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Gas Prices May Soon Rise to Dangerous Levels Print E-mail
by Tom McGregor    Thu, Jul 15, 2010, 05:54 AM

Agency Oil.jpgThe International Energy Agency provides plenty of evidence that the era of cheap oil is over, forever.

Salon reports that, “the first sentence of the executive summary of the International Energy Agency’s (IEA) influential ‘Medium Term Oil Market Report,’ released (Monday), states the broad outline of the problem baldly: ‘Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with OPEC spare capacity declining to minimal levels by 2012.”

Demand for oil products, especially transportation fuels, is increasing rapidly. One can place blame on all those developing nations whose populations have been approaching the crucial $3,000 per capita GDP level – that pivotal moment when, as revealed by the IEA, “a middle class emerges, eager to purchase cars, fly in airplanes, install air-conditioners and, more generally, use energy consuming products. ‘People can’t blame a lack of refinery capacity, the IEA claims in refinery upgrades is proceeding apace; and doesn’t appear likely to be a difficulty in the near future. Yet overall, supply of the raw product – gas and oil – is having a harder and harder time to keep up with demand.

According to Salon, “this would seem to be the definition of a world approaching ‘peak oil’ – that moment when supply stops growing and begins to decline, while demand continues to chug along. But it is not until Page 30 of the IEA’s very detailed 82-page report that those all important words are even mentioned. Here are some excerpts from the critical section:”

“The concept of peak oil production and its timing are emotive subjects which raise intense debate. Much rests on the definition of which segment of global oil production is deemed to be at or approaching peak. Certainly our forecast suggests that the non-OPEC, conventional crude component of global production appears, for now, to have reached an effective plateau, rather than a peak …”

To read the entire article from Salon, link here:

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written by Shadrach , July 15, 2010

Tom:

First, congratulations for using a liberal rag like Salon to start an important discussion. I do not always like their liberal editorial slant, but they do a good job at reporting news in depth.

Second, remember the ultimate source is an association that want to promote Nuclear power - so have a dose of cynicism. I do not think we are quite as close to oil peak as this article implies.

Third, even so the point is clear and that day will come some time, we need to be making little steps to moving gradually to a post-petroleum world. We need to do so not with government overreach, but with an understanding of how the free market works and doesn't work. In other words, oil alternatives take time and infrastructure. Free Markets typically look for short term profits over long term investments.

We need policies to incentivise activities that would otherwise be delayed to the point of hurting economic growth.

We need (1) to continue and expand use of tax breaks for non-petroleum energy (tax breaks for wind energy is working), (2) having just revamped and streamlined nuclear regulations, we need to seriously rework the regulatory mess that hydro-power has to go through just to add electric power to the 85% of US Dams that do not generate electricity , many of which can do so now with new technology turbines, (3) We need to subsidize the construction of nuclear plants through low-cost or government insured loans (Nuclear plants have a huge up front cost, but their energy is comparitively cheap after the up front costs are met; (4) with increases in technology, up to half of cars 50 years from now could easily be elctric, but until electric cars have greater capacity, we need to increase domestic use of natural gas vehicles by having a tax credit for gas stations to have a natural gas pump set.

200 years from now we have no diea where our energy will come from. Will science and the markets have found a way to harness solar to the point that all energy is clean and renewable everyday? Maybe, but between now and then, we need a national vision that uses our scientific and market structures as the world reaches the end of the petroleum based economy on the horizon (although I do not think the horizon is as close as it appears).

When France has 80% of its electricity from nuclear energy, we will be placing our economy in peril if we do not utilize sound policy and free market structures to diversify and modernize our energy supply.



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written by Tim Peak oil , July 15, 2010

Hubbert was right!


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written by Told you so. , July 15, 2010

It's about time...what took the deleoping world so long!
Those folks in China carrying the little "Red Book" and wearing one set of cloths and owning nothing did us in the West a favor. Then they bought the line on development and were willing to work for nothing to get inmto our consumer culture.
Now we say no go...global warming.. oh this is going to be so good.



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written by John Weekley , July 16, 2010

Most economists agree that, in the United States, rising costs for energy not only produce more inflation, but lower the quality of life for those on relatively fixed incomes.

High costs of fuel are a "value added" cost. Every stage of production or service delivery becomes more expensive, and those that depend on distant transportation to local markets are even more impacted by inflationary pressures.

Previous fuel cost increases have been responsible for more business meetings being held by electronic conference, and fewer business trips of a marginal business nature.

There's a popular theory that rising energy costs bring us closer to alternative fuels. But, in reality, our three primary fuels consisting of gasoline, coal, and natural gas fuel such a large percentage of our machines that higher costs generally fuel demand for more sources of the same fuels and lower prices.

I have seen here and elsewhere the claim that all of the wind turbines and solar panels in the world now existing would never equal the energy output of a single coal mine. That's not only true, but if you cost out the actual business costs of the alternatives, the coal is incredibly cheaper.

In my opinion, what we are lacking is long-term and universally accepted strategies for alternative fuels, and service delivery models for making those fuels readily and inexpensively available.

I will not drive an electric powered car until there are recharging stations on most major highways every 30 miles or so.

In the short run, rising fuel costs will cost us more jobs, hurt our economy, fuel inflation, and keep us even more dependent on foreign oil.




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written by Ken Dickson , July 16, 2010

Note the "battery trip" Obama made was to a company controlled by Korea! Brazil was loaned $2B by Obama aka George Soros, & China gets all of the oil produced from that source!

The "anoited one" said he was going to change America...Wake up! Nothing should be a surprise!



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written by mannys , July 16, 2010

i dont trust the free-market to help move use along. look at what they did to us and themselves a few years ago.they put us in the ditch so to speak.we need a government manhattan type project, we need to add solar panels to all new building and homes, it has to become part of the cost of the house..we need to lead not be lead. there will be alot of resistance from oil and gas and they are POWERFUL but it will be the difference between us being in the global lead or being lead


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written by ElHombre , July 17, 2010

"Most economists agree that, in the United States, rising costs for energy not only produce more inflation, but lower the quality of life for those on relatively fixed incomes."

I would like to meet an ecnomist who doesn't agree with that statement. They need to be hounded out of the profession.



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written by Shadrach , July 17, 2010

Ken:

The story about "Brazil was loaned $2B by Obama aka George Soros, & China gets all of the oil produced from that source!" is just another false story being passed around by the Faux News Network.

The Truth - (1) The non-partisan, US Import Export bank, which is not supported by taxpayer money, is loaning the money; (2) the 2 Billion dollar loan was approved in 2009 before even a single Obama appointee was on the Board (all Bush appointees); (3) the money was loaned because it will be used to purchase US manufactured equipment, (4) China does not have sole access to that oil as they loaned Brazil $10 Billion; and, (5) Geaorge Soros had sold off all of his Petrobras shares prior to the US Export Bank oan.

See http://www.snopes.com/politics...ziloil.asp

I understand that Mega Conservatives have many valid reasons to disagree with Obama. I just wish that their ideological differences could not so frequently inflamed by patently bogus news stories that falsely informs their opinions.

Ken:

Your "claim that all of the wind turbines and solar panels in the world now existing would never equal the energy output of a single coal mine" is verifiably false. Currently wind alone supplies 1.3% of world electrical power. For your statement to be true, there could only be 100 coal mines in the world. There 51 "major" us mines lised by the EIA. http://www.eia.doe.gov/coal/page/acr/table9.html There are 20 Texas coal mines according to the railroad commission. See http://www.rrc.state.tx.us/pro...CoaLst.pdf

In other words, yes coal is 50% of US electricity, but coal is not so aesome that even a single mine can beat all the wind in the world.

Even more, by 2030, wind will be 20% of US Electricity. The long trem global future is renewables, hydro and nuclear.

Short term we are petroleum and coal based.

The question is, can we move to more domestic, more clean, more sustainable and still have the efficiency that free markets demand. I think we can.



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written by furrpiece , July 17, 2010

It doesn't take an economist to explain the impact of oil prices on our economy.

On the business side, anything you do that requires transportation or uses plastic is priced at a cost to you of the price of oil. Even a small increase in gasoline prices will cause your costs to go up, and therefore the prices for your products or services.

If you are in government, and oil prices go up, you will spend more as a consumer of products and services, and will charge more for products and services you provide.

If you are a consumer, you will pay more for:

1) Your cost of living for almost everything you do

2) Your costs of buying ALL goods and services will increase - some substantially where several steps are involved to provide a product or services

3) Your taxes will go up to pay for the increased costs of operating government -- hitting you at a time when your cost of living is already high

The combined impact of all of these conditions are:

1) An ever-increasing wage/price spiral

2) Ever-increasing prices for goods and services

3) A decrease in the quality of life (and for those on fixed incomes, a serious decrease in spending power for survival)

4) The inflationary spiral trashes the ability or ordinary Americans to or many small businesses to do business on credit because rates are so high, and government is increasing invading the marketplace with its own borrowing....so not much is left to lend.

Look at the Carter years, and you can actually see much of this disaster model unfolding day-after-day.



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written by rufuslevin , July 18, 2010

Simple solution...shift the burden of govenment finance to the lowest income and youngest citizens and make all earnings and income for retired citizens over 65 tax free...no matter WHAT thier incomes. This makes the recipients of welfare and social services RESPONSIBLE to find a way to pay for their needs, rather than merely shift it to other members of society. Same with petroleum.....provide national mass transit and limit individual transport via highway...if you want to reduce ALL energy usage and become efficient. Oil is not the issue so much as waste of ANY energy. Just like trying to make "healthcare reform" by jockeying with INSURANCE rather than cost and efficient use controls....jockeying with petroleum price and supply does not get at the need for efficient energy consumption.

But that would get in the way of special interest groups, their agendas, and their financial support of politicians and parties.

Solve problems to fix issues, not divert attention to alternative methods of waste and therein create a new group of wealthy folks via "change" and "hope".




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