Below is a summary of each of the presidential candidates energy plans, which I got from their websites. Obama's plan and "theme" promotes being green, while McCain's plan and "theme" promotes oil independence. I have used an "*" to indicate which measures I consider effective, primarily, in achieving OIL independence. In accordance with their "themes," I counted 3 stars for Obama's and 6 stars for McCain's energy plans. Personally, I consider Oil Independence to be a more vital global economic, national security, and immediate survival issue than Green.

Obama's Energy Plan
"Plan for a clean energy future"
Another round of economic stimulus
Reduce carbon emissions by 80% by 2050
Invest $150 Billion over 10 Years in Clean Energy
Double energy research for clean energy
Close the "Enron Loophole" crack down on speculation
Regulate Futures Market on offshore exchanges
Windfall Profits Tax on top grossing oil companies
Use existing oil leases
*Deploy cellulosic ethanol: tax incentives for 2 Billion Gallons by 2013
*Expand local ethanol refineries & 36 Billion Gallons of Renewable Fuels by 2022
*Increase CAFE standards
http://www.barackobama.com/issues/energy/#support-next-generation-biofuels

McCain's Energy Plan
"Lexington Project: Strategic oil independence by 2025"
$2B/yr for clean coal technologies
*Permanent 10% R & D tax credit
45 new nuclear power plants by 2030
Enforce existing CAFE standards
*$300M prize for Li Ion battery (30% current costs)
*$5,000 tax credit for every customer who buys a ZEV
*Swift conversion to FFV, faster than (50% by 2012)
*Expand domestic oil exploration
*Expand use of domestic supplies of natural gas
http://www.johnmccain.com/Informing/Issues/17671aa4-2fe8-4008-859f-0ef1468e96f4.htm

Personally, I consider Oil Independence to be a more vital global economic, national security, and immediate survival issue than Green.

Absolute agreement on this point, although if "green" happens as a side effect, no complaints from me.

We need to stop sending money to the OPEC countries who hate us.

Notice how Obama wants to close the Enron loophole. John McCain's campaign is FILLED with Enron lobbyists and executives ;). Not to mention the dozens of oil lobbyists. Just because the THEME of McCain's plan is oil independence doesn't mean he will deliver or offer any useful solutions. I think it's pretty clear-cut in this case who should be president.

McCain wants to build dozens of nuke plants and humour the coal companies with "clean coal" while Obama wants to invest 150 billion in clean energy. That 150 billion over ten years sounds a lot like the foundation of something like the apollo energy plan Texas is always talking about.

Now I'm just waiting for Jason to come in here and try to convince people that regulating futures markets is a bad thing, because any policy decision that isn't based on some crackpot free market theory is tyranny.

This one idea (*Increase CAFE standards) from obama can outdo all of the ideas from McCain put together. You simply increase CAFE standards based on the new rating system to average 45 mpg for 2020, then increase it more from there. Let the car companies cry is they can't build SUVs or trucks, I don't care.

darthvader 420,
My intent was to have an objective discussion of transportation specific (oil) aspects of the plans. Comments about one's acquaintances or character, is the classic logically flawed argument, argumentum ad hominem (abusive: attacking the person). Investing $150 billion over ten years in clean energy is not of much solice, if OPEC owns half of the Fortune 500 and our banks in ten years. We need targeted, not diffuse, goals.

aliendroid,
CAFE standards are irrelevant to Flex Fueled vehicles. The most important goal is to get off oil. An ethanol fueled vehicle, with fuel that costs half as much, or less, than gas, but does 25 mpg suits me just fine. Brazil achieved 100% oil independence in just three years with ethanol flex fueled vehicles.

My first post was pretty shallow, sorry about that Tom. I do stand by my comments about McCain's campaign staff though. Just look at the guy's voting record, he's always been a shill for his big industry friends, voting to deregulate industries so that his friends can abuse the system at the expense of the rest of the country. See the Enron loophole, in which McCain played a big role on the legislative side, and the mortgage meltdown. Many of McCain's advisers are the same people who've been deregulating the mortgage industry and making big bucks on predatory lending. I could go on, but let's get back on topic.

I've gone and read more about Obama's energy plan on his site and overall I'm impressed. His plan calls for huge sums of money for renewable energy, including programs to help communities and industries transition. I'm very happy that he wants to pursue cellulosic ethanol but I really worry about his stance on expanding current ethanol initiatives. A huge part of the plan should be cracking down on the corn lobby and getting away from using farmland for fuel. This is a part of the debate that is entirely missing right now and it scares me. Hasn't Obama seen the world bank report that blames using farmland for ethanol production for ~70% of the global rise in food prices?! The farmland for fuel setup we have going right now to help mitigate the fuel crisis is causing a global food crisis!

Tom, looking to Brazil as a model for ethanol production is a bad idea. They may have achieved oil independence but they've done it by burning down huge swaths of rainforest to plant sugarcane crops for fuel. Sugarcane is a far better crop for this than corn, which is laughable, but it's still the wrong way to go. Second generation biofuels, using plants that can be grown in non-arable land and don't need much fertilizer, are the only sensible way forward. There are many many options here, many ways to grow fuel and sequester CO2 without displacing food crops. And that's what's missing from these energy plans :(.

Obama will invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure, accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, invest in low emission coal plants, and begin transition to a new digital electrical grid.

You don't believe that a 1.5 billion dollar investment per year will not help reduce our dependence on oil? MccCain wants to give $300,000 for a battery.

You don't believe that a 1.5 billion dollar investment per year will not help reduce our dependence on oil? MccCain wants to give $300,000 for a battery.

I think the battery prize is a little bit silly when you think about the numbers (the prize is 300 million by the way, not 300 thousand). It gets worse when you realize that NiMH battery technology is perfectly adequate for EVs today and the only problem is Chevron suing anyone who tries to make a decent EV with it. See the Toyota RAV4EV. McCain's incentives for R&D seem reasonable to me but let me tell you, I'd be a lot happier if he instead suggested forcing Chevron to sell the NiMH battery rights. That's the fastest way to affordable EVs but I know that in reality we'll just have to wait for Lithium batteries to become more affordable. What an awful predicament.

Let's all face the fact that both plans are a complete joke used to gain votes not achieve a strong and viable energy infrastructure and policy.

It's like having a child draw up a war plan. Are these guys energy experts? Are their staffs loaded with such rare and gifted individuals? The answer is no. What are you people thinking?

If we truly want to move forward in the best possible way we need to devote a lot of time and resources to come up with a great plan. A plan that deals with all levels from technical to geopolitical. We are wrapped up in the use of our petrol dollar and cannot just cut free without major ramifications. If we were to "get out of oil" tomorrow our entire economy would collapse. Complete cluster %^&*.

Thus, we need a plan that smoothly transitions us from non-renewable and highly unpredictable fossil fuels to renewable, sustainable and highly predictable fuels. That is why I keep calling for the creation of The Apollo Energy Plan. Bringing together the best minds in the world (technical, political, economic, etc.) that will look at all the different paths we can take and create an optimized and realistic plan. That plan will also not sit in stone. It must be an active project that is continuously developing, evaluating new technologies that can be added to the mix. If anyone feels this can be best done by Obama or McCain over a cup of coffee while watching Fox news then you deserve what's coming next.

Let's all face the fact that both plans are a complete joke used to gain votes not achieve a strong and viable energy infrastructure and policy.

It's like having a child draw up a war plan. Are these guys energy experts? Are their staffs loaded with such rare and gifted individuals? The answer is no. What are you people thinking?

If we truly want to move forward in the best possible way we need to devote a lot of time and resources to come up with a great plan. A plan that deals with all levels from technical to geopolitical. We are wrapped up in the use of our petrol dollar and cannot just cut free without major ramifications. If we were to "get out of oil" tomorrow our entire economy would collapse. Complete cluster %^&*.

Thus, we need a plan that smoothly transitions us from non-renewable and highly unpredictable fossil fuels to renewable, sustainable and highly predictable fuels. That is why I keep calling for the creation of The Apollo Energy Plan. Bringing together the best minds in the world (technical, political, economic, etc.) that will look at all the different paths we can take and create an optimized and realistic plan. That plan will also not sit in stone. It must be an active project that is continuously developing, evaluating new technologies that can be added to the mix. If anyone feels this can be best done by Obama or McCain over a cup of coffee while watching Fox news then you deserve what's coming next.

Obama's stated plan as it is right now is much closer to your ideal energy plan than McCain's, which is something along the lines of "build more nuke plants and drill for oil yeehaw." Check out the site, it talks about all kinds of things like focusing on wind and solar and creating a smart grid project (I would have thought that would excite you.) Don't worry, Obama's energy plan isn't designed to appeal to the idiots at Fox News, I think they're actually thinking some of this through. Of course I don't think his plan goes far enough and I'm sure the plan is in great need of more real experts coming on board, but this is a start at least. Let's talk about where the plan is right now and where it needs to go from here instead of proclaiming that McCain and Obama are the same thing and we're all doomed.

I have read Obama's energy plan http://www.barackobama.com/issues/pdf/EnergyFactSheet.pdf

and I was impressed with the plan. I'm sure Obama didn't come up with this plan himself , but I at least have confidence that he will attempt to initiate this plan. I do see wind and solar as valuable components in his plan. He is definitely not beholden to big oil, and even his plan includes nuclear which is a surprise to me.

The truth of the matter is that without Dem's And Repub's working together nothing will get accomplished.

Why the heck would Obama's energy plan excite me? I'm glad to see he is on the right wavelength but it scares me that he thinks he (and a few of his buddies) can come up with something that is so important to our future. I Hope both candidates admit that it will take a huge effort to come up with a good plan. I know they are going for votes but I hope deep down they realize that simple reality. I'm surprised you guys don't.

Since Congress is the outfit that has the next move.. and they can do it today.. Why don't they put together a list comprising of "best of both".. and get an energy policy out there. "green" and "independence" are both admirable goals that we can all live with!

Since Congress is the outfit that has the next move.. and they can do it today.. Why don't they put together a list comprising of "best of both".. and get an energy policy out there. "green" and "independence" are both admirable goals that we can all live with!

Maybe because there's a small conflict of interest going on?

"With billions of dollars of solar and wind power projects and thousands of green-collar jobs hanging in the balance, the U.S. Senate on Wednesday again failed to extend a key investment tax credit for renewable energy.

Republicans blocked the legislation from coming to the floor, marking the eighth attempt to extend the 30 percent tax credit beyond it’s Jan. 1, 2009, expiration date. The extension is backed by all the state governors save Georgia, a coalition of Fortune 500 companies, Wall Street banks, renewable energy startups, and tech giants like Google (GOOG), Hewlett-Packard (HPQ) and Applied Materials (AMAT)."


http://greenwombat.blogs.fortune.cnn.com/2008/07/30/eighth-times-not-a-charm-senate-fails-again-to-extend-key-renewable-energy-tax-credit/

Tom, thanks for posting this information. It's quite interesting.

I'd disagree with the McCain six star rating. I think the battery prize is unnecessary and I doubt the government could do it in a constructive way (XPrize took four years to come up with the Automotive XPrize); we have plenty of natural gas; and oil drilling is beyond absurd for any number of reasons, not the least of which is that it continues the addition, puts off the hard work of oil demand destruction, and, according to people like T. Boone Pickens there isn't any oil there anyway.

So I get three stars for each.

Having said that, the McCain proposals are much more focused. Obama's are much much fuzzier. Too much airy fairy stuff about being green and no real meat on the proposals. It's like we can wait twenty years to solve these problems.

Texas

Thus, we need a plan that smoothly transitions us from non-renewable and highly unpredictable fossil fuels to renewable, sustainable and highly predictable fuels. That is why I keep calling for the creation of The Apollo Energy Plan. Bringing together the best minds in the world (technical, political, economic, etc.) that will look at all the different paths we can take and create an optimized and realistic plan. That plan will also not sit in stone. It must be an active project that is continuously developing, evaluating new technologies that can be added to the mix. If anyone feels this can be best done by Obama or McCain over a cup of coffee while watching Fox news then you deserve what's coming next.

Texas, I am trying to imagine how to implement your sustainable fuel proposal. Above all else, what we need is a president and congress who realize the magnitude and implications of the oil issue. We need agreement of the importance of "Oil Independence," and not the greening of the US. Such a united political vision may be impossible, but let's be optimistic. At some point the cries of a people having to pay more for oil than taxes, or an economy where OPEC owns a huge part of the Fortune 500 and major banks, will be heard.

We need governmental leadership in solving the "chicken and egg" problems of implementation. Let's apply organizational understanding and theory. I don't think a congressional committee, with all of its traditional political baggage, could be effective. We currently have a number of government agencies, headed by cabinent members: Secretary of Energy {DOE (http://www.eere.energy.gov/)}, Secretary of Transportation, and Secretary of Commerce, that are responsible for different aspects of these energy issues. They have traditional roles, and the existing departments themselves, may be so steeped in traditional roles and inflexible organizational lines as to make a new direction impossible. What we may need is the creation of another cabinet post, a super post, charged with implementation of "Oil Independence." An appointment of a business and technology leader, as opposed to a politican would be needed.

Rather than embellishing on this idea, I would ask if this seems like a feasible starting point for an implementation plan.

Republicans blocked the legislation from coming to the floor, marking the eighth attempt to extend the 30 percent tax credit beyond it’s Jan. 1, 2009, expiration date. The extension is backed by all the state governors save Georgia, a coalition of Fortune 500 companies, Wall Street banks, renewable energy startups, and tech giants like Google (GOOG), Hewlett-Packard (HPQ) and Applied Materials (AMAT)."




Republicans blocked this much needed extension. Do you really believe that another Republican for another 4 years is going to be any help especially with much of his plan doesn't include renewable energy. He wants natural gas, drilling, and nuclear power plants. We will be off of one drug and put right back on another drug of which most of it will be a benefit to big oil.

BillInInd
I have read Obama's energy plan http://www.barackobama.com/issues/pd...yFactSheet.pdf and I was impressed with the plan.
Bill,

In 2008, OPEC will clear $1.5 trillion in net export profits.
The total worth of the US Fortune 500 is $18 trillion.

At current rates OPEC will have enough funds to buy majority control in every company in the Fortune 500 within 6 years. Look at today's situation and multiply it by six: With today's oil money, the Saudis have launched a $900 billion Sovereign Wealth Fund to do such takeovers (enough to buy 100 GMs). Abu Dhabi Oil Trophies Today: GM and Chrysler buildings. Citigroup Inc, the biggest US bank by assets, will receive a $7.5-billion cash infusion from Abu Dhabi. What will IRAN do with its wealth? Buy six times as many centrifuges? Oil is power. Control of oil won WWI and WWII.

The world must become independent of oil in transportation or we will literally be economic slaves to OPEC. Obama's plan is all about green. Out of eleven pages of the "EnergyFactSheet.pdf", There is one less than one pitiful pagefull on Oil Independence. The aspect of the plan that impressed me most is that the authors of this plan just don't get it. Who cares about green if the world's economy is collapsed, you can't feed your kids, or travel to your job, or to keep your job you have to recite the Koran?

Bill,

In 2008, OPEC will clear $1.5 trillion in net export profits.
The total worth of the US Fortune 500 is $18 trillion.

At current rates OPEC will have enough funds to buy majority control in every company in the Fortune 500 within 6 years. Look at today's situation and multiply it by six: With today's oil money, the Saudis have launched a $900 billion Sovereign Wealth Fund to do such takeovers (enough to buy 100 GMs). Abu Dhabi Oil Trophies Today: GM and Chrysler buildings. Citigroup Inc, the biggest US bank by assets, will receive a $7.5-billion cash infusion from Abu Dhabi. What will IRAN do with its wealth? Buy six times as many centrifuges? Oil is power. Control of oil won WWI and WWII.

The world must become independent of oil in transportation or we will literally be economic slaves to OPEC. Obama's plan is all about green. Out of eleven pages of the "EnergyFactSheet.pdf", There is one less than one pitiful pagefull on Oil Independence. The aspect of the plan that impressed me most is that the authors of this plan just don't get it. Who cares about green if the world's economy is collapsed, you can't feed your kids, or travel to your job, or to keep your job you have to recite the Koran?


Drilling isn't the answer either. There are no spare drill ships available. The drill drips that are being produced are already have places to drill lined up. Oil from these new off shore drilling rigs will not be in the pipeline for 7 to 10 years. None of McCain's solutions are instantaneous either. In 7 to 10 years we could go a long way to getting off of oil. Just getting another shot in the arm to prolong the addiction will do nothing to help. Up till to months ago McCain was against off shore drilling. He is still against drilling in ANWR. Is McCain a visionary. He has fought against alternative energy's for a very long time. I just don't see how his plan is going to solve Americas problems.

If we start using natural gas for everything look for the price of natural gas to escalate, and then there will be a cry from people who heat their homes with natural gas. Already the price of natural gas is rising. Nuclear power plants is laughable.

Do you realize how long it will take to get places for nuclear power plants to be built. Nobody wants one in their back yard. If McCain does get elected, I would almost bet you that before he gets out of office that not one new nuclear power plant would get built.

Bill,


Drilling isn't the answer either. There are no spare drill ships available. The drill drips that are being produced are already have places to drill lined up. Oil from these new off shore drilling rigs will not be in the pipeline for 7 to 10 years.
Today, perhaps half the price of oil is determined by the futures market. What effects this half? The perception of the future. If congress allows drilling the price will go down immediately. Its not the future, but perception of the future. Some experts say we can pump this oil in two to three years.


. Is McCain a visionary. He has fought against alternative energy's for a very long time. McCain is not a visionary. But, his life has demonstrated that he is a patriot and an honorable man. If he says he will do it, he will.

The critical issue is creating the vehicles and infrastructure for a liquid substitute for petroleum.

. I just don't see how his plan is going to solve Americas problems. Please look at my original post. There are 6 stars in McCains plan vs. 3 in Obama's for Oil Independence. How can you ignore the arithmetic?


If we start using natural gas for everything look for the price of natural gas to escalate, and then there will be a cry from people who heat their homes with natural gas. Already the price of natural gas is rising. Nuclear power plants is laughable.

Do you realize how long it will take to get places for nuclear power plants to be built. Nobody wants one in their back yard. If McCain does get elected, I would almost bet you that before he gets out of office that not one new nuclear power plant would get built.
I agree with you on this. But, once again, the critical issue is not electric, but oil power.

I appreciate your forthrightness and comments. In this interchange we will both learn.

P.S. I worked in Kokomo, Indiana at Delphi for 35 years before relocating to Florida.

McCain:

45 new nuclear power plants by 2030
Enforce existing CAFE standards
*$300M prize for Li Ion battery (30% current costs)
*$5,000 tax credit for every customer who buys a ZEV
http://www.johnmccain.com/Informing/Issues/17671aa4-2fe8-4008-859f-0ef1468e96f4.htm

Triple that last one to $15k and he's got my vote.

Bill,


Today, perhaps half the price of oil is determined by the futures market. What effects this half? The perception of the future. If congress allows drilling the price will go down immediately. Its not the future, but perception of the future. Some experts say we can pump this oil in two to three years.


This paragraph is an embarrassment. How in Gods name will the perception of a minor amount of oil (The world produces 83 million barrels a day) effect the price? It's impossible because it will not in anyway help supply. Investors are not stupid. They know that supply needs to match demand. If demand is high and supply is low, even for the next year, the price will have to rise. Period. You also say there are "some experts" that say the oil can come out in 2 years" Please give any reference. This is a complete lie! Absolutely impossible. The current drilling rigs are now on a waiting list. Not even exploration will be completed in 2 years. You have no idea what you are talking about. You probably believe in oil coming from the center of the earth. Don't you?




The critical issue is creating the vehicles and infrastructure for a liquid substitute for petroleum.


Why does the substitute have to be a liquid? So energy companies can continue to control you? Why not NG gas? BEVs? Hydrogen? Have these been proven to be worse than a liquid fuel? Not that I am aware of. I agree that we will need a liquid fuel for our existing vehicles but not necessarily for our future ones. McCain's plan for our energy future is a joke. How can something so important be thrown together by a presidential candidate in a few months? It will take the best minds in the world a long time to get a really good plan together. Do you realize how complex our energy systems are? How deeply interconnected our energy policies are to the rest of the world? Ever hear of petrol dollars?





Please look at my original post. There are 6 stars in McCain’s plan vs. 3 in Obama's for Oil Independence. How can you ignore the arithmetic?


This just tops the most ridiculous thing I have ever read on this forum. Believe me the competition was fierce! Are you honestly relating the effectiveness of his plan to a stupid star rating? That's like saying a movie with 4.5 stars is obviously better than one that got 4 stars. Have you ever really studied mathematics? Wow! Absolutely asinine.

Texas,

I want to thank you for your uninhibited expression of honesty.

This paragraph is an embarrassment. How in Gods name will the perception of a minor amount of oil (The world produces 83 million barrels a day) effect the price?
The answer is in the comparison of the two Excel Cost vs Supply EIA data curves for pre peak vs post peak below. (The green freeform curve was added to show a rough relationship.) How do we explain the vast 6X difference ($130/$20) between these two curves at 1 MMB/D? The answer is the perception that will be less oil in the future to meet needs.


Why does the substitute have to be a liquid?
A liquid can be used with the existing liquid storage and filling station type infrastructure. Its energy density is in the same ballpark as gasoline, so it requires only little more vehicle on board storage volume.


This just tops the most ridiculous thing I have ever read on this forum. Believe me the competition was fierce! Are you honestly relating the effectiveness of his plan to a stupid star rating? That's like saying a movie with 4.5 stars is obviously better than one that got 4 stars. As stated in the post, the intent of the stars is to flag those policy items that are related to Oil Independence. It does exactly what it purports to do, viz. compare two plans.


Have you ever really studied mathematics? Yes, I'm proud to say that I mastered the ability to count to six, at a very early age. I can count the number of asterisks in the respective plans.


Wow! Absolutely asinine. Apology accepted.

guys, trying to argue with texas is like trying to win the special olympics (for those of you too sensitive, I apologize in advance). he is dragging you right back down into the peak oil pit and the same old hashed out statements he has made in at least 15 other threads. might as well just move on from his posts if this thread is going to mean anything.

texas, just go back to the oil drum where you belong.

And the last comment: tom, you are completely correct on perception. its amazing to me how people dont get that. In fact, I'd be willing to put my money where my mouth is.... It happens everyday. Just one small example... If Iran says anything to change the 'perception' of oil market stability, prices go up. If the perception gets better, prices go down. This works on the long term as well, with long term future buys, and trickles down to short term contracts.

I would put up $100 that the day a bill is passed to open up ANWR or the coasts to drilling, we see a significant drop in oil within a short period. When a bill is actually going to be voted on, if someone wants to take this up, feel free to send me a PM. Hopefully Pelosi will lose her seat over blocking votes on this issue, and we'll have a chance in the next year.

guys, trying to argue with texas is like trying to win the special olympics (for those of you too sensitive, I apologize in advance). he is dragging you right back down into the peak oil pit and the same old hashed out statements he has made in at least 15 other threads. might as well just move on from his posts if this thread is going to mean anything.

texas, just go back to the oil drum where you belong.

And the last comment: tom, you are completely correct on perception. its amazing to me how people dont get that. In fact, I'd be willing to put my money where my mouth is.... It happens everyday. Just one small example... If Iran says anything to change the 'perception' of oil market stability, prices go up. If the perception gets better, prices go down. This works on the long term as well, with long term future buys, and trickles down to short term contracts.

I would put up $100 that the day a bill is passed to open up ANWR or the coasts to drilling, we see a significant drop in oil within a short period. When a bill is actually going to be voted on, if someone wants to take this up, feel free to send me a PM. Hopefully Pelosi will lose her seat over blocking votes on this issue, and we'll have a chance in the next year.



My old arguments only sound that way to you because you haven't learned anything, despite all that is happening around you. Your powers of rationalization amaze me.

I'll take you up on that bet for sure! Firstly, why didn't the price of oil drop after the president said he lifted the ban? Maybe the speculators didn't think that congress will follow his lead? I think that is what you rationalized.

I can't believe you think you can relate the actions that Iran makes to a decision to drill in Alaska. The one difference is that anything that Iran does effects the supply in days, not years. You can't see the difference? The global supply is so tight compared to demand that every little disruption caused the prices to dart about. You can't see that either? What do you think is happening?

Do you deny that global oil production has been flat since 2005? If so, where is your data? Is it all a lie fabricated by "The New World Order"? Why don't we just use the data? Shall we? I know you can't because your theories will go right out the door. We can't have simple logic messing with your reality. I know.

Now why again would the price of oil fall now if they opened up Alaska? Are investors afraid that the oil will come rushing to the market before their futures contracts are due? How many years do you think it would take to get the oil out? Do you realize that supply has to match demand during that wait? Hello? If supply cannot match demand the price will go up until demand retracts. If not, there are shortages. Of course there is all kinds of delays and rubber band like reactions but that is expected due to the time it takes for things to change and become known.

If you were a long-term investor that thinks oil should be high, wouldn’t you be happy if the US decided to keep on pumping oil and continue it's addiction to the black gold? I would. Deeper and deeper they go. I would be a happy pusher of the oil drug.

Why is the price of oil dropping lately? We got results showing that Americans have severely curtailed their use of gasoline and even reduced their spending on good and services. Americans are scared $%^&less and consumer confidence is tanking. This is not a good sign for the economy. A retracting economy uses less oil. It was so severe that oil reserves increased faster than expected. Supply caught up with the now lower global demand. Now this will continue. If alternatives start making a dent into things and oil demand drops below supply then the price will continue to drop. If Americans now see the price of gas getting cheaper and get over the initial shock they will start using more. Demand will rise and eventually the price will start going up to match.

What will happen in China and India will depend on what happens to our economy. Guys, this is simple supply and demand. The only difference is that there can be major delays. However, The "perception" that oil supplies coming out of America five years from now has nothing to do with what is needed in the short-term. Do you really think we will hit 95 or 100 million barrels a day in 10 years? What are your estimations? I say we have about 85 million barrels and might go a little higher after Saudi Arabia's new massive projects come on-line.

Let's talk about EROI. Do you guys feel that the amount of energy it takes to explore, extract, refine is going to be the same over the coming years? Do you not believe that the sweet crude coming out is not that sweet as it was 10 years ago? We now have to use tar sands and special techniques (read that as more power and resources) to get the same global supply. If you dispute that please state what you think.

Thus, the price of petroleum based energy is getting higher every year. Even if we keep the same rate that we did for the past 3 years (around 85 million barrels a day) the amount of net energy produced is reduced. Makes sense, no? If all of that 85 million barrels a day was the fresh sweet crude you get a lot of energy for very little energy in. Now in 10 years that same 85 million barrels a day might be coming from tar sands, shale, old fields, etc. do you think you get the same net energy out? Thus, that resulting energy is more expensive! I can't believe you guys don't get that simple logic. Just research Google for EROI and look at what is was for the huge oil field of Saudi Arabia back in the 1970s and what it is now to extract shale oil or tar sands. It's shocking, not to mention the amount of water needed for tar sand processing.

So we all agree that the population of the world is growing. Right? More customers. We also agree that the citizens of China and India all want a piece of the pie. Many want to drive cars. If we don't have a substitute for oil fast enough, then what do you think has to happen to the price of oil? It will go up until they can't afford the oil.

There is also the reality that 83 million barrels of oil is a heck of a lot of energy. That's true! Many of us waste unbelievable amounts of energy (especially us Americans - we are world famous energy pigs). Sure we can pare down like we are doing now or like we did in the 1980s. The real question is how will the rest of the world react? Will they also cut down their energy use and thus we have a global recession? A situation where things will bounce back to using that 83 million barrels of oil a day eventually? To be honest that is not so bad. We could add quite a lot of Indians and Chinese (and many other people of the world) to the energy game and live quite comfortably. Might even be more healthy. However, increases in supply can't happen overnight. Projects take capital and time to complete. Take your favorite toy. It's much easier to break it than it is to go out into the garage and build it from scratch. Right? Same thing. Remember that energy demand destruction is very easy at first but gets harder. You can stop going on Sunday drives, stop going on vacations, stop buying all the crap that we buy but you still have to get to work. All the tractors and trucks have to grow and bring your food. If they don't then jobs are lost, and we go into recession or worse. Then we don't have to worry about the price of oil. It will be cheap! Global demand will be far below the 83 million barrels a day we can produce. This is not a good thing! It will take 10 years to get back to where we were. Ten painful years (check out US energy use in the 1980s and 1990s). Like a giant yo-yo.


Anyway, I'll take your bet that the price of oil will not drop due to the news that we opened up Alaska and or the outer shelf. That oil is a long way away from the market and doesn't signal any long-term transition away from oil. It only secures our addiction.

The price of oil needs to stay high because us humans want that energy. It's so good at making our lives easier that we crave it. We will continue to desire more energy, even if we can't have it. If there is a shortage of it we will even go to war for it. Oil is not a new shirt that you can just wave away because it's too expensive. Oil is the food on your plate. It's the difference between life and death. It's really that simple. No energy, no life. One only needs to follow the population vs. energy curves to see the direct correlation (over millennia).

I didnt read past the first couple of inches... but i'll respond to this:

"I'll take you up on that bet for sure! Firstly, why didn't the price of oil drop after the president said he lifted the ban? Maybe the speculators didn't think that congress will follow his lead? I think that is what you rationalized."

First of all, have you looked at oil lately? Since the executive order was removed, prices are down about $20, and gas is about 50 cents below its all time high (traded commodity price). I am NOT giving that complete credit, but it certainly helped. Second, yes the order was mainly symbolic, and most people believe congress will not authorize off shore drilling, so the price drop won't be reflected in a major way. Ultimately it is the decision of congress. And then if you really want to get dicey, its also up to the states. You cant sit there and say that the price of oil has dropped because of some amazing news that we havent been hearing for MONTHS about demand destruction. The oil and gas inventory are not much changed since he removed the executive order.

so when it looks like we are going to get offshore drilling, hit me up in a PM. I'll be happy to take your money.

I didnt read past the first couple of inches... but i'll respond to this:

"I'll take you up on that bet for sure! Firstly, why didn't the price of oil drop after the president said he lifted the ban? Maybe the speculators didn't think that congress will follow his lead? I think that is what you rationalized."

First of all, have you looked at oil lately? Since the executive order was removed, prices are down about $20, and gas is about 50 cents below its all time high (traded commodity price). I am NOT giving that complete credit, but it certainly helped. Second, yes the order was mainly symbolic, and most people believe congress will not authorize off shore drilling, so the price drop won't be reflected in a major way. Ultimately it is the decision of congress. And then if you really want to get dicey, its also up to the states. You cant sit there and say that the price of oil has dropped because of some amazing news that we havent been hearing for MONTHS about demand destruction. The oil and gas inventory are not much changed since he removed the executive order.

so when it looks like we are going to get offshore drilling, hit me up in a PM. I'll be happy to take your money.




What a joke! You actually believe the price has been going down because the president lifted the ban? If so, how come any bad new happening in the middle east causes an immediate adjustment but after the lifting of the ban by Bush... <crickets>

Yes, there was news of demand destruction. You are the first person I have read that believes it was bush that caused the recent drop. Maybe you should read what I wrote. What, slow reader? ;)

OK, let's just say the bet is on and if and when congress lifts the ban we can see what happens to the price. We will have a few members decide what the reaction was. Fair enough? We will also look at different, credible articles explaining what happened. Seriously, if what you say is true it will be huge news and the reaction will be swift, significant and long lasting. If not, then what would have been the point. Right? We won’t see the revenues for over fives years (if we are lucky) so you are counting on the “perception” factor. Good luck!

Texas,

Guys, this is simple supply and demand. Simple question: What is your explanation for the difference between the two graphs shown in my thumbnail?

The nature of the bet will be so technical that I am not going to bother hashing out the details before it looks like something is actually going to happen. When it does, we can come together.

I will say this... There will be no people involved to make a subjective opinion on 'why' oil have moved in either direction. There will be a date and non biased metrics to determine who wins the bet.

"Yes, there was news of demand destruction. You are the first person I have read that believes it was bush that caused the recent drop. Maybe you should read what I wrote. What, slow reader?"

You must not get out enough. It 'contributed' to oils fall in recent weeks, along with congress geting more serious about market speculation and institutional commodity positions, continued demand destruction, and a 'slight' easing of tensions with Iran (although it got a little tense today), not to mention a strengthening of the US dollar. All of those things helped bring oil almost below $120.

Tom, I laughed when I saw you say John McCain is an honourable man who keeps his word. Might want to look a little closer at your favourite candidate before the election. The man's campaign would be over already if it wasn't for the cable news outlets giving him a complete pass.

The nature of the bet will be so technical that I am not going to bother hashing out the details before it looks like something is actually going to happen. When it does, we can come together.

I will say this... There will be no people involved to make a subjective opinion on 'why' oil have moved in either direction. There will be a date and non biased metrics to determine who wins the bet.

"Yes, there was news of demand destruction. You are the first person I have read that believes it was bush that caused the recent drop. Maybe you should read what I wrote. What, slow reader?"

You must not get out enough. It 'contributed' to oils fall in recent weeks, along with congress geting more serious about market speculation and institutional commodity positions, continued demand destruction, and a 'slight' easing of tensions with Iran (although it got a little tense today), not to mention a strengthening of the US dollar. All of those things helped bring oil almost below $120.




OK, so if oil reserves go down or there is other news that brings the price back up will that then prove to you how insignificant Bush's lifting of the ban was? Let's just see what happens and we will get back to this. Note: Just watch the supply and demand. How tight the market is going to be a short time in the future is key.


Here is what I think you imagine the speculator to be thinking... "Hummm, should I go long or short... Well, if I say the price goes any higher they will kill this game we are playing so I better keep it down to a playable limit. I don't want this party to end! he he. So what do I do... Bush just lifted that ban so oil is sure to be flooding the market next year. Better go short! Yes! It keeps the game going and will protect me when Bush's oil starts flowing before the contract is up. Sweet!"

Am I close here? If so, you have no idea how the system works. Here is how the futures contracts works:

http://en.wikipedia.org/wiki/Futures_contract


What is so technical about the bet? Sounds like you are chickening out. How about we say the price drops by 30 percent (on average) for the next 4 months following the decision by Congress to lift the ban? If it didn't at least do that then why even bother talking about it?? Right? The oil is so many years in the future so it's not going to change our level of oil independence or position until the oil increase is ramped up. Thus, my numbers sound reasonable. If you want to make a different guess at what will happen I'll take a good look at it to see if it's significant and reasonable. Fair enough? Otherwise we should stop talking about the "perception" effect and treat the action as a minimum five year plan that will give us a small bump (like Alaska did) but not really change anything compared to te 85 million barrels a day of global production.

Tom and CarZin:

Why is it that so many can't face the fact that there is no oil fairy, offshore or otherwise? The facts in this regard are irrefutable. US production peaked in 1970. Right now we are producing at 1946 levels. Even if the MMS is correct in their estimate of the amount of oil in offshore areas is correct -- and no one thinks it is, with even T. Boone Pickens in his recent Senate testimony calling the estimates "ridiculous" -- those amounts would be so small that even the MMS admits the impact would be "insignificant."

And what when would this oil appear? The MMS says by 2028. Having worked with oil leasing I can tell you that's a bureaucratic wetdream. 2038 would be surprising.

Since the financial markets don't believe there's any offshore oil in an amount that will effect prices, nothing George Bush did (or could do) with respect to offshore oil drilling has made one whit of difference with respect to oil prices. What did? That's pretty simple: US oil demand destruction, building US inventories, a slowing US economy, and a consequential slowdown in the economies of other large developing countries. That's all on the demand side, not the supply side.

To give credit where it's due, Bush did effect a drop in oil prices by starting negotiations with the Iranians. Iranian supply is absolutely critical to world oil prices, which is why oil prices spike whenever that supply is threatened. Bush calmed the markets by dropping the "we will not negotiate with the Iranians" stance, a dramatic change which was probably due to Henry Paulson making it clear to him just how harmful to our economy the position was. However, if Bush starts aggresively pounding the table about Iran you will see oil prices skyrocket.

You're undermining your credibility by focusing on the weakest part of John McCain's energy platform. There is a lot to like. Why waste your time on offshore drilling and goofball theories about how psychology is some magic potion that will turn inconsequential amounts of oil into market moving supplies. I understand why the campaign wants to do it -- it thinks that few will understand the issues and it makes for a nice sound bite -- but the more you know the sillier it gets. (The Democrats do the same thing by pointing the finger at the oil companies and "speculators" -- neither of which play any greater role in the run up as offshore drilling or lack thereof).

Tom, I laughed when I saw you say John McCain is an honourable man who keeps his word. Might want to look a little closer at your favourite candidate before the election. The man's campaign would be over already if it wasn't for the cable news outlets giving him a complete pass.

. . . Says the Obama fan. . .

I don't believe any politicians can bear close scrutiny.

Dead on DonC. Finally someone who makes some sense!

Don C, This is in response to your “Tom and CarZin” post.

As a preamble, let me say that our thoughts, ultimately, are in general agreement, but we have just taken different perspectives in viewing this situation. Allow me to explain:

The "Oil Independence" elephant has a small tail.
To use an analogy, your response focuses on the tail and ignores the elephant. Let me elaborate. The elephant is the main thread, given in the very first post, which demonstrates that the focus of McCain’s plan is on "Oil Independence," while Obama’s is on "Green."

This is irrefutable. The tail is just the one item about domestic drilling. If you cut it off, this is just one item from McCain’s plan, the “Oil Independence” score is still 5 ½ stars to three. The elephant hasn’t gone away.

You state your main point in this last post with great relish:


Why is it that so many can't face the fact that there is no oil fairy, offshore or otherwise? The facts in this regard are irrefutable. US production peaked in 1970. Right now we are producing at 1946 levels. Even if the MMS is correct in their estimate of the amount of oil in offshore areas is correct -- and no one thinks it is,

We all agree with you – your main point is obvious and requires no further discussion. End of story – move on to the elephant.


You're undermining your credibility by focusing on the weakest part of John McCain's energy platform. I find this statement ironic: I'm not focusing on it: cut off the tail (domestic drilling) of the plan and move on – the elephant is still there.


In what follows, I agree with your thinking that: this tail is just for political show and is the weakest part of the plan.


There is a lot to like. Why waste your time on offshore drilling and goofball theories about how psychology is some magic potion that will turn inconsequential amounts of oil into market moving supplies. I understand why the campaign wants to do it -- it thinks that few will understand the issues and it makes for a nice sound bite -- but the more you know the sillier it gets. (The Democrats do the same thing by pointing the finger at the oil companies and "speculators" -- neither of which play any greater role in the run up as offshore drilling or lack thereof).

Now let’s talk about the tail. In what follows, keep your perspective, this is the tail. The elephant won’t go away if the tail shrivels up and falls off in the discussion that follows.

There is some confusion and confounding with regard to my discussion of the influence of “perception” on prices. First, let me state that I have always been mystified by the price fluctuations of individual stock or futures prices. To me, some of the price movements defy common sense. I claim no deep understanding. Now this is where the confounding has entered our discussion.

Please refer to the thumbnail. The Pre vs. Post Peak Comparison clearly demonstrates that OPEC Post Peak Capacity Expectations for less than 1 MBD (a tight supply), have a huge influence on prices. The thumbnail shows huge swings for OPEC tight residual capacity.

Now this is where we differ in opinion. Ordinarily, US capacity would have little effect on prices. However, when OPEC Post Peak Capacity is tight, I would expect perception of US marginal capacity, to have a global influence on price. If we disagree on this, fine. Let's just not lose sight of the elephant.


We are in agreement on all else. Enjoy your weekend. :)

Please refer to the thumbnail. The Pre vs. Post Peak Comparison clearly demonstrates that OPEC Post Peak Capacity Expectations for less than 1 MBD (a tight supply), have a huge influence on prices. The thumbnail shows huge swings for OPEC tight residual capacity.

Now this is where we differ in opinion. Ordinarily, US capacity would have little effect on prices. However, when OPEC Post Peak Capacity is tight, I would expect perception of US marginal capacity, to have a global influence on price. If we disagree on this, fine. Let's just not lose sight of the elephant.
[/I]

We are in agreement on all else. Enjoy your weekend. :)




While you are wrestling with Tom over elephants I wanted to talk about your graph. I think what is confusing you is that the world has basically gone from prices being dictated by supply to where the prices are more influenced by demand because supply is constant (or can be interrupted easily). In the good old days America could drop the price of oil very easily by flooding the market with excess oil (they had capacity). When we peaked in 1970 OPEC took over that role. They could then lower prices by flooding the market. They could also say they were going to just bring on more resources in the near future and that would keep things in check because they could eventually deliver. However, lately the world has been unable to raise production in the face of obviously growing demand. Global production has been flat since 2005. Thus, even when Saudi Arabia says they are going to put more oil on the market, as they did recently, the world does not really believe they have the power they once had. It seems like OPEC is just blowing a lot of smoke but not producing anymore oil in needed quantities to satisfy skyrocketing demand.

Now think about this, Saudi Arabia says that they are going to put a few more million barrels a day on the market in the near future but that news didn't effect the price at all! This is not even smoke and mirrors. Saudi Arabia does have a few new mega projects that are close to completion! However, The rest of the world doesn't think that is really a strong position or they feel China and India will just snap up that extra oil and ask for seconds. Thus, most investors realize that supply is not only tight but unlikely to increase in any significant way (able to match growing demand).

Now compare America’s off-shore drilling and Alaska plans with those of Saudi Arabia's plans. Saudi Arabia is only a few years away and have proven construction activity that is nearing production. They are expected to produce a few extra million barrels a day. Even in the most wildest American dreams can we even hope to put that kind of production on the market within 5 years. It's not even proven!

Thus, If Saudi Arabia's announced plans to increase production in the millions of barrels a day didn't effect the price of oil how do you expect America's far less proven and much further in the future plans? Answer: It won't make a bit of difference.

Now it seems that the only thing that will effect the price of oil is consumers reactions to increasing prices caused by tight supplies. If they really get spooked and the price rises too much then they tighten their collective belts too tight and oil reserves go up. Remember that global world supply remains the same. If demand drops too much then eventually global supply will retract and we then have less oil production in the world. Can you see how that is really goings to throw a wrench in the works? Real, true reduced global production? If you think that is easy to just ramp back up then just look how long it took to ramp up after the oil embargos. Some say most countries will never even match their current levels once things are slowed down, either by a peak situation or by human decision. The world's fields are old and tired. Getting more so every day. You can just imagine world global oil production as either constant or slowly decreasing, unless otherwise proven wrong. Demand will swing up and down in reaction to the resulting price fluctuations. If the price is too high demand will retreat. We will see increases in the reserves and the price will drop. This will cause people to loosen up their belts and buy more. This will keep on cycling. When a huge storm hits or someone bombs someone else then that cuts into supply confidence. The price will rise and demand will retract.

I hope people can see what a pickle we are in. We can't open of the spickets anymore... They are wide open! It's like you are threatening your kid brother by spraying him with a hose. You then threaten him that you are going to turn it up and cause more pain. Once you are hitting him with the full force what are you going to threaten him with next? Answer: nothing, you are playing your best hand. There is nobody out there that can flood the market anymore. Nobody! The only power people have now is the threat to turn things down or off. Now that’s a scary thought. There is no substitute for oil that can be brought on-line before massive damage is done. If Iran bombs the Strait and prevents ships from filling up it will be analogous to when Russia cut off Cuba from petroleum supplies. Maybe far worse. The average Cuban lost 20 lbs during that transition. Sound like fun?

Texas,

I respect your viewpoint on our oil situation. I take an analytical approach to problems. I have seen some projections done by respected think tanks on the price of oil, that have been off by a factor of 5 for 2008. But, I suspect that none of these approaches may be able to predict the oil situation, because the determining factors will be fear and panic. Your last paragraph speaks to this.

It is the responsibility of the few of us who understand what faces this nation to get us to Oil Independence. This was my intent in starting this thread.

Don C, This is in response to your “Tom and CarZin” post.


Please refer to the thumbnail. The Pre vs. Post Peak Comparison clearly demonstrates that OPEC Post Peak Capacity Expectations for less than 1 MBD (a tight supply), have a huge influence on prices. The thumbnail shows huge swings for OPEC tight residual capacity.

Now this is where we differ in opinion. Ordinarily, US capacity would have little effect on prices. However, when OPEC Post Peak Capacity is tight, I would expect perception of US marginal capacity, to have a global influence on price. If we disagree on this, fine. Let's just not lose sight of the elephant.
[/I]

We are in agreement on all else. Enjoy your weekend. :)

Tom, I don't understand your interpretation of the graph. As I read it, there has been less oil "left in the ground" so to speak as prices have risen. I would expect that since as price rises you'd expect sellers to cash in on their finite resource. To give a silly example, where I live a lot of people have large palm trees in their yards. As the price of these things have gone more people have offered their palm trees up for sale, leading to less of a plam tree reserve.

That does not mean, however, that the reserve is determining price. If more oil or palm trees are left in the ground, I don't think that potential supply would drive prices down. All it might mean is that the sellers were thinking prices would rise further and they wanted to wait. You could and often do have rising prices and more supply being withheld from the market.

Oil prices are set by supply and demand and invariably there is marginal supply. But unless that supply is actually significant it can't effect significant price changes. In the economics underlying anti-trust law some have theorized that there is something called a potential entrant which act to restrain price rises. In this case the market players won't raise prices too high for fear that it will attract another entrant. But I'm not sure anyone has actually documented that such a thing exists, and in any event the potential entrant would have to be a large competitor for it to matter. If the potential entrant was minor it wouldn't matter.

Or am I missing your point on this?

Finally, with respect to your observation that Obama is more green and McCain more national security oriented, I think that's quite right. But I don't know if at the end of the day it matters. I'm more national security and wealth transfer oriented, but I also like the green aspect. It's like trying to figure out whether you like being thin and in shape because you look good or because you're healthier. Doesn't really matter because it works for both. :)

Finally, with respect to your observation that Obama is more green and McCain more national security oriented, I think that's quite right. But I don't know if at the end of the day it matters. I'm more national security and wealth transfer oriented, but I also like the green aspect. It's like trying to figure out whether you like being thin and in shape because you look good or because you're healthier. Doesn't really matter because it works for both. :)

Yeah, you nailed it.

Tom, you have to stop basing your opinions on these energy plans on cheesy one-word descriptions a PR guy somewhere made up. You have to analyze actual policy positions and goals to make any reasonable judgment on something like this. And please nobody assume that McCain has expertise on something like national security just because he was a pilot (bottom of his class, got preference due to his admiral father.) Plus he's surrounded by oil lobbyists. Talk about conflict of interest!

Yeah, you nailed it.

Tom, you have to stop basing your opinions on these energy plans on cheesy one-word descriptions a PR guy somewhere made up. You have to analyze actual policy positions and goals to make any reasonable judgment on something like this. And please nobody assume that McCain has expertise on something like national security just because he was a pilot (bottom of his class, got preference due to his admiral father.) Plus he's surrounded by oil lobbyists. Talk about conflict of interest!




Ah! Now it makes more sense. OK, we all agree that McCain is a war hero and is committed to working hard as President, should he be elected. However, After reading the following can we also agree that we might want to let energy experts and people who "like math" work on our energy plan? I think that's only reasonable:


"McCain came into conflict with higher-ranking personnel, he did not always obey the rules, and that contributed to a low class rank (894 of 899) that he did not aim to improve.[10][12][13] He did well in academic subjects that interested him, such as literature and history, but studied only enough to pass subjects he disliked, such as math.[5] McCain graduated in 1958."

http://en.wikipedia.org/wiki/John_McCain

http://www.nytimes.com/2008/08/04/opinion/04mon1.html?ex=1375588800&en=ad134f9ff4b3660d&ei=5124&partner=permalink&exprod=permalink

http://www.nytimes.com/2008/08/04/opinion/04mon1.html?ex=1375588800&en=ad134f9ff4b3660d&ei=5124&partner=permalink&exprod=permalink




Yes, it's quite embarrassing. It's like the teacher left the room and the kids are running around destroying the place. Unbelievable. I’m just wondering how long the masses will put up with it. I'm guessing they are not too happy, judging on the extremely low approval ratings for both the president and congress.

I do think it's a good idea to move the energy plan away from Washington. I don't even think it's possible to get enough consensus to get it started the way things are going. Thus, I guess we will all just have to wait until things get a lot worse. After that happens we can either just put out fires and limp along or somebody is going to step up to the plate and start swinging.

My prediction is pain and vacillation followed by copying another country's successful plan. Perhaps Germany's. This is painful to watch because I know what we’re capable of doing.

DonC,

Oil prices are set by supply and demand

Here are some reasons why the classic supply-demand curve is no longer valid for oil.

Contemporary Economic theory does not model oil, with its global influences, realistically. Saudi oil reserves at $100 a barrel are worth 60 trillion, more than the market cap of all the world’s largest companies combined. They have created a fund to start buying up companies and banks. The price of oil is not determined by a simple supply - demand curve. The price of everything and the value of the dollar, is determined by the supply of oil. It is not just another commodity. It is related to energy, which is the lifeforce that permits technologies to transform raw materials and ideas into new products. It supplies the basis for all other commodities.

Neither the supply nor demand of oil is elastic in today's world. Oil is critical to the world's transportation/productive sector. At any point in time, demand is constant, and with time, increasing. Global demand can only be slightly reduced by conservation. In the past OPEC could jigger the supply part. But, there are no new significant reserves; OPECs supply has peaked. The supply cannot be increased. The supply is no longer elastic.

There is another consideration that is not comprehended by the classic S-D curve that determines price: global oil stock "consumer" (Organization of Economic Co-operation and Development) inventories. It is unused consumer demand integrated over time. Below is a thumbnail showing an Excel graph of EIA data that shows that inventories were below the 5 year average. Its hard to imagine enough excess capacity in the future to restore oil stocks. Pelosi wants to dump the US strategic reserve. The EIA projects stocks below average for the coming year and probably beyond.

The classic S-D curve shows the interaction in a well ordered market. After 2005 (the Price-Surplus Capacity graphs suggest 2000), there is a new dynamic in the market. Below a volume of 1 MMB/D, price is very volatile. What is significant about this volume? 1 MMB/D corresponds to EIA's volume estimate for yearly Non-OPEC supply growth. It is, if you will, an estimate of the error band. This is the point, in the post global peak oil era, where a quantifiable "fear of the unknown" and not the exercising of a “well ordered market” determine price. I suspect the world economy will be stuck near this point for some time.

Conclusion: Oil independence is the most crucial world economic survival challenge of the last 100 years.

"Yes, it's quite embarrassing. It's like the teacher left the room and the kids are running around destroying the place. Unbelievable."

I think we more or less get what we deserve. John McCain runs ads with Britney Spears and Paris Hilton and it supposedly makes a difference. Cut me a break. And the media coverage is horrible. John McCain changes his position on offshore drilling and he's called a flip-flopper. Cut me another break. Since when is changing your mind as new information comes to light so terrible.

With Obama it's worse. He says he'll compromise on offshore drilling and he called a flip-flopper? In that case Ronald Reagen, and any other president who ever managed to get anything done, were the greatest flip-floppers of all time. If you make it a crime to compromise then you get what we have now: mindless bickering and a complete logjam.

If you don't think Congress is doing a good job -- and it's hard not to come to that conclusion -- then you need to look in the mirror. Because what we see in DC is a reflection of ourselves.

"Yes, it's quite embarrassing. It's like the teacher left the room and the kids are running around destroying the place. Unbelievable."

I think we more or less get what we deserve. John McCain runs ads with Britney Spears and Paris Hilton and it supposedly makes a difference. Cut me a break. And the media coverage is horrible. John McCain changes his position on offshore drilling and he's called a flip-flopper. Cut me another break. Since when is changing your mind as new information comes to light so terrible.

With Obama it's worse. He says he'll compromise on offshore drilling and he called a flip-flopper? In that case Ronald Reagen, and any other president who ever managed to get anything done, were the greatest flip-floppers of all time. If you make it a crime to compromise then you get what we have now: mindless bickering and a complete logjam.

If you don't think Congress is doing a good job -- and it's hard not to come to that conclusion -- then you need to look in the mirror. Because what we see in DC is a reflection of ourselves.



Yes, that's why I said it's embarrassing... Me included! What bothers me the most is that we don't even follow simple economic and strategic principles that modern companies follow that help keep themselves strong and more stable. You know, things like a good long-term planning, keeping the budget in check, etc. It truly seems like our government is out of control. Even the rats are jumping ship.

Contemporary Economic theory does not model oil, with its global influences, realistically. Saudi oil reserves at $100 a barrel are worth 60 trillion, more than the market cap of all the world’s largest companies combined. They have created a fund to start buying up companies and banks. The price of oil is not determined by a simple supply - demand curve. The price of everything and the value of the dollar, is determined by the supply of oil. It is not just another commodity. It is related to energy, which is the lifeforce that permits technologies to transform raw materials and ideas into new products. It supplies the basis for all other commodities.

Neither the supply nor demand of oil is elastic in today's world. Oil is critical to the world's transportation/productive sector. At any point in time, demand is constant, and with time, increasing. Global demand can only be slightly reduced by conservation. In the past OPEC could jigger the supply part. But, there are no new significant reserves; OPECs supply has peaked. The supply cannot be increased. The supply is no longer elastic.

...

Conclusion: Oil independence is the most crucial world economic survival challenge of the last 100 years.

Tom I think I agree with most of what you're saying here. I believe in Peak Oil. I doubt Saudi Arabia has anything near the reserves it claims. And I believe that both supply and demand are quite inelastic in the short run.

My only point was that offshore drilling offers so little potential that it will have no effect on oil prices when production comes on line, and, as a consequence, there is no magical "psychology" that will convert legislation paving the way for offshore drilling into a decrease in current prices. As you correctly point out, supply and demand are both inelastic in the short term and the market clearing price will reflect that demand. It's just axiomatic -- price has to balance supply and demand -- and psychology has nothing to do with it. (On this point I will say that when I saw George Bush babbling about how offshore drilling would lower current prices because of psychology I did think that if he had another neuron we'd have a synapse.)

I do, however, think you are greatly overestimating the importance of oil in the longer term. It is just another commodity. Human history in some ways is a story of "where to we put the sh*t" and "what energy source do we use now?" On the latter point, we ran through wood, we ran through whale oil, we're in the process of running through oil, and if T. Boone has his way we'll run through natural gas.

What usually happens in cases like this is that people tend to overestimate how stable demand is. It takes a while longer than you'd like, but then suddenly it drops like a rock.

The great thing is that we actually have some better alternatives. If we get off our duffs we can come up with alternative sources -- wind, solar, biomass -- that are more sustainable. The technology is here, we just have to use it. Additionally, since the US uses so much of the world's oil, we are really the dog and not the tail. As we cut consumption, even if the large developing economies like China, Indonesia, and India continue stoking demand by subsidizing oil princes, that demand destruction will have a big impact.

Finally I'd point out that demand destruction is greatly aided by the fact that our oil consumption is so incredibly concentrated in the transportation sector. It would be very difficult and much harder if we had to cut oil consumption is a hundred sectors. But we don't. We just have to destroy demand in one sector.

DonC,


My only point was that offshore drilling offers so little potential ... In terms of quantity of oil, yes. What is important is to demonstrate that we have the political will to go the last mile and are seriousness enough about the situation to the point of doing something stupid.



The great thing is that we actually have some better alternatives. If we get off our duffs we can come up with alternative sources -- wind, solar, biomass -- that are more sustainable. The technology is here, we just have to use it. Additionally, since the US uses so much of the world's oil, we are really the dog and not the tail.
My concern is that in the process of doggedly playing monopoly with OPEC, that they will end up owning Boardwalk and all the hotels. I fear GM may be a paradigm for this country. We have the determination and engineering forte to do it, but not the investment capital or "A" bond rating to borrow it.

“ …we ran through wood, we ran through whale oil… ” – DonC

Take a look at yesterday’s NY Times article about whale oil:

http://www.nytimes.com/2008/08/03/nyregion/03towns.html?_r=1&scp=1&sq=Whale%20oil&st=cse&oref=slogin

Wow!

Obama is offering $7k credit on plug ins!

My vote just switched.

Now if McCain will up it to $10k, I'll switch again!

I just think getting as many PHEV's in the hands of consumers has so much potential upside that it will be a critical issue for me in the fall.

Wow!

Obama is offering $7k credit on plug ins!

My vote just switched.

Now if McCain will up it to $10k, I'll switch again!

I just think getting as many PHEV's in the hands of consumers has so much potential upside that it will be a critical issue for me in the fall.

You're what they call the single-issue voter. Please don't be swayed so easily :(. This is the future of your country we're talking about, look at the big picture! I do agree that getting PHEVs on the road is very important though. But how do we power all these vehicles? It's either 50 nuke plants and more coal (plants that won't be ready for at least a decade) or we jump on the solar revolution like in Germany and get cheap clean power flowing tomorrow.

You're what they call the single-issue voter. Please don't be swayed so easily :(. This is the future of your country we're talking about, look at the big picture! I do agree that getting PHEVs on the road is very important though. But how do we power all these vehicles? It's either 50 nuke plants and more coal (plants that won't be ready for at least a decade) or we jump on the solar revolution like in Germany and get cheap clean power flowing tomorrow.


I was kind of joking. But I would like to see a bidding war on PHEV rebates between the two candidates:

McCain - "I'll pledge $5,000"
Obama - "Oh yeah? How about $7,000"
McCain - "That's NOTHING, I'll pledge $10,000"

Maybe by election day they'll be free!

You're what they call the single-issue voter. Please don't be swayed so easily :(. This is the future of your country we're talking about, look at the big picture! I do agree that getting PHEVs on the road is very important though. But how do we power all these vehicles? It's either 50 nuke plants and more coal (plants that won't be ready for at least a decade) or we jump on the solar revolution like in Germany and get cheap clean power flowing tomorrow.

If the car are all charged between 11PM and 5AM, there is no problem. SCE has already stated they can handle 1,000,000 plug-in vehicles during that time frame and that is only one utility.

Drive during the day within range - charge at night during off peak times. I want an EV-1.

I have a question about how the $7,000 tax rebate works.

What if you don't pay that much in taxes that year? What if you only pay $4,00?. Do you get that back and the other $3k the next year?

If not, this rebate is going to be yet another incentive that only helps people who need it least. If that tax credit doesn't span multiple years, it means poor people will actually have to pay more for their Volt than rich people.

I dont know the answer to your question 'exactly', but i will say the $7000 will probably be paid out over a few years. Something like you can claim it for 2 or 3 years after, but it will be smaller amouts adding up to $7000.

I have a question about how the $7,000 tax rebate works.

What if you don't pay that much in taxes that year? What if you only pay $4,00?. Do you get that back and the other $3k the next year?

If not, this rebate is going to be yet another incentive that only helps people who need it least. If that tax credit doesn't span multiple years, it means poor people will actually have to pay more for their Volt than rich people.

Considering what the Volt will cost, that is not a worry. If you can't use the tax credit in one year, you can't afford to buy a Volt anyway.

If you guys think the President can change things please check out Gerald R. Ford's balanced energy plan. He gave that speech in 1974 and it sounds exactly like the ones we hear today. It even mentions Alaska! Interesting video:


http://jp.youtube.com/watch?v=Y4wkXLKX8QY

If you guys think the President can change things please check out Gerald R. Ford's balanced energy plan. He gave that speech in 1974 and it sounds exactly like the ones we hear today. It even mentions Alaska! Interesting video:


http://jp.youtube.com/watch?v=Y4wkXLKX8QY

Amazing how special interests in congress could hold back such a bold and forward thinking plan. On one hand, I feel like the political climate is much different today than it was then. But on the other hand, look at the republicans in congress today who kick and scream and whine for more offshore drilling while holding back renewables. Something's gotta give.

Considering what the Volt will cost, that is not a worry. If you can't use the tax credit in one year, you can't afford to buy a Volt anyway.

Sure, but the credit doesn't apply just to a Volt. It applies to all ZEV's. So if someone comes up with a $20,000 electric car like the Triac then after rebate it would be only $13,000.

But if you can only get a credit as big as your tax payment, then aren't lower income people being screwed?

Amazing how special interests in congress could hold back such a bold and forward thinking plan. On one hand, I feel like the political climate is much different today than it was then. But on the other hand, look at the republicans in congress today who kick and scream and whine for more offshore drilling while holding back renewables. Something's gotta give.

That's kind of a one sided view. Democrats have been standing in the way of Nuclearfor 30 years as well as drilling in Alaska and offshore.

Republicans have stood in the way of wind and solar.

They've all been in favor of food shortage causing ethanol subsidies that have done nothing but drive up costs of food and fuel

They're all to blame. Trying to turn this into a partisan blame game is what's caused the problem in the first place.

That's kind of a one sided view. Democrats have been standing in the way of Nuclearfor 30 years as well as drilling in Alaska and offshore.

Republicans have stood in the way of wind and solar.

They've all been in favor of food shortage causing ethanol subsidies that have done nothing but drive up costs of food and fuel

They're all to blame. Trying to turn this into a partisan blame game is what's caused the problem in the first place.



Outsiders only have to look at what we Americans have done to ourselves since our oil production peaked way back in 1970 to come to the conclusion that our system of government is not adequate for the goal of keeping our country strong and stable over the long-term. We are a short-term, give-it-to-us-now culture driven by our need to get elected and to show short-term progress before we get kicked out.

If you just look at our sorry state where we import almost 70 percent of our transportation energy, ran up a multiple trillion dollar deficit (almost $500 billion this year alone!), and are absolutely gridlocked towards making any significant and meaningful long-term solutions you might have to agree with that assessment.

That said, I feel that once we do really feel the pain we can get moving. It's just getting to that "we don't have any other choice" point that disappoints me.

That's kind of a one sided view. Democrats have been standing in the way of Nuclearfor 30 years as well as drilling in Alaska and offshore.

Republicans have stood in the way of wind and solar.

They've all been in favor of food shortage causing ethanol subsidies that have done nothing but drive up costs of food and fuel

They're all to blame. Trying to turn this into a partisan blame game is what's caused the problem in the first place.

I have no problems with the democrats blocking nuclear. That's debatable though. They've been blocking offshore drilling for very good reasons (very little oil out there, environmental damage, etc etc.)

Republicans have stood in the way of wind and solar solely because of pressure from certain industries that have far too much influence in the GOP.

They all voted for ethanol subsidies because they are woefully misinformed by the corn lobby. That issue does go beyond party.

I'm not playing a partisan blame game, just calling it how I see it. I'm by no means endorsing the democratic party here, just pointing out how corrupt and untrustworthy the republican party as a whole is these days. If people paid more attention to the issues instead of getting caught up in these "partisan blame games" so enthusiastically presented by the news media the last 30 years would have been very different. Before accusing people of being "too partisan" we should all look at the facts. There's no need to defend the mainstream republicans in the name of balance when their positions are clearly stupid and short-sighted. Leave that to CNN.

I'm keeping my eye on The Gang of Ten. Five Democrats and five Republicans. I like the idea of them coming to together to get things solved but I disagree with their main premise that we have plenty of reserves (15 mbds worth of extra capacity within the next 15 years? Really?) and all we need to do is start drilling and we will all be saved. I couldn’t' disagree more with this idea that we have so much oil just sitting out there or that it will do any good at all. If anything it’s a distraction to alternatives that can be brought on much faster and will bring us where we really want to be. Free from using non-renewable fuels.

I wish The Gang of Ten would just get The Apollo Energy Plan (or equivalent) going so that in a year’s time we can have a fully optimized plan that we can put the weight of the country behind. Those experts will know all about drilling times, market effects, availability of drilling rigs, EROI, etc. and come up with a plan and a timetable for what we can expect. No, it won't be pretty but that's the point. The government is unable to see a plan of this magnitude through to fruition so they are unable to make the biggest sacrifices to get it done. The members of The Apollo Energy Plan however will be thinking in the short, medium and long-term with an emphasis on the long-term stability of our energy infrastructure and policy. Anything less is a Band-Aid on a bullet wound.

FYI: Darthvader and Lampcord,

look at the republicans in congress today who kick and scream and whine for more offshore drilling while holding back renewables. Something's gotta give.

Bush in his 2007 State of the Union Address asked for the "Energy Independence and Security Act of 2007." He announceed the "20 in 10" initiative, focused on reducing gasoline demand by 20% in 10 years (2017), primarily through renewable flex fuels.
These are the main provisions.
*Alternative Fuel: Mandatory Renewable Fuel Standard (RFS) requiring fuel producers to use at least 36 billion gallons of biofuel in 2022
*National fuel economy standard of 35 mpg by 2020
*Required vehicle technology and transportation electrification. Incentives for the development of plug-in hybrids.
*Accelerated Research and Development (Solar, Geothermal, Marine and Carbon Sequestration)

See the DOE Website http://www.eere.energy.gov/afdc/incentives_laws_security.html

I was talking about the Republicans in congress voting down tax incentives for solar and wind. I would be more impressed with Bush if he started by clamping down on his friends at Chevron, but hey, every little bit helps. Kinda wish he didn't wait till the end of his last term. :)

All the reliable metrics are predicting the democrats will take even more control of the house and senate as well as the white house this fall though so this is all moot. We should be focusing on the democrats, making sure they don't screw things up more a la corn ethanol in the future.

Lately I wonder if the Republicans have too great of a conflict of interest to take us where we need to go in the next 4 years. I'm talking in all branches of government.

Let's face it, Republicans go to oil like flies to #$%^. Agreed? Now what's the biggest problem facing America today? Oil. Hummmm. The oil people are dumping massive amounts of money into this election and where do you think the money is going? Yup. So I just wonder.

I don't like to take sides but the conflict is just so glaring. I just can't believe some of the solutions the Republicans come up with and how they can so blatantly resist technologies that make such sense like solar and wind. Even worse I can't believe they are getting away with it! It's unbelievable. Killing a tax credit for solar development? Are they crazy? Taking the strongest stance to lift the ban and start drilling? This is so obviously a gift for the oil companies (new land leases) that it's almost laughable.

Do people actually buy this crap? That drilling will help at all? What about the rest of the world that is drilling anywhere and everywhere but are still not increasing global supply? Flat global production since 2005 should be telling us something. How can a little protected land change our situation? Even if they hit Alaska-like fields? Did Alaska help in any significant way towards our oil independence? No! It was just a bump that came and went, just like this will.

The amount of time we spent on this is appalling. That's why I say just lift the damn ban and give the oil companies the land. Merry Christmas. Then we can start talking about real solutions and a real plan made by real experts.

Oh and the nuclear issue? Well, if it’s also causing a huge logjam in the works then have 50 or so of them approved. They will cost a fortune but will probably never be turned on. That's because our technology will be so much better in ten years. Going with the nuclear plan McCain proposes will be a multiple billion dollar waste and those 50 will only be used to replace the coming wave of reactors that will require decommissioning (most of our reactors are over 30 years old). I say let's do what the Germans are doing. Just let nuclear fission finish it's course (until pebble reactors or fusion reactors are perfected in the coming Century) and slowly fade them away. I know it's better to burn out than fade away but in this case...

Outsiders only have to look at what we Americans have done to ourselves since our oil production peaked way back in 1970 to come to the conclusion that our system of government is not adequate for the goal of keeping our country strong and stable over the long-term.

Silly Texans. Why did you ban oil drilling in 1970?

http://gailtheactuary.files.wordpress.com/2007/03/us-production.jpeg

Originally posted by BillinINd

Quote:
Originally Posted by Obama Energy Plan
Obama will invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure, accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, invest in low emission coal plants, and begin transition to a new digital electrical grid.

You don't believe that a 1.5 billion dollar investment per year will not help reduce our dependence on oil? MccCain wants to give $300,000 for a battery.

150 billion divided by 10 is NOT 1.5, it 15, you divided by 100, sorry that kicks McCain a$$...:cool:

Please tell me where Obama is going to get the $150B for this "investment".

Please tell me where Obama is going to get the $150B for this "investment".



Altazi, you just want a Band-Aid for a bullet wound. It's going to cost well over a trillion dollars. What are you thinking? You have no idea how big our problem is. You think we can transition our 70% imported oil to alternatives (even if that is domestically produced - which is geologically impossible) with less than $150 billion? lol. That is also impossible. It will also take well over 10 years of intense war-like effort.

I thinks it's funny (in a sad and pathetic way) how people have no idea of our situation. They kind of got a taste of it as the price of oil was shooting up to $147 and everyone was getting very quiet. Even the Republicans were talking about putting up solar panels!

Now that the price is coming back down people are breathing easy. The price is coming down not because the supply issue has been fixed but due to demand destruction and a recessing economy.

Folks, you ain't seen nothing yet. We will be extremely lucky to just be in a stagnant economy for the next 10 years before alternatives begin to take hold. That would be great! All of those decades that we ignored and exasperated the problem and all we have to do is go 10 years without growth? Brilliant!

You see, every time Americans take a breath of relief they open up their wallets and start to spend. The more you spend the more energy you use. The more you drive to the shop. The more oil is used. The more the reserves will shrink. The more the price will rise. etc. An endless cycle where the limit is our 85 mbd of global oil production. Every year the proportion of light sweet crude gets smaller and the resulting amount of energy needed to explore, extract and refine gets greater. Does this sound like a strong and stable situation to be in?

Please tell me where Obama is going to get the $150B for this "investment".

Repealing the Bush tax cuts covers most of his proposed new spending :). You have no idea just how massive those cuts were, and they were all for the super rich too. To try and avoid being called a "tax and spend liberal," Obama's tax plan includes substantial tax cuts for everyone making under $200,000 a year. Due to this and all the new spending he's proposing, the budget deficit would still grow bigger under Obama. Nothing compared to what would happen with McCain though, who wants to extend the insane Bush tax cuts and also give small tax cuts to the middle class, while staying in Iraq forever.

So yeah, this isn't going to be free. But what option is there now other than deficit spending? The republicans have practically bankrupted the country over the last 30 years on pointless wars and military spending and tax cuts for the wealthy elite, and did absolutely nothing on energy. Like Texas says, we're pretty screwed here.

Altazi, you just want a Band-Aid for a bullet wound. It's going to cost well over a trillion dollars. What are you thinking? You have no idea how big our problem is. You think we can transition our 70% imported oil to alternatives (even if that is domestically produced - which is geologically impossible) with less than $150 billion? lol. That is also impossible. It will also take well over 10 years of intense war-like effort.

You know what I want? I want to not pay about 40% of what I make to various government agencies. I am ready to be done with self-serving public "servants". I am tired of the incredible waste of my hard-earned resources. Most of all, I am just sick to death of politicians and their ilk who think they know what's better for me than I do.

You know what I want? I want to not pay about 40% of what I make to various government agencies. I am ready to be done with self-serving public "servants". I am tired of the incredible waste of my hard-earned resources. Most of all, I am just sick to death of politicians and their ilk who think they know what's better for me than I do.

I don't know what's great for you, but getting off of oil in the long run will be good for America. If it takes higher taxes on my part to help I will gladly pay more taxes as long as I know that money is going toward alternate energy.

The rest of the first world pays way more in taxes than Americans and they seem to complain about taxes less. And unless you're a millionaire there's no reason to side with tax cutting "fiscal conservatives."

The rest of the first world pays way more in taxes than Americans and they seem to complain about taxes less. And unless you're a millionaire there's no reason to side with tax cutting "fiscal conservatives."



There are extremes on this globe from citizen-loving kings to extreme capitalism. We fall somewhere near the extreme capitalism but not quite that cold. I personally think America would be better off if we treated every citizen like a human being. I believe that once people reach a given level of pride they are motivated to take care of themselves and their families. Others feel that you need to control people. The rich here in America have forgotten what the real purpose of a democracy is! It's to give the power to the people and keep from having lopsided wealth and power at the top of the food chain. Come on, the silver spoon-fed fat cats in our society wouldn't know a hard days work if it bit them on the rear or have ever had to worry if they were going to be able to afford medicine for their children's fever.

We love to hide behind our democracy and capitalism but to me it's an embarrassment. With the coming energy crisis we are seeing the middle class get destroyed and the rich get wealthier. It's just par for the course but we should all be ashamed of ourselves for letting it get this bad. Our founding fathers are turning over in their graves! If a society is truly judged by how it treats it’s weakest members then we will clearly go down as a people whose technology got a little ahead of themselves. I think that would be a fair assessment.

we will clearly go down as a people whose technology got a little ahead of themselves. I think that would be a fair assessment.

Not too much different from the Easter Island folk who cut down 100% of their trees then abruptly fell back into the stone age. Except right now the island is our planet.

Not too much different from the Easter Island folk who cut down 100% of their trees then abruptly fell back into the stone age. Except right now the island is our planet.



The history of Easter Island should be required reading by anyone working on energy plans for our country. McCain, Obama, I’m talking to you!



“By now the meaning of Easter Island for us should be chillingly obvious. Easter Island is Earth writ small. Today, again, a rising population confronts shrinking resources. We too have no emigration valve, because all human societies are linked by international transport, and we can no more escape into space than the Easter Islanders could flee into the ocean. If we continue to follow our present course, we shall have exhausted the world's major fisheries, tropical rain forests, fossil fuels, and much of our soil by the time my sons reach my current age.”

http://www.hartford-hwp.com/archives/24/042.html