Gas prices high is a good thing

[jetboots]

In the big picture, what the world really needs is gas prices to go way up.

I don't care if its cause they actaully should or because gas companies want to make 29billion more in profit that year, the point of the matter is that it will lead to much quicker adaption of alternative fuels as well as ecomomic demand for new technologies.

I realize many other things will go up in price in consiquence, buy hey, it depends on how much value you place in things not being as polluted. I for one would gladly pay extra for the sake of not screwing ourselves over.

[iponjs]

The oil industry isn't really the main source of our pollution - nor is gasoline consumption, but I agree that higher gas prices are good for our society. We do way too much unnecessary driving - mostly to WalMart to buy crap we don't need. The resulting traffic and garbage (not to mention debt) are taxing society.

I had to drive from CT to VA on labor Day weekend (return leg of business trip) and the traffic was WAY lighter than normal - even lighter than an average weekend, let alone a holiday weekend.

[Conan]

i dont disagree, everyone at work is carpooling now

[Sue Denim]

As oil becomes more expensive, coal starts looking like a more viable option. Unfortunately, that will hurt pollution, not help. Conservation will help, but I'm just saying that it's a mixed bag.

[Sue Denim]

Oh, and higher fuel prices mean higher prices for everything. That means inflation, so the Fed will raise interest rates to stop that. That will put the brakes on the economy by reducing investment and growth. Given enough of a slowdown, we may see job losses, leading to bankruptcies and home foreclosures. This could hurt demand for housing, resulting in a bursting of the real estate bubble.

What I'm describing is stagflation, or inflation plus low (or no) growth. Stagflation is highly correlated to spikes in energy prices.
http://www.moneyweek.com/article/1308/investing/other-viewpoints/gef-stagflation.html

Be careful what you wish for...

[indie]

Some people just don't get it, do they. (http://themermaidtavern.blogspot.com/2004/03/high-gas-prices-blessing-in-disguise.html) . .?

[mgb]

Where I live it's great, the government is about to cut everyone in the province a cheque for $400, just because we produce oil.

Overall the effect of high oil prices is disasterous. Sue Denim is right. Way higher production prices for the simplest of things. I see it as an end to the house boom because interest rates will start shooting up to battle inflation.

The problem is a lack of alternative energy sources and a population intensely reliant on one product.

As for coal, it's been said that Alberta has enough coal to supply energy to Alberta for like 500 years. But still, it won't last forever.

[Geek Engineer]

Well all of this certainly doesn't seem to hurt my idea of building an ad hoc wind power to methane farm.

I have to agree with Sue thought stagflation could be in the cards, but hopefully we will come out of it more energy independent and diversified this time. I suppose they could find a ton of oil somewhere else or switch to coal by then for all I know.

[sbw]

Oh, and higher fuel prices mean higher prices for everything. That means inflation, so the Fed will raise interest rates to stop that. That will put the brakes on the economy by reducing investment and growth. Given enough of a slowdown, we may see job losses, leading to bankruptcies and home foreclosures. This could hurt demand for housing, resulting in a bursting of the real estate bubble.

What I'm describing is stagflation, or inflation plus low (or no) growth. Stagflation is highly correlated to spikes in energy prices.
http://www.moneyweek.com/article/1308/investing/other-viewpoints/gef-stagflation.html

Be careful what you wish for...

yes, yes it is--and I wasn't even alive for the gas lines of the '70's. everything is likely fucked, from a macro perspective.

and who doesn't get it, indiejade? the ones pining for ecological utopia, or the ones (sue denim, myself, and many others) who recognize that those utopian visions would ruin the economy?

Scott

edit: sorry, I'm a little woozy from all the coke I just did in ibiza, indie...and the hamptons were nice, too, though a little crowded this year...

[Trystorp]

everything is likely fucked, from a macro perspective.


This statement reminds me of
this website (http://www.lifeaftertheoilcrash.net) I read recently.

[mgb]

yes, yes it is--and I wasn't even alive for the gas lines of the '70's. everything is likely fucked, from a macro perspective.

and who doesn't get it, indiejade? the ones pining for ecological utopia, or the ones (sue denim, myself, and many others) who recognize that those utopian visions would ruin the economy?

Scott

The economy doesn't have to be ruined. If it's reliance on fossil based fuels was lessened, things like hurricanes wouldn't pose such a devastation to the economy as a whole.

It's like the entire economy of the world has invested all it's resources into one, let's call it a stock, and they ride all the ups and downs of that stock when it might have been a good idea to diversify the portfolio ages ago.

It might take a crushing blow to the economy to for the bigger picture to emerge. That's kind of too bad, but what can you do when, "[s]ome people just don't get it." (as tongue in cheek as indiejade may have been).

[sbw]

isn't it a little late? aren't all the eggs already in one basket?

if oil prices continue to go up, and inflation necessarily follows, many of the existing mechanisms will be disrupted. if the consequent recession/depression DOES force the "bigger picture to emerge", will it be worth it? will we be able to retrofit, or will chaos and misery result? some american citizens (those displaced by the first hurricane) are getting a tase of the 3rd-world life, and they don't seem to like it. I'm sure I wouldn't either.

Scott

[Xylix]

isn't it a little late? aren't all the eggs already in one basket?

Not really, this is perhaps the best time such a thing could occur. Unlike in the 70s the technology to wean us off of Oil is here, or at least near. Further, even without the hurricane's China's growing demand would have put us in the same pinch in a few years.

The difference is that when that pinch hits there'll be fewer SUV's more Hybrids, and greater investment in alternatives.

[PenguinHunter]

Some people just don't get it, do they. (http://themermaidtavern.blogspot.com/2004/03/high-gas-prices-blessing-in-disguise.html) . .?

:lol: I expected that link to be to the thread where you were comlaining about the incorrect usage of ellipses. I feel bad every time I forget to space the dots now. You've ruined the ponderous post process for me. It's hard to break the habit when MS Word automatically spaces them for you. . .

[Sue Denim]

This statement reminds me of
this website (http://www.lifeaftertheoilcrash.net) I read recently.
Then you'll really like this website (http://dieoff.org). :devil:

[Biff_Loman]

I don't give a damn about the economy slowing down. Yes, house foreclosures, blah blah blah. This is short-term pain for long-term gain, as long as we invest in alternative energy sources.

If you think roller-coaster gas prices are bad for the economy, imagine what a real oil peak would do if we had absolutely no other options. If there was no preparation whatsoever, the doomsayers' scenarios could prove correct.

Global warming is also an issue. People like to hype up the controversy, but from my readings in New Scientist (great publication for the interested layman) it seems that there is no real controversy in the scientific community. As far as the scholarship is concerned: the earth is heating up, we're doing it, and our climate is going to change a lot even if we stopped emitting carbon today.

I'm aware that there are other sectors that emit carbon, other than transportation. IIRC, the production of concrete accounts for 5% of the world's carbon emissions. Mining is another heavy-hitter.

Again: I don't give a rat's ass about stagflation and other economic woes when so much is on the line. If we fail to properly invest in alternative energies, we could be looking at disaster once oil production cannot meet demand.

[eyebyte_atWork]

i dont disagree, everyone at work is carpooling now

No Shit? Really?

Dude - I have noticed more people on the metro trains lately - Georgia being alot like Texas - you know how hard it is for people to give up their driving.

[Sue Denim]

biff_loman, you are correct to point out the urgency. Please know that my point about stagflation, as well as my point about how coal usage as an alternative will increase pollution, was to illustrate that there are tradeoffs. As you correctly point out, it really comes down to some short term pain, vs a possible long term catastrophe. And if we wait for either peak production, or for irrefutable signs of global warming (not sure what other evidence is needed, really), then catastrophe is not too strong a term.

OTOH, if we would do more before we hit these turning points, we have a much better chance of mitigating the possible catastrophes, and at the same time, minimizing the likely tradeoffs. Whether or not it's too late is speculative, but there's no doubt that starting TODAY would be better than waiting for something really bad to happen and then reacting.

So I guess I'd say that a modest rise in energy prices, to get people's attention is probably a good thing. I'm have to think that people will become more aware of fossil fuel supply issues (including peak oil theory, as well as the precarious political issues related to where most oil is located) at $70/bbl of oil than they were at $30/bbl. It might still need to go higher to get people to make substantive changes. If I could control it and had ultimate wisdom, I'd probably choose a level that maximizes the behavior changes while mitigating the pain. But I don't have that power.

I'm starting to see more discussions about oil supply in the "mainstream" media lately. Unfortunately, I think there are still a lot of people focusing on the short term price fluctuations more than the (slightly) longer term changes going on.

[floid]

and who doesn't get it, indiejade? the ones pining for ecological utopia, or the ones (sue denim, myself, and many others) who recognize that those utopian visions would ruin the economy?
One important thing "to get" is that an economy, like a religion or any other dreamed up conceptual system that originates from the restless churning of human minds, is nothing but an abstract idea that only has an effect upon the real world because a good number of people believe it does. Like all illusions it will collapse when there are no longer enough "true believers" to support it.


The environment, on the other hand, has always existed independently of human thought and will continue to exist whether we "believe in it" or not.

Perhaps this is what Indiejade "gets" that you don't.

[indie]

and who doesn't get it, indiejade? the ones pining for ecological utopia, or the ones (sue denim, myself, and many others) who recognize that those utopian visions would ruin the economy?

It's quite possible that your sense of humor is the most empty of any one I have come across on the Internet, ever.

But frivilous details aside, I'm shocked that you're separating us into camps so soon! The Ecological Piners of Utopia vs the Steadfast Cronies for Economic Resilience. It really is so black and white, isn't it?

[indie]

and who doesn't get it, indiejade? the ones pining for ecological utopia, or the ones (sue denim, myself, and many others) who recognize that those utopian visions would ruin the economy?

It's quite possible that your sense of humor is the most empty of any one I have come across on the Internet, ever. This is, of course, assuming you are indeed aware of the subtle "link."

But frivilous details aside, I'm shocked that you're Nazi-separating us into camps so soon! The Ecological Piners of Utopia vs the Steadfast Cronies for Economic Resilience. If only it were so black and white.

[Zero Angel]

One important thing "to get" is that an economy, like a religion or any other dreamed up conceptual system that originates from the restless churning of human minds, is nothing but an abstract idea that only has an effect upon the real world because a good number of people believe it does. Like all illusions it will collapse when there are no longer enough "true believers" to support it.


The environment, on the other hand, has always existed independently of human thought and will continue to exist whether we "believe in it" or not.

Perhaps this is what Indiejade "gets" that you don't.
Ah, so this 'market' thing you speak of is something that exists only within our minds and has no basis in reality?

I wonder what the psychological motivators are for this construct that we call 'market'. Perhaps it is an occurance that happens when our Te and Si team up to protect our ego, thereby creating a construct which serves as the basis for security. A sort of grounding mechanism if you will.

[mgb]

Ah, so this 'market' thing you speak of is something that exists only within our minds and has no basis in reality?

I wonder what the psychological motivators are for this construct that we call 'market'. Perhaps it is an occurance that happens when our Te and Si team up to protect our ego, thereby creating a construct which serves as the basis for security. A sort of grounding mechanism if you will.

floid is right to an extent.

It has no basis outside of the human sphere (that we know of). You don't see animals buying low and selling high or black holes succumbing to public pressure about their over consumption.

It's a completely human construct.

[floid]

Ah, so this 'market' thing you speak of is something that exists only within our minds and has no basis in reality?

I wonder what the psychological motivators are for this construct that we call 'market'. Perhaps it is an occurance that happens when our Te and Si team up to protect our ego, thereby creating a construct which serves as the basis for security. A sort of grounding mechanism if you will. Santa Claus is real to those who believe in him.

Consensus can create purely human "realities" such as race, economy, politics, and religion but they are all, so to speak, faith based realities, that would vanish if human brains devolved into monkey brains.

I suspect we would be considerably better off without some of our faith based realities, and we would probably not even have to get monkey brains to do it.

[C.J.Woolf]

Ah, so this 'market' thing you speak of is something that exists only within our minds and has no basis in reality?
It has some basis in reality, that's all. Very little of the "money" in the economy is cold hard cash; most of it is virtual, in the form of credit, securities, etc. If everybody tried to cash them in at once we'd find out how little of it is "real".

There was a Monty Python sketch about a magician who put up apartment buildings that were perfectly safe to live in -- provided the residents believed in them. That's the economy.

An afterthought: Hell, even the dollar is virtual. It has perceived value only because its holders trust that it is backed by the "full faith and credit of the United States government".

[Sue Denim]

floid is right to an extent.

It has no basis outside of the human sphere (that we know of). You don't see animals buying low and selling high or black holes succumbing to public pressure about their over consumption.

It's a completely human construct.
It's interesting to add a point about the current price of oil being derived from supply and demand (naturally). Demand is a human created force. Supply has a human-derived and a 'natural' component since it is a finite resource. A big part of the dispute between Peak Oil "doomers" vs. "cornucopians" is how much of the supply is affected by people, and how much is controlled by nature (geology, laws of physics, etc.).

In addition, the debate over the viability over alternatives has similar themes in the arguments. Some people say that as price of oil increases, more alternatives will be developed (people controlled supply, technology will save us, etc.). Doomers predict that there will be naturally imposed limits on efficiency and scalability of alternatives.

As many people currently fleeing Houston can attest, when you're out of gas, you're out of gas, and price is hardly relevant. Of course, this is highly situational.

[Dman]

The high oil prices are probably even FUELING (no pun intended) the most recent spike in housing prices – people know that interest rates are going up and want to get in on the action while they can, before rates price everyone out of the market.

I like mgbradsh’s description better, an “end to the housing boom”, rather than that overused and misinterpreted term “real estate bubble”.

BTW I think the smartest thing an auto company could do right now is make hybrid full-size SUVs and trucks. You know people would pay extra for them, you’re already shelling out $50k what’s an extra $5k for superior fuel efficiency and a feel-good attitude? Nobody wants those little sissy hybrid cars except college professors and nerdy little elitists (ok, just kidding, that was a cheap shot). Make everything a hybrid for crying out loud!

[Zero Angel]

Random Thought:
City busses use less fuel then certain one ton trucks

[crule81]

In the short term, higher gas prices are going to hurt the poor the most. Not everywhere do the poor have easy access to public transportation. This is just something for those of you on the left to think about.

[Dman]

The high oil prices are probably even FUELING (no pun intended) the most recent spike in housing prices – people know that interest rates are going up and want to get in on the action while they can, before rates price everyone out of the market.

I like mgbradsh’s description better, an “end to the housing boom”, rather than that overused and misinterpreted term “real estate bubble”.


Not to gloat, but -

http://www.msnbc.msn.com/id/9503454/

[indie]

I hope interest rates do go up. . . it's about time those cocky real-estate agents had their turn. Real estate agents are about the most arrogant and unethical people on the planet.

(On a semi-related tangent) I think that all those people who joined the hype and bought real estate as a means of investment recently, thinking it was better than the stock-market, will be sorely disappointed when their investment fails to produce the expected return in the long-run. I read/heard something recently about how the maturing GenX and GenYers are content to rent, not wanting to be bogged down by the responsibility of home-ownership, preferring the freedom. This seems to be quite accurate regarding people I know, etc. As the baby-boom generation slowly begins to fade out, there will be a surplus of available homes. Prices will go down. Expected ROI not met.

[Sue Denim]

Not to gloat, but -

http://www.msnbc.msn.com/id/9503454/
Not sure I follow your point here.

From your link:

He issued a fresh warning about risky mortgages, saying in the event of a widespread cooling in the housing market certain borrowers and lenders “could be exposed to significant losses.”

At the same time, Greenspan said most homeowners are in a fairly good position to weather a shock if prices drop.

“The vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices,” he told a bankers conference in California.
Either situation, "significant losses" or a "decline in house prices", is more of a bursting bubble scenario than an end of the housing boom. Unless I misunderstand the distinction you're making, I thought you were claiming that the end of the housing boom would NOT lead to a decline in prices. I understood your objection to the term "housing bubble" to be a disagreement with the idea that housing prices would fall. Please clarify why you're gloating, because it sounds to me like Greenspan is warning about declining prices.

[jetboots]

Originally Posted by sbw
and who doesn't get it, indiejade? the ones pining for ecological utopia, or the ones (sue denim, myself, and many others) who recognize that those utopian visions would ruin the economy?



It's quite possible that your sense of humor is the most empty of any one I have come across on the Internet, ever. This is, of course, assuming you are indeed aware of the subtle "link."

But frivilous details aside, I'm shocked that you're Nazi-separating us into camps so soon! The Ecological Piners of Utopia vs the Steadfast Cronies for Economic Resilience. If only it were so black and white.

I essentially agree with sbw, but to rephrase without using "the most emtpy humour", i think it can be sumed up like this:

There are two extreme schools of thought:

1) Those who believe that the environment is more important than the economy
2) Those who believe that the economy is more important than the environment

Then there are all those inbetween to a certain degree that acknowledge the presence of the other, but regardless, it does become a binary black and white decision: at the end of the day are you coming from the side of 1) or 2)?

Obviously you are coming from 2) and myself and sbw from 1). Nothing wrong with either, just a point of view (to look at it without bias).

What is more important: sustaining a logging economy in an area, or an endangered bird that is threatened by the logging? Coming from 1) bird, from 2), logging.

[Dman]

Not sure I follow your point here.

From your link:

Either situation, "significant losses" or a "decline in house prices", is more of a bursting bubble scenario than an end of the housing boom. Unless I misunderstand the distinction you're making, I thought you were claiming that the end of the housing boom would NOT lead to a decline in prices. I understood your objection to the term "housing bubble" to be a disagreement with the idea that housing prices would fall. Please clarify why you're gloating, because it sounds to me like Greenspan is warning about declining prices.

No.

Significant losses related to “certain” lenders and borrowers, refers to lenders and borrowers who have foolishly been too loose with credit terms. In other words, a borrower who took out a variable interest rate mortgage on a $300k house, but only makes $50k a year in income (and the lender who let him). Lenders have been getting too loose with their terms for years, ever since rates went down to rock bottom.

It’s the same with credit cards. Virtually anyone can get credit, and for amounts far beyond what they can actually handle. We’ve seen many examples of people who qualify for way more than they can handle, and the smart ones don’t take it all, but most people take as much as is offered. This will cause many defaults and foreclosures, which will slow down the housing boom, or end it, but will not “pop” it in the sense of real estate actually depreciating.

Greenspan is referring to a what-if scenario, not a likely scenario, when he speaks of housing prices declining. What is a likely scenario (what he’s warning about) is that rates will increase. Which is why the real estate market is so hot, get it while you can before you get priced out by rates. Then it will level off.

You must not have clicked on the link within that article, which is here –

http://www.msnbc.msn.com/id/9493012/

His only what-if concern about falling real estate prices is isolated to certain local markets. Again, his primary concern, that is more likely, is an end to the boom - a slowdown - not a “bubble-pop”. This is not the stock market, there is actual intrinsic value behind these assets.

[Sue Denim]

No.

Significant losses related to “certain” lenders and borrowers, refers to lenders and borrowers who have foolishly been too loose with credit terms. In other words, a borrower who took out a variable interest rate mortgage on a $300k house, but only makes $50k a year in income (and the lender who let him). Lenders have been getting too loose with their terms for years, ever since rates went down to rock bottom.
This still doesn't explain how the article justifies your gloating, which was what I asked you to clarify.

And btw, the word "certain" does not exist in the article. However, he does use the term “unsustainable levels,” which implies a drop.


It’s the same with credit cards. Virtually anyone can get credit, and for amounts far beyond what they can actually handle. We’ve seen many examples of people who qualify for way more than they can handle, and the smart ones don’t take it all, but most people take as much as is offered. This will cause many defaults and foreclosures, which will slow down the housing boom, or end it, but will not “pop” it in the sense of real estate actually depreciating.Actually, defaults and foreclosures in real estate will affect prices overall. Defaults and foreclosures on credit cards don't have the same effect. These words don't prove your gloating, either.


Greenspan is referring to a what-if scenario, not a likely scenario, when he speaks of housing prices declining. What is a likely scenario (what he’s warning about) is that rates will increase. Which is why the real estate market is so hot, get it while you can before you get priced out by rates. Then it will level off.
You have a unique ability to read the mind of Alan Greenspan.

The article, however, states:

“It is still too early to judge whether the froth will become evident on a widening geographic scale or whether recent indications of some easing of speculative pressures signal the onset of a moderating trend,” he said.


You must not have clicked on the link within that article, which is here –

http://www.msnbc.msn.com/id/9493012/
I quoted it, so I think your comment is really trying to be insulting. If you want a discussion, then please be nice, Dman.


His only what-if concern about falling real estate prices is isolated to certain local markets. Again, his primary concern, that is more likely, is an end to the boom - a slowdown - not a “bubble-pop”. This is not the stock market, there is actual intrinsic value behind these assets.
You are saying there is not intrinsic value in the stock market, and that the price of real estate reflects purely intrinsic value? Hardly, on either case.

I still don't see your cause for gloating, not in this article anyway.

[Xylix]

Then there are all those inbetween to a certain degree that acknowledge the presence of the other, but regardless, it does become a binary black and white decision: at the end of the day are you coming from the side of 1) or 2)?


Nope, there are quite a few other possibilities as well:

3) A healthy economy, by necessity relies on the a healthy enviroment
--3a) and the Economy is more important, so the enviroment should be taken care of to enhance the economy.
--3b) thus the enviroment is more important (essentially the same as 1)
--3c) Thus any attempt to rate one as more important than the other is idiocy, however the most effective mechanism of dealing with this is to attempt to maximize both the enviroment AND the best economy.

4) Neither the economy OR the enviroment are of any importance.

5) The inverse of 3..., the enviroment by necessity relies on a healthy economy..., wierd, but possible!

6) 5 AND 3...


and I'm sure there are even more than that.


Incidently, I fall into group 3c.

[indie]

I essentially agree with sbw, but to rephrase without using "the most emtpy humour", i think it can be sumed up like this:

There are two extreme schools of thought:

1) Those who believe that the environment is more important than the economy
2) Those who believe that the economy is more important than the environment

Then there are all those inbetween to a certain degree that acknowledge the presence of the other, but regardless, it does become a binary black and white decision: at the end of the day are you coming from the side of 1) or 2)?

Obviously you are coming from 2) and myself and sbw from 1). Nothing wrong with either, just a point of view (to look at it without bias).

I don't subscribe to any extreme schools of thought, especially not ones that believe the "economy is more important than the environment." Where on earth did you get such a notion?

[jetboots]

I don't subscribe to any extreme schools of thought, especially not ones that believe the "economy is more important than the environment." Where on earth did you get such a notion?

Im overly overly simplifying the matter. Im talking about if you had to pick what is more important: economy or environment, and those were the only two options or else you get killed.

It's discritizing a continous phenomenon/opinion into two groups. Just cause one would pick the economy does not make them a cold hearted bastard towards the environement, its simply a matter of rounding up or down.

[God]

We've been doing this company-vehicle-carpool-on-corporate-gas-card.

It works. :)

Especially since I live so close to a co-worker.