oil

Mood in the hood

John Hofmeister, President of Shell Oil Company, was on Charlie Rose Tuesday night.

About 22 minutes into the segment, he says the following [my own transcription]:

If we don't drill more in this country, I am quite concerned about civil disturbances in our urban areas because of the price of fuel.

...

I was meeting in Los Angeles with mayor Villaraigosa and I asked him a specific question because I lived there during the Rodney King civil disturbances. [I] said, "How is the mood in the hood based upon the price of gasoline compared to the mood in the hood at the time of the Rodney King disturbances?" He said it's threshold.

Let us drill or those people will act all crazy again! You know how they can be when it comes to things like this.

And they say environmentalists are alarmist.

Since when is regulation optimal?

I like Jeffrey Sachs, and I generally agree with what he has to say about poverty, health, and the obligations of the rich to look after the poor. But he gets it dead wrong in the current Scientific American:

Even with a cutback in wasteful energy spending, our current technologies cannot support both a decline in carbon dioxide emissions and an expanding global economy.

Says who? Why can't we find ways to dramatically lower our primary energy use per dollar of GDP? Not because we're already so perfectly balanced. And not because the electric industry (amounting to 40 percent of U.S. GHG emissions) has done a damn thing to increase their energy efficiency in the last 50 years.

Even if every industrial facility in the country had optimally designed their factories for energy efficiency (they didn't), we still would need to confront this reality: an optimal capital allocation when natural gas was $3/MMBtu, coal was $1/MMBtu, oil was $20/bbl, and electricity was 6 cents/kWh looks pretty suboptimal when natural gas is up to $10, coal is pushing $3, oil is north of $100, and electric is running towards 9 cents.

Yes, technology is good. But we have to get beyond the idea that regulation is optimal, all capital is optimally deployed, and there are no significant opportunities for energy efficiency.

On oil and the dollar, Bush and McCain acknowledge their own cluelessness

This post was originally published at the just-launched Think Progress Wonk Room, the new public policy rapid-response blog of the Center for American Progress Action Fund. Brad Johnson, the climate specialist for the Wonk Room, was a writer for Hill Heat.

Skyrocketing gas prices are crippling the budgets of Americans, as Bush has newly discovered. But he doesn't have a solution. Nor does Sen. John McCain (R-AZ). Bush's every response to energy problems is to drill for more oil and blame China. McCain has a more evolved position: his solution is to drill for more oil and build nuclear power plants, and blame China and terrorists. But neither will address a major culprit in the recent shocking spike in oil futures and gas prices -- the collapse of the American dollar due to a vicious circle of shortsighted right-wing economic policies.

Rising cost of oil pushes value of the dollar down

Bloomberg reports:

Crude oil may reach a record $130 a barrel this year because pension funds are investing more in commodities, said Pierre Andurand, the chief investment officer of BlueGold Capital Management LLP, a hedge fund ... "Next year, oil may rise even further to $150 a barrel."

Okay, this is a hedge fund guy who is betting the ranch on oil and probably doing his part to drive up prices. But at the end of the day, this is an issue of fundamentals -- supply and demand:

Oil companies such as Exxon Mobil Corp., Royal Dutch Shell Plc and BP Plc are finding it tougher to replace their findings and are drilling for harder-to-reach deposits while energy demand and crude prices surge to records.

Another little-discussed factor in the run-up of oil prices is the run-down of the dollar, and with it, U.S. living standards compared to the rest of the world. Thank you so much, President Bush!

Increased attractiveness of alternative energy is some consolation

Oil just passed the $106 mark, putting it well above the inflation-adjusted record set just a few days ago. In an earlier post, I predicted that the price of oil would go down. So far I have obviously been wrong, although I suspect that the price will decline by the end of the year since this seems awfully like a part of the greater speculative commodity bubble we are witnessing.

But putting that aside for a moment, there is one great benefit of the high price of oil that environmentalists should be celebrating: it is making alternative energy much more attractive, so much so that the high price may usher in a major wave of renewable energy projects that will, in turn, lead to greater scale economies and perhaps the mainstreaming of alternative energy. This would be a great thing.

Now for the bad part. First off, if politicians hadn't been so cowardly and short-sighted and had actually followed economists' advice for a carbon tax long ago, the high prices of energy could be funneled into tax rebates for us all or research and development for all sorts of green technologies. Instead, the money is going to the oil companies and the terrorists. Not good.

Second, the high prices of energy are leading to inflation, which is greatly complicating the Federal Reserve's ability to deal with the recession we're in (yes, it's a recession), and the effects are highly regressive, hurting the poor much more than the rich.

Overall, the high price of energy is doing some pretty bad things -- but if it can help tilt the playing field to alternative energy, this silver lining may end up being an amazing turning point in history.

Americans reduce gas consumption as prices continue to rise

Shocked by high gas prices? You're not alone: according to the lead story in today's Los Angeles Times, prices are at a record high.

The gravity-defying price of oil shot through another barrier Monday by briefly touching $103.95 a barrel in New York trading, the highest cost ever for black gold even after adjusting for inflation.

But the experts say it's not so much a rise in demand that is pushing up the cost, but a fall in the value of the dollar.

"I don't think it's a coincidence that the price of oil hits an all-time high around the time that the dollar hits an all-time low against the euro," said Ken Medlock, an energy studies fellow at Rice University's Baker Institute. "The amount of dollars you have to give up for a barrel of oil is going to increase because the dollar is purchasing less and less."

In response, according to an excellent story in Monday's Wall Street Journal, Americans have at last began to turn against gasoline.

Volkswagen’s new entry to the clean diesel fleet

Enough election talk, it's time to put some honest-to-goodness car news in the Gristmill (so this one's for you, JMG!).

Volkswagen is about to unveil a new Golf hybrid, said to feature an all-electric mode at low speed and regenerative braking to compete with the Prius and its ilk. The difference is that this is a diesel-electric hybrid, which VW says will get 69 mpg and exceed Europe's (and California's) tough emissions standards.

The point is somewhat moot, as this internal-combusion-perpetuating monster will not be for sale in the U.S. But is this just another indicator that clean diesel cars are greener than hybrids?

Perhaps. But filling one of these new Golfs with locally produced, organic, fair-trade biodiesel made from waste vegetable oil by a worker-owned biorefinery will certainly help.

The next generation of infrastructure should help more Americans go carless

It appears that oil has reached a new all-time high in real terms. Given that gas prices normally peak during the summer season, the stage could be set for some ugly pump prices this year, although expensive oil may not be the most painful part of the current commodity price boom for consumers (an honor […]

Oil and the status of women in the Middle East

I'm not sure this falls under my "campus news" beat for Grist, but I heard it at a seminar at a college campus, and it's compelling enough that I'm going to say that because it falls within academia, it counts. Michael Ross is a political scientist at UCLA who was published in the February 2008 American Political Science Review with the assertion (PDF) that much of the gender inequality in the Middle East relative to the rest of the world can be explained not by traditional Islam, but by the presence of oil.

The quick version is that Ross makes a strong case that women are hurt by a previously unappreciated effect of the infamous "resource curse" that imperils democracy in countries with abundant fossil fuels.