I can’t afford to buy gadgets, new cloths, or even cable TV any more. And my overall income has gone up, but my costs have gone up quicker; gas topping that list.
I can’t imagine I’m the only one not renting DVDs and buying electronics like I used to.
A consumer economy is based on buying products and services, if more of my income is spent on gas, and on higher priced food because the transportation costs have increased, I can’t buy stuff like I used to.
And if you get enough people in my situations, it starts to impact things.
FreeRepublicans.com - 12:08pm on 08/06/2006
Or put another way, this illustrates the importance of the government & society pushing energy conservation & energy efficiency programs. I know that some will disagree with me, but I don’t feel that the free market on it’s own would have gravitated to this solution on it’s own. Rather it would have continued to optimize for short-term gains and the cost of a long-term crisis. (Similar to what the US auto industry has done twice now, once in the ‘70s, and now in the last couple of years, via their over-reliance on gas-guzzling autos.)
I feel that society & government should play a role in setting long-term policy, such as in a reduction in energy usage, or reduction in industrial pollutants. (Other examples include pushing new technologies, infrastructural decisions like where to build highways, investment in basic research, investment in public education.)
Carrick - 12:08pm on 08/06/2006
Or put another way, this illustrates the importance of the government & society pushing energy conservation & energy efficiency programs. I know that some will disagree with me, but I don’t feel that the free market on it’s own would have gravitated to this solution on it’s own.
But what has government done to have “gravitated to this solution”? If anything, they’ve made the cost of energy far higher than it would be under the free market.
Rather it would have continued to optimize for short-term gains and the cost of a long-term crisis.
The energy market, for the most part, is all about long term gains.
I feel that society & government should play a role in setting long-term policy, such as in a reduction in energy usage...
Shouldn’t we instead be using more energy while pushing to utilize the most BTUs we can squeeze out? Energy is life, and everything we do in life requires it. I say: more energy!
likwidshoe - 12:08pm on 08/06/2006
but I don’t feel that the free market on it’s own would have gravitated to this solution on it’s own. Rather it would have continued to optimize for short-term gains and the cost of a long-term crisis. (Similar to what the US auto industry has done twice now, once in the ‘70s, and now in the last couple of years, via their over-reliance on gas-guzzling autos.)
I would disagree. People don’t buy a “gas guzzler”. They buy a large comfortable vehicle. If it gets better mileage all the better.
In recent years the size of vehicles has increased while mileage hasn’t gone down. That’s come from the private sector, not government intervention.
What were seeing today is the market working, as consumers have a different cost/benefit equation nowdays.
The free market isn’t perfect, but central planning is much worse.
The Whistler - 12:08pm on 08/06/2006
On the other hand, Carrick, I don’t expect the market to control pollutants as the market will NOT have an incentive to do so.
So within reason controlling of pollutants would be a reasonable use of government control.
The Whistler - 12:08pm on 08/06/2006
I read a column that attempted to explain why this oil price shock has had less impact on inflation than previous ones. One factor, mentioned above, is the smaller role energy plays in the economy. AND so far energy price increases have had Less inflationary effect at each stage of the commercial cycle. Productivity of the American worker of today is so great. This allows the inflationary effect to be filtered out before creating inflation of retail prices in the rest of the economy, outside of the energy sector…
Zsa Zsa - 12:08pm on 08/06/2006
I feel that society & government should play a role in setting long-term policy, such as in a reduction in energy usage, or reduction in industrial pollutants. (Other examples include pushing new technologies, infrastructural decisions like where to build highways, investment in basic research, investment in public education.)
Carrick,
As the chart above demonstrates, and you well know yourself, in inflation adjusted dollars, the prices of both crude oil and gasoline are just now reaching the area of all-time highs. With crude priced at $25-$28 per barrel there is no incentive to save, no reason to invest in alternative fuels or processes, and little impetus to expand domestic drilling and refining operations.
Buyt with crude priced in the $70-$75 per barrel range and gas at $3.00-$3.50 per gallon at the pump, there is now all manner of incentives.
The Senate passed a bill just this week expanding our domestic off-shore drilling operations. The extreme environmental concerns that have kept new refining facilities and new nuclear generating plants out of consideration for the past three decades will fall by the wayside as well, as newer technologies and increased demand push lawmakers and bureaucrats beyond the comfort zone of past leftist rhetoric.
The “pain at the pump” is exactly the cure for what ails us in the area of energy utilization. As the Jimmy Carter years demonstrate, there is little that government can do beyond exacerbating the problems we face. The supply shortages we now encounter, which are reflected in the higher market prices, are the result of govenment actions, and not a justification for more government interference.
Bat One - 01:08pm on 08/06/2006
Bat One...Well put!
Zsa Zsa - 05:08pm on 08/06/2006
Just so, Bravo1. Government regulation has pushed the American refining system into an untenable position. People in EPA and DEP who have no idea how to make gasoline are the very people who have made rules concerning the production of gasoline and its chemical composition. They have blocked the construction of new refineries and efforts to modernize exsisting refineries. Drilling in the Gulf has been restricted mainly because of the deterioration of the bayou/delta in Southern LA. Advances in equipment and technique have reduced spillage in offshore operations, even with events such as Katrina. Every barrel lost is not just lost revenue, it is money going out in order to cleanup and pay fines. You can rest assured other countries around the Gulf are not as concerned with stopping spills. And you can bet your ass China’s drilling operations will be rather dirty, it ain’t their water. Long story short, new sources of energy are being developed, have been all along, and R&D take time and effort as well as money.
TwoHotel9 - 05:08am on 08/07/2006
I take the points you guys have made. Bat1 makes some especially good points.
Let me just start by observing that in 1982 we could predict that we would have the current tightening of supply. When energy prices dropped in ‘86 & stayed fixed in nominal dollars (hence were actually getting cheaper), industry responded by producing solutions that depended on cheap energy.
The car industry manufactured gas guzzling SUVs. People in the green industry opened up green houses for e.g. orchids and other exotic plants (plants that only live in a very narrow range of temperature) in regions that depended on careful climate control (heating in the winter, cooling in the summer). This is, as I see it, how any conservative private market works. They optimize for the short term. (A dollar today is better than the possibility of two tomorrow).
In spite of the low cost of energy, governmental (primarily EPA) regulations pushed the auto industry towards lower cost vehicles, pushed for more energy efficient homes, and more efficient industrial utilization of energy. None of these changes occur at the drop of a dime of course. Better efficiency cares for example, rely on new technologies and in some cases new infrastructure, to make them practicable.
In the very long run, with the current crunch on supply, we might just now be starting to adapt to de facto shift in the global energy market. In this respect “the pain at the pump” as B1 puts it comes to quickly, and really (calendar date level) really cannot be anticipated long enough in the future to expect the market to adapt to sudden dramatic shifts of this sort.
Society (and government as its proxy) can plan for the long term, which is different than saying that it is always effective (similar to the problem with the least effective politician gets elected). We decide where to put in the highways, not industry. We zone cities and communities for business & private to protect against Bhopal-type disasters, and so forth.
My personal economy has slowed.
I can’t afford to buy gadgets, new cloths, or even cable TV any more. And my overall income has gone up, but my costs have gone up quicker; gas topping that list.
I can’t imagine I’m the only one not renting DVDs and buying electronics like I used to.
A consumer economy is based on buying products and services, if more of my income is spent on gas, and on higher priced food because the transportation costs have increased, I can’t buy stuff like I used to.
And if you get enough people in my situations, it starts to impact things.
Or put another way, this illustrates the importance of the government & society pushing energy conservation & energy efficiency programs. I know that some will disagree with me, but I don’t feel that the free market on it’s own would have gravitated to this solution on it’s own. Rather it would have continued to optimize for short-term gains and the cost of a long-term crisis. (Similar to what the US auto industry has done twice now, once in the ‘70s, and now in the last couple of years, via their over-reliance on gas-guzzling autos.)
I feel that society & government should play a role in setting long-term policy, such as in a reduction in energy usage, or reduction in industrial pollutants. (Other examples include pushing new technologies, infrastructural decisions like where to build highways, investment in basic research, investment in public education.)
Or put another way, this illustrates the importance of the government & society pushing energy conservation & energy efficiency programs. I know that some will disagree with me, but I don’t feel that the free market on it’s own would have gravitated to this solution on it’s own.
But what has government done to have “gravitated to this solution”? If anything, they’ve made the cost of energy far higher than it would be under the free market.
Rather it would have continued to optimize for short-term gains and the cost of a long-term crisis.
The energy market, for the most part, is all about long term gains.
I feel that society & government should play a role in setting long-term policy, such as in a reduction in energy usage...
Shouldn’t we instead be using more energy while pushing to utilize the most BTUs we can squeeze out? Energy is life, and everything we do in life requires it. I say: more energy!
I would disagree. People don’t buy a “gas guzzler”. They buy a large comfortable vehicle. If it gets better mileage all the better.
In recent years the size of vehicles has increased while mileage hasn’t gone down. That’s come from the private sector, not government intervention.
What were seeing today is the market working, as consumers have a different cost/benefit equation nowdays.
The free market isn’t perfect, but central planning is much worse.
On the other hand, Carrick, I don’t expect the market to control pollutants as the market will NOT have an incentive to do so.
So within reason controlling of pollutants would be a reasonable use of government control.
I read a column that attempted to explain why this oil price shock has had less impact on inflation than previous ones. One factor, mentioned above, is the smaller role energy plays in the economy. AND so far energy price increases have had Less inflationary effect at each stage of the commercial cycle. Productivity of the American worker of today is so great. This allows the inflationary effect to be filtered out before creating inflation of retail prices in the rest of the economy, outside of the energy sector…
Carrick,
As the chart above demonstrates, and you well know yourself, in inflation adjusted dollars, the prices of both crude oil and gasoline are just now reaching the area of all-time highs. With crude priced at $25-$28 per barrel there is no incentive to save, no reason to invest in alternative fuels or processes, and little impetus to expand domestic drilling and refining operations.
Buyt with crude priced in the $70-$75 per barrel range and gas at $3.00-$3.50 per gallon at the pump, there is now all manner of incentives.
The Senate passed a bill just this week expanding our domestic off-shore drilling operations. The extreme environmental concerns that have kept new refining facilities and new nuclear generating plants out of consideration for the past three decades will fall by the wayside as well, as newer technologies and increased demand push lawmakers and bureaucrats beyond the comfort zone of past leftist rhetoric.
The “pain at the pump” is exactly the cure for what ails us in the area of energy utilization. As the Jimmy Carter years demonstrate, there is little that government can do beyond exacerbating the problems we face. The supply shortages we now encounter, which are reflected in the higher market prices, are the result of govenment actions, and not a justification for more government interference.
Bat One...Well put!
Just so, Bravo1. Government regulation has pushed the American refining system into an untenable position. People in EPA and DEP who have no idea how to make gasoline are the very people who have made rules concerning the production of gasoline and its chemical composition. They have blocked the construction of new refineries and efforts to modernize exsisting refineries. Drilling in the Gulf has been restricted mainly because of the deterioration of the bayou/delta in Southern LA. Advances in equipment and technique have reduced spillage in offshore operations, even with events such as Katrina. Every barrel lost is not just lost revenue, it is money going out in order to cleanup and pay fines. You can rest assured other countries around the Gulf are not as concerned with stopping spills. And you can bet your ass China’s drilling operations will be rather dirty, it ain’t their water. Long story short, new sources of energy are being developed, have been all along, and R&D take time and effort as well as money.
I take the points you guys have made. Bat1 makes some especially good points.
Let me just start by observing that in 1982 we could predict that we would have the current tightening of supply. When energy prices dropped in ‘86 & stayed fixed in nominal dollars (hence were actually getting cheaper), industry responded by producing solutions that depended on cheap energy.
The car industry manufactured gas guzzling SUVs. People in the green industry opened up green houses for e.g. orchids and other exotic plants (plants that only live in a very narrow range of temperature) in regions that depended on careful climate control (heating in the winter, cooling in the summer). This is, as I see it, how any conservative private market works. They optimize for the short term. (A dollar today is better than the possibility of two tomorrow).
In spite of the low cost of energy, governmental (primarily EPA) regulations pushed the auto industry towards lower cost vehicles, pushed for more energy efficient homes, and more efficient industrial utilization of energy. None of these changes occur at the drop of a dime of course. Better efficiency cares for example, rely on new technologies and in some cases new infrastructure, to make them practicable.
In the very long run, with the current crunch on supply, we might just now be starting to adapt to de facto shift in the global energy market. In this respect “the pain at the pump” as B1 puts it comes to quickly, and really (calendar date level) really cannot be anticipated long enough in the future to expect the market to adapt to sudden dramatic shifts of this sort.
Society (and government as its proxy) can plan for the long term, which is different than saying that it is always effective (similar to the problem with the least effective politician gets elected). We decide where to put in the highways, not industry. We zone cities and communities for business & private to protect against Bhopal-type disasters, and so forth.