Gasoline: Economic Threat (Repeat)

[gumOnShoe]

Time suggested recently that oil prices are set to rise again, and that once again speculators were likely to inflate the price of oil by 20 - 40 dollars a barrel in the near future. They additionally see the prices reaching $100 a barrel this summer. That means that, sans tax, gasoline will cost $2.38 per gallon based on the cost of oil. Add in shipping & processing costs and then taxes and we're likely to see $4.00 / gallon prices again soon, and possibly $5.00 / gallon by next summer or the one following that.

I'm arguing in this topic that the continued structure of the American economy can't handle those prices and won't be able to. Our electrical grid can't support a mass migration to electrical cars either. Public transportation is largely nonexistent and bogged down by buses which will be harmed by the gas prices as well.

To top it all off, consumers in the U.S. still have not and likely will not learn how to budget and save until our entire economic system is utterly destroyed (which it probably will be when an alternate power such as China can live with out us) and the only people who survive it and do well are those who learned how to live within their means.

Basically, I think the upcoming gas crunch, which will put a choke hold on every single U.S. market (again) is likely to cause another round of credit & house payment misses forcing more people further into debt and to default on their payments causing another wave of repossessions and likely another recession, if not depression if other countries are able to move in on resources while avoiding harm to themselves.

So the question is, what the fuck do we do? Alternate energy sources are on the cusp of being available, but they still aren't. It'll be another 10 years (assuming we continue to invest) before any products can be released main stream and adopted enough to make changes. We need to fund public transportation projects in a way we never have before, relying on high speed rail systems to connect our cities for shipping and spawn travel. We should look into alternate modes of air travel (including the much feared dirigible), and we ought to do our best to build our cities and communities in such a way that you can walk most places you need to get to, and when you can't expect to be able to order it to a local store via the internet.

We should make our society more modular and less about going to one big store and funding one big company. And more importantly, this restructuring would ultimately alleviate the need for costly travel forms.

The truth is simple. Our reliance on gasoline is ready to tip us towards a strained economy which will send us into another recession in 2-3 years before we have a chance to recover fully from this last one.

[Elfer]

If you want to do anything in terms of policy, you need to stimulate demand for alternative energy. The Ontario government actually did something fairly clever to this effect a while ago, called the MicroFIT program. Basically, people can install solar energy systems on their homes, and the government will sign a 20-year contract with you where they pay a ridiculously high premium on the electricity sold back to the grid. A system 10 kW or less sees payback in 6-10 years, and the rest is profit. One provision is that at least 40% of the photovoltaic cells used have to be produced in Ontario (soon to be 60%)

In other words, they've provided the capital and a financial incentive for people to set up solar electricity generation and form a more decentralized energy production system, while at the same time not having to deal with any of the actual logistics, meaning that there's a lot less red tape to be dealt with. At the same time, it stimulates the solar industry in the province and reduces the cost of solar energy via an economy of scale. It's actually surprisingly clever and efficient, to the point that I can hardly believe it's a government program.

[gumOnShoe]

At 5/3/10 01:49 PM, Elfer wrote: If you want to do anything in terms of policy, you need to stimulate demand for alternative energy. The Ontario government actually did something fairly clever to this effect a while ago, called the MicroFIT program. Basically, people can install solar energy systems on their homes, and the government will sign a 20-year contract with you where they pay a ridiculously high premium on the electricity sold back to the grid. A system 10 kW or less sees payback in 6-10 years, and the rest is profit. One provision is that at least 40% of the photovoltaic cells used have to be produced in Ontario (soon to be 60%)

In other words, they've provided the capital and a financial incentive for people to set up solar electricity generation and form a more decentralized energy production system, while at the same time not having to deal with any of the actual logistics, meaning that there's a lot less red tape to be dealt with. At the same time, it stimulates the solar industry in the province and reduces the cost of solar energy via an economy of scale. It's actually surprisingly clever and efficient, to the point that I can hardly believe it's a government program.

I like the idea, but unfortunately, that doesn't translate well here in the U.S. I suppose individual states could attempt to do that, but the federal government will probably never be able to jump start that kind of project, especially given the current state of legislative politics.

And this unfortunately goes beyond the source of power on our electrical grid. As I said, our grid needs an upgrade which is almost entirely manual labor based at this point, after the technical details are filled out. And then, beyond that we're talking about totally restructuring the transportation system which is our real problem here. A majority of our goods are shipped by truck. Fluctuations in oil cause prices to rise on goods because they are shipped by truck. Similarly, by air & sea. It would make sense if we had better rail systems, but we don't.

We haven't invested well enough in alternate transportation systems, and it doesn't look like we are likely to start either. Due to the way suburbia is set up, it makes rail travel difficult to use or build. You'd almost need to start new cities centered around the principal of being modular away from the ones that exist today.

[AJ]

PUMP ALASKA. I know it's short term, but it would at least buy some time to implement something long term without having to rush it. Alaskans get reimbursed lost wages for oil not getting pumped. It's called the PFD, or personal fund dividend. They get like 4,000 dollars a year just for existing, simply because, like you said, the price of gas going up makes the price of everything go up. The oil in Alaska is easily accessible and in no short supply. Not that it really matters since they dump half the shit they drill into the ocean to fuck with the ecosystem.

I know that leaving it for our kids, and our kids' kids is absolutely the worst thing we could do, but I mean, what the hell can we do?

[Elfer]

At 5/4/10 09:27 AM, gumOnShoe wrote: I like the idea, but unfortunately, that doesn't translate well here in the U.S. I suppose individual states could attempt to do that, but the federal government will probably never be able to jump start that kind of project, especially given the current state of legislative politics.

Yeah, it's definitely something that's better handled by individual states rather than the fed. In fact, different states should have different stipulations based on climate. For example, Arizona and New Mexico should be encouraging slightly larger solar systems, because irradiation is higher and population density is lower.

And this unfortunately goes beyond the source of power on our electrical grid. As I said, our grid needs an upgrade which is almost entirely manual labor based at this point, after the technical details are filled out.

That's the great thing about decentralizing production though, it makes the grid's inadequacies less substantial, and it makes repairs/upgrades to the grid easier to do.

And then, beyond that we're talking about totally restructuring the transportation system which is our real problem here. A majority of our goods are shipped by truck. Fluctuations in oil cause prices to rise on goods because they are shipped by truck. Similarly, by air & sea. It would make sense if we had better rail systems, but we don't.

Again, this is one of those things that seems like it'd be a huge deal to do, but in the long run it's not going to sink you. As fuel starts to cost more, there will be more funding for rail shipping because it will be the more economically viable option. You'll also see an arguably more effective move to local production, as well as online distribution of non-material goods.

We haven't invested well enough in alternate transportation systems, and it doesn't look like we are likely to start either. Due to the way suburbia is set up, it makes rail travel difficult to use or build. You'd almost need to start new cities centered around the principal of being modular away from the ones that exist today.

Suburbia is not inherently terrible. In hindsight, it's not something that I would plan on building, but there's a lot more that can be done with it. Back yards can be used for food production, roofs can be used for energy generation (wind or solar, even solar water heating would help), parks could have community gardens. For transportation, buses are still quite efficient, and generally one or two routes is enough to conveniently transport a whole suburb to a hub. To be honest, I wouldn't be too hasty to convert suburbs into high-density areas even if it were possible, since many of them are built in areas where the soil quality is quite good, and it'd be a real shame to pave over it.

One thing that would really help if any new suburbs were to be constructed in a more fuel efficient planning structure would be to have blocks with more than two rows of properties, with footpaths instead of roads. This would be less expensive to build, and would provide more affordable housing to people who don't own cars. If you exclusively walk/bike/bus to where you need to go, there's no reason for your property to be adjacent to a street. The most obvious logistical issue with this is emergency services, but pretending there's no workaround for that is practically denying that creativity and engineering even exist.

[gumOnShoe]

At 5/4/10 09:46 AM, michelinman wrote: PUMP ALASKA. I know it's short term, but it would at least buy some time to implement something long term without having to rush it. Alaskans get reimbursed lost wages for oil not getting pumped. It's called the PFD, or personal fund dividend. They get like 4,000 dollars a year just for existing, simply because, like you said, the price of gas going up makes the price of everything go up. The oil in Alaska is easily accessible and in no short supply. Not that it really matters since they dump half the shit they drill into the ocean to fuck with the ecosystem.

I know that leaving it for our kids, and our kids' kids is absolutely the worst thing we could do, but I mean, what the hell can we do?

Not that. Its a non-solution and will only forstall the problem. Reasons it won't help avoid the next recession:

1) It'll take 10 years to tap anything offshore or in Alaska, even if it would be profitable to companies that drill there it wouldn't be profitable to the nation as a whole.

2) The amount of oil we could extract per day from Alaska wouldn't offset 1% of our total need.

3) Any attempt to continue to rely on oil leaves our system susceptible to the same problems its susceptible now. If oil is a problem now, drilling for more can't be considered a viable solution no matter what.

At 5/4/10 09:57 AM, Elfer wrote: Yeah, it's definitely something that's better handled by individual states rather than the fed. In fact, different states should have different stipulations based on climate.

I agree that that makes sense.

That's the great thing about decentralizing production though, it makes the grid's inadequacies less substantial, and it makes repairs/upgrades to the grid easier to do.

Got any more info on this, maybe I'll write my state senators?

Again, this is one of those things that seems like it'd be a huge deal to do, but in the long run it's not going to sink you. As fuel starts to cost more, there will be more funding for rail shipping because it will be the more economically viable option. You'll also see an arguably more effective move to local production, as well as online distribution of non-material goods.

This has pretty much already happened with banking... but I'm not convinced we'll really try to move away from our current transportation system. There's a lot of protectionism over the auto industry that needs to be removed so that we can get around in other ways. I'm also not convinced cities will rebuild themselves quickly enough in a way to make alternate transporations as availabe as they'd need to be to ween people off of cars, not to mention the psychological addiction we have to driving.

One thing that would really help if any new suburbs were to be constructed in a more fuel efficient planning structure would be to have blocks with more than two rows of properties, with footpaths instead of roads. This would be less expensive to build, and would provide more affordable housing to people who don't own cars. If you exclusively walk/bike/bus to where you need to go, there's no reason for your property to be adjacent to a street. The most obvious logistical issue with this is emergency services, but pretending there's no workaround for that is practically denying that creativity and engineering even exist.

Emergency services, and moving (recently experienced that one) in or out of the building. Its an interesting idea. I just wish I saw more demand for it...

[Elfer]

At 5/4/10 10:25 AM, gumOnShoe wrote: Got any more info on this, maybe I'll write my state senators?

Well, basically in a grid system, energy that's produced feeds into the grid and energy consumed feeds out. If a connection breaks between the generation and consumption points, you get blackouts. When you have say, one large power plant and nothing else servicing a large area, a fault in the grid can cause a huge blackout, or even a cascading blackout as seen in 2003. However, if you have the grid peppered with smaller generating stations (for example, a barn with a 10 kW solar system on the roof can power about ten homes), then people in the area will have more access to electricity while the system is repaired.

Similarly, upgrades where a piece of infrastructure needs to be taken offline will cause a reduced loss of service in the affected area, making it easier to fix the system.

This has pretty much already happened with banking... but I'm not convinced we'll really try to move away from our current transportation system. There's a lot of protectionism over the auto industry that needs to be removed so that we can get around in other ways. I'm also not convinced cities will rebuild themselves quickly enough in a way to make alternate transporations as availabe as they'd need to be to ween people off of cars, not to mention the psychological addiction we have to driving.

Yeah, this is a problem that a lot of people need to get their shit together on. They're introducing a new tax scheme in Ontario that will make gas slightly more expensive, and you have no idea how hard it is to convince people that for the average consumer, gasoline is a "luxury" good. They don't understand that having a home and a workplace that are an hour away from each other is a luxury that is enabled by their purchase of gasoline.

Emergency services, and moving (recently experienced that one) in or out of the building. Its an interesting idea. I just wish I saw more demand for it...

Moving would be, I think, less of an issue. Since it's generally not ultra time-sensitive in the way that emergency services are, it would simply take a bit longer and be a bit more expensive, but people would adapt. We'd also get more used to the idea of selling furniture (that doesn't have sentimental value) along with a house and living with fewer possessions, since if it's going to be a pain to move something, you might not want to have it in the first place.

[JeremieCompNerd]

Honestly, I think at this point the government should fund the production and distribution of solar panels. If we got the solar panels for free, instead of the pay back system, it would be much more immediate benefit. Which, for the average american consumer, is all that matters. Then they don't have to worry about buy back prices at all. Don't pay the person for the energy produced in the long haul, just give them the solar panels to produce it and you get to keep any energy they don't use. They don't pay a bill, you get energy from them, it's a win/win. Admittedly, the logistics of affording those will be a drain on the government, but that's what getting rid of pork barrel is for.

[poxpower]

Every year alternative energies are just "10 years away" haha.

There's leaps and bounds to be made simply in energy efficiency. The technology is largely there around the world but it takes 5-10 years for your extra money spent on it to turn into savings and people no rikey that.

We're like obese people, cramming those donuts in while complaining how there's not yet any drugs that turns fat into pure diamonds and basically not realizing that spare ribs and cheeseburgers might be a great upside today but diabetes and heart attacks are not so awesome 20 years down the line.

[TheThing]

There's no way gas prices will ever reach $5.00 a gallon.

A) Gas topped off at ~$140 a barrel in 2007-2008, and the average price didn't go much higher than $4.25. If prices do go over $5.00 a gallon, it will be from artificial increases by oil companies.

B) In this economic climate, and with this president, gas prices will be frozen if they start reaching those marks (can't wait to hear the new round of Barrack Obama - Jimmy Carter parallels Fox News will make). After the crazy profits oil companies saw in 2007-2008 at the expense of the average customer.

C) I'll become rich. I'll be shorting oil when it gets to the $90-$100 range, and make mad dough from it. But since none of my grand plans ever works out, you better believe that oil won't get that high.

At 5/4/10 03:29 PM, poxpower wrote: The technology is largely there around the world but it takes 5-10 years for your extra money spent on it to turn into savings and people no rikey that.

And that's why we're in an economic crisis - because people didn't realize that they would actually have to pay for the things they bought later. Likewise, that don't realize that to make money, you have to spend money.

We're like obese people,

Really? I think of it more as heroin addicts. Rather than weening themselves off of heroin and onto coffee or something less dangerous, they figure if they just use purer heroin, they won't run into the same health problems they are now.