Solution to the Global Petroleum Crisis

Rising petroleum prices may plunge the world into a global recession. Here’s what to do about it.

In my view, financial speculators are largely responsible for the recent surge in the price of petroleum. Indeed, this is yet another case of “irrational exuberance”, similar to the previous technology and real estate bubbles. Of course, as in previous bubbles, financial speculators will provide many seemingly convincing arguments to rationalize their actions.

However, at the end of the day, we must recognize that petroleum has become an essential asset class for institutional investors. And, given the unabated growth of institutional capital from pension funds, insurance companies, university endowments and sovereign wealth funds, petroleum prices are likely to continue their upward trajectory.

So what can be done to stem the rise of petroleum and avert a global recession?

First, the U.S. in coordination with other major economies must create a new Petroleum Speculation Tax which would be levied on financial investors that buy and sell petroleum assets but do not take physical possession of petroleum. Previous proposals have largely called for a windfall tax on energy producers. However, energy producers do not set the price of petroleum; they are price takers. The price of petroleum is set by financial investors which trade in petroleum assets. Therefore, my proposal is likely to more directly influence the price of petroleum.

Second, emerging market economies (i.e. Brazil, Russia, India and China) must accelerate their efforts to substitute petroleum with alternative fuels. For example, Brazil and Pakistan have made significant progress in substituting petroleum with sugar-based ethanol and Compressed Natural Gas [CNG] respectively.

In particular, India, which is a major sugar producer along with Brazil, must accelerate the adoption of sugar-based ethanol. To that end, India must move towards mandatory blending of twenty-five percent ethanol with petroleum as against the current five percent. Moreover, India should also liberalize the import of ethanol from Brazil until domestic producers are able to meet demand for twenty-five percent blended ethanol. The advantages of substituting petroleum with ethanol are obvious. General inflation within India would moderate while sugar cane farmers would receive higher prices.

In short, the U.S. must curb excessive speculation in petroleum and India must accelerate the substitution of petroleum with ethanol to rein in surging petroleum prices and bolster the global economy.

Disclosure: None

Comments

[mangolfer]

He is right. Go to and read for yourselves:

hsgac.senate.gov/publi...

[Medici]

What? Brazil already substitutes its need for oil with sugar based ethanol, this article is loaded with inaccuracies and is wrong.

Everyone knows The cure to High Oil Prices is Higher Rates and Strong Dollar.

The real problem is how do you do that-

[BrianPursley]

www.bloomberg.com/apps...

"June 2 (Bloomberg) -- Hedge-fund managers and speculators reduced bets on higher oil prices by 80 percent since July as crude futures rose to records and U.S. regulators started investigating trading, government data show.

So-called speculative net long positions fell to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27 from a record 127,491 on July 31, according to a U.S. Commodity Futures Trading Commission report on May 30."

[MatthewGoldseth]

One more example of the Visions of the Anointed. Tax, tax, tax...We've seen this knee-jerk method of market interference a million times before...child-like punishment to change behavior (while confiscating the wealth of citizens)...good intentions, consequences be damned....as if the profit-motivated mind won't find another loophole or way to pass on this tax.

The ugly truth here is that high prices have been a blessing in disguise for many who constantly lament our dependence on fossil fuels. Whether from an environmental standpoint, a technological innovation standpoint or a foreign policy standpoint.....high prices have done far more to influence behavior and create alternatives than government taxation and "regulation" has ever done.

For the first time ever, Im watching people drive slower on I-95....people are car-pooling to work, inflating their tires, passing up the "Sunday Drive"....people are buying smaller, more fuel efficient cars. It will take time, but these effects will, over time, reduce the overall demand for petroleum in the US.

Contrary to the hand-wringing and the projection of one hobgoblin after another to scare us into bowing to their benevolence....we are and will continue to develop alternative energy sources that slowly, but surely, wean us off oil. Solar, nuclear, wind, hybrid, coal-to-gas, natural gas, and on and on.

200 years ago NYC was a filthy wretched mess with smoke, soot, horse piss&poop, dirty water, disease, etc. We relied almost completely on burning coal and wood for heat, cooking, power...
We've come a long way haven't we?

As the advance of technology makes these alternatives efficient and affordable and as our demand decelerates, the next generation or 2 may look back on us as a hysterical group of cry-babies overreacting to a short term challenge.

In the meantime, there's plenty of fossil fuels in this country which have been put off limits by regulatory obstacles. Americans are starting to hedge their well-intentioned environmental zeal with some practical compromise...and are moving in support of tapping those natural resources we've been so blessed with.

By the way...my darn grocery bill is more of a shock than my gas bill. And most of that inflationary shock is a direct result of this ethanol boondoggle...exactly the type of alternative energy good intentions which have created disastrous consequences for the world's food supply while putting further pressure on land, water and fertilizer resources.

I'd love to see some of the zealots back off and let technology and economics run their course to solve a problem. Stop tossing your monkey wrenches in there please.

Disclosure:
The only energy related companies I own are Chesapeake Energy and Navios Maritime.

[maximax]

"a new Petroleum Speculation Tax which would be levied on financial investors that buy and sell petroleum assets but do not take physical possession of petroleum" - another comment on this site straight from the economics textbook. I (also?) have a degree in econs and I like the subject despite its shortcomings, but you just cannot map out a solution to a market you don't understand, especially as the oil market is far far far from the textbook version of a market. Dude, bad news for you, the hedgers using the paper barrel market mostly don't want physical delivery (which I am sure you do know is in Cushing, Oklahoma), they just use the paper market to hedge with an instrument that is correlated in price to the physical market they trade in. But according to your proposal these hedgers would be taxed for hedging. And if you knew anything about oil beyond those politically motivated enquiries you would know better than to blame it all on speculators.

[john s.gordon]

petroleum speculation tax - your logic is irrefutable. remember the SE asia currency speculation that wiped everybody out about 10 yrs ago? that could have been prevented by international agreement on a cross-border money transfer tax but the speculators were not interested in having their money-sloshing capers limited in any way.
> jack

[Michael Levy]

10 Reasons Why Oil Price Speculation Requires a Change in the Rule of Law by Michael Levy

High oil prices that are governed by the commodity markets are in dire need of common sense law and order. When speculation and detrimental logic and reasoning take central command of human society, the results always turn out to be damaging to the majority, at the abundance of the few. The experts and speculators will argue we need free markets and any interference will take away free trade. Well, in many cases they are correct, however, when it comes to essential commodities of food and energy they are completely out of order. Here are a few reasons why essential commodity markets require new legislation.

1. There has been no shortage of gas at any filling station for the past 10 years yet prices are up 1200% because of futures trading going out more than eight years. Even the Saudi oil minister has recently stated the price of a barrel of oil should be no more than $70.00. Demand from China and India is still far less than that of the USA. The Chinese stock market is down 50% signifying a sharp slow down. This news still is not enough to stop the wild speculators hiking the oil prices.

2. When hurricanes hit Florida many gas stations are closed and there is a real shortage of gas for a few days. However, if a gas station increases its prices they will be prosecuted for price gauging. Therefore, if we take the experts argument that there is a shortage of oil then that still does not give anyone the right to profit from the shortage as this is deemed to be prices gauging. How can the USA governments have double standards and prosecute gas station owners who price gauge and not treat commodity markets in the same manner?

3. Oil is an essential commodity for every day living in the same way as water is an essential commodity. It makes no sense to trade water so why leave oil in the hands of anyone who wants to make a quick buck gambling on prices.

4. Pension and hedge fund managers have invested billions of dollars in oil futures. The futures markets are very volatile, thus, no place for pension funds to risk the money for people who trust them to build future wealth. The fiduciary duty of a pension fund manger is to find reasonable returns with low risk and the commodity markets is not that place.

5. If the price of oil was regulated between $40.00 - $80.00 a barrel, the price could go up and down on supply and demand. This would be fair to everyone, for even when supply was plentiful, the price would not drop below $40.00 which will still give a fair profit to most oil related industries. When oil is in short supply the price would be limited to a ceiling of $80.00 which is more acceptable to world economies.

6. There is a moral issue that greed cannot come before peoples basic needs ... No right-minded, ethical, principled government can allow starvation and financial ruin because of a system of trading that is completely out of control.

7. The price of a barrel of oil effects transport, food supply, industrial production and every part of modern day living. If terrorists wanted to devise a plan to destroy the world. economies what better way than finding a method to allow oil to trade at $140.00 a barrel. Why play a game that makes terrorists and anarchists happy.

8. Goodwill to all people is the credo every democratic country is built upon.$140.00 a barrel oil delivers no goodwill. It only brings hardship and political uneasiness.


9. Noble deeds and fair dealing is the hallmark of success for every truly prosperous person. Since the world is made-up from people, where are the noble deeds and fair dealing in the commodity pits.

10. We are all put on earth to help each other succeed in the pursuit of freedom, liberty and happiness. There is no freedom when people are slaves to greed. There are only liberty takers when oil trades over $80.00 a barrel. And finally financial hardship brings misery and discontent.

The time for change in essential commodity trading is now. To quote a few voices from the past...

“Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor”_Thomas Jefferson

“For greed all nature is too little.”_Seneca

“It is greed to do all the talking but not to want to listen at all” _ Democritus

“He who is greedy is always in want.” _Horace

[Seriously]

To Brian Pursley - Just because they reduced their visible positions does not mean that they are not still in the oil market. In fact it points to the funds actually wanting to pour more and more money into oil and other commodities. Please do your homework.

[WACG]

Nonsense. The blogger displays a lack of understanding. The largest cause for the oil price spike is The Fed trashing the value of the dollar with unnaturally low interest rates. The reason they are doing this is because of the latent (but growing) and serious effects of The Shrub's inability to halt the exploding Federal Deficit. As long as the dollar continues to be anemic oil prices will remain high for HOLDERS OF DOLLARS. Oil is priced in DOLLARS.

[Mmarrkk]

tax tax tax...do you people have any other page in your play book? tax this tax that. and what do we do with this tax? redistribute wealth I guess. fund more government programs? excuse me while I throw up. we need less tax, less government, fewer government programs. Aaarrrrgggghhhhhhhh. Cheap oil is not a God-given right. Buy a bicycle or a motorbike.

[BrianPursley]

Seriously: So when speculative net long positions fall you call that "speculation"... Please go purchase a dictionary.

[phinsuntanning]

petroleum speculation tax , the most funny thing I heard. Not in an alection year or in a republican administration. This is a year to get consumer money at any cost!

[kildonan]

Let see let's regulate the oil price at $40 - $80/bbl...
we'll take 1.5MMbopd off the market from the Canadian oil sands, and halt construction of another 2.0MMbopd of future oil sands production (2012 - 2014). I guess the offshore Brazil stuff is no longer economical, and we might as well forget about ANWR ever being explored/developed. And I guess the US government will subsidize the oil price to US consumers to the tune of $100 - $150/bbl for the next 10-years. Just guess the value of the USD then!

[SmallTrader]

A petrolium speculation tax is what one would expect from the Carter administration...Specu... in futures aren't the bad guys here...Most can't hold positions overnite because of the huge volatile swings that happen overnite let alone intraday...If you do a little research you will find that just a few years ago pension funds and the like weren't allowed to trade the futures markets... Now with the onset of index funds that track commodities they can jump on board, as can most other funds and individuals that were not previously allowed to trade futures...Look at the timing of the introduction of indexes to the rise in commodity prices....One final note...a speculation tax disregards the oil policy we have held on to for the past 20 years...Fact is, we have no friends when it comes to oil...We'd be better off being selfsufficient and then on our dime, switch to alternative fuels....Remember, the "Gas Guzzler" tax that we still pay did nothing to stem the acquisition of low mpg vehicles. During it's life, we saw a jump in buying towards big SUV's, sports cars, and AWD vehicles all which tend to burn more gas than usual.

[LiquidSoapDispenser]

Amen to Matthew Goldseth's comment!

[Makes Sense]

Don't you just love all the wanabe commissars of energy who find the answers to the discomfort of every market change emerging from the business end of a gun? Don't like a particular market result? Use force and make people's behavior conform to your personal vision of the good!

Some ideas are not merely economically false; they are morally contemptible.

[rb-freedom-for-all]

By committing to solar power like we did the space race, we could end our energy dependence on foreign oil and slash our greenhouse gas emissions. See the following article that appeared in Scientific American in December 2007 for a detailed discussion of what would be required and how it could be accomplished:

www.sciam.com/article....

[PeterSterling]

You can more easily fix the problem by rapidly increasing domestic oil and gas supplies; see www.strategicnine.com/...

[CLH]

A totally stupid way for the gov. to make things worse. Raju get a brain!!

[ritr54]

Why doesn't the U.S. agree to build and run nuclear power plants in countries around the world? Eventually China Japan or Russia will start doing it.

[nakedjaybird]

What a jerk! Have the emerging countries fix the energy demand problem? The US wastes more energy of many forms than these others use. The US has the means to use less than they demand, many times over. The US has the means to fix the problem. We aught to make it easy for the developing nations to develop. Get a grip. Another tax? Why not a better monetary betting practice?

[nakedjaybird]

Here's a new and best trading practice: First, NO LEVERAGE. Everything buck for buck. And delivery mandatory.

Margin @ 100%, period.

That would pretty much eliminate speculation.

[whiplash1]

SUPPLY & DEMAND.

LIMITED SUPPLY drives UP. Economics 101.

The financial markets speculate the price will go up because of the scarcity relative to demand. If there were an abundance of oil they would speculate lower prices and this is not happening.

I recommend everyone to STOP THE BREEDING, or at least reduce to ONE child per family. More people create increased demand.

India and other thirds world nations have exploding pollutions. The Catholic Church forbids any kind of contraception. Africa is out of control and is starving yet they have needs for more energy. We are going to self destruct. World population is increasing by more than 70 MILLION per year. In the USA, we are increasing by 3 to 4 million people. Uncontrolled immigration with their large families is to blame for this.

Alternative sources are not abundant in the USA… most likely because of our screwed congress which is controlled by BIG OIL which wants NO alternatives until every last drop of oil is sold.

If you want to help reduce the price of oil…..buy less, use less and breed less.

The consequences will be grave. We are seeing the beginnings of it now.

[whiplash1]

Peter Sterling

Peter,

Get a grip. "You can more easily fix the problem by rapidly increasing domestic oil and gas supplies"

It takes several years to get oil from the ground and into our automobiles. There is no quick way. Best is to conserve by driving less and using smaller and more economical cars. Also… work on alternative energy ...solar wind geothermal and so on.

If you slow down to about 5 MPH you will save about 15% to 20% on gas. At $4.00 per gallon, this could mean a savings of 60 to 80 cents per gallon.

[UraniumDigger]

No tax!
We need an energy "Manhattan-projec...
We need uranium instead of coal (once the plant is built, it"s clean & cheap).
Forget ethanol.
Maintain a strong dollar.

By the way Smalltrader, Carter recommended double-hulled ships and , of course, it got shot down. We now have double-hulled ships.
Carter had solar-collectors installed on part of the White House, Reagan had them removed.

[User 127919]

why people lie about gas . let say George soro said that we got a bubble in gas and oil but he is a currency trader . get out of gas and oil now. there is to much lies in t he iol and gas business

[galewhitaker]

Here is a message for all you drillers. When an oil company buys a lease and pumps oil out of the ground the oil does not belong to America or Americans! It belongs to the oil company that pumped it. The oil company will sell the oil to the highest bidder and it probably will be Japan not an American refinery. There is no way to force oil companies to sell the oil to an American refinery at any price. For you guys that like ANWAR, any oil that is found there will be shipped southward in the Alaska pipe line. The Alaska pipe line is limited to 1.4 million barrels/day. 1.4 is four tenths of one percent of the 86 million barrels of oil that are currently burned by world consumers. This extra oil will make no difference to the price at the pump.

We have passed peak oil. Oil is a declining resource and will increase in price for the rest of time, just like gold.

Do you traders realize that the latest "rally" was engineered by Bernanke shooting the system full of funny money? Big Ben can't control the price of oil. This market is going to crash no matter what he does.

[MichaelfromBrooklyn]

A response to Matthew Goldseth - I enjoyed your post, and agree that the price of oil has done more to change behavior, model mix at the OEMs, etc than government regulation has. However, I don't agree that your grocery bill is higher primarily due to biofuels. It is certainly a factor - according to the FAO 10% of the increase can be attributed to biofuels (www.ft.com/cms/s/0/82e...). More of the increase is due to higher energy prices (producing food, especially animal products, is very energy intensive) weather events, and increasing demand in China. This said, I'm all for government to stop subsidizing corn-based ethanol, allow Brazilian ethanol in, etc.

[shure46]

while it is true the speculation has an affect on the price of petroleum , it is not the major cause of commodities rising ....simply put , there are too many people on this planet scrambling for too few resources ....THAT is the elephant in the room , and it is NOT going away ....the solution to all of our problems is , " all of the above " ......there is no single solution , we must apply ALL solutions ....alternative energies , drill more wells , try to conserve energy when we can , drive more fuel efficient vehicles , reign in oil speculations , our government needs to be fiscally responsible and stop blowing billions of dollars on pork crap non-sense like going to mars for a bag of rocks and a few desert landscape photos ....AND , numero uno , every person on this planet needs to understand it is time to slow down having babies .....I do NOT want draconian measures implemented , but I would like someone to start discussing the issue of overpopulation , and inform the people of the world to wear a frickin' rubber now and then ......if you think things are bad now , just wait until the population hits 10 billion !!!!!! You ain't seen nothin' yet ........and there is NOT an infinite supply of oil ....THAT is the crux of the matter , plain and simple .......

[jjason]

Margin at 100% and make delivery mandatory. Congress can do this now. Then watch prices for all commodities fall.

Read the Masters report ( see comment number one ) and read what Phil Davis, William Eichler, and Anthony Schneider have to say on the role of speculators. All three have written articles on SeekingAlpha.

Also go to:

www.star-telegram.com/...

and then send a letter to your members of Congress to fix the problem.

[mangolfer]

I don't write this, just "cut and paste". But I still think the speculator is the biggest part of the problem!

Independent experts agree that excessive speculation is elevating oil prices:

Akira Yanagisawa, Senior Economist at Japan's Energy Data and Modeling Center: "In the most recent terms (the third and fourth quarter in 2007), the fundamental prices [of oil] are estimated around 50 to 60 dollars. On the other hand, it is estimated the premium has risen up to around 40 dollars at maximum." [Institute of Energy Economics, 3/08, eneken.ieej.or.jp/en/d..., p. 13]

Michelle Foss, Center of Energy Economics at University of Texas: "[G]iven that inventories of crude and products are healthy in many locations and that the very real risk of supply disruptions has so far been avoided, the remaining factor left to balance the price per barrel is speculation. The role of speculation in oil markets has been widely debated but could add upwards of $20 to the price per barrel." [Oxford Institute for Energy Studies Working Paper, 2/07, www.oxfordenergy.org/p..., p. 34].

Larry Chorn, Chief Economist of Platts: "says the actual costs incurred in producing the most expensive oil is only around $70 or $80 a barrel, meaning that about $50 of the current price represents 'the market's risk premium plus speculation.'" [BusinessWeek, 5/13/08, www.businessweek.com/b.../ db20080513_734146_page...

Senate Permanent Subcommittee on Investigations: "Several analysts have estimated that speculative purchases of oil futures have added as much as $20-$25 per barrel to the current price of crude oil, thereby pushing up the price of oil from $50 to approximately $70 per barrel." [Staff Report, 6/06, levin.senate.gov/newsr.../ 2006/ PSI.gasandoilspec.0626...

Clarence Cazalot Jr., CEO, Marathon Oil: "$100 oil isn't justified by the physical demand in the market - it has to be speculation on the futures market that is fueling this." [CNNMoney, 11/12/07, money.cnn.com/2007/11/...? postversion=2007111216...

J. Stephen Simon, Executive Vice President, Exxon-Mobil: the price of oil should be $50 to $55 per barrel based on supply and demand fundamentals. [House Testimony, 4/1/08, globalwarming.house.go...].

John Hofmeister, President, Shell Oil Co: The proper range of crude oil is "somewhere between $35 and $65 a barrel." [Financial Post, 5/22/08, www.financialpost.com/...].

Gerry Ramm, Senior Executive, Inland Oil Company: "Excessive speculation on energy trading facilities is the fuel that is driving this runaway train in crude oil prices." [Senate Testimony, commerce.senate.gov/ public/_files/RammSena...

[nakedjaybird]

Would NO LEVERAGE, MANDATORY DELIVERY AND 100% MARGINS prevented the:

- housing fiasco,
- subprime whatever,
- Wall Street bubbles,
- energy wheeling (can't remember the buzz word),
- savings and loan failures,
- and most "financial" excesses,
- including credit crunches??

Who regulates this stuff???? The real question is "who does not regulate this stuff??". Well, maybe the first question was correct!!!

[shure46]

In a way high prices can be considered somewhat of a "blessing" , because people are too selfish to voluntarily conserve energy unless it hits our pocketbooks ( I am including myself here ) ....BUT , there is a point at which a threshold is reached , and high energy prices cease to be beneficial , and end up collapsing our economy .....5 bucks a gallon and we are in deep crap .....very deep crap .....depression deep crap .....4 bucks a gallon is killing me right now , and 5 ??????? NOT GOOD .......Things will seriously begin to crash at 5 bucks ......starting with bankruptcies and store closings ....people will simply have no spare change to spend on much else besides food and energy ....BUT the upside is that all you soccer moms driving a frickin' hummer might sell that pile of crap and get something a little less thirsty ....it erks me to see some yuppie driving a damn hummer ....and alone in the vehicle at that !!!!!! Ya think you're in the army or somethin' ????????? 6 miles to the gallon ?????? good grief ....do you have any idea how serious this damn energy situation is ??????? We live in a different world now , and selfish extravagance is not a status symbol anymore ....it is a BS ego trip that is fine and dandy in a world with 4 billion people , but with 6.5 billion and rising ?????? You ain't seen nothin' yet .....watch what happens when the population hits 10 billion , and China and India start guzzling energy like we do ....total disaster , and it WILL come ....mark my words .......all the alternative energy solutions in the world will do nothing when the population/consumption increases and absorbs any gains made .......zip , nada


On Jun 26 08:27 AM Matthew Goldseth wrote:

> One more example of the Visions of the Anointed. Tax, tax, tax...We've
> seen this knee-jerk method of market interference a million times
> before...child-like punishment to change behavior (while confiscating
> the wealth of citizens)...good intentions, consequences be damned....as
> if the profit-motivated mind won't find another loophole or way to
> pass on this tax.
>
> The ugly truth here is that high prices have been a blessing in disguise
> for many who constantly lament our dependence on fossil fuels. Whether
> from an environmental standpoint, a technological innovation standpoint
> or a foreign policy standpoint.....high prices have done far more
> to influence behavior and create alternatives than government taxation
> and "regulation" has ever done.
>
> For the first time ever, Im watching people drive slower on I-95....people
> are car-pooling to work, inflating their tires, passing up the "Sunday
> Drive"....people are buying smaller, more fuel efficient cars. It
> will take time, but these effects will, over time, reduce the overall
> demand for petroleum in the US.
>
> Contrary to the hand-wringing and the projection of one hobgoblin
> after another to scare us into bowing to their benevolence....we
> are and will continue to develop alternative energy sources that
> slowly, but surely, wean us off oil. Solar, nuclear, wind, hybrid,
> coal-to-gas, natural gas, and on and on.
>
> 200 years ago NYC was a filthy wretched mess with smoke, soot, horse
> piss&poop, dirty water, disease, etc. We relied almost completely
> on burning coal and wood for heat, cooking, power...
> We've come a long way haven't we?
>
> As the advance of technology makes these alternatives efficient and
> affordable and as our demand decelerates, the next generation or
> 2 may look back on us as a hysterical group of cry-babies overreacting
> to a short term challenge.
>
> In the meantime, there's plenty of fossil fuels in this country which
> have been put off limits by regulatory obstacles. Americans are starting
> to hedge their well-intentioned environmental zeal with some practical
> compromise...and are moving in support of tapping those natural resources
> we've been so blessed with.
>
> By the way...my darn grocery bill is more of a shock than my gas
> bill. And most of that inflationary shock is a direct result of this
> ethanol boondoggle...exactly the type of alternative energy good
> intentions which have created disastrous consequences for the world's
> food supply while putting further pressure on land, water and fertilizer
> resources.
>
> I'd love to see some of the zealots back off and let technology and
> economics run their course to solve a problem. Stop tossing your
> monkey wrenches in there please.
>
> Disclosure:
> The only energy related companies I own are Chesapeake Energy and
> Navios Maritime.

[whiplash1]

Hurray!!!
Somebody finally comes out with the real reason for our world problems.

Simple economics 101.... supply and demand. Too much demand for limited or finite supply will spell big trouble, especially when it comes to energy, water and food and commodities.

STOP THE BREEDING, folks, or we will suffer..BIG TIME.


On Jun 27 11:31 AM shure46 wrote:

> In a way high prices can be considered somewhat of a "blessing" ,
> because people are too selfish to voluntarily conserve energy unless
> it hits our pocketbooks ( I am including myself here ) ....BUT ,
> there is a point at which a threshold is reached , and high energy
> prices cease to be beneficial , and end up collapsing our economy
> .....5 bucks a gallon and we are in deep crap .....very deep crap
> .....depression deep crap .....4 bucks a gallon is killing me right
> now , and 5 ??????? NOT GOOD .......Things will seriously begin to
> crash at 5 bucks ......starting with bankruptcies and store closings
> ....people will simply have no spare change to spend on much else
> besides food and energy ....BUT the upside is that all you soccer
> moms driving a frickin' hummer might sell that pile of crap and get
> something a little less thirsty ....it erks me to see some yuppie
> driving a damn hummer ....and alone in the vehicle at that !!!!!!
> Ya think you're in the army or somethin' ????????? 6 miles to the
> gallon ?????? good grief ....do you have any idea how serious this
> damn energy situation is ??????? We live in a different world now
> , and selfish extravagance is not a status symbol anymore ....it
> is a BS ego trip that is fine and dandy in a world with 4 billion
> people , but with 6.5 billion and rising ?????? You ain't seen nothin'
> yet .....watch what happens when the population hits 10 billion ,
> and China and India start guzzling energy like we do ....total disaster
> , and it WILL come ....mark my words .......all the alternative energy
> solutions in the world will do nothing when the population/consumption
> increases and absorbs any gains made .......zip , nada

[ALMIR]

Sir,

I will take this opportunity to add some useful words about bio-fuels.

As rising food prices continue to threaten food security around the world, Brazilian ethanol is one obvious solution being largely ignored. Brazil set up its efficient fuel alternative program in the 70s, when the first oil crisis hit the world. Now Brazilians drive cars moved by ethanol or gasoline mixed in any proportion. And since long ago gasoline in Brazil is not pure, but blended with 25% ethanol, resulting that internal consumption of ethanol in the country is already superior to gasoline's. Ethanol in Brazil is already much cheaper than gasoline at current international oil prices.

Brazilian ethanol is produced from sugarcane without any governmental subsidies and the fuel has a very competitive price. Researchers are increasing the productivity (more fuel extracted per sq.km. of crops) by adapting sugar canes species to each type of land and topography. The productivity now is more than 3 times the records of 30 years ago and it keeps on raising, being expected to soar very soon when the technology to extract ethanol from cellulosic materials (crop waste) will be available for large scale production.

Ethanol production in Brazil uses just one percent of total arable land, and the country can expand its sugarcane fields without disturbing sensitive land areas (like Amazon), just by tapping land such as depleted pastures. Just raising intensity of cattle production from the current 0.8 animals per hectare to 1.2 animals (a target already far exceeded in many parts of the country) would release about 80m hectares of land for crops. There remains plenty of room for expansion: the country has 355 million hectares of farmable land, of which 7 million hectares under sugarcane of which the amount used to make ethanol fills 3.4 million hectares (compared to 200m hectares of pasture). Another 105.8 million hectares remained available, which allows Brazil to increase ethanol production without affecting the environment or food. By comparison, the additional terrain for Brazilian crops could surpass all of the land now under cultivation in the European Union.

Meanwhile, Brazilian food production has doubled in the past decade and that’s the most impressive thing about ethanol from sugarcane: in contrast to corn-based American ethanol or biodiesel derived from soybean oil, there is no cost pressure and no competition with food.

Another persuasive fact for incentiving ethanol production in Brazil is the electric energy that is generated as a by-product of ethanol processing: taking into consideration the energetic balance, the electricity generated in sugar cane processing in Brazil is almost as large as its ethanol equivalence. It's like a two large scale hydroelectric plants generating electricity exactly when it's more necessary: in the Brazilian dry season! So the producers of ethanol are also having increasing revenues by selling electricity to the country's national electric system, which has become an strategic and reliable source of electricity. For all these reasons, ethanol in Brazil is a win-win game for the country, the farmers, the consumers and the environment.

Off course Brazilian ethanol does not intend to concur with petroleum, but it could ease up current oil crisis by supplying a small part of the world energy demand. It is only necessary to look at the increasing demand from the non-oil countries like India and China to understand that the very high price of oil is here to stay. With the existing price of oil, the permanent threat of war in the Middle East, the international geopolitics, and the environmental problems, there seems to be no other easy solution for the energy problem away from the liquid ethanol produced out of sugarcane. This is certainly a very important aspect of the Brazilian economy for the next few years and the rest of the world will have to accept the reality of the liquid ethanol from sugarcane as the right and best solution for the oil crisis.

The problem is that much of Brazil’s ethanol exports continues to face prohibitive tariffs and other barriers to developed markets in the US and Europe. The United States currently places a 54-cent-a-gallon tariff on ethanol imported from Brazil. Consumers in the country are being severely affected, particularly in areas such as the Southeast, where corn does not exist and the logistics to bring ethanol from the center of the country is practically impossible. It is difficult to understand the maintenance these tariff levels, except for political reasons. The developed world appears purposely myopic in relation to the opportunities Brazil presents, maybe it's because that would upset wealthy US and European farmers – a price apparently not worth paying.

Almir R. Américo – Sao Paulo, Brazil ([e-mail]...

[shure46]

thanks whip , and I feel the same way ....glad to see another person that understands the very huge problem of too many damn people scrambling for too few resources ....and yet the politicians still yell for MORE GROWTH !!!!!!! ( translation ) MORE PEOPLE !!!!!!!!!! Too have " more growth " , you have to have " more people " .....this is pyramid scheme economics .......finally , one day , the pyramid ALWAYS collapses .......Just about EVERY problem we face can be traced back to overpopulation ......pick a topic , energy , food , water , commodities , ALL a direct result of supply and demand problems .......I am going to make a prediction ......soon , you will go to walmart , and there will be 100 people fighting over 20 loaves of bread that cost 5 bucks each ......watch and see , I have already noticed some items wiped out when I grocery shop ......it didn't used to be that way .......and have you ever noticed the HUGE pallets that are brought out EVERY night to keep those shelves stocked ??????? The hundreds of people that run over you shopping ?????? The future is going to be very different than we have grown up with ......ALL the problems we have seen in other countries , will be here one day ......simple equation , less farmland x more mouths to feed = trouble ........I live near dallas , tx .....and I have watched thousands of acres of prime farmland turned into sub-divisions .......that has always been scary to watch , and now the earth is demanding payment for all we have reaped .......we are pissing off a very formidable opponent ......and yes , I DO hope people will voluntarily have less kids , or else the government will step in ( after it is too late of course ) and impliment draconian measures ......WE the people can solve our own problems with a little attitude change , and by realizing that WE as individuals DO make a difference , either bad , or good .....our choice .......as a disclosure , I have 1 kid , and I would consider 1 more , but definately stop at 2 , and this having 4 or more kids is nuts ......If the population hits 10 billion , we are in severe deep crap big time ...ALL OF US

[shure46]

Almir 6-28 , 12:52 PM post - Yes , my friend , alternative energy sources help , and the solution to our problems is " ALL OF THE ABOVE " , NOT this or that .......I find it incredible that our politicians argue about WHICH solution will work , when it will take ALL solutions , INCLUDING slowing down the population explosion .......for instance , suppose we cut consumption in half ( hightly unlikely and I am being very generous here ) ok , consumption gets cut in half ......in 25 years we have twice as many people consuming ....net gain = ZIP , NADA , ZILCH ......back to square one .....unless we get this population explosion under control , the results will be the same ......very very high prices and shortages for the rest of our lives ......but yes , we need to impliment anything to help ease the situation NOW ......diversity , drill more wells , develope nuclear ( however there is a huge disposal problem of DEADLY nuclear waste ) solar , wind , bio , conservation , sell the frickin' hummers , voluntarily stop having so many kids , think before we consume , raise the thermostat a few degrees ....ALL OF THE ABOVE NEEDED NOW .......and we can stop blowing billions of dollars going to mars for a bag of dirt and desert photos ........we have dirt and desert here !!!!!!! how about spending billions of dollars for desalinization plants so we can pipe water to death valley and grow crops ???? Beats wasting our money on mars ...THERE'S NO OXYGEN ON MARS !!!!!! We will NEVER live there ......It's fantasy BS to get tax money funnelled to NASA ....LOTS OF MONEY for nothing

[shure46]

As a side note , the world consumes 85 million barrels of oil PER DAY NOW , China and India have only just begun to consume mass quantities like we do here in the USA .......together , they have 5 times our population .......FIVE TIMES !!!!!!! This is serious shit , believe me ........

[owais]

WOW, Whip & Shure! Finally some sense!! I agree completely that any workable solution will necessarily require reduction in population and consumption. For a (much much) longer discussion on this topic, you may want to read an old post...

fakirana.blogspot.com/...

...and BTW, we (as in China and India populations together) are not 5 times yours (as in the USA). We are 8.08 times yours! So, the [Comment edited for abusive language. Commenter put on watch.] got 62% more serious just this moment...

[shure46]

owasis , wow !!! I was trying to be conservative with my 5 times population so as not too exaggerate , BUT I was WAY OFF !!!!!!!! and yes the situation just got 62% more serious ....it is very serious , and it absolutely amazes me to hear this constant echo of " we need growth " from our politicians , and we almost NEVER hear one word about this population explosion ......incredible ....talk about the elephant in the room !!!!!! And ALL I ask is that we start to talk about it , and people VOLUNTARILY consider before having too many kids ......I DO NOT want to see the government react after it is too late and start passing draconian laws .....we the people have to act first , because when the government acts , it usually over-reacts , and passes a bullshit law to make money off of our " crimes " .......first the government incites fear , and then they pass a draconian law , and then they simply label more people as criminals in order to take their money or property .....that's why we the people need to get sensible here , or the government will do it for us ........BUT I would like to see the U.N. have a major meeting on overpopulation , and simply inform the world it is time to slow down having babies , also the catholic church needs to stop calling contraception a sin ....it is NOT a sin !!!!!!

[shure46]

THE WORLD , is full of lies .......and greed , and selfishness .......THAT , is the problem reduced to the lowest common denominator


On Jun 26 02:30 PM User 127919 wrote:

> why people lie about gas . let say George soro said that we got a
> bubble in gas and oil but he is a currency trader . get out of gas
> and oil now. there is to much lies in t he iol and gas business

[shure46]

has anyone seen that arab prince's mercedes , that is completely covered with diamonds ???? a picture is definately worth a thousand words ....and my words to that prince are " FU FU FU FU " x 1000 ......

[owais]

Well, yes, Shure, I completely agree with you- it is much better for us to voluntarily correct our course, then have someone else do it for us...

Which reminds me... :-) ...nothing to do with the discussion string... but funny that I have been put on watch for merely repeating a word from the previous comment! I guess it is not just the govt that can correct one's course forcibly!!

(Dear Corrector-of-my-mistak... heart-felt apologies for using the s-word. I beg your forgiveness. May you, in your divine kindness forgive me).

[shure46]

I am new here , so I don't really know the rules , but it does appear we are supposed to suppress our need to cuss !!!!!! seems like a fair idea , but i must admit it is hard to stay civil when discussing many of these topics ......my personal frustration with the injustices of the world , gnaw at my gut , with devilish precision ....and a few cuss words slip out now and then ......very difficult to express some things without a good ole slanger once or twice in a sentence ......I do hope the thought police here take that into consideration , and I do support the concept of civility when at all possible ......now and then , a little slack is needed , for the topics are heavy , emotionally charged , and the stakes are high ....

[bradp]

Arent there already regulations in place limiting the number of children Chinese citizens are allows to have? I could have sworn I watched something where a mother and father in China were contemplating having their second baby in Canada to avoid a "2nd child fine" of somewhere in the neighborhood of $75,000.

Anyway, lots of people in this world and it seems likely that politics over resources will degrade into conflict over resources in some cases.

[Goldilocks]

Hello All ! Was wondering when the subject of overpopulation would ever crop up...sure hope this isn't the last we hear of it ! Good lookin'out Whiplash1 & Shure46 ! Where are all our leaders on this one ?