NOPEC?
I saw a new bill exists dubbed NOPEC intend on punishing OPEC exporters for limiting supply and causing high prices. I wonder how we'll do that?
http://leahy.senate.gov/press/200504/041405a.html
“We are one step closer to getting this bill on the books and available for use against the oil cartel,” said Leahy. “OPEC nations openly conspire to violate the norms of our antitrust laws, yet they expect to do business with us and reap the benefits. It is past time for Congress to approve these antitrust tools as a check on OPEC’s abuses.”
The bill is of course misdirected. When dealing with a nonrenewable resource like oil, that will SOON ENOUGH, be worth $100+/bbl and more as supply fails to keep up with demand, there can be no complaint in my eyes on fixing prices.
If I were an oil exporter, I'd say, MY OIL is "on sale" at a bargain price of $180/bbl. Buy it now, or buy it later, your choice. Of course oil exporters aren't easily in a position to do that given foolish dependence upon oil income.
The blame game is of course to be expected, but it is a little scary. What actually do "consumers" do when faced by high prices? Of course what they SHOULD do is conserve and look for alternatives.
Sure, I suppose the "antitrust" laws imply monopoly power on key resources is a bad thing - especially because high profits create large amounts of wealth which can be used to use buy-out or sabotage the competition. However it is still hard to apply to nonrenewable oil. By-in-large governments control oil reserves and all have the right to control exports. If OPEC nations want to collectively limit oil exports, how is this offensive to buyers? For me the offensive part comes from expectations. Economies run by smooth transfer of goods and materials, and buyers want steady suppliers so they can plan on the future.
Not only do buyers want steady supply, they want steady prices, but is it the responsibility of exporters to keep prices low?
The U.S. has under 5% of the world's population and uses 25% of the world's oil each year. That means we have 5x our "fair share". How can we expect this imbalance to continue forever? If China and India also can find ways to benefit from cheap oil, who's responsible for that?
WE are responsible for our own demand. As long as our demand is "above average" WE are the problem, not the suppliers.
I've been having fun watching the high gasoline prices, riding the bus this winter, and now biking. Today I saw $1.94/gal - disappointed prices are falling again.
I have been wondering what the future will be like - soon future - next 5 years as the current production is projected to decline, and current projected new production can't even match this loss, much less any projections of increased world consumption - running at 2-4% for the last few years.
Will we just be faced by high prices? As oil prices are bid up into the $150-$250/bbl range (from $58/bbl high lately), will gasoline just cost more, like $5/gallon, OR will there be actual shortages?
Will there be gas-lines like in the 1970's? Overall I expect not since the 1970's had an OPEC embargo which reduce actually supply, while now we might expect the U.S. is wealthy enough to continue bidding for as much oil as consumers are willing to pay for. I lean towards the second - I expect, if price rises are relatively smoothly increasing, distributors will keep producing as long as demand exists.
If there was a real disruption - like a terrorist attack that suddenly reduced world supplies say by 20%, perhaps shortages could come, but under such a crisis, the president could justify a short term dipping into the strategic reserves to make up the difference. It's actually a money maker for the government, given short term shortages since the government can sell high and buy again when prices moderate later. We have like maybe 4 months supply in the reserves, and perhaps over 6 months given imports alone, and probably over a year given a small percentage reduction of supply. So it might seem actual shortages except localized ones could be minimized.
Probably higher prices are the bigger factor in affecting consumption. I expect the U.S. could cut our oil consumption by 25% if we needed to in the short term. I'm not saying the economy could handle that well.
The big question in "transitioning" towards conservation and alternative fuels, is there's no clear point in time when it is necessary. I'd say we're long past security in an oil economy, but prices can go down again, and everyone must wonder if higher prices now are a sign of short term issues, or a sign of long term trends.
I see long term trend as oil prices will keep going up, when measured by yearly averages, but short term prices can do anything - from falling to $10/bbl as at least as likely as jumping to $200/bbl under opposite events.
Back to high prices and shortages, myself I'm not strongly affected by high gasoline prices or shortages. A scarier shortage for me would be natural gas, given I live in the cold state of Minnesota, where most houses are heated by natural gas. I don't know anything about the dangers here, or how they'd represent themselves. I know that gasoline and natural gas prices tend towards moving together, even if there's little direct competition for fuel usages. So if oil jumped and gasoline rose to $5/gallon, I could expect natural gas prices also to spoke.
My home heating costs averaged $88/month in 2004, before I got my high efficiency furnace this winter. Perhaps that will go down by 1/3 now - to $60/month average with luck. If prices quadrupled, and say fuel costs are 50% of the bill, that $150/month average, or $1800/year. Costwise I can handle that, although it would encourage perhaps some investment in improved insulation, energy efficient windows, or just the plastic over the windows in the winter to help keep heat in. Such improvements are probably already cost effective, but I don't notice while prices are expected.
Jumping in prices encourages a big jump in reaction more than gradual price increases - just like the frog in the slowly boiling water.
I suppose the same is true for oil and gasoline. Price spikes will do more to encourage short term reaction than gradual increases. Perhaps both are limited in their ability to get action.
The short term solution to high natural gas prices will be government subsidies on poor people, but better long term solutions would subsidize efficiency and conservation and invest there for poor people.
At the moment there's still minimum wage people (<$10/hr) who will commute 30 miles to work (each way) in a poor mileage pickup truck because of cheaper exurb housing, but their livelihood is slowly getting degraded as prices rise. I know such people.
The best "wake up call" for them is a price spike - like a summer of $4/gallon gasoline, and then a gradual reduction to maybe $2.50/gallon, and occasional new spikes. The first shock would cut into their budget, and when opportunities came up - like needing a newer car, or a different housing arrangement, they'd remember this danger and make a choice that can help them.
I CERTAINLY see it vital (as President Bush has said) that the strategic reserves NOT be used except under clear large scale acute shortages. Anything else gives the wrong message.
Well, even as I learn about things, it is still hard to believe how fast (and slow) things will be changing in the coming years.
I try to imagine what it might have been like in the 1920's - things going fast and furious and overall measurably irrational and dangerous levels of debt all around. The signs were there, even if the crisis date was unknowable. I don't think individuals can "play the crisis" for profit, but I think we can prepare now as we have money and resources to invest in reducing our own need for big incomes and high consumption.
A part of me believes the conspiracy theory that the Republicans are purposely bankrupting the government as a way to roll back government programs. Certainly there is some value in honest debate here - like the Concord Coalition, and I project the federal government will be forced overtime to reduce itself and state and local governments will have to renew localized programs to help their own poor, and areas that are too poor to meet these needs will suffer the most.
On the other hand, economic depressions perhaps might trigger a new rise of the liberal "new deal" politics and big government will assert itself through an era of high unemployment, high inflation.
Lots to think about, not overly healthy to project too much, except if it triggers action now. What can I do to minimize my needs for money, for government services? What can I do if I lose my job? What can I do to help strengthen my community to help those worse off than myself?
It's overwhelming even on the smallest questions. Maybe the ultimately question comes down to rediscovering frugality. Even that is hard - so much opportunity around us now - how can we "step back" and limit ourselves? If tougher times are coming, why not enjoy the power and freedom now - travel, learn, explore, and do all the things that may become much harder in the future?
No answers from me. I do both in my own way - trying to be responsible, yet time is precious and lots to take in now.
Anyway, I'm not going to waste my time blaming for higher prices. We get what we deserve, at least in the long term. Conserve now or later.
http://leahy.senate.gov/press/200504/041405a.html
“We are one step closer to getting this bill on the books and available for use against the oil cartel,” said Leahy. “OPEC nations openly conspire to violate the norms of our antitrust laws, yet they expect to do business with us and reap the benefits. It is past time for Congress to approve these antitrust tools as a check on OPEC’s abuses.”
The bill is of course misdirected. When dealing with a nonrenewable resource like oil, that will SOON ENOUGH, be worth $100+/bbl and more as supply fails to keep up with demand, there can be no complaint in my eyes on fixing prices.
If I were an oil exporter, I'd say, MY OIL is "on sale" at a bargain price of $180/bbl. Buy it now, or buy it later, your choice. Of course oil exporters aren't easily in a position to do that given foolish dependence upon oil income.
The blame game is of course to be expected, but it is a little scary. What actually do "consumers" do when faced by high prices? Of course what they SHOULD do is conserve and look for alternatives.
Sure, I suppose the "antitrust" laws imply monopoly power on key resources is a bad thing - especially because high profits create large amounts of wealth which can be used to use buy-out or sabotage the competition. However it is still hard to apply to nonrenewable oil. By-in-large governments control oil reserves and all have the right to control exports. If OPEC nations want to collectively limit oil exports, how is this offensive to buyers? For me the offensive part comes from expectations. Economies run by smooth transfer of goods and materials, and buyers want steady suppliers so they can plan on the future.
Not only do buyers want steady supply, they want steady prices, but is it the responsibility of exporters to keep prices low?
The U.S. has under 5% of the world's population and uses 25% of the world's oil each year. That means we have 5x our "fair share". How can we expect this imbalance to continue forever? If China and India also can find ways to benefit from cheap oil, who's responsible for that?
WE are responsible for our own demand. As long as our demand is "above average" WE are the problem, not the suppliers.
I've been having fun watching the high gasoline prices, riding the bus this winter, and now biking. Today I saw $1.94/gal - disappointed prices are falling again.
I have been wondering what the future will be like - soon future - next 5 years as the current production is projected to decline, and current projected new production can't even match this loss, much less any projections of increased world consumption - running at 2-4% for the last few years.
Will we just be faced by high prices? As oil prices are bid up into the $150-$250/bbl range (from $58/bbl high lately), will gasoline just cost more, like $5/gallon, OR will there be actual shortages?
Will there be gas-lines like in the 1970's? Overall I expect not since the 1970's had an OPEC embargo which reduce actually supply, while now we might expect the U.S. is wealthy enough to continue bidding for as much oil as consumers are willing to pay for. I lean towards the second - I expect, if price rises are relatively smoothly increasing, distributors will keep producing as long as demand exists.
If there was a real disruption - like a terrorist attack that suddenly reduced world supplies say by 20%, perhaps shortages could come, but under such a crisis, the president could justify a short term dipping into the strategic reserves to make up the difference. It's actually a money maker for the government, given short term shortages since the government can sell high and buy again when prices moderate later. We have like maybe 4 months supply in the reserves, and perhaps over 6 months given imports alone, and probably over a year given a small percentage reduction of supply. So it might seem actual shortages except localized ones could be minimized.
Probably higher prices are the bigger factor in affecting consumption. I expect the U.S. could cut our oil consumption by 25% if we needed to in the short term. I'm not saying the economy could handle that well.
The big question in "transitioning" towards conservation and alternative fuels, is there's no clear point in time when it is necessary. I'd say we're long past security in an oil economy, but prices can go down again, and everyone must wonder if higher prices now are a sign of short term issues, or a sign of long term trends.
I see long term trend as oil prices will keep going up, when measured by yearly averages, but short term prices can do anything - from falling to $10/bbl as at least as likely as jumping to $200/bbl under opposite events.
Back to high prices and shortages, myself I'm not strongly affected by high gasoline prices or shortages. A scarier shortage for me would be natural gas, given I live in the cold state of Minnesota, where most houses are heated by natural gas. I don't know anything about the dangers here, or how they'd represent themselves. I know that gasoline and natural gas prices tend towards moving together, even if there's little direct competition for fuel usages. So if oil jumped and gasoline rose to $5/gallon, I could expect natural gas prices also to spoke.
My home heating costs averaged $88/month in 2004, before I got my high efficiency furnace this winter. Perhaps that will go down by 1/3 now - to $60/month average with luck. If prices quadrupled, and say fuel costs are 50% of the bill, that $150/month average, or $1800/year. Costwise I can handle that, although it would encourage perhaps some investment in improved insulation, energy efficient windows, or just the plastic over the windows in the winter to help keep heat in. Such improvements are probably already cost effective, but I don't notice while prices are expected.
Jumping in prices encourages a big jump in reaction more than gradual price increases - just like the frog in the slowly boiling water.
I suppose the same is true for oil and gasoline. Price spikes will do more to encourage short term reaction than gradual increases. Perhaps both are limited in their ability to get action.
The short term solution to high natural gas prices will be government subsidies on poor people, but better long term solutions would subsidize efficiency and conservation and invest there for poor people.
At the moment there's still minimum wage people (<$10/hr) who will commute 30 miles to work (each way) in a poor mileage pickup truck because of cheaper exurb housing, but their livelihood is slowly getting degraded as prices rise. I know such people.
The best "wake up call" for them is a price spike - like a summer of $4/gallon gasoline, and then a gradual reduction to maybe $2.50/gallon, and occasional new spikes. The first shock would cut into their budget, and when opportunities came up - like needing a newer car, or a different housing arrangement, they'd remember this danger and make a choice that can help them.
I CERTAINLY see it vital (as President Bush has said) that the strategic reserves NOT be used except under clear large scale acute shortages. Anything else gives the wrong message.
Well, even as I learn about things, it is still hard to believe how fast (and slow) things will be changing in the coming years.
I try to imagine what it might have been like in the 1920's - things going fast and furious and overall measurably irrational and dangerous levels of debt all around. The signs were there, even if the crisis date was unknowable. I don't think individuals can "play the crisis" for profit, but I think we can prepare now as we have money and resources to invest in reducing our own need for big incomes and high consumption.
A part of me believes the conspiracy theory that the Republicans are purposely bankrupting the government as a way to roll back government programs. Certainly there is some value in honest debate here - like the Concord Coalition, and I project the federal government will be forced overtime to reduce itself and state and local governments will have to renew localized programs to help their own poor, and areas that are too poor to meet these needs will suffer the most.
On the other hand, economic depressions perhaps might trigger a new rise of the liberal "new deal" politics and big government will assert itself through an era of high unemployment, high inflation.
Lots to think about, not overly healthy to project too much, except if it triggers action now. What can I do to minimize my needs for money, for government services? What can I do if I lose my job? What can I do to help strengthen my community to help those worse off than myself?
It's overwhelming even on the smallest questions. Maybe the ultimately question comes down to rediscovering frugality. Even that is hard - so much opportunity around us now - how can we "step back" and limit ourselves? If tougher times are coming, why not enjoy the power and freedom now - travel, learn, explore, and do all the things that may become much harder in the future?
No answers from me. I do both in my own way - trying to be responsible, yet time is precious and lots to take in now.
Anyway, I'm not going to waste my time blaming for higher prices. We get what we deserve, at least in the long term. Conserve now or later.
posted by Ares Olympus at 5:09 PM
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