Comments (32)

The discussion of energy consumption always focuses on the fact that the U.S. uses more than any other county. However, it falls to mention the fact that the U.S. produces more than any other country. The U.S GDP is $13 trillion out of a worldwide total of $54 trillion. This equates to 24% of toal global production. In terms of energy use, the U.S. uses 3.4 TW out of a world total of 15 TW (23%). Therefore, the U.S. uses 23% of the world's energy to produce 24% of its production. So the fact is the U.S. is using LESS than its fair share.

The discussion of energy consumption always focuses on the fact that the U.S. uses more than any other county. However, it falls to mention the fact that the U.S. produces more than any other country. The U.S GDP is $13 trillion out of a worldwide total of $54 trillion. This equates to 24% of toal global production. In terms of energy use, the U.S. uses 3.4 TW out of a world total of 15 TW (23%). Therefore, the U.S. uses 23% of the world's energy to produce 24% of its production. So the fact is the U.S. is using LESS than its fair share.

Sorry to be critical, Dimitry, but you clearly don't get it. The discussion was not on energy usage, but gasoline usage. And France does, in fact, use a significantly smaller amount of gasoline per capita than the US, about 16% of the average American (0.77 l/day versus 4.5 l/day in the US). Even with your second point, you're wrong yet again. France uses about 1/2 the amount of energy per capita, including nuclear. Now, the reasons for this are complicated (Texas and Florida summers, perhaps?), but the numbers are not up for debate. The US, along with Canada , uses more energy per capita than any where else in the world.

Here is a perfect example of an econmist, perhaps even a well meaning one (Krugman writing in the NYT), who just doesn't grasp the significance of "peak oil":

==After all, a realistic view of what’s happened over the past few years suggests that we’re heading into an era of increasingly scarce, costly oil.

The consequences of that scarcity probably won’t be apocalyptic: France consumes only half as much oil per capita as America, yet the last time I looked, Paris wasn’t a howling wasteland. But the odds are that we’re looking at a future in which energy conservation becomes increasingly important, in which many people may even — gasp — take public transit to work.==

Krugman doesn't "get" that France uses a very similar amoung of energy per capita - a scientific measure that is foreign to the economically educated. They achieve this energy density through heavy reliance on nuclear power - a very problematic approach, because the nuclear waste issue has not been solved and because it would take us decades to construct the required power plants. He further doesn't understand the penetration of oil-driven energy infrastructure on our economy, starting first and foremost with food production (artificial furtilizers, farm machinery), food transportation (trucks, planes, trains), water generation and distribution and of course, consumer goods.

So, to an economist, oil resource depletion means mostly "more public transport." Unfortunately, it would be far more disrutpive than that.

To Phil Inq, et.al. 5/9/08
From Fran Jackson
110 Summit Ave
Hatboro, PA 19040
(215) 672-3805 e-mail: frnjks@juno.com
BSME 1952 Northeastern Univ, Boston , MA; MME 1957 Univ of Delaware, Newark, DE
50+ years experience (36 with GE)
Registered Professional Engineer in PA (PE-007311-E) and Ohio (E-024017)
Subjects: Phil Inq 5/9/08 page C6 “Gasoline hits $3.65; oil tacks on 16 more cents” Inquirer wire services.
Yet another article discussing high oil cost and indicates some of the contributing causes over which we have no or are not exercising control and again it fails to identify and discuss a most significant cause that we could do something about, i.e., it doesn’t address how to substantially ameliorate the problem (substantial increased efficiency in energy sector) and more importantly the obstructions ( industry for offering inefficient products, Govt for not fixing the rules so efficient products will be offered&preferred, and press for not reporting on both) thereto!

We are in a vicious circle: price of oil goes up and we pay more for imported oil which devalues the $ and oil price increases which devalues the $ even more!!!
Conservation is clearly the area that can have the most impact the soonest and is the most cost-effective approach to curtailing oil demand and lowering US&World energy cost and CO2! Emphasis should be on ”doable” most effective and cost-effective actions like drastically (4 times the mpg vehicles) and not more expensive minor, or less, impact actions (wind, solar, corn ethanol, etc)!

The below and more is technically and economically achievable. Issue is money, i.e., where will necessary investment come from. Achieving 35 mpg I expect would add 1,000-2,000 $s per vehicle mfg cost and as an unfunded Govt mandate, increasing cost to purchasers would “dampen” sales. This would hurt the industry; no wonder they are fighting it! My estimates are: for 5,000-8,000 $s per vehicle 75+ mpg could be achieved by 2013 model year – now we have done something substantial; pay the added mfg cost, a Govt funded mandate, from redirected: ethanol society’s costs, “pork”, increased “guzzler tax”, increased Govt revenue from economic stimulation of funded mandate, easing up on power and less than 10 cent per gallon increase in gas tax; supplement this with funded Govt mandates in all other energy consuming activities and I project, for $B 150-200/year intelligent investment, the below achievable:

fwj estimates: US Crude demand&cost per barrel&MillionMetricTons(MMT) CO2/yr less
Direction------------------------- Fran’s Plan------------------------
Aug. Past NewLaw Fran’s Plan crude cost/$brl CO2 less/yr
2008 21.3mbd 21.3mbd 20.4mbd 81 (2008$s) 140(MMT)
2011 22.3 21.9 17.7 71 656
2016 24.0 22.1 15.5 58 1031
2025 27.5 22.1 13.1 32 1406

My calculations indicate: for years 2008 thru 2025 NewLaw (35 mpg) direction US will consume 142 B(billion) barrels of oil at $100/barrel with total US energy retail bill at about 18.5 $T(trillion) for oil and more when other energy retail costs are counted. Whereas serious conservation (“attacking oil demand with a vengeance” FWJ Plan) could reduce ‘08 thru ‘25 oil demand 40 Bbarrels (5800 MMTons of CO2) less; and at 9.3 $T less consumer cost for oil products and more for all energy. Further US Balance of payments would be 6.4 $T less for the period, global warming would be curtailed, and Iran&Chavez would have 0.8 $T less each to use to support their mischief and our&world’s foreign policies would be less constrained. In addition, the 6.4 $T less for crude which would go overseas would stay in US economy investing in more and better paying US jobs which would significantly boost US economy, strengthen the $ and would even increase Govt revenue from income and sales taxes further increasing gain! And after 2025, US would be demanding 40% less oil at a third the price, or one-fifth the oil cost to US consumers each year thereafter!

Effective and cost-effective to Public and helps auto industry & auto industry jobs, US economy and deficits! A big win for US, but needs Govts to act.

Additional info

Suggestions to Congress: 1. I would be delighted to explain and/or testify my below technical assessment as to what technology could do; even under oath! 2. What you should insist on from auto industry is testimony from both Management and technical personnel under oath, even with polygraph attached if felt necessary, as to what could be achieved (including their assessments of below information and all the references listed therein) and at what cost per vehicle and how soon for what packages of technologies! 3. Same offer to Administration’s Management and technical personnel as suggested in 2 above to Industry, especially those promoting the corn ethanol “folly” this wasted money should be better spent.

Energy and Inflation solution information.

Administration and Congress responsible for what they have not done (substantially increase CAFÉ and WITH A WAY OF PAYING FOR IT ( corn ethanol “folly” full financial cost about same cost as building far more efficient vehicles!); and include A/C on in official CAFÉ test).

Govt and Industry has “know how” and are not acting on it! E.g., Govt NHTSA PRIA for CAFÉ MY 2008-2011 for light trucks – PRIA lists almost 30 items to improve mpg! Govt guidance is spend $fewhundredish/vehicle ( an unfunded mandate) for a few “cheepies” and increase light truck only mpg 11 % increase (for fleet increase of about 3.4 % requiring 16 years to fully materialize while demand grows at 1.5+ % per year, or up 27 % in 16 years for a net increase of 24 %); yet, from list, for $2,000/vehicle could get 50 % more mpg and by doing all for about $ 5,000/vehicle 100 % more. Industry, Govt and others know how to do a lot to significantly reduce oil demand that is not being done, i.e., action to cut gasoline demand at least a factor of 3 and preferably more, possibly 5!!!!

US (and other) Govt failure to act needs to be corrected; and only way I see for that to happen is publicity exposing Govts and informing Public of “truth”, including dispelling some well “spun” myths.

If you need more info or clarification of what is presented, please do not hesitate, you or your designee, to contact me; and any suggestions on how to get message out to Public and/or confirm this can be done so “press” will hear it from multiple sources and start informing, please let me know.

==None of these comments seem to address the real problem here, or rather the main point of the article. As a commodity, and oil is a commodity, its price should adjust to supply and demand. Why is it not adjusting? If consumption of oil is decliming in the US, why are we paying more?==

Read the first post on this thread. It explains why, when the supply and demand are inelastic, the laws of supply and demand do not apply. I understand that most Americans think of the laws of supply and demand as more powerful that gravity, but they are simply economic approximation of complex human behavior. They are not laws of science at all.

==Perhaps it is because demand worldwide is still rising?==

It is rising and the supply is not increasing.

==Or perhaps it is because it is not truely a "free market." While collusion is illegal in the US, would it suprise anyonne is the Bush Amin decided not to investigate this?==

Again, idea of a free market as an arbiter of prices through the supply and demand equation is meaningless when the supply can't be increased and demand can't be decreased until system-wide crisis. There is absolutely no incentive for the oil producers and refiners to lower prices - we will buy all they make and ask for more.

==Oil companies are clearly making big profits at our expense.==

I think that's called business.

==I am doing everything I can to buy as litle gasoline as possible. We do not need oil to run the modern world. It is time to create a new world with systems that do not rely on oil.==

Then turn off you freakin' computer and stop heating your house, start growing your own food with compost in your back yard and stop using most products you buy in a store. Or conversely, get used to massive coal and nuclear polution.

==btw- Dimitry has no clue==

I am afraid you missed most of the science you had learned from junior high onward.

I have no idea about the science or how anybody really knows how much oil is left in the ground. It's clear, however, that sudden spikes are not attributible to increased consumption around the world, as that would be a steadier increase. The best immediate way to cut our gasoline consumption would be to cut our in-office work week to a 4 day week, and have people who can do so, work from home. It is absurd to have office workers go to an office to do work they can do from home.

None of these comments seem to address the real problem here, or rather the main point of the article. As a commodity, and oil is a commodity, its price should adjust to supply and demand. Why is it not adjusting? If consumption of oil is decliming in the US, why are we paying more?

Perhaps it is because demand worldwide is still rising?

Or perhaps it is because it is not truely a "free market." While collusion is illegal in the US, would it suprise anyonne is the Bush Amin decided not to investigate this?

Oil companies are clearly making big profits at our expense.

I am doing everything I can to buy as litle gasoline as possible. We do not need oil to run the modern world. It is time to create a new world with systems that do not rely on oil.

btw- Dimitry has no clue

==The Earth spins, and the Sun shines - an unending suppy of power. Harness it efficiently, invest and develop the associated distribution systems, and we are good to go.==

We hear that a lot from non-technical people, who generally have no idea how to transition from a carbon infrastructure to something different without a major economic and social upheaval.

Their last great idea - biofuels, touted by every "know nothing" as the nest best thing since sliced bread has failed spactacularly, causing no relief of oil prices and excarcebating an already gathering food price increases. Even a cursory examination of the energy balances involved should have convinced folks how stupid an idea it really was.

The next great white hope - solar energy? Wind power? It will require a surface equivalent to Arizona to provide a decent amount of electric energy from the sun. Not to mention that most of the "technological" solutions, like solar, wind and nuclear require a full functioning carbon infrastructure in order to make the transition in the first place - you are not going to make a solar array or an efficient wind turbine with a campfire and a hand-operated wood lathe.

The underlying assumption by both the "free-marketeers" and by the "greens" is that given enough money and desire, the eggheads will come up with some technological gizmo to suck energy out of thin air, or that people will suddenly agree to a large contraction of the economy and 50% of the population will start happily cultivating land with the help of beasts of burden.

People would have to quit their jobs for gasoline consumption to really drop.People don't drive unless they have to and that has been going on in America for quite a while now.All of the major oil fields are in decline,every damn one of them.The American ruling class should study the revolution in France of 1789 if they want an idea of what their fate may come to.

Oil is a finite resource; energy is not. The Earth spins, and the Sun shines - an unending suppy of power. Harness it efficiently, invest and develop the associated distribution systems, and we are good to go.

Lets all remember the the rise in energy,gas,and food is the formula to a one world government,which the elite want to happen. this will happen sooner that you think.

The powerful conspirators are made up largely of the international bankers, and the Illuminati, which is a super-rich organization, which controls the mainstream media, workforce, education system, companies, banks, energy supplies and governments. They are controlled by the richest people in the world such as the super-rich Rothschild and Rockefeller families. They also hide behind many organizations such as the United Nations, the WTO and the Council on Foreign relations.

more pointless blather from Mufson. Last time he wrote that gas prices were skyrocketing because housewives in India cooked with subsidized kerosene.

There is a lot of oil in the ground that can't be pumped out due to rock formations and the like. When an oil field gets below 3300 psi natural gas bubbles up and seal the field. So its not as simple as it sounds. There is a lot of oil in oil shale that costs a tremendous amount of gas and water to get out.
Switching to smaller cars would help but it doesn't solve the problem - China's oil consumption is growing quickly and we are funding that growth by our trade deficit with China.

There is a lot of oil in the ground that can't be pumped out due to rock formations and the like. When an oil field gets below 3300 psi natural gas bubbles up and seal the field. So its not as simple as it sounds. There is a lot of oil in oil shale that costs a tremendous amount of gas and water to get out.
Switching to smaller cars would help but it doesn't solve the problem - China's oil consumption is growing quickly and we are funding that growth by our trade deficit with China.

From the NY Times:

"DETROIT — Soaring gas prices have turned the steady migration by Americans to smaller cars into a stampede.

In what industry analysts are calling a first, about one in five vehicles sold in the United States was a compact or subcompact car during April, based on monthly sales data released Thursday. Almost a decade ago, when sport utility vehicles were at their peak of popularity, only one in every eight vehicles sold was a small car.

The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickup trucks and large sport utility vehicles have dropped sharply."

ONE in FIVE? That is peanuts. America will move towards real energy independence when FOUR out of five cars sold is a compact or sub-compact, the only exceptions being family cars for large families.

Bernard Shaw said, "America will be the first country to drive to the poorhouse in an automobile." Let us conserve more energetically and prove him wrong.

On supply/demand

In the very long run, supply is inelastic- in the short to medium run it may be relatively elastic- that's one of the major questions...

In the short run- demand is relatively inelastic- in the LONG run- it may prove to be VERY elastic as people make longer term decisions regarding car purchases, where to live, etc.

Are these two reports comparing apples and oranges---or in this case dollar sales vs. gallons sold?

Are these two reports comparing apples and oranges---or in this case dollar sales vs. gallons sold?

Are these two reports comparing apples and oranges---or in this case dollar sales vs. gallons sold?

Are these two reports comparing apples and oranges---or in this case dollar sales vs. gallons sold?

I have ridden the bus to work every day for the past 8 years. I have mixed feelings - the bus is now packed so I kind of resent that as it finally took high gas prices for these people to get out of their cars. On the other hand, if there are more people taking the bus there will be more routes at more convenient times. Now, if they could just keep gas high to keep these people on my bus.

The "American Gas Out" is the silliest idea since the Gas Tax Holiday. Not buying gas for a day will do NOTHING to affect the price. It will just mean that more people will buy more gas tomorrow. No change in demand-->no change in price.

If you want to stick it to the oil companies, then USE less gas.

You forget that they only estimate oil resources based on wells they currently pump from.

There have been vast amounts of oil found since that study was published but we haven’t begun drilling yet.

Now there is estimated to be over 150 years left of oil in reserves that have yet to be tapped. That means the oil companies don’t want to spend their own money and profits on developing them so they are saving up for when they WILL have to open up the new fields... 30 years from now.

Gasoline demand in the U.S. is quite inelastic, with small, long-term increases, and seasonal variations that are well known.

What is pushing gasoline prices up is not domestic demand. The problem is foreign demand.

For a decade or so, China and India -the two most populated countries on Earth- have been growing at 10 percent or more per year. This growth requires huge amounts of energy -as well as many other resources- which has caused worldwide increases in the prices of oil, steel, copper, gold... and food.

In addition, for several years, the value of the U.S. dollar has been falling, largely as a result of the Federal Reserve's policy of low interest rates. Since the U.S. dollar is the global trade currency, its decline is reflected in global inflation.

Oil is a finite resource. There's maybe 50 years left at current levels of consumption. Do we want to blow it out our tailpipes or use it to make plastics for medical devices, etc.?

Tax the stuff, raise the carbon tax, gas tax, all of them. Use part of the funds for tax rebates to the poor and to industries that need it. Use part for infra-structure, part for alternative fuels and technologies, part for a reduction of the deficit or tax cuts. But raise the tax so some of the revenue is going to good use.

Do you want to continue to have all the increases in the price of oil go to Wall Street speculators, Big Oil, and Opec? Based on the marvelous ads in the Washington Post, the oil companies can afford a little price reduction. If we take their data and extrapolate:
ExxonMobil $10B quarterly profit is $40B annual.
Profit is just 7.9% of each dollar in providing product.
Multiply by 13 to get revenue of $520B.
Oil Executives (not management) own 1.5% of stock or $7.8Billion in equity amongst a very small number of individuals.

Raise The Tax!!

From $2600 to $5300 is not an increase of $1900 nor could it be an increase from 5% to 8%. Is this inflation adjusted or income adjusted or just screwed up?

Saudi Arabia, Iran, Egypt, Syria, Iraq. Get our brave soldiers out of harms way and nuke the bastards. The first CEO that complains nuke him.

AMERICAN GAS OUT
May 7, 2008

Dear Sir or Madam:
We as the citizens of the united states need to make a stand against big oil and say you don’t run the country its WE THE PEOPLE OF THE UNITED STATES that are suppose to have control . SO I say we finally as a people come together and say no to high gas prices and BOYCOTT buying gas for one day which would send a message to big oil, since all the politicians in Washington play a lot of pondering with us as citizens and with the big oil lobby. The gas out should be on May 15th 2008.
Sincerely,
A concerned citizen

First, United States refineries do not run at full capacity and that is after allowing for maintenance shutdowns.

I often wonder about DOE statistics, if they are subject to political corruption as the rest of the Federal government seems to be. However, I was impressed by their statistics on Iraq.

Recent statistics showing nominal decreases or increases as compared to let's say last year at this time does not show the entire picture in someone's upcoming book. I think going back as far as ten (10) years shows a pattern of production and consumption as relating to supply and demand.

Interesting that through most Congressional Hearings I witnessed, Legislators were wholly dependent on the Oil Industry itself to provide statistics. Of course enviromental regulation has been the choice excuse by the Oil Industry to not expand refinery capacity through expanding existing refineries or building new refineries back to the Hearings lead by Senator Ted Stevens of Alaska several years back.

Recently the Govinator or Terminator of California did terminate a proposal for building a new unloading Pier somewhere in that state due to enviromental issues. I suppose if the Oil Industry drags its feet in meeting enviromental regulations there is de-acceleration meeting demands. Hey why not slow down the process, prices will only increase leading to record breaking profits.

And that brings us back to "reasonable profit" a point somewhere above "normal profit" on those bean counter and economist charts. I have suggested that there is a point on those charts whereby the inflation caused by profits is detrimental to society itself, call that anti-trust or a violation of rights to Incorporate on United States soil, makes no difference to me. On the domestic and international balance sheet, profits in the form of inflation equate to liabilities elsewhere to include negative growth conditions in under developed countries first and foremost, just the kind of places to incubate new terrorist cells.

So, it is a matter of national security to me, whether we are talking about filling reserves that could have been filled prior to a rush to war or exciting chaos somewhere in the world due to food shortages. I think there is a correlation between a recent attack on al-queda in Somalia and food riots there, would you agree ?

First thing that conservatives have to get out of their minds is that "Corporations are people too". Corporations in America make money. Sometimes corporations will make cost effective decisions adhering to the law or not. Know of examples whereby Corporations informed the EPA that, "We are polluting today, send someone over to fine us". That is a cost effective solution used in the past by some "Corporations are people too", imagine that.

Oh, and there are one or two more whopping fallacies probably enabled through lobbyist ties that have yet to be revealed as inaccurate postulates which seem to be adopted as well, hmmm, let's say Congressional Urban legends ? Those two Oilmen in the Whitehouse are worthless. Perhaps they are confused, I submit, Rumsfeld was not confused at all.

Now how does that go, a drug is a drug is a drug, interesting.

What if..... And call me crazy... But what if the INCREASE IN DOMESTIC OIL CONSUMPTION IS TIED TO THE ILLEGAL IMMIGRATION PROBLEM that is… Of course… Tied to the Housing sector!!!

You know... They drive as well ;) 30million is no small number.

Amazing that 1. The impact of million of new drivers could account for increase in demand. and 2. The bust of the housing construction sector dramatically reduces consumption in materials costs as well as gas (everything uses petroleum these days)

And wow... the consumption raised with overall domestic growth... What an analysis!!

Lets go over the fundamentals again, which have to do with science.

1. Supplies of oil are inelastic, the current production rate is about the largest the world can sustain.

2. Demand is inelastic, current world-wide fossil fuel usage can't be reduced without severe functional disruption to modern life-supporting infrastructure due to limitations in current technologies and global pursuit of continuous growth.

This phenomenon, most puzzling to most economists, is the embodiment of the closed nature of our energy system, which is at the root of our current problems. Most economists do not understand this concept, because the idea of unending resources is at the root of capitalist economics, which is what they learn as they grow up.

This phenomenon disconnects the oil prices from supply/demand calculation, making it more a "system requirement", like air. What would happen to the price of air, if it was a finite, and increasingly short supply? You do the math.

Unortunately for us, in a system of closed (finite) resources, it would appear that Marx would have the upper hand after all. A really stunning conclusion today, but here it is upon us.