"How do you know they will make less money?"

Supply and demand. Economics 101. If the demand for gas is less, then the price will go down and the amount of gas sold will go down so the oil companies will make less money.

"The average car in the US is much more efficient than it was in 1970, but gas is more expensive today than in 1970, even when the price is adjusted for inflation. How do you explain that?"

Like you said, it's global. Amount of oil consumed world wide has gone up, and we're bumping up against production limits, plus the cost to pump a barrel of oil has gone up so price has gone up.

Probably more than that, the market is highly manipulated. OPEC controls supply to some extent. The futures market for oil is manipulated by wall street speculators.

You know all that. I wonder why you asked...

"You know all that. I wonder why you asked..."

Gasoline consumption in the US peaked in 2007. The highest national average price in 2007 was $3.22; the highest price in 2012 is over $4, with lower consumption.

Remember that any business will price according to supply and demand... with the caveat they need to make a profit. That is Economics 101. No profit = bankruptcy = no company.

Companies will make huge profits if they can... look at software companies; e.g., net profit as a percentage of sales. The oil industry has one of the lowest net profit percentages... under 10%. Car companies even lower. Banks, insurance, software, and service industries can be much higher (20-30% is not uncommon for some).

Oil companies really make very little profit per gallon of gasoline -- the government makes more money per gallon via taxes -- than oil companies make in profit per gallon. The oil companies make large dollar profits based on volume. If the volume decreases, their fixed overhead does not... so they will need to charge more money per gallon just to cover the fixed expenses. The cost of raw oil fluctuates and oil companies have little control over that price in countries like OPEC. Each year every regulation adds more cost per gallon.

So if you want oil companies to be cleaner and more environmentally safe, you as the consumer must be willing to pay more money per gallon. Can't have your cake and eat it too.

So why is it that consumption has dropped, and you didn't mention it but supply has increased, yet the cost has increased? If it was just supply and demand, prices should have dropped.

"So why is it that consumption has dropped, and you didn't mention it but supply has increased, yet the cost has increased? If it was just supply and demand, prices should have dropped."

The cost of raw materials has increased (oil)... much of that artificially via taxes, regulations, profit taking, middlemen, etc. We have no control over much of the International prices where foreign cartels and governments fix prices.

We must also look at the world supply -- India and China are consuming more and more. Keep global in mind. If an oil company can sell domestic raw crude for more money to some European or Asian company, why would they sell it cheaper to someone in the States? So beware of additional drilling on US soil.

Remember, oil companies are making pennies per gallon profit on gasoline.
I am not trying to paint the oil companies as good citizens.

One of the most important drivers for any radical improvement in technology is money. When gas prices hit $4/gallon in 2007/2008 it sparked a mini-boom in vehicle efficiency. Now you see countless vehicles with Hwy mileage > 30mpg. I have little doubt that most problems we have can be solved when given the proper incentive to do so.

Many people are buying more fuel effecient vehichles not only because of the price of gas but to also do something about human caused global warming. I believe car manufacturers are realizing that there is an environmental car market as well. Price does not drive everything.

Also; http://www.reuters.com/article/2012/03/12/column-oil-idUSL2E8EC3Y120120312

Edited by wildlife on 04/05/2012 16:08:03 MDT.

Good article Dan

If (when) they build the Keystone Pipeline, almost all of the oil will be refined in Texas and shipped to Europe and China.

This will not reduce gasoline prices in U.S.

I think things are so complicated we can't know how supply/demand, speculation, regulations, or anything else effect gas prices.

It seems like they keep bumping up prices until we squeal, then back off a little for a while, then repeat infinitely.

Rather than the scamsters getting the excess profits, we should raise gasoline taxes, like they do in Europe. This would be fair, because it would go to paying for the externalities, like health effects of air pollution, military expenses,... We could offset it with reductions in income tax so it doesn't have an economic effect.

Like increase gas tax by $1 a gallon. If average person would then pay an extra $500 a year, then exempt the first $500 of income tax that people pay. Eventually having $4 a gallon might be good.

Increasing taxes on gas is only going to hurt poorer people. It won't have as much effect as those who are more able to afford it. And then you will build another layer of bureaucratic nonsense to redistribute income, and scumbag (not all businesses) businesses will find a way to gain political influence and special franchises to profit.

Manufacturers will build the cars that people want, though they will try to influence the buying public to buy big cars and trucks. The profit on a standard-sized pick up is substantial (actually huge) versus a compact gas saver.

Best to let the public decide by buying the vehicles and fuel based on the market, not having the government force manufacturers to produce and the public to buy what politicians feel is best for the populace.

"Best to let the public decide by buying the vehicles and fuel based on the market, not having the government force manufacturers to produce and the public to buy what politicians feel is best for the populace."

I believe you pointed out how MPG of vehicles has improved over the years? That was because of the CAFE standards that the government passed.

It would be better to increase gas tax, because some people would just drive less rather than buy a car with better MPG. The CAFE standards don't encourage people to drive less.

"Increasing taxes on gas is only going to hurt poorer people."

If, say, the average person paid $500 a year more in gas tax, then exempt the first $500 of income tax. Poor people that pay less than $500 a year probably don't own a car anyway. It wouldn't be perfect, but it would be somewhat fair.

Jerry,

The first CAFE standards were set in 1975, after the '73 OPEC oil embargo. Wasn't needed and the public rushed out and bought Datsuns, Toyotas, and Hondas for the better gas mileage. Hurt Detroit big time. But as gas prices stabilized many people went back to larger cars because that is what they wanted. Happened again in the early 80's and subsequent gas price spikes. That is the consumer driving the market demand. If no one wants fuel efficient cars, then why should government over-rule their desires -- doesn't the government represent the people; or is the government above the wants of the populace? If a majority of consumers want fuel efficient cars, the government doesn't have to tell the car makers to build them, they will react to consumer demand.

If someone could build a 200 mpg car today that performed well, they would own the car market. And believe me, manufacturers are trying. Don't need the government to tell them to do it. And why is the government's job to tell people how people vote with their money?

What is fair is to let each person spend their own money how they want, without the government telling them what to do via taxes and regulations.

BTW, should I pay more money to go to a movie, buy a hot dog or a soda because my income is higher than the national average? Where do we draw the line or do we even need a line. Let the people vote with their dollars not have your "best government many can buy" make their purchasing decisions for them.

I would be better off selfishly not spending extra money to reduce pollution because the pollution I produce gets dilluted so much I would never notice it.

However, the pollution we produce together is killing us. We need to all agree to spend extra to pollute less.

The government is the mechanism to make everyone do it.

If you just let each person decide for themselves, then it won't work.

"The government is the mechanism to make everyone do it.

If you just let each person decide for themselves, then it won't work."

But isn't that how the US works? The people elect representatives to carry out the will of the people? Or are you saying, that what the people want does not matter any more?

Of course, if you prefer a totalitarian state then it works.

You really want to fix it? Then this will work.

Everyone is not allowed to drive a car more than 5 years old. They pollute and get poor mileage. It will hurt the poor. But who cares about the poor? They drive the biggest polluters and fuel guzzlers anyway... its all they can afford. Are you still driving that older Honda? If so, tsk, tsk, tsk. The new ones use much less gas and pollute less. It is your environmental duty to get a better car to protect the air.

Ration gas. 5 gallons per week. Not enough gas to get to work or the trail head? Too bad. The air will be cleaner.

Anyone caught buying or selling gas ration coupons will be put to death. Otherwise, the prisons would be overflowing with gas ration criminals.

Of course the economy would collapse, and anarchy will take over. But who cares? The air will be cleaner.

;)

When votes are based on misinformation what do you do?;

http://thinkprogress.org/romm/2012/01/28/413955/james-hansen-on-cowards/?mobile=nc

"When votes are based on misinformation what do you do?"

Ah... another conundrum! How about the Iraq war with misinformation about WMD. And many of our citizens cannot make informed decisions, because they lack a good education (despite it was free), or the majority of people don't even bother to vote at all.

We are doomed.

we probably are! But......from my link above;

"It is not true to suggest that the world could not produce all its power needs through renewable methods.

Less than 1% of the worlds’s deserts, if covered with concentrating solar power plants, could produce as much electricity as the world now uses. Make that 1.5%, and it could power all the ground-based transportation energy as well (high speed trains, plug-in hybrid cars, trucks etc). See the Desertec website: http://www.trec-uk.org.uk/index.htm and http://www.trec-uk.org.uk/csp.htm

For the United States, the equates to only 15% of the Federal Land area of Nevada (and which could be dispresed) and approximately $2trln. of investment to supply and distribute 100% clean electricity to the entire United States. This is less money than the bank-bailouts and stimulus combined, and would have been a much better use of those resources. ALL the fossil-fuel power plants in the US could be shut down for good, and their CO2 emissions stopped (and all the nuclear plants shut down too). Power storage for nighttime demand would use heated salt storage, already a known technology fro the 1950′s. Other methods could compressed air storage and rock heating, but the heated salt storage would handle it all today.

The same applies around the world. 90% of thr world’s population lives within 2,700 km of a desert, and could similarly be supplied with solar electricty from there. HVDC power transmission has significantly lower losses/km than HVAC to make this viable, and the technology is available today. See the Desertec website: http://www.trec-uk.org.uk/elec_eng/grid.htm#incremental_hvdc

Edited by wildlife on 04/05/2012 20:18:03 MDT.

"Less than 1% of the worlds’s deserts, if covered with concentrating solar power plants, could produce as much electricity as the world now uses."

and another view...

The deserts aren't dumping grounds. In "my" desert the BLM has entered into secret agreements with solar companies to build solar farms on federal land. Public input was denied/limited/or done in non-traditional ways. The Obama administration has skirted the normal process because it is on federal land and they only want "solar tick marks" on their record. These farms are 6,000 acres plus each, and are on public land. The solar companies are getting sweat-heart deals. Why not make them buy their own land? There is a lot of private land in deserts for sale.

How much CO2 does the desert absorb? Apparently a lot. And what about endangered species like the desert tortoise and fringe-toed lizard? Well, if you want to build something on private land and these creatures live on your land, you won't pass the environmental impact report and you won't get a permit. But on federal land set aside for the enjoyment of Americans for all time, the land gets the shaft. And there is a lot of animal and plant life out there. My son, who is a biologist, is doing a lot of surveys on this BLM solar land projects. Most of us rarely see a desert tortoise... he can find dozens on some days.

And where were the Occupy Wall Street protesters, when they were needed in the lower Colorado desert to stop the rape of our deserts?

Okay... off soap box. Time to criticize the cell phone and GPS users :)

"How about the Iraq war with misinformation about WMD."

The right wingers knew there were no WMD. That was just a propoganda argument to get people to go along.

They wanted a war for political reasons. More corporate welfare for contractors. The president is more powerful when there's a war - for security reasons he can spy on people unconstitutionally which will make it easier to get re-elected. Since there's a war it's easier to pass programs like getting rid of social security.

Bush, Cheney, Rumsfeld, and Condoleeza should be in a jail. There should be a glass wall with no privacy. A stall for toilet where you can see their feet. People walk by and laugh at them. Mothers tell their children - "look, that's what will happen to you if you're evil"...

What really makes me mad is that military guy that just killed a bunch of Afghans. That was his fourth tour. I think that's what to expect when you make people do four tours. The Democrats and Republicans are both guilty of going along with this war when we don't have enough soldiers.

I'm just posting ideas Nick. The turtles and lizards are probably already screwed - like us, except they can't really do anything to change how WE act. 1% of the worlds deserts is not bad if spread around. I know you like deserts - me too. We all want our cake and eat it too. I think this year there may be a heat wave in the Midwest that will convince a whole lot more people that we are on the wrong track. James Hansen predicted in 2008 that during the first term of the Obama Whitehouse that some record setting weather event would change peoples minds. That could be heat in the Midwest this year.

Edited by wildlife on 04/05/2012 20:49:57 MDT.

I'm just trying to push this to page 200.

What's bad, is that by the time there's enough change so it's obvious to people, there's a delay before we can do anything to correct the problem.

Even if we stopped producing CO2, it may continue getting warmer for years or decades or centuries before it starts getting cooler. Nobody really knows.

Like if the artic warms up, then methane will be released, which will continue making it warmer even if we stopped CO2.

All of your ideas about producing energy are not yet commercially viable - like storing energy for over night - heating salts, pumping air into reservoirs,... - we should be able to get them to work but we better get busy figuring out how to make these viable on the scale needed.

I hear you on the obvious thing. It's pretty obvious we won't be able to change fast enough. People are worried about a totalitarian government telling them what to do. Ha! They aint seen nothing yet about Mama Nature's Totalitarian Manners.