I've never considered wealth to be the determining factor in being an elitist. It is more of an attitude that you know best in all matters, and turn your nose up at others and their opinions.
OK, but that certainly blows a hole in the "Celebrities don't have to worry about family budgets. But we sure do," line from one of McCain's anti-Obama ads, doesn't it? "Even though I'm wealthy enough not to know how many houses I own and my opponent grew up poor and went to college on scholarships, he's out of touch with the average American's financial problems and I totally understand household budgets" just doesn't seem to ring true.
On the subject of the 57 states thing...I saw a clip of the speech on YouTube (too lazy to look the link up), and he definitely said it more than once.
1) I strongly suspect that this is false.
2) Assuming it is true, exactly what conclusion are you drawing from it? That a Harvard-educated constitutional law scholar and member of the US Senate doesn't know how many states there are? Seriously?
The conclusion I draw from McCain's gaffe on houses is that he's fortunate enough not to have to worry about households budgets or keeping track of how many things he owns. No real knock against him, but it does make his attempt to paint Obama as somebody who doesn't understand the concerns of hard-workign Americans a bit hypocritical.
The conclusion I would draw from Obama's gaffe (if repeated) is that he tends to misspeak when he says a number beginning with "fifty" for some reason--kind of like how I tend to misspell the DOS command "dir" as "ls" when I'm using a Windows system. Maybe he likes Heinz products.
I'm not going to disagree with you that Clinton was an extraordinarily accomplished man, but are you really saying that (Georgetown + Oxford + Yale) and (Columbia + Harvard + teaching at the University of Chicago) are not in the same ballpark? I mean, maybe, I'm looking at things too coarsely, but I would refer to both of those as "records of extreme academic achievement" or "histories of success at elite academic institutions."
And in fact... I absolutely agree with your notion that military service; of which engaging an enemy force, defeating an enemy force or at the very least, deterring enemy forces from engaging us is the definining mission thereof... should be a mandatory experience in holding the office of President.
I'm starting to agree with the notion that mandatory military service for all would be good for the country. It might cause us to stop fetishizing military service and ascribing superhuman strength and wisdom to those who have engaged in it.
No the democrats don't really do this. This points to a fundamental problem with the Democrat party, and explains how they can lose to a chimp for important offices. The Republicans are far more organized and have much slicker campaigns than the Democrats. Providing supporters with as much information as possible to enable them to stay "on message" is just one more example of Republican political savvy.
Yes, the Republicans do seem to have an uncanny ability to get otherwise intelligent people to buy into their marketing phrases simply by repeating them until they no longer sound ridiculous.
I don't think that the grandparent phrased it clearly, but the point is correct. There's supply and there's demand. The intersection gives you price and quantity. If the story is that speculation is driving us above the equilibrium price, it means that somebody has to be stashing physical oil somewhere. You can't do it on paper alone.
The way a futures trader would do this is to drive the price of futures up high enough that people who would otherwise sell oil on the spot market decide to hold on to it and sell it on the more profitable futures market. Alternately, they could drive the price up so high that people who would not otherwise buy physical oil buy barrels of oil on the spot market and then sell futures contracts against them. In either case, the futures price has to be high enough to make it a worthwhile investment, especially if you're not storing your oil in the ground but rather tanking it somewhere.
If that story was true, we'd expect to see reduced output from oil producers or some evidence of huge quantities of oil being stored somewhere. We'd also expect to have seen futures prices higher than spot prices during the run up--which they weren't. I'm pretty well convinced that Krugman's argument is correct.
Negative. The whole argument for "speculation is driving up prices" is based on "paper oil," or oil futures. Read on.
The author does not explain how the futures traders manage to affect the spot price without causing hoarding. This is not surprising, because it pretty much runs counter to economic theory. The only people who buy contracts on the spot market are people who use oil or people who produce oil. You can't speculate on that market.
So how does somebody who can't actually take delivery of the oil affect the spot market over the long haul? More importantly, how does such a person profit from it? The only scenario I can think of is driving up the futures price high enough to cause hoarding, but that's a losing proposition as you're betting against yourself. So where's the story, aside from "Something funky is going on"?
The issue is that driving up the price on long-term oil positions drives the airlines who wanted to lock in their prices back to the spot market. In the short run, speculators can do this. In the long run, speculators have to dump those contracts. They can't take delivery of them. Essentially, they can be a pain in the ass for a while, but the airlines can simply move to the spot market where the only buyers are those who actually produce and take delivery of the oil.
Over the life cycle of the contracts, speculators essentially factor themselves out because they have no ability to affect the final price of the good unless they create market conditions that make it profitable to hoard oil or reduce output. Since the futures price was lower than the spot price for most of the run-up, there's no sensible reason to believe that's happened, especially in the absence of serious evidence of hoarding or supply cuts.
"Oil prices rose 12 dollars based on the fact the speculators said it would rise 12 dollars."
Was said by quite a number of people a few months ago, and it was clear they influenced the prices. Since nobody in the supply chain has an incentive to lower it, why would it go back down.
And remember, it's not true 'supply'. Supply is choked by the suppliers.
The key point is long term. In the short run, speculators can run up the price of futures, causing oil producers to buy back contracts that are near their maturity date and resell those barrels of oil at a higher price in the future. In the long run, speculators who do that will lose their shirts because they're buying high-priced futures and then selling them at a lower price as they approach maturity.
Oil is a stock and flow problem. There's supply and demand. Oil suppliers are the sole source of the supply curve for the spot market. Speculators don't factor into it except in the scenario I outlined above (and if we were seeing that, we'd be seeing evidence of reduced output from oil producers--and none is apparent). If the demand curve remains stationary, the only way to change the price is to reduce supply and quantity. We're seeing steadily increasing quantities and increasing prices. That looks an awful lot like a demand curve that's steadily on the march against a supply curve that's not keeping up with it.
Oil is drilled by many underdeveloped states that have little if any environmental regulations. Any less demand on the oil of the rest of the world would help decrees the environmental effect of accidents around the world.
So you're suggesting that if we pump a barrel of oil here, then some other country that would have pumped a barrel of oil will not do so? Is there some law of economics that I'm not aware of at work here?
But, it does not mater as long as "we" are not the ones killing the environment. right?
Well, that's not really the purview of our Congress, is it? Their job is to make sure that we use our resources appropriately, independent of what China or anybody else does.
That stilla considerable abbount of money, and when it doesn't cost you a dime more to refine $2 gas than it does to refine $4 gas, people get kind of pissed about the price.
Price isn't just about what it costs to make it. It's about demand too. If the price of gas was still $2, people would demand more gasoline than was available. Oil companies could choose who gets it randomly, or they could hold a dancing contest. Or they could raise the price until they reach a market clearing quantity.
I'm not a big supporter of trying to drill our way out of a problem that we can't solve by drilling, but I also can't really see casting the oil companies as the villains in this. We're just reaching an uncomfortable physical and economic reality.
I did. You just ignored it. The cost is risk to the local ecosystem. Bearing in mind once again that I am neither agreeing or disagreeing that such a cost is overwhelming. I'm simply pointing out that it's part of the equation.
This has gone on all summer. The Republicans are holding every bill hostage to this drilling.
That is why I'm pointing out that this is batshit insane. We're talking about a negligible estimated bump in world production and price. It's not worth making a ridiculous scene in Congress over, and it's certainly not worth holding up any legislation over. It's an ineffective window-dressing solution to a serious problem, not something that's worth any real time invested by our legislature.
If oil development is restarted in the US again, it will send a signal to the oil markets. That signal will say that more oil will be available in the future -- more supply. It will cut the potential sale price of the oil reserves still in the ground. Since oil is very high right now, producers will have an incentive to pump more oil now and sell it at a high price rather than leaving it in the ground to sell at a lower price in the future. They will respond by working overtime pumping more oil now. That will cause immediate supplies to go up, which will cause immediate prices to drop.
This is true. The other part of it that's also true is that the signal is, "There will be 0.2% more oil in the future!" There's no real evidence that producers are withholding a significant amount of their output right now, and the actual future shift in supply is negligible, so I'm not sure why you're assuming that it will cause any significant change in output.
A small part of the recent drop in oil prices is probably due to predictions that the US might change from "no new production" to a policy of "some new production". Mostly it's related to higher inventories of oil and gasoline.
Another part of it is that there's a lot of speculation that China will continue to cut its oil subsidies--something that's much more likely to make a real difference in the equilibrium quantity of oil.
The DOE link does not mention the discounting of future availability of oil being built into the current price and it doesn't appear to do any demand estimation at all. What makes someone at the DOE qualified to discount worldwide supply and demand for oil 25-years in the future? Maybe she knows something about the amount of oil there. How does she know the economic growth of China and India in 2025?
That's what the Energy Information Administration does for a living. They project future worldwide supply and demand of all sorts of energy markets. It's a department full of a mixture of energy experts, accountants, and economists who do exactly the type of forecasting you're looking for. Look at their web site. I'm weighing their analysis against your hand waving and armchair econometrics.
Estimates of oil reserves are always low. Technology improves and it gets cheaper to get at oil. Prices rise and oil that was considered "too expensive to drill for" at $40/barrel is now highly profitable at $120/barrel. Does she discount future technology improvements? Not explicitly she doesn't.
That's true. There may be a technological breakthrough that makes all analysis obsolete, thus making the deep analysis of industry experts no better than that of random people on Slashdot. Based on historical norms, though, we're not looking at more than 300,000 bbl per day. It doesn't matter what's recoverable or how much is down there. The market price is a stock and flow problem.
This is why the Democrats won't allow this drilling. Because it might work and because it would likely cut gas prices (maybe
I'm not sure if you're just yanking me or if you're seriously not getting it. The point is that this action does not affect the price of oil one way or another. So it won't cause higher or lower prices. The prices won't change appreciably. There is no choice between higher and lower prices in this equation. It's going to be higher prices regardless.
Think of it this way: You have cancer. You say, "I'm going to take a Tylenol to fix this." I say, "Tylenol will not appreciably improve your cancer." The correct thing to say is not, "You just want me to die of cancer!" It's, "Wow, you're right. That's not a potential solution but rather something that's ineffective that I was going to do to make myself feel better."
Even the opposition talking points admit that drilling will help people a little.Now you're saying it won't help them at all. Sticking to one answer makes a more credible argument in an absolute (but not necessarily a partisan) sense.
If you give me a penny, you have technically made me wealthier. Is it really off base to say, "Giving me a penny isn't going to make me any wealthier" if it's true in a practical sense?
I dispute the DOE numbers you are using as your only basis for argument.
Based on absolutely nothing as far as I can tell. Do you dispute them because they upset you? Because you have some secret data that the DOE isn't aware of that you're not sharing? By all means, post your data and sources.
I'm not sure why you're so desperate to hide behind them to oppose oil drilling. You have yet to identify a downside to oil drilling.
The DOE's whole reason for existence is to research our energy needs and advise on policy. I'm weighing their opinion based on hard numbers against the unsupported arguments of random people on the Internet, and you can't imagine why I'm giving the Department of Energy the benefit of the doubt?
The downsides that have been identified are the general potential for environmental disaster. Frankly, I'm skeptical of that, but I don't know enough about it to quantify those risks. That's why I'm neither strongly for or against the ban. I'm simply against ridiculous rhetoric that implies that off shelf drilling is a meaningful solution to our problems.
It's actually a silly argument. You're opposed to it because it might only help a little and you want to argue about how much "a little" is.
A silly argument? It's a cost-benefit analysis. It's exactly how we're supposed to do policy! What are the potential downsides? What are the potential upsides? Quantify them. Compare them. Make a decision. As far as I can tell, both the downsides and upsides appear to be near zero, so why the big deal over it? Why are we throwing tantrums and calling each other evil? This is a non-issue that appears to amount to a combination of political grandstanding and boot licking for the parties' respective constituencies (in this case, reflexive environmentalists and oil companies).
Without any identified downside, it only makes sense to try drilling. Then we'll see if "a little" is really a little.
As I said, in the absence of a compelling reason one way or another, I don't really care. All I see is empty rhetoric that doesn't match up with the data, and that annoys me. I seriously doubt that it will be an environmental disaster. I'm also quite sure that it will have no real effect on the problem it claims to be solving. Normally, when the government tries to do something and the stated reason for doing it is transparently untrue, I get suspicious. That's about it.
But this isn't about doing things that make sense, is it?
If it were about making sense, I would be more surpised at your remarkable lack of interest in actual numbers and data. As it stands, I'm not.
So screw the needs of people. Nevermind poor people who can't afford the costs of perfect environmental spiritual purity.
Find something that addresses the needs of people and we'll talk. Until then, it's all just rhetoric, grandstanding, and snipping the substance out of my posts.
I don't want to be friends.
I'm not suggesting that we should be friends (although I have no idea why you seem intent on declaring me an enemy because I disagree with you). I'm suggesting that if you actually read and address the arguments in a policy discussion, you might actually learn something. For example, when somebody presents hard numbers that show that your claims are totally wrong, you should probably internalize that data and think about what it means to your position.
You guys hurt people intentionally to consolidate your power.
What "power" am I consolidating, exactly?
You guys take and take and take from working people to give the money to people who produce nothing -- trapping those people who get the checks in a lifestyle of poverty, irresponsibility, and hopeless dependence. All for power. You guys choose union control over learning in education.
Oh, sorry. I didn't realize that I was talking with a crazy person.
WTF does any of this have to do with the issue at hand? Do you typically snip out the actual data and arguments in a discussion and respond with incoherent rants on unrelated subjects? I can get that on the subway.
You guys choose "the earth" and animals over people.
It has been demonstrated that this is not a solution that will help the people. I discussed this at length (with data, no less!) in previous posts, but you seem to have ignored it. If the idea of a sober cost/benefit analysis upsets you and you'd rather foam at the mouth and rant, go ahead. Don't pretend it's meaningful policy discussion, though.
Pelosi made the point to prevent the vote. If it doesn't matter, then why spend so much effort opposing it? Why not just let it happen and say "see, it didn't help" when it doesn't help?
Apparently, there are environmental concerns. I don't know enough about those concerns to make a judgment as to whether or not they're legitimate. If they are, then ignoring them for something that makes essentially zero difference is bad policy. If the concerns are not real, we're doing something with negligible environmental impact that will have negligible impact on world prices. In the absence of further evidence, the payoff matrix is pretty clear to me.
The answer is because it actually will help.
Why do you continue to make this shit up in the face of evidence to the contrary? Where are your numbers?
Again, the translation: "We won't help poor people with their fuel bills -- not even a tiny, insignificant little bit -- because some oil company might make some money. We don't care about people."
Ascribing nefarious motives to people who just have a legitimate policy disagreement with you is not endearing or even sensible. You might try assuming, for a moment, that people can disagree with you for reasons other than craziness or evil. You might learn something, especially if those people present numbers when you don't appear to have any.
If there's no oil there, how do (the people you hate who work at) the oil companies make any money anyway?
Have you looked at the numbers? Let's say we're looking at 1/2M barrels per day (more than the DOE estimates, mind you). Let's say that they make a measly $1 per barrel (they likely make quite a bit more than that). That's ~$180M in profits per year for the industry. That's not chump change. It is chump change for the people on the other side of the equation. If you believe otherwise, let's see your numbers.
Think of it this way: If I took 1 penny from every US citizen, I'd be about $3M richer. On average, it wouldn't make any difference to those citizens. There is no inconsistency in these two observations. I'm not sure if you're being dishonest or if you just haven't thought this through.
There is more than just the Continental Outer Shelf that needs to be explored:
And while I could quibble about the impact those numbers have on the world market, I'll simply point out that those things were not at issue in this case.
The whole point of the debate was to remove those restrictions, which would render the entire report you linked to obsolete.
I think that you skimmed the paper rather than reading it. That's for the "reference" line for comparison (the lower one). The upper one is derived without those restrictions. The graph shows the difference in millions of barrels per day over time. Note that nothing really changes until damn near 2020, and after that, the change is less than 1/2 of 1% of world supply.
If we're still bumping up against the same oil supply and demand problems we have today in 2017, we've taken a seriously wrong policy turn somewhere.
Even your silly 0.2% increase number is a positive number.
Silly? Like, as in, "The Department of Energy's number" silly?
Even by your silly estimation, doing something is better than the nothing that the other side has to offer.
Sorry to break this to you, but nothing is exactly what the US government can do about the world supply of oil and the fact that world demand is outstripping and will likely continue to outstrip our ability to increase world supply. If the problem is "Waaa! Make gas prices lower!" then the only solution the government can offer is to tax people and subsidize gas at the pump. Throwing out a non-solution to a problem that has no practical supply-side solution is not exactly clever or heroic.
If we really wanted the government to do something about the price of oil, we'd have to ask them to enforce conservation. We do have demand-side power. Of course, the same people who think that a negligible shift in world supply a decade from now will solve all of our problems would probably throw a shit-fit if the government tried to tell them how much energy to use or how to use it.
It's like not picking up a $5 bill you find on the ground because it's such a small fraction of your yearly pay.
And the Republican argument is essentially, "I know that we're $300K underwater on this deal, but if we could just pick up a $5 bill, we'd be saved!" Of course any small delta is a positive number, but if it doesn't affect the actual price in any noticeable way, exactly what is the point of making a scene over it? The reality is that this is simple political theater combined with a desire to make a payoff to the oil industry.
Frankly, I don't know what the real costs of drilling would be, so I don't have a position on whether we should do it or not. I have a pretty good idea about the benefits, though, so I kind of wonder why anybody cares about this issue.
(And other people say it's a lot more than $5 though. But you won't even let them look.)
Of course. Nebulous "other people" are always saying stuff that doesn't sync up with the expert consensus. They're not typically right and they often have an agenda. They should submit their findings to the DOE and see where that goes.
A lot of real people are in a world of hurt with these high gas prices. America simply announcing there will be plenty of oil by its commitment to drill will drop prices over night. But Pelosi's summer vacation and politics trump the less advantaged. Par for the course for Democrats.
If by "plenty of oil" you mean a 0.2% increase in supply over a decade from now, then let's start those pumps! Land of plenty, here we come!
Wow! a projection of a non significant impact on the price. Guess we shouldn't do it. Of course not doing it will have a significant impact on the price in a way I don't want.
What part of "no significant impact" do you not understand? It means that "not doing it" will produce no significant change as well. There's no difference. No impact. Increasing the world supply by 0.2% years from now will not change anything--now or years from now.
What alternative to drilling is project to return more, faster?
Reducing demand. Our market power in the oil market has never been on the supply side. Supply is only going to become more inelastic in the long run. Demand will become more elastic.
Oil prices are high because speculators think future supply will be low. If we drill, speculators may think future supply will be higher. This will lower current prices even though the oil won't be immediately available.
Nonsense. Speculators (if, by "speculators" you mean people who don't take delivery of oil) can't run up the price of delivered oil unless they drive up the futures price high enough to encourage physical hoarding or output reduction. Where is the evidence of that? Who is storing all of the oil that has to be disappearing from the oil supply? Show us the numbers!
It's easy to blame speculators for creating what is, by all appearances, a very real supply and demand problem, but I don't see any evidence justifying it.
And you guys have been saying that for many years. That's why we couldn't fix the problem back then too. Now, many years later, it is not fixed.
So, that would have "fixed the problem" then? A fat 0.2% increase in world production that, according to the DOE would have an "insignificant" effect on the price? I'm crushed that we missed the boat on that solution.
This is the standard politician's formula of "X is a problem, Y is something I want to do. I'll pretend that Y will solve X and sucker the electorate into letting me do it."
Granted, he never said "I invented the internet", but it's not hard to get that from "I took the initiative in creating the internet".
If he had said something like, "I took the initiative in creating the highway between City A and City B," do you think that people would have jeered at him for implying that he was out there driving a steam roller?
You again? Are you sure you're not just the other poster's sock-puppet that chimes in when one of his points gets knocked out?
Why in the world would somebody need sock puppets to defend this position on Slashdot of all places?
Or do you really have nothing better to do than check this thread to see if I've responded to something he said?
I get email when people respond to me. I got one for your response, came back to find it, and ended up on this post by accident. It seemed interesting enough. As for having nothing better to do, I think that there are three people still on this thread, and I'm pretty sure that you're one of them.
Obviously, I didn't say it enough times... morality is a product of evolutionary forces [wikipedia.org]. No bag of meat can analyze it into anything else, because said bag of meat is, itself, a product of evolutionary forces.
So any and all results of reason are the result of evolutionary forces because the brain evolved and is the result of evolutionary forces? Fair enough. Doesn't it appear, then, that evolutionary forces have done a pretty good job of finding codes of ethics that work pretty well?
I'm glad it makes you feel good, but that's simply not valid under evolutionary forces. Survival of the fittest, natural selection, and random chance don't involve pity or compassion.
Whoa there! I'm allowing your claim above for the sake of argument, but that doesn't follow. The fact that our brains are the product of evolution does not mean that our brains have to use principles of natural selection in determining a code of ethics. In fact, I'd say that using the principles of natural selection are likely to result in a pretty crappy code of ethics--and that's my evolved bag of meat talking. There's a difference between "The brain evolved" and "The brain must always use the principles of evolution to arrive at its conclusions."
Anyway, the previous poster just said there was no standard of absolute morality, and now you're arguing that there should be some ideals that are standard. You can't have it both ways. Do you agree with him, or don't you?
It depends on what you're asking. I certainly don't think that there is any sort of magic morality built into the universe. I also don't think that you can enumerate a moral code that works in all situations. I do think that some solutions to the problem of morality are better than others. For example, a code that protects members of a society from being beaten to death is a better solution to the problem than one that does not, all else held equal.
I assume that you're on the side of an absolute, universal moral code. I'd love to see it and learn how it handles the myriad edge cases out there. I suspect that God, in His wisdom, probably doesn't have a much better hit rate of putting together moral codes that work in the real world than the collective reasoning power of mankind does.
Again you use a paradox of material implication (well, I think it was you who did it last time... although I might be blaming something from the other poster on you. What's the difference, though, you're defending him after all). Logically, "If I jumped off a cliff yesterday, I'd still be alive now" is true (because I didn't jump off a cliff yesterday). You might as well have asked "If red were green, would you murder orange?"
No, that's not the construct at all. There's a difference between a hypothetical and an actual logical formula. The word "if" is used in both contexts, but that's about it. I'm asking this in the hypothetical sense. It's like asking, "If they weren't out of sandwiches, would you buy one?" Most people don't foam at the mouth and say, "Nonsense and hogwash! They are out of sandwiches, so the entire line of questioning is abs
Slashdot Mirror
OK, but that certainly blows a hole in the "Celebrities don't have to worry about family budgets. But we sure do," line from one of McCain's anti-Obama ads, doesn't it? "Even though I'm wealthy enough not to know how many houses I own and my opponent grew up poor and went to college on scholarships, he's out of touch with the average American's financial problems and I totally understand household budgets" just doesn't seem to ring true.
1) I strongly suspect that this is false.
2) Assuming it is true, exactly what conclusion are you drawing from it? That a Harvard-educated constitutional law scholar and member of the US Senate doesn't know how many states there are? Seriously?
The conclusion I draw from McCain's gaffe on houses is that he's fortunate enough not to have to worry about households budgets or keeping track of how many things he owns. No real knock against him, but it does make his attempt to paint Obama as somebody who doesn't understand the concerns of hard-workign Americans a bit hypocritical.
The conclusion I would draw from Obama's gaffe (if repeated) is that he tends to misspeak when he says a number beginning with "fifty" for some reason--kind of like how I tend to misspell the DOS command "dir" as "ls" when I'm using a Windows system. Maybe he likes Heinz products.
I'm not going to disagree with you that Clinton was an extraordinarily accomplished man, but are you really saying that (Georgetown + Oxford + Yale) and (Columbia + Harvard + teaching at the University of Chicago) are not in the same ballpark? I mean, maybe, I'm looking at things too coarsely, but I would refer to both of those as "records of extreme academic achievement" or "histories of success at elite academic institutions."
I'm starting to agree with the notion that mandatory military service for all would be good for the country. It might cause us to stop fetishizing military service and ascribing superhuman strength and wisdom to those who have engaged in it.
Yes, the Republicans do seem to have an uncanny ability to get otherwise intelligent people to buy into their marketing phrases simply by repeating them until they no longer sound ridiculous.
Yep. What you're seeing is called the Phillips curve.
I don't think that the grandparent phrased it clearly, but the point is correct. There's supply and there's demand. The intersection gives you price and quantity. If the story is that speculation is driving us above the equilibrium price, it means that somebody has to be stashing physical oil somewhere. You can't do it on paper alone.
The way a futures trader would do this is to drive the price of futures up high enough that people who would otherwise sell oil on the spot market decide to hold on to it and sell it on the more profitable futures market. Alternately, they could drive the price up so high that people who would not otherwise buy physical oil buy barrels of oil on the spot market and then sell futures contracts against them. In either case, the futures price has to be high enough to make it a worthwhile investment, especially if you're not storing your oil in the ground but rather tanking it somewhere.
If that story was true, we'd expect to see reduced output from oil producers or some evidence of huge quantities of oil being stored somewhere. We'd also expect to have seen futures prices higher than spot prices during the run up--which they weren't. I'm pretty well convinced that Krugman's argument is correct.
The author does not explain how the futures traders manage to affect the spot price without causing hoarding. This is not surprising, because it pretty much runs counter to economic theory. The only people who buy contracts on the spot market are people who use oil or people who produce oil. You can't speculate on that market.
So how does somebody who can't actually take delivery of the oil affect the spot market over the long haul? More importantly, how does such a person profit from it? The only scenario I can think of is driving up the futures price high enough to cause hoarding, but that's a losing proposition as you're betting against yourself. So where's the story, aside from "Something funky is going on"?
The issue is that driving up the price on long-term oil positions drives the airlines who wanted to lock in their prices back to the spot market. In the short run, speculators can do this. In the long run, speculators have to dump those contracts. They can't take delivery of them. Essentially, they can be a pain in the ass for a while, but the airlines can simply move to the spot market where the only buyers are those who actually produce and take delivery of the oil.
Over the life cycle of the contracts, speculators essentially factor themselves out because they have no ability to affect the final price of the good unless they create market conditions that make it profitable to hoard oil or reduce output. Since the futures price was lower than the spot price for most of the run-up, there's no sensible reason to believe that's happened, especially in the absence of serious evidence of hoarding or supply cuts.
The key point is long term. In the short run, speculators can run up the price of futures, causing oil producers to buy back contracts that are near their maturity date and resell those barrels of oil at a higher price in the future. In the long run, speculators who do that will lose their shirts because they're buying high-priced futures and then selling them at a lower price as they approach maturity.
Oil is a stock and flow problem. There's supply and demand. Oil suppliers are the sole source of the supply curve for the spot market. Speculators don't factor into it except in the scenario I outlined above (and if we were seeing that, we'd be seeing evidence of reduced output from oil producers--and none is apparent). If the demand curve remains stationary, the only way to change the price is to reduce supply and quantity. We're seeing steadily increasing quantities and increasing prices. That looks an awful lot like a demand curve that's steadily on the march against a supply curve that's not keeping up with it.
So you're suggesting that if we pump a barrel of oil here, then some other country that would have pumped a barrel of oil will not do so? Is there some law of economics that I'm not aware of at work here?
Well, that's not really the purview of our Congress, is it? Their job is to make sure that we use our resources appropriately, independent of what China or anybody else does.
Price isn't just about what it costs to make it. It's about demand too. If the price of gas was still $2, people would demand more gasoline than was available. Oil companies could choose who gets it randomly, or they could hold a dancing contest. Or they could raise the price until they reach a market clearing quantity.
I'm not a big supporter of trying to drill our way out of a problem that we can't solve by drilling, but I also can't really see casting the oil companies as the villains in this. We're just reaching an uncomfortable physical and economic reality.
I did. You just ignored it. The cost is risk to the local ecosystem. Bearing in mind once again that I am neither agreeing or disagreeing that such a cost is overwhelming. I'm simply pointing out that it's part of the equation.
That is why I'm pointing out that this is batshit insane. We're talking about a negligible estimated bump in world production and price. It's not worth making a ridiculous scene in Congress over, and it's certainly not worth holding up any legislation over. It's an ineffective window-dressing solution to a serious problem, not something that's worth any real time invested by our legislature.
This is true. The other part of it that's also true is that the signal is, "There will be 0.2% more oil in the future!" There's no real evidence that producers are withholding a significant amount of their output right now, and the actual future shift in supply is negligible, so I'm not sure why you're assuming that it will cause any significant change in output.
Another part of it is that there's a lot of speculation that China will continue to cut its oil subsidies--something that's much more likely to make a real difference in the equilibrium quantity of oil.
That's what the Energy Information Administration does for a living. They project future worldwide supply and demand of all sorts of energy markets. It's a department full of a mixture of energy experts, accountants, and economists who do exactly the type of forecasting you're looking for. Look at their web site. I'm weighing their analysis against your hand waving and armchair econometrics.
That's true. There may be a technological breakthrough that makes all analysis obsolete, thus making the deep analysis of industry experts no better than that of random people on Slashdot. Based on historical norms, though, we're not looking at more than 300,000 bbl per day. It doesn't matter what's recoverable or how much is down there. The market price is a stock and flow problem.
I'm not sure if you're just yanking me or if you're seriously not getting it. The point is that this action does not affect the price of oil one way or another. So it won't cause higher or lower prices. The prices won't change appreciably. There is no choice between higher and lower prices in this equation. It's going to be higher prices regardless.
Think of it this way: You have cancer. You say, "I'm going to take a Tylenol to fix this." I say, "Tylenol will not appreciably improve your cancer." The correct thing to say is not, "You just want me to die of cancer!" It's, "Wow, you're right. That's not a potential solution but rather something that's ineffective that I was going to do to make myself feel better."
If you give me a penny, you have technically made me wealthier. Is it really off base to say, "Giving me a penny isn't going to make me any wealthier" if it's true in a practical sense?
Based on absolutely nothing as far as I can tell. Do you dispute them because they upset you? Because you have some secret data that the DOE isn't aware of that you're not sharing? By all means, post your data and sources.
The DOE's whole reason for existence is to research our energy needs and advise on policy. I'm weighing their opinion based on hard numbers against the unsupported arguments of random people on the Internet, and you can't imagine why I'm giving the Department of Energy the benefit of the doubt?
The downsides that have been identified are the general potential for environmental disaster. Frankly, I'm skeptical of that, but I don't know enough about it to quantify those risks. That's why I'm neither strongly for or against the ban. I'm simply against ridiculous rhetoric that implies that off shelf drilling is a meaningful solution to our problems.
A silly argument? It's a cost-benefit analysis. It's exactly how we're supposed to do policy! What are the potential downsides? What are the potential upsides? Quantify them. Compare them. Make a decision. As far as I can tell, both the downsides and upsides appear to be near zero, so why the big deal over it? Why are we throwing tantrums and calling each other evil? This is a non-issue that appears to amount to a combination of political grandstanding and boot licking for the parties' respective constituencies (in this case, reflexive environmentalists and oil companies).
As I said, in the absence of a compelling reason one way or another, I don't really care. All I see is empty rhetoric that doesn't match up with the data, and that annoys me. I seriously doubt that it will be an environmental disaster. I'm also quite sure that it will have no real effect on the problem it claims to be solving. Normally, when the government tries to do something and the stated reason for doing it is transparently untrue, I get suspicious. That's about it.
If it were about making sense, I would be more surpised at your remarkable lack of interest in actual numbers and data. As it stands, I'm not.
Find something that addresses the needs of people and we'll talk. Until then, it's all just rhetoric, grandstanding, and snipping the substance out of my posts.
I'm not suggesting that we should be friends (although I have no idea why you seem intent on declaring me an enemy because I disagree with you). I'm suggesting that if you actually read and address the arguments in a policy discussion, you might actually learn something. For example, when somebody presents hard numbers that show that your claims are totally wrong, you should probably internalize that data and think about what it means to your position.
What "power" am I consolidating, exactly?
Oh, sorry. I didn't realize that I was talking with a crazy person.
WTF does any of this have to do with the issue at hand? Do you typically snip out the actual data and arguments in a discussion and respond with incoherent rants on unrelated subjects? I can get that on the subway.
It has been demonstrated that this is not a solution that will help the people. I discussed this at length (with data, no less!) in previous posts, but you seem to have ignored it. If the idea of a sober cost/benefit analysis upsets you and you'd rather foam at the mouth and rant, go ahead. Don't pretend it's meaningful policy discussion, though.
Apparently, there are environmental concerns. I don't know enough about those concerns to make a judgment as to whether or not they're legitimate. If they are, then ignoring them for something that makes essentially zero difference is bad policy. If the concerns are not real, we're doing something with negligible environmental impact that will have negligible impact on world prices. In the absence of further evidence, the payoff matrix is pretty clear to me.
Why do you continue to make this shit up in the face of evidence to the contrary? Where are your numbers?
Ascribing nefarious motives to people who just have a legitimate policy disagreement with you is not endearing or even sensible. You might try assuming, for a moment, that people can disagree with you for reasons other than craziness or evil. You might learn something, especially if those people present numbers when you don't appear to have any.
Have you looked at the numbers? Let's say we're looking at 1/2M barrels per day (more than the DOE estimates, mind you). Let's say that they make a measly $1 per barrel (they likely make quite a bit more than that). That's ~$180M in profits per year for the industry. That's not chump change. It is chump change for the people on the other side of the equation. If you believe otherwise, let's see your numbers.
Think of it this way: If I took 1 penny from every US citizen, I'd be about $3M richer. On average, it wouldn't make any difference to those citizens. There is no inconsistency in these two observations. I'm not sure if you're being dishonest or if you just haven't thought this through.
And while I could quibble about the impact those numbers have on the world market, I'll simply point out that those things were not at issue in this case.
I think that you skimmed the paper rather than reading it. That's for the "reference" line for comparison (the lower one). The upper one is derived without those restrictions. The graph shows the difference in millions of barrels per day over time. Note that nothing really changes until damn near 2020, and after that, the change is less than 1/2 of 1% of world supply.
If we're still bumping up against the same oil supply and demand problems we have today in 2017, we've taken a seriously wrong policy turn somewhere.
Silly? Like, as in, "The Department of Energy's number" silly?
Sorry to break this to you, but nothing is exactly what the US government can do about the world supply of oil and the fact that world demand is outstripping and will likely continue to outstrip our ability to increase world supply. If the problem is "Waaa! Make gas prices lower!" then the only solution the government can offer is to tax people and subsidize gas at the pump. Throwing out a non-solution to a problem that has no practical supply-side solution is not exactly clever or heroic.
If we really wanted the government to do something about the price of oil, we'd have to ask them to enforce conservation. We do have demand-side power. Of course, the same people who think that a negligible shift in world supply a decade from now will solve all of our problems would probably throw a shit-fit if the government tried to tell them how much energy to use or how to use it.
And the Republican argument is essentially, "I know that we're $300K underwater on this deal, but if we could just pick up a $5 bill, we'd be saved!" Of course any small delta is a positive number, but if it doesn't affect the actual price in any noticeable way, exactly what is the point of making a scene over it? The reality is that this is simple political theater combined with a desire to make a payoff to the oil industry.
Frankly, I don't know what the real costs of drilling would be, so I don't have a position on whether we should do it or not. I have a pretty good idea about the benefits, though, so I kind of wonder why anybody cares about this issue.
Of course. Nebulous "other people" are always saying stuff that doesn't sync up with the expert consensus. They're not typically right and they often have an agenda. They should submit their findings to the DOE and see where that goes.
If by "plenty of oil" you mean a 0.2% increase in supply over a decade from now, then let's start those pumps! Land of plenty, here we come!
What part of "no significant impact" do you not understand? It means that "not doing it" will produce no significant change as well. There's no difference. No impact. Increasing the world supply by 0.2% years from now will not change anything--now or years from now.
Reducing demand. Our market power in the oil market has never been on the supply side. Supply is only going to become more inelastic in the long run. Demand will become more elastic.
You're clearly not reading the same EIA reports the rest of us are. The delta appears to be about 0.2% of world supply.
Nonsense. Speculators (if, by "speculators" you mean people who don't take delivery of oil) can't run up the price of delivered oil unless they drive up the futures price high enough to encourage physical hoarding or output reduction. Where is the evidence of that? Who is storing all of the oil that has to be disappearing from the oil supply? Show us the numbers!
It's easy to blame speculators for creating what is, by all appearances, a very real supply and demand problem, but I don't see any evidence justifying it.
So, that would have "fixed the problem" then? A fat 0.2% increase in world production that, according to the DOE would have an "insignificant" effect on the price? I'm crushed that we missed the boat on that solution.
This is the standard politician's formula of "X is a problem, Y is something I want to do. I'll pretend that Y will solve X and sucker the electorate into letting me do it."
If he had said something like, "I took the initiative in creating the highway between City A and City B," do you think that people would have jeered at him for implying that he was out there driving a steam roller?
Why in the world would somebody need sock puppets to defend this position on Slashdot of all places?
I get email when people respond to me. I got one for your response, came back to find it, and ended up on this post by accident. It seemed interesting enough. As for having nothing better to do, I think that there are three people still on this thread, and I'm pretty sure that you're one of them.
So any and all results of reason are the result of evolutionary forces because the brain evolved and is the result of evolutionary forces? Fair enough. Doesn't it appear, then, that evolutionary forces have done a pretty good job of finding codes of ethics that work pretty well?
Whoa there! I'm allowing your claim above for the sake of argument, but that doesn't follow. The fact that our brains are the product of evolution does not mean that our brains have to use principles of natural selection in determining a code of ethics. In fact, I'd say that using the principles of natural selection are likely to result in a pretty crappy code of ethics--and that's my evolved bag of meat talking. There's a difference between "The brain evolved" and "The brain must always use the principles of evolution to arrive at its conclusions."
It depends on what you're asking. I certainly don't think that there is any sort of magic morality built into the universe. I also don't think that you can enumerate a moral code that works in all situations. I do think that some solutions to the problem of morality are better than others. For example, a code that protects members of a society from being beaten to death is a better solution to the problem than one that does not, all else held equal.
I assume that you're on the side of an absolute, universal moral code. I'd love to see it and learn how it handles the myriad edge cases out there. I suspect that God, in His wisdom, probably doesn't have a much better hit rate of putting together moral codes that work in the real world than the collective reasoning power of mankind does.
No, that's not the construct at all. There's a difference between a hypothetical and an actual logical formula. The word "if" is used in both contexts, but that's about it. I'm asking this in the hypothetical sense. It's like asking, "If they weren't out of sandwiches, would you buy one?" Most people don't foam at the mouth and say, "Nonsense and hogwash! They are out of sandwiches, so the entire line of questioning is abs