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About That $72 Billion Subsidy

I am going to be pretty busy for the next few days, and probably won’t be able to put anything new up until at least mid-week. Until then, over the past few days there have been a lot of headlines about a recently released study from the Environmental Law Institute. The study concluded that over the past seven years, fossil fuels have benefited from some $72 billion in subsidies. Their headline was innocent enough:

U.S. Tax Breaks Subsidize Foreign Oil Production

(Washington, DC) — The largest U.S subsidies to fossil fuels are attributed to tax breaks that aid foreign oil production, according to research to be released on Friday by the Environmental Law Institute in partnership with the Woodrow Wilson International Center for Scholars. The study, which reviewed fossil fuel and energy subsidies for Fiscal Years 2002-2008, reveals that the lion’s share of energy subsidies supported energy sources that emit high levels of greenhouse gases.

The research demonstrates that the federal government provided substantially larger subsidies to fossil fuels than to renewables. Fossil fuels benefited from approximately $72 billion over the seven-year period, while subsidies for renewable fuels totaled only $29 billion. More than half the subsidies for renewables—$16.8 billion—are attributable to corn-based ethanol, the climate effects of which are hotly disputed. Of the fossil fuel subsidies, $70.2 billion went to traditional sources—such as coal and oil—and $2.3 billion went to carbon capture and storage, which is designed to reduce greenhouse gas emissions from coal-fired power plants. Thus, energy subsidies highly favored energy sources that emit high levels of greenhouse gases over sources that would decrease our climate footprint.

Let me be perfectly clear here. I am very opposed to policies that subsidize our usage of fossil fuels. But I am also opposed to painting with very broad brushes. In the case of the oil subsidies, three things stand out. First, the taxes the oil companies paid over that time period are about an order of magnitude higher than those so-called subsidies. Second, many of these so-called subsidies would merely be called tax deductions in any other industry. Finally, many of the so-called subsidies didn’t even go to Big Oil.

One of my diligent readers took the time to actually read the study, and broke it down:

I was a little puzzled by this ELI study. First of all, the itemized subsidies only added up to $68 bn, not $72. Maybe they were just listing the largest items – I didn’t read the fine print. I thought it would be useful to see just what was being subsidized rather than blurting out “BIG OIL Subsidy!!” I found it useful to consider 10 categories of fossil fuel subsidies.

1) 22%, or $15 billion of the $68 billion listed, was allocated to the Foreign Tax Credit you referenced. Not $72 billion.

2) 23% went to subsidize production in high cost environments, areas that may have otherwise been commercially marginal (although that of course depends on price). This seems like a legitimate use of subsidy to me, if without it most of these projects would have not been undertaken. [RR: As I have argued before, it makes sense to subsidize things that are deemed important, but otherwise uneconomic].

3) 11% went to various accounting conventions, particularly treatment of intangible costs.

4) 10% went to assumed loss stemming from lower than expected offshore lease government take. This seems very arbitrary to me. As I understand it, the ELI is assuming some globally fair government take, and calculates that the feds could get more. Maybe. But there’s no free lunch. A higher take might mean lower bids or less development.

5) 9% went to a low income housing energy assistance program. This is money paid to states to insure low income families get access to fuels. Hardly a Big Oil subsidy.

6) Another 9% went to government storage programs, the SPR and two other minor programs. This is a government initiative, not a handout to the oil industry.

7) 8% went to an accounting rule benefiting independent producers, not Big Oil.

8) 5% went to the coal industry.

9) 1% went to incentives for clean fuels.

10) 1% went to a variety of small miscellaneous programs.

So, of these

– Numbers 1 and 3 may have room for revenue take ($22 bn);

– Number 4 possibly but would have the side effect of lower US production (how could it not?) $7 bn;

– Number 2 would clearly have a negative impact on US production ($16 bn);

– Number 7 would hurt smaller companies but may be minor source of revenue ($5 bn)

– The rest are not really benefiting the oil industry very much.

I view this as $22 bn in possibly vulnerable oil industry subsidies, another $23 bn in at least partly defensible subsidies, and $27 billion (getting back to $72 bn) in subsidies that don’t benefit the large mutlinationals much at all.

Again, let me make it clear that I oppose true fossil fuel subsidies. In fact, I support “antisubsidies” – higher taxes – for fossil fuels in order to incentivize conservation and promote renewables (and again, I think it can be done in a revenue-neutral manner). But I do think the discussion should be intellectually honest, and we shouldn’t lump money destined for research into carbon sequestration into all-encompassing “oil subsidies.”

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September 21, 2009 - Posted by | carbon tax, gas tax, oil companies, subsidies

47 Comments

  1. I am not sure I would even count that Foreign Tax Credit as a subsidy to Big Oil since it's a general tax credit that is available to any US company operating abroad. Now, people could debate if they should have this subsidy at all but to single out oil companies taking advantage of this tax break is silly.

    Comment by Terry | September 21, 2009

  2. "Again, let me make it clear that I oppose true fossil fuel subsidies. In fact, I support "antisubsidies" – higher taxes – for fossil fuels in order to incentivize conservation and promote renewables (and again, I think it can be done in a revenue-neutral manner). But I do think the discussion should be intellectually honest…."ROFLOL

    Comment by Kit P | September 21, 2009

  3. Okay, take out the 2.3 Billion.That leaves $69,700,000,000.00?No, Terry, I think the point was that that particular subsidy is NOT available to other industries operating abroad.

    Comment by rufus | September 21, 2009

  4. Total chief warns of oil shortages by 2015 if investments aren't made…There will be oil shortages by 2015 EVEN if investments are made.About one billion of the earth's seven billion now live at the highest standard — most of those in the U.S., Western Europe, and Japan. There are about two billion people who see some possibility of moving up to first world standards. But the first billion already use more than 25% of the world's oil output. The truth is there simply won't be enough oil resources for three billion people to live at the same standard that the top one billion now enjoy.

    Comment by Wendell Mercantile | September 21, 2009

  5. There's not even enough oil to come, completely, out of recession.Between us, the Euros, Japan, Chindia, and the rest of the world we'll need another 6 million barrels of oil/day to get back to the most modest growth.If you can find more than 3 million of that you're a better man than I.And, that's only for 2010. Every year, thereafter, it gets uglier, an uglier.

    Comment by rufus | September 21, 2009

  6. There's not even enough oil to come, completely, out of recession.Hey Rufus, we agree on something.

    Comment by Wendell Mercantile | September 21, 2009

  7. THAT'S Scary. Let me go back and look at my figures, again.:)

    Comment by rufus | September 21, 2009

  8. "There's not even enough oil to come, completely, out of recession."That's my worry too. US credit is tapped out. We couldn't stimulate our way out of a paper bag at this point. Just our luck to have Carter Jr. in the oval office at this juncture of history. I'm eagerly awaiting his address to the nation,where he tells us everything will be okay if we just turn our thermostats up to 80 degrees.

    Comment by Maury | September 21, 2009

  9. Glycerin to ethanolIt's not just soap, anymore.

    Comment by rufus | September 21, 2009

  10. Rufus said:No, Terry, I think the point was that that particular subsidy is NOT available to other industries operating abroad.I re-read that section of the ELI report and I stand corrected. There is a special provision in that portion of the tax code that allows oil and gas companies to classify their royalty payments to foreign governments as a 'tax' and therefore take a tax credit instead of just taking a normal tax deduction.I don't have a problem with removing this tax loop-hole but getting the law changed could be problematic without cooperation from the foreign government.

    Comment by Terry | September 21, 2009

  11. More than two billion Chinese and Indians (among others) certainly aspire to a greater share of global oil consumption. Since there won't be enough to go around, several possible eventualities present themselves.First, there is the global die-off that the doom-mongers over at The Oil Drum revel in the thought of (which is why reading that web site is so bad for the soul even if, like many of the people there, you are ok with billions of "abstract humans" dying because of your secret smug conviction that as a Westerner you won't be one of them).More likely, sanity will prevail, and driving a ridiculous 3.0+L monstrosity will cease to be part of the definition of "The American Way". Once people wake up and smell the coffee, walking, riding a 150mpg scooter, or taking public transport will seem preferable to having no job and/or not eating. (Actually, more likely again, the coffee will just get so much more expensive that whether you wake up and smell it or not, you will be buying less of it. This will, of course, disproportionately affect the poor).While I don't think option 1 will come to pass, the severity of the pain of option 2 quite likely depends on the length of time available to transition from gas guzzlers to scooters … THAT'S what an appropriate gas tax would be designed to improve.

    Comment by PeteS | September 21, 2009

  12. "I don't have a problem with removing this tax loop-hole but getting the law changed could be problematic without cooperation from the foreign government."I think the other issue here is whether a similar credit is provided by other governments to their oil industries. Is it a level playing field now, or not? If this credit were eliminated, would it put US companies at a disadvantage in bidding for foreign projects, thereby increasing foreign control of oil reserves?

    Comment by armchair261 | September 21, 2009

  13. Gobs of oil out there. Right now, a glut–tankers laid up in Malta for months, no where to offload.A natural gas glut to the moon.OPEC has taken 4 mbd off the market in a thug-cartel action, and we still have a glut.The Oil Era is ending, and with a whimper.OPEC is trying a thug business model: Threaten your customers with erratic, high pries and unreliable supplies. We will see how long that works. I think it already collapsed, and will collapse every time it is tried.That is how markets work. On oil industry subsidies I agree with RR.

    Comment by Benny "Boom, No Doom" Cole | September 21, 2009

  14. Benny, oil is selling at $70.00/barrel for some reason.We used 19.5 million BOe/day last week. To get back to 3q 07' – 2q 08' levels of growth we will need to use at least 21 million BOe/day.Europe is in approx. the same boat. Ditto, Japan. Chindia is going to use an extra 1 mbpd, every year, for a lot of years. Add in another .5 mb/day for Russia, OPEC, and the rest of the world, and you're looking at 6 Million Barrels/Day.Then, we start thinking about 2011, and 2012. There Ain't No Way we can come up with that much oil. The "Bidding War" is getting ready to get into high gear.Buy a "Flexfuel."

    Comment by rufus | September 21, 2009

  15. I have to agree with Benny on prices. I think traders have been overly optimistic about the recovery and future demand growth, and that we're going to see a big pullback in price this year as hopes deflate. Inventories are too high, and the IEA is saying OPEC production exceeds demand by 600,000 bopd. Shorts are increasing.But I think the longer term fundamentals are sound and we'll see higher prices a few years down the road.

    Comment by armchair261 | September 21, 2009

  16. The U.S., alone, can put on 600,000 bpd in the blink of an eye. Vehicle Miles Traveled is trending back up. We've gone from around 8.6 mbpd of gasoline used to 9.2 last week in just a few months.Business inventories are at rock-bottom, and the big trucks are starting to roll, again. China's new car sales last month were up 79% from year-ago.If we pick up Japan, and Europe will, also. OPEC consumption, the equivalent of China's, has never slowed down.Add in: Mexico production tanking, North Sea tanking, Prudhoe Bay, Venezuela, and Nigeria sliding. Worldwide production from "existing" wells falling 6.9%/yr. Jeez. We got a mess coming. Whether Exxon, or Poet got a subsidy is going to be a long way away from our primary concern in 2011.

    Comment by rufus | September 21, 2009

  17. Be not pessimistic. One thought: Lithium batteries are improviong at an eight percent annually compounded rate, according to industry buzz. Well–not fast enough to turn the tables this year, or next year, or maybe even for a decade. But if progress continues apace, we should see lithium batteries become very, very competive–perhaps compelling–in our lifetimes. And I am bald.Yield from palm oil plantations are rising about 4 percent annually, and they can grow palm in Brazil.We have an indispitable glut on natural glut, a perma-glut for all intentd and purposes. You can run cars on CNG–see cngvehicles.net for a used car dealer selling cng cars off the lot ofr under $10k. Or, you can make methanol from NG.There is no doom scenario that makes sense.The scenario that makes sense is that the Oil Thug States find themselves with a redically shrinking market, starting sometime between now and 10 years from now.One more price spike in there? Maybe, but only maybe. Speculators and manipulators run the NYMEX. One way to look at subsidies for oil propduction (usually tax breaks) is that they result in lower prices.

    Comment by Benny "Boom, No Doom" Cole | September 21, 2009

  18. I am not at all pessimistic. I DO think oil prices will skyrocket. Even with all that glut in floating storage, I think it still amounts to only around 100 million barrels at best — not much more than a single DAY of global consumption. So when consumption takes off again, there isn't much buffer, even with OPEC spare capacity.But even in the worst case, i.e. no short term technology saviour, no dramatically better lithium batteries etc., "scooter mode" — i.e., enforced serious belt tightening — will keep things moving until something else is sorted out. That's as long as supplies don't fall off a cliff, which is where a US gasoline tax could help.

    Comment by PeteS | September 21, 2009

  19. "Speculators and manipulators run the NYMEX. "Sigh.What do you think of this reference?http://www.sunovpetroleum.com/2009/04/the-speculation-myth/Not necessarily endorsing it, but it is interesting.

    Comment by armchair261 | September 21, 2009

  20. About one billion of the earth's seven billion now live at the highest standard — most of those in the U.S., Western Europe, and Japan. There are about two billion people who see some possibility of moving up to first world standards. But the first billion already use more than 25% of the world's oil output.I think you got the numbers wrong. I think the US alone (300 million people) use about 25% (~20 million bpd) of the world's oil output. And provide ~25% of the world's GDP. Fair exchange? The truth is there simply won't be enough oil resources for three billion people to live at the same standard that the top one billion now enjoy.Relax & leave it to the free market, Wendell. At some price ($200/bbl? $500/bbl? $2,000/bbl?) there is no shortage, just lots of conservation. See last summer and a mere $150/bbl for how well that works…Incidently, the US goes from owned by China to owned by Saudi Arabia. Minor detail…

    Comment by Optimist | September 21, 2009

  21. Buy a "Flexfuel."ROFLOL. At least you'll always have a great career as a comedian, Rufus!And if you want a vehicle that's flexible as far as fuel goes, buy a diesel…

    Comment by Optimist | September 21, 2009

  22. Armchair-Here is a link also.At one point, a barely known comapny, Vitol, controlled 11 percent of trading on the NYMEX. Obviously, enough to gin prices. Others can cloak their identities.Look, if you were Putin, and your political life, and maybe even your life (no Russian leader has ever left power unless dead)depdned on higher oil prices, would you not game the NYMEX? http://www.time.com/time/business/article/0,8599,1909756,00.html

    Comment by Benny "Boom, No Doom" Cole | September 21, 2009

  23. "Speculators and manipulators run the NYMEX."Sigh. What do you think of this reference?Oh boy. We'll never beat the enemy if we can't even identify the enemy.Make a nice target, those speculators, don't they? Anybody flinched when the president used the battle cry ("Speculators!") as he screwed many of the GM bondholders out of their life savings?The problems are not as distant as those faceless people on Wall Street. The enemy is your elected prostitutian. Yes, the same guy y'all love for bringing home the bacon.In fact, you can take it one step further…

    Comment by Optimist | September 21, 2009

  24. Don't make me laugh, Benny. Putin is busy enough, making enemies and intimidating people, that he doesn't have time left to game the NYMEX. Playing Europe's energy markets and winning concessions from Washington is about as much as I can credit the man for.Just because Putin would love to manipulate the NYMEX is not proof that he is doing it. Ditto for speculators and oil prices.What the anti-capitalists are beating the capitalists at capitalism? Your theory makes no sense…

    Comment by Optimist | September 21, 2009

  25. "… which is where a US gasoline tax could help "Trust a Euro — look out at a world in which the evil EU is (by far) the world's largest fossil fuel importer, and conclude that what the world needs is for US citizens to pay higher taxes!Have high gasoline taxes failed to stimulate innovation in Europe because of some intellectual/emotional problem with EUtopians? Or because taxing one particular product is not a particularly effective way to jump start the technical innovations the world realy needs?I'm voting for the second explanation.

    Comment by Kinuachdrach | September 21, 2009

  26. "I think you got the numbers wrong. I think the US alone (300 million people) use about 25% (~20 million bpd) of the world's oil output. And provide ~25% of the world's GDP. Fair exchange?"No, I don't think so. The US produces only 22% of global GDP. The European Union produces one third more than that, using one third less oil. The EU produces roughly $1.25m of GDP per bbl/day. The US produces roughly $0.75m of GDP per bbl/day. You are WAY, WAY behind in the efficiency stakes. The EU also has stringent targets for increased oil efficiency (even though it considers itself way behind where it wants to be). The USA is a joke in this department.Sorry for telling it like it is. But the only thing keeping you from sensible efficiency is some poppycock about the American Way of Life™ and some macho posturing about flimsy-toy-driving Euro-socialists.

    Comment by PeteS | September 22, 2009

  27. "Have high gasoline taxes failed to stimulate innovation in Europe because of some intellectual/emotional problem with EUtopians? Or because taxing one particular product is not a particularly effective way to jump start the technical innovations the world realy needs? I'm voting for the second explanation."Or how about the third explanation — that you're flat out wrong about the lack of innovation, and not only has it occurred but it leaves the US in the dust as far as oil efficiency is concerned.

    Comment by PeteS | September 22, 2009

  28. Optimist:My conjecture makes sense. Russia sells oil. They would like higher oil prices. Putin cannot afford the luxury of thinking long-term. The Russian economy surged on higher oil prices. He is popular because of higher oil prices (certainly not his pecs).In the short-term, oil demand is price inelastic. A perfect market to game prices.We know that entities can trade on the NYMEX and cloak their identity. We know that as much as 11 percent of trading is controlled by a single entity. Who knows if just two or three entities collude actions? One has to assume that, of course, Putin is gaming the NYMEX. Why wouldn't he? Too busy? You are joking, of course.Come now. Too busy to think about gaming prices for the one good Russia can sell?Areyou waiting in line to buy Russioan cars? How about their clothes. Har-har. A vacation in Moscow come November? Har-har.A nation of alcoholics, and in decline to boot. Population going south. In more ways than one. They will squeeze what they can get out of oil. By any means necessary.

    Comment by Benny "Boom, No Doom" Cole | September 22, 2009

  29. Pete S.Nuclear fission and fusion have both been proposed as a solution to our "energy crisis".What Energy ? Nuclear energy (thermal energy) used to do what ?………….Make electricity ———————————Electricity is vastly more important than any of the liquid fuels being endlessly discussed on R Squared.No Electricity ?No lights. No AC. No toaster, no microwave. No television. No radio. In some cases no hot water. Or no water at all because the water pumps are electric.No electricity ? Industrial processes grind to a halt and shut down, No arc welders – the factories shut down. No electricity for the electroc motors that keep production rolling.No juice for the microwave cell towers. Your cell-phone is useless. No way to conduct business, The Internet is shut down. No more on-line baaking. So long "Pay Pal"No R-Squared Energy Blog,No Ice Machines, No refrigeration. Complete melt-down at the grocery store — Food rotting by the tons.No street lights. No stop lights. Mo Police or Emergency communications of any kind. And you can't call the Emergency Room or Fire Department or Police after the looters break into your house and kill your wife and children..Having said that, let's resume our silly conversation about oil and the oil substitutes and how much money oil companies are or are not getting from the DOE.Define electricity whatever way you want to. It is of far more importance to our lifestyle than the any of the liquid fuels used for transportation ever thought about being.John

    Comment by Anonymous | September 22, 2009

  30. We need to put PeteS on a motor scooter for a winter of commuting in Buffalo, NY. He will be too busy surviving to have a a baseless opinion on how others should live. Here is the deal. There is no technical problem producing all the energy to allow the entire world population to enjoy an American standard of living which includes producing energy and food with insignificant environmental impact. There is nothing remarkable about Americans other than a government that can not dictate beliefs.

    Comment by Kit P | September 22, 2009

  31. @John: "Electricity is vastly more important than any of the liquid fuels being endlessly discussed on R Squared. Having said that, let's resume our silly conversation about oil and the oil substitutes and how much money oil companies are or are not getting from the DOE. Define electricity whatever way you want to. It is of far more importance to our lifestyle than the any of the liquid fuels used for transportation ever thought about being."You're slightly missing one point, John. You're not RUNNING OUT of electricity, or the means of making it. (By "you", I mean the US on the assumption that's where you are). You are, in all probability, running out of oil. If you could magically and instantly replace your oil consumption with electricity you would not be in any predicament. But you can't.(By the way, if the right flavour of Bussard fusion ever comes to fruition, you will be able to generate electricity directly from nuclear power, instead of indirectly using a coolant. That would make me as happy as it would you. But it's a long shot).

    Comment by PeteS | September 22, 2009

  32. "Look, if you were Putin, and your political life, and maybe even your life (no Russian leader has ever left power unless dead)depdned on higher oil prices, would you not game the NYMEX?"LOL Oh come on, we've had this conversation before. And if I were Obama, or the EU, or Japan, or any big net importer, I'd game the system right back at Putin. Not very convincing.I've read no evidence anywhere that sellers are always smarter than buyers. They certainly seem to be in a precarious negotiating position right now. Putin wasn't able to do much gaming late last year, and the Russians and OPEC weren't able to do any effective gaming from about 1981 until about 2004. There's been a futures market since 1983.Will read your ref a bit later on.

    Comment by armchair261 | September 22, 2009

  33. "We need to put PeteS on a motor scooter for a winter of commuting in Buffalo, NY. He will be too busy surviving to have a a baseless opinion on how others should live."LOL.Actually, I've been in Buffalo in the winter. Miserable place, alright. Ok, add a wraparound plastic fairing to the scooter. A 150mpg scooter engine still produces enough waste heat to warm the occupant.Here's another alternative: sit at home in the house you can't afford to heat in Buffalo, NY because you don't have the means to commute to a job.Btw, I have no view on how Americans should live, other than I wish for your sakes that your life is better than it's likely to be should you fail to transition to a more oil-efficient lifestyle in an appropriate timeframe. (Oh, and, should you act in time, things will be easier on me too … but think of that as a happy accident! 🙂"Here is the deal. There is no technical problem producing all the energy to allow the entire world population to enjoy an American standard of living which includes producing energy and food with insignificant environmental impact."So you say. But in any case, as I pointed out to John, energy is not the immediate issue. Oil is.

    Comment by PeteS | September 22, 2009

  34. "Or how about the third explanation — that you're flat out wrong about the lack of innovation"Fair enough, Pete. You have the floor. Tell us about all the innovations. Tell us about the Euro solutions to post-fossil transportation fuels that will leave us all gasping in awe. I'm serious — I would really like to hear about them.While you are putting that long, long list together, let me tell you a parable. Let's suppose we meet someday in a bar in Olde Dublin towne, and decide once we have had a few beers together that neither of us is really such a bad person after all. But regretably, we realize that we will both get old, and some day will be sitting there half-blind, lame, incontinent.Maybe it's the Guinness, but one of us suggests that since we are headed eventually into that decrepitude, we should get ready for it now by strapping on fogged up goggles, hitting our foot with a hammer, and wetting ourselves. The other proposes that, since we can see decrepitude in our future, we throw ourselves with all our present strength into medical research and try to remove the causes of blindness, lameness, incontinence before they lay us low.Which side of that argument would you like to take, Pete?

    Comment by Kinuachdrach | September 22, 2009

  35. So you say. But in any case, as I pointed out to John, energy is not the immediate issue. Oil is.———————————-We can do without "OIL"We cannot do without "electricity"Look, half of the U.S. ELECTRICAL energy consumption goes to electric motors (which drive most of various industrial processes) or your personal home comforts such s AC, refrigeration equipment. vent-a hoods, room fans, etc.Hi-Fi equipment, electric guitars and so on….Just give me a weeks worth of "motor fuel" or a week's worth of electricity.I'll take electricity every time……………I can walk. I can carpool, I can take the bus. I can't access r-squared energy blog without electricity.john

    Comment by Anonymous | September 22, 2009

  36. PeteSI understand you think we are running out of oil. Furthermore, I am not too concerned because oil is just one form of energy that can be used for transportation. The standard of living I was talking about is the freedom to live and work where one chooses. The fraction of family income needed for food and energy has never been smaller. Our houses and cars are more efficient so we can drive bigger cars farther to bigger houses. All using less energy. Funner how the Jarvox principle works.PeteS has the perception that a high standard of living is bad for the environment however the opposite is true. People who enjoy a high standard of living demand clean air and water. I also see no problem extending these benefits to all.

    Comment by Kit P | September 22, 2009

  37. Benny,I found this quote to be very revealing, from your Time article:"Around the same time, SemGroup, a large oil-distribution company, filed for bankruptcy after losing $2.4 billion on a short position that also dwarfed the supposed limit."It tells me that there's a lot of risk involved in playing the futures market. As opposed to being easy prey for speculators. Speculators who know they might lose billions aren't going to just rush in and play like they can't lose.Honestly, this has been batted around so much. The fact alone that there are so many different opinions from people far more clever than you or I tells me that it can't be a simple answer. Maybe speculators are responsible for something between 0 and 100% of price swings. It doesn't have to be an all or none deal. If there was unassailable evidence we'd have read it by now.

    Comment by armchair261 | September 22, 2009

  38. Lithium batteries are improviong at an eight percent annually compounded rate, according to industry buzz. Benny ~Of course, even the best LI-ion battery means nothing unless you have electricity to pump into it.

    Comment by Wendell Mercantile | September 22, 2009

  39. Kinuachdrach said: "Fair enough, Pete. You have the floor. Tell us about all the innovations. Tell us about the Euro solutions to post-fossil transportation fuels that will leave us all gasping in awe. I'm serious — I would really like to hear about them."Kit P said: "I understand you think we are running out of oil. Furthermore, I am not too concerned because oil is just one form of energy that can be used for transportation."Why, what a disagreeable pair you two are! Fortunately, your disagreements are nicely complementary. Kit P — yes, oil is just one form of energy, the one that happens to utterly dominate transportation uses today, and for the medium term future. The best way forward is to economise on its use until your other forms of energy take over. Kinuachdrach — the Euro innovations are not in post-fossil fuels but in the minimisation of fossil fuel use, hopefully giving more time to transition.Kinuachdrach said: "Let's suppose we meet someday in a bar in Olde Dublin towne, and decide once we have had a few beers together that neither of us is really such a bad person after all."Well, I'M fifty percent of the way there already. I've only YOUR credentials to examine. But I'm prepared to be gracious. That "Olde Dublin Towne" sounds suspiciously Englishy though. Let's make it na sean-áiteanna Bhaile Átha Cliath, agus tusa a ceannódh an deoch go léir 😉

    Comment by PeteS | September 22, 2009

  40. Oh, while I'm at it:"PeteS has the perception that a high standard of living is bad for the environment however the opposite is true."The only thing that's bad is whatever air YOU'RE breathing — it's making you hallucinate if you imagine I said anything remotely like the above.:-)

    Comment by PeteS | September 22, 2009

  41. We Need Our TrucksDo we really ?So that we can transport "grapes from Chile" unloaded at Long Beach or the Port of L.A. into "reefers" driven all the way across the U.S. so some Nymex rip-off, con-artist can have his daily grape fix in New York ? What are we going to do about oil ??How about doing something simple ….. like using "common sense ?John (former Teamster)

    Comment by Anonymous | September 22, 2009

  42. FED-EX steaks delivered over-night from Argentina. No wonder the "Third World" hates us.John

    Comment by Anonymous | September 22, 2009

  43. “Third World" hates us.”John, you are engaging in class warfare. RR wants me to be civil. In my experience, Americans are the most loved people in the world. I know that is not what journalist will tell you. The only place I traveled while in the navy where I was not treated as an honored guest was California. I had the same experience too when traveling with plenty of money. About 25% of people I work with are foreign nationals. Many are here fleeing repression. About 25% of my American coworkers have worked overseas. We did it because we enjoy different cultures not big cars or big houses. I have more than 20 years for large multinational companies. Our safety standards go with us. There is no technical barrier to improving the quality of life for the poorest. However, getting sick or shot makes it hard to finish an energy project. The reason countries of are ‘third world’ is because their repressive government keep them that way. South Korea is an example of a country without natural resources can go from dirt floors rural society to an industrial power in 50 years.

    Comment by Kit P | September 22, 2009

  44. "the Euro innovations are not in post-fossil fuels but in the minimisation of fossil fuel use, hopefully giving more time to transition."Yes, Pete — that is the impression I had gained: high gasoline taxes in Euroland have reduced the peons' use of gasoline, but without stimulating post-fossil alternatives. So the EU will hopefully have more time to transition, but has nothing to which to transition.That is a serious issue, worthy of deep consideration. The people in the US who promote high taxes on fossil fuels generally believe that those taxes will stimulate alternatives to fossils — but the Euro experience shows that has not happened. Why?If we take a side tour for a moment through low tax US, there are lots of hybrid vehicles on the road already — basically vehicles with small gasoline engines and lots of extra "stuff". There are valid questions about whether complex hybrid vehicles actually save energy over their entire life cycle including manufacturing, but no questions about where hybrid technology came from — Japan & the US, not the EU.Then there is omni-present ethanol as a fuel extender, which Rufus may have mentioned in passing in some post a long while ago. Again, there are questions about whether ethanol really saves on fossil fuels; but again, no suggestion that this alternative fuel technology came from Europe.Similarly with developing technologies such as Plug In Hybrids and Electric Vehicles — not from Europe.Even Compressed Natural Gas vehicles, which are hardly new technology and which use another fossil fuel anyway, have not had any push from Europe.Why the glaring lack of post-fossil transportation technology from high tax Europe? Why is more of it coming from low tax US?There used to be a guy (maybe his name was Coppard?) who stomped around a number of energy-related blogs pushing the theory that governments in places like Europe have become so addicted to high taxes on other people's oil that they desperately need the fossil fuel industries to continue. Eurogovs talk a good game about getting off fossil fuels, but then they make so little technological progress it almost looks like they are deliberately squashing post-fossil alternatives.The message here is the old one about the Law of Unintended Consequences — high gasoline taxes give high-taxing governments a strong incentive to maintain gasoline usage. And lo & behold, the supposedly prudent EU imports about as much oil as the supposedly profligate US.Bottom line, high gasoline taxes are demonstrably NOT the way to stimulate the growth of post-fossil transportation technologies.

    Comment by Kinuachdrach | September 23, 2009

  45. Electric Vehicles — not from EuropeI just noticed yesterday that Renault's electric car that Project Better Place is trying to get into countries all over the world, depends on battery technology from Nissan or NEC, not Europe.Guy Negre's air car seems to be in limbo all decade. But it is at least different.

    Comment by Clee | September 23, 2009

  46. Kinuach,Unfortunately, you (that is to say "Coppard?") have hit the nail on the head vis-a-vis tax revenues. The German government makes a LOT of money on those taxes and they suffer when consumption goes down. In addition, Germany's economy is very sensitive to car sales (domestic as well as exports) – think of Porshe, BMW, Mercedes, Audi, VW – that's lot of automobile manufacturing power for just one country. Finally, add in that it's perfectly legal for Germany's legislators to hold side jobs, which they nearly all do…quite often on the advisory boards of Automobile manufacturers, their suppliers, and utilities. The end result is that the government that can be proud of their (compared to the US) reasonably fuel-efficient cars but must overcome both potential revenue problems (macroeconomic as well as personal) AND political/economic retribution (layoffs cost votes) if they try to push the auto makers any faster than they want to be pushed. This was the reason for their version of "cash for clunkers".In the course of my job, I spent a significant amount of time looking for hybrid or electric cars (5-passenger) made in Germany or at least in Europe and available for purchase, NOT as auto trade show one-offs. There was nothing – ZERO. I was seriously ready to recommend buying aftermarket electo-car conversions on Ebay and importing them to Germany…from the USA.Interestingly, things are much different in power generation, where Germany pushes wind and solar (and other renewables) quite heavily. This has given Germany an impressive (and lucrative) leadership role in the export of clean power generation technology to other nations. (Now let's see if they can hold onto it in the face of price competition from the continuously improving Chinese.)I suspect that if/when the oil situation worsens dramatically and customers (domestic and abroad) are defecting to scooters in droves, German auto makers will surprise many with the speed at which they can introduce new hybrid and/or electo models, at least from a manufacturing standpoint. My worry is they will start just a tad too late and require (yet another) bail out to survive the transition.

    Comment by Brian | September 24, 2009


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