aloysious

I can see you do understand the concept of marginal utility, although possibly inadvertently.

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Rigged

I agree that we should be more aggressive in pursuing alternatives, but there is commercial reality to think about. What is possible for consumption at this point, safety of the product, can some of these new technologies be viable for mass production, are they cost prohibitive? For example, I live in Mass and we have this big to-do about "cape wind" which would put wind turrets up to replace some of the energy we usually derive out of coal. Ok well here is the problem, it is more expensive (I mean FAR more) than it is to produce coal power. Second, the environmental consequences of putting the turrets in the middle of a protected area for whales and other sea life. Commercial fisherman would be effected by the lack of fish, and people who own homes on the cape don't want to look at them. They are not ascetically pleasing. Also the amount of energy the wind turrets would produce would be less than 2% of the energy used on the current grid at a prohibitive cost. So the project was scrapped by the governor. I think it was a smart move, but there are a lot of things we need to consider in the move to alternative energy sources.
Corn based ethanol pollutes more than gasoline, it causes is higher prices in commodies like meat.
I don't really think the government is all to blame for this. We as consumers are STILL buying gas guzzling SUVs and enormous trucks. We don't conserve energy, we run heat and air conditioning when we are not home. Waste water on our grass...especially the people who live in the damn desert, you don't get a fucken lawn in the desert without wasting an enormous amount of water.

Zoning is something else that is a problem. We zone commercial and residential so far from each other that we ENCOURAGE people to drive.The planning schemes are usually having every commercial business on one street and all the homes a whopping 7-5 miles away. Not exactly walking distance, and subdivisions don't have sidewalks! lol.
You want people to walk, bike, etc? Build shit closer, more people will mingle, be outside and be social. Christ. PUDs are a popular solution but I still think that zoning boards should be scrapped. They favor friends that make bad development decisions. The area i live in is a perfect example of a bad development decision. You can't walk anywhere. If you chose to try its uninviting not to mention dangerous with all the masshole drivers around.

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It is what they want, after all: "a god to punish, not a man of their infirmity."

"When George W. Bush looked into the eyes of Vladimir Putin, he claimed he saw his soul, when John McCain looked into them he saw the letters K-G-B."

- Economist (on John McCain)

Elliott

It is because there is no control over the distribution of fuel.
First of all fuel should be priced on a sliding scale. Lets say every commuter is alloted 25 gallons a week at a reasonable price, and the price of fuel should increase for individuals who require more than that should be forced to pay a premium when they go over the alloted amount. This provides incentives for those tiny dicked hummer/suv/sports car owners to ditch their gas guzzlers for cars that dont require as much fuel. Fuel should be treated in the same way we monitor controlled substances such as painkillers, amphetamines, and other potentially harmful prescription drugs.

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The_Heretic

It's $4.00 per gallon because drivers are willing to pay it.

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"Enough!!" -so rang Barack Obama's voice off the walls of Mile High Stadium

OldManOnFire

I don't see the relevance in the cost of gasoline to marginal utility??

If we were talking about plates of spaghetti or bottles of beer, where people have a choice to consume or not consume, and they are actually deriving some pleasure in their consumption, it might make some sense. But we're talking about gasoline which in the way our society and lifestyles have been designed, is not an option--it is a necessity.

Personally I have never purchased gasoline thinking about the satisfaction I will receive in obtaining another gallon of the stuff. I'm not willing to pay more simply to gain marginal utility. I purchase the stuff to put in my cars and machinery to make them move around...period...currently I have no other options.

Perhaps you will kindly provide a summation of how marginal utility relates to the cost of a gallon of gasoline???

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OldManOnFire

Things to ponder:

If fuel should be priced on your sliding scale, then why not water, electricity, beer and pizzas?

If a lady drives a large SUV approximately 50 miles a week to shuttle her kids to school and activities, how can this be worse than another person driving a sub-compact and commuting 250 miles per week?

What about businesses...penalize all of them who use more than 25 gallons per week?

If you exclude businesses, government vehicles, military vehicles, emergency vehicles, cargo transportation vehicles like 18-wheelers, who is left??

We have poorly designed metropolitan areas with business in one area and residential in other areas, and mass-commuting for long distances in all directions. Don't these communities need to be re-designed and give people other options before we punish them for buying gasoline?


I understand the intent of your post, but until there is a reason to ration gasoline...equally to everyone...there are probably better ways to approach the high fuel cost issue...

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bornright

The only way to slow inflation is to raise interest rates which in turn slows growth. This was done in the Carter years and if you borrowed money your interest rate was at 20%. Tough times for anyone in business or wanting to buy a home. Inflation was climbing at a rate of 18% a year with no end in sight. Salaries aways lag behind therefore buying products slowed considerably therefore causing prices to level off and also causing high unemployment. Not all of these tough times was Carter's fault but he had to share most of the blame for it.

Rigged

My EXACT point, some of these issues with bad planning...ok look at Los Angeles, the WORST planned city in history of mankind. You can't get anywhere without driving. Its isolated and many communities become racially/economically divided because of bad urban planning.

The most common model now is the nuclei model which you see more in the midwest/west, so when we building so spread out...we get more people choosing automobiles rather than trains or buses.

The other one is the traditional "hoyt" model, which uses, transport corridors, such as rail lines and major roads, are mainly responsible for the creation of sectors, thus transport has directional effect on land uses. Cities would thus grow along major axis. Far more utility in this model than "spread" going on in the west. If effency in use of our resources is what were after, we should go back to the old model, fix our zoning laws. There is another model that is not shown here, its the centric model which is also popular in the east and midwest, the "commuter" model.



Three Models of Urban Structure

If your interested in the effect of land use on transportation, I suggest you get involved in your local government. That is where these decisions are made, usually by people who have no formal training.

My hunch is that most people won't recognize this as a major cause of our troubles today. I believe that land use is one of the major contributors, and if we don't take some of that over boated federal budget and put it toward building a federally funded public transportation system I don't think there will be much improvement as far as "greener" solutions go. IMO trashing cars altogether is the best way to handle it. It starts with better planning.

__________________
It is what they want, after all: "a god to punish, not a man of their infirmity."

"When George W. Bush looked into the eyes of Vladimir Putin, he claimed he saw his soul, when John McCain looked into them he saw the letters K-G-B."

- Economist (on John McCain)

OldManOnFire

Your math is correct but in a society where the 'haves' always want more and the 'have nots' believe they are entitled to all things no matter their costs, it would be a tough pill to swallow for most.

Also, if 'all' interest rates are at the levels you state, then this has a very negative affect on business. The cost of money becomes unaffordable for growth and research, and higher costs mean higher prices on goods and services, etc.

Then when things begin to cost more, which does temporarily slow consumption, people simply start demanding more compensation, and the vicious cycle continues.

I believe people today have only two choices in how to deal with gasoline prices and inflation and the credit crisis, etc. etc. etc.; First, they can smarten up quite a bit, take control of their lives, live within their means which includes saving a minimum of 10% of their compensation, and be proactive in taking necessary actions today before things get worse. And second, they can allow themselves to be controlled by one crisis after another, constantly deal with fiscal issues, maybe bankruptcy, and let the system drive them into the dirt.

We really need to remove our sense of entitlement in which we believe we can buy $300 jeans, $200 shoes, and $400K homes which require two incomes just to pay the mortgage payment, and $50K cars on 10 year loans or lease, etc. I've always said the absolute easiest thing to do is spend money...including money we don't have by abusing credit--it's ingrained in us to make more and buy more and make more and buy more, etc. When in our lives do any of us stop and ask ourselves 'what the hell do I need all this crap for when it's making me poor and miserable?'. Well the time is here for everyone to ask this question, and for many, it's time to make tough decisions to get their lives in control...

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OldManOnFire

Article today:

Will oil prices continue to stay high?
Some believe spike as high as $200 a barrel is possible

The Associated Press
updated 4:02 p.m. PT, Fri., April. 25, 2008

HOUSTON - Oil's meteoric rise to near $120 a barrel looks like more than just another economic bubble — growing demand and tighter supplies are likely to keep prices high. Some analysts say even $200 a barrel would not be out of the question.

The latest price surge — pushing crude to record heights in recent weeks, and to nearly double its level a year ago — has some key components of a classic bubble, when market prices climb far above their intrinsic value. The burst comes when investors realize the assets are overvalued.

But growing worldwide thirst for crude, in large part from the rapidly developing economies of China and India, means frustrated consumers probably won't get any relief.

"We can do our homework, but prices are going to go where they want to go at this point," said Jeff Spittel, an analyst at investment bank Natixis Bleichroeder Inc.

Americans who hoped to ride out temporarily high prices by carpooling or driving less may have to make those habits permanent. And because of the premium prices, oil companies may be willing to search out more oil in places they previously couldn't afford to explore.

Oil came close to $120 a barrel Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two Iranian boats in the Persian Gulf. The markets were also weighing the effects of a pipeline attack in Nigeria and a looming refinery strike in Scotland.

Retail gas prices, which at times rise in tandem with crude oil, moved further into record territory near $3.60 a gallon.

The Organization of Petroleum Exporting Countries — which supplies about 40 percent of the world's crude — insists it's supplying more than enough oil.

Instead, many observers blame speculative traders for bidding up the price as a hedge against inflation and as protection from the sinking U.S. dollar. Some see that as evidence of a bubble.

It's also becoming harder and more expensive for oil companies to find and tap new petroleum reserves — a troublesome scenario given forecasts that the world's energy needs will escalate by more than 50 percent in the next two decades.

Toss in the weak dollar and political instability in some oil-producing countries, and it seems unlikely that oil will fall below $100 a barrel anytime soon, if ever.

Widely watched oil price prognosticator Goldman Sachs has said oil could average $110 a barrel by 2010, up from a previous forecast of $80, and that a spike as high as $200 a barrel is possible in case of a major supply disruption.

Supply is at the heart of soaring prices, said John Moroney, a Texas A&M economics professor who just finished a book on energy production and consumption. He cites production declines in Mexico, an unstable oil industry in Venezuela and possible shrinking production capacity in the Middle East.

"I don't buy the bubble theory," he said.

Many analysts believe the weakness of the dollar is a bigger factor than supply and demand because the soft dollar draws investors worried about inflation into commodities such as oil and gold.

It also makes commodities less expensive for buyers operating in other currencies. Many investors see the dollar only heading lower if the Federal Reserve keeps cutting interest rates, which most analysts still expect it to do next week.

Some market watchers say oil will probably keep rising until demand falls off, which they describe as the market's way of finding fair value for the commodity. For oil, some estimate that price as low as $60 or $70 a barrel.

"The fundamentals don't justify anywhere near these prices, even when you factor in geopolitical problems," said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Cambridge, Mass.

He expects prices to fall as low as $80 this year and perhaps as low as $50 in the next three or four years as more global supply comes on line.

Demand already has begun to wane in the U.S., where fuel prices are causing turmoil in an economy already saddled with recession fears, a housing and credit crisis, and dismal retail sales.

Drivers have begun to cut back on gasoline consumption. Some people have taken to riding bikes to work or organizing car pools. The sale of gas-electric hybrid vehicles is up. Larger trucks and sport utility vehicles are selling slowly.

It's unclear how much a drop in oil prices could reduce gasoline prices. The prices do not always move together because they are subject to separate supply and demand forces. While oil prices have risen 80 percent in a year, gas prices climbed only 24 percent.

Trying to predict where prices are headed has devolved into a guessing game, some analysts said.

Two weeks ago, the Energy Department acknowledged "significant uncertainty" in its oil price projections, noting the threat of supply disruptions in oil-producing nations, unusual weather or refinery outages.

The major oil companies began reporting earnings for the first three months of the year this week, with ConocoPhillips saying it earned more than $4 billion, up 17 percent from a year ago. Exxon Mobil Corp. and Chevron Corp. are scheduled to report earnings Thursday and Friday.

The higher prices have allowed companies to extract oil from sources too expensive to tap only a few years ago, like the Canadian oil sands and deepwater sites in the Gulf of Mexico, said Gary Adams, who heads the U.S. oil and gas practice for Deloitte & Touche USA LLP. He expects the price of oil to settle at around $90 to $100 a barrel in the coming months.

Even if oil prices fall back to $60 or $70 a barrel, "the capacity of those businesses to do well and fund major projects will continue," said analyst Bernard Picchi of securities firm Wall Street Access. "These are great storehouses of value, and I don't think anyone can take that from them right now."

URL: Will oil prices continue to stay high? - Oil & energy - MSNBC.com


OMOF comment: At $200 a barrel, this equates to $4.76 per gallon of gasoline just for the crude oil cost. Add $.60 in taxes and another $.57 in refinery and dealer costs, and at $200 a barrel, we'll be paying $5.93 per gallon...

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Did you know both our problems and the solutions can be found simply by looking in our mirrors...and...Never confuse the extraordinary stuff I think and write with that of a well-balanced person...