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September 29, 2005

Oil

Evidently Rita did more damage to gulf oil production than Katrina. The Mineral Management Service (MMS) is reporting 98.59 percent shut down of gulf oil production and 79.97 percent of natural gas production..

Here is a DOE site with some more graphs and data.

A lot of rigs were Beached, Sunk, or Adrift in the gulf . These are very expensive pieces of equipment that are not easily replaced. Repairing and repositioning this equipment is no small task. Kind of reminds me of Kuwait after Saddam withdrew. Thus far the market seems to be holding it breath about what this means. At the very least expect a short term spike in prices. Interestingly enough some French refineries and shipping concerns that supply the US with refined petrol have gone on strike. (Freedom fries indeed?)

I've been thinking about what possible consumption reducing solutions might be acceptable to the republican lead congress.

What does everyone think of a revenue neutral gas tax? Adjust the price of gas with taxes to discourage consumption, but offset it with income tax cuts. That way “Taxes” will not be increased but consumption should decrease.

At the same times it provides a more stable market environment for the development of alternatives like ethanol, bio-diesel, and coal to gas conversion.

Posted by BobJYoung at September 29, 2005 01:45 PM
Comments

Raise the gas tax while prices are rising? Can you say "political suicide?" Or DOA?

You don't think rising prices are already encouraging conservation? If they are, then why not let the market keep working? If it isn't already encouraging conservation, then there's no point in raising the tax.

Would this tax be deductible for people below the minimum income tax threshold? If not, then it's regressive. And if it is, then how can it be made revenue neutral from a taxpayer perspective? Where would the money come from to pay a "tax return" to those who have not paid an income tax in the first place?

Posted by: bk at September 29, 2005 02:43 PM

Oops, my bad. From the gas tax revenue. Duh.

Posted by: bk at September 29, 2005 02:47 PM

I don't think prices are going to stay high. I expect them to shoot up in the short term (6months) then collapse. Once they collapse consumption will grow, then prices will rise and collapse again. This seesaw won't do anyone any good. It discourages exploration, building of new refineries and development of alternatives.

And I'm not advocating instituting it right this instant. (After all it takes congress 6 months to pick its nose.) I'm advocating wait till prices peak then keep them up their with taxes.

I'm also more than open to a better idea.

Posted by: Bob J Young at September 29, 2005 03:00 PM

I think that any sort of gas tax is the wrong way to go, because it's tremendously regressive, especially once you get out of the cities, where there are few if any public transportation options.

I think we'd be better off having a significant 'guzzler' tax for new low MPG vehicles that owners would pay yearly as long as they own their car or truck. This would get rid of meddlesome CAFE standards (which I dislike, even if I appreciate the goal), but still promote conservation.

Posted by: buckaroo at September 29, 2005 03:22 PM

The problem with CAFE and guzzler taxes are that the auto makers and republicans would fight them, and there are dodges to get around CAFE. I read that Subaru is considering raising the height of their cars so that they qualify as light trucks to get around CAFE.

Posted by: Bob J Young at September 29, 2005 03:31 PM

Conservation is already being encouraged through the price system. At dealerships SUV's are sitting on the lots right now while 30mpg+ little cars are flying out the drives.

At-the-pump taxes are highly regressive even if they're offset against income taxes. Among other things, the poor will drive cheap cars, and higher gas prices at the pump means gas-guzzlers become cheaper to buy.

Posted by: Tully at September 29, 2005 09:26 PM

How about No Interest loans for the instillation of solar panels in private homes?

How about making them required at all federal instillations that are capable of using them?

Rather then slap consumers around who are already hurting (ever try to find an affordable home in a decent neighborhood located anywhere near a metro area... i.e. where the jobs are.... on the east coast?) .... lets give them something that will actualy ease thier pain AND create jobs at the same time.

I know I'd put up solar in a heart-beat... and my house is well situated for it too.... the problem is coming up with the up-front cash to do it without going into a debt death spiral.

Posted by: cengel at September 30, 2005 09:53 AM

Bob,
I think you have it wrong. As I read the figures, the MMS is saying that production is 98.59% of daily oil production and 79.79%of gas,which would mean a reduction of 2% and 21% respectively.

Posted by: Marc at September 30, 2005 04:12 PM

Marc:Look again. MMS is reporting “shut-in” production. That means wells that are shut off.

Also look at the DOE link. The graphs show that as time progressed after Ivan and Katrina the shut in numbers go down.

Posted by: Bob J Young at September 30, 2005 05:26 PM

For those who are interested the news coming out of the gulf is still spectacularly bad.
Theoildrum.com has the details

Refineries down and rigs destroyed.
Here is a DOE summery (pdf warning).

Posted by: Bob J Young at October 1, 2005 06:06 PM

A good first step would be to stop all direct government susidies to the oil industry. Anyone ever think about that? There is a 36 billion $$$ giveaway in the last energy bill, why not start small and at least stop the flow of taxpayer money to private industry.

Posted by: Rick DeMent at October 3, 2005 07:02 AM

So Rick, do think that if these subsidies go away that we won't end up footing the bill anyway in the form of a higher price?

Bob, how about adjusting building codes to require using 2 X 6's for exterior framing on new construction and remodels?

Posted by: bk at October 3, 2005 12:24 PM

BK: That would help with heating/cooling usage but not transportation.
But yes I like that idea. After all, isn't the use of low flush toilets nationally mandated? Although I think it would be better to write the specification in R-value rather than specify a specific building design. You can make the same argument about more efficient cars, trucks and appliances.

Considering the lifespan of cars, houses and appliances it will take years for the effects to show up.

Although I don't know how the republicans would react to the suggestion of "more regulation".

(Second though, I can guess how they will react. They will hate the idea.)

I use natural gas to heat the house. I'm not looking forward to my heating bill this winter. Although I did install a programmable thermostat this weekend and am looking into getting the attic insulation "refreshed". It tends to settle and loose its efficiency.

Posted by: Bob J Young at October 3, 2005 04:22 PM

We've been on the prgrammables since we bought our house. Much easier even without the cost savings. We own a 3 BR colonial. the bedrooms are upstairs and thwe downstairs is kitchen, dining, living room. We are contemplating buying a TV for upstairs and using our extra bedroom as a "den," and then the downstairs heat can drop down to 58-60 right after supper.

That'll put us farther from the fridge, too...

Now that I think of it, maybe more new homes should have multiple heating zones. Perhaps even 3 or 4, to allow for unplumbed low-use zones to be controlled.

Posted by: bk at October 4, 2005 12:19 PM

It wouldn't be that hard to accomplish zones in a house during the construction phase. And it would also be relatively cheap to implement. Just the price of a couple of valves in the plumbing and heating ducts.

(Talking about efficiency just makes my geeky side feel all warm and fuzzy. I've always dreamed of a house that was so well built that you could walk away from it for 50 years, and when you came back the passive heating/cooling, water systems and solar electric system would still be working.)

Posted by: Bob J Young at October 4, 2005 04:13 PM
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