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By Robert Rapier on Sep 26, 2010 with 152 responses

The Lesson from Rising Ethanol Prices

I thought it was a bit humorous recently — when corn ethanol prices dipped and were cheaper than both sugarcane ethanol and gasoline (even when adjusted for lower energy content)  — that some corn ethanol proponents pointed to this as a watershed event. Their underlying message, which was repeated almost daily in the comments on my blog, was that corn ethanol had now reached the point of permanent price competitiveness with gasoline. But I have repeatedly warned about price volatility in the energy business; that nothing is permanent. Today natural gas is $4 per million BTUs, but a few years ago it was $15. Oil has traded between $10 and $150 over the past decade. And corn — upon which corn ethanol is dependent — is not only strongly influenced by energy prices, it is a commodity in its own right and has volatility that can be influenced by crop failures around the globe.

Those who highlighted corn ethanol’s competitiveness in the summer have been pretty silent on the topic lately. The reason is that ethanol prices are sharply on the rise:

Schork Oil Outlook: Ethanol’s Late Season Surge

Since the end of June, spot ethanol CBOT futures for October delivery have surged 43% on the back of a strong export market along with substantial spikes in corn and sugar feedstocks. Strength in this market is motivated by new estimates from the USDA. In short, the crop yield forecast has been lowered and the volume dedicated to ethanol output has been raised.

So back in June, ethanol was briefly cheaper than gasoline. Today, ethanol on the spot market trades for $26.84 per million BTUs ($2.04 per gallon) and gasoline trades for $16.87 per million BTUs ($1.94 per gallon). (Sources, CBOT, EIA). But the point here is not to simply highlight that ethanol is now 60% more expensive than gasoline. After all, in the long run we may pay $50 per million BTUs of liquid fuel and be happy that the supplies are available. The lesson here is that energy prices, whether current as in this case with corn ethanol — or future speculations based on cellulosic ethanol or algae — are going to be subject to great volatility. In this context, a future projection of $2/gallon for cellulosic ethanol is meaningless.

A year from now, ethanol may once again be competitive with gasoline, or the situation could be even worse than it is now. I think one of the biggest risks hanging over the corn ethanol industry is that of a major crop failure in the Midwest. Imagine a terrible drought in Iowa that causes corn crops to fail. A corn ethanol industry that is heavily dependent on Iowa corn is going to need to scramble for supplies, and prices will be driven much higher. That would shed a spotlight on the industry that they would rather avoid; that is that ethanol could be subject to extreme volatility due to a crop failure OR to volatility in the energy markets. Public support for corn ethanol would probably vanish in such an event. People would be dealing with higher food prices as well if crops failed, once again focusing attention on the food versus fuel debate.

This scenario is certainly not out of the question. Energy cycles take place over many years, and most of the corn ethanol industry is less than a decade old. Whether the industry survives in the long run will be highly dependent on the crops coming in reliably year after year to keep price volatility to a minimum. The lessons people should take from rising ethanol prices are that energy prices are volatile, and nothing is permanent.

  1. By mus302 on September 26, 2010 at 4:41 am

    Robert, the phrase ‘you make hay while the sun is shining’ comes to mind. Opponents of ethanol use any event no matter how temporary to beat up ethanol and proponents use any event no matter how temporary to boost ethanol. That same things plays at across all issues.

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  2. By Rufus on September 26, 2010 at 11:32 am

    Well, thank goodness, with the new engines that BTU differential will be negated by the Octane Differential. It will, simply, be a price per gallon equation.

    What happens when some crazed jihadis sink a couple of oil tankers in the Straits of Hormuz?

    I think the key, though, is that it’s highly likely corn will be back in the $3.50/bu to $4.00/bu range in 2011, but it’s highly “Unlikely” that gasoline won’t be at least $0.50/gal higher.

    According to the Wiki Megaprojects data we’re, now, getting down to around 3 million bb/day “new” supply from oil, and that is Not enough to hold production steady. Add in 10% Growth in China, and India, and OPEC, itself, and it’s looking a bit dodgey for oil supplies from here on out.

    You Are right, though, Robert. After watching Oil Prices go from $50.00 to $147.00, down to $35.00, and back up to $86.00, we should realize that predicting energy prices (short run) is a “Mug’s Game.”

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  3. By rrapier on September 26, 2010 at 12:17 pm

    I think the key, though, is that it’s highly likely corn will be back in the $3.50/bu to $4.00/bu range in 2011, but it’s highly “Unlikely” that gasoline won’t be at least $0.50/gal higher.

    But the point here is not that we shouldn’t develop alternatives to gasoline. Of course we should.

    The point is that to use an event like sub-$2 ethanol to imply that this is a new, permanent situation and we are never looking back is pretty silly given the inputs that ethanol has to depend upon. While corn may be down in the $3.50 range next year, it is also likely that it will spike back up in the future, on a fairly regular basis.

    RR

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  4. By Kit P on September 26, 2010 at 12:25 pm

    “Today natural gas is $4 per million
    BTUs, but a few years ago it was $15.”

     

    I can also recall NG being $1.50/MMBTU
    which is why I used $1.00/MMBTU for the cost in my business plans.

     

    “The lessons people should take from
    rising ethanol prices are that energy prices are volatile, and
    nothing is permanent.”

     

    Energy production facilities have high
    capital costs but produce for many years. However, the cost of
    energy shortages is staggering. The most expensive and and dirtiest
    BTU is the BTU not available.

     

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  5. By Wendell Mercantile on September 26, 2010 at 12:27 pm

    I think one of the biggest risks hanging over the corn ethanol industry is that of a major crop failure in the Midwest. Imagine a terrible drought in Iowa that causes corn crops to fail.

    A terrible drought would certainly be a risk, but a more likely scenario is that monoculture corn farmers will continue to abuse* the soil, sucking out the nutrients and tilth that took tens of thousands of years to develop, so that corn will only grow when sustained by increasingly large amounts of applied synthetic fertilizers, herbicides, and fungicides.

    In much of the Corn Belt already the soil has become nothing more than a sterile matrix whose only function is to serve as a bed holding seed corn in contact with the water and synthetic chemicals growing corn draws its energy from.
    ___________________
    * Now that corn futures are ticking upward again, how many farmers will have the will and discipline not to plant another year of corn-on-corn next year…and the year after…and the year after, instead of letting a field lay fallow to regenerate, or plant it with a less lucrative crop that helps rebuild the nutrients in the soil?

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  6. By russ-finley on September 26, 2010 at 12:28 pm

    Robert has summarized what has been pointed out in the comments and other articles many times before. In a nutshell, biofuels will not save consumers money on average. As peak oil arrives, the costs of all liquid fuels will rise. Fuel prices dependent on the additional variable of crop yields will be especially volatile.

    More evidence that electrification of transport may be the best way forward.

    Rufus said:

    Well, thank goodness, with the new engines that BTU differential will be negated by the Octane Differential. It will, simply, be a price per gallon equation.

    A small consolation when we are paying $9 for a gallon of liquid fuel, assuming such engines ever get mass-produced and you don’t mind driving out of your way to find a gas station selling E85 corn ethanol.

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  7. By Wendell Mercantile on September 26, 2010 at 12:33 pm

    Well, thank goodness, with the new engines that BTU differential will be negated by the Octane Differential.

     

    Rufus~

    Engines that can use the high octane of ethanol have been available for more than 20 years in the form of the compression ignition engines Scania developed and that Sweden uses in its buses.

    Why haven’t our ag equipment makers taken advantage of them and put them in tractors and corn pickers.

    Why haven’t the lobbying organizations for the ethanol industry and the corn growers ever asked John Deers, New Holland, and Case International to make them available so that corn farmers can be at the leading edge of  using ethanol burning engines?

    The next time you see RFA’s Bob Dinneen, please ask him that.

     

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  8. By Rufus on September 26, 2010 at 12:46 pm

    There’ll be more Corn, AND Beans planted next year. Don’t forget, Beans are up around $11.00. I imagine the Tractors are running in Brazil, and Argentina, as we speak.

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  9. By rrapier on September 26, 2010 at 12:47 pm

    A terrible drought would certainly be a risk, but a more likely scenario is that monoculture corn farmers will continue to abuse* the soil, sucking out the nutrients and tilth that took tens of thousands of years to develop,

    The latter issue may develop over time, but the former is hanging out there right now. We know that crops fail, or come in far lower than expected. That is going to be an annual risk every year, and could in any given year drive prices very high, very fast.

    RR

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  10. By Wendell Mercantile on September 26, 2010 at 12:55 pm

    Rufus~

    Rather ominous isn’t that both corn and beans are ticking up? As the same time the earth’s population steadily continues to increase?

    That can only mean the spectre of debating “food or fuel” will once again come to the forefront. Having that issue on the front pages wasn’t good for the ethanol industry last time, and won’t be good for their image this time.

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  11. By Rufus on September 26, 2010 at 1:30 pm

    Nope, not good. Another “Perfect Storm” is lining up against the ethanol industry, and a good bit of it may not survive. E85 will, likely, be the first candidate for the “firing squad.”

    The Blenders credit seems almost certainly doomed. That, plus a run-up in corn prices just as gasoline demand is weakening (temporary, though, it may be) again means “no bucks in E85″ for awhile (probably at least a year.)

    The “mandate” will save some biorefiners, but some will, surely, take the pipe – one more freakin’ time.

    The only positive news is: Sugar has gone up more than corn, and our exports are picking up (we’re even back to exporting to Brazil.) A couple of large countries are mandating ethanol blends starting on Jan 1st, 2011. Some solace.

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  12. By mus302 on September 26, 2010 at 1:33 pm

    Wendell Mercantile, diesel engines are compression ignition. So just about every tractor and corn picker already has that type of engine.

    Scania is using ethanol in compression ignition engines to displace diesel consumption. In Europe they have a far greater need to displace diesel consumption since such a large percentage of their fleet is diesel powered. Here we have a far greater need to displace gasoline consumption.

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  13. By Duracomm on September 26, 2010 at 1:42 pm

    Rufus said,

    There’ll be more Corn, AND Beans planted next year. Don’t forget, Beans are up around $11.00. I imagine the Tractors are running in Brazil, and Argentina, as we speak.

    Those tractors are off to a running start causing vast amounts of environmental destruction in the process.

    All so the ethanol producer welfare recipients lined up at the government trough get to keep receiving that sweet , sweet taxpayer money.

    For producing a fuel adulterant that

    1. Increases environmental destruction
    2. Increases air pollution
    3. Decreases fuel economy
    4. Uses massive amounts of petroleum to produce.
    5. Does nothing to decrease petroleum imports.

    Difficult to imagine a more thorough, comprehensive, concentrated package of fail than the current ethanol policy in the US.

    Which explains why there are two classes of ethanol supporters

    1. The technically clueless
    2. Those that benefit from the current corrupt, destructive ethanol policies.

    America’s grasslands vanishing amid agricultural boom

    DE SMET, S.D. — To the west of this small town, which helped inspire Laura Ingalls Wilder’s classic book series that included Little House on the Prairie, the view opens to a vast, unbroken landscape that seems to roll on forever.

    The USA’s open plains and prairies are threatened by soaring grain prices that have increased their value as cropland. Grain prices have been driven up by a seemingly insatiable worldwide appetite for food and by federal energy policies promoting corn-based ethanol…

    As a result, landowners in South Dakota and across the USA’s Farm Belt are converting to cropland marginally productive acres that for decades — in some cases, centuries — have remained uncultivated because farming them wouldn’t have been profitable or because of their environmental value.

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  14. By Rufus on September 26, 2010 at 1:57 pm

    Duracomm, we’re ADDING 4.7 Million Acres to the Conservation Reserve Program this year, NOT Subtracting it. Get your facts straight.

    Also, those farmers up there are getting More bu/acre with less fertilizer/bu every year. And, more, and more of them are doing it “No-Till/Low Till.”

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  15. By Duracomm on September 26, 2010 at 2:22 pm

    Rufus, once again ignoring facts on the ground to support ethanol welfare.

    And showing his amazing ability to focus on one little twig of a factoid while ignoring the forest of fail his ethanol welfare support has generated. said,

    we’re ADDING 4.7 Million Acres to the Conservation Reserve Program this year, NOT Subtracting it.

    So that fragile virgin prairie being plowed out and destroyed is a figment of the reporters imagination?

    Also, those farmers up there are getting More bu/acre with less fertilizer/bu every year. And, more, and more of them are doing it “No-Till/Low Till.”

    Well great Rufus know some ag buzzwords, can’t say that I’m impressed.

    Furthermore, no-till (while a really nice system) does not change the fact that farmground has a biotic diversity about one species above a parking lot.

    As opposed to the rich, wildlife supporting, biologically diverse rangeland that was destroyed to support your ethanol welfare.

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  16. By mus302 on September 26, 2010 at 2:35 pm

    Duracomm said:

    Which explains why there are two classes of ethanol supporters
    1. The technically clueless

    2. Those that benefit from the current corrupt, destructive ethanol policies.

    Elitist? Yes.

    Offensive? Yes.

    Persuasive? No.

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  17. By Rufus on September 26, 2010 at 2:42 pm

    Duracomm, have you EVER been on a farm? Do you Hunt? Thought not.

    Have you even planted a garden? Yeah, well, let me give you a hint. If you want to kill some rabbits go hitch a ride on a combine. If you want to kill some doves, or quail check out the wheat fields. Deer? Plant a garden.

    You want “biologically diverse” follow the farmer around. You want to starve? Live on rattlesnakes? Go pitch a tent on the “rangeland.”

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  18. By Kit P on September 26, 2010 at 10:47 am

    “Elitist? Yes.”

     

    Rufus you will be the first jarhead
    elected to the Elitist Hall of Fame. Congrats!

     

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  19. By Duracomm on September 26, 2010 at 4:54 pm

    Rufus,

    IIRC you say you work as an insurance salesman. That position leaves you zero room to questions others comments based on whether they farm or not.

    You said,

    You want “biologically diverse” follow the farmer around.

    Your point is destroyed by the fact that the pheasant hunters and groups like ducks unlimited are always pushing for the conversion of cropland back to rangeland.

    Why? Because the habitat and hunting opportunity on rangeland are vastly superior to that of farmground.

    Farming is necessary and can be environmentally sustainable.

    The problem is lunatic government ag policies and in particular recently the ethanol welfare agenda have completely disconnected economics and sustainability while creating vast environmental damage.

    What has not been recognized is the widespread economic and and social disruption ag subsidies have caused in the ag communities they were supposed to help.

    It is nearly impossible for a young person to get started in farming these days because ag subsidies, and ethanol welfare programs have driven land prices far above their productive value.

    Of course minor little amounts of personal destruction like this don’t bother the supporters of ethanol welfare.

    They just want to keep that sweet, sweet taxpayer money flowing to ADM and the other ethanol welfare recipients.

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  20. By Duracomm on September 26, 2010 at 5:27 pm

    Rufus

    Your short series of comments on this thread illustrate just how insane the system has gotten and how fast you have to spin your positions to justify it.

    1. When pointed out that commodity prices are going up you say that more crops are being planted.

    2. When it is pointed out that all this extra planting is causing environmental destruction you say more land is being enrolled in CRP

    There it is. Your ethanol welfare support and the government ag program insanity have set up a system that is trying to simultaneously accomplish diametrically opposed tasks.

    1. On one hand commodity prices are higher due to increased demand caused by ethanol welfare. So we will farm more ground to reduce costs.

    2. On the other hand this extra farming is causing environmental destruction so the government will pay farmers to convert their farmground back to rangeland.

    What The Foaming at the mouth kind of stupidity do we have here?

    Only an ethanol welfare supporter could hold those two mutually impossible positions at the same time and not pass out due to cognitive dissonance.

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  21. By ronald-steenblik on September 26, 2010 at 5:59 pm

    Duracomm wrote:

    What The Foaming at the mouth kind of stupidity do we have here?

    You are making a lot of good points. But personal insults like this have no place on these pages. Do us all a favor, please, and dispense with them.

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  22. By Benny BND Cole on September 26, 2010 at 6:00 pm

    Barring some unforeseen breakthroughs, it seems like the PHEV is our best bet.

    If widely adopted, liquid fuel consumption would drop so much, it doesn’t really matter much if we use biofuel or gasoline.

    Fleets, of course, can go to CNG. So can cars, but it may take time for the infrastructure to get built out. The Internet may may the CNG build out a lot easier–you can go online from your car and find out where the nearest CNG stations are. Or check online before you drive.

    In either event, we get cleaner air and a better balance of trade-more prosperity more clean air. Hard to not like that.

    Ethanol is a farm subsidy, one of many built into our economy, along with rural infrastructure subsidies and farm payouts.

    Remember, though; It was that fat ghetto lady that bankrupted America. Not the $3 trillion we spent in Iraqistan on what Cheney ultimately called an oil war.

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  23. By Duracomm on September 26, 2010 at 6:43 pm

    Ron,

    Unfortunately, What The Foaming at the mouth stupidity is an accurate description of the current absurdity that is US ag policy.

    It was a policy comment not a personal insult.

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  24. By Duracomm on September 26, 2010 at 6:55 pm

    Benny,

    Don’t want to get to far in the weeds, “but” , lots of issues are combining to bankrupt America.

    The Debt Tsunami
    The CBO’s latest warning on the long-term deficit is scarier than ever.

    The CBO’s new long-term forecast is considerably more pessimistic than the one it issued 18 months ago, mostly because of the recession, which has driven the budget deficit above 12 percent of GDP.

    But the report makes clear that the recent economic downturn did not cause the government’s predicament and that the situation will not necessarily improve once the economy does. The principal cause of long-term fiscal distress is the aging of the U.S. population, coupled with rising health-care costs — which, together, will drive spending on Medicare, Medicaid and Social Security to new heights.

    Unchecked, federal spending on Medicare and Medicaid combined will grow from almost 5 percent of GDP today to almost 10 percent by 2035 — and to more than 17 percent of GDP by 2080.

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  25. By Duracomm on September 26, 2010 at 7:04 pm

    Benny,

    For a more “pessimistic” budget outlook there is this article.

    Realistically the current insanity that is ag policy is a tiny little drop in the bucket.

    The problem is everybody is defending their tiny little drop of insanity to the death and that lends itself to a rather abrupt end to the good times when the politicians run out of other peoples money to spend (TM Margaret Thatcher)

    Our Debt Is More Than All the Money in the World

    Just a reminder: We are in trouble.

    I have argued that the real national debt is about $130 trillion. Let’s say I’m being pessimistic. Forbes, in a 2008 article, came up with a lower number: $70 trillion. Let’s say the sunny optimists at Forbes got it right and I got it wrong.

    For perspective: At the time that 2008 article was written, the entire supply of money in the world (“broad money,” i.e., global M3, meaning cash, consumer-account deposits, checkable accounts, CDs, long-term deposits, travelers’ checks, money-market funds, the whole enchilada) was estimated to be just under $60 trillion.

    Which is to say: The optimistic view is that our outstanding obligations amount to more than all of the money in the world.

    Global GDP in 2008? Also about $60 trillion.

    Meaning that the optimistic view is that our federal obligations outpace the entire annual economic output of human civilization.

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  26. By Rufus on September 26, 2010 at 7:41 pm

    Duracomm, 100 years ago we rowcropped 400 Million Acres. Today, we rowcrop a little less than 250 Million Acres. My two statements were Not mutually exclusive. It is very likely that some milo, and rice, or wheat acreage could be planted in corn this year while other acreage goes into the CRP.

    The fact remains, we’re paying landowners Not to farm over 30 Million Acres.

    You can relax, Bubba; you’re getting everything you want. The Subsidy is going away. The Tariff is going away, and the “alternate” fuel E85 is going to be severely damaged. Enjoy the news. As Bastardi would say, “it’s the only news you’ve got.” :)

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  27. By Duracomm on September 26, 2010 at 7:53 pm

    Rufus, in all good cheer, said,

    You can relax, Bubba; you’re getting everything you want. The Subsidy is going away. The Tariff is going away, and the “alternate” fuel E85 is going to be severely damaged. Enjoy the news. As Bastardi would say, “it’s the only news you’ve got.” :)

    Someday the only discussion of ethanol that is going to interest me will be what type of barley pop I want to order.

    Someday.

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  28. By Rufus on September 26, 2010 at 8:15 pm

    Just one word of advice:

    Be Careful What You Pray For.

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  29. By Wendell Mercantile on September 26, 2010 at 9:00 pm

    diesel engines are compression ignition. So just about every tractor and corn picker already has that type of engine.

     

    mus302~

     

    I know diesel engines are compression ignition (CI) engines. But the CI engines in Sweden uses E95 and not diesel fuel, that why I called them CI engines. 

     

    My point was that both corn farmers and the ethanol industry should want corn farmers to use ag equipment that use E95 instead of diesel fuel. How can corn farmers and the ethanol industry expect us to use ethanol if they aren’t willing to do it themselves and power their farm equipment with CI engines that can burn the fuel they produce — especially since those engines aren’t revolutionary and have been available for more than 20 years in Sweden?

     

    Surely for the sake of not appearing to be hypocrites, the ethanol lobbyists and NCGA should have at least put themselves on record as saying they want farm equipment with CI engines that burn E95.

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  30. By Perry on September 27, 2010 at 12:13 am

    Wendell and Duracomm, the two of you clearly hate ethanol. Can either of you offer a better substitute for gasoline? Something we can put in our tanks today? In 36 years, the last drop of oil will be auctioned on Ebay. Surely we can do more than rant against ethanol in the meantime.

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  31. By Duracomm on September 27, 2010 at 1:20 am

    Perry,

    Don’t have a hate for ethanol, just really dislike the wasted resources and collateral damage caused by current ethanol policies.

    Corn ethanol in particular has several substantial technical hurdles blocking its use as an effective substitute for petroleum based fuels.

    1. There is not an unlimited amount of land available to raise corn. There may be lots of land in the US but big chunks of it are not fit for raising corn.

    Generally the counterargument offered at this point is cellulosic ethanol. OK, but could we actually have something slightly bigger than a pilot plant effectively on production for 2 or 3 years first before we count on that particular product.

    2. I see corn ethanol as a highly fragile feedstock. Drought tops the potential show stoppers. Others that are not thought of as often include too much early moisture (can’t plant) too much late moisture (can’t cut), early frost, lack of heat, too much heat, etc. One of the wild cards would be the arrival of a new corn pest or disease that would substantially cut yields.

    The US ag does an amazing job of pulling good yields out of bad conditions but all it takes is one bad year and we will have as they say issues.

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  32. By Duracomm on September 27, 2010 at 1:37 am

    Perry,

    In 36 years when the last drop of oil is auctioned on ebay driving cars is going to be the least of our problems.

    There will however be abundant career opportunities in agriculture as all of those draft horses are not going to drive themselves down the rows.

    See the problem here?

    If oil disappears the modern ag system that supplies the feedstock for corn ethanol is going to be one of the first thing to collapse. No petroleum driven agriculture no corn for ethanol production.

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  33. By Bioblogger on September 27, 2010 at 2:16 am

    All this means to me is that the U.S. needs more choices at the pump and automobiles that can utilize a variety of fuels – like Brazil. Brazil is hardly energy “nirvana” but they are much more self-reliant, enjoy a healthy balance of trade regarding transportation fuels, and they benefit from multiple choices at the pump – half being non-fossil. Enabling market entry of different non-fossil fuels is the only way we can end our “oil addiction” and many of the “cold turkey” consequences of it. Of course oil will fluctuate and so will corn ethanol. But I submit more biofuels will 1) make transportation fuel prices fluctuate less if the incentives of gross speculation are mitigated and 2) make oil “boring” as a strategic commodity – which would serve to greatly reduce energy insecurity in the world. Constrained resource access causes price instability.

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  34. By Rufus on September 27, 2010 at 2:38 am

    Of course, you can always ask yourself, “what would the price of gasoline be if we Didn’t have that 875,000 gallons of ethanol every day?”

    And, before you jump in and say, “oh, it’d be the same because Saudi Arabia would just produce more,” let me remind you that Saudi Arabia didn’t “jump in” and produce more when the price of oil was climbing to $147.00/bbl.

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  35. By Rufus on September 27, 2010 at 2:40 am

    Oops,

    875,000 Barrels of Oil every day.

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  36. By Perry on September 27, 2010 at 2:54 am

    Duracomm said:

    Perry,

    In 36 years when the last drop of oil is auctioned on ebay driving cars is going to be the least of our problems.


     

    Never mind 36 years from now. Let’s talk about next year, or the year after. Peak oil bites us on the butt. 50 million people have payments to make on their useless hunks of junk. But, they can’t get to work, because they can’t find fuel or can’t afford it any longer. Do you think they’ll care what the EROI of corn ethanol is? I don’t think so. They’re gonna want something….anything….to put in their otherwise useless cars.

     

    It’s probably time to put warning signs on new cars. Caution: You may be unable to obtain fuel for this vehicle in the near future.

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  37. By Rufus on September 27, 2010 at 3:27 am

    Kit, I just went back and read your answer to my question. Thanks. It helped in my effort to get my mind around the “usefulness” of solar.

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  38. By Biocrude on September 27, 2010 at 3:28 am

    Wow, this is one of the best discussions I’ve seen in a long time on this blog, and I think it is important for someone like me, who mainly reads and doesn’t post, to chime in every now and then.  

    First off, my hat goes off to Rufus, who almost always remains civil, and valiantly defends the ethanol industry with great optimism and vigor.  Second, I would say that my favorite quote was when Perry suggested that Rufus sell tickets to people to find out what his real name is.  Perry, you had me laughing out loud, and you can add me to that list.  

    RR, you are a well admired and respected energy expert.  I always like checking out your take on anything Clean Tech, and I don’t think you are an enemy of EtOH :)

    In response to this thread, I have a few points I would like to make.  As I see it, the real problem is the US dependency on oil, and our current healthcare situation.  Both are going to bankrupt us quickly in the future if we don’t do something swiftly.  IMHO, here are the steps we need to take:

    -Reduce the strategic value of petroleum (Anne Korin is a champion of this idea, “Turning Oil into Salt.”  http://www.youtube.com/watch?v=znoliPCqWYQ)  Use every means possible to strip oil of its strategic value, incentivizing mass transportation, bike commuting, tele commuting, carpooling, increasing availability of renewable fuels that are here today like biodiesel, ethanol, methanol, autogas, PHEVs and BEVs.  Also, utilizing CNG, and LNG.  Even CTL liquid fuels can make sense as much as I hate coal.  However, what is the comparison of a coal power plant and all the destruction that went into removing the mountain top for the coal, compared to a war ravaged country, where tanker trucks are routinely blown up, and oil fields are set on fire?  I might have to side with coal, and try to enact as many “dirty technologies” aimed at cleaning up existing practices of extracting fossil fuels.  ( A great site I was turned onto from this blog, and you don’t hear about it in mainstream media, because it has nothing to do with Lindsey Lohan… http://www.ogi-tm.com/ogi_late…..hreats.php )

    -We need to stop arguing about which alternative is the best option, and enact all of them.  Focus on who the real enemy is, petroleum.  The ILUC emissions, and GHG gasses will be much higher in a disaster/emergency scenario where the entire US is simply trying to survive, and no longer focuses on whether they are in the carpool lane of their commute.   Environmentalists love to find any problem with an emerging clean technology, kill it before it can become viable, and thus we are left with business as usual.  Well, BAU is broken, and the only certainty out there is that oil is going to continue to become harder and harder to extract, whereas clean technology will continue to become more and more efficient.  Just look at how far we’ve come from the PCs of the 80s, to the iPhone 4 of today.  That is human ingenuity at its best.  

    -Enact environmental, agricultural and social policies that focus on making our world, and the human beings that live here more healthy.  Let’s clean up the air in our cities so people aren’t getting asthma and COPD from breathing the air they live in.  Let’s incentivize farmers to grow rotational crops, so that the land is not being raped of nutrients, and using petrochemical fertilizers that further contribute to the dead zone in our oceans.  There are plenty of sensible energy crops that can be used for both food AND fuel, as well as provide symbiotic nutrients and qualities to the soils.  Let’s educate Americans on how much meat they really need to eat, and regulate how the entire livestock industry in the US is operated.  Get rid of the antibiotics, GMO foods, and feedlots.  If we start eating sustainably, we can start farming and raising livestock sustainably.  It all starts with education.  

    -One last point.  EVs are a great idea, but it often seems like the EV proponents out there are the most delusional.  Cars are on the road for an average of 17 years after they are purchased at a dealership.  We have almost 250 million cars in the US today.  If you are going to promote EVs, that’s great, but I want a more immediate solution than what the world looks like in 2035.  I just hope our EV world doesn’t grow out of a post apocalyptic Mad Max scenario…  

    -@ Ron Steenblik, can you please give us the breakdown in your opinion of what the petroleum industry receives as “subsidies” or “tax breaks” and which ones, if any you think they could do without?  Ie, is there some money there that we could direct into a responsible petroleum reduction energy program?  

     

     

     

     

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  39. By mac on September 27, 2010 at 3:33 am

    “Caution: You may be unable to obtain fuel for this vehicle in the near future”

    Are these warning signs going to be on electric vehicles too ?.(LOL)

    Like I told Rufus a while back,,, ….. When we run out of oil ……

    …. “Drivers will crawl on their bellies like men dying of thirst in the desert,
    begging for just a single drop of E-85″

    [link]      
  40. By Perry on September 27, 2010 at 3:49 am

    Biocrude said:

    -One last point.  EVs are a great idea, but it often seems like the EV proponents out there are the most delusional.  Cars are on the road for an average of 17 years after they are purchased at a dealership.  We have almost 250 million cars in the US today.  If you are going to promote EVs, that’s great, but I want a more immediate solution than what the world looks like in 2035.  I just hope our EV world doesn’t grow out of a post apocalyptic Mad Max scenario…  


     

    Why can’t EV’s be an immediate solution? If peak oil did hit next year, we’d never know it with 10 million new EV’s on the road. As oil production wanes, we increase the number of EV’s on the roads. That’s not a suggestion or wishful thinking. It’s simply what we’ll have to do to cope. Biofuels can also help ease the pain. Joe Blow isn’t going to junk the Lexus he still owes 40 payments on. Like a junky hooked on smack, he’ll need to be weaned slowly.

     

    That wasn’t me with the Rufus joke btw. I always believed Rufus when he said he was a retired salesman. I wouldn’t hide it if I were an ethanol lobbyist. Nothing to be ashamed of. It’s not like they’re pimping drugs. It’s more like they’re pushing methadone. Completely legal, and probably the best way to deal with 200 million American junkies.

    [link]      
  41. By carbonbridge on September 27, 2010 at 3:58 am

     Biocrude said:

    Wow, this is one of the best discussions I’ve seen in a long time on this blog, and I think it is important for someone like me, who mainly reads and doesn’t post, to chime in every now and then.  ….my favorite quote was when _____? suggested that Rufus sell tickets to people to find out what his real name is. 

     


     

    Mr. or Mrs. Biocrude:  My suggestion is to become a member, post more of your opinions instead of just lurking and use your own name, not an alias.  Then you will gain credibility.  You wrote and shared a wonderful new tome of opinions.  [As I see it, the real problem is the US dependency on oil, and our current healthcare situation.]  There are 100′s of other readers out there who could also share their opinions or even ask some of these resident engineers here further legitimate questions.  I hope that others in this space follow your lead…  Good luck.

    –Mark

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  42. By mac on September 27, 2010 at 4:34 am

    Perry,

    The bit about people crawling on their bellies to get E-85 was not meant to be sarcastic or a slam on Rufus.

    That’s exactly what will happen. People will be screaming at the government crying “Why didn’t you crank up the ethanol production, when you knew this was coming.!!!!! ”

    And, your are absolutely right. They won’t give a flying flip about the EROEI of ethanol.

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  43. By rrapier on September 27, 2010 at 4:39 am

    And, before you jump in and say, “oh, it’d be the same because Saudi Arabia would just produce more,” let me remind you that Saudi Arabia didn’t “jump in” and produce more when the price of oil was climbing to $147.00/bbl.

    I am in favor of reducing our dependence on Saudi Arabia as much as possible, but you are badly wrong about what you just wrote. As oil prices ran up from late 2007 to mid-2008, the Saudis raised oil production from 8.6 MMBPD (August 2007) to 9.7 MMBPD (July 2008; the record month). When prices crashed, they dropped production back down.

    RR

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  44. By Perry on September 27, 2010 at 5:04 am

    mac said:

     People will be screaming at the government crying “Why didn’t you crank up the ethanol production, when you knew this was coming.!!!!! ”


     

    The sad part is, they do know it’s coming. It’s hard to find an educated person anywhere who doesn’t know it’s coming. We’re like deer in the headlights. 

    [link]      
  45. By Kit P on September 27, 2010 at 9:09 am

    “It helped in my effort to get my
    mind around the “usefulness” of solar.”

     

    That is right Rufus, even very small
    fractions are useful.

    [link]      
  46. By Wendell Mercantile on September 27, 2010 at 9:47 am

    …the two of you clearly hate ethanol. Can either of you offer a better
    substitute for gasoline? Something we can put in our tanks today?

     

    Perry~

    I don’t hate ethanol as a fuel.  As I’ve said before, I hate the politics, backroom shenanigans, kick-backs, and subsidies that have been part of Big Corn and Big Ethanol. I also don’t care for what Big Corn and industrial monoculture is doing to the environment and the thick, fertile soil across the Corn Belt that took tens of thousands of years to develop.

    An alternative we could put in place quickly:  Methanol from coal, natural gas, and bio-gasifiers. Had all the subsidies and tax credits that have gone into corn ethanol over the last three decades gone instead to developing a methanol fuel infrastructure, we’d be in much better shape than we are now.

     

     

     

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  47. By Duracomm on September 27, 2010 at 10:46 am

    Perry said,

    Never mind 36 years from now. Let’s talk about next year, or the year after. Peak oil bites us on the butt. 50 million people have payments to make on their useless hunks of junk. But, they can’t get to work, because they can’t find fuel or can’t afford it any longer. Do you think they’ll care what the EROI of corn ethanol is? I don’t think so. They’re gonna want something….anything….to put in their otherwise useless cars.

    The problem is corn production requires lots of petroleum. From crop chemicals to fertilizer (big user of petroleum) to farm machinery and transport infrastructure that runs on petroleum fuel.

    All of this takes massive amounts of petroleum and when farmers start cutting back on fertilizer levels when the price of fertilizer sky rockets corn yields are going to fall off. And then we start getting into a supply problem.

    Corn ethanol production is tightly coupled to petroleum consumption. Anything that drives up oil prices is going to drive up ethanol prices and likely reduce ethanol production levels.

    Which means in a peak oil scenario corn ethanol won’t be able to act as a replacement for petroleum.

    [link]      
  48. By Kit P on September 27, 2010 at 11:21 am

    Biocrude, thanks for the link. BS
    artists are much more believable with good quality emotional music.

     

    What is wrong with doing things for
    good old logical reasons? Like riding a bike to work because you
    enjoy riding a bike.

     

    “Environmentalists love to find any
    problem with an emerging clean technology ..”

     

    Here is the problem with your approach
    Biocrude, you want to counter one emotional agrument with another.
    However, to get an engineer like me design something you need a
    logical approach. To get a banker to approve a loan to pay me to do
    the engineering, you need a logical approach. Even if I think
    something is a great idea and let my emotions cloud my judgment, the
    banker is going to hire someone like RR to perform due diligence or
    vice versa.

     

    “whereas clean technology will
    continue to become more and more efficient.”

     

    This is an example of false logic.
    First I want to know what you mean by clean and efficient. A
    practical matter would be to taking waste biomass to use as an energy
    source. I can show using LCA that emission are reduced. However,
    regulators are still going to require best available technology (BAT)
    at the point of production to further reduce emission. This will
    actually reduce efficiencies. Worse than that, it will kill the
    economics and nothing will get improved.

     

    “Let’s clean up the air in our cities
    so people aren’t getting asthma and COPD from breathing the air they
    live in.”

     

    What Biocrude is now doing is gunny
    sacking by bring up unrelated issues. First Biocrude brings up the
    strategic issues of oil and now he has thrown health issues into the
    sack.

     

    The logical way to solve a problem is
    to identify the root cause and correct it. The primary causes of
    COPD is smoking, occupational exposure, and indoor air quality
    resulting from smoking and biomass cooking (third world problem). So
    where is air pollution a problem?

     

    http://www.airnow.gov/

     

    Sorry to steal your thunder Biocrude
    but my generation already passed regulation and cleaned up the air.
    Most of us never started smoking either.

     

    “Let’s educate Americans”

     

    In one paragraph Biocrude list 12
    unrelated issues all of which Biocrude does not seem very well
    educated on. It sounds like Biocrude is more interested in Stalinist
    type reeducation camps to control other people he thinks is
    uneducated.

     

    I often hear that environmentalists are
    green on the outside and red on the inside. Rufus and I are both for
    corn ethanol because it creates rural jobs and is a step towards
    reducing oil imports. Mass reduction programs run by commies are not
    part of that agenda.

     

    “One last point”

     

    Hang in their Biocrude. You are
    articulate and should ‘chime in every now and then’ more often.
    Ideas that are developed without being challenged are not very well
    developed.

    [link]      
  49. By Kit P on September 27, 2010 at 11:50 am

    “Why can’t EV’s be an immediate
    solution? If peak oil did hit next year, we’d never know it with 10
    million new EV’s on the road.”

     

    The first logical reason is ‘peak oil’
    is not a problem. Maybe someday! BEV could reduce oil imports if
    we had the capacity to build ’10 million new’. However, at least two
    more things have to happen. Consumers have to buy them. Second BEV
    have to work on a reliable basis. Of course neither of those things
    have happened.

     

    “Completely legal, and probably the
    best way to deal with 200 million American junkies.”

     

    The flaw in Perry logic is that 200
    million American junkies do not think they are junkies. For 40 years
    I have had recreational drug users tell me about the hazards of
    radiation from nuke plants, so I am used to the irrational.

     

    The catch 22 of the environment
    movement is you have to find ’10 million new EV’s’ each year willing
    to shell out $10k extra for a problem they do not think they have.
    It is a little hard to compete with a red Mustang convertible.

    [link]      
  50. By Wendell Mercantile on September 27, 2010 at 12:07 pm

    But, they can’t get to work, because they can’t find fuel or can’t afford it any longer.

    Perry~

    I believe what you meant to say was, “They can’t go to work in their own cars.” They can still go to work.

    * They can walk.
    * They can ride bicycles.
    * They can ride motor scooters that get 75-80 or mpg.
    * They can van or car pool.
    * They can share an apartment or dorm room close to their place of work and go home for weekends.
    * They can move closer to where they work so they can walk or bike.

    Or their employers can do what many factories did in WW II. They set up pickup points for their workers and sent buses out to bring them to work, much as we do now with school kids.

    [link]      
  51. By Rufus on September 27, 2010 at 12:27 pm

    Robert, if you go here

    http://www.jodidb.org/WDS/Tabl…..ortId=2409

    you will see that Saudi Arabia was producing 9,206,000 bbl/day in Dec ’07, and 9,471,000 bbl/day in July ’08 – a whopping 265,000 bbl/day increase.

    [link]      
  52. By rrapier on September 27, 2010 at 2:41 pm

    Robert, if you go here

    http://www.jodidb.org/WDS/Tabl…..ortId=2409

    you will see that Saudi Arabia was producing 9,206,000 bbl/day in Dec ‘07, and 9,471,000 bbl/day in July ‘08 – a whopping 265,000 bbl/day increase.

    Three things, Rufus. First, nice cherry-picking. It is obvious why you started in December instead of November. By starting there you can avoid adding another 200,000 bbl/day to the mix. Likewise, by cutting off in July instead of August, you avoid another 60,000 bbl/day.

    Second, I have never used JODI for oil data. I don’t know how reliable their information is. I use the EIA for data because they have been very reliable with oil data (however very unreliable with respect to predicting the future).

    Finally, and perhaps most importantly, even your cherry-picked data shows that Saudi did increase production as oil prices rose. Hence, even by selecting the dates you did it stills shows that contrary to your claim, Saudi did increase production. And if you extend the timeline across the entire run-up in oil prices, you will see that they raised production by a total of 1 million barrels per day when oil prices started to rise.

    Your contention is simply inaccurate, even when you cherry-pick.

    RR

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  53. By Rufus on September 27, 2010 at 2:59 pm

    No, you don’t understand; it doesn’t matter. YOU said:

    As oil prices ran up from late 2007 to mid-2008, the Saudis raised oil production from 8.6 MMBPD (August 2007) to 9.7 MMBPD (July 2008; the record month).

    So, I used December to July. But, the fact that their peak was August is telling. They had to Strain to get that last little bit, and they didn’t do that until oil prices had already gotten very high.

    I’m just trying to make the point that we can’t rely on the Sauds, or anyone else, to do what is “Needed” for us to have Cheap Oil. Their interests lie elsewhere.

    In fact, I’ll have to look back, but I think they were actually “lowering” production from 2006 to 2007 when a significant proportion of the price increases were taking hold.

    [link]      
  54. By Rufus on September 27, 2010 at 3:15 pm

    Yeah, here we go:

    http://www.jodidb.org/WDS/Tabl…..ortId=2409

    In June of ’06 they were producing 9,401,000 bbl/day, and by Jan ’07 they had cut that by over a Million Barrels to 8,377,000 bbl/day.

    So, when all is said, and done, they made a “round trip” – cutting by a million, raising by a million, and ending up within a hundred thousand of where they started.

    Too slick for us, by a “fair amount.”

    [link]      
  55. By rrapier on September 27, 2010 at 3:16 pm

    So, I used December to July. But, the fact that their peak was August is telling. They had to Strain to get that last little bit, and they didn’t do that until oil prices had already gotten very high.

    No. You don’t understand Saudi. I wrote a lot about them during that time, and I can tell you exactly what happened. First, prices started to run up from June 2007 when they were in the $60s. By July they hit $70, were at $80 the 2nd week in September, $90 in October, etc. until they hit $147 in July 2008. The fact is that production was raised by 1 MM barrels per day over that time of rising prices of the 2nd half of 2007 through the 1st half of 2008. Or, if you just take the 1st half of 2008, you still have a substantial rise in production.

    Second, the Saudis don’t respond to prices by simply putting more oil on the market. The do not sell on the spot market. They sell to customers, and they increase when their customers ask for more. However, if they deem inventories to be at high levels, they will cut back deliveries to try to keep prices supported. When they were cutting production from the 2nd half of 2006, many argued that they had peaked. I said “Look at inventories.” They were globally at record highs, so the Saudis cutting production was consistent with their philosophy. I took a lot of grief at TOD by saying that they would raise production when inventories came down, but that is exactly what they did.

    So, while I have no interest in being dependent on the Saudis for oil, your whole line of argumentation is grossly in error. They did in fact substantially raise production when prices went high, but that was primarily because inventories had been drawn down. And they weren’t squeezing “that last little bit”, it is just that demand started softening and they started to cut back again.

    If you want to know what Saudi is going to do, just pay attention to global inventories. It is a very reliable predictor (until they can’t actually raise production further, but they aren’t at that point yet).

    RR

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  56. By mac on September 27, 2010 at 3:38 pm

    Wendell.

    Good conservation suggestions. The problem with conservation is that every barrel of oil saved in the industrialized world will likely be gobbled up by the developing world — China and India, etc. The net effect of even Herculean conservation efforts is likely. to be zero.

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  57. By Wendell Mercantile on September 27, 2010 at 4:08 pm

    The problem with conservation is that every barrel of oil saved in the industrialized world will likely be gobbled up by the developing world — China and India, etc.

    mac~

    That’s true. But I don’t know what we’ll do with the world’s population racing to 9,000,000,000 — all of whom will want to live the First World lifestyle they see on television, movies, and through the Internet. There simply aren’t going to be enough resources for nine billion people to live like most Americans. (Example: The average American (man, woman, and child) owns 0.48 cars. Extrapolate that to an entire world of nine billion and that would mean 4.1 billion cars. There’s not enough steel, rubber, glass, and plastic to build that many cars; enough concrete and asphalt to build roads for them to run them on; let alone the fuel to power them.)

    Something will have to change, but how do you convince about seven billion people to lower their expectations so the top two billion can can continue to live comfortably?

    I think in the long run we are all screwed.

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  58. By ronald-steenblik on September 27, 2010 at 5:00 pm

    Biocrude wrote:

    -@ Ron Steenblik, can you please give us the breakdown in your opinion of what the petroleum industry receives as “subsidies” or “tax breaks” and which ones, if any you think they could do without?  Ie, is there some money there that we could direct into a responsible petroleum reduction energy program?  

    They can do without all of them.

    “I will tell you with $55 oil we don’t need incentives to oil and gas companies to explore. There are plenty of incentives.” – President George W. Bush, quoted in “House Energy Bill Increases Tax Breaks: Legislation at Odds With Bush Proposal”, Washington Post, 19 April 2005.

    I don’t have any definitive numbers myself (though I and a number of other people are working on that). At the low end of the scale — and in all cases these are for the oil AND gas industry, not just petroleum — are the tax breaks put forward for eliminating by the Obama Asministration: about $4 billion a year. Others, such as Friends of the Earth, have estimated the subsidies at $6.6 billion. Doug Koplow has estimated the value in 2006 to have been $49 billion (say, $53 billion in money of today). Doug’s numbers include lots of other stuff, such as some value of military protection (on the argument that oil shippers could pay for their own security), and of course the cost of maintaining the Strategic Petroleum Reserve.

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  59. By Perry on September 27, 2010 at 5:49 pm

    Wendell Mercantile said:

    Something will have to change, but how do you convince about seven billion people to lower their expectations so the top two billion can can continue to live comfortably?

     


     

    We just foist communism on them. Pan Google Earth over North Korea at night. The house with lights on belongs to the Dear Leader. Cuba raised gas prices to $6.50 a gallon today. Both drivers are highly upset.

    [link]      
  60. By mac on September 27, 2010 at 6:15 pm

    Wendell,

    I ride my bike to the local gas station & convenience store here in the town where I live , so I am a conservation “good guy” ha, ha. I also carpool to the grocery store with my neighbor since the nearest real grocery store is 15 miles (one way) from my house. We started doing this when gas went to 4 bucks a gallon and have just never stopped. I live in rural Texas and it’s long way to just about anywhere. The closest Home Depot is 40 miles away (one way).

    Increased gas prices really hurt us out here. That’s why I’m against a gas tax. It’s only going to hurt rural America. and the little guy in general, Every small that uses a vehicle to deliver a service or produce a product will simply pass the gas tax on to the consumer and we will end up, in effect, getting taxed twice. .A gas tax would merely be a windfall of money for the politicians to squander. A gas tax is basically just a forced conservation measure. It would undoubtedly cause a change in driving habits but will not solve the dilemma of ever increasing worldwide demand for gasoline as worldwide supplies of oil dwindle. Once again a gas tax would merely be a windfall for spend-thrift politicians who would throw it around like Monopoly Money.

    Yes, population is a kind of “elephant in the room” that no one seems to want to talk about. Whenever the subject is brought up, you are immediately accused of being a disciple of Paul Erlich or a Malthusian prophet of doom.

    The Chinese saw that they were unlikely to get very far in their economic plan to make China a modern, industrialized nation, until they got hold of the population problem. One of the very first things the Chinese did was to institute the One Child for One Family Rule.

    Once you stabilize the population, you get past the problem of having to spend all your waking hours futilely trying to figure out a way to feed an exponentially growing number of hungry mouths. Then, you can direct your energies away food production and can focus on other things such as industrialization.

    Ever expanding populations competing for a dwindling resource such as oil sounds to me like a recipe for disaster. That’s why I like the electric car idea and electrifying the transportation system. .

    .

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  61. By Kit P on September 27, 2010 at 6:34 pm

    “That’s true. But I don’t know what
    we’ll …. Extrapolate that to an entire world of nine billion”

     

    It is amazing that those who do not
    what is going to happen always predict some doom scenario.

     

    Extrapolate the air and water quality
    trend in the US in 1970 you could conclude a doom and gloom.
    However, when I check the actual environmental quality of our lives
    it is very good while using less energy per capita.

     

    Everything is better than 50 years ago.
    I see no technical problem with providing a high standard of living
    to all. There is food to feed North Korea but it is harder to
    control the well fed.

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  62. By Perry on September 27, 2010 at 6:42 pm

    Kit P said:

    The catch 22 of the environment
    movement is you have to find ’10 million new EV’s’ each year willing
    to shell out $10k extra for a problem they do not think they have.
    It is a little hard to compete with a red Mustang convertible.


     

    Early adopters will bear those costs Kit. I remember plasma tv’s selling for $5000. I paid $1200 for my 46″ LCD. That was three years ago. They’re even cheaper today. I doubt the Leaf will cost more than a Corolla 5 years from now. Just look at Tesla. The Roadster is $109,000. The Model S will sell for half that and go farther on a charge. I think they’ll sell the heck out of them. Looks better than a Lexus and has a 300 mi. range.

     

    It’s not just battery costs that will drop with mass production. All those fancy new electronics have to be paid for. Give it a few years. EV’s will become mainstream and just as affordable as ICE’s. When that happens, which do you think will have the advantage with $5 or $7 gas?

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  63. By Kit P on September 27, 2010 at 7:00 pm

    “I live in rural Texas …”

     

    That explains a lot, any where near?

     

    http://en.wikipedia.org/wiki/D…..mas,_Texas

     

    I want MAC to explain again his
    personal experience with large populations of people in rural Texas.

    [link]      
  64. By Rufus on September 27, 2010 at 7:58 pm

    The study, “Dirty Money” found that the top 35 spending companies and trade associations, including oil, mining and electric utility, invested more than $500 million in lobbying and campaign contributions from January 2009-June 2010 to crush clean energy and clean tech legislation. Besides the federal level, one of the states Big Oil has been most active in is California. When analyzed the groups spent $1,800 in lobby expenditures a day for every senator and representative during the time of the study.

    Six of the seven companies with the largest lobbying expenditures are Big Oil companies*ExxonMobil (1), ConocoPhillips (2), Chevron (3), BP (5), Koch Industries (6), and Shell (7). According to “Dirty Money,” their 18-month lobbying expenditures total $143 million

    From an article at Domesticenergy.com – It won’t let me post the URL.

    Read about your Real “Lords and Masters.”

    [link]      
  65. By savro on September 27, 2010 at 8:12 pm

    Perry said:

    mac said:

     People will be screaming at the government crying “Why didn’t you crank up the ethanol production, when you knew this was coming.!!!!! ”


     

    The sad part is, they do know it’s coming. It’s hard to find an educated person anywhere who doesn’t know it’s coming. We’re like deer in the headlights. 


     

    With all due respect, Perry, I disagree. You/we mingle amongst a very energy-aware crowd and discuss these subjects from sunrise to moonset, so it’s easy to assume that the general public understands the core issues of energy supply/demand and the problems we’re facing. Unfortunately, the opposite is true; energy issues, for the most part, sail right over the general public’s collective heads — unless the prices at the pump begin to spike.

    Those of us who actually recognize the important role of energy, and how it’s (sometimes subtly, sometimes blatantly) the backbone of transportation, industry, the economy and foreign and domestic policy, are in the minority.

    [link]      
  66. By Perry on September 27, 2010 at 8:40 pm

    I don’t know Samuel. It’s hard to imagine a college letting someone pass through its doors without at least covering Hubbert’s curve.

    “But that optimistic outlook on scientific achievement—documented in a nationwide opinion poll conducted by the Pew Research Center and Smithsonian—does not extend to the environment. A small majority of those polled said most of the United States would face severe water shortages by 2050. Six in ten said the oceans would be less healthy than they are now, and seven in ten foresaw a major energy crisis. Overall, fewer than half expected the quality of Earth’s environment to improve.”

    http://www.smithsonianmag.com/…..ntent=poll

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  67. By Kit P on September 27, 2010 at 9:00 pm

    “I paid $1200 for my 46″
    LCD.”

     

    Perry did you grow up in that town in
    Texas I just linked? I am sorry but I am not going to take lessons
    on energy and the environment from someone who paid more for a TV
    than the car I drive to work.

     

    The amazing low cost of consumer goods
    never ceases to amaze me. Enjoy because there is no problems
    providing electricity although the industry did not see big TVs
    coming. Saved by the recession.

     

    Batteries and motors are not
    electronics. Batteries and motors are already mass produced.
    Batteries and motors are heavy, you can not make them lighter without
    causing a fire hazard.

     

    Let me explain work and power! It
    takes a certain amount of ‘mechanical work’. It takes the same
    amount of work to get you from your house to work. If you walk, we
    will call it manpower. The rate at which you do work is power.

     

    If you ride a horse to work we would
    call it horse power(HP). It takes more power to get to work on a
    horse because both you and the horse got to work. It takes more
    power to get you work driving a car (or horse pulled cart) because
    you and all that other stuff got to work with you.

     

    The point of this over simplification
    (all mechanical engineers cringe at the same time) is that weight
    matters when doing work. All those batteries and motors add weight.

     

    Again, the rate at which work is
    performed is power. The reason no one talks about cow power is
    because the efficiencies of a co-product (milk) are offset by the
    time it would take to ride a cow to work. Folk from Texas could
    explain some other practical reasons. If we want to get to work
    faster, it takes more HP.

     

    Now to electricity and the difference
    between electronics and doing work for transportation. I have a 10
    watt (power) set of 12, 12 volt LED path lights. It uses a 10 watt
    transformer that is small and light. Another set of path lights uses
    6 incandescent 12 volt path lights. It uses 125 watt transformer
    that is much heavier. Since I want light, I paid more for expensive
    light which used less energy but paid less to the transformer. More
    light for the same money.

     

    The reason this that power (P) is
    proportional to the product of current (I) and electrical potential
    (E) or voltage (V).

     

    P = IE

     

    It takes power to get your car work.
    This means high currents. Power (P) is also proportional to the
    product of the square of the current (I) times resistance. Bigger
    wires means lower resistance. So while the trend in electronics is
    less power which means lighter. BEV are always going to have heavy
    expensive components.

     

    “I doubt the Leaf will cost more than
    a Corolla 5 years from now.”

     

    Perry is basing his assumptions on
    consumer goods that do not do work using power. Converting chemical
    or electrical energy to power it do work is entirely different.
    While I would not be surprised in the if the cost of the Leaf comes
    down but not close to a Corolla. If five years, I will have a
    Corolla that has long been paid for and will meet my needs for
    another 20 years. The leaf will need a $18,000 battery. About the
    cost of a new Corolla.

     

    Electronic consumer goods have changed
    a lot in the last 50 years but not the theory of work and power.

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  68. By paul-n on September 27, 2010 at 9:35 pm

    Electronic consumer goods have changed
    a lot in the last 50 years but not the theory of work and power.

    Hear, hear.  The number of people that use computers and cellphones as examples of what we should expect with BEV’s is amazing.

     

    BEV’s can work, if we do no make unrealistic demands of them.  That is, make them small and light, and accept they they have limited range on electric.  For those who really need range, you can and add a (modular) small ICE generator , or have a vehicle designed for that purpose.

    Trying to have an electric RAV-4 with 300mile range is just silly.  Why use an efficient,  but expensive, electric powertrain for an inefficient vehicle, where most of that capacity will never get used, and is just expense and deadweight being carried around?  Electric cars should not try to be big, powerrful long range vehicles – ICE’s are much better at that.  They should try to be efficient vehicles, and those who care about effieciency will want an efficient vehicle.  If you have an electric SUV then you do not care about being efficient

    This does not mean we have to go to the X-prize style minimalist vehicles, but somewhere in there is a happy medium.  Once upon a time, we were happy driving vehicles that were less powerful than today;

     

     

    I can’t find recent data by I would guess the average horsepower is easily over 200.  But do we need that power? Have average travel speeds increasd that much (most city drivers will say speeds have decreased since the 70′s).  

    What has happened of course, is that cars have gotten bigger. The proportion of “light trucks” (incl SUV + minivan) has gone from being minority to majority.

    If we have realistic expectations for EV’s then EV’s could be on the road today, at a price that people can afford.  If we want them to match ICE, they will be, and remain, at prices that only a few can afford and they will not make any difference.

    We do not need better batteries to make a sensible BEV, we need  a sensible V the put the BE into.  

     

     

    [link]      
  69. By OD on September 27, 2010 at 9:40 pm

    Kit, you entirely missed Perry’s point. Electric cars currently suffer from economies of scale. When they no longer do, the price will come down.

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  70. By OD on September 27, 2010 at 9:48 pm

    The leaf will need a $18,000 battery. About the cost of a new Corolla.

    The battery cost is rumored to be in the $9,000 range, not even close to $18,000.

    [link]      
  71. By paul-n on September 27, 2010 at 11:31 pm

    OD,

    There is not a scale problem with producing cars, it is only the electric part. And even then, there while there may be “scale” to be gained, that does not necessarily lead to much greater “economies”.

    Take a look at the hybrids.  Toyota has sold more than a million Prius worldwide, and all the other hybrids would probably add up to the same again.   That is certainly some scale, but they are still $5-10k more than their std versions, and this is with batteries of 2-5kWh.

    While there are new variations of Li-ion chemistry all the time, making the batteries does not change much, and they have been doing that ion a grand scale for years already.

    You can buy Li-ion from EV conversion sites like this one for $470kWh, so the $370kWh for the Leaf sounds about right for an OEM.  AGM Lead acid is a mature technology and that is more then $200 per (effective) kWh, and it uses far cheaper materials than Li-ion.

    The cost for the electric powertrain will presumably come down as they tool up and mass produce them,  and will probably equal or better an ICE one.  Keep in mind that iron and steel are cheap, copper is not.

    The problem with the EV is that it is carrying around a very expensive “fuel tank”, and there is  no way to get around this, except to engineer the the car to be more efficient(smaller, lighter,aerodynamic) to make the fuel tank smaller.  

    They car companies and EV buyers can hope for some battery breakthrough, but in the meantime they need to work with what they have, and that means facing the reality that unless it is small EV, it will carry a big price tag.

     

     

     

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  72. By Wendell Mercantile on September 28, 2010 at 12:39 am

    I see no technical problem with providing a high standard of living to all.

    We currently can provide a high standard of living for only about 20% of the earth’s population of seven billion. What miracle do you anticipate that will enable us to provided a high standard of living for all nine billion that will be around by the year 2050? (Perhaps we will at last have controllable fusion energy. That’s the one thing I see on the horizon that might be a game changer.)

    I certainly can’t predict the future, but based on the rate we are using resources, it’s difficult to imagine the earth will be a very pleasant place for the majority of the population in 40-50 years.

    [link]      
  73. By ronald-steenblik on September 28, 2010 at 2:10 am

    Perry wrote:

    Cuba raised gas prices to $6.50 a gallon today. Both drivers are highly upset.

    Mac wrote:

    Increased gas prices really hurt us out here. That’s why I’m against a gas tax. It’s only going to hurt rural America. and the little guy in general, Every small that uses a vehicle to deliver a service or produce a product will simply pass the gas tax on to the consumer and we will end up, in effect, getting taxed twice. A gas tax would merely be a windfall of money for the politicians to squander. A gas tax is basically just a forced conservation measure. It would undoubtedly cause a change in driving habits but will not solve the dilemma of ever increasing worldwide demand for gasoline as worldwide supplies of oil dwindle. Once again a gas tax would merely be a windfall for spend-thrift politicians who would throw it around like Monopoly Money.

    Perry: drivers in Western Europe have been paying that kind of price since 2007, and prices almost that high before that. This graph shows prices in February and March, 2009. Prices today are higher than these. Somehow these other countries have survived.

    Gasoline prices

    Note that U.S. prices are among the lowest in the industrialized world, and the revenues from fuel taxes — which are hypothecated to the Highway Trust Fund — do not even cover the cost of building and maintaining the nation’s highways. Hence ever few years Congress has to vote for several-hundred billion-dollar Highway Bills in order to keep the system solvent. 

    Your comment, Mac, reminds me of a conversation I had with a high-ranking USDA official (Bush appointee) after the release of my study critical of biofuel-support policies, “Biofuels: Is the Cure Worse than the Disease”?

    I had expected the guy (a former corn farmer) to defend government support for corn ethanol for all sorts of reasons, but his main concern seemed to be the high price of fuel for people living in rural areas. He honestly believed that biofuels would make a big difference in the price of fuel purchased in the corn belt.

    I was astounded that he was willing to create huge distortions throughout the country’s transport-fuel and grain markets just so, as he put it, farmers in Iowa wouldn’t have to pay an arm and a leg to drive into town to do their shopping. But he was.

    I pointed out that, if that was his main concern, there were other ways to deal with the problem. Australia, for example, provides all manner of fuel-tax rebates for rural consumers. (Or, like some developing countries have done as an adjunct to reforming consumption subsidies for fossil fuels, the government could institute targeted cash transfers.) Ultimately, of course, it did not make sense to insulate rural drivers from the price paid by their fellow citizens. Rural drivers would cope. They would find their own ways to reduce their costs of driving. But it would also likely mean a return of some merchants to main street. People in small-town America bemoan the disappearance of small merchants. What was behind that change? In part it was due to the economies of scale of Wal Marts and big groceries. But it was also driven by cheap transport fuel, which meant that consumers didn’t mind driving longer distances to do their shopping. Raise the price of fuel and differnt patterns of distribution will emerge. And it could very well be that using large trucks to transport goods to stores closer to consumers may be cheaper than for consumers to drive long distances to a central depot.

    Mac’s concern about a gas tax merely providing ”a windfall for spend-thrift politicians” is a legitimate one, but frankly doesn’t show much imagination. It is highly doubtful that Congress would vote for an increase in the federal gasoline and diesel excise taxes without providing tax relief elsewhere. A plausible scenario would be that a higher tax would be phased in over several years, and while that phase-in was occurring, rebate checks would be sent from the IRS. After a new equilibrium between supply and demand had been reached (because fuel taxes would depress demand, tax revenues would presumably be lower a few years after the final tax rate had been reached), income tax rates could be reduced, and rebates stopped.

    Mac: income tax penalizes the fruits of hard work and entrepreneurism. A gas tax would tax something with many externalities and for which the supply is limited. Which do you think is a more fair basis for a tax?

    [link]      
  74. By Perry on September 28, 2010 at 3:37 am

    Lithium car batteries run about $650 per kwh now. That’s expected to drop to $250 kwh by 2020. That sounds about right to me, since lithium batteries for laptops and other consumer devices run about $200 kwh today. At those prices, a Leaf battery would cost $15,600 today, but only $6000 when it’s time for a new one. I suspect when that time comes, someone will offer to rebuild it for a fraction of that. The $4000 Prius battery can be rebuilt for $500. Instructions are available on the internet.

    [link]      
  75. By carbonbridge on September 28, 2010 at 4:19 am

    Wendell Mercantile said:

    We currently can provide a high standard of living for only about 20% of the earth’s population of seven billion.  I certainly can’t predict the future, but based on the rate we are using resources, it’s difficult to imagine the earth will be a very pleasant place for the majority of the population in 40-50 years.


     

    Wendell:  On the surface and also from reviewing history of just the last century, I heartily agree with you!

    Yet there are some real and definate underpinnings to key and disruptive technologies which might break a global energy logjam which Peak Oil declines will surely exacerbate.  Key individuals of financial means are searching for new and profitable answers.  Prizes have been offered for things like stripping CO2 out of the air.  When magnet money like this begins changing wallets and is respent, then anxiously awaited solutions will surely rise to make a near-term difference which we’d all instantly recognize.

    1) Maybe homo sapiens WILL have to follow a 20 yr. Chinese model for negative population growth and one-child families as this planet will be hard pressed to support 9 billion people.  Earth’s population has more than doubled in less than 50 years while the continental shelves have been seriously over-fished.  And now we are collectively dealing with 10W30 shrimp from the recent Gulf catasrophe which isn’t over just because it isn’t being aired on network news!

    2) Maybe some new, novel and decentralized energy production technology will surface amid the declining curves of traditional resources vs: growing energy demands from developing countries.

    3) Maybe profits associated with a new decentralized energy source would become the new global economic backbone itself and thus be responsible for resurgence and stable economies — just exactly opposite of oil wars!  This in itself might be the biggest breakthrough – simply decentralizing grand new profits via citizen-owned municipal energy production centers.

    4) Maybe some sort of zero-point Tesla-type electrical production technology will surface and be quickly reproduced like big-screen TV’s at affordable prices.  While not an expert in this area, I believe that certain techs like this exist, have existed for decades and simply have not been allowed to come forward and be reproduced.  Should this happen, lots of changes in how global humanity achieves a higher standard of living would occur and quickly.

    5) Or maybe a brand new biodegradable fuel will surface using proven technology from the bowels of what we were recently discussing in another thread concerning municipal waste conversion (not purposefully grown biomass) and become a seamlessly transparent and very profitable, bio-recycled liquid energy? 

    • Just musing some possibilities here having learned that:

    • The first green is definately the money. 

    • The second green could be near-term environmental improvements amid some stability factors for all who inhabit this fragile blue planet.

    • Still open to hope for globally sustainable solutions — and not yet resigned to failure…

    • Yet time to innovate and physically adopt is growing short.  I think that we all realize this…  Goodnight.

    -Mark

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  76. By Kit P on September 28, 2010 at 9:14 am

    “Kit, you entirely missed Perry’s
    point. Electric cars currently suffer from economies of scale. When
    they no longer do, the price will come down.”

     

    I understand Perry’s point. Batteries
    and motors have been mass produced for 100 years. It only takes a
    basic understanding of electrical theory to understand why we use ICE
    in POVs. The reason BEV are not produced is they a bad engineering
    idea. Paul explains:

     

    “Electric cars should not try to be
    big, powerrful long range vehicles – ICE’s are much better at
    that.”

     

    I am not going to spend $40k to make
    short little trips around town and save $10 per month on gasoline. If I
    had to spend lots of time on the highway, then I might buy $40k
    diesel and run biodiesel.

     

    “Keep in mind that iron and steel are
    cheap, copper is not.”

     

    Heavy duty motors are very reliable
    uncontrolled conditions. Under road conditions, the most unreliable
    POV components are the battery, starter motor, and alternator. Insulation breaks down.

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  77. By Perry on September 28, 2010 at 9:29 am

    What the above diagram illustrates is that OPEC crude oil supplies for all practical purposes remained on a moderately bumpy plateau between July 2004 and late 2008. During this period, crude oil prices grew from around $40/Bbl to more than $140/Bbl. The steep rise in prices are now thought to be the combined result of physically tight supplies and speculators detecting these tight supplies. With the collapse of crude oil prices, OPEC met during the fall of 2008 and agreed to cut supplies to support the oil price. What is interesting is that total OPEC crude oil supply increased by approximately 0.72 Mb/d (using IEA’s criteria of a production that may be sustained for 90 days) during the oil price spike in the summer of 2008 compared to the summer of 2005. It required a doubling of the price to bring this increase in supply into existence.

    This suggests that OPEC had little spare crude oil capacity during the summer months of 2008. Despite this increase in supply, data shows that OPEC net exports were lower in 2008 than in 2005

    http://europe.theoildrum.com/node/6859

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  78. By Perry on September 28, 2010 at 9:33 am

    Kit, you’re going to sit in your Corolla and watch the world pass you by. We get that. Some people have never been on the internet, and never will. The rest of us somehow manage to trudge on.

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  79. By Kit P on September 28, 2010 at 9:36 am

    “We currently can provide a high
    standard of living for only about 20% of the earth’s population of
    seven billion. What miracle do you anticipate that will enable us to
    provided a high standard of living ..”

    It is called electricity Wendell. The
    reason we only provide a high standard of living to about 20% of the
    earth’s population is corruption. Look how far South Korea has come
    in 60 years compared to North Korea who got all the energy resources.

     

    Electricity makes clean drinking water
    and sewage treatment affordable. At that point the environmental
    impact of large populations becomes manageable.

     

    “controllable fusion energy”

     

    Between coal, nuclear fission, and
    renewable energy there is no problems providing providing electrical
    until the sun novas let alone 2050. However, corrupt governments
    that first ignore the basic of public health have trouble with
    electricity because of the cost of disease and starvation.

     

    Just for the record, I think I have a
    high standard living because I have the freedom to live a few miles
    from where I work and I do not think commuting 100 miles a day in a
    SUV enhances quality of life.

    [link]      
  80. By Kit P on September 28, 2010 at 9:53 am

    “release of my study”

     

    Have you every produced anything that
    people need? Why does the parasite class think they are superior to
    the producing class?

     

    “Western Europe”

     

    Who cares about a bunch of small
    overcrowded countries?

     

    I know Ron that you think we should be
    civil to people who politely advocate the government stealing our
    earnings but gosh Ron nothing is dumber that the idea of raising
    taxes on energy will get people to live the way you think we should.

     

    Ron I want you to go down to the
    breaker box and open the main. This will help you and your family
    use less of that evil stuff.

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  81. By mac on September 28, 2010 at 10:34 am

    Perry.

    Here comes the all electric Navy. The U.S. Navy plans to run its combat ships with huge electric motors. Here’s a little quote from the long and interesting article. Amazing……

    “Using this technology for Navy surface ships is not a new concept, he noted. It was first used on some Navy ships in the early 20th century, and again during World War II.

    O’Rourke said that electric-drive technology was adopted by the cruise ship industry beginning in the late 1980s, and that today, most if not all cruise ships under construction are being built with electric drives. Electric propulsion also is found in icebreakers and floating offshore oil platforms, and is becoming more common in passenger and car ferries.”

    I hope the URL copies.

    All-Electric Ship Could Begin to Take Shape By 2012
    As part of an ambitious technology plan for the Navy fleet of the future, the Office of Naval Research is exploring ways to power all-electric ships. …
    http://www.nationaldefensemaga…..c2453.aspx – Cached – Similar

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  82. By OD on September 28, 2010 at 10:41 am

    Kit, you’re going to sit in your Corolla and watch the world pass you by. We get that. Some people have never been on the internet, and never will. The rest of us somehow manage to trudge on

    He believes oil production will not decline in his lifetime, why would he do anything else?

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  83. By mac on September 28, 2010 at 10:55 am

    Perry,

    It amazes me that the huge, open-pit mining trucks, freight trains and Navy Destroyers can all run with electric motors, but somehow not the automobile..

    URL didn’t copy. If interested, just Google..

    All-Electric Ship Could Begin to Take Shape By 2012.

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  84. By OD on September 28, 2010 at 10:59 am

    It amazes me that the huge, open-pit mining trucks, freight trains and Navy Destroyers can all run with electric motors, but somehow not the automobile

    When do you think we will start seeing farm equipment move to electric? What about semi’s? Those two things seem to be the most critical to mainting any sense of BAU.

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  85. By Wayde Northrop on September 28, 2010 at 11:26 am

    It amazes me that the huge, open-pit mining trucks, freight trains and Navy Destroyers can all run with electric motors, but somehow not the automobile..

    I could run a car on electricity very easily if I wanted to do it as they diesel-electric locomotives. I’d just tow a trailer and put a diesel-generator in the trailer. My electricty supply would follow me whereever I go.

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  86. By mac on September 28, 2010 at 11:45 am

    OD said

    “When do you think we will start seeing farm equipment move to electric? What about semi’s? Those two things seem to be the most critical to mainting any sense of BAU.”

    I think Wal-mart has started to convert some of their semi’s to hybrids.

    I was going to suggest to Rufus that he get himself an electric tractor, Then he wouldn’t have to listen to people gripe about “too many fossil fuel inputs’ out on the farm. (just kidding)

    Actually, electric tractors might work okay since electrics develop maximum torque from a dead stop, You don’t have to rev them up and shift into compound low and all that like an ICE.. Battery expense and weight again, but I suppose it’s possible. The dig out power of electric is amazing They trounce ICE in the 1/.4 mile.

    Let;s design Rufus a tractor recharged off solar panels.and windmills with a back up generator running on E-85..

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  87. By Duracomm on September 28, 2010 at 11:59 am

    Cat has recently put a diesel electric bulldozer on the market. They don’t like the term hybrid because it does not store power onboard.

    Cat Reveals Pricing of World’s First Hybrid Dozer

    The world’s first diesel-electric hybrid bulldozer will carry a price tag that is about $100,000 more, or 20% higher, than a comparable non-hybrid machine. But will pay for itself in about two-and-a-half years, Caterpillar Inc. managers said June 23 at the company’s training facility in Edwards, Ill.

    Though such a high premium is unusual for a piece of construction machinery, over the life of the machine, the D7E is expected to save 30% in owning-and-operating costs, primarily in fuel but also productivity, maintenance and other efficiencies of hybrid drive. Under Cat’s simple-payback analysis, the D7E pays for itself in under three years.

    [link]      
  88. By mac on September 28, 2010 at 12:18 pm

    Duracomm,

    Really interesting. I will go to Caterpillar site. Thanks

    [link]      
  89. By ronald-steenblik on September 28, 2010 at 12:50 pm

    Kit wrote (between the gratuitous insults):

    I know Ron that you think we should be civil to people who politely advocate the government stealing our earnings but gosh Ron nothing is dumber that the idea of raising taxes on energy

    I assume that you did not miss the point about shifting more of the tax burden to transport, not increasing the overall tax take. Indeed, if you think the government should be taking less in taxes, I’m not going to argue that point. But are you saying that, for a given amount of tax take it is better to tax earned income than transport fuels? Why is the latter “stealing our earnings” but the former is not?

    And are you arguing that not only Western Europe but also Australia, South Korea, Japan, Turkey, and even Bangladesh have gotten it wrong? Why do you think that the average fuel economy of new passenger vehicles sold in Western Europe and Japan is more than 70% better than that of new passenger vehicles sold in the United States?

    In any case, the context of my comments was Mac’s believing that the “true” cost to the economy of gasoline is $8 to $15 per gallon, while at the same time being against confronting drivers with that “true cost” through higher taxes. If $8-15 per gallon is the true cost (I’m not saying it is), then continuing to price gasoline in the range of $2-3 per gallon means that people are not facing the consequence of their consumption, and engaging in behaviour – buying gas guzzlers, buying homes far from their workplace — that only perpetuates the drain on the economy. In short, Mac’s two positions are inconsistent, in my opinion.

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  90. By paul-n on September 28, 2010 at 1:58 pm

    It amazes me that the huge, open-pit mining trucks, freight trains and Navy Destroyers can all run with electric motors, but somehow not the automobile..

    C’mon Mac, you can do better than say things like that.  The problem is not running on electricity, the real problem is a battery electric vehicle.  

    Keeping in mind that a battery is a box containing a reversible chemical reaction, it is the equivalent of an ICE vehicle, that also has to carry not only the fuel, but also all the oxygen needed for combustion, and then capture and hold all the combustion products, all the time, and carry all this around with it.  If you could make such a system, the energy density would probably be like batteries – 1/100th of the fuel itself.

    Not one of the examples you give is a battery electric vehicle, they just happen to use electric drivetrains, with the electricity coming from diesel engines (or gas turbines, in some cases)

    As Wade points out, you can make any car into a diesel (or gasoline) engine-electric, a Volt style series hybrid.  In effect, you are replacing the clutch/gearbox/transmission with electric generators and motors.  For heavy equipment, this often (but not always) makes more sense than mechanical or hydraulic drivetrains.  

    I am a proponent of the series hybrid system, as it allows you to optimise (minimise) the size of the engine for the average power needed for operations.  

    But at car scale you start to run into problems – small motors and generators are not as efficient as large ones, and for the acceleration that drivers seem to demand, you have high peak to constant power ratios.   You still need to have battery (or ultracapacitor) storage to handle the peak power demands, and the motor must be sized for the peak loads, which can mean that in cruise condition it is oversized and less efficient.  

    Look at the trouble Chevy has been having with the Volt.  They had had to give up efficiency in order to maintain “performance” and carrying capacity, with the end result being that when running on the engine, it is going to be less efficient than a Prius, and much more expensive.

    All of the examples you give above have been engineered for specific operating conditions.  The designer is faced with the competing aspects of speed(=power), carrying capacity, and fuel efficiency  (and cost)- You set a design point for one, and then optimise for the others.

    Add battery power into the mix and then range becomes a constraint from the weight/volume of batteries.

    Ships, trains and mining vehicles all have set operating speeds,and a maximum of about 10-20% greater than that. Yet with cars we demand maximum speeds of 50-100% greater than operating speed.  Trains and trucks have accelerations equivalent to over a minute for 0-60, yet for our cars we demand acceleration of 0-60 in less than 10s.  If a train is to have car like acceleration, the engine needs to be upsized by an order of magnitude, just to meet this desire.

    At the other end of the vehicles scale, golf carts, BEV’s dominate, because there are minimal requirements for range and performance and crash safety, and vehicles are engineered accordingly.

    Electric forklifts have huge carrying capacity and minimal performance and range

    Recently we have a great example of designing cars for maximum efficiency and moderate road performance, carrying capacity, and range – the X prize.  Criteria were set for 0-60 in 15s, instead of the 8-10 deemed “desirable”, and cars were allowed to carry two people instead of four, and range was minimum 100mi

    The result was vehicles that used very little fuel/electricity – the two seater Li-Ion Wave had a 25kWh battery pack (same size as the Nissan Leaf) and could go 250 miles on a charge.  

    The tradeoff – two seater and 0-60 of 15s, is not the end of the world, but look at the criticism these cars got  from people on this forum.  ”how can you take four people and fishing gear over the mountains” or “what happens when you floor it going up a hill? – nothing”

     

    As long as drivers demand vehicles that “do it all”, the ICE will be the primary power source, whether running through a gearbox or an electric drivetrain  Give up the demands for racecar like performance and large carrying capacity and then BEV  becomes possible, practical, even.  

     

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  91. By savro on September 28, 2010 at 2:30 pm

    I think Ronald hit the nail on the head when he said:

    Income tax penalizes the fruits of hard work and entrepreneurism. A gas
    tax would tax something with many externalities and for which the supply
    is limited. Which do you think is a more fair basis for a tax?

    Kit’s claims that Ronald’s pro-gas tax stance is “politely advocating the government stealing our earnings” is a complete fallacy. The point here has nothing to do with the government levying an additional tax; it’s about restructuring the method of taxation.

    Before I looked into it, I was against a gas tax for the simple reason that I thought it was just another ploy for the government to add more to our tax burden. But if it would be instituted in the manner that Ronald and RR have advocated for –by lowering income taxes and swapping it for a “consumption tax”– I don’t think I’d have a problem with it. The fine print will be very important, but I’d back the idea in theory.

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  92. By Kit P on September 28, 2010 at 6:02 pm

    “And are you arguing that not only Western Europe but also Australia, South Korea, Japan, Turkey, and even Bangladesh have gotten it wrong?”

     

    I am saying the kind of cars Americans drive is not the business of government.  I never had a problem finding a POV in the US that did not get good mileage. 

     

    Ron, I think you have an agenda that is more about controlling how other people live and are using this issue to support your manipulation.  That is what it sounds like Ron.  Pardon me if I took it wrong. 

     

    “that only perpetuates the drain on the economy”

     

    The thing is I do not think the coal miner or farmers driving a pickup truck are a drain on the economy.  However, people who write papers are a drain on the economy.  Maybe we could come up with a tax system that picks on the real drain on the economy. 

     

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  93. By Kit P on September 28, 2010 at 9:59 pm

    All-Electric Ship Could Begin to Take
    Shape By 2012

    http://www.nationaldefensemaga…..c2453.aspx

     

    First thing to note is that it is a
    2007 article.

     

    “The all-electric ship effort is
    still in its infancy”

     

    Zumwalt class destroyer

    http://en.wikipedia.org/wiki/DDG-1000

     

    “2 Rolls-Royce Marine Trent-30 gas
    turbines and emergency diesel generators, 78 MW”

     

    Basically a gas turbine driving a
    generator (rather than reduction gears). The shaft is driven by a
    variable speed induction motor.

     

    Nothing all that new.

     

    In the category of small world, the
    ship is named after Admiral Zumwalt. His first ship during WWII was
    my first ship during VN. Another admiral mentioned 
    shared a stateroom when we we junior officers.

     

    More cool info:

     

    http://ewh.ieee.org/conf/ests0…..Doerry.pdf

     

     

    Very cool stuff:

     

    http://www.dtic.mil/cgi-bin/Ge…..tTRDoc.pdf

     

    “Anticipated improvements in
    commercial motor drive technology will enable the use of
    transformerless propulsion motor drives at 6.9 kV in the near
    future.”

     

    NGIPS
    anticipates that medium speed diesel generator sets will play an
    important role in providing fuel efficient propulsion plant
    configurations. Although much heavier than an equivalently power
    rated gas turbine, the improved fuel efficiency of the diesel engine
    can result in a substantial reduction in required fuel that can
    result in a ship with a lower full load displacement.”

     

     

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  94. By paul-n on September 29, 2010 at 12:44 am

    Just in case everyone thinks that engine-electric systems are the only way to go for “hybrids”, here is an example of a vehicle that uses a mechanical  energy recovery system:

     

    This “train” carries up to 50 people, weighs 13 tons, has a top speed of 40mph and is powered by a 2L diesel engine from a Ford Fiesta, and gets 13mpg!

    The secret is the round part in the middle  It holds a half ton, 1m diameter flywheel that recovers the braking energy, and then assists during acceleration.  The round trip efficiency is over 90% and, unlike a battery, it has unlimited “charge” cycles.  

    The flywheel allows for faster braking and acceleration, and on the short stop interval line (3/4 mile between stops) allowed this train to do six round trips per hour compared to four for the standard diesel railcar it replaced, and using 1/4 of the fuel.

    More information at http://www.parrypeoplemovers.c…..nology.htm

     

    The conventional diesel railcar that it replaced, carried 75 people, used a 215kW engine and weighed 40 tons, and was slower to accelerate and stop, and cost 3x as much to buy and maintain and used 4x the fuel!  

    The new train has half the axle load, and can run on lightweight rail, track construction cost is about 1/4 of conventional, and it can run on lines that are no longer rated for heavy trains, without needing expensive refurbishment.

    A good example of just how low the average power requirement is during stop-start driving, and optimised design to take advantage of that.

    The company has a design for a engine less “plug in” version, that would plug into a DC power supply at each stop, to spin up the flywheel to max in 30s, and give it enough energy to go up to 1/2 a mile to the next stop – an electric streetcar with no overhead wires!

    The train pictured above costs about as much as two city buses.

    Options like this make building light urban transit much cheaper than conventional trains/streetcars, and allow cities and rural towns to run passenger service on disused freight lines without expensive rehabilitation.

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  95. By mac on September 29, 2010 at 1:52 am

    Avro,

    All a gas tax is going to do is protract the oil age. With artificially curbed demand created by a gas tax, the oil companies will just jeep on doing business as usual. On and on and on…….. The gas tax is a fraud.

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  96. By mac on September 29, 2010 at 2:11 am

    Avro.

     

    Plus,,,,,,,,, the oil companies don’t have to pay the tax..

     

    Y.O.U.  will have to pay the tax !!!

     

    ……….So that oil companies can weather peak oil and still keep everyone addicted to oil when we come out the other side

     

    What a fraud…...!!!!!!

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  97. By rrapier on September 29, 2010 at 2:13 am

    mac said:

    Avro,

    All a gas tax is going to do is protract the oil age. With artificially curbed demand created by a gas tax, the oil companies will just jeep on doing business as usual. On and on and on…….. The gas tax is a fraud.


     

    Then would you support lower gas prices to stimulate demand, and run us out of oil faster, so then the oil companies could no longer keep on doing business as usual?

    Of course the part missing from your analysis is that a gas tax would also improve the prospects for renewables.

    I do think tha the first time I have ever seen someone suggest that a gas tax would benefit the oi companies.

    RR

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  98. By ronald-steenblik on September 29, 2010 at 2:23 am

    Kit wrote:

    Ron, I think you have an agenda that is more about controlling how other people live and are using this issue to support your manipulation.  That is what it sounds like Ron.  Pardon me if I took it wrong. 

    No, Kit, though it sounds as if you have a real bee in your bonnet about people who you pigeon-hole as certain types, on whom you need to play amateur psychologist. That’s too bad, because it sours your comments.

    Again, you seem to be missing my point, which was to highlight the logical conclusion of Mac’s claims about the “true” cost of gasoline. If the true cost is $8-15 per gallon, as Mac claims it is, and everybody in America — coal miners, farmers driving pickup trucks, policy analysts — are paying $2-3 dollars for their fuel, then that difference is having to be made up elsewhere in the economy — through higher taxes (on coal miners, farmers driving pickup trucks, policy analysts) and higher externalized costs.

    What I don’t understand is why you feel that levying a tax on fuel is “controlling how other people live”, while levying a tax on income (required to pay for subsidies), or requiring a minimum blend of biofuels in transport fuels, is not. All government regulations and taxes affect the economy and hence the decisions people make: the challenge is to design those regulations in taxes in a way that are the most cost-effective, avoid unintended consequences, and are fair.

    I am saying the kind of cars Americans drive is not the business of government.

    Now there’s an interesting concept. I’d like to hear how you would regulate (if at all) this market. Let’s start with standards. First of all, should Americans be free to drive around in armoured tanks, or any vehicle wider than the normal width of car lanes, on public roads? Should they be free to buy cars whose rear brake lights flash blue, and whose back-up lights flash green? Should they be able to drive cars with steering wheels located on the right side of the car (like those sold in Britain)?

    Your remark above seems to imply that countries in most of the rest of the industrialized world dictate what kinds of cars their citizens can drive. That is not so, or at least no more so than in the United States. All countries, including the United States, have established minimum fuel-economy ctandards. Are they really necessary? I think there is a case to be made that they are not. They are probably redundant in Europe and Japan in particular, where the high price of fuel encourages drivers to choose cars that are fuel-efficient.

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  99. By mac on September 29, 2010 at 2:42 am

    Kit,

     

    Interesting post you made, 

     

    I am still reading your references,  The Navy has been pretty cool aboiut the new technology stuff

    Nuclear submarines and all that..

     

    It’s fun to think about this stuff,……..  The electronic rail guns and all that.

     

    Ok on  the Zumwalt.  I was over there too. but I was a ground pounder..

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  100. By ronald-steenblik on September 29, 2010 at 3:12 am

    RR wrote:

    I do think that is the first time I have ever seen someone suggest that a gas tax would benefit the oil companies.

    Indeed. From Angry Mermaid:

    You can see why the API [American Petroleum Institute] was so worried [about increased taxes on transport fuels]. As a New York Times editorial put it: “What the oil companies are probably worried about is that people and industries will consume less of their product as alternatives appear and consumers become more energy-efficient. But isn’t that the point of the exercise?”

    Confused

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  101. By mac on September 29, 2010 at 4:11 am

    Robert,

     

    The oil companies just want to keep on doing business as usual. 

     

    We are NOT going to run out of oil.

     

    A gas tax that reduces demand will mitigate the first few supply-demand shocks called Peak OIL.

    As production declines the oil companies will just keep producing, only at a lower rate of productipn.

     

    Everyone will will reduce consumption because of the high cost OF GASOLINE due to constricting supplires and  gas taxes.  And the oil companies will just keep rolling on and on and on forever.  After the “so-called windfall profits” from the first few supply short-falls, the oil companies will merely go back to their old routine. (and continue to profit just like the good old days)

     

    We will be paying more for gas.  To add insult to injury, we will be paying an outrgeous additionial gas tax on top of that !!!!.  It will not stop demand one iota.  Not one bit.  Every drop of oil produced from this moment on is already spoken for until the bitter end..

     

    A gas tax will NOT reduce worlwide consumption of oil !!!!

     

    The only thing that will stop the flow oil is for oil to become economically uncompetitive compared to alternstives.  IF you say “Well, a gas tax would help to make oil uncompetitive”,  then let me ask you this:  What would you do to replace oil ?  Coal to liquids ? which is equally uncompetitive ?  

    I already told you what I would do.  Electrify the transportation system. Just like you suggested in your “Letter to the President”.

     

     

     

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  102. By mac on September 29, 2010 at 5:06 am

    Robert,

     

    All that a gas tax is going to do is put another burden on an already fragile economyy.  If we are in a recession because of oil prices, then what will doubling the price of gas do ? 

     

    You say that high oil prices caused the recession.  “WHAT DO YOU THINK DOUBLING THE PRICE OF GAS IS GOING TO DO WHEN YOU LEVY A GAS TAX ????. 

     

    YOU’LL HAVE US IN A DEPRESSION    THAT  WILL  LAST  100 YEARS. !!!!!

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  103. By Kit P on September 29, 2010 at 9:34 am

    “I was over there too.”

     

    Never made it over there, I left the
    ship just before it made a westpac. Being port and starboard on a
    WWII tin can makes everything that comes after a piece of cake. Camping is okay if no one is shooting at you.  It just never occured to me that dying from smoke inhalation from an electical fire is just as dead. 

     

    My GQ watch station was running the
    Turbine generator. We were playing war games on a nice day in the
    Pacific when the first drill called to tripping #1 TG. I was given
    an order to trip #2 TG. I question the order 3 times before
    complying. Subsequently, the diesel did not start and we had to be
    towed back to port.

     

    Later on a my first nuke ship as an
    nuke qualified officer, a similar event happened during propulsion
    plant drills but my diesels started. We were only dead in the water
    a few minutes because we did not lose electric power.

     

    When you have awesome weapon systems
    that do not like static discharges and nuke plants with decay heat,
    very reliable electric power systems are essential. The navy is
    again considering putting nuke plants on cruisers because of the huge
    electrical demand of modern weapons systems.

     

    The Russian ice breakers electric
    propulsion systems are being built on barges to provide electricity
    to remote areas or places with temporary shortages.

     

    http://en.wikipedia.org/wiki/N…..icebreaker

     

    However, when it comes to applications
    for personal transportation; the ICE has clear advantages doing
    mechanical work. Unless the electricity comes from a nuclear power
    plant, BEV have no clear benefit.

     

     

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  104. By ronald-steenblik on September 29, 2010 at 10:29 am

    Mac wrote:

    We are NOT going to run out of oil. … As production declines the oil companies will just keep producing, only at a lower rate of production. … Everyone will will reduce consumption because of the high cost OF GASOLINE due to constricting supplies and gas taxes.  And the oil companies will just keep rolling on and on and on forever. We will be paying more for gas.  To add insult to injury, we will be paying an outrgeous additionial gas tax on top of that !!!!.  It will not stop demand one iota.  Not one bit.  Every drop of oil produced from this moment on is already spoken for until the bitter end. … A gas tax will NOT reduce worlwide consumption of oil !!!! The only thing that will stop the flow oil is for oil to become economically uncompetitive compared to alternstives.  IF you say “Well, a gas tax would help to make oil uncompetitive”,  then let me ask you this:  What would you do to replace oil ?  Coal to liquids ? which is equally uncompetitive? I already told you what I would do.  Electrify the transportation system. Just like you suggested in your “Letter to the President”.

    Thanks, Mac, for spelling out your concerns. If I may summarize them, they seem to be this:

    • There is a finite amount of oil, but it is large, and all of it will be produced eventually, unless something cheaper comes along. Big Oil will continue to be the purveyors of it, whether it is exhausted over a short or a long time span. The only way to cut short the era of petroleum is to develop an alternative that is inexhaustible, scalable, and above all cheaper. That means electrifying transport.
    • A gas tax in the United States will not reduce worldwide demand for oil, because the reduced U.S. demand will be picked up by other countries.
    • Worse, increasing end-user taxes on oil products will drive the United States into a century-long depression.

    I think your first set of points is a reasonable diagnosis. However, to go back to your earlier references to studies on “the true cost of gasoline”, those stressed the costs of military protection of foreign oil, pollution externalities, and net outflows of U.S. wealth to pay for imports. Reducing U.S. demand for petroleum products, even if countries elsewhere take up the slack, would at least reduce those costs. Increased use of biofuels might also make a dent in petroleum use, but their use perpetuates the era of the internal-combustion engine (ICE) — exactly as you describe would take place in the absence of a radically different new propulsion method.

    Developing cheaper, scalable, and effectively inexhaustible alternatives to petroleum-powered ICEs will not happen overnight, however. And their ability to compete with petroleum products will be much harder, and slower, the cheaper are those products. Government subsidies for R&D are probably a good idea no matter what. But subsidizing the alternatives on a large, and semi-permanent time scale, would be extremely costly, because not only would taxpayers have to pick up the bill, but a relatively high level of petroleum fuels would be consumed in the meantime.

    Regarding your fear that increasing end-user taxes on oil products will drive the United States into a century-long depression: that assumes a huge increase in fuel taxes in a very short time, rather than a phasing in of higher taxes combined with tax shifting (more to transport fuels, less on earned income), which is what we are proposing.

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  105. By Kit P on September 29, 2010 at 10:46 am

    “who you pigeon-hole as certain
    types”

     

    If it walks like a duck, looks like
    duck, and quakes like a duke; then maybe it is a duck/ When people
    want to raise taxes, they never come out and say that. They talk
    about shifting taxes or redistributing wealth but it really about
    raising taxes.

     

    My industry uses a systematic approach
    that includes lessons learned. One of the things that I have noticed
    when investigate events is that some mangers assign blame and dish
    out punishment before the investigation. We see that a lot in
    society. There is a mine explosion and RR and the media immediately
    blame the CEO of the coal company.

     

    Some believe that if we just hold
    people accountable, the problem will get better.

     

    What is the problem, what is the root
    cause?

     

    Energy use makes us more productive.
    Americans are among the most productive people in the world and using
    more energy is exactly what should be expected. When you look at
    energy use per unit of production Americans are among the most
    efficient people in the world.

     

    The consequence of being productive and
    efficient is not being forced to drive motorized shopping carts.

     

    Now there is another group of people
    who are not productive. They run around and say OMG, we should hold
    those productive people accountable.

     

    It will not affect me because be
    productive and efficient implies that I have a large amount
    disposable income and can not reduce my energy use anyhow.

     

    “First of all, should Americans be
    free to ..”

     

    Of course Americans are not free to
    show ‘fire’ in a crowded theater. Ron confuses regulations to
    promote safety with regulation to restrict freedom based on flawed
    perception of a non-extent problem.

     

    I have never had a problem finding an
    economical car. Civics and Corollas are among the best selling cars
    in the US.

     

    Ron says moms driving SUVs is bad.
    Therefore, he writes

     

    “All countries, including the United
    States, have established minimum fuel-economy ctandards. Are they
    really necessary? I think there is a case to be made that they are
    not. They are probably redundant in Europe and Japan in particular,
    where the high price of fuel encourages drivers to choose cars that
    are fuel-efficient.”

     

    Ron can not decide if restricting
    personal freedom is better done with high taxes or regulations.

     

    Ron wants to tell the most productive
    coal miners in the world how to live based on Japan where they have
    no coal mines.

     

    There us a reason to pigeon-hole
    people who ignore all the choices especially the ones that work.
    These people will never solve any real problems.

     

    People use energy to be more productive
    and as consequence can afford to use more energy to be comfortable.
    Therefore demand for energy is increasing.

     

    What is the solution for increasing
    demand?

     

    All together now!

     

    Increase supply!

     

    We can make all electricity we need
    with nuclear power yet there is a whole industry or report writers
    who explains why we can not. Nuclear is just one choice. We run out
    of demand long before we run out of choices.

     

    American farmers say that they are so
    productive that they have saturated the market for food. Could we
    allow them to make energy? Now I am buying E10.

     

    There is a whole industry or report
    writers who explains why we can not.

     

    The last point is these new production
    will result in more taxes being paid. Some body has to produce
    something so the report writers can eat.

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  106. By ronald-steenblik on September 29, 2010 at 12:08 pm

    Kit wrote:

    Ron can not decide if restricting personal freedom is better done with high taxes or regulations. Ron wants to tell the most productive coal miners in the world how to live based on Japan where they have no coal mines.

    And you, my friend, want to put words in people’s mouths that they did not say, and then twist them. I trust that other readers will understand what I was saying, even if you appear either not to be able to, or choose not to.

    And by the way, Japan had coal mines until a few years ago. Very expensive and subsidized ones they were, too.

    [link]      
  107. By Kit P on September 29, 2010 at 1:20 pm

    “ trust that other readers will
    understand what I was saying, ..”

     

    No Ron that is exactly what you are
    saying. There are personal consequences to excessive regulations and
    high taxes. It is defacto way of controlling people and restricting
    their freedom.

     

    I am wrong Ron that you only want to
    debate between regulation and taxes, you do not want to discuss
    production. I am I wrong Ron to think you are anti-production?

     

    Ron wrote,

     

    “after the release of my study
    critical of biofuel-support policies, “Biofuels: Is the Cure
    Worse than the Disease””

     

    The biggest disillusionment I have with
    renewable energy is that the same people who are against coal,
    nuclear, and oil just happen to be against renewable energy too.

     

    Now I happen to think the adversarial
    systems has benefits. The best example I can think of is that some
    ‘loon’ refused to sign off on the EIS for the oil pipeline. As it
    turns out that this really sharp guy guy was right. Buying a heated
    oil pipeline in permafrost, would not work.

     

    So Ron how do I know you are blowing
    smoke?

     

    “And by the way, Japan had coal mines
    until a few years ago. Very expensive and subsidized ones they were,
    too.”

     

    While it is a nice irrelevant
    discussion, Ron get to avoid being called out as a promoter of
    burdensome taxes and absurd regulations.

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  108. By ronald-steenblik on September 29, 2010 at 1:59 pm

    So, there you go again, Kit. Unable to put together a cogent argument you resort to vitriol. Guess what: nobody cares what you think of me. (Nor do they care what I think of you.) Mainly they get annoyed that you take up so much space to spout your pathetic attempts at character assassination. Scrolling past it gets mighty tiresome.

    I’m really disappointed. I had thought you had turned a new leaf and were starting to walk the high road. (Sorry for the mixed metaphor.)

    [link]      
  109. By rrapier on September 29, 2010 at 2:27 pm

    mac said:

    Robert,

     

    All that a gas tax is going to do is put another burden on an already fragile economyy.  If we are in a recession because of oil prices, then what will doubling the price of gas do ? 

     

    You say that high oil prices caused the recession.  “WHAT DO YOU THINK DOUBLING THE PRICE OF GAS IS GOING TO DO WHEN YOU LEVY A GAS TAX ????. 

     

    YOU’LL HAVE US IN A DEPRESSION    THAT  WILL  LAST  100 YEARS. !!!!!


     

    Mac,

    I have spelled out many times how this would work. Gas taxes would be raised, and either 1). Income taxes lowered to compensate; or 2). Allowing a tax credit that compensates the average person for how much the higher tax impacts them. For instance, if the average family’s gasoline consumption is 1000 gallons per year, and gas taxes were raised by $1, you could give them a tax credit of $1,000 to compensate. They still have incentive to use less or to use alternatives, and it doesn’t impact their bottom line.

    You would have to make various concessions to businesses, and there are obviously details that need to spelled out. By when people say “you just want to raise taxes” — that’s just ignorance.

    RR

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  110. By savro on September 29, 2010 at 2:28 pm

    So if I understand correctly, Kit doesn’t think that the concept itself of shifting the tax burden (not raising taxes) from earned income to consumption is a bad idea. It’s just that –in Kit’s mind– Ronald is from California, which means he’s a far-left liberal environmentalist, and therefore Ron’s idea of tax shifting is just a ploy to raise taxes.

    Which gets me to wondering: What if someone really only wanted a gas tax to be instituted in a manner that would absolutely NOT raise the overall tax burden – how would he go about advocating this concept without automatically being accused by you of disguising his real goal of raising taxes? Would proof that he does not reside in California suffice?

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  111. By rrapier on September 29, 2010 at 3:28 pm

    Samuel R. Avro said:

    So if I understand correctly, Kit doesn’t think that the concept itself of shifting the tax burden (not raising taxes) from earned income to consumption is a bad idea. It’s just that –in Kit’s mind– Ronald is from California, which means he’s a far-left liberal environmentalist, and therefore Ron’s idea of tax shifting is just a ploy to raise taxes.

    Which gets me to wondering: What if someone really only wanted a gas tax to be instituted in a manner that would absolutely NOT raise the overall tax burden – how would he go about advocating this concept without automatically being accused by you of disguising his real goal of raising taxes? Would proof that he does not reside in California suffice?


     

    I am just reading back through Kit’s responses here. I agree with Ron; this is really getting tiresome. Long screeds peppered with personal insults and misrepresentations. Kit just comes across as a bitter person, jealous of certain people, and trying to tear them down in a futile attempt to build himself up. I was tempted just to delete his last two responses; they are an utter waste of space.

    RR

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  112. By Kit P on September 29, 2010 at 3:44 pm

    “vitriol”

     

    Yes, Ron I am being ‘highly caustic or severe in effect, as criticism’.  Is this the first time that you have been strongly criticized for your theories?

     

    “Scrolling past it gets mighty tiresome.”

     

    Life is hard sometimes buddy, deal with it!

     

    “concept itself of shifting the tax burden (not raising taxes) from earned income to consumption is a bad idea.”

     

    No Sam, you missed the concept entirely.  The way to meet increasing demand for energy is to increase production.  I do not think responding to increased demand for energy by regulations to that tell people what to buy or tax them out of buying it will work.  

     

    “therefore Ron’s idea of tax shifting is just a ploy to raise taxes.”

     

    I do not think Ron is from California but Sam nailed.  Just a ploy to raise taxes! 

     

    Furthermore, Sam I think both NY and California provided numerous examples of ‘far-left liberal environmentalist’.   I think that both states have I tax rates and high energy cost that are the result of poor energy policy.

     

    Finally for you guys who write stuff for a living, your post may be well written but ‘cogent’ is not important.  Make all the compelling argument you want.  MY goal is not to win a debate but to understand an issue and find good solutions.

     

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  113. By savro on September 29, 2010 at 5:27 pm

    Kit P said:

    No Sam, you missed the concept entirely.  The way to meet increasing demand for energy is to increase production.  I do not think responding to increased demand for energy by regulations to that tell people what to buy or tax them out of buying it will work.  


     

    I agree with you on the need to increase energy production, but you continue to misunderstand the concept of a gas tax in exchange for lower income taxes (or rebates of some kind).

    By exchanging income tax for a consumption tax, it is giving the consumer an option to save a lot of money by reducing gasoline consumption. No one is forcing anyone to conserve, all it does is give them a real monetary incentive to do so. I suspect that a substantial number of people will begin to voluntarily reduce their gasoline consumption in order to spend their saved income tax dollars on other things.

    You keep trying to paint this as a “regulation” – yet it’s the furthest thing from increased control.

    I look at it like this: Imagine a fellow from the IRS calls you and says, “We’re returning ‘X’ amount of dollars from your income tax to do what you wish with it. If you want, you can continue to live your life as you always did and use the money to cover the new tax on gasoline. If, however, you think you can get by with a little less gasoline, feel free to spend the extra money on your sailboat.” Now what’s wrong with that?

    Obviously, as I mentioned earlier, the details of how exactly this would be implemented is key. But in theory, if income tax can be reduced by the amount that the gas tax is adding, I don’t see why you shouldn’t like this. This is free choice at its best.

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  114. By rrapier on September 29, 2010 at 6:00 pm

    Samuel R. Avro said:

     

    I agree with you on the need to increase energy production, but you continue to misunderstand the concept of a gas tax in exchange for lower income taxes (or rebates of some kind).


     

    I don’t think he misunderstands it, you are just seeing Kit for what he is. He thinks its a bad idea. It doesn’t matter the reasons that he thinks its a bad idea, he has that in his head. Therefore, any justifications you pose are just going to be met with obfuscation and hand-waves. It also doesn’t matter if his logic in this case is consistent with his logic in other cases. If often isn’t. But that doesn’t matter. All that matters is that for Kit it is a bad idea, and if you try to provide logic Kit will revert to things like “This is really about something else.”

    After all, look at his statement: “I do not think responding to increased demand for energy by regulations
    to that tell people what to buy or tax them out of buying it will work.”
    Contrast that with his staunch defense of corn ethanol, which because of energy regulations is in most of our fuel — with the volumes climbing each year That wasn’t a consumer choice; it was forced and Kit is happy with it. He is the king of inconsistency. In this case, though, he thinks it is a good idea so he uses different logic.

    RR

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  115. By Kit P on September 29, 2010 at 7:49 pm

    “You keep trying to paint this as a
    “regulation”

     

    No regulation is CAFE standards.

     

    “I don’t think he misunderstands it,
    you are just seeing Kit for what he is. He thinks its a bad idea.”

     

    RR is correct, I think before you start
    social manipulation of 300 million people, you should have a very
    good reason and have an effective solution. During WWII we had a
    very good reason and rationing was very effective.

     

    I am just an engineer. If society
    decides peak oil and AGW are a crisis, then I can solve it in about
    one day. Ration fossil fuels to an acceptable level until
    alternatives increase suppy again.

     

    Here is why that will not work. We
    have to get China, India, and Brazil among others to agree and ration
    energy (Beyond the current infrastructure limits in these countries).

     

    The social manipulation crowd (aka,
    environmental justice) have taken off the table offshore drilling,
    ANWR, and any place that smacks of new sources of domestic oil.
    Nuclear is a no, no for these folks too for a very long time. Coal
    bad. Now ethanol is bad, biodiesel is bad, wind bad, solar bad,
    biomass bad. If it does not work then it is good. Fusion good, wave
    power good, algae good!

     

    That leaves conservation except for the
    social manipulation crowd. They still get to ride in stretch limos,
    fly part jets, and attend black tie dinners to reach an agreement on
    how to screw the average guy because after all, as RR writes:

     

    “”This is really about something
    else.””

     

    Again RR is right! It is not about
    solving a problem it is about manipulating people.

     

    I lived in California, it is easy to
    recognize manipulating with the proper training. My older sister and I went to
    the mountains for a music festival. She insisted that I was lost and
    the we should stop and ask for directions. I pulled into a gas
    station. She asked me if I was going in. I said ‘we’ are not lost
    but if ‘you’ would feel better ‘you’ can check. When she came out,
    she confirmed we not lost. Also that she got the date wrong.

     

    Sometimes it is really about something
    else.

     

    So while some of the rest of you want
    to debate the slickest way to take away our rights and stick your
    hand in our wallets, I will keep talking about how we can meet demand
    for energy.

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  116. By mac on September 29, 2010 at 9:16 pm

    A gas tax on Americans will not stop worldwide consumption of oil Every drop of oil that Americans are forced to save will be purchased by someone else and burned, Worldwide consumption of oil will be at 100 % capacity. Every drop of oil production will be consumed. A gas tax will not reduce consumption of oil worldwide but will only hurt Americans.

    A gas tax is therefore useless.

    If you are concerned about global warming, greenhouse gas emissions and CO2, a gas tax on Americans will not reduce GHG or CO2.worldwide. Someone else will simply burn the oil that Americans don’t burn because of artificially inflated gas prices. There will be no worldwide reduction in GHG or CO2.

    A gas tax is therefore useless..

    If high oil prices did indeed trigger present recession, then a gas tax will only aggravate any recovery, or make it virtually impossible.

    A gas tax is useless AND damaging.

    1. A gas tax will not reduce worldwide consumption of oil.
    2. A gas tax will not reduce worldwide greenhouse gas emissions or CO2.
    3. A gas tax will only hinder economic recovery

    The gas tax is therefore a useless hindrance.

    Investing all the gas tax money to find a way to replace oil ?. It will likely never happen. If a tax on the oil that men sweat blood to get out of the ground is ear-marked for a big R&D program to displace oil, the oil companies will fight it tooth and nail, with multitudes of lobbyists, tons of money and all their many friends in Congress. Most, if not all the R&D money that would have been used to find a replacement for oil will end up on the cutting room floor.

    After Congress gets through with all its amendments, earmarks and pork, the beautiful little bill you drafted on your dining room table one rainy afternoon will look like it’s been through a paper shredder.

    The result will be that Americans will be left with nothing but a big fat gas tax. The money will not be used to find an oil replacement. The money will likely end up bolstering the governments legacy costs or to pay interest on T-Bills and such like. Bills rarely sail through Congress un-challenged or in their original form. They are almost always amended.

    No, your pristine, immaculately crafted solution to the world’s oil problem will end up looking like it’s been through a meat grinder.

    The American people will, of course, be left holding the bag while paying big $ bucks $ for gas,

    Most of the real guts of the bill will be ripped out. The net result is that Congress will have lots of new revenue to play with and the oil companies will just keep on doing business as usual. It will end up changing nothing. It will have the negative effect of inflationary gas prices

    That’s the scenario if the bill passes. Most likely it will never get through Congress and will die in committee and never even get to the House floor for a vote.

    The oil companies can live with high gas taxes in Europe because they know that every drop of oil they will ever find is already sold somewhere in the world. If European demand falls due to high taxes, they will simply sell the oil elsewhere.

    I really don’t think high gas taxes really bother the oil companies that much but Big Oil will draw a line in the sand on a bill that will undermine their business or potentially destroy it. Count on it.

    Every drop of oil that will ever be found has already been sold. So if governments want to tax gas, who cares ? It’s neither here nor there to the oil companies and does not significantly affect their bottom line

    Finally, if a gas tax becomes law, it will NEVER go away It will be there forever.

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  117. By mac on September 29, 2010 at 9:41 pm

    I’d like to meet the Airhead that thought up this gas tax
    idea. 

     

    In fact, there are probably about
    320 million fellow Americans who would like to meet this reprobate in a back
    alley somewhere,   The author of this
    gas tax “idea” must be some clueless, self-appointed “social engineer” that
    never did a real days work in his life but has sat around after graduating from
    college dreaming  up misery for other
    people.  Or it could be some worthless
    Teknocrat, more worried about his Global Warming agenda than on economic
    realities.  Or, perhaps it’s just the
    usual greedy politician rubbing his sweaty palms together, drooling at the
    thought of  ‘all that money.”

     

    Youi can take the Gas Tax and “stick it where the sun don’t
    shine”

     

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  118. By rrapier on September 29, 2010 at 10:01 pm

    A gas tax on Americans will not stop worldwide consumption of oil
    Every drop of oil that Americans are forced to save will be purchased by
    someone else and burned, Worldwide consumption of oil will be at 100 %
    capacity. Every drop of oil production will be consumed.

    I agree with that bit. I think all the oil will eventually be consumed. However, it is extremely short-sighted to suggest that we shouldn’t try to curtail our oil consumption to limit the impact on us when all the oil is consumed. That’s the whole point here. The less dependent you are on oil, the less impact shortages and spiking prices will have on your economy. If I personally use a lot less oil than my neighbor of similar income, I am going to be a lot better off financially as oil prices rise. The same can be said for the country as a whole. We can make Venezuela and Saudi Arabia rich, or we can adopt policies to keep more of that money in the in country.

    Further, you are a fan of renewable energy, are you not? Wouldn’t taxing gas make them more affordable and boost their prospects?

    It seems to me like you are unhappy with the status quo of oil dependence, but when it comes to taking actions to do something about it you are actually just fine with the status quo.

    RR

     

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  119. By Wendell Mercantile on September 30, 2010 at 12:23 am

    The result will be that Americans will be left with nothing but a big fat gas tax. The money will not be used to find an oil replacement. The money will likely end up bolstering the governments legacy costs or to pay interest on T-Bills and such like.

    Or, the result may be as in Western Europe where because of their high gas taxes, one routinely sees turbo-diesels that get 60 or more mpg; and small, well-made hatchbacks that get 50 mpg or more burning gasoline.

    A likely result would also be the end of people in the US buying big pickups and SUVs for nothing more than vanity reasons and to pump up their psyche.

    People that really need big trucks and SUVs to do useful work and make a living (carpenters, contractors, cowboys, ranchers, forest rangers, etc.) would get the appropriate tax breaks or rebates to allow them to continue working.

    Another likely outcome would be an increase in the acceptance of all-electric cars. The sales of small, all-electric city runabouts for commuting and doing in-town errands would likely skyrocket.

    There could be desirable outcomes of a gas tax, but I also agree, “Never gonna happen GI.” Any politicians who lined up behind a gas tax would be dead meat at the next election.

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  120. By paul-n on September 30, 2010 at 12:42 am

    So a gas tax is unpopular – who knew?

    I don’t think that anyone has advocated a domestic gas tax as serious way to reduce worldwide oil consumption, at least I hope not because Mac is correct that it won’t.

     

    However, it will reduce domestic consumption, which is desirable, as lots of money is leaving the country on oil imports.  The trick is to do it without causing undue, or lop-sided, economic harm

    So is there a better way?

    Leaving aside the issue of overtaxation, for the moment, lets consider some of the major goals of the current (and past) government;

    •  increase employment
    • increase domestic oil production, and oil alternatives (ethanol, biodiesel, etc)
    • reduce dependence upon oil imports 
    • increase the efficiency with which energy (especially oil) is used

    If we agree that increasing taxes on X makes people/companies likely to use less of X, and reducing them makes them use more, then it would seem that what is needed is to;

    1. reduce income and/or employment taxes (e.g. payroll tax)
    2. reduce taxes and/or pay subsidies on domestic energy production
    3. put a tax on imported oil (except imports from Canada/Mexico) 
    4. provide tax breaks/incentives on energy efficiency measures
    5. make sure all these taxes and tax breaks, collectively, add up to zero

    We have already seen government doing (2), with the ethanol and biodiesel subsidies, and the tax credit for “stripper wells”.  There are a bunch of other supports for domestic energy production, so (2) is being implemented

    The government is also making some efforts on (4), with tax credits for home/business energy efficiency improvements, and also on certain vehicles.  Of course, these are a bit of a patchwork, and are not as focused or as effective as they could be.

    But nothing is being done on (1), because the government needs the revenue, and nothing is being done on (3), with the single exception of ethanol, with a 45c/L tariff, to counteract the blenders credit.

    BUT,  putting an import tax on oil, and then cutting income tax and payroll tax, would be a better way than just an across the board gas tax.  It avoids taxing domestic production at the same time as subsidising it.

    It will encourage domestic production, above and beyond the production incentives.   Off continent imports are currently about 50% of total oil, and shrinking.  Increase in domestic oil and biofuels, and Canadian production, will see this % keep shrinking, but an import tariff would see domestic production grow faster, and imports shrink faster.

    It does not necessarily mean the domestic price of oil has to rise by the tariff amount.  So, by the time imports are down to 1/3, a $1/gal import tariff is an average of just 33c/gal on fuel.  

    Oil alternatives like using CNG and electrification of rail become more attractive.

    We might also see more ethanol being used where it is produced, as then the farmer is avoiding the import tariff altogether.

    Of course, this assumes we can trust the government to enact said tax breaks at the same.  

    Any decrease in income tax (e.g. raising the tax free threshold) means people have more money in their pockets.  If they are able to then spend less on oil, by whatever means they choose, then so much the better. 

    Reducing payroll tax in particular, since it is regressive, and is a direct increase in the cost of employing people, will help with job creation.

    The domestic energy industry gets a double win, as it will benefit from both reduced employment costs, and being more competitive with imported oil.  This is of particular benefit to the labour intensive biofuels industry.  (This does not excuse any of them for environmental degradation, and clear rules on this must be set and followed, regardless).

    Even though some would see this a benefit to “Big Oil”, it is only a benefit on what they produce here, so when evaluating where to spend their exploration $$, they might just be more likely to do it here, rather than there.  If it makes a significant dent in US imports, and the world oil market see the US is turning away, and thus depresses the world oil price even slightly, then the US gets a double benefit by buying less imported oil, and what it does buy is at a lower price than it would otherwise have been, so the economic benefit is magnified.

     

    So, yes, it is a “gas tax” but only on the gas we don’t want – the imported stuff.  It does not hinder economic recovery as all the money stays here.  The US has placed import tariffs on everything from ethanol to steel to lumber, primarily with the intent of protecting/increasing domestic production, a tariff on oil is in keeping with that philosophy.

     

    Alternatively, to take a slightly different angle on Kit’s approach, the government could just place an import embargo on all off-continent oil.  A bit more draconian, but would be effective, and there are no new taxes involved.  However, it could be argued that doing this, overnight, might hinder an economic recovery, though it didn’t seem to in WW2.    

     

     

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  121. By Duracomm on September 30, 2010 at 1:45 am

    Here is novel idea.

    How about we just let the energy sellers and the energy buyers agree on what they think energy is worth and let everybody go on about their business?

    I’m surprised anyone can look at the political class in washington DC and not conclude that the smartest thing to do is to keep them away from anything as important as energy policy.

    They have done such a great job with the housing market, the economy, and the budget it obviously makes perfect sense to let them apply their Midas touch to the energy sector.

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  122. By mac on September 30, 2010 at 3:11 am

    Duracomm said

    “Here is novel idea.

    How about we just let the energy sellers and the energy buyers agree on what they think energy is worth and let everybody go on about their business?

    I’m surprised anyone can look at the political class in washington DC and not conclude that the smartest thing to do is to keep them away from anything as important as energy policy.

    They have done such a great job with the housing market, the economy, and the budget it obviously makes perfect sense to let them apply their Midas touch to the energy sector”.
    ———————————————————————————————————-
    “Two thumbs up, ”

    Too many special interest groups and lobbyists in Washington to get a single minded, coherent energy policy. It’s almost certain that few congressmen really know anything about energy.

    Our beloved Congress is usually made up of about 70% lawyers trained in the adversarial law system, That may be why there is always a big “Cat Fight” going on in DC and nothing gets done. Lawyers in Congress love to argue with each other just like they used to argue with each other in court.

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  123. By Perry on September 30, 2010 at 6:24 am

    Robert has the right idea. Such a tax would be a windfall for people who managed not to use gasoline. It would hit rural folks harder though, because they use more gasoline to do the same tasks. Never mind if China would burn through any fuel we saved. The point is to cut OUR dependence.

     

    Why don’t we just front load this gas tax onto new car sales? Figure how much gas it will use in 10 years of average driving and slap it on the sticker price. $10,000 for a pick-up or SUV. $5000 for a car that averaged 25 MPG. $2500 for a Prius. Nothing for an EV. Give everyone who buys a new vehicle $5000 at tax time. Once again, it would be a winfall for people who are fuel conscious. It would make hybrids the “smart” choice for wallet watchers. PHEV’s and EV’s would narrow the price gap.

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  124. By Perry on September 30, 2010 at 6:35 am

    More importantly, people like Mac wouldn’t be unduly penalized for living outside of cities. Someone could still buy a large pick-up or SUV, and come out ahead if it was a hybrid. There will always be those people who light their cigars with $100 bills though. Those are the folks I don’t mind taxing.

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  125. By ronald-steenblik on September 30, 2010 at 10:18 am

    Paul wrote:

    [P]utting an import tax on oil, and then cutting income tax and payroll tax, would be a better way than just an across the board gas tax.  It avoids taxing domestic production at the same time as subsidising it. It will encourage domestic production, above and beyond the production incentives. … It does not necessarily mean the domestic price of oil has to rise by the tariff amount. So, by the time imports are down to 1/3, a $1/gal import tariff is an average of just 33c/gal on fuel.

    No, Paul, it doesn’t work that way. First of all, consider the WTO issues raised by substantially raising the import tax on oil (a topic on which I’ve commented before on these pages). The United States is a charter member of the WTO, and of the GATT before that. One of the central aims of the GATT and WTO has been to progressively reduce import tariffs. This is done through rounds of multilateral trade negotiations, in which in each round member economies commit to maximum (“bound”) levels of tariffs on an MFN — meaning the tariff applied to all other WTO members except those benefitting from free-trade agreements — basis. The United States has not bound its import tariff on crude oil, but it has bound its import tariffs on imported petroleum products, generally at a few pennies per barrel.

    If the United States were to raise its MFN import tariff on crude oil substantially, more imports would come into the United States in the form of products, and fewer in the form of crude oil (though there would be some shift to more supplies from countries with which the United States has a free-trade agreement, notably Canada and Mexico). The effect, in short, would be mainly to change the composition of imported petroleum, not the level of imported petroleum (except to the extent that higher domestic prices dampen overall demand; see below). And that is not even accounting for the possibility of importing and then re-exporting foreign oil through countries with which the United States has free-trade agreements (e.g., Chile, Israel, Jordan, Morocco, Oman, Panama).

    Technically, while still abiding by WTO rules, the United States could raise its applied MFN tariffs above its bound MFN tariffs on petroleum products. But it would then have to compensate affected WTO-member trading partners (including Norway, the UK, Venezuela, and Saudi Arabia, but not Iraq or Iran) for losses caused by the imposition of the tariff. That could prove to be VERY expensive.

    Of course, it could simply flout WTO rules, or withdraw from the WTO, but it is unlikely to do that, for a myriad of reasons.

    As for the effect on domestic prices, unless the tariff led to total self-suffiency or made the United States a net exporter, an import tariff equivalent to $1 per gallon of gasoline ($42 per barrel of crude, say), would indeed raise the price of fuel all across the nation by approximately the same amount ($1 per gallon), creating windfall profits for domestic producers and producers in countries with which the United States has a free-trade agreement. Remember: prices are determined by the price of the marginal supplier, and the marginal supplier would likely be oil from a country subject to the tariff.

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  126. By ronald-steenblik on September 30, 2010 at 10:45 am

    Perry wrote:

    Why don’t we just front-load this gas tax onto new car sales? Figure how much gas it will use in 10 years of average driving and slap it on the sticker price. $10,000 for a pick-up or SUV. $5000 for a car that averaged 25 MPG. $2500 for a Prius. Nothing for an EV.

    Such taxes exist already in a number of European countries (and perhaps elsewhere): they’re called feebates. Feebates have also been studied in the United States. This study from 2005 concluded:

    Feebates are a market-based alternative in which vehicles with fuel consumption rates above a ‘‘pivot point’’ are charged fees while vehicles below receive rebates. By choice of pivot points, feebate systems can be made revenue neutral. Feebates have been analyzed before. This study re-examines feebates using recent data, assesses how the undervaluing of fuel economy by consumers might affect their efficacy, tests sensitivity to the cost of fuel economy technology and price elasticities of vehicle demand, and adds assessments of gas-guzzler taxes or rebates alone. A feebate rate of $500 per 0.01 gallon per mile (GPM) produces a 16 percent increase in fuel economy, while a $1000 per 0.01GPM results in a 29 percent increase, even ifconsumers count only the first 3 years off uel savings. Unit sales decline by about 0.5 percent but sales revenues increase because the added value off uel economy technologies outweighs the decrease in sales. In all cases, the vast majority of fuel economy increase is due to adoption of fuel economy technologies rather than shifts in sales.

    The problem with too high a feebate based on the typical driver is that it penalizes people who buy a vehicle mainly for limited but heavy-duty use, not for commuting. By contrast, the amount paid through a per-gallon tax is by definition proportional to the amount of fuel consumed.

     

    Perry then wrote:

    More importantly, people like Mac wouldn’t be unduly penalized for living outside of cities.

    That strikes me as an interesting statement. I know many people (e.g., cousins in New England who moved deep into rural New Hampshire but then commuted long distances, in SUVs, to jobs in the Boston area) for whom living in a rural area is a choice. People in cities pay much more for parking than people living in small towns. Should we give city drivers a break so that they are not unduly penalized for living inside of cities?

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  127. By Kit P on September 30, 2010 at 11:04 am

    “If we agree that increasing taxes on
    X makes people/companies likely to use less of X”

     

    We do not agree. Higher energy prices
    causes people to buy less of Y. The most energy intensive thing my
    family does is drive to see other family members. When gas prices
    went up we packed a picked lunch instead of eating in a restaurant.

     

    “provide tax breaks/incentives on
    energy efficiency measures”

     

    Where have a heard that before Jimmy
    Carter. I really begin to understand why they trust the government
    to give money back to carpenters who need a big truck.

     

    Am a big advocate of conservation, just
    not the stupid things people say. I replaced my heat pump a few
    years ago because it was old and needed to be replaced. The new one
    is more efficient. I would have made the same choice regardless of
    the tax breaks.

     

    Not wasting energy is an old
    conservative idea.

     

    “as important as energy policy”

     

    I take it that MAC never read NATIONAL
    ENERGY POLICY, May 2001; or the 2005 Energy Bill?

     

    Those documents are worth reading if
    you want to understand the issues and solutions.

     

    There are things that big government
    can effectively promote like large energy projects. I will be
    surprised in big government will be very effective at weatherizing
    homes of poor people. I suspect some small local governments will
    spend the money wisely but it appears to be a huge rat hole if you
    look at how much has been spent in the last 30 years.

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  128. By mac on September 30, 2010 at 11:37 am

    While Ron and Paul are arguing the fine points, lets get back to the basics

    Cost inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available. A situation that has been often cited of this was the oil crisis of the 1970s, which some economists see as a major cause of the inflation experienced in the Western world in that decade. It is argued that this inflation resulted from increases in the cost of petroleum imposed by the member states of OPEC. Since petroleum is so important to industrialized economies, a large increase in its price can lead to the increase in the price of most products, raising the inflation rate. Another good example of cost push inflation was the decision by British Gas and other energy suppliers to raise substantially the prices for gas and electricity that it charges to domestic and industrial consumers at various points during 2005 and 2006.

    If we take gas at $2.50 gal. now and arbitrarily raise its price with a gas tax to $5.00 a gallon, it has exactly the same effect as if the price of crude went from its present $80 a barrel to $160. Since oil is a commodity for which there is no ready substitute, any increase in the price of oil tends to be inflationary. A gas tax that arbitrarily inflates the price of oil is no different than OPEC raising prices. Futures traders, OPEC or gas tax – its all the same and the resultant inflation is the same no matter who instigated the price hike. The 1980s suffered both double-digit inflation and recession. I know. I was there sitting in the gas lines. Investment gurus were advising people to go out and buy TV sets, boats, cars, and anything else you could get your hands on because “prices are going up”. Runaway inflation.

    For a gas tax hike to effectively change consumption habits it cannot be rolled out in insignificant increments. You are going to have to sock it to people. When you do that, it’s going to cause inflation. This is the double whammy of the gas tax. It not only raises the price of oil but also raises the price of everything else right along with it. Oil has ingratiated itself into the economy in so many ways that even slight movements in the price of oil have far reaching effects.

    A gas tax that takes gasoline on up to $5 a gallon is a risky proposition at best and small incremental changes won’t work. Most people say it would take a gas price of four to five dollars a gallon before they would fundamentally change their driving habits. Inflation and recession here we come. We are already in a recession caused by an oil price spike ( so Robert says) and you want to raise gas taxes…. Amazing… ….

    Please don’t bother to re-assure me. Just send your fantasy gas tax bill.to your Congressman so he can throw it in the circular file.

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  129. By ronald-steenblik on September 30, 2010 at 12:31 pm

    Mac (a different Mac this time?) wrote:

    For a gas tax hike to effectively change consumption habits it cannot be rolled out in insignificant increments. You are going to have to sock it to people.

    That’s not entirely true. A gas-tax increase that is rolled out in “insignificant” increments (I guess we need to agree on what is “insignificant” — would 10 cents per year be insignificant? what about 20 cents per year?), if the schedule is known and people believe that it is not going to be stopped or slowed, will be factored into the decisions that they make when buying a new car. It will also be factored into the decisions that companies make when investing in a new car design. That may not have as big an impact in the short term as an instantaneous big increase in the tax, but it will send an important signal and thereby influence investments in long-life assets.

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  130. By Wendell Mercantile on September 30, 2010 at 1:24 pm

    if the schedule is known and people believe that it is not going to be stopped or slowed, will be factored into the decisions that they make when buying a new car.

    It would also be helpful if the tax were to go into a specific pot of money. For example, in 2005 after Hurricane Katrina, they could have slapped a $0.25 per gallon tax on gasoline and diesel to go specifically to hurricane relief and recovery, plus put a sticker on every gas pump in the country saying, “25 cents of the price of each gallon goes to the Katrina relief effort.”

    There are a number of worthy causes we could fund with a specific gas tax:

    * Send a mission to Mars.
    * Buy more F-22 Raptors.
    * A nationwide school building fund.
    * Rebuild and modernize the electric grid, etc.

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  131. By OD on September 30, 2010 at 1:51 pm

    If we take gas at $2.50 gal. now and arbitrarily raise its price with a gas tax to $5.00 a gallon, it has exactly the same effect as if the price of crude went from its present $80 a barrel to $160.

    I don’t believe that to be true. With solely raising the tax on gas, you do not get the inflation on food, home goods, and whatever else oil plays a role in like you do when the price of oil doubles.

    We could also make certain industries exempt from the tax, like the trucking industry, so delivery/shipping rates do not skyrocket like they do when oil doubles.

    I have to agree with Robert. The positives far outweigh the negatives with such a tax.

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  132. By OD on September 30, 2010 at 1:55 pm

    There are a number of worthy causes we could fund with a specific gas tax:

    Pay down the national debt, so our currency doesn’t become toilet paper. Laugh

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  133. By ronald-steenblik on September 30, 2010 at 2:01 pm

    Wendell said:

    There are a number of worthy causes we could fund with a specific gas tax:

    Wendell, I assume (I hope) you are speaking tongue-in-cheek here. That is exactly the kind of sentiment that (rightly) scares people about any talk of increasing the gasoline tax. Robert, Samual and I were talking about tax shifting: reducing income taxes in exchange for increasing the tax on gasoline. Using the tax revenues as a slush fund that politicians can play with, to fund their pet projects, is the road to ruin.

    On the other hand, there is nothing (except competition) stopping an oil company from charging 12.5 cents more per gallon and offering to match that extra surcharge to raise money for worthy cause, such as aiding Katrina victims.

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  134. By Wendell Mercantile on September 30, 2010 at 2:09 pm

    I assume (I hope) you are speaking tongue-in-cheek here.

    Maybe, maybe not.

    It could also be the ultimate form of democracy if whenever one bought gas, s/he could designate to which worthy government pot their fuel tax money goes.

    For example, I might want all my fuel tax money to go to the Department of Defense, while someone else might want theirs to go to building canals and hydroelectric dams. (Rufus of course could have all his fuel tax money go to ethanol subsidies.)

    It could be refreshing if we decided directly where our tax money goes, instead of letting politicians and lobbyists do it.

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  135. By rrapier on September 30, 2010 at 2:14 pm

    mac said:

    If we take gas at $2.50 gal. now and arbitrarily raise its price with a gas tax to $5.00 a gallon, it has exactly the same effect as if the price of crude went from its present $80 a barrel to $160.


     

    Disagree 100%. If oil goes to $160 a barrel, most of that money flows right out of the country and adds to the trade deficit. If you instead raised the price, you could keep all of that money in the country. Big difference. Now we can debate whether that money could be used wisely or whether it would be squandered, but the money would certainly end up in two very different places in your example. In my proposal, I would refund it back to people in the form of a tax credit. So in that case, people get back that $2.50. In the other case, the Saudis get it. That doesn’t seem like “exactly the same effect.”

    RR

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  136. By rrapier on September 30, 2010 at 2:22 pm

    Kit P said:

    “If we agree that increasing taxes on

    X makes people/companies likely to use less of X”

     

    We do not agree. Higher energy prices

    causes people to buy less of Y. The most energy intensive thing my

    family does is drive to see other family members. When gas prices

    went up we packed a picked lunch instead of eating in a restaurant.

     


     

    This looks like another of those “I don’t need to see data when I experienced it personally.” In fact, we do have data showing the miles being driven falling and oil consumption falling as oil prices went up.

    http://www.fhwa.dot.gov/pressr…..t08102.htm

    Secretary Peters said that Americans drove 9.6 billion fewer
    vehicle-miles traveled (VMT) in May 2008 than in May 2007, according to
    the Federal Highway Administration data. This is the largest drop in VMT
    for any May, which typically reflects increased traffic due to Memorial
    Day vacations and the beginning of summer, and is the third-largest
    monthly drop in the 66 years such data have been recorded. Three of the
    largest single-month declines – each topping 9 billion miles – have
    occurred since December.

    So you can disagree all you want. But sometimes facts inconveniently get in the way of preconceived notions. In this case, the drop in miles driven is certainly due to the fact that gas prices were $0.50-$0.60 higher in May 2008 than in May 2007 (and would ultimately be a dollar higher). Of course most of that money flowed right out of the country.

    RR

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  137. By paul-n on September 30, 2010 at 3:32 pm

    While higher price for X may make people spend less on Y, they will certainly be looking at their consumption of X too.

    The key point being – it reduces inefficient and non productive use of X.

    When oil prices were at their peak, the airline, bing the most vulnerable, started to do things differently.  They slowed down their flights, used light on board equipment, taxied on only one engine, plugged planes into ground power at airports more etc etc.

    Southwest saved $42million per year in fuel costs by slowing down their cruising speed, adding one to three minutes to their flights.

    http://www.thestar.com/Busines…..cle/420956

    I would say that is pretty clear evidence of higher price for X leading to more efficient ways to use X, and use less X overall, which was the whole idea.

    When the fuel was cheap, it was not worth their trouble to do these things, or they would have done them years ago – they have long know flying a bit slower saves fuel.  When the check in time at the airport is now longer than most short haul flights, what difference does few minutes make?

     

    Higher oil prices by tax, rather than higher commodity prices, keep the money in the country rather than out.  We cannot rely on the government to use that money as efficiently as possible, but at least it is still here.

     

     

     

     

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  138. By Perry on September 30, 2010 at 4:06 pm


     

    Ronald Steenblik said:

     

    Such taxes exist already in a number of European countries (and perhaps elsewhere): they’re called feebates.  

     


     

    I think people could live with that, especially if they were revenue neutral. And, my hunch is fuel savings would be even better than 29%, since EV’s will be hitting showrooms soon. On the rural areas……yes, some people move out there by choice and then commute long distances. Others live out there, because that’s where their job is. It’s not the farmer’s fault he has to drive 25 miles for groceries.

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  139. By Wendell Mercantile on September 30, 2010 at 5:17 pm

    It’s not the farmer’s fault he has to drive 25 miles for groceries.

    But it is. Back in the day, farms were self-sustaining and there weren’t many food items that people didn’t grow for themselves. They grew apples, peaches, and pears; had nut trees; had large vegetable gardens; raised chickens, pigs and cows; made their own cheese — and that’s mostly what they ate — the stuff they grew. They made trips to town perhaps every other week to pick up a part for the thresher, to deposit or withdraw money at the bank, or to stock up on the items they didn’t grow such as coffee, sugar, spices, etc.

    Ask an industrial, mono-culture farmer today if he actually eats anything he grows on his farm, and he will say, “Of course not.” Farmers are no longer farmers — instead they grow commodities.

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  140. By mac on September 30, 2010 at 8:01 pm

    Let’s bring that money back home from Saudi Arabia and spent it on good old American made products, end the balance of payments and put Americans back to work.

    Okay, let’s do that. Let’s go on a little make-believe shopping trip……

    It’s April and we actually got back $1,500 bucks from the Feds due to the gas tax credit. .Excitedly, we jump in the car, the wife, the kids, all of us. We have been wanting a new TV for a long time. We soon discover however that all the television sets are made in China or Japan, We also soon notice that consumer electronics are made in Japan, Korea, China, Mexico, etc. Then, we look at a digital cameras. (Made in Japan again). Disheartened that we can’t find anything made in the U.S. we head off to the bicycles.

    Okay, lets spend the tax credit on the kids. Let’s buy the kids some bicycles. Ooops, the little sticker says “Made in China” So you look around for another bicycle. You finally find one. It says made in Taiwan. Wow, that’s much better, but still no cigar. Discouraged that we couldn’t find anything we wanted that was actually made in America, we gave up and headed home disheartened.

    On the way we stopped at the grocery store. After all, it’s as American as apple pie and we surely can “keep the money at home” and correct the trade balance in the grocery store, So, we all pile into the grocery store. The grapes looked good, but Oh, Oh, wouldn’t you know it, “Product of Chile”. Of course, I immediately threw them back in the bin and went on. As I went down the vegetable aisle. I picked up a little package of garlic bulbs. Are you ready for this ? The little sticker said “Product of China”. Apparently, we do not even grow our own food any more..Imagine that. Importing garlic ??? all the way from China.?

    By this time I was getting a bit depressed so I headed over to the beer and wine aisle and grabbed a cheap bottle of Yellowtail wine.”Product of Australia” That won’t do. I remembered what they said on TV “Buy American” so I pulled a six-pack of beer from the cooler. It said Corona and had a pretty girl laying on a beach. I said, Hey honey this looks good. (oops, made in Mexico.)

    Finally, I just got disgusted, put everything back.on the shelves and got the family into our little Japanese car and headed home.. I put on my sun glasses (Taiwan) I had on my new shirt I bought at Wal-Mart. (Made in Indonesia) My pants were made in Thailand.. My Nike sneakers??? “China”, of course. The only thing I had on that was Made in America was my watch (made in Switzerland)

    Now, Just exactly what were you saying about all that gas tax rebate money staying at home ?

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  141. By mac on September 30, 2010 at 8:46 pm

    Robert,

    I made a typo.

    If we take gas at $2.50 gal. now and arbitrarily raise its price with a gas tax to $5.00 a gallon, it has exactly the same effect as if the price of crude went from its present $80 a barrel to $160.

    It should read: “it has exactly the same inflationary effect as if the price of crude…”

    I left out the word “inflationary”

    The subject of the post (the main theme) was Inflation. My contention was that since oil is a commodity in our economy for which there is no substitute, that any price increase is inflationary whether it comes from OPEC, the NYMEX futures traders or a steep increase in the gas tax.

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  142. By rrapier on September 30, 2010 at 9:57 pm

    mac said:

    Now, Just exactly what were you saying about all that gas tax rebate money staying at home ?


     

    The beauty of the scheme is that they can do whatever they want with it. They can save it, spend it, put in an extra mortgage payment on their house, or whatever they want. But the objective of tilting the field away from fossil fuels will be the result.

    RR

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  143. By mac on October 1, 2010 at 12:19 am

    Ron.

    Same mac. No change.

    They interviewed a number of people after the crude run-up to $147 a barrel.

    While not all agreed, many said that they would not change their gas consumption habits much until the retail price of gasoline was 4-5 dollars a gallon. Since there is no alternative to oil except conservation strategies such as the gas tax, CAFE standards, public transportation or simply doing without these are being touted as a “solution to oil”

    They are not a solution, They will, at best only reduce present consumption.

    Actually, there is a solution, but it involves abandoning oil altogether, A very touchy subject for many people with vested interests..

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  144. By mac on October 1, 2010 at 12:46 am

    Robert.

     

    Remember energy exchanges….all the inevitable energy losses  ?????

     

    If you give $100 to the government, you will be lucky to get back  $75.

     

    It’s  called The law of financial physics.

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  145. By carbonbridge on October 1, 2010 at 1:17 am

    mac said:

    My contention was that since oil is a commodity in our economy for which there is no substitute, that any price increase is inflationary whether it comes from OPEC, the NYMEX futures traders or a steep increase in the gas tax.

    Actually, there is a solution, but it involves abandoning oil altogether, A very touchy subject for many people with vested interests..


     

    It has been fascinating as well as educational to follow the rather passionate discussion of ‘gasoline taxes’ on this thread.  Personally, I find it far easier to interpret methods of thermally rearranging carbon, hydrogen and oxygen atoms than to suggest or debate significant tax strategies.

    Wondering too IF there might possibly be any consensus achieved here — as this blog’s Moderator has been sincere in his support for new liquid fuel taxes for some time…  I hesitate to even guess about consensus of opinion. 

    Thus I’ll wait for a member’s thread to further discuss profitable substitutes for a crude oil economy.  I think that this is what many of us are working to accomplish.  Please carry on.

    -Mark

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  146. By ronald-steenblik on October 1, 2010 at 2:27 am

    Wendell wrote:

    Back in the day, farms were self-sustaining and there weren’t many food items that people didn’t grow for themselves. They grew apples, peaches, and pears; had nut trees; had large vegetable gardens; raised chickens, pigs and cows; made their own cheese — and that’s mostly what they ate — the stuff they grew. They made trips to town perhaps every other week to pick up a part for the thresher, to deposit or withdraw money at the bank, or to stock up on the items they didn’t grow such as coffee, sugar, spices, etc. 

    Ask an industrial, mono-culture farmer today if he actually eats anything he grows on his farm, and he will say, “Of course not.” Farmers are no longer farmers — instead they grow commodities.

    Thank you, Wendell. I was fixin’ to make the same point.

    I spent the first eight years of my life on a farm in rural Maine. That was back in the ’50s, when the price of filling up a gas tank was much higher relative to a person’s weekly income than it is today. My Dad was a machinist for the railroad, but managed to grow potatoes, English peas, sweet corn, all manner of squashes, asparagus, and various other vegetables. (My brothers and I helped weed and harvest). He grew strawberries, and we had apple trees, pear trees, quince, chokecherries (good for wine). We made our own maple syrup. My Dad kept bees. We had a milk cow (fed mostly on the hay we grew) and kept roosters. We ate a lot of venison and other game. Beef was not a major part of our diet. We exchanged milk or honey for eggs from our neighbor. We weren’t totally self-sufficient, of course: my parents still had to drive into town for their (imported) coffee beans. (See other string.)

    “Back in the day”, farms in Iowa were equally polyvalent, and that was probably so across much of rural America. But government policies (and the economics of industrial farming) and cheap transport fuel encouraged monocultures, and planting wheat or corn ”from fence row to fence row.”

    Farmers aren’t “penalized” for living where they do. Fuel (a large part of which is exempt from fuel taxes, by the way) is a cost of their business, and at least partly a consequence of what they choose to grow.

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  147. By paul-n on October 1, 2010 at 4:36 am

    Actually, there is a solution, but it involves abandoning oil altogether, A very touchy subject for many people with vested interests..

    Mac, I don;t disagree with this. With the exception of the airline industry and plastics/petrochemicals, almost every other use of oil can be replaced with something else – for a price.

    And that price, whether you replace it with biofuels, coal(steam ships and trains), XX-to-liquids, electric vehicles, or transit, or human power (walk/bicycle), is clearly some way above what oil is today, because the replacements aren’t happening, unless forced (e.g. the 10% ethanol mandate).

    So how then, assuming all these alternatives combined allow us to abandon oil, and the “vested interests” can be controlled, do you suggest we make that happen? 

     

     

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  148. By Perry on October 1, 2010 at 5:00 am

    It sounds like your dad was a railroad worker who grew much of his own food Ronald. That one cow couldn’t have provided much milk for the city slickers though. If 80% of us want to live in cities, the 20% who remain rural have to be a LOT more productive than they were 100 years ago. They have to provide food for more than just their family. That, or the rest of us can move back to the country. My dad would probably qualify as a farmer in your book. He has a few acres of veggies, some walnut trees, and a few chickens. Those are just distractions though. Something to keep him busy when the bait shop has no customers.

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  149. By ronald-steenblik on October 1, 2010 at 9:58 am

    Perry wrote:

    If 80% of us want to live in cities, the 20% who remain rural have to be a LOT more productive than they were 100 years ago. They have to provide food for more than just their family.

    Agreed. But there is nothing to prevent farmers with a lot of land from both providing for much of their own needs AND exporting their surplus production. That is why I mentioned Iowa, where farms used to be much more polyvalent. A striking study [PDF] by the Leopold Center for Sustainable Agriculture at Iowa State tracks the changes that have taken place on Iowa’s farms over the decades. As recently as 1920, 34 types of crops were widely planted, including plenty of fruits and vegetables: apples, potatoes, cherries, plums, grapes, strawberries, pears, peaches, raspberries, watermelons, apricots, and tomatoes. By 1964, all of those items had fallen off the list. Today, only feed corn, soy, hay and oats remain as widely planted crops.

    So, in short, the farms have been able to squeeze out a bit more grain and soy production from expanding into acres that formerly produced edible fruits and vegetables, or housed a few cows and chickens. But the price is that they have also substantially reduced the food they grow for local use. … Which means, of course, more trips to a distant grocery store.

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  150. By Kit P on October 1, 2010 at 12:37 pm

    “The beauty of the scheme is that they can do whatever they want with it.”

     

    Just how much more beautiful it would be if the government did not confiscate our money for some social experiment, so we can hire an accountant to beg the government to get it back.

     

    I think it is beautiful to use my money to do what ever I want with it to start with.  I am very happy with Shell and my electric utility.  I am also happy with the way my local government spends my tax dollars.  I am not too happy with how my federal government spends money. 

     

    Energy has a high ROI for quality of life compared most other things.  MAC is correct that taxes will have to be very painful to people to use less.  

     

    But then we want the government to make it less painful for those without a lot of disposable income by giving the money back.

     

    Here is an idea!  We tax $100 for each trip to a sustainability conference.  When and if we every see any results, we give the money back.  When a project produces sustainable energy, we give the money back. 

     

    We tax $100 for each report Ron writes.  We give the money back when he has a farm with 5 different crops. 

     

    Armchair quarterbacks love to tell others how they should live.  Who cares until they start inviting taxes to tell other how to live?

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  151. By rrapier on October 1, 2010 at 12:57 pm

    Kit P said:

    “The beauty of the scheme is that they can do whatever they want with it.”

     

    Just how much more beautiful it would be if the government did not confiscate our money for some social experiment, so we can hire an accountant to beg the government to get it back.


     

    You might have a point if we didn’t already pay income taxes. But we do, and therefore your point about your money being confiscated is already null and void. That’s happening now. I would just reallocate how it is collected.

    RR

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  152. By ronald-steenblik on October 1, 2010 at 1:36 pm

    Kit wrote:

    Armchair quarterbacks love to tell others how they should live.

    Problem is, Kit, you can’t seem to tell the difference between positive (description and explanation) and normative statements. You seem to think that if somebody challenges another person’s argument that the challenger is being normative — i.e., “telling others how they should live.”

    And by the way, Kit, you have no idea what I grow or don’t grow in the way of food. But, despite complete ignorance of that, it doesn’t seem to stop you from commenting, eh?

    And what is YOUR proposal for funding the federal government? How much of the current budget would you cut, where would you cut it, and how would you keep it solvent?

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