Really what they should do right now is take the opportunity to put in place a carbon tax. That would raise current prices back to previous prices, but it would also suppress demand even after the pandemic passes, so that the wholesale price stays low. You'd essentially have the tax getting paid by Russia and Saudi Arabia because demand would never return to a level that would absorb the supply glut.
Who would want to be the governor seen as increasing taxes at the beginning of economic troubles? In general any kind of tax increase at the moment is going to fall flat.
And then if it happens to still exist two years from now, it's already the status quo.
I think it would be incredible for the US do push towards renewables and cut oil consumption, but sometimes you have to accept the world as it is, and not how you want it to be.
Also just want to borrow your phrasing to say I think it would be incredible for all those shale oil folks to keep pulling in those paychecks, but sometimes you have to accept the world as it is, and not how you want it to be.
Look, I get that climate change is one of the most important problems we are facing. But if we want to devise a solution, it has to pass the "political viability" test. Else, you are only inviting a radicalized electorate.
Example: "yellow vests" in France, which is supposed to be a rich society with plenty of resources to withstand the shock from rearranging an oil-based economy, with people supportive of generous social safety nets. If France can't get a gas tax passed without fierce nationwide protests, forget about making oil jobs redundant in Texas, let alone in developing countries like Nigeria or Kazakhstan.
You say American, but >40% of production is Texan, and the remainder are primarily low-population states like North Dakota and Alaska. Most of the demand isn't in the same states as most of the supply.
So you do it in those other states, like New York or Illinois, that have people but not oil, and you can get rid of most of the demand because most of the people with oil jobs aren't in those constituencies. And the people who gain jobs from replacing them would be -- solar installations are inherently local. So would everyone receiving the dividend, even though part of it would be paid for by suppliers.
And it's really the same in Europe -- Eastern Europe has most of the supply but Western Europe has most of the demand. And China and India have negligible oil production per capita.
Texans can buy as many pickup trucks as they like, but if you stamp out 80% of the world demand like that, nobody is going to buy their oil. And once the jobs are already gone and the industry isn't interested in making ICE cars just for Texas and Russia and Saudi Arabia, there won't even be that.
Thought of mine is as the number of electric cars increases California's oil imports will drop eventually to near zero.
You could also just pay them off to shut up with some tax credits or something when it's a closer fight like that. It's not ideal, but destroying California's oil demand has the same outcome climate-wise whether some of the money goes to local oil producers or not. You basically tax the world oil production market to the tune of $1, of which California is less than a percent of, then give the local producers two cents out of the dollar, which is more than twice what they lost and should make them very happy.
In theory that could even work in a state like Texas -- pass a carbon tax and give some of the money to the local oil producers as compensation for the correspondingly slightly lower wholesale global oil prices, so that they have to sell their oil outside the state and for a lower price but still come out ahead with the tax credit. But then you get a lower dividend for everybody else, in proportion to how many local oil producers there are that you have to pay off, and it's not exactly a popular proposition there to begin with, so the hope of getting that through in Texas still seems pretty slim.
I tend to dislike consumer carbon taxes because I feel it tends to punish people for decisions they made previously. Like a old fart who bought the last car he's ever going to own in 2005. Which results in political blowback. See the yellow vests in France.
This is what the dividend is for. If you bought a Toyota Camry in 2005 and now you're paying more for gas but receiving a dividend, the dividend is more than the higher gas prices -- some of the tax gets paid by oil producers (since lower demand lowers prices) but all of it goes to individuals, and some of it gets paid by carbon emissions by corporation, but once again all of it goes to individuals.
The people who would get screwed are the people who just bought a 12 MPG SUV rather than buying one fifteen years ago, expecting to keep it for a long time, because their carbon footprint is enough above average for enough time that it could exceed the dividend. But why should we have any sympathy for this behavior? The writing has been on the wall for a long time here. You bought a high-MPG gasoline-powered car in 2005 when viable electric cars weren't really available, you're fine. You buy a low-MPG one in 2020, you can't claim you didn't see this coming.
It would be make more economic sense to pay these people to stay home and do nothing!
We’re going to need to bounce back as much as we can, which means increased oil consumption.
It might mean coal gets knocked back, however!
Just saw a coal train going to the coal export terminal by my house that looked mostly empty.
Already, coal is down to just 22% of US electricity as of the end of January. It’s possible it could fall below nuclear power by the end of the year.
Price is a good way to reduce consumption, but price spikes are not.
My opinion is, the focus should be on switching consumption to renewables one large milestone at a time. For example, diesel would be produced less and used more enough for a renewable alternative engine and fuel supply chain for cruise ships to make economic sense, then within a few years all cruise ships will be on renewable. Fossil fuel is not the enemy, fossio fuel dependency is.
You can make similar economic arguments for more public electric transport for example (what people pay in tax is miniscule to what they pay for gas every year).
This will increase pollution and energy demands in the coming months at a higher level than before the crisis.
Well, from what I've read. I am a total idiot in these matters.
You first have to give the corporate world a gift before you take it away. Similarly to how the corporate world treats consumers.
I think that it's possibly efficient because it burns one clock cycle of a respondent's thoughts, and lets them remember the human.
Same goes for most other industries. This isn't a situation where you just wake up one day and it's over. It's not a war where you just make up and get back to work. This virus is out there, and most experts say even if you were already infected, you will only become temporarily immune (similar to flu).
So until you see a vaccine develop, coronavirus is not going away by any stretch. It will continue to cause problems in the medium term.
@trvrb on Twitter. And this other guy, with this thread: https://mobile.twitter.com/PeterKolchinsky/status/1244029896...
(Which doesn’t mean I disagree with your overall point that this won’t be an instant-bounceback.)
“Public” tourism industry is going to be okay (and aren't too worry about it for better or worse) but OTA and traditional tour operators are bleeding and some will eventually die.
Small local actors too but they will be replaced (or back after a year of unemployment, with loans from bailout banks).
Of course oil is a problem but a tax or cap and trade system would make more sense to address it.
Taxes and cap-and-trade systems are indeed the mechanisms of how current international agreements try to attempt CO2 emissions, they're a fine way to implement it.
Where did I go wrong? Was it when I evolved?
This idea that OPEC controls everything in oil is simply false
We have to drastically cut down oil use, let's not pretend that the pre-corona oil consumption was tolerable, much less desireable.
Now would be a good opportunity make internaltional agreements to cap oil consumption and extraction to its current level in shutdown, and when the shutdown starts to get rolled back, the shock will be smaller as rising demand and price mechanisms reconcile how the remaining lower oil supply gets used.