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Sunday, September 25, 2005

It Boggles the Mind

With oil prices rising higher and higher, I can't believe in the vast majority of the mainstream press articles that I've read, and the comments from individuals is the steadfast belief that oil prices will eventually come down. They will not come down over the longterm because there is no more oil left in the world for them to use. I think a lot of people who have superficially read about "Peak Oil" are unable to really understand what it means. It means there is no going back EVER. We are NEVER going to have the enormous SUV usage in the US that we had even a year ago. The only way SUVs will come back is if a replacement fuel source is found that is abundant and as efficient or more efficient than petrol. None exists.

Reading statements from executives in the auto industry, pundits in the same industry, one finds absolutely no mention of the causes behind these prices. The hurricane is not the sole cause of oil prices: oil was going up before they struck. Middle East production is not the source of the problem: the Arabs are pumping more oil than ever. Logic tells us that the only possible explanation for higher oil prices is that there simply is not enough oil for everyone. Yes there are other factors that play into the price, but for all these factors to work in tandem would require the root of the problem to be a simple lack of oil. If refining capability was the SOLE issue, then the Middle East could build more refineries where there is little no pollution control. If hurricanes were the SOLE cause of this price hike, then why were prices skyrocketing before they struck?

I listened to a podcast of Bob Lutz talking about people's need for SUVs. 99.9 percent of people in America have absolutely zero need for SUVs. The very acronym SUV is a lie. Frequently these vehicles have no utility whatsoever. Their trunk space is inadequate and commonly less than a car's. Their handling is atrocious. Their safety is negligible. Their pollution is pallatable. Their need is questionable. I cannot think of one use of SUVs that cannot be adequately performed by some other mode of vehicle. A pickup can perform all the functions of an SUV with more loading capacity, and towing capacity. With pickups now all having extended cabs for additional passengers, the "utility" of an SUV is a joke.

Some might say that the SUV is necessary because it roughly approximates the abilities of a pickup and gives the passenger more comfort than a pickup. The vast majority of people who use pickups for regular towing and carrying are businesses. I have never in my life seen a full size SUV being used by a business where they could purchase a cheaper and better pickup. The only segment of society that requires "comfort" while towing large things, is the suburban male, who will tow his boat twice a year at most and will want the additional comfort of an SUV, probably to compensate for his wide girth.

Americans and even Europeans need to understand a couple things. One, societies in history never consistently get wealthier and wealthier. There is always at some point a fallback. The Great Depression is a distant memory for most but it was a decade long event that was less than 100 years ago. It could very well return in an oil crisis. America was much harder hit by the Depression than Europe. Peak Oil will hit the US much harder than Europe as well. There are many similarities.

The other thing that the West must understand is that for added comfort in their lives, often others must suffer. In order for people to travel quickly to their jobs and live in distant communities away from inner city blight, we have allowed our bodies to inhale millions of tons of pollutants every day around the globe. Thousands and thousands of people die of lung cancer and associated breathing disorders caused by pollution every year. The very weather is changed from the exhaust from tailpipes of cars. Whole forests are levelled to make way for roads. Cars themselves kill millions across the globe every year simply by crashing into each other and running over people. For our endless quest for "comfort" we have taken enormous casualities that aren't always obvious to society. A war can easily be seen as causing problems because the damage is so direct from the impact. But the damage caused vehicles, a damage I think that is unfortunately necessary to some extent, is so indirect that it is often ignored. We ignore it at our own peril.

Comments:
Quite a rant you have going. Too bad it has no basis in reality.

Oil prices will never come down? Your argument being that it is a non-renewing resource? Why then is the price of oil, on an inflation adjusted basis less now than it was in the 70's? Was oil a renewable resource then? I think not.

SUV's have no utility? My guess is you are single and childless. For those with families, it is amazing the utility we find in these vehicles. Pick up trucks do not offer more utility of the type we seek. Oh, and by the way, check the fuel usage of a typical 1/2 ton, 3/4 ton or 1 ton pickup. Greater fuel economy? Sorry, not an educated argument on your part. I think what you are saying is you find no utility for your lifestyle, so, please, feel free to buy whatever you want.

As to the amount of pollutants the SUV's sold today send into the air we breath - my guess is you drive an older vehicle, and as an older vehicle, no matter how small, it is sending far more pollutants in to the air than my brand new SUV.


You link the great depression and energy together - do you have any idea what caused the great depression? It was a liquidity issue - it had nothing, repeat nothing to do with the availability of energy or the cost of energy. Please help me understand how energy availability or the cost of energy would have anything to do with another depression. Please speak to specifics, not generalities.

You say the economy is a zero sum game - for me to have comfort, you must suffer. May I suggest you take an Economics 101 course at your local community college. Economics is not a zero sum game. Wealth can be based on natural resources and their exploitation, but is also based on the productivity of people. Yes, we can have our cake and eat it too - but it means we have to provide value to the system - you can only do that by educating yourself, rather than ranting about things you don't understand.
 
What's your point that oil was more expensive in the 70s than it is now? That has absolutely nothing to do with the price of oil going down. First of all it has already beaten that level which was 3 dollars inflation adjusted. Second of all the shortage now is caused by nature. The shortage then was caused by OPEC for our support of Israel. Two very different things.

SUVs have no utility in many of their forms. A car based SUV has no utility, especially if it is not capable of going offroad. To deny this is to deny reality. Obviously your myopic right wing Anne Coulter is my mentor mentality prevents you from seeing anything close to what the vast majority of people think outside of the US and that's a shame. Everyone, quite literally everyone who is not a fascist thinks that SUVs are an abomination that pollutes and feeds greedy monarchs in the Middle East, as well as have no utility. Or are you a forest ranger carrying timber to work?

Your guess is wrong I drive no vehicle. To say a big engine pollutes less than a small engine is insane. Which you clearly are.

Nowhere in what I wrote above did I say oil caused the Great Depression. Not only are you insane, you are semi-literate.

Oh right, you mean those GAP shirts you wear, the video games you play, and the oil you drive with don't come from third world tyrannies and oppressed workers. Good one. Time for you to drive your big SUV outside of your obese suburb and see the world. Or get a girlfriend.
 
Wow - so the person behind this Blog is a child.

What is the point in oil being more expensive in the 70's than now? No, $3 per gallon does not beat that level, and no, it is not cause by nature now - it is cause by the value of exploration and extraction, and refining capacity. Perhaps your Jr. High School teacher can expound on that point. Or, you can do a little reading here: http://www.thetruthaboutcars.com/content/11292058241518084276/index.php
So glad you have decided for everyone that SUV's can't possibly have any utility - other than forest rangers carrying timber to work - I guess it is o.k. for them, but not for a family carrying personal items. So, as the Czar of what people can drive and what they can find useful, shall we forward all our requests for transportation needs to you for your verdict?
So, you do not drive, but you are the expert in what others should find usefull in satisfying their needs.
You say "nowhere in what I wrote above did I say oil caused the Great Depression", but you did say that oil would cause a depression in the future - and in your response offered no support - what a scholarly work.
It appears to me that:
1. You do not have any position of any authority or importance in the auto industry;
2. You dont have any position of any authority or importance anywhere;
3. Your not well educated;
yet you have a blog where you supposedly have something worth reading about automobiles?
But you do excel at spouting childish remarks when someone calls you on your uninformed rants, as in "time for you to drive your big SUV outside of your obese suburb and see the world. Or get a girlfriend". Very mature. Why don't you post that on the header of your blog for everyone to see the mentality of the person behind this blog?
 
Your esteemed education taught you that "your" = "you're" evidentally. I must be the idiot to dare take on someone who doesn't know how to spell.

And if you're offering a webpage as a scholarly source, you truly are a moron.
 
In an effort to educate the uneducated:

References to the oil price are usually either references to the spot price of either WTI/Light Crude as traded on New York Mercantile Exchange (NYMEX) for delivery in Cushing, Oklahoma; or the price of Brent as traded on the International Petroleum Exchange (IPE) for delivery at Sullom Voe. The price of a barrel of oil is highly dependent on both its grade (which is determined by factors such as its specific gravity or API and its sulphur content) and location. The vast majority of oil will not be traded on an exchange but on a over-the-counter basis, typically with reference to a marker crude oil grade that is typically quoted via the pricing agency Platts. For example in Europe a particular grade of oil, say Fulmar, might be sold at a price of "Brent plus US$0.25/barrel".or as an intra-company transaction. IPE claim that 65% of traded oil is priced off their Brent benchmarks. Other important benchmarks include Dubai, Tapis, and the OPEC basket. The Energy Information Administration (EIA) uses the Imported Refiner Acquisition Cost, the weighted average cost of all oil imported into the US as their "world oil price".

It is often claimed that OPEC sets the oil price and the true cost of a barrel of oil is around $2, which is equivalent to the cost of extraction of a barrel in the Middle East. These estimates of costs ignore the cost of finding and developing oil reserves. Furthermore the important cost as far as price is concerned, is not the price of the cheapest barrel but the cost of producing the marginal barrel. By limiting production OPEC has caused more expensive areas of production such as the North Sea to be developed before the Middle East has been exhausted. OPEC's power is also often overstated. Investing in spare capacity is expensive and the low oil price environment in the late 90s led to cutbacks in investment. This has meant during the oil price rally seen between 2003-2005, OPEC's spare capacity has not been sufficient to stabilise prices.


Oil prices, 1994-2005 (not adjusted for inflation).Oil demand is highly dependent on global macroeconomic conditions, so this is also an important determinant of price. Some economists claim that high oil prices have a large negative impact on the global growth. This means that the relationship between the oil price and global growth is not particularly stable although a high oil price is often thought of as being a late cycle phenomenon.

A recent low point was reached in January 1999, after increased oil production from Iraq coincided with the Asian financial crisis, which reduced demand. The prices then rapidly increased, more than doubling by September 2000, then fell until the end of 2001 before steadily increasing, reaching US $40 to US $50 per barrel by September 2004. [4] In October 2004, light crude futures contracts on the NYMEX for November delivery exceeded US $53 per barrel and for December delivery exceeded US $55 per barrel. Crude oil prices surged to a record high above $60 a barrel in June 2005, sustaining a rally built on strong demand for gasoline and diesel and on concerns about refiners' ability to keep up. This trend continued into early August 2005, as NYMEX crude oil futures contracts surged past the $65 mark as consumers kept up the demand for gasoline despite its high price. (see Oil price increases of 2004 and 2005).)

The New York Mercantile Exchange (NYMEX) trades crude oil (including futures contracts) and provides the basis of US crude oil pricing via WTI (West Texas Intermediate). Other exchanges also trade crude oil futures, eg the International Petroleum Exchange (IPE) in London trades contracts in Brent crude.

I do understand that offering this information to someone who considers someone a moron who offers a well reasoned article as substantiation is an exercise if futility. I will leave your blog now for others where the author does more than name call, where the authors offer something more than blather.

From what I have read of your blog, you are an insignificant little loser who has recently landed some insignificant job. You know nothing, and you show it here. I wish you all that you deserve, which is to continue in your low paying insignificant position. You will never amount to anything. And the best part is that you know it. You may not acknowlege it here, but you know it.
 
Nice copy and paste job. You can tell you didn't write it because the text you copied has references to prices that you didn't list. I also know you didn't write it because it doesn't have your standard spelling and grammatical errors. The two last paragraphs where you desperately portray yourself as someone who is above me yet must have the last word shows me someone who is never listened to in public and must get his kicks refuting anyone who dares question his Ayn Rand me-first philosophies. Come back to me when you write something yourself. All you've shown is that you can use Google and the copy/paste feature of Explorer. Clown.
 
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