A friend sent me this article saying:
I mean, I don’t claim to know a lot about the situation, but I DO know that 90% of those people are wrong.I read over it, and I think he's right...the comment section (and the article itself!) is a mishmash of wishful thinking, financial super-secret advice of the type you typically receive in penny-stock spam email, and some solid points.
The article? Oh yes -- a six-pronged thrust "Plan-B" (financial, not contraceptive) akin to the Fed's bailout of the financial markets to counteract the very real threat of skyrocketing oil prices. The author suggests that
- Asian countries should remove all energy subsidies from their economies, allowing the cost to rise and (hopefully?) demand to fall
- The EU should set a maximum tax on "petrol"
- Non-OPEC nations reduce or eliminate royalties or taxes on new oil production in their nations
- American political candidates should campaign to reduce American oil imports by 5% a year
- All oil tax revenues should be earmarked to "renewable" non-oil or "zero-carbon" research
- All commodity speculation should be ended, now.
(Aside: wouldn't that be speculation? This article even starts off badly, titling itself "Oil is too important to leave to market forces". In one of the many paradoxes of this rather shabbily thought-out production, the author is requiring market forces to combat market forces -- and speculation to fight speculation. Oh well, fight fire with fire, I always say! If you want to get rid of ignorance you should just...be more ignorant, perhaps.)
But the point here wasn't to fisk the article; it's bad enough as it stands. There were actually some writing-worthy comments in the section. Gleaned from the bones of this very rotten piece of typewriter excrement, I have prepared for you a smörgåsbord of worthwhile conversation topics -- and my responses to them, to boot.
We are on the downward slope of oil production (not temporary). Because various VI's including governments wont admit to this for financial and political reasons, scapegoats will abound and every pundit in the media will have a simplistic but incorrect answer.Wrong! Massively wrong! Incalculably wrong. That is, for the reasons this person thinks. Or at least what I think they think. The usual suspect for someone spouting this drivel is that Oil Is About To Run Out. This couldn't be more wrong. Even relatively easy-to-get oil isn't going to run out any time soon -- estimates vary widely that "Peak Oil Production" is going to occur anywhere from before now to 2012 to 2112. The Society of Petroleum Engineers hangs it's hat on 44.6 more years from now...counting officially reported reserves.
However, boys and girls, this doesn't take into account unproved or unreported reserves or "unconventional oil sources", such as tar oil, heavy oil, tar sands, or the massive pile of oil that is the bedrock of the Rocky Mountains. Oil shale reserves represent anywhere from two to four trillion barrels of oil -- or at least twice that of the reserves held by Saudi Arabia. There is more oil in the tar sands of Canada than we've used so far...as the human race.
So, are we going to run out of oil? No. Will it get more expensive? Yes. But, as our reader(s? perhaps?) know, not all of this is actual supply-demand economics!
To make a long answer short, this commenter is an idiot and utterly uninformed. His excuse is contained in his comment -- he's a product of modern media information dissemination.
If you curb 'speculation' in consuming countries, 'speculation' will move t[o] bid up prices on producing nations exchanges like Russia and Iran. This would remove any incentive to keep prices down and result in much higher prices. Actually there would be much, much higher prices and shortages.
The last point on speculation: maybe it is the wrong way round. Consumers are disappointed by higher prices because they are unprotected. They couldn't lock-in forward prices when they were lower. Speculation in oil is much lower that other financial mkts. Broader participation is better.
These are very good, very solid comments. Bravo to them! Speculators are actually good for markets. They take on risk that larger companies won't or can't; bigger risks for potentially bigger rewards. Not to mention the fact that by taking on this risk, they allow the bigger players to "read" the market more effectively without wagering any of their own capital. A great example of this is the masterful utilization of contract-buying and speculator-using being displayed by Southwest Airlines. They bought their fuel contracts at the right time. There's a reason they're the only airline posting positive numbers.
There is more than enough sunlight to answer the world's energy needs, and the technology is there to exploit it. The electric car is already a viable form of transport and can be developed much further.
It is vested interests that are deliberately blocking such developments.
This worries me. No resource is unlimited. Solar cells require gallium arsenide, cadmium telluride, or copper indium selenide, as well as massive amounts of silicon -- all of which are found in, shall we say, limited quantities lying around your garage or growing in a field. Where do people think solar cells come from? Storks? How about wind turbines? Do we find them in cabbage patches? (Actually, wind turbines come from India). It takes energy (and steel, and mining, and carbon fibers, and rare-element ores) to make these things.
It seems to me that the replacement of income tax by a carbon tax on finite fossil energy resources will both remove a disincentive to work, while ecouraging the development of alternative renewable energy sources and the more prudent use of those whose supply is not limitless
If people really want to be "sustainable" we need to kick it back a few centuries, because wood grows forever. But oh-- that causes global warming! And it would be a huge step backwards towards a life that is "solitary, poor, nasty, brutish and short".
Additionally, should US taxpayers continue to subsidize the rest of the world market by providing the backbone force protection for the major sea lanes internationally?
AK - Next you'll be saying that it should be illegal to hedge against monetary inflation. Sounds like FDR speak and oil is the new gold. Why do you avoid writing about the last few years of G8 currency debasement and the effect this has had on the price of everything?
These are three very interesting comments. They speak for themselves and really should just get gold stars for thoughtfulness.
Forgive my cynicism - but isn't a combination of weak dollar and high oil prices a very good way from the US to prevent rapid Chinese and Indian economic growth and everybody blames the Chinese anyway?Now this is a very thought-provoking idea. I don't truly believe the Bush administration is crafty enough to pull something like this off, though I wouldn't put it past any administration. The weak dollar policy helps American trade numbers by driving up exports and pushing down imports, making it more or less expensive to trade depending on the direction.
By direct corollary, a weak dollar hurts China because it literally makes their products more expensive. Combine this with the fact that commodities such as oil and food are on the rise (due to the weak dollar, in part) and you get a lose-lose situation for China, as they must allow their currency to rise in order to stay out of the wringer -- which ties into point one of the original article. However, America is essentially a big customer to China's cheap production. While we may have geopolitical motives to prevent them from becoming an economic behemoth, we also hold the keys to their livelihood. We can take our business elsewhere. While it would hurt our economy, it would not destroy it as it would theirs.
It's food for thought, at least. The situation would play out as described, but I don't know if that is by design or by coincidence.
Finally, the winners for pure succinct literary gold:
Politicians can only block or unblock. They never create anything. Politicians caused the world's energy prices and cannot be the solution to them. I confidently predict that future generations will look back and marvel how private enterprise will have solved what will be viewed as a minor problem.
Either you're a capitalist or your're(sic) not.Need I say more?