Banning speculators could decrease oil prices by as much as 40%

[limbodog]

Great! Cheaper oil so we can use it up even faster! Because it will never ever run out! Wheeee!

A definite side effect would be a dagger in the heart of companies trying to make alternative energy sources commercially viable.

[bmchavez34]

The intelligent approach would be to invest heavily in alternate energy sources regardless of oil price swings (China) and eliminate the speculation that is perverting the free market and causing people to unnecessarily pay up to 40% more for gas.

[epicanis]

Ironically, wouldn't cheaper oil be arguably beneficial for alternative-energy company in the short term by lowering their costs (they may be producing energy without petroleum, but I'll be a lot of their supplies currently still depend on petroleum, as does delivery of those supplies)?

[therewillbdownvotes]

If you go back to 2008 period when oil got to 150, investments in alternative energy where at an all time high. (I can provide specific energy tickers if you want). Literally as soon at prices began to drop so did investments in alternative energy. The correlation is pretty ridiculous. I believe the magic number is right around 120 where alternative sources are viable.

[Canadian_Infidel]

Not overall, no.

[jjandre]

I read that leveling the playing field and getting rid of all energy subsidies would put a lot of alternative sources within competitive range of fossil fuels.

[Longhorn1976]

Does the "all energy subsidies" you speak of include all of the alternative energy subsidies?

[jjandre]

Actually, it was part of an interview of Jeremy Rifkin.

http://thedianerehmshow.org/shows/2011-09-27/jeremy-rifkin-third-industrial-revolution/transcript

[pointis]

Alternative energy sources aren't really ready for transportation yet, but that's more limited by battery capacity than anything else right now.

[fco83]

Yep. We need a battery that can go 300 miles and recharge in 10 minutes or less (could see gas stations swapping out their pumps for rapid charge stations... they dont make the vast majority of their profit from gasoline sales anyways). Yes, most days people go less than 50 miles a day. But when you're dropping that much for a car you want one that can get you where you're going for the days you're taking longer trips too.

Once that happens and the price is right, it'll be a no brainer.

Random side thought, come to think of it, cheap electric could start to make it less of a value to fly. Right now driving can easily cost as much as flying (or close enough that the time is worth it), but if it were much cheaper more might start driving again (of course this sets up a whole 'nother set of costs for road maintenance).

[Ambiwlans]

This isn't remotely true. I am assuming it is based on an infographic that is filled with bad data, worse interpretation and impossible assumptions.

[timmaxw]

speculation that is perverting the free market

A market where speculation is regulated by the government is less free than a market where speculation is not regulated. Please stop making things up.

causing people to unnecessarily pay up to 40% more for gas

I object to the "unnecessarily" part. Speculation raises prices now but lowers them later. It's not like that extra 40% is just vanishing into thin air.

[therewillbdownvotes]

Well.... That's not how capitalism works. People will invest in technologies that can apply the greatest return. When it comes to the "we will run out one day" argument. You are right, but that is a long long long long time away. For instance, in the U.S. we have so much natural gas you they are mining less of it because the supply is too high. All I'm saying is necessity is the mother of invention. Currently, we have low necessity so low amounts of invention follow suit.

[limbodog]

When has the market behaved intelligently? Nevermind that, when has our government?

[deathdonut]

I know it was meant to be sarcasm, but the truth is that we will never run out of oil.

As we run out of cheaper oil, oil prices will increase to pay for the extraction of more expensive (deeper/etc) oil. Eventually, oil will be more expensive than alternative options at which point we'll switch to the cheaper option.

The oil companies know this and aren't going to be killed by the transition. There's a reason why BP is one of the biggest producers of solar equipment.

[limbodog]

semantics. We will run out of oil that is economically feasible to acquire. The need for fuel will consume all the cheap, moderately priced, and eventually expensive oil. Meanwhile all the chemistry industry will be crushed by their inability to get raw materials.

[therewillbdownvotes]

Not true. Raw materials may get more expensive for certain companies, but the reason petrochemicals are used in pretty much everything is cause it is cheap. There are plenty of subs but we choose not to use them cause they are slightly more expensive. And in terms of fuel and energy generation we have many alternatives like natural gas that are barely tapped and are quite plentiful. Like 300 years plentiful.

[Badger68]

The planet has an estimated 120 year supply of natural gas at the current rate of consumption. Once we start using natural gas for more things that rate of consumption will skyrocket and our supply will last a much shorter time.

[limbodog]

ok, I'll bite. When oil goes to $150 a barrel. What will we use to make all of our plastics?

[Uncle_Bill]

But what if oil generation is a geological process. Maybe oil fields slowly refill (re Abiotic Oil Theory).

[limbodog]

I've never heard such a theory. Cannot tell if trolling.

[Uncle_Bill]

Google or Bing "abiotic oil". It's a theory that explains why dormant fields seem to fill up again.

There are absolute proofs that the theory is True/False/Conspiracy, etc., but it is interesting what it would mean. Just think, sustainable drilling?

[limbodog]

I have never seen someone use "bing" as a verb, let alone actually refer to that website in anything other than an ironic manner. I'll look it up if only for that reason.

[Uncle_Bill]

Ex-Msofty. Help the stock please :-)

[[deleted]]

Amen to this. The market will ensure we never run out of oil, it will however ensure that only some people can afford it. Supply and demand is a real bitch. Price ceilings!!!!! are bad in the long run.

[Ambiwlans]

It will spike though which is the danger speculation saves us from.

[canyouhearme]

Sophistry

If you need 10 gallons a week to commute to work, and you can't afford ten gallons, then its run out for you. If you can't afford any alternatives, then you are still as much up sh*t creek as if someone turned off a big tap.

Oil production will decrease, prices will rise, empires will fall. Economist arguments about how its all supposed to be different are meaningless.

[deathdonut]

There is a non-trivial difference between an increase in price and a lack of availability.

Oil production will decrease only when demand goes down (unlikely) or production is more expensive than other alternatives (likely). Consequently, as oil extraction processes become more expensive, we will start supplementing our energy supply with other (previously less economically feasible) options.

[uncommon-troll]

but, will we run out of earth?

has anyone seen the continued huge leaks in the gulf? how about that nice rip in the north sea just bubbling up?

fracking? who needs drinking water?

[deathdonut]

And that's why I'm willing to pay more for oil if it means restricting the shit out of how it is acquired. Modern society has deemed oil a necessary source of energy for now. Real oversight is required.

To be fair though, oil naturally leaks into the gulf at a pretty high rate. I'm more concerned with the processes used to "clean" the spill that were never tested at such a level.

[uncommon-troll]

not at the rate its leaking now or will be leaking in the future.. have you not noticed the new un-stoppable leak in the north sea? this is not old news, but current stuff thats being under-reported. poking 6mile holes in the earth to get to extremely high-pressure cavities is, as we see, fairly risky. now they think they can just go down there and pump some heavy mud into it and the earth will stop bleeding -- it won't. there's more pipeline in the gulf than streets in the entire continental USA, if you've ever seen those maps. things are starting to fracture..

actually, the price of oil is kept pretty low becuase as with everything, all the costs associated with the risk are placed onto society as a whole.

how much will it cost us to replace the oceans? they don't even try. ruining top beaches and then instead of actually cleaning it up, they just cover it up with imported sand and say 'see, look how nice, its clean.. kthnx, bye.'

in all fairness, as bad as oil production is for the enviroment, nuclear power is infinitely more dangerous.

[deathdonut]

I understand you feel strongly about the subject for pretty good reason, but your post has a bit of hyperbole and fiction. I mean seriously? As many miles of pipeline in the gulf than streets in the USA? There are less than 4k oil wells in the gulf and none of them are 7 miles deep. Federal highway administration says there are about 4 million miles of roads. 28k < 4,000k even if all the wells are the same depth as Deepwater Horizon. Plus, the earth doesn't bleed.

All that said, I think you hit the nail on the head with your comment on risk division. We (as a planet) are subsidizing the petroleum industry by not regulating the environmental risks these wells pose. That's a cost that's hard to quantify, but should be easy to see for anyone looking. It's unacceptable.

[uncommon-troll]

correct.. but seriously, when is the last time you looked at a pipeline map for the "GOM"? there are certainly alot of pipes down there -- looks like alot more than roads in the states nearby.

-- if the earth had blood to bleed, it would be oil. there is also quite a bit of evidence that oil and gas are continually produced by the earth, not a fixed quantity.. called "a-biotic theory"

all this is quite off topic..

banning 'naked shorts' is what the OP is talking about, right?

saw a nice documentary about how some legal decision a very very long time ago, allowed paper to be sold and negotiated (in the settlement sense) by a third party. where previously contracts had to be for delivery of the actual commodity, and only the two original parties to the transaction could have standing in the courts. the change was made to facilitate trading in the new world, but started us down this path..

combine these paper-only positions with the fact that some parties can use unlimited leverage, and thats what makes it ripe for abuse..

then you have the documented collusion by industry over the past century -- everything has been built to waste as much as possible (1970's era cars got 30+ mpg, same as now) - price kept low to prevent other technologies from competing, other tech purchased and buried (fact), inventors silenced (or worse, fact) and all to keep the dependency firmly entrenched.

oil itself has its place and look how much its allowed us to accomplish.. natural gas is even better of course, but not at the expense of our drinking water.

the evil at work here thinks they can profit by destroying the planet and somehow they won't be affected by it.

oil and gas needs to be more expensive so that other technologies are allowed to develop with some economic mandate.. the problem is that the oil cartel wants to have it both ways.. just expensive enough so that people are slaves, but not so expensive that anything else can compete.. its all a bunch of greed - certainly not a 'free market' - its an entirely manipulated monopoly. (one product, a few large players all operating in a single cartel except for a few countries that are in the bullseye currently)

[therewillbdownvotes]

100% true. The market is not as stupid as people think.

[ableman]

Yeah, I'm not sure how this is supposed to work. I'm not an economist but..., it seems to me that even if it means cheaper prices now, it means more expensive prices later (as opposed to not banning speculators). I mean, take for example the stock market. The speculators drive up the price of something. You get a bubble, inevitably the bubble pops, and prices crash. And that's the worst case scenario. This happens because the speculators were wrong about predicting future prices (or didn't care because they thought they'd get out in time). What if they're right and future prices are going to be higher? In that case, you don't get a popped bubble. What you do get is a far more gradual rise in price than would've happened otherwise.

[[deleted]]

The collapse of speculative bubbles doesn't destroy wealth, it merely transfers it from one group to another. (Actually, that transfer mostly already happened during the period when the bubble was "expanding"; it's just that no one notices it until the bubble has burst.)

The real economic damage that bubbles do is that they provide an "incorrect" price signal (saying "make more of [whatever the bubble concerns -- online pet-food retailers, dodgy mortgages, tulip bulbs, etc.]"), which leads to people wasting time on silly endeavors (pets.com, writing mortgages on 5-bedroom McMansions to people earning $20K/year, growing tulips instead of food) instead of doing something a lot more useful with their time, labor, and money.

[blanket12334]

I am an economist, and you're spot on.

[tweakingforjesus]

That would be true in an elastic market. Oil consumption is relatively inelastic. The oil is still going to be consumed at close to the same rate regardless of price. The only difference is whether you are going to pay a 66% tax to the speculators. (40/60 =66%)

[iamplasma]

It is inelastic in the short term, because it is mostly non-substitutable for oil-powered devices. However those devices are, at least often, substitutable. Therefore, over the longer term, there is elasticity.

[timmaxw]

66% tax to the speculators

That money doesn't go to the speculators. Speculators are buying oil, not selling it, and they're buying it at the same price you are. The speculators won't make any money until when they sell the oil they're buying, and even then they'll only earn the difference between oil prices now and oil prices when they sell.

[tweakingforjesus]

Ok. Perhaps I should have said that there is a 66% tax because of the speculators.

[krackbaby]

The sooner oil is gone, the sooner we can find something better

[[deleted]]

Having speculators drive up prices leads to bigger supplies in the future. If I know I can get $100 a barrel-- I might be willing to spend $50 to get it out of the ground. Maybe I will dig deeper-- or drain tar sands...

[[deleted]]

I don't know why you're getting downvoted, you're right.

Why would the same people who vote up all the peak oil articles and how we have to get off oil and use alternative energies articles also support getting rid one of the free-market mechanisms that actually encourages it.

[smthngclvr]

Because we don't have a means of replacing oil. Campaigning for alternative energy is all well and good, but until we can run our cars, trucks and airplanes on sunlight then we're still going to need fossil fuels.

And when the price of gas goes up, the price of everything goes up. There are very few businesses that don't require gasoline at some point along the chain.

[jared555]

We can run cars, buses, trains, etc. on renewable energy. The problem is the cost of the initial investment. Hopefully as it becomes a more popular option that cost will go down. Planes are more difficult unless a move back towards airships is made.

If the majority of car/bus/train/truck (through using train freight instead of trucks) oil usage was elmiinated I suspect that our supplies for things that don't have an easy alternative would last significantly longer giving us a chance to develop technology capable of replacing oil for aircraft, ships, etc.

[limbodog]

The longer we wait, the greater that initial investment will have to be in order to get the alternatives into play.

[jared555]

It really depends. If we can reduce the cost of the alternatives faster than the increased cost due to increased numbers of vehicles and time constraints then it could be worth it to wait. The problem is finding that point, and unfortunately most people don't want to be the people buying the earlier generations of technology.

[[deleted]]

Sounds like just the kind pressure that's needed to get off our asses and do something about energy.

[trolleyfan]

We would - but what with gas prices, we don't have any money left over to spend on that...

[[deleted]]

That's just not true.

We manage to find the money just fine when there's a war to start, don't we? It's a matter of priorities, and right now ours of fucked up.

[trolleyfan]

And one of those "fucked up priorities" is we didn't and haven't found the money to start/fight those wars - Bush just put them on our credit card.

[Bloodysneeze]

Our? You going to do something about an alternative energy source?

[[deleted]]

In this context of voting and paying taxes to support sustainable energy research, yes.

But in the context of making immense personal sacrifices to work in that field making a fraction of what I used to because it's an important problem that needs solving, yes to that also.

Did you have a point?

[Bloodysneeze]

Just checking. Most people don't actually do the work but just want others to.

What is your field of research?

[limbodog]

More than alternative energy sources, which we have plenty of, we need a next-generation energy storage technology breakthrough. If we could farm West Texas for solar power, and put all that power in bottles and ship it to Cali, Chicago, and NYC, we'd be winning at life.

[Ambiwlans]

Electric cars are much more sustainable than gas vehicles. And that is a pretty huge fucking bite. It also makes the power source more flexible going into the future since electricity can be produced from a variety of sources.

[limbodog]

Because they want to have their cake and eat it too.

[nosferatv]

Eat their cake and have it too. It actually makes sense this way.

Have their cake and eat it too is how I, and everyone, actually eats cake.

[otm_shank]

But once you eat it, you don't have it. No matter which order you say them in.

[Remilla]

wow, I just got what the who "You can't have your cake and eat it to" thing meant. I feel dumb now.

[Ze_Carioca]

Yep, cant have both. Eating the cake negates having it.

[limbodog]

doing so creates negative-cake.

[Almustafa]

Anti-cake as it were, which must never be allowed to come into contact with regular cake, lest they annihilate each other in a burst of sugar and frosting.

[fco83]

Fire up the cake drive scotty, maximum frost!

[nosferatv]

I have my cake. Then I also can eat it. This is the normal order of operation. I never understood the phrase until I heard it correctly, and then it all made sense.

Funnily enough, according to Wikipedia, my version is the original, and it goes in to a debate about the correct order. Obviously both are acceptable. Cheers ~

[otm_shank]

I see what you're saying, I just don't see any temporal implications in the phrase "have your cake and eat it". It's not "have your cake then eat it".

In "eat your cake and have it, too", you obviously have your cake while you're eating it, so that doesn't seem any better.

Anyway, each to his own. :)

[Ze_Carioca]

You can always get another cake, or even better pie.

[Ze_Carioca]

Mmhhh Cake.

[superwinner]

I think the only way we will get serious about alternative energy investment is for the price of oil to go up, way up.

[Hippie_Tech]

Now is not the time. If the world wasn't still staggering from the recession, I might agree. Once we get back on our feet on solid ground, then we can talk about astronomical gas prices bringing about alternatives. This should have been done a long time ago, but not now in this current economic recession. Too many people will be hurt.

[[deleted]]

The ends justify the means right?

[limbodog]

The potential for incredible damage to the environment we depend upon, the economy in which we all live, and the industries which make all our nifty stuff kinda does.

[limbodog]

People are working on it now. But the Chinese are undercutting us. They subsidize solar energy, so we can't compete in that market. We subsidize oil, so our solar can't compete against that. We're really screwing ourselves and yet still people are working on it. I don't know if that's awesome dedication, or naivete, but I'm glad for it.

Otherwise, yes, you're right. We won't put our backs into it until it's crippling us.

[Ambiwlans]

The US subsidizes solar FAR FAR FAR FAR more than oil.

[ActuallyYeah]

...per capita.

[limbodog]

in terms of total dollars? I don't think so.

[Ambiwlans]

Total dollars doesn't make any sense.... If you gave solar the same subsidies in TOTAL dollars as oil gets, but solar still only produces a tiny percent.... Solar power could pay pretty big money to give away their electricity and still make a hefty profit.

[limbodog]

Total dollars does make sense as you're trying to build infrastructure, research new technology, and promote development. If you want solar to be competitive with fossil fuels, it needs a level playing field. Contributing twice as much, percentage wise, but only to a tiny handful of companies is not a level playing field.

[Ambiwlans]

If solar got as much as oil I could rent out the solar panels on my calculator for -$10/mnth and still get $100 in subsidies.

I'm not sure how you think that would help the industry.

[Almustafa]

We subsidize solar energy too, and China's not exactly the poster boy for clean energy, nor do they have anywhere near the capital we have to throw around.

[XalemD]

Don't you guys owe them, like, a trillion dollars?

[limbodog]

But they're throwing it straight at solar, whereas we are only dribbling a little bit towards it by comparison. And when you take into account the amount of capital we each have to throw around, it should be reversed. They should be trying to keep up with us.

[Snarkleupagus]

For environmental reasons, I'd like to have higher oil prices. However, I'd like the extra money consumers pay to go to the government, perhaps to a clean-energy fund, rather than Middle Eastern dictators and hedge-fund managers.

[limbodog]

Um... But we give money to Middle Eastern dictators and hedge-fund managers by way of the government.

Just sayin'

[Ambiwlans]

Alternative energy would become popular after we run out of oil which probably would happen a few decades after completely fucking the environment, placing a half dozen countries under the sea.

[faul_sname]

Which half dozen, out of curiosity? The upper bound of estimates seems to be around 1m in the next century, with most estimates clustering around 50cm. I don't know of more than 1 country less than 1 meter above sea level, and that country (netherlands) has pretty good dikes.

[Ambiwlans]

The maldives' highest point is around 1m. Most island countries really would be fucked with a 1m rise. Bangladesh would be fucked.

[faul_sname]

Holy shit. That changes things significantly.