dc_dux

Its no more absurd than the following speculation without supporting data... "I speculate the impact of regulation to be about 50%" (ace)

I'll try one more time:



Source: A Primer on Gas Prices

Regulations have little impact on distribution/marketing, refinement, taxes, profit....unless you want to deregulate pipelines and refineries with the trade-off of far greater possibilities of environmental degradation for a minimal reduction in those costs.

As Baraka noted, the cost of crude is based on world supply and demand (and is a greater percentage of the cost now than the 53% in 2005). Factors that impact that are surging demands outside of the US along with Saudi Arabia's lowering of its output, Iraq producing at below pre-war levels...

...and probably most important for the cost at the pump in the US, the devaluation of the US dollar as oil trading currency.



But what do I know....I "havent given it much thought"

__________________
"The perfect is the enemy of the good."
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Baraka_Guru

This should give you even more perspective:


We are now producing more oil than we're discovering. You can only discover so much oil before demand outstrips it. The discoveries that are now being made are in places that are difficult to extract from. The rate of discovery is very slow now, which only makes sense. The world is only so big.

These are just a couple of factors that would see the spike of oil prices.

Now imagine demand outstripping the production--the demand depleting the supply.....

Cheap oil (yes, cheap oil; the oil that fueled such popular American pastimes as muscle cars and SUVs--oh those lazy summer road trips...) was a dream from which we all had to wake up. Oil at less than $50/barrel was a dream. Oil being cheaper than water was a dream. Crude oil has hit a high of $0.70/litre, while some pay as much as $0.99 for a litre of bottled water (often more). And Americans complain of paying $0.85 a litre for gasoline at the pump. (It's a damned good thing you aren't fueling your cars with bottled water!)

Anyway, the prices you are seeing for oil are realistic. There is no failure of American policy here; it's mostly economics, industry, and consumption at play (not to mention some global geopolitics). It takes a lot of energy to move one person + several hundred pounds of metal, plastic, and rubber from point A to point B.

Maybe something else is amiss?

Get ready for $200/barrel oil. If we're lucky, it won't happen until after 2010. We shouldn't be working to suppress the price of oil; we should be working to suppress the use of it.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

aceventura3

Regulations are a factor affecting the price of oil. I don't think that is in dispute. The question is how much?

US policies are a factor affecting the price of oil. I don't think that is in dispute. The question is how much?

There are other factors affecting the price of oil, i.e. supply, demand, profits, etc. I don't think that is in dispute. The question is how much?

Just for thought. Since this thread started the price of oil has gone up close to 10%. There has been no material shift in demand, supply, no natural or accidental catastrophes that would impact the price of oil. The only thing going on is how the US is responding to the current financial mess. Every day we are seeing a price move purely based on headlines and US policy as it relates to those headlines.

I say 50% of the price of oil is currently due to US policy and regulations. DC and Baraka think my number is unrealistic, but don't give their estimate, they simply attack mine in a manner that lacks clarity.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

dc_dux

ace...IMO, its irresponsible to speculate that 50% of the price of oil is due to US policies/regs without providing some type of data to support that claim. I didnt attack your claim...I asked you to back it up with factual information.

I try not to draw conclusions without knowing the facts. I did the best I could by providing DOE data on the component cost of a gallon of gas in the US..and offering my opinion on which of those components may or may not be impacted to some degree (relatively small IMO) by regulations if one is willing to accept increased possibility of environmental degradation as a result of de-regulated oil drilling, refinement or transport.

Your OP was focused on energy policy/regulations and a specific piece of legislation.

If you want to expand the premise to include US tax policy, monetary/fiscal policies, trade policies, tangentially related regulations, etc....I might come closer to agreement with your 50% speculation....but would still lean to thinking that the greatest percentage impact on the price of oil in a global market/economy is beyond US polices/regulations

__________________
"The perfect is the enemy of the good."
~ Voltaire

aceventura3

On one level I have absolutely no idea where to start. US policy and regulations affect demand. US policy and regulation affect supply. The US is the largest consumer of oil in the world. US policy and regulation has a material impact on where and how oil resources are developed. The US is the engine that drives the oil market. I am not saying our policies and regulations are a failure, I just think it important that we know and understand the costs.

The current US posture of de-valuing the dollar is having a material impact on the price of oil. All these issues come back to US policy and regulation.

I am talking about the price of oil and you give data on the price of gas. I know gas is one of the prime uses for oil, but I don't get the connection between my premise and the data you supplied. The connection is not clear.

I have never suggested that oil production be deregulated. However, some regulations are excessive and are a net negative to society in my opinion, including the restrictions on producing or using oil from tar sands in Canada.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

dc_dux

Ace...I will repeat myself in case you missed it:

Your OP was focused on energy policy/regulations and a specific piece of legislation.

If you want to change the focus and expand the premise to include US tax policy, monetary/fiscal policies, trade policies, tangentially related regulations, etc....I might come closer to agreement with your 50% speculation.

But would still lean to thinking that the greatest percentage impact on the price of oil in a global market/economy is beyond US polices/regulations.

__________________
"The perfect is the enemy of the good."
~ Voltaire

aceventura3

The specific legislation referenced is an example of the short-sightedness of the people in Washington. Your responses in my view further supports the notion that policy/regulation/legislation is not carefully evaluated for its real economic impact. In the legislation referenced it seems that law makers where so short sighted that they did not even know the impact on DOD. The legislation contradicts the spoken desire to reduce our reliance on ME oil. The legislation perpetuates the enrichment of ME countries at the expense of the American public.

The reason I am having difficulty with knowing how to respond to your objections to my 50% claim is because I don't understand your objection, it is not clear. For example: Ethanol has an impact on the price of oil. US policy and regulations make the production of ethanol more expensive in spite of subsidies. You seem to want to draw some kind of line on this type of policy/regulation or another, I don't get it.

http://www.autobloggreen.com/2008/02...if-america-st/

Brazil is able to produce ethanol efficiently, why can't we? US policies/regulations is the answer, isn't it? If we used less oil because of ethanol, oil demand would change, wouldn't it? Reducing the demand on oil would have an impact on price, wouldn't it?

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Baraka_Guru

I cannot even begin to speculate what proportion of the oil price is influenced by American policy alone. All I know is that it's doubtful to be as high as 50%. There are far too many global factors--political, technological, geographic, and economic global factors. The American economy is big, but it's not that big.

The European Union and China combined consume nearly as much oil at America. Add everyone else into the mix, and you'll find America consumes only a quarter of the oil consumed globally. But this is shifting, of course, as we know about the booming Asian countries.

Athabasca Oil Sands: Geopolitical importance
The Athabasca Oil Sands are now featured prominently in international trade talks, with energy rivals China and the United States negotiating with Canada for a bigger share of the oil sands' rapidly increasing output. Output at the oil sands is expected to quadruple between 2005 and 2015, reaching 4 million bbl/day, increasing their political and economic importance. Although most of the oil sands production is currently exported to the United States, that could change.

An agreement has been signed between PetroChina and Enbridge to build a 400,000 barrel-per-day pipeline from Edmonton, Alberta to the west-coast port of Kitimat, British Columbia to export synthetic crude oil from the oil sands to China and elsewhere in the Pacific, plus a 150,000-barrel-per-day pipeline running the other way to import condensate to dilute the bitumen so it will flow. Sinopec, China's largest refining and chemical company, and China National Petroleum Corporation have bought or are planning to buy shares in major oil sands development.

If anything, China will be taking over much of the influence of the price of oil. Their economy depends on it. They are facing a huge phase of expansion, and with that you have an influx of wealth (both domestic and foreign) to be used to bolster the economy. The American economy is contracting right now, and China will pick up any slack left by it and then some. Compared to 1999, China is spending 35 times more on crude oil. They have a huge population and it's modernizing. Oil imports are expected to triple by 2030.

How do you think this affects oil prices?




Shall we look to India next?

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot