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The Fundamental Problem With Gasoline Pricess….is…..

June 21st, 2008 | by Windspike |

The fundamental problem behind high gas prices is that the supply of oil has not kept up with the rising demand across the world.

I Call Bull Shit here - Demand isn’t increasing, it’s shrinking as prices go up.

There has to be more to this than the old economic supply demand curve. Perhaps, it’s how the commodities brokers are jacking up the price per barrel because they can. Or is it because the Big Oil Companies are more interested in record breaking profits than they are in lower pump prices?

Come on, the Saudis are sitting on an enormous reservoir of oil that is allready have large number of straws sucking out crude. The solution isn’t to drill now for oil found ten years from now. Bush can’t tell that his inability to convince the House of Saud to change their output says to me that he’s a) either got zero cred with the Saudi Sheiks and couldn’t convince them to take a shit on their royal toilets over an outhouse sitting in the desert sun let alone get them to increase production, or b) the Bush family is in collusion with the Saudis to make more money for their own heirs. Either way, it’s not a pretty picture.

If you bother to read the President’s Radio Address, you will notice that absolutely NONE of his four proposed “solutions” involve the introduction of new technologies, green energy, or alternative and sustainable energy solutions. Why? I think you know.

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  1. 5 Responses to “The Fundamental Problem With Gasoline Pricess….is…..”

  2. By rube cretin on Jun 21, 2008 | Reply

    Windspike,
    “The fundamental problem behind high gas prices is that the supply of oil has not kept up with the rising demand across the world.’ This statement is absolutely true. Price is the mechanism used by the market to allocate resources. Demand cannot exceed supply. World wide petroleum extraction rates have peaked. I use extraction, not production, because oil production takes about 100 million years. While there are substantial quantities remaining to be extracted the maximum rate at which it can be extracted has been reached. This unfortunate fact was predicted with considerable precision over 50 years ago. While Saudi Arabia or other middle east countries might be able to briefly increase the extraction rate a modest additional amount most knowledgeable geologists and petroleum engineers agree that the era of cheap oil is coming to an end.

    “I Call Bull Shit here - Demand isn’t increasing, it’s shrinking as prices go up.” This statement is absolutely false. China and India and most oil exporting countries are increasing their rate of petroleum consumption at rates of over 10 percent/year. Sure we are seeing some minor demand destruction here in the USA. But with only 300 million of the 6.7 billion persons on the planet we consume over 20 percent of all the oil produced in the world each day. Petroleum pump prices in the USA are among the cheapest in the world because of our low tax rates. European countries have very high tax rates which they have used to build excellent mass transit systems. We choose to provide the lowest possible price for petroleum which encouraged massive wasteful auto owernship and use and built our cities and suburbs in a very energy inefficient way. We are just beginning to start paying the price.

    Now while i agree with our presidents analysis of the problem his solutions and those you offer will prove to be totally ineffective IMO. His are all political in nature. He is attempting to place blame on the democrats, while he and Chaney set our course in early 2001 when they developed and implemented a energy strategy to drill more and attempt to control the largest remaining known reserves of petroleum. Regardless of what you believe the Iraq war was and is all about oil. Ask yourself this question. Do you really believe if there were substantial amounts of oil in ANWAR or on the outer continental shelf the fascist government we now have would have been prevented from drilling? The reason they have not drilled my friend is because precious little oil is there to be extracted. Sure there is some minor amounts located in these areas, but not enough to make a real difference. As a democrat i wish congress would tell the oil companies to drill any damn where they wanted including my back yard. The alternatives Bush is recommending is just political fodder to shift the blame. For example, his other idea is to build more refineries. Now who in there right mind builds a new refinery, when you know that the product you are processing is running out. That is the real bullshit that is being fed to the ignorant american public.

    AS for your alternatives. “New technologies.” Beware of the technological quick fix. I am not aware of a single new technology which offers a energy source as effective as petroleum. Look at what a boondoggle ethanol is proving to be. I don’t know what green technology is. I have heard the word tossed around but what the hell does it mean. What it means is a political term to further confuse the public and give them hope. If it means going back to burning wood, then it will sustain a few but not in the style to which we have become accustomed. To my knowledge there is not a single alternative or technology out there which offer even a close match for petroleum.

    Well you say. If all this is true what is to be done? I really don’t know, other than a major effort at conservation and efficiency at all level of our society. But you see we are still under the delusion that something will come forward to save us. I my opinion we missed our last chance in 1980 when we elected a happy go lucky idiot as president and he dismantled all of the programs which Carter had put in place. Read Carters Malaise speech if you want to know what we should have done. But no the American public choose a leader who gave them what they wanted not what the needed and by god we are about to pay the price. Personally i recommend you learn to grow a garden, get a weapon, and make as many friends as possible. But do not give up hope. “The road that is built in hope is more pleasant to the traveler than the road built in despair, even though they both lead to the same destination.” ~Marian Zimmer Bradley

  3. By windspike on Jun 22, 2008 | Reply

    Rube,
    Did you read my whole post? The House of Saud is sitting on a reservoir of oil so large that they are controlling supply. OPEC decides what the output will be, not demand. This is not a pure supply demand curve scenareo. The Bush Family is notoriously linked with the House of Saud.

    Demand in my town is shrinking. And, I’ll bet in the US. Sure, it’s a global market, but shrinking demand here, should affect the price here, no?

    Actually, I like Carter - the only man to use the Presidency as a stepping stone to greatness. His idea to ration oil and have us only fill up on odd and even days staved off a major crisis.

    What has Bush done to rectify this problem? Solve it? Nope. You have a better solution?

    Quite definately, the crisis may actually help us save the environment. If we all get out of our cars and on our bikes or walk, we should be fine. No loss for me as I already ride my bike, walk or take public transit. You can’t cut down on auto use more than that from my angle.

    What have you done to conserve?

  4. By rube cretin on Jun 22, 2008 | Reply

    yes, i read your whole post. The House of saud is sitting on a reservoir of oil. However, and this is really important to understand, there is not an infinite amount of oil on our finite planet. While actual reserve data is extremely difficult to access, most petroleum geologist believe Saudi has peaked and can no longer control the market as they have done in the past. You see, at some point even very large fields are depleted. Texas, Mexico, Alaska, the north sea in england, are all good examples. I suggest you go to this link to see a detailed discussion of what is going on in saud. http://www.theoildrum.com/node/4159#comments_top

    The site is run by some of the most informed oil experts in the world and the discussions taking place are informative on these matters. The point is this. Rising energy prices are an early symptom of a very serious problem for our way of life. All the noise we here from politicians is just diverting attention from a very serious problem that is taking place. IMO there is not a more important issue in our world today than declining energy supplies.

    What have i done? Not much. Just every life style change imaginable including heating with wood, no air conditioning, permaculture, and while i am still connected to the grid alternative means of generating electricity are in place and operating. I have been working on this subject for 35 years.

    Remember this. Petroleum Depletion is a fact. So the only way prices will be stable is if demand is continually shrinking. But (absent a worldwide depression) it is only high prices that will cause demand to continually shrink. What that means is that prices must and will continually rise. google this site, http://dieoff.org/, to get the whole story about the importance of energy and what a declining supply is going to mean for civilization.

  5. By Windspike on Jun 22, 2008 | Reply

    Rube,

    Thanks for the clarification. I am curious as to what your permaculture operation looks like. Do you have any snaps? Have you found a cost effective way to gather energy and sell it back to the grid?

    Incidentally, you and I agree. Oil is evaporating as a resource. It’s done. Where we disagree is that we need to be looking for more to solve the problem.

    We all need to quit the fossil fuels addiction, cold turkey if necessary. The DTs may hurt us personally, but the result will be a much cleaner and healthier environment and lifestyle going forward. Nothing about what Bush suggested hints to that.

  6. By Windspike on Jun 22, 2008 | Reply

    Funny, I just found this article when looking through the daily rss feed:

    Two years ago, President Bush declared that America was “addicted to oil,” and, by gosh, he was going to do something about it. Well, now he has. Now we have the new Bush energy plan: “Get more addicted to oil.”

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