Sharing the oil dregs
One interesting question on a world oil crisis is how available oil will be distributed.
On the surface capitalism says rsources go to the highest bidder.
The curious thing is the U.S. uses 25% of the world's oil. That's perhaps fine and dandy while there's "excess capacity", but is it going to hold if there's supply shortages? Will we continue to get our 1/4 market share? Will our market share go up as we might pretend to be willing to pay more than most?
Then, given "modern" food production is largely dependent upon oil, where's the "moral choice"? I mean if it is a matter of some countries starving, and others like ours continuing to waste oil just because we can afford it?
I can't really set up a clear scenario. Higher oil prices might be feasible for the U.S., but it won't be easy either. Even if we have the land, and can afford the energy and fertilizers to produce food, will that food have a cost which can be paid? Will U.S. food exports be competitive under higher oil prices? I expect not.
Again, and again, I can't predict the future, except that higher oil prices must come, even if not uniformly by market forces. Again and again, I say its best to adjust to higher prices now through higher gasoline taxes.
It is hard to know how Europe gets by with $4-$5/gallon gasoline/diesel. Without the high fuel taxes, would their consumption also be higher like ours? If our taxes are raised, will this curb our consumption?
There's a strong self-interest (for global trade) to import fuel cheaply, and use it to generate wealth, which is exported back out again. In fact, that's the only clear way for oil importing nations to compete at all in a global economy.
There is little short term incentive for the U.S. to raise fuel costs, to raise the cost of goods which we export, because that makes us less competitive with others. The same argument can be used on lowering environmental protections for global competitiveness. Fortunately the U.S. is weathy enough to set some standards on air and water quality, even if the primary effect is to outsource industry that isn't competitive here.
You could argue something like "If we raise gasoline taxes by $2/gallon, similar to Europe, that we'll "lose" 1 million jobs which will be displaced to other countries where taxes are lower. I don't know if such an argument is valid.
On the other side, you can argue that the U.S. Trade deficit is the most key measure for our long term strength, and while it continues to expand, as a country we continue to get weaker.
Protectionism is the knee-jerk response to losing jobs or reducing imports. Reducing imports will raise the cost of goods sold here. In response exporters who are hurt by this will raise their own import costs of our goods.
Now given thoughts of a global energy crisis, this sort of protectionism might be considered good because it increases local self-reliance.
On the other hand, there will be objections as long as the danger is not apparent.
Is there any other way to reduce our trade deficit? Certainly it is a self-limiting reality - at some point foreign investors will stop being interested in "investing" in the U.S., and the debt will slow. If the dollar loses international value, people won't want to trade with it, and will divest themselves. Such action, applied by millions of investors, will spiral out of control. Actually big investors are the saviors since they have so much invested, they CAN'T divest because they own too much, and have an interest in keeping the dollar valuable.
Back to my original question, on sharing the world oil dregs, the second half of world oil resources, with the U.S. owning a 3% world share in this club, and needing a 25% share in consumption, we're in trouble whatever we might want. It is hard to believe the world will continue selling oil for dollars like this.
I know nothing, but it makes sense that the world is now beholden to the U.S. dollar for oil trading, like an international tax that props up our power. It makes sense that at some point, this relation must be broken, and when it happens, the U.S. will have much greater trouble than so far. We'll finally have to be accountable for our debt.
Overall it seems that "culture" is a machine, one that grows more and more complex, more and more dependent upon key resources to keep it functioning. If any resource fails, the machine grinds to a halt. Everyone's running around with their heads cut off trying to keep the cogs turning, and it's a balancing act that can last a long while, but is not a stable equilibrium.
It's like balancing a 10' pole from the bottom, and slowly adding weights on the top. Once you reach a critical level of mass on top, there's no "stable" shut down process. There's only continuing, or crashing.
If only we'd STOP adding more weights on top, maybe the crash won't be quite as hard!
On the surface capitalism says rsources go to the highest bidder.
The curious thing is the U.S. uses 25% of the world's oil. That's perhaps fine and dandy while there's "excess capacity", but is it going to hold if there's supply shortages? Will we continue to get our 1/4 market share? Will our market share go up as we might pretend to be willing to pay more than most?
Then, given "modern" food production is largely dependent upon oil, where's the "moral choice"? I mean if it is a matter of some countries starving, and others like ours continuing to waste oil just because we can afford it?
I can't really set up a clear scenario. Higher oil prices might be feasible for the U.S., but it won't be easy either. Even if we have the land, and can afford the energy and fertilizers to produce food, will that food have a cost which can be paid? Will U.S. food exports be competitive under higher oil prices? I expect not.
Again, and again, I can't predict the future, except that higher oil prices must come, even if not uniformly by market forces. Again and again, I say its best to adjust to higher prices now through higher gasoline taxes.
It is hard to know how Europe gets by with $4-$5/gallon gasoline/diesel. Without the high fuel taxes, would their consumption also be higher like ours? If our taxes are raised, will this curb our consumption?
There's a strong self-interest (for global trade) to import fuel cheaply, and use it to generate wealth, which is exported back out again. In fact, that's the only clear way for oil importing nations to compete at all in a global economy.
There is little short term incentive for the U.S. to raise fuel costs, to raise the cost of goods which we export, because that makes us less competitive with others. The same argument can be used on lowering environmental protections for global competitiveness. Fortunately the U.S. is weathy enough to set some standards on air and water quality, even if the primary effect is to outsource industry that isn't competitive here.
You could argue something like "If we raise gasoline taxes by $2/gallon, similar to Europe, that we'll "lose" 1 million jobs which will be displaced to other countries where taxes are lower. I don't know if such an argument is valid.
On the other side, you can argue that the U.S. Trade deficit is the most key measure for our long term strength, and while it continues to expand, as a country we continue to get weaker.
Protectionism is the knee-jerk response to losing jobs or reducing imports. Reducing imports will raise the cost of goods sold here. In response exporters who are hurt by this will raise their own import costs of our goods.
Now given thoughts of a global energy crisis, this sort of protectionism might be considered good because it increases local self-reliance.
On the other hand, there will be objections as long as the danger is not apparent.
Is there any other way to reduce our trade deficit? Certainly it is a self-limiting reality - at some point foreign investors will stop being interested in "investing" in the U.S., and the debt will slow. If the dollar loses international value, people won't want to trade with it, and will divest themselves. Such action, applied by millions of investors, will spiral out of control. Actually big investors are the saviors since they have so much invested, they CAN'T divest because they own too much, and have an interest in keeping the dollar valuable.
Back to my original question, on sharing the world oil dregs, the second half of world oil resources, with the U.S. owning a 3% world share in this club, and needing a 25% share in consumption, we're in trouble whatever we might want. It is hard to believe the world will continue selling oil for dollars like this.
I know nothing, but it makes sense that the world is now beholden to the U.S. dollar for oil trading, like an international tax that props up our power. It makes sense that at some point, this relation must be broken, and when it happens, the U.S. will have much greater trouble than so far. We'll finally have to be accountable for our debt.
Overall it seems that "culture" is a machine, one that grows more and more complex, more and more dependent upon key resources to keep it functioning. If any resource fails, the machine grinds to a halt. Everyone's running around with their heads cut off trying to keep the cogs turning, and it's a balancing act that can last a long while, but is not a stable equilibrium.
It's like balancing a 10' pole from the bottom, and slowly adding weights on the top. Once you reach a critical level of mass on top, there's no "stable" shut down process. There's only continuing, or crashing.
If only we'd STOP adding more weights on top, maybe the crash won't be quite as hard!
posted by Ares Olympus at 2:51 PM
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