PDA

View Full Version : Wine ing about gasoline



Chili 18
04-24-2006, 12:32 PM
Amusing article off Bloomberg

Kevin Hassett is director of economic policy studies at the American Enterprise Institute. He was chief economic adviser to Republican Senator John McCain of Arizona during the 2000 primaries. The opinions expressed are his own.

The Lessons of Pinot Noir for the Energy Market: Kevin Hassett

April 24 (Bloomberg) -- For most of my adult life, I have been a big fan of wines made from the pinot noir grape. This was great, because the reds of choice for most Americans were cabernets and merlots, and the wine racks at my local supplier were filled with terrific and cheap pinots. For 10 bucks, you could get something positively delicious.

The movie ``Sideways'' ruined all that. Its protagonist rhapsodized about pinots, detailing the care the grape required and extolling the ``haunting and brilliant'' flavors it produced.

Now my favorite pinot noirs have all increased sharply in price. Bottles that once cost $8 sell for more than twice that.

While I'm unhappy that my preferred wine has become so expensive, I wouldn't think of demanding that the government do something about it. We don't need new subsidies for pinot noir growers, or tax-free savings accounts from which one can fund pinot noir purchases. We shouldn't subsidize scientific research into alternative grape varietals and we surely don't need to study how to make a pinot noir substitute from corn.

Similar Story

Yet that's pretty much the story behind the surging oil and gasoline prices we're experiencing. It wasn't a movie that did it, but skyrocketing global growth, which has caused energy demand to soar. But like fine pinot grapes, oil supplies are limited, and it takes time to expand capacity. So prices have taken off. On Friday, oil reached a record $75.35 a barrel in New York, partly because of concern that shipments from Iran and Nigeria will be disrupted.

According to the Department of Energy, as of April 17 the average retail price for U.S. gasoline hit $2.783 cents a gallon, 54.6 cents higher than at the same time last year. It was the third week in a row that prices rose. The government report noted that ``some stations have already posted prices for regular gasoline that exceed $3 per gallon and it is certainly possible that average retail prices across the country could reach that level sometime this year.''

According to the New York Times, Democrats see this as a big political opportunity. The Democratic Congressional Campaign Committee sent a memo, the Times reports, that guides House candidates on the best way to take advantage of the situation. The memo recommends that candidates highlight how energy companies receive billions of dollars in tax subsidies at the same time that they generate record profits at their customers' expense. Bad (read Republican) energy policy has made the mess worse.

Dead Wrong

The memo has its economics dead wrong. Current policy subsidizes, perhaps excessively, alternative fuels and energy exploration, but hasn't done so in a manner that could possibly have had much impact on oil prices. Their effects are just too small relative to the rest of the market.

That doesn't mean we should have done more. It's natural to be upset about high prices, but making energy prices a political football can't possibly lead to good policy.

The best possible policy response to high prices is for the government to sit back and let market forces work their magic. Higher gasoline prices will increase demand for hybrid vehicles, encourage private firms to work hard to develop economical alternative fuels, and induce homeowners to adjust their thermostats. All of that is happening already. No government action is needed.

One Sure Way

I doubt the political opportunists will mention it, but if we really want to accelerate the transformation of the energy sector, there is one reliable way to do it: pass a massive increase in energy taxes. If we do, gasoline and other fuel will become very expensive, and everyone will accelerate the search for alternatives.

Other approaches, including research subsidies, have been tried for years, and have still left us with an energy sector heavily reliant on fossil fuels. That's because even the recent high prices haven't made fossil fuel consumption uneconomical. It probably would take large tax boosts to do that.

Big subsidies for alternatives, like ethanol, are less attractive because they require the government to pick a winner. The best approach would be to encourage firms and citizens to find alternatives of their own, without constraints. A high energy tax does that.

Real Pain

Those high taxes would cause real pain today, which makes them extremely unlikely. In addition, they would merely speed up the process of finding other sources. Switching from fossil fuels now as opposed to a few years from now would have to yield very large gains for the high taxes today to be sensible policy.

So we should let the market tell us when to stop using oil.

The sharp increases in energy prices, like the pinot noir prices before them, have had a significant negative impact on me. But, interestingly, the merlot bashing in ``Sideways'' has crushed demand, and some wonderful bargains can now be had in the merlot aisle. Who knows what might happen to gasoline prices if demand climbs for an alternative?

In the meantime, I'll just ride my bike to the liquor store and pick myself up a bottle of merlot.





Hmmmm. What would be involved in converting to ethonol? Re jet the carb? I saw on CNN that Brazil was almost totally energy indipendent. No imported oil. They grow massive sugar cane crops specifically for conversion to ethonol fuel. Most cars sold there will run on gas or ethonol. Not such a bad idea I think if it reduces our ties the the ever so charming Middle East etc.. And... Good for the American farmer.

Carl C
04-24-2006, 01:04 PM
Or................................................ .................................................. .................................................. .................................................. .......................We could all get sail boats.:boat: :boat: :boat:

Kikwear
04-24-2006, 01:26 PM
Or................................................ .................................................. .................................................. .................................................. .......................We could all get sail boats.:boat: :boat: :boat:
That's not even cool to joke about. :bonk:

Woodsy
04-24-2006, 02:41 PM
Chili...

Your analogy makes little sense. Unfortunately gasoline (and other fossil fuels) are not like like wine... they are a strategic consumer commodity absolutely necessary for the economic health of our nation. While you might think that high gas prices might be a good thing, spurring the development of economically viable alternatives, the reality is high fuel costs are the harbinger of doom for our economy. The higher costs of gas and fuel in general are just the spark needed to start the recession/inflation bomb.

As fuel prices spiral up and up, the cost of delivered goods such as groceries and milk will continue to spiral up as well. This forces the average american to tighten thier belts, spending less and less of thier disposable income. It also usually indicates an increase in taxes as cities & states scramble to cover the increased costs. In fact increased energy costs will impact almost every aspect of your life.... in a very negative fashion! Almost everything you need will increase exponentially in cost... with the exception of your salary.

Until we, and by "WE" I mean the USA, stop meddling in the affairs of others, nothing will change! In order to have a healthy vibrant economy we need to have a stable, not volatile source of energy. This requires the middle east to be somewhat calm. We need to stop mucking around in that god forsaken sandbox known as Iraq, and the smaller sandbox known as Afganistan, stop rattling our saber at Iran and others. These folks have been at each others throats for centuries, and its not likely to change regardless of what we do.

We need to examine other sources of energy, such as nuclear power plants, wind farms, solar energy, hydrogen fuel cells etc. All of this research needs to be funded in part by the government because it isn't profitable and private industry won't spend the $$$. We need to invest in mass transit, 75 years ago America had the best mass transit system in the world, now we have almost none! We need to look at more efficient ways to move people. The other thing we need to do is limit litigation, especially on new technology... hydrogen fuel cells work well, but the cars tend to blow up when in an accident. Limiting litigation will help spur development.

Anything that will reduce our dependence on foreign oil would be a good thing!

Woodsy

BUIZILLA
04-24-2006, 03:00 PM
WOODSY for PRESIDENT

Bob
04-24-2006, 03:19 PM
"We need to examine other sources of energy, such as nuclear power plants, wind farms, solar energy, hydrogen fuel cells etc. All of this research needs to be funded in part by the government because it isn't profitable and private industry won't spend the $$$. "

I know, let's get the Goverment to form a whole new Department of Energy in order to solve the problem.

Opps!.... er..umm .... I forgot, President Jimmy "the cardigan" Carter already came up with that 30 years ago. Didn't work so well the first time but try it again on your tax dollars please, not mine.

Carl C
04-24-2006, 03:30 PM
WOODSY for PRESIDENT:yippie:A Donzi at every dock!

gcarter
04-24-2006, 03:52 PM
For the next 15-20 years we are stuck with the world pretty much the way it is. It will take that long to establish standards on ethanol, hydrogen, or whatever is to be established as "the fuel" du jour. Not to mention to build an infrastructure.
Mass transit only works in the North East.
WE couldn't retreat far enough in the middle East to make any difference at all. What we need to do is WIN the fight. That, in the long run, might bring some stability.
Let's talk about Iran.....do we want them to have an A bomb? Would that be a good thing? China and Russia want to keep them in power because the Iranians are useful to them and Russia and China have no scrupples.
There are other places in the world where we could buy oil.....Sudan, Burma, also a number of other African countries intent on civil war and the slave trade ( yep, I said slave trade). Do we want to do this? China does, but, as you know, the Chinese are really nice people.
Then there's Canadian tar sands, and Colorado shale oil that Bob already mentioned. These are VERY promising. But they to need some more technology improvements. Today these sources of oil would cost at least $50-$60/ per barrel. But it is right here and we don't have to fight anyone for it.
Back in the mid "80's, oil prices sky rocketed and eventually the economies of virtually every country in the East collapsed. Then oil went down to $9.00/ barrel. This might happen again. I just hope ours doesn't collapse first.

gold-n-rod
04-24-2006, 04:11 PM
Woody makes some very compelling statements. Much more sane than the "wino".

A governmental intervention is needed now to prevent economic disaster in this nation. Otherwise, the fat cats at Big Oil will fiddle as Rome (US) burns down.

A windfall profits tax could be used to finance the development of badly needed refineries, the manufacture and distribution of biofuels, and to encourage the development of other alternatives.

The alternative is a death spiral for many, many people in this country who cannot absorb the economic impacts of obscene energy costs on their daily existence nor survive an unravelling of our national economy. Fortunately, I am not in that position, but millions and millions are.

This thread won't survive, given the Board rules, but the challenge remains.

:wavey:

Bob
04-24-2006, 04:37 PM
Right now everybody is upset with the spike in oil prices.

There was the same amount of oil in the world a few months ago as there was today.

If you will recall, gasoline spikes around Memorial Day every year. Why you ask, because every year around Memorial Day the refiners change over from Winter blended gasoline to Summer blended gasoline AS IS MANDATED BY FEDERAL AND STATE LAWMAKERS. You cannot just flip a switch, it involves cleaning equipment and shutting down processing systems.

If lawmakers would streamline regulations concerning boutique blends of gas and additives, it would help the issue. For example, California mandated the use of MTBE in all gasoline sold in the state until it found out that if it was spilled, it was almost impossible to clean up out of the groundwater. Now it is against the law to put MTBE is gasoline formulations. Don't try telling me that the government can fix this, they are a large part of the problem.

By the way, the last refinery built in the US was in 1976. All growth in refining capacity has been through increasing the efficency of existing refineries

In 1970, a new Donzi cost around $6,000 and gas was about 30 cents a gallon. Today, a new Donzi costs around $60,000 and gas costs about 3 bucks.

gcarter
04-24-2006, 05:51 PM
In 1970, a new Donzi cost around $6,000 and gas was about 30 cents a gallon. Today, a new Donzi costs around $60,000 and gas costs about 3 bucks.
$6000.00 in 1970 was 30007.48 in 2005, also $0.30 was $1.51 in 2005.

What's more interesting was 1980....
Oil was $40.00/ barrel...equals $101.59 in 2005.
Gasoline was $1.31/ gallon...equals $3.43/ gallon in 2005.
(source...http://www.westegg.com/inflation/ )
Quit your bitching, things have been worse.
They got better then, they'll get better soon too!:checkered

gcarter
04-24-2006, 06:30 PM
This is interesting;

http://www.gasbuddy.com/gb_gastemperaturemap.aspx

Chili 18
04-24-2006, 07:45 PM
Certainly didn’t mean to get political. Not to cause anyone to waddle up on their soapbox to defend or argue a position. We all really need to see eye to eye on this one to find a solution. I watched Saving Private Ryan again last night. It reminded me of why those folks were called the greatest generation. Because they were all Americans FIRST. And red, blue or yeller second. They all pulled together when the going got tough. We.. As AMERICANS… Need to find a way to do the same. It begins with a desire to work together. Fwiw…

Ethanol is not a pie in the sky fantasy. It is something we could have at every pump in the nation within lets say five -7 years. The Automobile and engine makers can make the switch to dual fuel in a year or two if they wanted, or had to. They all sell duel fuel vehicles in Brazil today. They can do it here too. Older cars could be converted is desired. Gas would still be available, at a price. In Brazil, Ethonol costs much less than gasoline. This was the main reason people wanted to switch. Hydrogen is a nice concept. Let’s keep working on that. Perhaps in thirty years, it may be a viable option. In the meantime. We as a nation could cut our imported energy use by half to two thirds in the next 5 +- years. Why not. If the country worked together to achieve that goal. Take that OPEC. C-ya!

Why couldn’t we put a referendum on the next federal ballet in two years or so? ?Do you agree we as a nation should work together in a government and private sector cooperative, to create an ethanol fuel program set to be viable within five years? Yes or No. If yes, would you donate a percentage of your refund towards this national project? Distribution? Simple. If you want to sell fuel in the US. You must offer U.S.ethonol in at least one pump by 200X. Period. How long would it take to get massive quantities of corn or cane in the ground? A special genetic line of corn perhaps. Fuel corn, whatever. How long would it take to create several refineries to make the fuel? If we all worked together, because we all thought it was important.

Heck, we can still nuke Iran if we must. And to hell with their oil.

What if instead of griping about how that is unrealistic or “impossible”, we all said Lets find a way. Perhaps we could be known as a pretty darn great generation ourselves huh.

I’d certainly take a hard listen to a candidate that ran with this platform.

Over n out/\/\/

DonCig
04-24-2006, 08:51 PM
I 2nd the vote;
Woodsy For President!

Ed Donnelly
04-24-2006, 09:53 PM
Mr Carter. Great site for gas prices.
If you go to the breakdown for the U.S. and Canada,
They show Canadian prices between $1.05 to $1.25
They just don't mention ours is litres
$1.05X4litres=1 U.S. gal=$4.20
$1.25x4litres=1 U.S. gal=$5.00
I don't even want to do the U.S. Canadian exchange.........Ed

Lenny
04-25-2006, 01:05 AM
Mr Carter. Great site for gas prices.
If you go to the breakdown for the U.S. and Canada,
They show Canadian prices between $1.05 to $1.25
They just don't mention ours is litres
$1.05X4litres=1 U.S. gal=$4.20
$1.25x4litres=1 U.S. gal=$5.00
I don't even want to do the U.S. Canadian exchange.........Ed

Ed, George, we are officially at $6.00 + a gallon for Premium now. So basically $240 a day in the X-18 and a small Block... :(

Thank GOD this thing is fun and I love it more than life itself :D

Tony
04-25-2006, 09:31 AM
There was the same amount of oil in the world a few months ago as there was today.

This is one of our problems...we do not and have not ever believed the fact that oil is non-renewable. It has taken us FAR too long to come to the understanding that one day there will be no more oil. Similar to global warming, we seem to bury our head in the sand until it is too late. Like our obscene federal debt...just let our grandchildren worry about it! While difficult to do, it is far more effective to be pro-active than reactive.

Donzigo
04-25-2006, 08:28 PM
Good points on all, very good, Chli, Woodsy................

I've lived a few years in the Holy Land, Sandbox, whatever.....and I will certainly agree that these folks do not have any national identity to any nation, even the ones they live in. The culture is against living in the twentieth century's secular culture, and all the perceived heathen ways of life that go with it. The day that we or anybody else who trys, leaves, they will be shooting guns in the air and continue fighting between the various sects and tribes, just like they have been doing for 2,000 years. IMHO, we don't have a chance of changing a culture that has no desire to be like us, in any way, shape or fashion ............

I got your answer to the tranportation/oil/gas issue..........but, uhhhh, we'll need to start growing some special food to power this one and maybe start making a whole bunch of shovels to get the used fuel off the road, too.

MOP
04-25-2006, 09:33 PM
Richard I have Dib's on marketing, maybe we can charge the state for keeping the highways groomed and well fertilized!

MOP
04-26-2006, 10:19 PM
i have the perfect test sector ;) and about 500 acres of alfalfa around me ;)

You looking to stock up on fuel for next winter? :garfield:

RedDog
04-27-2006, 09:27 AM
http://www.donzi.net/forums/attachment.php?attachmentid=20278&stc=1&d=1146147969

Chili 18
04-27-2006, 09:46 PM
plenty of fuel around if i want horses :rolleyes:
i could use 6 or 7 cords of wood though.. all cut, split and neatly stacked and covered right about now LOL
pretty soon i'll be surrounded by plenty of corn... hmmm maybe i need to make a still....
Alcohol fuel made the buzz on CNN tonight. This link below was mentioned.
http://www.ethanolstill.com/




:pretzel:

roadtrip se
04-28-2006, 04:49 PM
as long as he doesn't make me ride the stinkin' bus! I stopped doing that in grade school.

Keeper of the dino fleet...

gcarter
04-28-2006, 08:37 PM
Jamie, what's involved in converting besides changing out ALL of your fuel lines?
I wouldn't mind ethanol if I didn't have to make ALL I would need for my cars and service trucks!
And you need a lot more of it, don't you? A lot fewer BTUs?