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2006-04-24 Home Front Economy

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Posted by Anonymoose 2006-04-24 00:00|| || Front Page|| [3 views since 2007-05-07] Top

#1 KRISTOL on FOX AND FRIENDS argued that private companies only earn an average of 25 cents or less per gallon of gas, which according to him was low by any corporate standard. The AMer audience was reminded by the panel that Euros are already paying US$4-6.00 per gallon, while Japan and Asia pay much more. The rest is payout to foreign suppliers + US Gov-specific subsidation of inflows from Amer and foreign companies in order to keep US domestic prices low. When Dems complain about high gas prices for consumers, what they are indurectly arguing for is higher US-specific Government payout/subsidation, i.e. Socialism, NOT the free market.

Posted by JosephMendiola 2006-04-24 01:38|| 2006-04-24 01:38|| Front Page Top

#2 what can be done to make gasoline more affordable?

A) Harness up the usual suspects.

Moose,
Blew up a low mileage 327 small block when I was a kid doing experiments with fuels: acetone, lacquer thinner and more..yes i went ~~haywire~~ overboard and ran it hard. Do it at your own risk.

Basically from the factory your average engine is "detuned" for a reason, that be longevity.

If you "hot rod" an engine mecanically, it will go faster but it will also work harder too. You *will* drive it harder and it won't last as long, that is unless you drive it like a little old lady.

fuel additives can work also, but untested or unapproved fuel additives can detrimentally effect the main lubricant.. oil [blow by the rings etc]

nitro is a fuel additive! :)
My brother in law used to blow up engines in his nitro street cars all the time.

ON TOPIC: what can be done to make gasoline more affordable?

A) drive like a little old lady, it saves gas but kills the innocent.

Posted by RD 2006-04-24 04:29|| 2006-04-24 04:29|| Front Page Top

#3 RD: I gather the acetone principal is *not* to raise the fuel rating. The theory is that gasoline has inefficient vaporization, and that a tiny amount of acetone breaks the surface tension, thus allowing more complete combustion.

The max limit is 3oz per 10 gallons, less than 1% of your fuel. Any more than that and it *will* raise your fuel rating, and ironically, your fuel efficiency will go down.

Some attribute the increased efficiency to acetone working as a solvent on engine deposits, but that is an unlikely theory, given the observational results.

The best advice I saw from the pro-acetone crowd was to only use the trick during peak gas prices, then go back to gas only when the price falls.

Posted by Anonymoose 2006-04-24 11:55|| 2006-04-24 11:55|| Front Page Top

#4 Oil is no more expensive than milk, which we produce here and don't need to ship across oceans in supertankers or continents in thousand mile long pipelines. So the level of oil prices is not the primary problem.

The volatility of oil prices due to the world's reliance on low cost oil from the politically volatile regions of the world. (I think a case can be made that oil itself makes a region volatile.) We have a more than adequate supply of oil in the U. S. All we have to do is keep the price above $50 per barrel, adjusted for inflation. An oil import fee that achieves this goal will stimulate domestic production that will have less price volatility than imported oil.

It will send fewer dollars to the Saudis and Hugo.

It will stimulate conservation.

It will eventually (decades) allow us to let the Arabs go back to being camel jockeys.

Raise import fees on oil and use the proceeds to reduce income taxex.

Posted by Nimble Spemble 2006-04-24 12:11|| 2006-04-24 12:11|| Front Page Top

#5 NS - use it to reduce taxes OR ... use it to promote capital investment in alternative sources here?

Without some significant buffering, most companies would be reluctant to put in the risk capital needed for exploiting some of those domestic oil sources, I suspect.

Posted by lotp 2006-04-24 13:41|| 2006-04-24 13:41|| Front Page Top

#6 Reduce Taxes.

I have great faith in the market and very little faith in the government. There is lots of capital sloshing around. If there is an opportunity for market rate profit, capital will flow. If there is not enough capital flowing, raise the import fee. All the buffering required is a floor on price so that investors can be confident of a return.

Or am I misunderstanding you?

Posted by Nimble Spemble 2006-04-24 13:47|| 2006-04-24 13:47|| Front Page Top

#7 All the buffering required is a floor on price so that investors can be confident of a return.

Not sure the market will react the way you predict it will, is all.

Posted by lotp 2006-04-24 13:54|| 2006-04-24 13:54|| Front Page Top

#8 Not sure the market will react the way you predict it will, is all.

Only one way to find out. I'm still not sure what kind of buffering you have in mind. I just get suspicious of governement picking winners instead of getting out of the way of private parties.

Posted by Nimble Spemble 2006-04-24 14:42|| 2006-04-24 14:42|| Front Page Top

#9 Your approach is like a sledge hammer - it takes a "command economy" approach by setting an artificial value for oil.

A more targeted approach would be something along the lines of a 5-10 year tax deduction for capital investments in oil sand exploitation, i.e. if the intent is to offset the risk of investing in these techologies, offset it directly rather than manipulate the oil value itself.

Better yet, ALSO give a tax break to successful new technologies that bypass oil entirely.

Posted by lotp 2006-04-24 15:01|| 2006-04-24 15:01|| Front Page Top

#10 I agree that my proposal could be construed as a command economy type move, but we are subsidizing foreign oil through immense DoD command type expenditures now.

Your more targeted approach would become a permanent subsidy of a particular industry like the entire Department of Agriculture.

My goal is not just to induce investment and domestic supply. It is to reduce demand for foreign oil, whether by conservation, substitution or investment. I don't really have a preference which.

For example, I am currently replacing the furnace (#2 fuel oil) and a/c (elec) in my home. Straight replacement would probably be $6,000 and annual fuel of $3,500. Cost for a repalacement of an air-air heat pump with back-up propane furnace is about $10,000, with about $2,500 per year in fuel cost. If I install a geothermal heatpump the cost is $17,000 with annual fuel expense of maybe $1,500. The economics drive consumers not to go geothermal, even though it is the proper energy decision because they don't see the return quickly enough. If fuels contained their full cost (all that DoD expenditure) there would be a quicker payback. That's the kind of decision that targeted approaches miss.

Posted by Nimble Spemble 2006-04-24 16:17|| 2006-04-24 16:17|| Front Page Top

#11 NS, there are two main problems with your approach.

1. It locks in windfall profits to existing producers.

2. No one knows what the right price is to get sufficient new supply. Is it $40?, $50?, $60?

More generally it doesn't address the real problem, which is to encourage new supply from sources that would not otherwise be developed because of cost and risk.

I'd argue that risk is a much bigger factor than cost, since essentially unlimited quantities of gasoline can be produced from coal for less than $40/b equivalent.

They way around these problems is for the government to invite tenders for supply over 20 years from new domestic sources only, where the bidder sets the price. There may well be problems deciding what is a new source, but its an 'at the margins' problem and can be managed.

This approach not only removes the price risk, it has the very consierable benefit of giving long term visibility to supply.

There are essentially 2 ourcomes.

One is oil prices stay high and the US gets security of supply and the government makes a lot of money.

The other is oil prices crash, and the economy gets cheap oil and security of supply, but the government picks up a big bill.

Posted by phil_b">phil_b 2006-04-24 17:05|| http://autonomousoperation.blogspot.com/]">[http://autonomousoperation.blogspot.com/] 2006-04-24 17:05|| Front Page Top

#12 Good heavens man... where do you live NS?

Posted by 6 2006-04-24 17:46|| 2006-04-24 17:46|| Front Page Top

#13 Free markets are not the solution because the oil market is controlled by cartels of governmental monopolies. Even in the freewheeling days of the Trexas Oil Patch, it was a series of boom, cuthroat competition, and bust until the Texas Railroad Commission stepped in to regulate the market.

No sane capitalists are goining to invest hundred of billions $ on oil substitutes in the $30-40/barrel range when Middle Eastern enemies can load crude onto tankers for $4/barrel. The source of the problem are hostile foreign governments manipulating markets and the greatest part of the solution will have to come the US government distorting the market. That means taking away the risk from alternative producers that they will be wiped out when oil drops to $20.

One way is for the feds to make long term contracts to buy synfuels (mostly coal, shale and tarsands), at a reasonable profit to producers. The production then can be sold by the gov at market prices. An alternative is to tax oil and gas imports high enough that that synfuels production becomes attractive. Either way, like in food production, the tax payer will have to take on more of the investment risk.

Besides an electric economy based on standardized nuclear reactors (another topic), I prefer a combination of long term synfuels contracts and sliding scale oil import taxes to shift the economics to domestic production. In the long run, it will ensure lower energy prices less susceptible to foreign manipulation. Also the wealth will be kept within the country and away form those to try to kill us.

Posted by ed 2006-04-24 19:59|| 2006-04-24 19:59|| Front Page Top

#14 1. It locks in windfall profits to existing producers.

So what? Now the Sauds and MM get the windfall profit and use it to kill us. Existing domestic producers are most likely to reinvest the profits in other domestic sources of energy, so I don't really have a problem

2. No one knows what the right price is to get sufficient new supply. Is it $40?, $50?, $60?

I'd argue that risk is a much bigger factor than cost, since essentially unlimited quantities of gasoline can be produced from coal for less than $40/b equivalent.

Those statements seem contradictory to me. Somehow we can find the right price, even if by trial and error.

They way around these problems is for the government to invite tenders for supply over 20 years from new domestic sources only, where the bidder sets the price. There may well be problems deciding what is a new source, but its an 'at the margins' problem and can be managed.

That's how the Department of Agriculture builds mountains of cheese.

Posted by Nimble Spemble 2006-04-24 20:21|| 2006-04-24 20:21|| Front Page Top

#15 6, Pennsylvania, why?

Posted by Nimble Spemble 2006-04-24 20:22|| 2006-04-24 20:22|| Front Page Top

#16 SynGas overview

Posted by 3dc 2006-04-24 20:46|| 2006-04-24 20:46|| Front Page Top

#17 NS, if you invite bids for supply, the market sets the price. Its akin to a futures market where suppliers enter into a contract to supply amount x, at time y, and price z. Most business transactions are like this for the very simple reason businesses need forward visibility for planning and budgeting purposes.

Posted by phil_b">phil_b 2006-04-24 23:02|| http://autonomousoperation.blogspot.com/]">[http://autonomousoperation.blogspot.com/] 2006-04-24 23:02|| Front Page Top

00:02 JosephMendiola
00:00 3dc
23:59 2b
23:58 2b
23:55 anonymous2u
23:54 Alaska Paul
23:50 3dc
23:48 RD
23:47 Alaska Paul
23:45 JosephMendiola
23:44 RD
23:44 Alaska Paul
23:39 JosephMendiola
23:31 Danielle
23:29 JosephMendiola
23:27 Alaska Paul
23:24 mac
23:23 rafael
23:21 JosephMendiola
23:14 N guard
23:05 RWV
23:02 phil_b
22:55 Alaska Paul
22:54 RWV