unrealistic recoverable reserves of 200B bbl (8x higher than USGS official numbers), we'd exhaust our oil supplies in 25 years.

. . . and of course energy demand has never been static - roughly doubling every 25 years.

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#39 meb58

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Posted 04 February 2013 - 22:13

It would be nice to see a graph correlating and or forecasting the number of new drivers world wide - not new cars - as a way of anticipating fuel demand from a huge segment. Does this also imply that manufacturing - just cars and trucks - demand move in sync? - as new drivers enter the job market. Looking at this another way, lets say we remove 2/3rds of all folks from this planet...how much fuel is left...demand is lower...cost is presumably lower...barring any funny business.

This is like watching Amoeba grow...or die :well:

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#40 Greg Locock

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Posted 05 February 2013 - 00:15

Here's how I looked at it before.

Say at the moment we have 1 billion first worlders consuming 10 units of energy (or any other resource) per capita per year. And 5 billion 3rd worlders consuming 1 unit. If we are to just cruise along as the 3rd world demands food, fridges, lights, water and mobility (none of which I can see any moral reason to deny them) , and not increase the planetary loading, then when there are 7 billion of us we are going to have to get by on 2 units each. That is, every process you know of can only consume 20% of the current amount of energy or whatever resource.

Sure play around with the numbers, and perhaps argue that in 2070 the disparity will be greater than equality (well of course it will), but that still leaves a mighty mission, IF we don't change an assumption.

Meanwhile EVs are crap and now we are all jumping on the Hydrogen boondoggle again. Hang on to your wallets, your government will be paying for this... http://www.reuters.c...E91303P20130204



#41 Robin Fairservice

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Posted 05 February 2013 - 00:56

Meanwhile EVs are crap and now we are all jumping on the Hydrogen boondoggle again. Hang on to your wallets, your government will be paying for this... http://www.reuters.c...E91303P20130204

Hydrogen cars have a couple of problems, aside from safe storage on the vehicle. Where is the distribution system? Popular Science looked at this a few years ago and for the USA came up with an astronomical cost. The dean of Mechanical Engineering at the University of B.C. published a study on efficiencies of alternative fuels, and by the time you have made hydrogen from what ever, distributed it and converted it to energy in a car, the overall efficiency was similar to the gasoline cycle.

#42 Greg Locock

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Posted 05 February 2013 - 10:34

Hydrogen cars have a couple of problems, aside from safe storage on the vehicle. Where is the distribution system? Popular Science looked at this a few years ago and for the USA came up with an astronomical cost. The dean of Mechanical Engineering at the University of B.C. published a study on efficiencies of alternative fuels, and by the time you have made hydrogen from what ever, distributed it and converted it to energy in a car, the overall efficiency was similar to the gasoline cycle.


So now you get your tinfoil hat out and ask why are all the OEMs jumping aboard this bus? In particular why are they so keen to promote a technology that one maker (H) has a clear advantage in, and every independent study has concluded that it is the worst of all possible solutions (slight exaggeration)?

#43 meb58

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Posted 05 February 2013 - 19:04

I've never been one to go out on a political or religious limb...but...

I submit, global warming is a religion...

With regard to jumping on bandwagons, NG, EV etc...I'm not a fan of Al Gore. I think he has done a lot, for personal profit, to preach (a deliberate religious term) much of this world into a carbonphobia mind set. He has helped to build and drive markets based upon anthroprogenic warming and the manufacturing world has no choice but to keep up with consumer demand...we have gone mad for green in every corner! ...and here we are at the perception thingy again, we are led along like sheep and we follow like sheep...we are easily brainwashed, greenwashed. The net benefit to society for many of these carbon 'relief' programs seldom if ever bare practical fruit. I don't dismiss the engineering behind them, just their practical application and maintenance. And we have a guy firmly entrenched in government, a perfect place to be to steer policy...to see that Government help subsidize the kit and caboodle while profiting from his own policies...package a perfect problem and perfect solutions. Let's see, update suburban America,(apologies for the geocentric phrase) click here...copy paste, done! White picket fence, one child (more than one is bad) no dogs or cats Bad) a solar array and wind farm in the back yard and a very green EV in every driveway. You'ld swear we kicked the gasoline and electric grid habit...sheep

We've got a new private 2million dollar solar farm in my area complete with motors that help it to follow the sun. It has been estimated recently that it will take 83 years to break even from an investment perspective if it runs at peak all of the time. Seriously? And we tax paying folk, paid for ~ 30% of it. And local P&Z pushed this project...more sheep.

My belief system, however fragile, is based upon a few very simple observations; climate has changed a bunch on this planet long before humans began to corrupt it...the IPCC and the Al Gorians of the world have done a wonderful job selling carbonphobia to the masses while disregarding their own personal choices, a level of transparency equal to their level of stupidity...we've got massaged graphs attempting to the prove the sky is falling, models that can't prove much of anything because they for the most part neglect water vapor energy and are fudged from the perspective of temperature in an effort to make them prove something we NEED to see...the list goes on. I don't dismiss the increase in CO2, but correlation does not equal causation...and the level of CO2 was between 250% - 300% higher than present day when T-Rex walked about (higher based on some estimates but I like stomata and that's my field). And I understand and appreciate that a fossil based society has a fairly terminal outcome...the 2 unit example is sobering...if this is true, our focus is in the wrong place...and we are making choices based upon inaccurate or skewed information. And that changes how we perceive a problem and how we react to it.


I wish I were more thoughtful today...more eloquent...it's just not in me today...must be Gore :mad: Sheep herder.

Edited by meb58, 05 February 2013 - 19:53.


#44 phoenix101

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Posted 05 February 2013 - 22:21

Global warming theory is not good or bad, it's just another humanitarian mess.

Everything we know suggests that human civilization was built on a massive upswing in global temperature, and that sometime in the future, global temperatures are supposed to plummet by roughly 6C.

Scientists are arguing about whether global cooling should have started already. They are arguing about whether or not humanity can survive a major drop in global temperature. They know that CO2 is symptomatic of global warming, as ocean warming renders CO2 storage mechanisms (phytoplankton) less effective, but they are arguing about the degree to which CO2 is also causal. If CO2 is causal, they are arguing about when anthropogenic global warming began, from the rise of agrarian deforestation to the industrial revolution.

Politicians and lawyers have turned anthropogenic global warming into a ubiquitous part of our culture b/c it has immense legal implications. If human economic activities affect the climate; therefore the entire human race, laws can be written to prevent injury. The burden of proof is two fold. First, they must prove that anthropogenic CO2 is causal. Second, they must prove that global warming is injurious.

Perhaps they are correct on the first count, but I cannot possibly imagine a scenario in which modern temperatures are injurious compared to the specter of a massive downward swing in global temperatures. Falling global temperatures would shorten the growing season and reduce arable land by rendering higher latitudes unseasonable. I'm not sure human beings would fair well if Russia and Canada, for example, was taken out of the world grain market.

Regardless, the US is in a position where it must reduce CO2 emissions, simply b/c it cannot produce enough fossil fuels to satisfy its own demands. This balance of trade issue is more pressing (given the state of the US economy) than plummeting global temperatures.

#45 gruntguru

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Posted 06 February 2013 - 00:37

Global warming theory is not good or bad . . .

:up:
How about "Global warming theory is not divine or evil"

Begs the question - why does the subject create such intense division, derision, finger pointing, name calling etc. . .? Big Bang is just a scientific theory - accepted by the majority of the scientific community, opposed by a few - but where is the .

The answer must lie in economic self-interest, somebody has to pay. So we argue the science and hope we won't have to pay. Problem is, if the science turns out to be correct, we pay later - in catastrophic measure.

And what are the short term savings anyway? OK we get to continue burning fossil based fuels until they actually run out - cheap because we don't pay for the environmental and health impacts (our kids and grandkids can pick up that bill).

#46 phoenix101

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Posted 06 February 2013 - 01:24

:up:
How about "Global warming theory is not divine or evil"

Begs the question - why does the subject create such intense division, derision, finger pointing, name calling etc. . .? Big Bang is just a scientific theory - accepted by the majority of the scientific community, opposed by a few - but where is the .

The answer must lie in economic self-interest, somebody has to pay. So we argue the science and hope we won't have to pay. Problem is, if the science turns out to be correct, we pay later - in catastrophic measure.

And what are the short term savings anyway? OK we get to continue burning fossil based fuels until they actually run out - cheap because we don't pay for the environmental and health impacts (our kids and grandkids can pick up that bill).


What catastrophe?

Global warming is a theory founded on the notion that we should be experiencing catastrophic cooling at this moment, but we aren't b/c CO2 levels are too high. Theoretically speaking, we are working to allow a catastrophe to happen.

This is not to say we should continue polluting with reckless abandon, but the earth has been 3C warmer than it is now and it has been 6C cooler than it is now. We are having a meltdown over temperatures that are well within natural range. If we were at +3C and rising, I'd see a good reason to worry, but +.5C?

In the grand scheme of climate data, we are complaining about the weather on a perfect summer day.

#47 bigleagueslider

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Posted 06 February 2013 - 03:15

Please stop telling people 'how it is' and go look at some data. Most US energy consumed is from oil. It's been that way for over a half century. The government spends untold sums of money to generate public data so you don't have to guess what fuel the US uses most.


phoenix101-

First let me say that I do enjoy this topic of discussion.

As for the percentage of US annual energy consumption from oil, it's currently less than 40% of total, which does not qualify as "most". While oil is the single largest source used, it is still far less than half. Almost 60% of US energy is associated with electricity production, which is a mix of NG, coal, nuclear, hydro and a small amount of solar/wind, but very little crude oil. The other 40% of US energy is mostly associated with transportation uses, and almost all of this comes from crude oil (diesel, gasoline, jet-A, etc).

Here is a graph that provides a good illustration of the constant improvement in US GDP vs. energy consumption:

Posted Image


#48 gruntguru

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Posted 06 February 2013 - 04:48

What catastrophe?

Let me Google that for you. eg:

World Bank Report Warns 'Catastrophic Consequences' of Global Warming

Global warming is a theory founded on the notion that we should be experiencing catastrophic cooling at this moment, but we aren't b/c CO2 levels are too high. Theoretically speaking, we are working to allow a catastrophe to happen.

Not according to those qualified to make such assertions.

This is not to say we should continue polluting with reckless abandon, but the earth has been 3C warmer than it is now and it has been 6C cooler than it is now. We are having a meltdown over temperatures that are well within natural range. If we were at +3C and rising, I'd see a good reason to worry, but +.5C?

I am not an expert , but experts have estimated a +4C rise by the end of this century as a "point of no return" ie the trigger for a runaway positive feedback cycle.

In the grand scheme of climate data, we are complaining about the weather on a perfect summer day.

Climate and weather are not the same thing.

Edited by gruntguru, 06 February 2013 - 04:51.


#49 phoenix101

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Posted 06 February 2013 - 05:35

Most is not always majority, unless the situation is dichotomous. If we were talking about bipartisan politics or yes/no polling, majority and most would be the same thing, and that's how society came to use them interchangeably. They are different. Regardless, you said oil was not the primary energy consumed. It is.

The graph is good info, and I'm really happy we're making a 'A' in real GDP to energy consumption. We're failing balance of trade for petroleum. We're failing transportation inflation. We're making 'D' in economic exposure to oil prices, and a 'C' in oil efficiency. These are a major part of our woes.

The 'A' is nice, but we're still on probation. Furthermore, the 'A' may not have much meaning b/c we may have cheated our way to an 'A' by firing all of our manufacturing workers, and exporting a majority of our plastics industry.

#50 phoenix101

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Posted 06 February 2013 - 06:12

Not according to those qualified to make such assertions.


If 'qualified' people assert that +3C to +4C is a catastrophic effect of global warming, they are not qualified. The common layperson can look up ice core temperature projections and see that the earth has been that warm in the past.

It's the World Bank. They couldn't care less about positive feedback or negative feedback. They are interested in global carbon trading schemes that will redistribute billions of dollars from the developed world into the developing world to make them more credit worthy. If the developing world uses the carbon tax income to prime their own economy for growth, CO2 output will increase appreciably according to current economic projections. Furthermore, we do not know the value of CO2 negative externalities nor can an artificial market accurately assign a value. Clearly, the scheme will be designed to achieve some sort of social objective. Also, we do we know the social upheaval that could be caused by redistributing billions to poor nations, then pulling the rug out from under them when we develop clean energy. We cannot predict the possible break down in global trade if nations hoard valuable pollution-saving resources (e.g. China hoarding rare earth metals).

The doomsday forecasts have nothing to do with climate.