Rising Oil Prices

[Fi$hy]

The reason for this coming up, one petrol price in the UK just went up above ?1 per litre. Secondly I did an economic mock on this today.

Do you think market forces, or government intervention should be the solution to the scarcity of Oil?

I've been wondering this all day. Firstly the simplest piece of economics ever. Price is the method of allocating resources. Scarce resources = higher price = reduced consumption.

Secondly, in the UK roughly 50% of the cost of petrol is in fact tax. The true market value therefore of petrol is about ?.50 per litre.

Ways to solve this problemo, using MF or govt. intervention:

1, Rely on market forces, those who can't afford to pay the price for a dwindiling resource, simply don't get it.

2, Reduce government tax, baring in mind that one day the price will again be at ?1 a litre - without govt "bumping" as simply put, Oil aint getting any less scarce

3, Increase government tax, hoping whilst the increased cost will be managable, it'll be motivation for research into other sources of energy.

Problems with each.

1, Unfortunetly, those who can't afford the higher price, can't just stop needing Oil, in todays world it's a neccesity not a luxury (not only transport, but a key part of production, power etc etc )

2, Whilst we could hope the lower cost, would generate investment in R & D. Chances are just like the yanks lower cost would just increase consumption

3, People would complain, as the government starts taxing something almost as vital as food and water.

What do you think?

 

[Gopha]

The reason for this coming up, one petrol price in the UK just went up above ?1 per litre. Secondly I did an economic mock on this today.

Jesus Christ! Thats loads, when you tihnk how many litres of petrol us and our family use is roughly 30 for a reasonably full tank, in a 1.6. Thats coming out to ?45 instead of ?20

 

[Fi$hy]

I dunno, I still don't see what the major issue. My dad's car gets about 300 miles to a 45 litre tank. That's still a hell of a lot cheaper than public transport.

 

[elDiablo]

I personally think that we need the newer technologies. I read somewhere a while ago (can't find the link at the moment - apologies, ) that a guy found a way of running cars on water with a few common chemicals. Perfectly legal, mostly eco-friendly (as much as oil is), and it doesn't hurt the engine likevegetable oil can. The one problem? A couple of big oil companies banded together and bought the patent from the creator, locked it up, and threw away the key so that no one could use it. Who would buy oil if you could use water, the stuff that covers two thirds of the Earth?!

As for paying R&D into it, I think it should be the oil companies. The big fat idiots who run the companies should realise that human life is going to exsist a lot past their own 60 years of life due to grease-induced heart attacks, and that if they don't do anything to further human development, they are hindering it (as are other people). They should spend less on their paychecks, and more on finding ways to power the future. At least they will be remembered in a good way for that!

As for the tax, the governments don't seem to be doing hugely better everytime they raise taxes, so why give it to them in the first place? I think the tax should be lowered, and by the time its a pound a litre in the future, we may have found a better, more efficient fuel. Either that, or give tax cuts to oil companies that actively spend a LARGE effort on finding new, cleaner fuels.

Sorry for the rant, but that article I read (mentioned above) really made me dislike people who screw humanity for their own personally gain on such a huge level!

 

[Haven]

Knowing the actual raw cost of a Barrel of Crude oil doesn't help us a whole lot without something to compare it to.

Comparing the cost per mile of different fuel technologies would be a useful excercise in economics - I'm talking the "true" cost i.e. including the cost of regeneration of exploited environments and the costs to manufacture.

We've known a long time now that we've a limited life span for oil reserves. Gas will run out first shortly followed by oil. However we still have coal reserves for probably another couple of hundred years (thats me guessing from papers I read a long time ago now). Its highly likely the big energy companies will continue to exist for a long time to come but will simply switch to coal reduction methods to derive a liquid fuel from it.

And then of course we have the untapped resources of the artic ... well mostly untapped as the US is making rapid inroads into alaska and russia is doing its bit in Siberia.

Finally and the most important point. All this talk of how we get more for less shows our innate conditoning via advertising, media and capitalist ideals that predominate in both government and society. When are we going to talk about how we get more FROM less ? Thats where my true interest lies.

 

[Pestcontrol]

Do you think market forces, or government intervention should be the solution to the scarcity of Oil?

Being a Liberal, i don't like the idea of government intervention. External intervention (Iraq) costs far more than it returns in the short and long term. If the government intervene for example by lowering taxes, they will have to pay for it. Where should this money come from? They can only redistribute money, not generate it. It's going to hurt someone either way. I'm definitely against lowering taxes on something that is scarce.

Similarly, i don't think it's very worthwhile to subsidise hybrid cars. You could do it initially to help car builders earn back the cost of research, but after that, the car should pay itself back by having better mileage, this should be enough of a stimulation and if it isn't, well then the market simply isn't ready for hybrid. Yet.

As you say, it's simple economics, price is demand / availability, availability is dropping as oil is a finite resource, and demand is rising. Hence the price increases. Demand can be reduced to some extent (smaller cars, etc), but only up to a certain point, and it's a slow process. Basically, whatever you do, it's like trying to reverse the flow of a river.

Indeed the best way to get people to use less of something is to make it more expensive, if there should be any govt intervention, it should be #3, more fuel tax (we need a poll!), but also, invest the additional income in alternative transportation and reduce dependancy on fossil fuels. Expand the railway networks, subsidise public transport, build nuclear power plants and offshore wind parks, strengthen the power grid to cope with it, fund more fusion and other research. Prepare your infrastructure for the future.

As for the alternatives - fund the research, subsidise the initial testing, and then pray fuel becomes expensive enough for the alternatives to be viable, if it is so, they will catch on rapidly. Cost is the primary motivation for everything.

 

[decky101]

no idea i think its plain old too little oil 2 mch bein used so we r runnin out so they charge more for the little we hav left

 

[Fi$hy]

no idea i think its plain old too little oil 2 mch bein used so we r runnin out so they charge more for the little we hav left

I've been wondering this all day. Firstly the simplest piece of economics ever. Price is the method of allocating resources. Scarce resources = higher price = reduced consumption.

What is this, resurect a dead thread with nothing to add day?