Thread: High oil prices good?

I've been thinking for a while now that while I may not like the decisions politicians are making I may be looking at it the wrong way, and they may be actually doing what's best for their country.

We all know that the international markets are fairly deregulated, but can be manipulated by powerful governments. So when the US government consistently takes steps that bring insecurity to the market increasing the prices it makes me wonder whether they aren't doing it because it's actually better for the country (we already know it's better for oil companies).

Things that come to mind
- The strength of US is know how and technology. It's more energy efficient than most everybody
- Energy inefficient countries are becoming more competitive with US
- If the energy prices are to go up it will hurt more the energy inefficient manufacturing than the energy efficient one, making the second more competitive
- US has critical influence over one of the largest producers of crude oil and can manipulate the market in the opposite direction it needs to.

After all in a market economy the most valuable players to US are the ones on wall street, who have expertise in complicated financial schemes like nobody else, and are thus in the best position to take advantage of unstable market, and not the 'middle class' who is probably affected negatively 'at the pump' and the 'heating bills'.
Just how the free market works. I always thought the message was 'If the gas prices are too high for you, the best is to find a better job or else deal with it any way you like'.

America Energy efficient?

The same America where the least important feature of a car is fuel efficiency?
Where companies set the airco to 'Freeze' even in the middle of the desert, and then expect people to come to work in a full suit? I've been in buildings that were so cold that the empolyees opened windows and doors to let the oustside heat in to make it bearable. And STILL the airco was kept at full blast.
Where recycling and reuse seem to be unimportant, and being 'green' is almost equivalent to being a tree hugging leftist?
Where there are people saying 'you can take my 4 gallon flushing toilet from my cold dead hand'.

I am fairly confident that Most western european countries outperform the US in efficiency.

I'd have to agree with Bruno here.

But I'm wondering if you guys are talking about the same kind of efficiency.

In manufacturing!

And at the same time very wasteful in consuming. And I distinguish between both as an economy competes with others not in its consuming power, but in its producing.
If you choose gas guzzler and are paying for it because you think it provides you better quality of life, it is your own choice of spending the money you've earned. If you didn't have the money to afford it, it wouldn't be an issue at all.
And yes europe may be outperforming US in energy efficiency and may have better standard of living. Europe clearly seems more energy hungry than US, but that's probably because it is more nervous about its lack of control over its main sources.

This is, of course, a speculation and any arguments are welcome.

Don't know about that last Europe statement. I don't have any facts about the gathering of energy.

And I'm definately not trying to get into an europe/US argument here.

I read somewhere that if the rest of the world consumed as much resources as the US does, we would need 5 more planets to support our living... I don't know how true it is but it's certainly food for thought...

I'm not sure you can separate production and consumption when discussing energy efficiency. I'll trust someone with better knowledge than me when they say production methods for producing fuel-hungry 4x4s are extremely efficient, but I'm not sure you can argue that a nation-state's energy policy is efficient because of how they produce. I think you really need to look at what they produce as well.

Now I really don't know whether manufacturing and the service industries in the US are competitively fuel efficient or not. But my point is that production and consumption are two sides of the same coin -- production methods might be fairly efficient, but the outcome of that production (and how we use it) shouldn't be ignored. At the very least the latter cancels out the former, at the worst we think we're absolved from global concerns because our industry will take the heat. (And I use 'we' because I think it isn't just the US here.)

Wrong! Whatever effect you see on the world economy won't be a result of what industry is doing, but is a result of what the market is doing and wanting. Until we change our individual approach (to heating, cooling, travel, agriculture, industry and the supply chain, and consumption in general), then the market forces will always push industry to producing inefficient products, even if the manufacturing process itself is less inefficient.

Legislating to force industry to become more fuel efficient is the tail wagging the dog. And it undermines the principles of free market economies not only fundamentally, but between nations -- how tough will the US be with financial penalties on US businesses compared to, say, European states on European businesses, or even the Chinese government on Chinese businesses? Each nation is going to be reticent to penalise their own domestic economy in such fiercely competitive international markets! That's why agreements like Kyoto are so difficult to make multilaterally.

Either we invent clean energy or we change our behaviour to consumption. Production and manufacturing will then naturally follow.

What about offering (more) incentives for producers/consumers of energy-efficient equipment?

You see, I go writing an essay-length message to try and get across my thoughts, and Ilija sums it up in one line!

You're absolutely right, it should be carrot not stick!

Originally Posted by FiReSTaRT

What about offering (more) incentives for producers/consumers of energy-efficient equipment?

Well, alternatively higher energy prices would cause the need for it w/o any incentives. If insulating your house costs you 2000USD, but saves you 3000USD over the cold winter months you will likely go ahead and pay for it, unless you prefer paying to heat the universe. Even taking out huge interest loan will save you money.

People in europe may like to drive 8cyl, 5l monsters, but it's expensive both in gas prices and in terms of space. In the US market every time the gasoline prices increase the demand for SUVs decreases and for sedans increases, just as you would expect. Investing in new technology is expensive, but the big businesses are not poor. As the supply for oil is limited eventually they will do it, when the returns on their investments are high enough. They are anything but dumb. I'm sure there are plenty of high-skilled PhD's that get paid way over the median salary to model these things, so that the management can make profitable decisions.