Personally I think the DOJ should investigate refineries, as none of the seem particularly eager to compete on price. They're making record profits as the price of crude collapses while the price of gasoline is flat.
http://www.latimes.com/business/la-fi-refinery-profits-recor...
It seems very fishy to me that we have so much crude building up, yet consumers aren't seeing any real benefit from cheaper gas, cheaper shipping, or cheaper domestic flights.
The EPA has been hostile to refinery expansion or new refinery construction.
Now, obviously price is only partly determined by cost.
Free markets y'all.
Two refineries have opened in the US this year:
Some oil is $1 a barrel to pump. It will always be worth pumping.
Some oil is $50 a barrel to pump. It is only worth it when oil price is greater than $50 a barrel.
Also, since we can not export crude, but can export distillates, we can sell gas to other countries, increasing demand to some extent.
Recently they have also been deferring maintenance to keep capacity of their refineries as high as possible and now failures are causing major shutdowns.
http://www.nbcnews.com/business/travel/airline-fares-record-...
> Airline fares recorded their steepest monthly decline in 20 years, falling 5.6 percent last month, according to the Bureau of Labor Statistics.
Consumer gas is a very small portion of energy use. Just a very visible one.
People had forty years to figure out, "Shit, what happens if gas gets expensive", and they did the wrong thing. Let'em pay.
Regardless of your suggested approach to solve global warming, I suggest you reconsider your reasoning. There's a limit as to how much oil companies can extract and remain profitable. To that point, oil storage utilization is at a historic high with new investments at a historic low.
The idea that there's such a thing as a 'free market' at all doesn't stand up. It's a mythical beast.
The only way to keep that oil in the ground is to eliminate the market for oil at profitable extraction prices through very cheap energy alternatives.
It's very difficult to solve the problem through regulation because you need all the countries making up a sizable portion of demand to regulate together. The incentive will be strong for individual countries to defy global pressure to do so, because cheaper energy means more economic growth. So far we've seen very little in the way of effective regulation and I'm not optimistic for a change, the incentives for short-term-minded politicians are in the other direction.
The hard thing about it is not scuppering economic growth (plenty of ways to achieve that), but keeping a lid on lobbying and bribes by the carbon industry until their political back is broken and renewables can take over.
But, if increased crude production in the US has lowered the long-term equilibrium price, the US could increase fuel taxes to discourage increased consumption.
The only downside to this is that it'd be a very regressive tax increase.
In the medium term renewables will take over. It no longer makes sense to build an oil fired power station any more. In a few more years it will probably be cheaper to drive electric (it already is if you just count the energy cost).
We might still continue making plastics and fertilizer from oil, but even for them the oil is substitutable. At that point we'll probably be more worried about the supply of other commodities and oil will be no more important to us than copper or iron ore.
"Saudi Arabia has maintained a high level of oil production despite the slump in crude oil prices, arguing it needs to protect its market share in an economy in flux because of the glut of U.S. oil."
http://www.upi.com/Business_News/Energy-Resources/2015/07/13...
https://research.stlouisfed.org/publications/es/article/1034...
The problem is that capitalism rapes externalities.
Even if you are not against the killing of an individual animal for food, for instance, the capability of doing so drives an increase in demand which drives an increase in supply -- billions of animals raised for the sole purpose of being killed for food. And then we try to do it more efficiently, at less cost, in factory farms. And economics drives us to this.
Similarly, the supply of oil will drive down prices and now result in newfound uses for it, we WILL use it up until none is left. And it's all in the atmosphere.
Same with elephant tusks in Africa being poached.
Same with overfishing.
Capitalism may be just too efficient... the name of the game is to increase money velocity through the system ... so without inflation, we will actually go even faster and eventually turn all the resources into garbage.
Oh and the greatest demand expansion of all... human population growth. The more people the faster we pollute. It's unsustainable. But all we can talk about are the cents each person is saving at the gas pump... really people?
If the person that reaps all of the money for a particular business makes enough money off of the venture that they can insulate themselves from the consequences, that is a failure of Capitalism. For example, someone lives in a community that depends on a particular waterway. They make a bunch of money by skimping on correct disposal of toxic waste, instead dumping it into the waterway. Once they've "made it," they take the money and leave the area. They are no longer feeling the effects of their actions, instead they are forcing them onto others. This is the legacy of Capitalism.
Could you please elaborate on this assumption?
Then reduce demand for hydrocarbons by simply producing lots of alternative energy.
The other alternative is wait for prices to be high, which increases demand for alternative energy exactly when it's the most expensive to manufacture.
A smart company will build and stockpile, then sell when prices are high. A smart consumer (with deep pockets and lots of patience) will do the same.
Elon Musk is doing his best to drive down the price of batteries and solar power. What will you work on? Baseload power probably needs nuclear. There are a number of nuclear energy startups right now.
Hell, you've got Germany closing perfectly good clean nuclear plants, that have to be replaced with new coal-burning plants, due to misguided environmental activism.
High prices may not be ideal economically, but they do reduce demand for oil, and increase demand for alternative energy.