[QUOTE=ewmayer;136306]The problem with that "let's do both" approach is that in the U.S. more drilling and the promise of more supply has long been used ... as a convenient political cover for doing precisely zilch to "wean ourselves off foreign oil.".[/QUOTE]

This is the only coherent argument I've heard against both drilling and conservation. American citizens and Washington politicians are incredibly weak-willed.

A few responses now; more later.

[quote=Prime95;136295]Read the PPS above.[/quote]I was working from the text of your posting before you added the PPS, and failed to notice after posting my reply that your post had changed..

[quote]Of course, your whole argument about running out of supply in 73-74 was a straw man too[/quote][B] My comments on the 1973-74 oil crisis were [U]NOT[/U] a straw man! [U]I personally witnessed "No Gas Today" signs posted at service stations in my Tulsa neighborhood![/U] There were multiple reports on news stations and in the paper about service station owners being told by their suppliers [/B](who were delivering from our refinery just a few miles away)[B] that they'd have to skip deliveries, or that they couldn't have as much as they ordered. I was personally denied permission, at a station in Dallas TX that had no sign stating their policy, to fill up my car's gas tank rather than limit my purchase to a smaller amount.[/B]

I do not see that happening now.

How old were you in 1974? I was 25.

As I wrote, earlier, running out of supply means that no gas is to be found for sale even when the prospective purchaser has plenty of cash to make the purchase. There were multiple service stations running out of supply in Tulsa (and also in other areas, as reported by national news services) over a period of several months in 1974.

If you continue to dispute this, please state how your definition of "running out of supply" differs from mine.

[quote]You are very good at spouting the democrat line.[/quote]If you want to continue referring to the Democratic Line (I prefer to use this phrase) or "the democrat line", please state what you think the Democratic Line is. ( I don't want to take the chance of misinterpreting text from your previous posts as being what you think the Democratic Line is.) Then I will point out, if you haven't noticed by then and withdrawn your accusation, how what I've written differs from that Democratic Line.

[quote=masser;136320]The conclusion I have taken from Cheesehead's arguments is this:
a. a Democratic plan will effect market psychology and bring down oil prices.
b. a Republican plan will not effect market psychology and not bring down oil prices.[/quote]After Prime95 posts his definition of the Democratic plan or "line", I will show how what I have posted differs from that, and clarify where necessary. I regret that I have written in such a way as to allow misinterpretations such as those conclusions.

[quote]So even though these changes will take a certain time to implement (say 10 years) a "large-scale energy conservation and renewable energy program" will have a psychological effect on the oil market....[/quote]There exist many solar energy product producers who can ramp up production very rapidly to supply a program of installing solar electric or water-heating panels on or near homes. Many conservation steps can be taken in less than a year.

[quote]...but committing to a program that will increase supply (say in 10 years) won't have any effect on the oil market?[/quote]The difference is that solar/wind energy and conservation can be rapidly ramped-up from present levels. The claims of 10-year delay in that path are being made out of ignorance.

The claim of 10-year delay in developing offshore oil to a significant amount -- say, 3% of U.S. demand -- is based on historical performance by the oil industry. There aren't a lot of new, unused offshore rigs sitting around just waiting to be towed into place -- and that's [I]after[/I] the limited number of deep-water drilling ships have done their part. In relation to offshore oil equipment, solar/wind energy equipment is much smaller-scale and uncomplicated and its production more easily and quickly ramped-up. Conservation measures are even easier -- insulation batts, caulk, and labor are all that's needed to significantly reduce the energy usage of millions and millions of homes across the country. We just need to mount a full-court press and incentives to persuade homeowners to do that, and establish or expand programs to assist low-income households in that regard. Congress could do what is needed on that level in just one year.

I will comment further after we've clarified some terms like "Democratic line". Meanwhile, I'll also scan back to see how I can clarify some things I've posted.

[quote]I agree with Prime95 - why can't we both increase supply AND decrease demand?[/quote]Increase supply of oil, or increase supply of energy sources in general?

[QUOTE=cheesehead;136355][B] My comments on the 1973-74 oil crisis were [U]NOT[/U] a straw man! [/B][/QUOTE]

OK it was an not a straw man, but a close relative. I state position A. You ignore A and present position B. Prove B and conclude/imply that position A is flawed or incorrect. In your honor, I propose we name this the cheese man. :lol:

[quote=Prime95;136295][I]Straw man, straw man, straw man!!![/I] A cheesehead favorite reply. Of course, your whole argument about running out of supply in 73-74 was a straw man too - but I suppose that one's OK. No where did I claim we were out of supply now. Your comment had no bearing on what I actually wrote - oil prices are subject to the laws of supply and demand[/quote]I got so riled that I completely forgot to point out why your claim of "straw man" is different from mine.

When you replied to the first sentence of my paragraph (which seems not to have survived the transition from the other thread, so I can't quote it) as though it expressed my argument, even though the rest of the paragraph described something quite different, you were creating a straw man by presenting your reply as though it were responding to an argument I did not make.

In contrast, your accusation that my "whole argument about running out of supply in 73-74 was a straw man too" is false because I never claimed or pretended that you [i]had[/i] said anything about the 1973-74 situation. Instead I was asking you to show an example of actual out-of-supply, as did actually occur in 1973-74 -- [I]which I cited as a reference fact, not as something you said or implied[/I].

You need to go look up the definition of "straw man" in a dictionary, then eat your straw crow here in public.

[quote=Prime95;136369]OK it was an not a straw man, but a close relative. I state position A. You ignore A and present position B. Prove B and conclude/imply that position A is flawed or incorrect. In your honor, I propose we name this the cheese man. :lol:[/quote]You're still wrong, and now you've posted straw cheese that you'll need to consume also.

I asked you whether you could give a contemporary example of an oil supply problem. [I]I never claimed that you had written anything about oil supply other than your actual words.[/I]

If I ignored something you wrote, [U]that is not a "straw man"[/U]. You are misusing the term, and apparently need to go look it up in a dictionary.

Show us exactly where I supposedly "conclude/imply that position A is flawed or incorrect". (Hint: if you admit that position A involved a supply problem, then you're admitting that my challenge to you to provide an example of contemporary supply problem was legitimate and thus not a straw man. If not, then what _was_ your position A to which you refer in the quote above, and _where do you see the words of mine_ that "conclude/imply that position A is flawed or incorrect"?)

[quote=Prime95;136369]I state position A. You ignore A and present position B. Prove B and conclude/imply that position A is flawed or incorrect.[/quote]Another point:

1) You say I ignore A,

2) then you say I conclude/imply that position A is flawed or incorrect.

So, tell us just how it's possible for me to conclude or imply anything about A if I actually ignored A. But if I didn't actually ignore A, why do you say I did? You can't have it both ways.

[QUOTE=cheesehead;136371]You need to go look up the definition of "straw man" in a dictionary, then eat your straw crow here in public.[/QUOTE]

Technically, I used the advanced technique of a "reverse cheese man". Don't try this at home. Let's go over it blow by blow.

I claimed (roughly): "we should drill because supply and demand laws say this will lower prices"

You applied the cheese man. Skillfully, you replied (roughly): "we don't have a supply problem, remember the 70s, that was a supply problem". All true, but irrelevant to my original claim.

Then I applied the reverse cheese man tying your cheese man back to the original claim. To expose the silliness of a cheese man argument, I used sarcasm and conceded that you had just convinced me that the law of supply and demand does not apply to oil.

[quote=Prime95;136376]Let's go over it blow by blow.

I claimed (roughly): "we should drill because supply and demand laws say this will lower prices"[/quote]And I never claimed or implied that you said anything different, so I presented no "straw man" at any time in this argument. Do you admit that? Will you apologize for falsely claiming ("Straw man, straw man, straw man!!!") that I had, and for causing this whole excursion that started with that line ("Straw man, straw man, straw man!!!") of yours?

[QUOTE=cheesehead;136377]I presented no "straw man" at any time in this argument. Do you admit that?[/quote]

I already have. I've labeled it the cheese man.

[quote]Will you apologize for falsely claiming ... that I had[/quote]

If it makes you feel better. I apologize for claiming you used a straw man.

[quote]and for causing this whole excursion that started with that line ("Straw man, straw man, straw man!!!") of yours?[/QUOTE]

No apologies for that. You and I use different rules here. I view straw men, cheese men, and reverse cheese men as all good fun - lively ways to have a debate.

You seem to view straw men as the ultimate sin. Whenever you see one, you loudly proclaim it. Reading between the lines, you seem to be saying "Look! I found a straw man! I just won the debate! It proves everything I've been saying.".

I regret that I escalated this mess at several points.

While I was away, my subconscious figured out that there was originally a simple simultaneous misunderstanding, and that I've made at least 51 percent of the trouble by throwing in demands for withdrawals and apologies.

George, I apologize for turning a simple misunderstanding into such a mess. You owe me no apology.

I apologize to the rest of forum participants for churning this up so much. I'll try to be calmer next time I don't understand why someone wrote something.


[SIZE=1](even if he's wrong about several things in post #107)[/SIZE]

[QUOTE=cheesehead;136274]And, do we really have a supply problem, anyway? I can't recall seeing any recent reports of service stations running out of gasoline [i]as they actually did in 1973-74[/i]. Can you cite current examples where the supply is actually too small rather than being considered "too expensive" by some folks?[/QUOTE]

I was going to comment on the problems caused by forgetting that "supply" is a function not a number nor a boolean variable. But then I got to wondering why it was that gas was "rationed" rather than skyrocketing in 1973-74. I remember that part of the problem wasn't a shortage of gasoline so much as a fear of shortage. People were topping off gas tanks at every opportunity - this resulted in more than usual amounts of gas in cars and long lines because people were spending three or four times as many minutes per week "at a pump" for the same total number of gallons. But I think another important factor must have been the recent memory of the Nixon wage and price controls.

[quote=wblipp;136391]But then I got to wondering why it was that gas was "rationed" rather than skyrocketing in 1973-74.[/quote]Price controls on gasoline (among other things) were instituted by President Nixon in 1973. Though most of Nixon's wage and price controls were phased out by President Ford, price controls remained on oil and gasoline for eight years. In particular, gasoline price controls were in place during the entire 1973-1974 Arab oil embargo.

[quote]But I think another important factor must have been the recent memory of the Nixon wage and price controls.[/quote]Not the memory, but the legal reality.

- - - - - - - -

Cautionary note to all:

At many places referring to the history of the 1970s, Presidents Nixon through Carter, the oil crisis, and/or wage and price contols, you may see statements along the lines of "Jimmy Carter imposed energy price controls". [U]This is the result of a very successful conservative misinformation campaign maligning President Carter, not historical fact![/U]

This lie has even made its way into the Wikipedia article on the 1979 energy crisis at [URL]http://en.wikipedia.org/wiki/1979_energy_crisis[/URL], in which the following false statement appears (it's there now, but may have been corrected by the time you follow the link): "In the United States, the Carter administration instituted price controls." (An example of the unreliability of Wikipedia's political-history-related statements.) This lie's influence can be seen at [URL]http://www.becker-posner-blog.com/archives/2005/10/response_on_pri.html[/URL], for example, where the writer cites that Wikipedia article as (erroneously) supporting his claim about Carter:

[quote]Two of the comments questioned my assertion that President Carter introduced price controls on gasoline that produced long lines. I am right, as shown by the following entry from Wikepedia on the 1979 energy crisis: "In the United States, the Carter administration instituted price controls. ...[/quote]Carter did no such thing; he [I]ended[/I] wage and price controls in all areas other than oil and gasoline, and began the phaseout of those remaining controls. His plan for that phaseout had them finally disappearing in what would have been his second term if he had been reelected. (Reagan got to celebrate the end of the last vestiges, instead.) However, certain conservatives have been (successfully) intent on distorting this part of history, giving Reagan credit for this and other achievements (e.g., taming inflation) that were actually the result of Carter's actions.

From "Carter and crude: setting the record straight" at [URL]http://www.powermag.com/ExportedSite/BlogArticles/27.htm[/URL]:

[quote][[I]Washington Times[/I] conservative columnist Bruce] Bartlett, in a memory lapse shared by many conservatives, blamed Jimmy Carter for imposing energy price controls. That’s an entirely bum rap. Whatever one has to say about Jimmy Carter and energy policy – and there is plenty to come in this article – he didn’t impose oil price controls.[/quote]

Carter did do some loopy things -- his synfuels program was a bust, for instance. But he certainly wasn't as terrible as many conservatives would like you believe.

(Yes, Carter-slander is one of my hot buttons. I think history has many valuable lessons for us, but only if that history is factually accurate.)

Most of the 'solutions' presented here are short term at best. I would like to see a much more long term approach.

1. Electric vehicles
2. improved home efficiency (incentives needed)
3. solar/wind development
4. alternative fuels
5. Lifestyle changes (reduce excessive consumption)


Cheesehead, can you show me an example of an integrated solar solution that provides both electricity and hot water from the same system?

P95, I have to agree that both reduced consumption and increased production should be implemented, however, as noted above, this does NOTHING to reduce dependence on foreign oil.

I'd like to make a statement that America does NOT have an energy policy at present. All we have is a consumption management plan.

DarJones

[QUOTE=Fusion_power;136442]P95, I have to agree that both reduced consumption and increased production should be implemented, however, as noted above, this does NOTHING to reduce dependence on foreign oil.[/quote]

Please explain, if we increase production or decrease consumption then we reduce our dependence (or at least slow our growing dependence).

[quote]I'd like to make a statement that America does NOT have an energy policy at present. All we have is a consumption management plan.[/QUOTE]

Amen to the first sentence. I'm not sure we even have a consumption management plan.

[QUOTE=Prime95;136444]Please explain, if we increase production or decrease consumption then we reduce our dependence (or at least slow our growing dependence).[/QUOTE]
Perhaps Fusion_power is regarding dependence as a binary variable.

I.e., "we" are dependent on foreign oil and even after increasing "domestic" production to the largest possible extent, "we" will still be dependent on foreign oil.

Quotes used above because I'm neither a US citizen nor resident in the USA.


Paul

[quote=Fusion_power;136442]Cheesehead, can you show me an example of an integrated solar solution that provides both electricity and hot water from the same system?[/quote]Why?

Or maybe I should ask: By "integrated", do you mean that the exact same mechanical structure, or at least some shared component, is used to convert solar radiation into both electricity and heat?

(In the following, I write in the context of a home-sized system. For instance, while extreme concentration of solar heat may be used in electricity generation stations, that isn't practical in a home system -- and the electric generating station isn't producing hot water for consumers.)

It might be convenient for a homeowner (or small businessowner) to purchase both as a package deal, but there isn't any particular engineering or energy savings to be had by combination of most physical components. Solar photovoltaic cells are inefficient for heating water; solar heat collectors are inefficient for generating electricity.

It may be helpful to recall that, thermodynamically, electricity is inherently high-temperature (several thousand degrees) while solar heat is inherently low-temperature (under a hundred degrees C.), so conflicting thermodynamic considerations would apply in a number of places in designing apparatus to collect/generate both.

I suppose both the heat collecting tubes and photovoltaic cells might be mounted on a common platform in a sun-tracking system, but sun-tracking usually isn't economically justifiable in most home systems. (I saw sun-tracking photovoltaics on a Solar Tour farm, but few homes would need that much.) There could be some possibility I'm overlooking.

Several days ago, my post #77 discussed profits and "windfall profits" measures directed at oil companies.

Let me make it clear that: (1) [I]I want oil companies to be treated like similar companies in other industries, not singled out for punitive treatment just because they're [B]oil[/B] companies[/I], and (2) that applies to both punitive and protectionary measures.

In particular, I want antitrust measures applied to the oil industry just as they ought be applied to other industries. The Bush administration has been noticeably reluctant to do that, for any industries, but especially the oil industry. The concentrations that have occurred in the oil industry mergers of the past decade have reduced competition, and that's bad for consumers.

Amoco, the company I worked for in the 70s, was better-run than most other oil companies while I was there and for a few years afterward. But since BP (British Petroleum) took it over in 1998 BP's way of doing things has not been to my liking.

[quote=cheesehead;135743]Back in 1973-4 (when the "obscene profits" cry arose), the [I]Business Week[/I] tables showed that oil companies had profitability similar to the averages of companies in most other industries. I specifically recall that one year, the oil industry was averaging 11-13% RoSE, which was about the average for all industries. Computer manufacturers, however, were in the high teens, and office furniture companies averaged about 25%. I didn't hear any Senators calling for windfall profits taxes on computer or office furniture companies, then or now.[/quote]But increasing concentration in the oil industry has raised its profitability levels since the 1970s. By itself, increased profitability's not necessarily bad, but when it's the result of companies' having larger and larger shares of the market and thus having greater power to make decisions detrimental to consumers, it's a sign that antitrust investigation and action is needed.

- - - - -

Recently I found a Consumer Federation of America report from 2003, "Spring Break in the U.S. Oil Industry: Price Spikes, Excess Profits, and Excuses", at [URL]http://www.consumerfed.org/pdfs/gasoline1003.pdf[/URL]. It is an external link from the Wikipedia article "Oil refinery" at [URL]http://en.wikipedia.org/wiki/Oil_refinery[/URL].

(Let me emphasize that it's from [B]2003[/B] -- five years ago.)

After reading it partway, I find that it looks reasonable, and all its description of oil industry operations seem in accord with what I know. I haven't crosschecked its figures, but have no reason to suspect any errors. After making some caveats, I'll recommend it to those of you interested in learning a bit more about how Big Oil works.

Caveats:

It's from [B]2003[/B] -- five years ago.

It mentions "a wild price spiral" and "the average increase of 26 cents per gallon in the price paid at the pump since the election of George Bush" in a section titled "Domestic Gasoline Price Shocks". So, keep in mind that a mere 26 cents was a "price shock" or part of a "wild price spiral" back then, in 2003.

It says, "The largest cause of rising gasoline prices in recent years is the domestic refining and marketing sector, not crude oil prices or where it comes from." That was then (2003), not now. So, keep in mind that you're traveling back in a time machine of sorts when you start reading this report.

Q: Since it's so "out-of-date", why do I heartily recommend it? A: Because the different situation back then allows one to study "the domestic refining and marketing sector" without distractions from abroad. So I recommend it as a way to learn more about certain aspects of oil companies from what seems to me, so far as I've read, to be a fair point of view.

Xilman is essentially correct re my statement about dependence on foreign oil. No matter how much we explore, no matter how many new wells we bring into production, the maximum we could produce would be 10% of our projected oil needs. Under those conditions, it is not possible to sway the world price of oil.

George, While I agree with your basic view re conservation and exploration, I do not accept the premise that it can significantly affect our dependence on foreign oil. I am of the opinion that the only way to affect that dependence in the long term is through a major paradigm shift in the way we manage our energy resources. Please note that this applies equally to the EU as to the USA.

DarJones

[QUOTE=Fusion_power;136475]George, While I agree with your basic view re conservation and exploration, I do not accept the premise that it can significantly affect our dependence on foreign oil. I am of the opinion that the only way to affect that dependence in the long term is through a major paradigm shift in the way we manage our energy resources. Please note that this applies equally to the EU as to the USA.

DarJones[/QUOTE]Sure does, IMAO. It applies at least as much to most of the rest of the overdeveloped world (AUS, NZ, J, CH, for example) as it does to the EU and US. Norway, and perhaps Canada, are the only major exceptions I can think of right now, but there could well be others.


Paul

[QUOTE=Fusion_power;136475]While I agree with your basic view re conservation and exploration, I do not accept the premise that it can significantly affect our dependence on foreign oil.[/QUOTE]

Then we are in agreement. The wording "does NOTHING to reduce dependence on foreign oil" was a bit misleading. Replace "NOTHING" with "little" or replace "reduce" with "eliminate" and I would not object.

*****

It might be interesting to hear what various readers would like to see in a comprehensive energy policy.

Off the top of my head I would do lots of "little things" in hopes that it amounts to a modest dent in slowing our growing dependence while we await Fusion_power's paradigm shift.
1) U.S. drilling, but not at "give away the farm" lease terms. Use proceeds for funding basic R&D in alternative energy sources (or debt reduction).
2) Mandate higher MPG standards and/or tax the crap out of gas guzzlers.
3) Place a substantial tax on non-clean energy sources. We want clean alternatives to have an advantage over non-clean ones.
4) Have a hefty guaranteed minimum price for energy. Reducing investor risk will encourage building of wind farms, solar farms, etc. A high price will also encourage a ton of private R&D.
5) Let the market decide what is cost effective. The mandated production of corn-based ethanol is dead wrong. Sugar or switchgrass or some other alternative energy might be a substantially better choice.
6) I'm no expert on the oil industry, but I suspect $140/barrel is all the incentive oil companies need. I'd repeal any tax credits that were designed to encourage oil exploration and drilling.

[QUOTE=Prime95;136488]It might be interesting to hear what various readers would like to see in a comprehensive energy policy.

Off the top of my head I would do lots of "little things" in hopes that it amounts to a modest dent in slowing our growing dependence while we await Fusion_power's paradigm shift.
1) U.S. drilling, but not at "give away the farm" lease terms. Use proceeds for funding basic R&D in alternative energy sources (or debt reduction).
2) Mandate higher MPG standards and/or tax the crap out of gas guzzlers.
3) Place a substantial tax on non-clean energy sources. We want clean alternatives to have an advantage over non-clean ones.[/QUOTE]Do you classify crude-oil derived motor fuel (whether petrol, gasoline or diesel) as unclean? If so, you appear to be moving to a more EU-like situation. LPG (despite being a CO_2 producer) has significant tax advantages in much of Europe. Electric (and its equivalent in various forms) and LH_2 has a substantial tax incentive here, despite taking a 65% efficiency loss at the generator and subsequent losses afterwards, at least in part because it doesn't fill city streets with CO_2, NO_x, SO_2 and particulates.

My personal view is that the problem is multifaceted and very complex. It will not be solved by a single mechanism, or even a moderate collection of mechanisms. It requires a very large number of disparate mechanisms, some widely applicable and some very focussed. A few suggestions, in no particular order:

1) Reduce wastage. That is, spend capital investment now to reduce future current expenditure. Examples include better thermal efficiency in buildings (whether to keep them hot or cool) and better fuel-economy in transport. Neither of these involves new technology (not to say that new technology can't do it better), merely application of widely understood and reasonably widely implemented processes and techniques.

2) Where wastage is inevitable, because of the laws of thermodynamics perhaps, exploit the waste product. Examples include using power-station cooling water to heat buildings (so-called CHP) or to grow high value crops (shellfish is the classical example, but many forms of vegetation appreciate high humidity, high CO_2 and warm temperatures) in climates which are otherwise unfavourable; the Microsoft Research building in Cambridge is heated primarily by its inhabitants and its computers, and it's cooled largely by carefully designed ventilation, with appropriate attention paid to to shading and/or reflecting the correct areas from solar heat.

3) Employ mechanisms which have greater than 100% thermodynamic efficiency. The best known is the use of heat-pumps to heat buildings in cold climates, but there are others.

4) Continue to invest in alternative sources of energy, whether fission, fusion, wind, tidal, wave, solar, geothermal or whatever. Some won't be cost effective in many circumstances. Some are already cost-effective and have been for decades. Some others, I'm sure, will become cost-effective in more circumstances.

5) Place amortized costs on consumers rather than instantaneous costs. The headline price may be higher on average, but the smoothing surely increases reliability and predictability (so reducing incidental costst significantly), thereby allowing a longer-term view on investment decisions.


Paul

The lies Big Oil tells | Dang Speculator Varmints!
 

Forgot to mention one more key argument in favor of reducing consumption as being the option of First Resort: [b]there is no environmental downside to reducing consumption.[/b], if done prudently[sup]*[/sup].

Oh wait, at this point the U.S. auto industry shills will counter with something like, "but think of the environmental cost of taking all those millions of SUVs out of the auto fleet prematurely, and having to replace them with newly manufactured 'green' vehicles" - conveniently ignoring that those gas guzzlers should never have been manufactured in the first place. I say, institute a nationwide "SUV recycling" program, and kick-start it with a couple billion $ of government money and tax incentives. [Maybe use a few % of that money that was slated to go to the pork-barrel housing-bailout bill, one of the few Bush vetos I agree with, though our motives surely differ].


[url=http://money.cnn.com/2008/06/23/news/economy/oil_drilling/index.htm]America's untapped oil[/url]: [i]Lawmakers lay into big oil for leaving million of acres untouched while at the same time asking to drill in Alaska and off the coasts.[/i]
[quote][i]By Steve Hargreaves, CNNMoney.com staff writer
June 23, 2008: 1:38 PM EDT
[/i]
NEW YORK (CNNMoney.com) -- Oil companies and many lawmakers are pressing to open up more U.S. land for drilling. But the industry is drilling on just a fraction of offshore areas it already has access to.

Of the 90 million offshore acres the industry has leases to, it is estimated that upwards of 70 million are not producing oil, according to both Democrats and oil-industry sources.

If all these areas were being drilled, U.S. oil production could be boosted by nearly 5 million barrels a day, up from about 8 million barrels a day currently.

That compares to an increase of maybe 2 million barrels a day experts say opening up other coastal areas and the Alaska's Arctic National Wildlife Refuge might yield.[/quote]
Sounds to me like Big Oil is using the current crisis atmosphere in an attempt to lock up long-term leases on huge amounts of previously-off-limits land and offshore areas. The motive is obvious: after all, it`s [b]not in Big Oil`s interest[/b] - just like it`s not in OPEC`s interest - to boost production in order to lower prices[/b] . The political cover for this? - notice how the Saudis made heavy use of this over the weekend - is too simply blame "oil market speculators." To be sure, speculation plays a significant role in the oil-price runup of the past 5 years - but that begs the question [unless your name is George Bush or Ben Bernanke], why has there been such a huge increase in speculative investment in oil and other commodities? Could it be that unlike the "new Lira" U.S. dollar, they actually have some intrinsic value which makes them attractive during periods when U.S. government policy is to try to inflate their way out of an economic mess by debasing the currency?

Nah, that couldn't be it - damn "speculator varmints" probably to blame for the dollar`s slide, too - and the dot com bubble, and the housing bubble, and halitosis, and itchy foot fungus...

==========

[i][sup]*[/sup]An example of why 'going green' isn't a complete no-brainer: the toxic materials used in rechargeable batteries for hybrid and all-electric vehicles. Without proper regulations with respect to the disposal of these [i.e. battery technologies not allowing for 100%-or-close recycling of toxic materials should be disallowed], there can in fact be considerable environmental downside from widespread adoption of such technologies.[/i]

John McCain has proposed an idea I've seen many times over the years (but I keep forgetting to mention it to others), an appropriate use of government money that ought to have bipartisan support: offer prizes for development of new technologies.

We've seen this concept work beautifully in the recent DARPA (Defense Advanced Research Projects Agency) Grand Challenge ([URL]http://en.wikipedia.org/wiki/DARPA_Grand_Challenge[/URL]). It set forth USD $1 million prize money in a 2004 competition to develop a fully autonomous ground vehicle capable of completing a substantial off-road course within a limited time. In 2005, prize money was increased to USD $2 million, and resulted in _five_ different vehicles that completed the 212 km (132 mile) competition course ([URL]http://en.wikipedia.org/wiki/DARPA_Grand_Challenge_%282005%29[/URL]).

In 2007, the DARPA Urban Challenge ([URL]http://en.wikipedia.org/wiki/DARPA_Grand_Challenge_%282007%29[/URL]) used a 96 km (60 mile) course in a simulated urban environment. "Rules included obeying all traffic regulations while negotiating with other traffic and obstacles and merging into traffic." From [URL]http://www.darpa.mil/GRANDCHALLENGE/[/URL]: "this event required teams to build an autonomous vehicle capable of driving in traffic, performing complex maneuvers such as merging, passing, parking and negotiating intersections. This event was ... the first time autonomous vehicles have interacted with both manned and unmanned vehicle traffic in an urban environment."

Now, McCain has proposed a $300 million (a 100x ramp-up from the DARPA challenges) prize for the development of advanced battery technology capable of powering motor vehicles. "As outlined by McCain, the prize would be paid the first innovator to develop a battery technology that 'leapfrogs' existing electric car and plug-in hybrid technology, in terms of size, capacity, power, and cost. The aim is a battery technology that capable of powering motor vehicles at 30 percent of current costs." ([URL]http://article.nationalreview.com/?q=ODg2MmE0OGU1MWUzNzg1YzBiOWNkOGUzYTIwMWQxZmQ[/URL]=)

- - - -

However, McCain continues to use misleading words when talking about energy policy. From [URL]http://article.nationalreview.com/?q=MjhhMTA4NzQ2YTQ4YjZkNzI0YzYyNmVhOThlM2I3ODA[/URL]=: "'There’s so much regulation' of the oil industry, McCain observed, 'that the last American refinery was built when Jerry Ford was president.'"

There again is the false implication (no new refineries = no new [I]refining capacity[/I]) that I wrote about earlier in this thread. It's part of the unfair slam that environmentalists are responsible for high gasoline prices.

I see everyone concentrating on oil as a fuel but what about oil as a source of cheap polymers? What is the economics in a system where burning (!) oil as a primary fuel for cars is considered insane because the relative price of plastics (and other materials made from oil) compared to energy becomes majorly unbalanced? Imagine if a barrel of oil was it's current price but energy costs were one quarter and polymers doubled. That's not just a speculation, but inevitable! Eventually the price of oil must reach parity with all new energy sources. The price may very well surpass energy prices. Once energy becomes cheaper than oil... There's going to be some major pain in countries that didn't invest their petrolium profits wisely - although they could use the fuel themselves to help delay the blow. A soft fall would be less painful but would spread their economic disadvantage over many years.

I think the concept of burning oil will eventually be seen the same way as farming before irrigation, crop rotations, soil management, etc. Or like pumping untreated sewage into a lake. A great idea at the time, but obviously it had to end sometime.

[QUOTE=nibble4bits;136842]I see everyone concentrating on oil as a fuel but what about oil as a source of cheap polymers? What is the economics in a system where burning (!) oil as a primary fuel for cars is considered insane because the relative price of plastics (and other materials made from oil) compared to energy becomes majorly unbalanced? Imagine if a barrel of oil was it's current price but energy costs were one quarter and polymers doubled. That's not just a speculation, but inevitable! Eventually the price of oil must reach parity with all new energy sources. The price may very well surpass energy prices. Once energy becomes cheaper than oil... There's going to be some major pain in countries that didn't invest their petrolium profits wisely - although they could use the fuel themselves to help delay the blow. A soft fall would be less painful but would spread their economic disadvantage over many years.

I think the concept of burning oil will eventually be seen the same way as farming before irrigation, crop rotations, soil management, etc. Or like pumping untreated sewage into a lake. A great idea at the time, but obviously it had to end sometime.[/QUOTE]

We talk about it, but it just gets lost in the noise of administrations that are busy refusing to open official emails at the times they are not busy losing them en masse. They see every hardship as an opportunity to seize new powers and avenues of exploitation, even sometimes writing new powers hundreds of pages into bulk legislation. When they do all this and treat us with contempt and continuously lie and deceive, it is hard to get people to notice that we are eating our seed corn or burning our houses to stay warm in the winter.

[QUOTE=cheesehead;135058]Me, too.

I want untapped oil reserves to be more widely recognized as worthy long-term investments than as unexploited resources begging to be consumed as soon as possible.

That reminds me ...

Back in the early 1970s, when I was working at the Amoco Production Company's research center in Tulsa, the company held, perhaps once a year, seminars to which employees from all departments were invited for an afternoon. The topics would be current technical developments in the fields of oil exploration and production, and new technology about to pass from research to productive use within our company. We were always advised that it was confidential, not to be disclosed outside the company, but I think the following can be ethically revealed 35 years later :)

During a discussion of the then-newly-being-developed North Slope oil field in Alaska, one of my computing department co-workers proposed from the audience that instead of working to ramp up production as soon as the Trans-Alaska Pipeline was completed, the company and nation should instead consider conserving it for the future when its hydrocarbons [I]might be more valuable as, for example, basic ingredients for food production than as fuel to be burned[/I]. Why not use Middle East oil as fuel, while conserving US oil for a future where it would be much more valuable for other uses than as fuel now? As soon as he finished his last sentence, there was spontaneous applause throughout the audience!

... as an example of how we oil company research workers thought U.S. oil policy should run ... and this from within a decidedly conservative region whose Republican representatives in Congress were staunchly in favor of increasing U.S. domestic oil production.[/QUOTE]

[quote=ewmayer;136491]Forgot to mention one more key argument in favor of reducing consumption as being the option of First Resort: [B]there is no environmental downside to reducing consumption.[/B], if done prudently[sup]*[/sup].[/quote]I disagree, but only because your statement doesn't go far enough. Not only is there no significant downside, but also it has an enormous upside absent from the proposals for increasing oil production: curbing global warming.

[quote]Oh wait, at this point the U.S. auto industry shills will counter with something like, "but think of the environmental cost of taking all those millions of SUVs out of the auto fleet prematurely, and having to replace them with newly manufactured 'green' vehicles" - conveniently ignoring that those gas guzzlers should never have been manufactured in the first place.[/quote]Even better (this is the sort of idea that conservatives could easily think of, _if_ they sincerely tried to think favorably about conservation): someone should figure out how much energy it takes to manufacture a new car, including energy to extract the raw materials and so forth, and how much less energy it takes to maintain a used car for, say, an extra three-four years instead of buying a new one. Then compare that to the amount of gas saved, according to the relative MPGs or LPKs.

(But, surely someone's already done that. Maybe I just need to Google more.)

Used-car dealers could use that as a selling point (or do they already? -- I haven't used-car-shopped since I bought my current car, used, three years ago after my previous thirteen-year-old one, also purchased used, exhibited mucho many disablements). I suppose that new-car dealers with some inventory of used cars for sale might not want to include that in their sales pitches, though.

[quote]I say, institute a nationwide "SUV recycling" program, and kick-start it with a couple billion $ of government money and tax incentives. [Maybe use a few % of that money that was slated to go to the pork-barrel housing-bailout bill, one of the few Bush vetos I agree with, though our motives surely differ].[/quote]In a way, that's already being done through private enterprise, no government money needed -- dealers are cutting thousands of dollars off the prices they're asking for used SUVs they have for sale!

Adam Smith handles the rest.

[quote][URL="http://money.cnn.com/2008/06/23/news/economy/oil_drilling/index.htm"]America's untapped oil[/URL]: [I]Lawmakers lay into big oil for leaving million of acres untouched while at the same time asking to drill in Alaska and off the coasts.[/I]

Sounds to me like Big Oil is using the current crisis atmosphere in an attempt to lock up long-term leases on huge amounts of previously-off-limits land and offshore areas.[/quote]I agree.

[quote]The motive is obvious: after all, it`s [B]not in Big Oil`s interest[/B] - just like it`s not in OPEC`s interest - to boost production in order to lower prices.[/quote]Well, it [I]is[/I] in American Big Oil's interest (short-term; few shareholders look long-term) to boost U.S. production -- the small amounts of conceivable U.S. increase wouldn't have much effect on prices.

Also, note that high oil prices don't boost oil industry profits all by themselves -- it's the sudden increase in value of all the oil that's on its way from well to consumer that boosts profits, temporarily. When oil prices fall, so do oil company profits, but mainly because the value of their unsold inventory suddenly drops. It's basically an accounting matter that will be the subject of the final installment of my explanation for only_human's personal peeve (shared by millions of other folks!) in post #39 of this thread.

[quote]The political cover for this? - notice how the Saudis made heavy use of this over the weekend - is too simply blame "oil market speculators." To be sure, speculation plays a significant role in the oil-price runup of the past 5 years[/quote]You presented evidence, earlier (starting at post #49 of this thread), that the price-insensitive Commodity Index Speculators have had the most effect. (Testimony before a U.S. Senate committee on May 20, 2008 -- [URL]http://hsgac.senate.gov/public/_files/052008Masters.pdf[/URL] -- especially note the right-hand side of Chart One on page 3)

[quote]- but that begs the question [unless your name is George Bush or Ben Bernanke], why has there been such a huge increase in speculative investment in oil and other commodities?[/quote]Wasn't it the Commodities Index Speculators? They are operating on a fundamentally different theory than classical commodities speculators have.

[quote]Could it be that unlike the "new Lira" U.S. dollar, they actually have some intrinsic value which makes them attractive during periods when U.S. government policy is to try to inflate their way out of an economic mess by debasing the currency?[/quote]Well, yes, Index Speculators couldn't have done it by themselves. However, don't forget that oil prices have been rising in all currencies, not only the USD, so it can't all be the fault of the dollar's fall (despite my original, not-very-correct contention in post #1, long ago when circumstances were different -- Egad, was I ahead of my time then?).

The real "REAL" reason for the rise in U.S. gas...
 

The real "REAL" reasons:

Too many people on this globe.
Not enough governmental control of people's lives.
Not enough group and communal living.
Too many people living in "the countyside".


Think them through.

[quote=Uncwilly;136961]Not enough governmental control of people's lives.[/quote]?

[QUOTE=cheesehead;136963]?[/QUOTE]
Communal, group intrests vs. selfishness.

[quote=Uncwilly;136961]Not enough governmental control of people's lives.[/quote]
[quote=Uncwilly;136971]Communal, group intrests vs. selfishness.[/quote]?? Specific examples?

[QUOTE=me]Think them through.[/QUOTE][QUOTE=cheesehead;136976]?? Specific examples?[/QUOTE]
First, remember that my statements are [U]designed to provoke[/U] [I]others[/I] to [U]think[/U].
Second, my statements are coming at the problem from a complete oblique angle. I am not talking about the [U]end[/U] reasons, rather the root reasons and the reasons for the next and previous rise.

You can add to the list:
Lack of true spine by politicians. (Pandering for votes and lack of willingness to lead.)

Okey-dokey.

From the but-I-could-be-wrong department:

[quote=cheesehead;136462]
[quote=Fusion_power;136442]Cheesehead, can you show me an example of an integrated solar solution that provides both electricity and hot water from the same system?[/quote] < snip >

For instance, while extreme concentration of solar heat may be used in electricity generation stations, that isn't practical in a home system[/quote]Here's something that might be practical for a home system:

"Inventors: Solar Dish Could Revolutionize Energy Production"

[URL]http://www.livescience.com/environment/080619-solar-power.html[/URL]
[quote=LiveScience Staff]A new type of solar energy collector concentrates the sun into a beam that could melt steel.

...

The prototype is a 12-footwide mirrored dish was made from a lightweight frame of thin, inexpensive aluminum tubing and strips of mirror. It concentrates sunlight by a factor of 1,000 to produce steam.

...

At the end of a 12-foot aluminum tube rising from the center of the dish is a black-painted coil of tubing that has water running through it. When the dish is pointing directly at the sun, the water in the coil flashes immediately into steam.

...

They could be set up in huge arrays to provide steam for industrial processing, or for heating or cooling buildings, as well as to hook up to steam turbines and generate electricity[/quote]While a "huge array" could produce both hot water and electricity, I doubt there's a home-system-priced steam turbine electricity generator that could run effectively on the amount of steam produced by one 12-foot dish.

Of course, I could be wrong, again.

Maybe this could power a home-system-priced steel foundry.

Perhaps a photovoltaic cell that reflects most of the sunlight it doesn't convert into electricity might, if used for the mirror material, be good enough for solar heat concentration by a factor of, say, 100 instead of 1000 on the water tube, and thus produce both hot water and electricity in an integrated home system. How'd that grab you, Fusion_power?

[QUOTE=cheesehead;137020]"Inventors: Solar Dish Could Revolutionize Energy Production"[/QUOTE]
This is over 100 years behind the times (or previously was 100 years ahead)
[URL="http://books.google.com/books?id=OEhHtP24ybIC&pg=PA207&lpg=PA207&dq=%22solar+motor+company%22&source=web&ots=awfc7NoHrN&sig=D2l7gu86My_FcGsHiv52YoiUT0Y&hl=en&sa=X&oi=book_result&resnum=7&ct=result"]http://books.google.com/books?id=OEhHtP24ybIC&pg=PA207&lpg=PA207&dq=%22solar+motor+company%22&source=web&ots=awfc7NoHrN&sig=D2l7gu86My_FcGsHiv52YoiUT0Y&hl=en&sa=X&oi=book_result&resnum=7&ct=result[/URL] Start at the bottom of page 208
[URL="http://www.montanagreenpower.com/solar/curriculum/timeline.html"]http://www.montanagreenpower.com/solar/curriculum/timeline.html[/URL] Look at 1861 to 1941
and
[URL="http://www.solarenergy.com/info_history.html"]http://www.solarenergy.com/info_history.html[/URL]

My understanding about the Google solar project is, that they will be using Sterling engines.

added: IIRC France had a huge solar furnace that would burn through steel beams, not melt, burn with flames like a torch.

Mainstream media finally getting it?
 

[url=http://money.cnn.com/2008/06/30/news/economy/energy_demand/index.htm]Energy's easiest fix: Use less[/url]: [i]While calls for more oil drilling dominate the headlines, experts say taking simple steps to use less could save twice as much.[/i]
[quote]NEW YORK (CNNMoney.com) -- Want to help the country save a quick million barrels of oil a day? Drive 5% less. Slow down. Inflate your tires.

Those three steps would reduce U.S. oil consumption by 1.3 million barrels a day immediately, according to the Alliance to Save Energy, a conservation group running an efficiency campaign backed not only by environmental groups but also the auto and oil industries.
[b]
That's nearly twice the estimated daily oil production that could come from drilling in the Alaska's Arctic National Wildlife Refuge, according to the government's Energy Information Administration.[/b][/quote]

[b]
Gas Price Update
[/b]
Forgot to post last week [was out of the office Friday and offline Fri-Sunday]: last week's Sunnyvale Valero Gas Prices held steady with unleaded regular self-serve costing $4.47[sup]9[/sup] per gallon, unchanged from Fri, 20 Jun.

IEA claims "speculation not to blame"
 

[url=http://money.cnn.com/2008/07/01/news/economy/oil_speculation/index.htm?postversion=2008070106]Speculation not to blame for oil - report[/url]: [i]The $140 (a barrel) oil question: Does the existence of more speculation lift oil prices? In a new study, the International Energy Agency answers 'no.'[/i]
[quote]NEW YORK (CNNMoney.com) -- An influential oil-policy group released a report Tuesday arguing that the increase in oil-market speculation is not driving up crude prices. But the study far from ends the debate.

Since 2003, the volume of investment funds in commodity markets - especially oil - rose from about $15 billion to $260 billion, according to the International Energy Agency ([url=http://en.wikipedia.org/wiki/International_Energy_Agency]IEA[/url]), which issued the report.

And many argue that all that extra money sloshing around is to blame for prices doubling from $71 last July to roughly $140 today.

The IEA isn't buying it.

"There is little evidence that large investment flows into the futures market are causing an imbalance between supply and demand, and are therefore contributing to high oil prices," the report said.

Instead, the IEA put the blame for higher crude prices squarely on strong growth in demand coupled with limited growth in supply.

"If supply is constrained and demand is increasing, prices have to rise," read the report.

The IEA argues that if speculation drives prices too high, the market would be unbalanced. Either demand would fall off, or stockpiles would rise. Neither has happened.

...

The IEA also made the argument that many commodities - such as coal and rice - are showing similar price increases, even those without the possibility of speculation.[/quote]
Sorry, not buying it, for the following reasons:

A. Demand *has* in fact fallen off in markets like the U.S. [which dominates global oil consumption and imports]. The countries which import much of their oil and in which demand has not yet plummeted [e.g. China and India] have in common that they are fast-growing emerging markets flush with dollars from an imbalance of trade with the U.S. Those dollars have to find a home, and one such home - especially with U.S. Treasury yields below inflation - is subsidizing the cost of oil-derived products in their home markets. Even so, there are clear signs that the costs of such subsidies are really starting to bite.

B. There is evidence that some key world stockpiles are indeed rising - the U.S. has recently completed filling of its strategic petroleum reserve, and Iran is pumping much of its high-sulfur crude [which is the first grade of crude to get dropped by refiners faced with skyrocketing crude prices] into tankers. [If it has not already curbed output due to limited tanker supply.]

Lastly, the bit about "other commodities showing similar price increases" is disingenuous. Many of these commodities [e.g. coal and iron ore] are expensive to extract and transport, so increased global energy prices [e.g. the price of diesel used by mining machinery and of the fuel powering ore-carrying trains and shipping] will also affect those commodities. Second, grain markets are most definitely *not* immune to speculation - even if some grains have no futures markets, those that do will be directly affected, and if prices of grains X and Y are rising fast, prices of grain Z may follow even in the absence of any direct futures-market linkage, simply because worries about the "rising price of grain" seen in X and Y may lead to hoarding of grain Z. Hoarding is the oldest form of commodities speculation, and requires no high-tech futures market.

I stand by my assertion that the dramatic rise in oil [and grain, and iron, and...] prices over the past 5 years [in dollar terms] is due in roughly equal measure to

1. Increased global demand

2. Dollar devaluation

3. Commodities-market speculation [driven in part by [2]].

[i]Edit: Gah! Completely forgot to add a key note about why trade imbalances can lead directly to inflation in emerging-market economies. I'll let Mike Shedlock explain it, with the caveat [in respect to his "global savings glut" comment] that roaring export economies in countries with a traditionally high personal savings rate *can* in fact lead to a "savings imbalance" which will try to find a profitable home in all kinds of places around the globe, including the commodities markets:

[url=http://globaleconomicanalysis.blogspot.com/2008/06/deflationary-hurricanes-to-hit-us-and.html]Deflationary Hurricanes to Hit U.S. and U.K.[/url]
[quote]Inflation is indeed out of control in Asia, notably China, India, and Vietnam. That inflation stems from Asia central bankers printing local currency to buy US dollars, in an attempt to keep their export machines going.

Bernanke foolishly calls this a savings glut. Printing money to buy dollars does not constitute savings. It is amazing that a Fed governor does not understand this simple truth.[/quote][/i]

My purpose in posting about the article describing Doug Wood's solar dish was simply to illustrate that one statement in my previous reply to Fusion_power wasn't necessarily true, not to tout Doug Wood's invention as something extraordinary.

[quote=Uncwilly;137045][URL="http://books.google.com/books?id=OEhHtP24ybIC&pg=PA207&lpg=PA207&dq=%22solar+motor+company%22&source=web&ots=awfc7NoHrN&sig=D2l7gu86My_FcGsHiv52YoiUT0Y&hl=en&sa=X&oi=book_result&resnum=7&ct=result"][COLOR=#22229c]http://books.google.com/books?id=OEh...um=7&ct=result[/COLOR][/URL] Start at the bottom of page 208

...

My understanding about the Google solar project is, that they will be using Sterling engines.[/quote]To what Google solar project do you refer? The book reviewed at your books.google.com link seems to be about history, not some current project. The bottom of page 208 is followed by a notice that pages 209-238 "are not part of this book preview".

[quote]This is over 100 years behind the times (or previously was 100 years ahead)[/quote]Yes, there is a long history of solar energy uses. Why, exactly, is Doug Wood's solar dish over 100 years behind the times? Has there been a "12-foot-wide mirrored dish ... made from a lightweight frame of thin, inexpensive aluminum tubing and strips of mirror" commercially available for over 100 years?

I hope you aren't thinking that just because I quoted a title including the phrase "Could Revolutionize Energy Production", I am necessarily endorsing that the device actually is revolutionary.

[quote][URL]http://www.montanagreenpower.com/solar/curriculum/timeline.html[/URL] Look at 1861 to 1941
and
[URL]http://www.solarenergy.com/info_history.html[/URL]
[/quote]Are some parts of those relevant to Doug Wood's solar dish, other than documenting that Mr. Wood is not the first inventor of a solar device? If not, what is your point?

[quote]added: IIRC France had a huge solar furnace that would burn through steel beams, not melt, burn with flames like a torch.[/quote]Home-sized and home-priced?

[quote]A. Demand *has* in fact fallen off in markets like the U.S. [which dominates global oil consumption and imports]. The countries which import much of their oil and in which demand has not yet plummeted [e.g. China and India] have in common that they are fast-growing emerging markets flush with dollars from an imbalance of trade with the U.S. Those dollars have to find a home, and one such home - especially with U.S. Treasury yields below inflation - is subsidizing the cost of oil-derived products in their home markets. Even so, there are clear signs that the costs of such subsidies are really starting to bite.[/quote]and further:

[quote][I]Inflation is indeed out of control in Asia, notably China, India, and Vietnam. That inflation stems from Asia central bankers printing local currency to buy US dollars, in an attempt to keep their export machines going.

Bernanke foolishly calls this a savings glut. Printing money to buy dollars does not constitute savings. It is amazing that a Fed governor does not understand this simple truth.[/I][/quote]I don't buy this at all at least as far as India goes. India has operated a current-account deficit economy much like the US for the past gazillion years. Look at the back page of any recent issue of The Economist and you will see that Indian forex reserves are puny compared to China or even Taiwan or Singapore. Moreover, the Indian government is most certainly not printing and the central bank has increased the reserve ratio for banks recently which is most certainly deflationary. So I call BS on this one.

India is a very different case from China and Mish is falling into the trap of failing to distinguish the two. India can hardly be classified as an export economy when imports>exports and total trade volume is a relatively smaller fraction of GDP than most countries.

Which leads me to the thought that perhaps Mish and others like him are not really understanding the reasons behind global commodity inflation fully. Perhaps supply and demand is a much larger component than they think and it is becoming so apparent now because we have reached a sort of tipping point and speculation merely seems to bring it into sharper relief.

Here in the northern and western part of Europe you fill up your tank at the gas station for €1.60 per liter. In 1 gallon goes 3.7854 liter and in a euro goes 1.5778 dollar. So we pay about $9.50 per gallon. By far the most of it is local taxes. (local equals country here)

Actually, I'm pretty happy with it. Otherwise we would have to pay taxes through other means and it made the continent far more proof for changes in crude oil prices. And the standard of living is equal to the US while being 30% more energy efficient.

[QUOTE=garo;137168]Which leads me to the thought that perhaps Mish and others like him are not really understanding the reasons behind global commodity inflation fully. Perhaps supply and demand is a much larger component than they think and it is becoming so apparent now because we have reached a sort of tipping point and speculation merely seems to bring it into sharper relief.[/QUOTE]

Speculation as a "supply-demand-dynamic amplifier" ... I like it. But that still begs the question of what is behind the huge increase in speculative commodities investing worldwide in the past few years: a combination of currency [especially dollar] debasement and laxer exchange rules on speculative trading seem to be the major drivers - Garo, your take?

Like Mish, I also fell into the trap of lumping India in with China - thanks for the BS call on that one.

On the oil-production front, hot off the Bloomberg presses:

[url=http://www.bloomberg.com/apps/news?pid=20601072&sid=arXTpOY4omL4&refer=energy]Russia’s Oil Output Falls in June, Extending Decline[/url]
[quote]July 2 (Bloomberg) — Russian oil production declined in June, bringing the world’s second-largest crude exporter closer to its first annual drop since 1998.

Production fell to 9.77 million barrels a day (40 million metric tons a month), 1 percent less than in June last year, according to data released by CDU TEK, the dispatch center for the Energy Ministry. Output rose 0.2 percent compared with May.

Russia’s production may have peaked as producers struggle with aging fields, rising costs and increasingly remote new deposits, senior executives at Moscow-based OAO Lukoil and TNK-BP, the country’s two-biggest independent oil companies, have said. The finance and energy ministries are developing tax-cut proposals in a bid to revive growth.[/quote]

[QUOTE=cheesehead;137148]My purpose in posting about the article describing Doug Wood's solar dish was simply to illustrate that one statement in my previous reply to Fusion_power wasn't necessarily true, not to tout Doug Wood's invention as something extraordinary.[/quote]Fair enough. I am just good and rotten tired of people thinking that solar power is new".

[quote]To what Google solar project do you refer? [/quote]
[url]http://www.google.com/corporate/green/energy/[/url]
It appears that what i heard was incorrect, but Google's solar plans and Sterling systems have gotten mentioned in several articles together.

[quote]The bottom of page 208 is followed by a notice that pages 209-238 "are not part of this book preview".[/quote] When I looked at it, it refered to the "Solar Motor Company" and their early 1900's boiler systems.

[quote]Has there been a "12-foot-wide mirrored dish ... made from a lightweight frame of thin, inexpensive aluminum tubing and strips of mirror" commercially available for over 100 years?[/quote]Maybe not exactly, but there have been 1.6m solar cookers used for years and other solar home systems.

BTW: Why not attach tubes to the backs of photovoltaics? Heat and electricity.

[quote]I hope you aren't thinking that just because I quoted a title including the phrase "Could Revolutionize Energy Production", I am necessarily endorsing that the device actually is revolutionary.[/quote]Not you, him.:rant:

[quote]If not, what is your point?[/quote]Solar's popularity is inversely proportional to the expense of other power. When someone "catches the sun" they think that it will be panacea.

Not you, I just don't like giving people like him (and his statements) too much acclaim.

NYT Article about the Saudi Khurais Oil Field
 

[url=http://www.nytimes.com/2008/07/01/world/middleeast/01saudi.html]Saudi Oil Project Brings Skepticism to the Surface[/url][quote]Khurais, about 90 miles east of Riyadh, the Saudi capital, is one of the planet’s last giant oil fields. The Saudis say that it holds 27 billion barrels of oil — more oil than all the proven reserves of the United States — and that it will significantly bolster the kingdom’s production capacity once it starts pumping a year from now, easing global need.
...
The Khurais complex, which includes two smaller adjacent fields, was discovered in 1957. It got only limited use, because its oil is less accessible than that of the great Ghawar field, the world’s largest.[/quote]
Notice the theme here - lots of oil still in the ground, but of the increasingly-expensive-to-extract variety.
[quote]During their presentation, Aramco officials acknowledged that they faced unusual challenges here, including a plan of daunting complexity in a tight contractor market. There are also risks: if the current high prices drive down demand, the Saudis could find their market for all this oil shrinking.

But they said they were on schedule or ahead of it, with the pipeline network 88 percent complete and the main processing plant 55 percent done. They also vehemently disputed the claims of oil-supply skeptics.

A variety of new technologies, including multiple lateral wells and microscopic robots swimming through rock pores deep underground, will allow the company to start recovering much more of the oil in its fields, said Mohammed Saggaf, who runs Aramco’s advanced exploration research wing. The company expects to increase the amount of oil it can recover from its fields to 70 percent from 50 percent over the next 20 years, Mr. Saggaf said, adding another 80 billion barrels to reserves.

With all this oil becoming available, the Aramco officials said they were baffled that the market seemed to be behaving as though there were a shortage.

“We’ve asked all the international oil companies that buy from us if they want more oil,” Mr. Nasser said. “But we can’t find customers.”[/quote]
The last quote is interesting - the (Big Oil == evil) tinfoil hat bloggers will immediately scream "price collusion!", but it could simply be that with oil companies already unable to pass much of current oil prices onto consumers in the form of higher gas prices [believe it or not, gas prices have not risen nearly as much as crude prices], refining margins have gotten so tight that Big Oil is actually losing money on the gasoline side of the equation. Evidence for that is that many oil companies are [url=http://news.yahoo.com/s/nm/20080612/bs_nm/exxon_dc]getting out of the retail gas station business[/url].

[quote=Uncwilly;137217][URL]http://www.google.com/corporate/green/energy/[/URL][/quote]Wow! Thanks for the link!

[quote]there have been 1.6m solar cookers used for years and other solar home systems.[/quote]There is an unusually large fraction (maybe 1-in-10) of house roofs sporting solar thermal systems in my former neighborhood a mile-plus from here -- I presume (never asked) an artifact of solar credits from three decades ago.

The problem is that even that modest fraction of solar-sporting houses is all too uncommonly-high compared to most U.S. urban or suburban areas.

[quote]BTW: Why not attach tubes to the backs of photovoltaics?[/quote]If the PV photon-absorbing material reflects most infrared, or at least doesn't let much through, then that kills the tube-heating efficiency. Even if most IR gets through, much has been scattered, so that it's not possible to concentrate it much by mirror now that the IR photons are traveling in a much wider range of directions.

But I could be wrong.

[QUOTE]Speculation as a "supply-demand-dynamic amplifier" ... I like it. But that still begs the question of what is behind the huge increase in speculative commodities investing worldwide in the past few years: a combination of currency [especially dollar] debasement and laxer exchange rules on speculative trading seem to be the major drivers - Garo, your take?[/QUOTE]

I suspect we won't really know for sure until after the event. Till then we can only "speculate". I suspect mass psychology has a role to play as everyone piles on to the winner. Certainly, the commodities indices play a huge role as has been pointed out by you. The devaluation of the dollar and the fact that many oil producing countries have their currencies linked to it lay a role too.

But basically we are running out of easy to extract oil. We haven't run out of it yet but people are being conditioned into accepting that fact and thus be more willing to pay a higher price for it. Also, I think that oil price was artificially low for many years around the turn of the century so that makes this higher price seems much worse.

Brent crude hits $146
 

Nice article here: [url]http://news.bbc.co.uk/1/hi/business/7486764.stm[/url]

Paul

An interesting post that explains how crude is priced these days. Explains what crude "futures" are and more.

[URL]http://peakoildebunked.blogspot.com/2008/07/366-futures-prices-determine-physical.html[/URL]

And a comment explains it even more succintly:

[QUOTE]There we have it at last in plain English from JD: in oil, futures prices *are* the real prices. In principal, short sellers would serve as a brake on momentum speculators, but the small size of the crucial oil futures markets relative to the geared speculative money pouring in has sheared the fingers from the short sellers several times during this past Spring, as has been remarked in comments here, and commentary elsewhere. Without the control of shorting futures, refiners are garroted by their limited just-in-time inventories of raw oil into paying the quoted price: they can't wait, have no alternative sources, and can't short the market down. We have a forward squeeze on prices playing off the upward fundamental momentum for oil and agricultural prices of recent years, just as you say Yves, following Soros' summation.

Academic economics and market economics play by entirely different rule books. One is theory; the other is praxis. Guess which one we live by?[/QUOTE]

[quote=garo;137301]An interesting post that explains how crude is priced these days. Explains what crude "futures" are and more.

[URL]http://peakoildebunked.blogspot.com/2008/07/366-futures-prices-determine-physical.html[/URL]
[/quote]Be careful about believing JD's statements at [URL="http://peakoildebunked.blogspot.com"]peakoildebunked.blogspot.com[/URL].

I don't object to what JD said about crude futures and prices, but in earlier posts, a) JD abused the concept of Hubbert's Peak in the context of demand (to which the Hubbert's Peak idea does not apply; it's about discovery and production, not supply or demand), and b) on June 15, in post 362 of that blog ([URL]http://peakoildebunked.blogspot.com/2008/06/362-more-surplus-oil-problems.html[/URL]) JD implies the Big Lie about refineries vs. environmental regulations that I exposed in the last part of post #87 of this thread.

[quote=Peak Oil Debunked: 362.]Why is there a refinery shortage? Well, in the U.S., this will give you a clue:[INDENT]Refiners faced with rising prices for premium grades of crude oil are rushing to expand their ability to process less expensive, dirtier crudes, but their efforts face concerns about pollution and global warming.

Several expansion projects in the U.S. are being slowed by worries that the processing of heavier crudes produces more air pollutants and greenhouse gases that contribute to climate change. While environmentalists have long been critical of heavier crude, government officials responsible for signing off on expansion projects are echoing that unease and demanding countermeasures to reduce the amount of pollution.[URL="http://online.wsj.com/article/SB121322847813566247.html"][COLOR=#bb3300]Source[/COLOR][/URL]
[/INDENT]Yup, NIMBYs and global warming activists are jacking up the price of oil.[/quote]JD uses a WSJ factual report to justify implying that a refinery shortage has been caused by "NIMBYs and global warming activists".

Two good questions to ask JD are: Since there are not yet (AFAIK) any U.S. refinery expansion regulations requiring the consideration of links to global warming during the permitting process, exactly how is it that "global warming activists" are jacking up the price of oil? Or is that latter claim of yours actually unrelated to the immediately-preceding WSJ quote in your blog, and thus misleadingly placed? (I haven't read the comments section of that blog; perhaps these questions are posed to JD there. But of course I'm recommending comebacks to direct to [I]anyone[/I] blaming refinery expansion slowdowns on global warming activists.)

WSJ's "Several expansion projects in the U.S. are being slowed by worries that the processing of heavier crudes produces more air pollutants and greenhouse gases" is sorta like saying "U.S. highway projects are being slowed by worries that more accidents will occur if directional signs and signal lights are not properly planned" or, more succinctly, "Traffic is slowed by stop signs". Nothing wrong with that -- it's JD's implied connection to oil price blame-placing that is at fault.

Also, JD seems to treat "being slowed" as unhealthy. But, in relation to what? "Being slowed" in contrast to "proceeding at maximum possible pace with no regard of consequences" or "being unregulated (like S&Ls in the Reagan years, or like subprime mortgages or index speculation in oil futures during more recent times)" seems like a good idea to me!

Note that oil company representatives a) have not complained that regulations were unnecessarily impeding refinery expansion plans (also see my previous link to testimony by an EPA administrator in 2000 at the end of the [I]Clinton[/I] administration), but b) have repeatedly stated that the main problem is that thin refining profit margins [I]have[/I] constricted their economic incentives to invest in refinery capacity expansion. It's others such as commentators like JD and politicians, not oil company spokespeople AFAIK, who have promoted the Big Lie.

After scanning a few of the most recent posts, I think that JD may be so intent on debunking the hype of certain Peak Oil extremists that s/he's careless about distinguishing between some facts and fiction. So, beware.

Umm... I am not defending JD. if anything the title of his blog site screams bias. I am not interested in his general anti-PeakOil arguments or environmentalist-bashing. I am just interested if his argument about futures being the price of oil holds any water.

[QUOTE=garo;137301]An interesting post that explains how crude is priced these days. Explains what crude "futures" are and more.[/QUOTE]

W.r.to the point made in the quote you posted, I'm not so convinced by the argument about "refiners have no choice but to pay market rates." The whole idea of futures markets is to be able to hedge against future price fluctuations - usually [but not always] those in the "up" direction. Even if a refiner lacks physical oil storage capacity for [say] a year's supply of crude, there is nothing preventing him from locking in an advance purchase price in the futures markets - of course there is a premium to be paid, but the whole idea is that the premium is quite small if one hedges against the more-extreme price-swing scenarios which can make or break a business.

I was reading an article yesterday that detailed how Southwest Airlines made aggressive use of futures-market hedging in the past 5 years to hedge against jet-fuel price rises. Guess what? As a result, Southwest currently is paying a FULL DOLLAR PER GALLON LESS for their jet fuel than are most of their competition, and [unlike just about every other U.S. carrier] is still making a profit - in fact during one recent quarter they made a profit strictly from their futures-market paper trading which was 10x their operating profit. Of course that's no magic bullet in perpetuity - most of their current futures contracts expire in 2010, at which point if oil is still at or above current levels they will also have to begin paying the higher price - but for industries where keeping your supply costs within reasonable [and more importantly, predictable] bounds can mean the difference between survival and bankruptcy in a very short time frame, it seems a no-brainer. But as usual, I expect the other carriers that are hurting now were the ones who tried to save money by [among other things] not paying any futures premiums. Their shortsightedness is hurting them now.

To use an analogy near to many Californians this summer: So you built a house in a scenic-but-wildfire-prone location ... Instead of paying extra for a Spanish tile roof, you saved money by using wood shakes. Instead of buying fire insurance you used all your available funds to make the place as lavish as possible. Now that it's burnt to ground, you expect me to feel sorry for you?

I inferred two points from that post and I may be wrong but they seemed to explain oil pricing a bit better to me.

1) There is no spot pricing in oil - there is only 'futures' pricing for benchmark crudes that is used to determine spot pricing for non-benchmark grades. This is different from the futures market as you explained.

2) The production for benchnmarks is so small now that it is possible to put a squeeze with relatively little money. If I had the money I could buy up a whole load of August futures as Contracts for Difference in the London market for say Nigerian crude. Then come August hire a tanker and buy all the Brent that is available in the market driving up it's price. This would also pull up the price for the Nigerian oil for which I own CFDs since it is linked to Brent. I'll make a heck of a lot more on CFDs than I would lose storing the Brent for say one month from August to September. There is relatively little Brent in the market making this squeeze possible. If Saudi sour was the benchmark I couldn't possibly do this squeeze.

Does this sound reasonable?

[QUOTE=cheesehead;137225]
If the PV photon-absorbing material reflects most infrared, or at least doesn't let much through, then that kills the tube-heating efficiency. Even if most IR gets through, much has been scattered, so that it's not possible to concentrate it much by mirror now that the IR photons are traveling in a much wider range of directions.

But I could be wrong.[/QUOTE]
I've wondered this myself. A solar heated tube is about IR photons true; and I guess you could say that the tube is actually a transducer from radiant energy to fluid convection.
However, I am thinking about a tube that functions as a conduction to convection transducer. Solar panels get very hot I imagine and while carrying that heat away might not have the nearly the energy concentration of focused IR it would still be raising the temperature of the water within. Sure it might not be hot enough yet to extract turbine work but could be fed into a conventional solar heated tube at that point.

[QUOTE=garo;137470][I][Speculative Hypothesis #2][/I] The production for benchnmarks is so small now that it is possible to put a squeeze with relatively little money. If I had the money I could buy up a whole load of August futures as Contracts for Difference in the London market for say Nigerian crude. Then come August hire a tanker and buy all the Brent that is available in the market driving up it's price. This would also pull up the price for the Nigerian oil for which I own CFDs since it is linked to Brent. I'll make a heck of a lot more on CFDs than I would lose storing the Brent for say one month from August to September. There is relatively little Brent in the market making this squeeze possible. If Saudi sour was the benchmark I couldn't possibly do this squeeze.[/QUOTE]

Interesting - but I wonder just to what degree grades like Brent are "nonsubstitutible." At some price point I would expect all but a few customers [say ones who for some reason simply can't refine lower-grade crude at any cost] would simply switch to a lower grade ... but I'm way out of my depth here. Any folks with some background in the oil industry or the refining process reading this?

[B]Addendum[/B] - Interesting piece by Mikkal Herberg in today's [I]San Jose Mercury news[/I]:

[URL="http://www.mercurynews.com/opinion/ci_9825490"]Current explosion in oil prices stands market on its head[/URL]
[quote]The rise in oil prices has been truly breathtaking. On a single day recently, the price rose by $11 a barrel. Just a little over eight years ago, the price of a barrel of oil was $11.

The conundrum is why the law of supply and demand doesn't seem to be functioning in the way it's supposed to and in the way it did in the past. The answer has much to do with today's dysfunctional, politicized oil market.

Demand isn't slowing because so many countries are protected from high prices by politically inspired price controls and subsidies. Supply isn't rising because most producer countries have little interest in or ability to raise production. Demand and supply have become largely disconnected from prices, which helps explain why prices have careened so high and why the market doesn't seem to work.

The contrast with the past is stunning. The last major oil shock was in 1979, when prices tripled from $12 to $36 a barrel, about $105 in today's prices. In response, world oil consumption dropped by an unprecedented 10 percent, while oil production capacity outside of OPEC rose by a staggering 25 percent. By 1985, demand for OPEC oil dropped by 50 percent, which led directly to the 1986 oil price collapse.

By contrast, since 2000 oil prices have risen nearly seven-fold, tripling over just the past three years. But world oil demand has grown by only 12 percent, while non-OPEC output declined by 3 percent. In other words, since 2000 there has been a negative global supply response.

On the demand side, China, India, developing Asia, Russia, and the Middle East - the countries now driving oil demand - are insulated from high prices by energy subsidies and price controls.

Subsidies are a tool of weak governments seeking to avoid a political backlash and relying on low energy prices to feed hyper-growth economies. But subsidies blunt the demand-dampening effect of high prices precisely where oil use is least efficient and where, in a free market, the drop in demand would be strongest.

The supply side is similarly skewed. Roughly 80 percent of the world's low-cost oil reserves are in countries that exclude or severely limit outside investment and where oil is controlled by state companies with few incentives to invest in more production.

In countries like Russia, Venezuela, Mexico, Iran and Indonesia, oil earnings are siphoned off to fund lavish social spending and co-opt political opposition. OPEC has under-invested for so long that it is unable to raise production significantly. Political violence undermines production growth in Nigeria and Iraq.

As a result, production increases now trickle out from a dwindling number of countries and are largely offset by declines in older fields elsewhere.

Under these conditions, prices have to be extremely high to trigger any meaningful market reaction. Cuts in demand have to be squeezed from the richest, most oil-efficient economies, and supply increases have to be wrung from the highest cost, highest risk areas. In important ways, the market has been turned on its head.

Nevertheless, prices are so high now that a delayed but powerful reduction in demand is taking shape.

Recent fuel price increases in China, India and elsewhere show that the costs of subsidizing oil use are forcing governments to face up to market forces. Also, high prices and a slowing economy are increasingly undermining demand in the rich countries. U.S. oil demand is declining at an annual pace of 2 percent, for example.

As a consequence, the next big move in oil prices within the next year or two will be downward. Finally.[/quote]Note, however, the contrast with the last sentence of the above piece and one by the same author from 29 April:

[URL="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/28/EDTF10BCUK.DTL"]Supply Side to Blame for High Oil Prices[/URL]
[quote]...any chance for near-term price relief will depend on a substantial slowing in demand growth. But the odds on this are long. It's true that demand is now declining slightly in the rich industrial countries, and even the United States is likely to experience a small demand decline this year for the first time in 25 years in the face of unprecedented gasoline prices. The growing global economic slowdown will also reduce world oil demand growth.

However, continued strong economic conditions are likely to keep oil demand growing fast enough in China, India, the Middle East and Russia to maintain pressure on tight and uncertain supplies. So high oil prices are here to stay for at least the next few years.[/quote]

Can I just say, spare me all this bullshit about subsidies being a tool of weak governments blah blah blah. Gasoline in the US is far far cheaper than in Europe and about the same as in India.

If anything, the US has not taxed gas adequately leading to a massive underfunding of public transport and way too much driving everywhere.

China and India still consume far less oil per capita than the US and Europe. The relative consumption differences will reduce significantly over time. That's a fact and the US and Europe just have to deal with it!

[quote=only_human;137515]Solar panels get very hot I imagine and while carrying that heat away might not have the nearly the energy concentration of focused IR it would still be raising the temperature of the water within. Sure it might not be hot enough yet to extract turbine work but could be fed into a conventional solar heated tube at that point.[/quote]Yes, but the efficiency might be so much lower than in dedicated solar-heating tubes as not to be worth the cost of attaching tubes to the back of photovoltaics instead of just having a solar-warming panel sitting beside the PVs.

[quote=ewmayer;137523][B]Addendum[/B] - Interesting piece by Mikkal Herberg in today's [I]San Jose Mercury news[/I]:

[URL="http://www.mercurynews.com/opinion/ci_9825490"]Current explosion in oil prices stands market on its head[/URL]


Note, however, the contrast with the last sentence of the above piece and one by the same author from 29 April:

[URL="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/28/EDTF10BCUK.DTL"]Supply Side to Blame for High Oil Prices[/URL][/quote](* ahem *) Ah, yes -- the perils of public prognostication.

I note that Herberg did mention "speculative activity in futures markets" and "the current frenzy of hedging and price speculation" in his April article, so it may be more difficult for him to echo my excuse, "I hadn't known there had been such a revolution in the type of investor that's participating in oil futures (and commodities in general) trading."

[quote=garo;137534]Can I just say, spare me all this bullshit about subsidies being a tool of weak governments blah blah blah. Gasoline in the US is far far cheaper than in Europe and about the same as in India.[/quote]But wasn't the "subsidies" reference to China, et al., not to U.S. or Europe?

[quote=ewmayer;137523]Interesting - but I wonder just to what degree grades like Brent are "nonsubstitutible." At some price point I would expect all but a few customers [say ones who for some reason simply can't refine lower-grade crude at any cost] would simply switch to a lower grade ... but I'm way out of my depth here. Any folks with some background in the oil industry or the refining process reading this?[/quote]The main properties of crude oil that affect its refinability are: heavy (slow-flowing, longer hydrocarbon chain molecules) vs. light (faster-flowing, shorter hydrocarbon chain molecules), and sweet (low percentage of sulfur compunds) vs. sour (high sulfur percentage).

A refinery can't process just any old crude oil that comes its way. If there's a high sulfur content, this means more acidity, and more sulfur compounds that have to be separated out, than in sweet crude. Refinery processing equipment has to be designed to handle a certain range of sulfur content.

Many refined oil products involve splitting ("cracking", in refinery parlance) large hydrocarbon molecules into smaller ones. So, light crude commands a higher price than heavy crude because it needs less "cracking" to produce the desired mix of products such as gasoline. (And, refinery design is affected by the viscosity range it is intended to proceess.)

When I started working in the computing department for (what-later-became-)Amoco in summer 1967, one massive set of programs (on punch cards!) in the process of being converted from their old IBM 704 to run on their new IBM 360 was a series that computed refinery specifications according to the type of crude oil. Each program was for only a certain combination of refinery equipment, and (if I understood correctly) computed what grade ranges of crude could be processed by that particular combination.

Here are two articles from 2004-2005 that discuss crude oil grades:

[URL]http://www.econbrowser.com/archives/2005/08/sweet_and_sour.html[/URL]

[URL]http://www.gasandoil.com/goc/news/ntn44964.htm[/URL]

So, yes, certain grades at the ends of the light/heavy and sweet/sour scales are "nonsubstitutible" for grades at other places on those scales, in that they can be processed by only a certain subset of oil refineries, not by other refineries.

- - -

P.S. Gasoline is composed of relatively small hydrocarbon chains -- it pours and evaporates readily. For an example of how thick the large hydrocarbons can be, look down at the asphalt pavement on which gasoline-powered vehicles are driving!

[quote=cheesehead;137556]But wasn't the "subsidies" reference to China, et al., not to U.S. or Europe?[/quote]

That is precisely my point. the US in its own way massively subsidizes oil by not taxing it like the rest of the world and providing huge taxpayer funding for road networks etc. Also, there is a massive subsidy for air travel through no sales tax and no tax on jet fuel.

So I would argue that the US subsidizes oil just as much as China, just in a different way. If these subsidies were removed you would end some of the distortion which sees the US far more reliant on the car and the airplane than on trains or public transport.

A contrarian argument could be made that Europe overtaxes distillates which distorts the market. After all, 2/3 of the price you pay for gas is tax. This obviously affects the living and travelling habits of all Europeans.

The tax collected on gas in the U.S. is earmarked for highway construction. The huge consumption in the U.S. means the tax collected pretty much pays for federal highway projects. State projects might be argued differently depending on which state you are in.

DarJones

Sure, you can make that argument. But then the low taxes do have an impact on demand, don't they? You can't really talk about subsidies without talking about taxes.

[QUOTE=Fusion_power;137597]The tax collected on gas in the U.S. is earmarked for highway construction. The huge consumption in the U.S. means the tax collected pretty much pays for federal highway projects. State projects might be argued differently depending on which state you are in.[/QUOTE]

Actually, this is no longer true. Since the tax rates are cents per gallon, two factors have eroded this funding. First, inflation has increased the construction costs while the revenue per gallon has remained flat. Additionally, to the extent that it has occurred, the increase in fuel efficiency has reduced the revenue per vehicle mile.

Whereas there used to be adequate Federal funding, the funding burden has been increasingly shifted to the states.

Relevant WSJ OpEd
 

[url]http://online.wsj.com/article/SB121564783168740955.html?mod=opinion_main_commentaries[/url]

[QUOTE]Your claim that any oil we drill for now will not come on line for five years or longer – and will thus have no effect on prices today – is incorrect. Unlike past oil crises, where the spot price of oil (that is, today's price) rose more than forward prices, the oil price for delivery in 2012 is trading at $138 per barrel. The market is sending a clear price signal that our problem is in the future – because we do not have the will to curb demand or increase supply.
[/QUOTE]
...
[QUOTE]The oil market, however, has more than anticipation; it has a well-defined forward price signal. This is a key component of the added $25-$40 per barrel in current oil prices. Congressional hearings and "make it go away" legislation will not stop that. Demonstrate the national will to address the supply and demand issues now and it will.

As forward prices decline, watch how quickly the spot price comes down.
[/QUOTE]

Jim Rogers: Oil speculators are getting killed
 

[URL="http://www.commodityonline.com/news/topstory/Oil-speculators-are-getting-killed-Jim-Rogers-10403-3.html"]Commodity Online | Oil speculators are getting killed: Jim Rogers[/URL]
[quote]By George Iype

SINGAPORE: Investing legend and commodities guru Jim Rogers says crude oil prices have been going up thanks to an unprecedented demand-supply mismatch. He said those who blame speculators for oil price surge do not understand the oil reality in the world.

Talking to [I]Commodity Online[/I], Rogers, who founded the Rogers International Commodity Index, said he has been predicting all these years that oil price would go up because of shortage of supply.

”Some people blame speculation for oil price rise. If it is speculation, when the oil price is too high, the people with oil will drown the speculators. It is just a stupid accusation that speculators are behind the oil rally,” he said.

He asked: “If people have oil, do you think speculators could have driven the prices too high like this?” “No. People are spreading all speculative stories that speculation is driving up oil prices. That is not correct,” the legendary commodities investor and author of such celebrated books such as [I]Hot Commodities[/I] and [I]A Bull in China[/I], said.

He said the truth of the matter is that there is so much shortage of oil in the world. “The shortage of oil in physical market is higher than in the futures market. That is the reason for the high crude oil prices,” he said.

”Those who blame speculators for the high oil prices, I would like to remind them that in futures market every time somebody buys oil, every time the speculators buy oil, the speculators also sell the oil,” Rogers, who is now settled in Singapore said.[/quote]I don't doubt Rogers' expertise in this area, but I do still believe that there is a significant speculative component to recent oil prices - which is of course partly driven by fundamentals in related areas, e.g. the plunging value of the dollar and the slashing of discount borrowing rates [and Treasury bond yields] by the U.S. Federal Reserve. Sure, most speculators do have to quickly turn around and sell the oil futures contracts because they have no physical storage capability - but [B]as long as there is an expectation of continued high and rising prices[/B] [the key to all speculative bubbles, for instance the housing bubble], speculators will be willing to gamble that the odds of prices going up are higher than those of prices going down. The resulting high level of speculative activity leads to a kind of bidder "feeding frenzy" which drives prices up over what they would be in a normal supply-and-demand-driven market condition. If the speculative prices get too out of whack, the bubble inevitably will deflate at some point - the only question is, just where is that price point? Depends on what's driving the bubble, and the overall economic context. In the case of housing, the bubble popped when a condition of [to use Mish Shedlock's phrase] "peak credit" was reached, i.e. where the average homebuyer was extending him-or-herself to their absolute maximum in order to buy into the mania - and the "maximum" was a function of the extremely loose credit conditions that prevailed at the time, i.e. if you had a pulse you get a no-money-down negAm mortgage on an overpriced house and a generous HELOC to accompany it and help you pay your bills while you waited for the price of your "purchase" to balloon enough to put you into the black, at least on paper. When enough folks began saying "this is nuts" and decided to stay on the sidelines in hopes that the speculative mania would ebb, things began to unwind rapidly, and entered the current deflationary-spiral phase. In oil, a combination of reduced demand from hurting economies in the U.S. and Europe, and an eventual spreading of the pain to the emerging economies [mostly in Asia] are what will eventually pop the bubble, but not to the extent of the housing bubble, because oil prices are nowhere as out-of-whack relative to what-fundamentals-would-support as they were in housing.

BTW, the Valero gas prices I've been tracking and periodically posting have leveled off for now - spent several weeks at $4.479/gallon, and fell back 2 cents last week to $4.459. I suspect that is at least as much a function of plummeting demand in the U.S. as it is due to the recent leveling-off of oil prices around the $140/barrel level.

[QUOTE=cheesehead;134554]
You may say: but that doesn't yet explain why pump prices go up immediately even when at the time of oil market price rise the crude oil is still in the slowpoke tanker two months away from unloading at New Orleans. And you'd be right. But I needed to explain the preceding stuff before I started explaining the rest of what's going on ...

(And here I must pause again.)[/QUOTE]Edit: I have been scratching my head over something lately: the loose correlation between crude prices and pump prices. Crude averaged $23.00 per gallon in 2001, while the price of mid-grade unleaded gasoline at the pump averaged around $1.55 per gallon. Crude has nearly sextupled, yet pump prices have not yet tripled. Is $7 a gallon a real possibility if crude prices linger where they are?

There is definitely speculative pressure in the petroleum markets, and in commodities in general. The conventional funds, as well as those hedge funds remaining, are looking for a place to run with their immense sums of capital, and commodities and energy are the only non-frightening places to put cash right now. Sure, oil investors will be hit hard within the next few months, but what else looks good now?

[QUOTE=FactorEyes;137858]I'm puzzled that crude has gone from $40 to $130 a barrel, yet the price at the pump has merely doubled. All this over the past 7 years.[/QUOTE]

Actually, there's a simple explanation for that: The profit margin that oil refiners make by "cracking" crude oil into more-useful petroleum products - the so-called "[URL="http://en.wikipedia.org/wiki/Crack_spread"]crack spread[/URL]" - for gasoline has [URL="http://www.theoildrum.com/tag/crack_spread"]plummeted[/URL] in the past year or so. So, while oil companies may be reporting record overall profits, their gasoline-refining arms are in many cases *losing* money, because they have been unable to pass much of the price rise in their feedstock on to the gasoline purchasers, due to competition and already-sharply-dropping demand. Believe it or not, U.S. retail gas prices would in fact be quite a bit higher than they already are if they truly reflected the price of oil, in terms of containing a typical historical refining profit margin. This margin erosion is the reason many big oil companies are exiting the retail-gasoline business in the U.S.

I believe the reason the crack spreads in jet fuel and diesel have not shown a similar drop as those in gasoline is that the oil companies have the customers for the former 2 fuels "over a barrel", as it were. Truckers still have to ship their wares in the same trucks and airlines [at least the ones that are still in business] still have to fly their routes using their existing planes, whereas U.S. consumers don't have to take long summer-vacation driving trips and don't have to drive the Hummer, if they have a smaller second vehicle they can use instead.

[quote=ewmayer;137861]I believe the reason the crack spreads in jet fuel and diesel have not shown a similar drop as those in gasoline is that the oil companies have the customers for the former 2 fuels "over a barrel", as it were. Truckers still have to ship their wares in the same trucks and airlines [at least the ones that are still in business] still have to fly their routes using their existing planes, whereas U.S. consumers don't have to take long summer-vacation driving trips and don't have to drive the Hummer, if they have a smaller second vehicle they can use instead.[/quote]So, you're arguing that gasoline demand is more elastic than jet fuel and diesel demands, right?

I would have, too, until I saw Figure 3 at [URL]http://www.theoildrum.com/node/4255#more[/URL], which seems to indicate the opposite!

[quote=http://www.theoildrum.com/node/4255#more]Figure 3 indicates that consumption during the first four months of the year dropped by -1.3% for gasoline, -3.9% for distillate, and -3.8% for jet fuels. Other products, not shown on Figure 3 include residual fuel oil, -21.6%; asphalt, -13.1%; and natural gas liquids, -5.8%. Overall consumption of petroleum products decreased -4.2%, which is a huge change. These amounts are calculated on an average daily basis, and reflect the fact that 2008 is a leap year.

Thus, what we are seeing is that gasoline, with a disproportionately low price increase, is holding up better in consumption than other products, with larger price increases. Part of this is the fact that with the lower price increase, Americans have had less need to cut back on their demand. Part of it, too, is that it has been possible to continue to get imports, even with this relatively low price increase, indicating that overseas demand for gasoline is not high, compared to other products.[/quote]I had casually noticed that local diesel prices seemed to have been climbing faster than gasoline, but hadn't really kept track. Reading on after Figure 3 there was an eye-opener to me.

[quote][B]The world market is perhaps beginning to value distillate more highly, relative to gasoline, because of its greater energy content. [/B]

I think part of what may be happening, on a worldwide basis, is a change in the relative value of distillate and gasoline. Gasoline started as the higher valued fuel, but is now becoming the lower valued fuel.[/quote]BTW, regarding "residual fuel oil, -21.6%" in the first quote -- I saw a news report, a few nights ago, saying that many Northeast U.S. homeowners with fuel-oil furnaces have been delaying their stocking-up for next winter because of recent price increases, apparently thinking they might get a better deal later. I think they might lose their gamble, and am glad I'm not a fuel-oil customer.

- - -

FactorEyes,

My intended but long-delayed final installment of my explanation for the price phenomenon questioned by only_human in post #39 three months ago is ... still on my to-do list. It will address why the gasoline price jumps only days after crude price jumps (whereas the processing process takes much longer). However, your edited question in post #162 --
[quote=FactorEyes]Edit: I have been scratching my head over something lately: the loose correlation between crude prices and pump prices. Crude averaged $23.00 per gallon in 2001, while the price of mid-grade unleaded gasoline at the pump averaged around $1.55 per gallon. Crude has nearly sextupled, yet pump prices have not yet tripled. Is $7 a gallon a real possibility if crude prices linger where they are?[/quote]-- is unrelated to the [I]short-term[/I] time correlation between crude price changes and retail gasoline price changes that only-human questioned, and I am not qualified to answer authoritatively. The Oil Drum ([URL]http://www.theoildrum.com/[/URL]), to which Ernst has just linked, seems more qualified (and a couple of decades more up-to-date, though many aspects haven't changed much), than I am about almost anything oil-related.

[quote=FactorEyes;137858]Sure, oil investors will be hit hard within the next few months, but what else looks good now?[/quote]... ummm ... [SIZE=1]gold? [/SIZE]

Or, more seriously, on the Iowa Electronic Markets ([URL]http://en.wikipedia.org/wiki/Iowa_Electronic_Markets[/URL], [URL]http://www.biz.uiowa.edu/iem/[/URL]), maybe the Democratic choice at [URL]http://www.biz.uiowa.edu/iem/markets/pr_Pres08_WTA.html[/URL] (current quote at [URL]http://iemweb.biz.uiowa.edu/quotes/Pres08_quotes.html[/URL] DEM08_WTA bid/asked 0.649/0.682, pays "$1 if the Democratic Party nominee receives the majority of popular votes cast for the two major parties in the 2008 U.S. Presidential election, $0 otherwise") ? 50% ROI in 4 months looks good to me :smile: Please, do consider possible risks there (not the most of which is: Is "CST" intended to be "CDT", or do they have a time machine?).

But I stray off-topic.

[QUOTE=FactorEyes;137858]There is definitely speculative pressure in the petroleum markets, and in commodities in general. The conventional funds, as well as those hedge funds remaining, are looking for a place to run with their immense sums of capital, and commodities and energy are the only non-frightening places to put cash right now. Sure, oil investors will be hit hard within the next few months, but what else looks good now?[/QUOTE]

I'm on the sidelines at the moment in cash, waiting for another bear-market rally and resulting opportunity to reload my short positions, mainly in financials and real estate. Fearful of another April-fools-style bear-market-rally-despite-no-good-news I bailed out of my shorts at end of June and missed the juicy continued runup that has occurred since. Even though the fundamentals have not changed - still extremely dire, no prospect of economic recovery this year and quite possibly through 2009 or even beyond - *now* the markets finally get it, and sentiment seems to have really turned. Nevertheless, I dearly hope that there is a hard mass-delusional core in the markets which will rally on even the slightest whiff of news-which-can-be-spun-as-good, and we get at least one more nice little rally we Bears can short the crap out of. But shorting is tricky work - for buy-and-hold-style investors gold is probably as good a place as any to be for the next year.

[QUOTE=cheesehead;137893]So, you're arguing that gasoline demand is more elastic than jet fuel and diesel demands, right?[/QUOTE]
No - in fact I expect demand for jet-fuel is also plummeting due to carriers going out of business and the still-in-business ones slashing their routes. With consumer spending on non-fuel items dropping, I also expect truckers are hauling less. My point there is, for e.g. United Airlines, unless they have a giant fuel depot to draw on, the planes they are flying, even if the number is smaller than last year, still *have* to fly. One would think that similar price competition as there is in retail gasoline would also exist for jet fuel, but I expect there are far fewer suppliers for that, and an airline can't just do like J6P does and keep an eye out for a gas station with a lower price as he goes about his daily business. Also, airlines likely enter into long-term fuel delivery contracts which perhaps specify a price at "prevailing market rate", which has a fixed crack spread built in. Speculation on my part, but it seems fairly plausible [at least to me]. Or it could simply be the aforementioned limited number of refiners and suppliers for Jet fuel makes it easier to control prices.

FORTUNE: OPEC's empty toolkit
 

[url=http://money.cnn.com/2008/07/15/news/economy/okeefe_oil.fortune/index.htm]OPEC's empty toolkit[/url]: [i]The leaders of OPEC says its members have plenty of oil to meet demand. So why aren't they putting more on the market?[/i]
[quote]NEW YORK (Fortune) -- The leaders of OPEC have a long list of culprits for high oil prices: the falling dollar, U.S.-Iranian tensions, and shady speculators.

Here's one they seem to forget: OPEC.

The Organization of Petroleum Exporting Countries consistently claims that supply is not a problem - that there's plenty of oil to meet demand.

But last year, as the price of oil nearly doubled, OPEC was actually cutting production. The cartel produced 1.5% less last year despite adding two countries, Angola and Ecuador, to its ranks. That cutback at a time of growing demand helped drive prices up.

...

Last week OPEC released its World Oil Outlook 2008, a 214-page report that can be summed up in one reassuring sentence from the foreword by OPEC Secretary-General Abdalla Salem El-Badri: "Availability is not an issue." Despite increasing demand, the report promises plentiful oil for decades to come.

Not surprisingly, then, El-Badri, who also runs Libya's national oil company, argues that, at $140, the price of crude oil is out of whack with reality.[/quote]
Perhaps, but even if so, it's out of whack in a way that should have been allowing OPEC member states to be making record profits even with a modest increase in output ... at least until very recently.
[quote]"Today, what is apparent is that oil supply and demand fundamentals are healthy," he writes. "There is, and has been, more than enough supply to meet demand, and oil stocks in major consuming countries are at comfortable levels. This should point away from the direction of current price levels."[/quote]
So where is all this ample supply which should be keeping prices from skyrocketing like they've been doing?
[quote]In recent weeks, while Congress has been holding dozens of hearings to try to figure out who to blame for the rude price of crude, the Secretary-General and his colleague Chakib Khelil, the president of OPEC and head of Algeria's oil ministry, have offered a variety of explanations. Khelil has cited the falling value of the U.S. dollar, referenced tensions between the U.S. and Iran, and pointed the finger at hedge fund speculators. (It's hard to argue with the first two, but I generally side with my colleague Jon Birger in believing that it's bogus to blame speculators.) Saudi Arabia called an emergency oil summit last month, the main purpose of which seemed to be to get out the message that rising prices weren't the cartel's fault.

But it's disingenuous for OPEC's leadership to suggest that reduced production had nothing to do with rising prices. OPEC pumps 44% of the world's daily oil production and, by its own count, has 78% of the world's proven reserves. In an increasingly tight market, there's no room for the largest group of producers to drop its output without directly affecting prices. And indeed, in announcements before and during the summit, the Saudis pledged to boost production by some 500,000 barrels a day.
[b]
Where's the oil?
[/b]
[u]The scary thought - held by observers like peak oil guru Matt Simmons and commodities investor Jim Rogers - is that the cartel can't do much more than that because the easy oil is already out of the ground.[/u]

"They've been telling us for years that they have between two and three million barrels of [daily] spare capacity," says Gal Luft, the executive director of the Institute for the Analysis of Global Security. "If you have it and you don't use it then you are deliberately denying liquidity to the market when it needs it. If they have it, why don't they use it? And if they don't have it, we need to know that. We need to put more oil in our strategic reserve."

OPEC has apparently given its members the green light to pump all they want, according to a survey released by energy news service Platts last month. The Platts press release about the survey says that "OPEC has a 'tacit' understanding that those members capable of boosting crude production should supply as much oil as world oil markets needed."

In other words, the leaders of OPEC are trying to regain control of oil prices and offer relief to their agitated customers, although Platts Global Director of Oil John Kingston sounded skeptical about how successful OPEC could be. "It's clear that with non-OPEC output continuing to sag, and world demand staying flat regardless of high prices, that any additional supply most likely must come from OPEC," he is quoted as saying. "But...its ability to put much more oil on the market looks severely constrained."[/quote]
This may all be moot fairly soon, if the sharp drop in demand in the U.S. due to the contracting economy spreads elsewhere - as it seems to be doing [recent GDP growth in Europe was anemic, UK and Spain economies cratering, etc].

[quote=ewmayer;137896]an airline can't just do like J6P does and keep an eye out for a gas station with a lower price as he goes about his daily business.[/quote]It isn't the pilots who buy the fuel; people in HQ office do that, and they can shop around. But, yes, they do buy ahead; I've heard several times (*) that Southwest was particularly aggressive in snapping up futures contracts last year, which is why they're the only profitable line now.

- - -

(*) -- not least of all, from the second paragraph in your post #147 at [URL]http://www.mersenneforum.org/showpost.php?p=137422&postcount=147[/URL], so I'm repeating the Southwest thing just for those who weren't paying attention back then

[QUOTE=ewmayer;137905]...[quote]...but I generally side with my colleague Jon Birger in believing that it's
bogus to blame speculators ...[/quote]...[/QUOTE]It always seems bogus to blame speculators !

Jacob

[QUOTE=ewmayer;137896]I'm on the sidelines at the moment in cash, waiting for another bear-market rally and resulting opportunity to reload my short positions, mainly in financials and real estate.[/QUOTE]

So far, so good - [url=http://finance.yahoo.com/q/bc?s=SKF]SKF[/url] got absolutely pounded today, down over 20%. [Although *still* up for the rolling-week ... that's how wild the recent runup in this one has been.] By way of perspective, in late March this one seemed a bargain at any price under $110 ... and promptly got driven all the way down to the high 80s at the height of the April Fools rally. Based on that not-too-distant-past experience, it's still much too high for my taste - a couple better-than-the-already-drastically-lowered-expectations earnings reports from the big financial firms could easily knock another 20% or more off this one. Or another bank could go belly-up tomorrow and it could spike right back up over 200. Ultrashort ETFs - not for the faint of heart or wallet.

[QUOTE=ewmayer;137896]I bailed out of my shorts at end of June[/QUOTE]Thanks for that visual.:yucky:

Seriously, because people are slowing down (to save fuel), there is a projected decrease in traffic deaths. The question is, will there be a net increase, because more people will drive vs fly (like post 9/11)? IIRC, more people died as extra traffic deaths after 9/11 than in the twin towers. A study showed that it is safer to fly (major US jet carrier), than to drive, for any distance greater than ~13 miles. The odds only get better for flying from there.

Diesel powered school busses will be doing less field trips. More companies will look toward container train shipping, this will save diesel. There is a greater push for bio-diesel (in all of it's forms). Also, several firms are 'recycling' their used crankcase oil into their diesel. Also, there is large movement for L/CNG for cross town fleets, this will be acclerated as diesel goes up. Also, hybrid diesel transit busses are being used more and more.

So, I think that diesel demand will shrink. (Remeber that as the economy slows, so do purchases, and transport of goods.)

[QUOTE=ewmayer;137896]I bailed out of my shorts at end of June[/QUOTE]

[QUOTE=Uncwilly;137920]Thanks for that visual.:yucky:[/QUOTE]

Believe me, it's a more pleasant visual [and olfactory] than that of me "reloading my shorts." :poop:

(* sigh *) When the OP strays, everyone else strays, too.

(Memo-to-myself)

Though I don't have time right now to develop it, I plan to discuss a phrase from the "OPEC's empty toolkit" article,
[quote]The cartel produced 1.5% less last year despite adding two countries, Angola and Ecuador, to its ranks.[/quote]and the (scary!) Export Land Model ([URL]http://en.wikipedia.org/wiki/Export_Land_Model[/URL]).

[url=http://money.cnn.com/2008/07/24/markets/cftc/index.htm]Government uncovers oil price manipulation[/url]: [i]Trading firm attempted to 'bang the close' by amassing large positions just before markets closed.[/i]
[quote]NEW YORK (CNNMoney.com) -- The government charged an oil trading firm Thursday with manipulating oil prices, the first indictment to come down since the regulators began a new investigation into wrongdoings in the energy markets.

The Commodity Futures Trading Commission charged Optiver Holding, two of its subsidiaries, and three employees, with manipulation and attempted manipulation of crude oil, heating oil and gasoline futures on the New York Mercantile Exchange.

The complaint names Optiver chief executive Bastiaan van Kempen, Christopher Dowson, a head trader of Optiver, and Randal Meijer, head of trading at an Optiver subsidiary.

The CFTC said the firm attempted to 'bang the close' by amassing large positions just before markets closed, forcing prices up, then selling them quickly, driving down prices and pocketing the difference.

"Optiver traders amassed large trading positions, then conducted trades in such a way to bully and hammer the markets," CFTC Acting Chairman Walt Lukken said at a press conference. "These charges go to the heart of the CFTC's core mission of detecting and rooting out illegal manipulation of the markets."

The alleged manipulation was attempted 19 times on 11 days in March, 2007, the agency said. In at least five of those 19 times, traders succeeded in driving prices higher twice and lower three times.

CFTC stressed that the price changes were small and the manipulation isolated, and that the investigation has nothing to do with the recent heat the agency has taken on capitol hill over rising oil prices.[/quote]
The last sentence would appear to negate the implications of the loud headline. I want to know whether any of the Big Boys were/are involved in this sort of thing. This includes the now-defunct Bear Stearns, which had a very large commodities trading division, and significant physical oil storage facilities [now both owned by JP Morgan, obviously].

Gas Price Update | The Oil Speculator Sideshow
 

Gas prices have started to give back a bit of their recent increase - again taken from the same Sunnyvale Valero station as before:
[code]Mon, 07 Jul: 4.49[sup]9[/sup]
Mon, 14 Jul: 4.45[sup]9[/sup]
Wed, 16 Jul: 4.43[sup]9[/sup]
Fri, 18 Jul: 4.41[sup]9[/sup]
Mon, 21 Jul: 4.37[sup]9[/sup]
Wed, 23 Jul: 4.35[sup]9[/sup]
Fri, 25 Jul: 4.29[sup]9[/sup]
[/code]So prices have given back 40% of the 40-cent increase they had in late May though early July - Down 20 cents from the all-time high of 4.49[sup]9[/sup] of early July. Interestingly, the drop in oil prices in the past 3 weeks appears to be more due to demand destruction [perhaps helped by the political sideshow over "oil speculators" - see below], which, rather than being a good thing, is in fact a deeply recessionary signal for an energy-intensive economy like that of the U.S.

[URL="http://money.cnn.com/2008/07/24/news/economy/okeefe_cftc.fortune/index.htm"]Fortune.com: The oil speculator sideshow[/URL]: [I]As the CFTC trumpets its charges against a Dutch trading fund, the fundamental supply-and-demand factors that govern the price of oil haven't changed.[/I]
[quote]Unfortunately, what will almost certainly continue to get lost in the coverage of the Optiver case - and, of course, in the ongoing bickering between Democrats and Republican about the provisions to attach to the speculation bill - is that Congress still has its facts wrong. That was reinforced by the CFTC's other big move this week: the release of a refreshingly reasonable and insightful report on the causes of the increase in the price of oil.

This meaty 40-page document has gotten short shrift this week. But it ought to be required reading for majority leader Harry Reid and his fellow senators before they press ahead with legislation that might do more harm than good.

The big conclusion of the Interim Report on Crude Oil, the product of an interagency task force led by the CFTC, is that "current oil prices and the increase in oil prices between January 2003 and June 2008 are largely due to fundamental supply and demand factors."

And it makes a really strong case. Global GDP has grown at close to 5% annually since 2004, the report points out, driving rising consumption of oil. And production has not been able to keep pace. In June, world surplus production capacity, the task force says, was a mere 1.35 million barrels per day, or about a third of what it average from 1996 to 2003. The market is getting tighter and tighter.

Just as compelling are the report's conclusions about what's not happening: Analysis of the futures markets showed no evidence of speculators driving up prices.

Plenty of smart observers (including my colleague Jon Birger here and here) have done a good job explaining why blaming speculators for $130/barrel oil just doesn't make sense. In their rush to embrace a quick-fix solution to the problem and to appease constituents outraged about $4 per gallon gas, however, lawmakers have seized on testimony from witnesses like hedge fund manager Michael Masters. Masters made a big splash by blaming a flood of money from institutional investors, who he termed "index speculators," for driving up prices.

That doesn't appear to be the case. When the task force examined non-public trading data for the so-called swap dealers (traders such as investment banks) who handle transactions for those institutional investors as well as other market participants, they found no evidence that their activity was providing upward pressure on prices. On the contrary, the analysis showed that the dealers "have held roughly balanced long and short positions in the crude oil markets over the last year and actually held a net short position over the first five months of 2008."

In other words, from the beginning of the year through the end of May, during which time the price West Texas Intermediate crude rose from $96 to $127, the positions of swap dealers would have benefited more from prices falling than rising. So much for blaming "index speculators" for the price rising.

What about regular "speculators" like hedge fund managers? Despite isolated examples such as the alleged behavior by Optiver, the CFTC's statistical analysis again found no evidence that speculative traders had significantly affected prices one way or another. In fact, their trading activity appears to have helped. "[T]he positions of hedge funds appear to have moved inversely with the preceding price changes," the report concludes, "suggesting instead that their positions might have provided a buffer against volatility-inducing shocks."

That's right, in general hedge funds have probably made things better, not worse. Driving out speculators and hedgers is not the way to solve the oil problem. And limiting their activity will only make the market less efficient.[/quote]

Highway Funding Plummets | Speculation Bill Stalls
 

[url=http://online.wsj.com/public/article/SB121721483297789245.html?mod=2_1577_leftbox]WSJ | Funds for Highways Plummet As Drivers Cut Gasoline Use[/url]
[quote][i]By CHRISTOPHER CONKEY

July 28, 2008 Page A1[/i]

An unprecedented cutback in driving is slashing the funds available to rebuild the nation's aging highway system and expand mass-transit options, underscoring the economic impact of high gasoline prices. The resulting financial strain is touching off a political battle over government priorities in a new era of expensive oil.

A report to be released Monday by the Transportation Department shows that over the past seven months, Americans have reduced their driving by more than 40 billion miles. Because of high gasoline prices, they drove 3.7% fewer miles in May than they did a year earlier, the report says, more than double the 1.8% drop-off seen in April.

The cutback furthers many U.S. policy goals, such as reducing oil consumption and curbing emissions. But, coupled with a rapid shift away from gas-guzzling vehicles, it also means consumers are paying less in federal fuel taxes, which go largely to help finance highway and mass-transit systems. As a result, many such projects may have to be pared down or eliminated.

The challenge comes at a time when surging costs for asphalt and other construction materials already are straining state and local transportation budgets. Those cost increases make it more expensive to maintain the nation's roads, bridges and rail networks.

In many areas, the ragged edges are already showing. About 25% of bridges in the U.S. are either "functionally obsolete" or "structurally deficient," like the Mississippi River bridge that collapsed in Minneapolis last August, killing 13 people.

Overall, the commission estimated, $225 billion a year is needed to meet the country's transportation infrastructure needs. Current spending is about 40% of that level.[/quote]
60% of $225 billion = $135 billion ... sounds like that now-useless $150-billion-plus Fiscal Stimulus package [much of which went straight into people's gas tanks, and thus overseas, mainly to countries that despise us] could have been better spent - that would've created a whole lot of new construction jobs, and ones of the real variety, not the "pulled out of thin air" Bureau of Labor Statistics kind. As far as longer-term infrastructure investment funding goes, someone remind me - how much is the war in Iraq costing per year? Or the [url=http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm]Interest on the $10 trillion national debt?[/url]


[url=http://money.cnn.com/2008/07/25/news/economy/congress_energy.ap/index.htm]Effort to limit oil speculation stalls in Senate[/url]: [i]Democrat's push to rein in oil market speculation meets with Republican opposition. Calls to expand domestic drilling are rejected.[/i][quote]WASHINGTON (AP) -- Senate Democrats failed Friday to advance a measure to rein in oil market speculators, one of a series of efforts to tell voters they are serious about addressing $4-a-gallon gasoline, and rejected Republican calls to expand offshore oil production.[/quote]
Sometimes parliamentary gridlock is a good thing - both the Dems' knee-jerk "evil speculators" bill and the GOP's drill-our-way-out-of-this-mess proposal are misguided and would not help bring oil prices down one iota. Hello? Oil prices have already dropped significantly in the past month, as U.S. demand plummets. That's supply-and-demand fundamentals and the free markets at work - the system clearly ain't broke, so stop trying to meddle with it.


[url=http://money.cnn.com/2008/07/28/news/companies/GM-cuts.ap/index.htm]GM slashes another 117,000 vehicles[/url]: [i]Latest production cuts bring General Motors' total reductions to just below the 300,000 units officials had hoped for this year.[/i][quote]Most of the cuts will affect production of full-size trucks and sport utility vehicles.[/quote]
GM's balance sheet is in shreds, but hey, they might just be up for a major environmental award for this one. :)

[quote=ewmayer;138457][URL="http://money.cnn.com/2008/07/28/news/companies/GM-cuts.ap/index.htm"]GM slashes another 117,000 vehicles[/URL]: [I]Latest production cuts bring General Motors' total reductions to just below the 300,000 units officials had hoped for this year.[/I]
GM's balance sheet is in shreds, but hey, they might just be up for a major environmental award for this one. :)[/quote]Saturday night, when I drove past the vacated first-in-the-universe Hummer dealership building near my home, it looked like there were several shiny Jeeps lined up on the highway side. It was just a split-second glimpse, because I hadn't actually expected any change there, but it may be that the look of dinkiness I predicted may not be an insurmountable obstacle after all.

Hmmm ... maybe someone figures that if Jeeps look dinky, they won't look like gas-guzzlers.

(How are they going to change the big "H" into a "J"?)

[QUOTE=cheesehead;138461](How are they going to change the big "H" into a "J"?)[/QUOTE]

By calling it [b]H[/b]appyland Jeep, maybe?

In California, maybe. :-) Not here.

Sanctions
 

Oil price is ultimately decided by a combination of production and demand, and expected production and demand in the future. Other factors, like the low value of the US dollar, makes the price seem even higher in the US, but is a very local factor to The USA.

As the price goes up demand goes down, which of course lowers the price of oil until a balance is reached. This has been discussed a lot. However the US imposed reductions in production is largely overlooked.

First the sanctions against Iraq and later the war. The sanctions started when the oil price was low and didn't have very large consequences. Oil exports from Iraq fell from more than 3 million barrels/day in 1989/1990 to almost nothing, and climbed to about 2 before the war against freedom, human rights and the people of Iraq. The war extinguished it, and iraqi oil export is still below 1,5 million barrels/day.

Now more and more sanctions are imposed against Iran and all companies doing business in Iran. Iran exports about 2,5 million barrels/day, and could export a lot more if they got better access to foreign competence, parts and capital. Iran is the second largest oil exporter in Opeq (by a large margin), and has the third largest proven oil reserves in the world, after Saudi Arabia and Canada. The sanctions are working, and more sanctions is expected to reduce oil exports from Iran further. Iran exported more than 5,5 million barrels/day before the first US sanctions began.

I think the US war against oil supply and expected oil supply is by far the most important reason for the recent rise in oil and gasoline prices.
Who profits? The Sauds, oil companies... Friends of GWB.

[quote=S00113;138558]the war against freedom, human rights and the people of Iraq.

< snip >

I think the US war against oil supply and expected oil supply is by far the most important reason for the recent rise in oil and gasoline prices.[/quote]But how, in your scenario, do you account for the timing? The rapid rise in prices of the past several months started [I]over four years after the U.S. invasion of Iraq[/I]. I hope you aren't arguing that it's taken four years for the effects you cite to finally reach the consciousness of oil traders.

If you want to criticize the U.S. Mideast military policy (as I and many others have done elsewhere) please stick to the actualities, not introducing some imaginary multi-year delay in a strained attempt to link it with every economic bump that comes along. There were oil prices quivers that happened right at the times of various military events, but they're in the past. A ridiculous stretch of the timing of military event influence only weakens your arguments.

There are more than enough reasons to criticize Bush administration military operations without dragging in some multi-year oil price change lag. Sure, those operations were important background factors for the current oil market, but there were other causes (such as, but not limited to, speculation) that have arisen in the past year or so, which are much more reasonably correlated to the recent (late-2007-to-present) oil price rise.

Note, for example, that though I've been warning about Hubbert's Peak in oil production in online forums for a long time, I never cite it as "by far the most important reason" for any particular price fluctuation. I'm not a Peak Oil alarmist (on a less-than-a-decade time scale, anyway). That approaching peak helps set an increasing floor on prices, but the shorter-term factors are also important in current pricing.

Yes, I note that you cite sanctions and other non-military factors. Had you restrained yourself to explaining connections between them and the oil market, I wouldn't have complained like this.

Okay, maybe that was too much protest, but editing time has expired.

[quote=cheesehead;138629]But how, in your scenario, do you account for the timing? The rapid rise in prices of the past several months started [I]over four years after the U.S. invasion of Iraq[/I]. I hope you aren't arguing that it's taken four years for the effects you cite to finally reach the consciousness of oil traders.[/quote]
Saudi Arabia had excess capacity at the time of the invation to replace the supply from Iraq. They promised to increase production to replace Iraqi oild before the war started, and did. This is is well known. Neither Saudi Arabia nor The USA expected the war to last for four years, and Saudi Arabia don't have much, if any, extra capacity left.

To tap oil fields for maximum output is an artform. If you tap one well too fast, you loose pressure and oil flows away from nearby wells. You basically have to search for it and may have to drill new wells to get it back, if possible. It is simple to increase output on the short term, but long term production increase is dependant on careful planning. How much oil you can pump from a field during it's lifetime is dependant on the number of wells, where you drill them and how fast and when you pump the oil up or and water or gas down for pressure support. It takes very talented people many years to learn an oil field, and it is more about intuition than exact science. Saudi Arabia was well prepared for expected increase in demand with excess capacity in case of a conflict, but did not have enough fields in development to handle many conflicts over a long time.

Also remember that many OPEC members oppose an increased production now, basically because they think americans deserve to pay more for oil. Those bad feelings have grown stronger with the wars.

[quote]If you want to criticize the U.S. Mideast military policy (as I and many others have done elsewhere) please stick to the actualities, not introducing some imaginary multi-year delay in a strained attempt to link it with every economic bump that comes along. There were oil prices quivers that happened right at the times of various military events, but they're in the past. A ridiculous stretch of the timing of military event influence only weakens your arguments.[/quote] This is not about an event four years ago, it is an ongoing process. StatoilHydro, the largest offshore oil and gas company in the world, announced this week their withdrawal from Iranian projects in the Persian Gulf, and cited american pressure as the reason. It was that or being shut out from doing business in The USA. StatoilHydro are not the first to leave, and Iran lacks the technology to develop the fields themselves.

Strenghtening and ongoing sanctions has reduced expected oil production in the future. Expected production in the future is just as important for setting the price as actual production this week. The prices don't jump because of an expected invasion with an expected production increase in another country to offset lost production, but increase as it becomes evident that the lost production won't be replaced anytime soon.

[quote]There are more than enough reasons to criticize Bush administration military operations without dragging in some multi-year oil price change lag. Sure, those operations were important background factors for the current oil market, but there were other causes (such as, but not limited to, speculation) that have arisen in the past year or so, which are much more reasonably correlated to the recent (late-2007-to-present) oil price rise.[/quote]
Speculation may account for a few dollars on the short term. Not a hundred dollars on long term.
[quote]Note, for example, that though I've been warning about Hubbert's Peak in oil production in online forums for a long time, I never cite it as "by far the most important reason" for any particular price fluctuation. I'm not a Peak Oil alarmist (on a less-than-a-decade time scale, anyway). That approaching peak helps set an increasing floor on prices, but the shorter-term factors are also important in current pricing.
[/quote]I think an artificial peak has been created by recent american foreign politics, and I think the people responsible are profiting from it. When you withdraw production and expected production from two of the largest oil exporters in the world, increased prices in the long term is the only possible result. Many more fields would have been developed by now if it wasn't for war and sanctions.

[quote]Yes, I note that you cite sanctions and other non-military factors. Had you restrained yourself to explaining connections between them and the oil market, I wouldn't have complained like this.[/quote]I didn't mean war against oil supply (or freedom) in the military sense. It is mostly about politics. Sanctions, political pressure and the way "peace" in Iraq was handled. The looting alone probably delayed new Iraqi productions by years. Add banning of Baath members from positions in the oil department.

[quote=S00113;138679]I didn't mean war against oil supply (or freedom) in the military sense.[/quote]It certainly looks like you meant a military war in at least some of your statements.

Consider your wording in post #181:
[quote=S00113;138558]First the sanctions against Iraq and later the war.[/quote]"... later the war" -- if you meant to depict a nonmilitary "war", why would you describe it as occurring later than the sanctions?[quote=S00113;138558]climbed to about 2 before the war against freedom, human rights and the people of Iraq.[/quote]Again, you refer to a war that occurs after the sanctions. You never give us any statement that would define all your uses of "war" as being nonmilitary.[quote=S00113;138558]The war extinguished it, and iraqi oil export is still below 1,5 million barrels/day.[/quote]"The war" still seems there most reasonably to refer to a military war, the U.S. invasion. If you want to argue that it doesn't, then tell us what reference date is implied by "still below 1,5 million barrels/day" -- "still below" since when? Isn't that referring to [I]still (since the U.S. invasion)[/I]?

Now, back to your post #184:

[quote=S00113;138679]The looting alone probably delayed new Iraqi productions by years.[/quote]What looting could you possibly be referring to, if not the looting that occurred right after the U.S. military invasion? There was no reported wave of looting immediately after any imposition of sanctions, was there?

I think what's happened is that in your first post, you used "war" to refer to the U.S. military invasion, but also used "war" elsewhere in your posting to refer to nonmilitary events. Then after I objected to your references to the U.S. military invasion, you temporarily forgot your dual usage when you protested that only the nonmilitary usage was meant.

I recommend that you admit that you [I]were[/I] referring to the U.S. military invasion in some sentences of your earlier post, and go on from there. Either admit that my post #182 was on-target, or give us a real refutation without trying to avoid taking responsibility for your words.

Tanker owners in "sickout" | SiVal commuting
 

[URL="http://www.bloomberg.com/apps/news?pid=20601109&sid=aWyhL5Kzop1s&refer=news"]Scooters, Shuttles Replace Mercedes, Maserati for Silicon Valley Commuters[/URL]: [I]Driving a Mercedes E500 gave Wes Richards a smooth ride to his office in Redwood City, California. Now he hops on a scooter for the 5-mile commute from his home in Atherton.[/I]
[quote] Aug. 6 (Bloomberg) -- Driving a Mercedes E500 gave Wes Richards a smooth ride to his office in Redwood City, California. Now he hops on a scooter for the 5-mile commute from his home in Atherton.

The price of gasoline trumped comfort, Richards said. He traded both his Mercedes sedan and his wife's Mercedes R350 sport-utility vehicle for a Piaggio scooter, a two-seat Smart car and a Toyota Prius.

``I don't miss having those cars,'' said Richards, 56, managing director of the Silicon Valley office of Korn/Ferry International, an executive-search firm. ``Those feelings are reinforced every time I visit the pump and fill up for $28, where before it was $90.''

The price of gasoline is changing Silicon Valley's commuting culture. Executives are giving up luxury cars, and companies like Google Inc. and Juniper Networks Inc. are making it easier for employees to telecommute, use mass transit or take company shuttles.[/quote]
[URL="http://www.bloomberg.com/apps/news?pid=20601109&sid=a7YjyGuwrZQg&refer=news"]Oil Companies May `Panic' on Outlook for Tanker Rental Rates: Chart of Day[/URL]: [I]Oil-tanker rental rates may rise after last week's 46 percent slump spurred owners to slow their vessels, reducing supply and increasing costs for oil producers and refineries who hire the vessels.[/I]
[quote]Oil-tanker rental rates may rise after last week's 46 percent slump spurred owners to slow their vessels, reducing supply and increasing costs for oil producers and refineries who hire the vessels.

Owners are telling captains to sail more slowly, according to three shipbrokers. The last time that happened, in the final months of 2007, rental rates posted the fastest two-month gain in at least 16 years, increasing costs for oil producers seeking to ship supplies to refineries.

The CHART OF THE DAY shows how slower sailing speeds at the end of last year helped bolster hiring rates. The average speed of very large crude carriers, or VLCCs, including those at anchor, has declined 3.8 percent to 10.21 knots since July 12.

``Panic will be moved from owners to the oil companies,'' Nikos Varvaropoulos, an official at Optima Shipbrokers, Greece's largest, said yesterday. The advance in the next several months may be ``even better'' than at the end of last year, he said.

Vessels on average slowed 20 percent to 12 knots in the final months of last year, according to a May 2 regulatory filing from Frontline Ltd., the world's largest owner of the vessels.[/quote]Interesting - the oil-tanker equivalent of a worker sickout, or better, a [URL="http://en.wikipedia.org/wiki/Slowdown"]slowdown[/URL].


Meanwhile, U.S. gas prices continue to retreat due to demand destruction - again from our favorite local Valero station:
[code][I]Fri, 25 Jul: 4.29[sup]9[/sup][/I]
Mon, 28 Jul: 4.25[sup]9[/sup]
Wed, 30 Jul: 4.23[sup]9[/sup]
Mon, 04 Aug: 4.19[sup]9[/sup]
Wed, 06 Aug: 4.17[sup]9[/sup][/code]

Reasons for the drop in oil prices
 

I have heard that China is no longer stockpiling diesel (as they have enough for their Olypmic possible demand [for generators]). Which I had heard was happening. I thought that it had been mentioned in this thread.

Secondly, I have heard that the hedge funds and speculators are heading for the exits (and it sounds like the pace is accelerating).

[quote=cheesehead;138716]It certainly looks like you meant a military war in at least some of your statements.[/quote]
The military takes part in the war, but most of it is fought by non-military means.
[quote]Consider your wording in post #181:
"... later the war" -- if you meant to depict a nonmilitary "war", why would you describe it as occurring later than the sanctions? Again, you refer to a war that occurs after the sanctions. [/quote]The U.S. sanctions against Iran started in 1979, and has increased in strenght during the last few years. Sanctions against Iraq began in 1990. The U.S. war against freedom, human rights and the Iraqi people, aka the "crusade" or "war on terror" began in 2001. The military attack against the Iraqi people was launched in 2003.
[quote]You never give us any statement that would define all your uses of "war" as being nonmilitary.[/quote]This is correct. A part of it is military, some is just hot air as well.
[quote]"The war" still seems there most reasonably to refer to a military war, the U.S. invasion. If you want to argue that it doesn't, then tell us what reference date is implied by "still below 1,5 million barrels/day" -- "still below" since when? Isn't that referring to [I]still (since the U.S. invasion)[/I]?[/quote]Some of it, yes, but why are you so hung up in the military part? It isn't very significant.
[quote]
Now, back to your post #184:

What looting could you possibly be referring to, if not the looting that occurred right after the U.S. military invasion? There was no reported wave of looting immediately after any imposition of sanctions, was there?[/quote]The looting began shortly after the U.S. took control over Bagdad and neglected to protect public property and keep law and order, as they were required to by the Geneva conventions. Some reports say U.S. forces encouraged looting (BBC: [URL]http://news.bbc.co.uk/2/hi/middle_east/3003393.stm[/URL]), which is exactly what I write is an important cause of the high oil price. Those crimes were part of the war against human rights and the Iraqi people, but not a military war in the sense that it followed international conventions on war and warfare. It was an extremely dirty attack of a souverign nation, and will hold back Iraqi oil production for a long time.
[quote]I think what's happened is that in your first post, you used "war" to refer to the U.S. military invasion, but also used "war" elsewhere in your posting to refer to nonmilitary events. Then after I objected to your references to the U.S. military invasion, you temporarily forgot your dual usage when you protested that only the nonmilitary usage was meant.[/quote]Note that when I protested I specifically wrote [I]war against oil supply (or freedom)[/I], to point to specific parts of the "war".
[quote]I recommend that you admit that you [I]were[/I] referring to the U.S. military invasion in some sentences of your earlier post, and go on from there. Either admit that my post #182 was on-target, or give us a real refutation without trying to avoid taking responsibility for your words.[/quote]I was refering to it as a part of the war, but I think the crimes commited during the occupation after the military attack were much more important than the military attack.

Btw, the annual energy review from EIA gives some insights in the numbers. Check for yourself how Saudi Arabia replaced Iraqi oil production, but wasn't able to sustain it for as long as neccessary, how Iraqi oil production never recovered, and how iranian production has decreased due to sanctions, and is decreasing due to more sanctions. Correlate it with price information in the same report. PDF here: [URL]http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf[/URL]

Okay -- I still find your terminology confusing, but your explanation makes a little more sense to me now.

Demand also plummeting in China
 

[url=http://in.reuters.com/article/businessNews/idINIndia-34955320080811]Oil falls on China crude import drop[/url][quote]NEW YORK (Reuters) - Oil prices fell on Monday as a drop in crude imports by No. 2 consumer China outweighed concerns over supply disruptions stemming from the conflict between Russia and Georgia.

China's crude imports unexpectedly fell 7 percent in July to a seven-month low in the steepest monthly drop since January 2005, as refiners balked at soaring crude costs amid lagging domestic fuel prices.

The drop in Chinese imports added to wider concerns about demand. Consumption in the United States and other developed economies has fallen due to high fuel prices.[/quote]

[QUOTE=Uncwilly;138890]I have heard that China is no longer stockpiling diesel (as they have enough for their Olypmic possible demand [for generators]). Which I had heard was happening. I thought that it had been mentioned in this thread.[/QUOTE]
[QUOTE=ewmayer;139230][url=http://in.reuters.com/article/businessNews/idINIndia-34955320080811]Oil falls on China crude import drop[/url][/QUOTE]

Echo.....:whistle:

U.S. Automakers Still in State of Delusion
 

[url=http://www.minyanville.com/articles/ethanol-gm-F-tm-hmc-driving/index/a/18462]Minyanville | GM Reduces Carbon Footprint by .0000001mm[/url]
[quote]Call it the 1 mile-per-gallon solution - and try not to laugh.

General Motors (GM) plans to release new versions of its full-sized pickup trucks and SUVs later this fall. Both space-age editions get an extra mile per gallon in both city and highway driving.

The new models are designated XFE (for “extra fuel economy”).

That’ll scare the bejabbers out of Toyota (TM) and Honda (HMC), eh?

On the new XFE models of Chevrolet Silverado, Chevrolet Tahoe, GMC Sierra trucks and GMC Yukon SUV models, GM extended the front lower air dam, lowered the suspension and revised the chassis to cut aerodynamic drag. GM also cut vehicle weight by using more aluminum parts, including an aluminum spare. The engine is a 5.3-liter V-8 with aluminum cylinder block and heads that can run on ethanol, surely one of the great boondoggles of our time.

All this creates a net savings of 1 mpg - a great selling point to the math challenged. The whole thing reads like a parody: Imagine a fast food chain pitching a cheeseburger, fries and chocolate shake package that makes you fat, but more gracefully than the competition. Call it health food![/quote]


[url=http://www.reuters.com/article/businessNews/idUSBNG28718220080815?feedType=RSS&feedName=businessNews]Ford plans new luxury crossover vehicle[/url]
[quote](Reuters) - Ford Motor Co is expected to announce Friday that it will build a new seven-passenger luxury crossover, the Wall Street Journal said, citing two people familiar with the automaker's plans.

The three-row Lincoln MKT crossover, which is due to go into production next year, will share the same architecture as the new Ford Flex, but will feature a much sleeker design compared with the boxy Flex, the Journal said.

The Acura MDX, the Audi Q7 and the Mercedes R class would be among the competitors for the new luxury crossover, the paper said, citing people familiar with the matter.

MKT is not designed to be a large production run and the company expects annual sales in the range of the mid-20,000 vehicles, the paper said.

The new luxury crossover will mostly likely be manufactured at Ford's Oakville, Ontario plant, the Journal said. People familiar with the plans could not confirm the production schedule there, it added.

Recognizing consumer demand for fuel economy, the MKT will come only with a V-6 engine, and not the more powerful V-8. Eventually, Ford's new, more powerful Eco-Boost engine is also expected to be an option, the Journal said.

Ford did not immediately return a call seeking comment.

Earlier this year, Ford abandoned a longstanding goal of returning to profitability in 2009 and accelerated plans to restructure its North American operations to produce more cars and cut back on slower-selling trucks and SUVs as fuel prices climbed.[/quote]
So in a perverse way, trying to foist yet another gas-guzzling SUV [but this one is "luxurious yet understated, and more greenish than our current lineup of gas guzzlers"] really does fit in with Ford`s "strategy", in the sense that it helps Ford achieve its abandonment of its longstanding goal of returning to profitability in 2009. Way to go, Ford! It`s clear that both you and General Morons deserve a big fat government bailout check.

[quote=ewmayer;139476][URL="http://www.minyanville.com/articles/ethanol-gm-F-tm-hmc-driving/index/a/18462"]Minyanville | GM Reduces Carbon Footprint by .0000001mm[/URL][/quote]

[quote=http://www.minyanville.com/articles/ethanol-gm-F-tm-hmc-driving/index/a/18462][FONT=Arial] an additional 1 mpg from the XFE models (the new models get 15 mpg in the city and 21 on the highway),[/FONT][/quote]Hey, give GM credit -- it's a 5-7% improvement from a few minor changes. In NASCAR, that percentage of performance improvement would raise a team from worst to first and provoke a tear-down inspection by officials.

What's sad is that 1 mpg is such a large percentage, or that it wasn't in the original design.

---

BTW, from a distance it looks like all traces of "Hummerism" are gone from the former Hummer first-in-the-universe dealership near my place that's being converted to a Chevy dealership.

[QUOTE=cheesehead;139489]BTW, from a distance it looks like all traces of "Hummerism" are gone from the former Hummer first-in-the-universe dealership near my place that's being converted to a Chevy dealership.[/QUOTE]

So the faux-news headline would be [i]"Glum and Glummer: Bummer of a Summer for Hummer"?[/i] [Just when you thought things around here couldn't get any dumber...]