Stop Me Before I Vote Again

Owen, this line of reasoning seems eminently plausible. And I was intrigued by your thoughts on some earlier posts about carbon taxes. My friend Charlie Komanoff has been exploring the higher wonkery of carbon taxes for some time -- he has a Web site: carbontaxcenter.org

I think we'd all agree that a walloping carbon tax -- rebated on a strict per-capita basis to every man woman and child in the country -- would be infinitely better than letting the Houston trolls or the sheiks expropriate all the goodies.

Until that happens, though, a salutary fright about oil prices can only have a constructive effect on peoples' planning and buying decisions. So you've fought me back to two cheers for the oil shock.

oil shock yes

peak shock...
the fat lady can be impersonated
by a knife thin profiteer

my gut sez we cap and we tax
just like we eitc and min wage

the carbon tax relies on guestimated substitution effects
i want for sure reductions hence the cap
and the carbon tax needs to be a price fixer
pinning the user price despite
the inevitable vile foxy flux in crude prices

if there was an external bad here
that was finite and repairable
at some cost
that oughta be the tax
because we could put a price on the bad
climate change looks like a stop it before it happens because we can't repair it

in edition the effect would have to be linear..
but carbon release has a non linear
effect highly related to ever other emitters levels
its up scale nastier

hence slap on a cap that squeezes down over time

key

you don't issue the cap related permits you auction them

"you can deter their entry into a market by a price cycle that dips below the alternative products' long-run break-even price fairly often, but can stay near or even above it for prolonged periods."

this is a particularly ill wrought passage
even for me

since its the whole point..
a paraphrase

oil coal may have effective substitutes
that simply require say $60 crude per barrel
floor on market prices to break even

but what if the oil price suddenly chugs down to $30 per barrel as it did in the late 90's
obviously the energy guys are in this for max profits so they like a hay day like now
but they nee their alt rivals to know
we can cut your balls off any time we want
we can pump at $30 just as much ....no ...more
then we pump now at $ 130

best asumption there's enough oil and coal and nat gas
to heat the sky to venutian levels

we gotta stop using it
it won't just run out
before we destroy this green set up of mothers
no god pre designed it that way

Maybe, but maybe not. Have you contemplated the expansion in coal mining and processing it would take to convert the US auto fleet to Nazi gas? It's would be the largest in history, by a large factor...

And, if undrilled oil exists, they are sure showing remarkable discipline and unity in foregoing it...

Interesting possibility you raise, I'm not bettin' witcha on this one, OP.

"And, if undrilled oil exists, they are sure showing remarkable discipline and unity in foregoing it..."

A lot of undrilled oil exists in Iraq, where we continue to nourish civil war; do you chalk this up to incompetence? I'm not sure about that.

I'm a more than usually complete ignoramus on this topic. But from everything I've read, the sages are very much divided and uncertain about why prices are suddenly so high. Demand and supply are apparently in reasonable balance. There aren't any shortages. Stocks haven't gone up anywhere, so there's no hoarding.

Owen's account -- if I understand him correctly -- is that this is an insiderish, cartelized, schmoozey business. Something made prices spike up and -- guess what? -- people still kept buying the stuff.

So with a kind of tacit, Quakerish, chamber-music consensus, the oil boys sorta kinda mutually agreed to enjoy it while it lasts.

Presumably if demand really started to fall, they might similarly arrive at a hive-mind consensus that the party's over for a while; time to drop the price and drive away any potential pests in the form of possible alternatives (including alternatives that involve changing the way we live).

This involves some guesses about the sociology of the oil business. Now Owen (as far as I know) has not been invited recently to any meetings in Houston, and nor have I, but these guesses don't seem implausible to me.

And for us outsiders, guesses are all we've got.

Well, druff, they haven't yet won the war for the drilling rights, though it sounds like that's coming soon. If they were to start sucking it up now, before the requisite "deal," the war would escalate and there would also be some risk that they'd have to let Iraq have more of the revenue than it's going to get in the coming "deal."

And remember that if peak oil isn't the hoax OP seems to be suggesting it is, then the future value of the Iraqi victory is many, many times its present value.