Political fuel


#1

Dear Tom and Ray. 1. Gas costs $3.50 per gallon. Obama says he will impose a new tax on oil companies. Clinton says she will end tax breaks for oil companies. Both say this will reduce gas prices. I say gas prices will go up by the tax increase plus the new accounting cost. What do you think?

2.Gasoline explodes to provide energy. Alcohol burns. Clinton and Obama mandate higher gas mileage in cars, while mandating alcohol-diluted gas. Am I right that these two mandates are an oxymoron by the politicians?


#2

Where do you get the idea that gasoline “explodes” while alcohol “burns”?


#3

Ron, you seem like an intelligent chap. So why do you take political promises seriously?! Recall that both Hillary and Obama (yeah, John McCain as well) are members of the US Senate, an extremely powerful political body in its own right. Has any of them tackled the oil situation this year? Do you expect any of them to do so in the remainder of their terms as senator? It hasn’t happened, won’t happen, and only a fool would swallow their campaign baloney.

There is no real oxymoron in the alcohol/mileage picture. Both alcohol and gasoline burn at controlled explosive rates. That’s not the issue. Let’s not take anyone too literally. What really matters is less dependence on foreign oil. So even if a politician phrases the matter in clumsy fashion, don’t beat up on them because of wording. The real question is whether or not they believe what they say, whether they will follow through (more money for research), or whether it is the typical politician’s vote-getting hot air. The third choice most always be assumed. Maybe we will be pleasantly surprised.


#4

In the short run, ending tax breaks or imposing new taxes will increase the price of gasoline. If they encourage a reduction in fuel usage, that would lead to a long term reduction in prices. But remember that large economies like India and China are dramatically increasing fuel usage, so price reductions here are iffy at best.


#5

Neither Clinton, Obama, or McCain can influence gas prices in the long run other than by subsidizing them out of tax revenue. The US imports 60% of its crude oil and 13% of its gasoline. This is bought at world prices!!! No amount of tax juggling to get US companies to drill for and produce more oil is going to affect the price significantly.

Politicians will tell you whatever it takes to get elected, whether that is feasible or not.

As stated on many posts over the last 6 months; THE USA CANNOT INFLUENCE THE WORLD PRICE OF OIL!! No more than it can influence the price of coffee! A full blown 30s style depression in the US would put a temporay damper on oil price increases.

So, if you are planning to buy a new car soon, use $7-$8/gallon for the price of gas that car will burn over its lifetime. This will be good for your financial health, but probably bad for GM, Ford and Chrysler.


#6

Taxes and tax breaks have nothing to do with oil prices. They would if a competitive market, but at the oil company level it is not a competitive market. The oil companies are an oligopoly where the number of players is so small that competition fails to function.


#7

Joseph; a small matter of supply and demand. That same oligopoly could not stop the oil price from falling to $10/ barreel in the early 80s after the runup to $49/barrel caused by the 1979 Iranian revolution. There simply was more oil available thn necessary at that time, causing the price to fall.

At the present time, growth in demand is not keeping up with growth in supply, no matter what you want to believe the oligopoly is capable of doing.

In previous posts we explained that over 75% of world oil reserves are in the hands of less than competent state oil companies. Mexico’s PEMEX is a prime example of a country with good potential reserves to increase production, but instead is losing production due to greed and incompetence.

So, you ain’t seen nothing yet. We are not about to run out of oil soon, but the lack of development opportunities by those who really know how to produce oil is hampering supply growth.

If there is a conspiracy, it is a conspiracy of INCOMPETENCE!


#8

I’m gonna skip the political question of gas taxes.

Gasoline doesn’t explode. It combusts (burns). As does alcohol. Rapid expansion is resultant from the heat created from the chemical reactions. In the case of a car engine, that’s controlled and converted into mechanical motion.

Try to fill a 700C bicycle tire at a gas station air pump and you’ll see the tire explode…with no gas or alcohol! I’ve done it! A real explosion is simply the result of rapid expansion to the level where sudden catastrophic failure of the surrounding structure(s) occurs, regardless of the cause.


#9

ALL politicians lie to get elected. They also over state their own importance. Just vote for the one that makes the fewest promises. They are probably closer to the truth.


#10

By the way…the new gas/diesel source will be derived from coal from which we have more than all the oil in middle east. We are just raising the price till the conversion process becomes competitive IMHO. At that point we will be energy independent. At this rate it could happen by tomorrow at 10 am.


#11

I’m still waiting for one of these folks to propose additional taxes (or import duties) to significantly raise energy prices and reduce consumption. I understand that it won’t get them elected, but that’s what needs to happen.


#12

Of course, that is what needs to be done, but as we all know, politicians of both parties will say what people want to hear, rather than what would actually make a long-term difference.

I have come to the point where I doubt the ability of most of the American public to distinguish between feel-good rhetoric and real solutions. Since the real solutions are almost always painful, politicians instead spout ridiculous short-term, feel-good policies while we sink further into debt and further into energy problems.

As Pogo the Possum said, “We have met the enemy, and he is us”.


#13

What they promise and what they propose next year may be entirely different things. Many politicians experience epiphanies after election.


#14

Yes, coal is such an obvious solution. Yet the politicians can’t/won’t take on the environmentalists and their high drama, emotional arguments which have gained so much public support.


#15

I think sheer economics and demand will force a move to coal based fuels, barring some unforeseen breakthrough technology. The environmentalists may whine, but life will go on and market forces will not be stopped. Coal based fuels have been available for over 50 years and only cheap oil has kept any serious development of that source from being pursued. It’s a known process that will probably yield more and cheaper fuel as the chemical engineers start applying their expertise to it.


#16

Coal can be used to make gas/diesel?


#17

Yes, as per several previous posts, both Germany and South Africa have succesfully liquified coal to make both gasoline and diesel. The technology is at least 80 years old. The CO2 generated in the process will have to be sequestered underground to meet GHG goals.

The process is defintely economic as oil gets to $200/barrel.


#18

Coal is basically pure carbon (the C in CO2). Add hydrogen (H) by one of several methods, and you get an oil-like hydrocarbon that can be refined into fuels. It’s messy, expensive, and dirty, so hasn’t been popular except in dire circumstances (such as Germany in WW2 and South Africa during the apartheid era).


#19

I like it!


#20

Has anyone noticed who the largest investors are for renewable/alternative fuels are? ?? Any guesses? The large oil corporations, of course. To heck with corn-based ethanol/methanol. There are presently researchers going a thousand miles an hour to develop saw grass resources as well as using lumber scraps, etc., to transplant the mostly cow corn being used to make methanol. That’s one reason why livestock prices and consequently meat prices at the grocery are going into the stratosphere. That, combined with the increased costs for fuel of all kinds to operate farm equipment, get them hogs and cows to the feed lots, then get’em to the slaughterhouse, and then to the stores is just the tip of the iceburg. No politician’s 2 or 3 minute sound bite is going to change anything at this point until Congress realizes who they work for and we squawk like he77. Just my vent for today. Politicians: If their lips are moving, they’re lying. (That’s at the Fed. level and in some States, also).