TonyT

Crude Reality: Big Oil's Purposely Restricting Supply

For those really interested in this issue, listen to this episode of NPR Science Friday... a great summary!

"Exploring Realities Of Offshore Oil Drilling"
www.npr.org/templates/...

Crude Reality: Big Oil's Purposely Restricting Supply

longoil - thank you for response. I wish my late night rant that started this thread was as articulated was well as the comments you've just made.

Breadnight - I personal think time will show that the answer to energy storage in our personal transportation will be battery storage (lithium batteries being the most efficient, as proved by tesla motors) charged off the grid. Your land cruiser and my jeep cherokee will eventually be replaced in time by more efficient electric models.

mekats - since oil has a low elasticity, constricting the supply won't necessarily result in lowering the demand.

DonaldRay - your criticism is well taken. I apologize for presenting the oil corporations as the root of the problem. My main point here was simply that offshore drilling won't significantly affect prices and it's time to start investing heavily in alternative technologies.

paulk8756 - Call me an idiot if that makes you feel better, but I'm a computer programmer who graduated at the top of his class (3.98 GPA). Part of the reason for the partisan tone of the original post was to provoke a heated response. Looking at the number of comments here compared to the rest of seeking alpha’s postings, it seems like that goal was reached. ...and thanks for your support of picken's plan!

nakedjaybird - couldn't agree with you more. you kick ass!

jhm47 - point taken. In regard to solar, the grid is most strained when the sun shines, so that works pretty nicely as long as it's not the majority of electricity production. Hydro can do a good job at balancing outing when wind/solar production is low, since the dam gates can be opened at night or when more output is needed. And I fully support nuclear.

paultaut - wind is pretty profitable here in the northwest, and it's estimated to quadruple in the next few years. Why wouldn't this also be true elsewhere? In regard to your "WE do not spend anything on Foreign Oil", I'm not arguing here, just curious: Is all the oil imported to the U.S. refined once it gets here, and none of it refined internationally?

BlueTea - Interesting. …and once again, I apologize to the oil drillers for insinuating that they were the root of the problem. America’s success is largely attributable to their contributions.

surgcare - we don't have to shift 100% straight-away. Oil is going to be part of the energy mix for a long time.

Crude Reality: Big Oil's Purposely Restricting Supply

From good summary of about price elasticity (www.energybulletin.net...)

"
* If production is elastic, we assume that if the price of a product goes up, or if a shortage of the product develops, then competitors are able to add new capacity to increase the availability of that product. Higher prices and/or shortages encourage suppliers to invest in additional plant, equipment, materials, and labor in order to increase sales and profits. Economists generally believe that when this new capacity comes on-line, a surplus of product will eventually develop, and the resulting competition for business will force suppliers to reduce their prices in order to sell more products.

* If production is inelastic, then higher prices and/or shortages do NOT bring forth new capacity because suppliers are unwilling, or unable, to increase production.

* If demand is elastic, it simply means that consumers will buy more of a product when the price comes down. They will buy less when the price goes up. Yes. There are other reasons why consumers increase or decrease consumption, but price is a fundamental driver of demand.

* If demand is inelastic, changes in price initially do very little to change consumer buying habits. Lower prices do not encourage much more consumption. On the other hand, consumers are willing to pay higher prices (up to a point) to keep on buying what they need. As prices continue to increase, however, consumers will begin to purchase cheaper substitute products, and/or will seek to change their lifestyle, because they can no longer afford the product. Although low income consumers are usually the most vulnerable to these realities, middle income consumers are seldom far behind."

Crude Reality: Big Oil's Purposely Restricting Supply

Scrooge - I totally agree with you about nuclear. Do you see there being any potential in wind, as proposed by oil man T. Boone Pickens?
www.pickensplan.com/

Crude Reality: Big Oil's Purposely Restricting Supply

rich311 - When companies wants to set prices, they want to find the sweet spot that maximizes prices. In terms of gas, it has a low price elasticity, meaning that they can increase the price without a significant decrease in demand (people still need to drive to work).
en.wikipedia.org/wiki/...

Crude Reality: Big Oil's Purposely Restricting Supply

Wow, I provoked a lot of people here. Thank you for those who took the time to give an intelligent response even if you disagreed with my position (longoil, bobby 1). Scrooge, I was born in NZ, and still have family there, and have never heard or experience complaints about blackouts.

Please, if you're going to comment, can you at least answer me these questions:

According to this study by BP, the U.S. only controls 2% of the remaining oil:
gcaptain.com/maritime/...

If we pumped all of that tomorrow how much would it really increase global supply? Could we keep up with increasing demand? Would it really drive down prices if that is all we have left to offer? How much of that would go to the U.S. market, verses being shipped overseas, since the U.S. seems to be anti-protectionist?

educate me.

The Debt Bubble: What's Bernanke To Do?

Not so silly if you're not an ideologue. Government programs are wasteful, but they provide jobs and are a portion of total economic spending. And unlike consumer spending, government spending doesn't automatically decrease during a recession, which has the effect of making the market less volatile.

Look at how the economy historically responds to war spending. Everytime we go to war, the economy gets a kick in the pants. Look at how government contractors like Halliburton have boomed since the Iraq conflict. If we abruptly stopped the war and cut that spending, it would have a big effect on the economy, starting with the stocks of military contractors. We need to cut government spending to fix the debt problem, but it's completely foolish to not to acknowledge that this would have some effect on the economy.