Originally Posted by Mikebert

Could you specify which direct subsidies you are talking about?

I found a pretty good study of the subject here:

http://www.mindfully.org/Energy/Foss...-Subsidies.htm

What evidence is there that US foreign policy in the Mideast actually keeps oil prices low?

Two answers:

1) The military efforts are only an enforcement of the diplomatic efforts. Where possible, we work through proxies such as the House of Saud. The invasion of Iraq, insofar as it was about oil, was to prevent loss of Iraqi oil to other customers; had that happened we might have faced shortages in this country which would have driven up the LOCAL price of oil dramatically. I don't believe our diplomacy has much if any effect on the global price of oil, it just secures our supply, and perhaps cuts us better deals.

2) Since we have powerful and influential corporations (especially during the current administration) that profit from high oil prices, the goal is not to keep prices low but to keep them high but manageable.

Originally Posted by Mikebert

No. As you know, fossil fuels are an extremely attractive source of energy compared to just about everything else.

Yes. As their economics are currently constituted. Which is to say: given a vast array of market distortions, ranging from disconnect between users and the harms caused by use to the outright transfers of socially-held wealth in order to 'keep supplies flowing' (without those costs being added in their entirety straight to the bottom-line price of the fuels).

As to their actual economics, when the entire undiluted picture is considered...

Well, for the sake of the argument, we've considered the anthropogenic GW thesis to be fact. So I'd have to say, given that, that their cost is a fair sight higher than the marginal savings achieved in using them over non-fossil options.

Originally Posted by Child of Socrates

The thing is, this is a good idea even if we don't posit global warming. Why tie the two together?

For the sake of The Thread, and for us poor literal-minded ISTJ's who see those trees all too well.

But (and I'm going to briefly step outside the 'taking it as a given' parameters) if it turns out that anthropogenic GW is discredited, you will have undercut your laudable-in-their-own right goals. If you make GW the major reason to do a thing, and it turns out that GW isn't what you thought it was, then it won't be unreasonable of people to ask, 'why do the thing?'

It just doesn't seem a very wise tactic to me. To take a good idea and tie it so tightly to something that might be quackery.

Originally Posted by Justin '77

Well, for the sake of the argument, we've considered the anthropogenic GW thesis to be fact. So I'd have to say, given that, that their cost is a fair sight higher than the marginal savings achieved in using them over non-fossil options.

But as Mike has pointed out, for any one person that cost is an externality. That is, it's a cost to society as a whole (including me), not a specific cost to me. It's the same old commons situation, where problems affecting all of us equally become somebody else's problem.

The only way we've found to internalize externalities is by law. Hence, for example, the Clean Water Act, which penalizes people and corporations for polluting water. If we're going to make people and corporations financially responsible for their portions of the global-warming cost of fossil fuels, we're going to have to do it through some rather heavy-handed type of government action, either a steep carbon tax or liability at law for damages.

Originally Posted by Justin '77

But (and I'm going to briefly step outside the 'taking it as a given' parameters) if it turns out that anthropogenic GW is discredited, you will have undercut your laudable-in-their-own right goals. If you make GW the major reason to do a thing, and it turns out that GW isn't what you thought it was, then it won't be unreasonable of people to ask, 'why do the thing?'

It just doesn't seem a very wise tactic to me. To take a good idea and tie it so tightly to something that might be quackery.

It just makes the thought exercise easier for me, for the time being.

Originally Posted by Brian Rush

But as Mike has pointed out, for any one person that cost is an externality. That is, it's a cost to society as a whole (including me), not a specific cost to me.

That is a problem. But easily resolvable. If we understand that something is directly causing someone else harm, it is easy enough to find the perpetrators of the act personally liable for the harm. And in positing the accuracy of the GW science, we have similarly posited our ability to accurately assess, down to very small quantities, the marginal effect of a greenhouse emission. So action and harm can be fairly discretely measured.

The whole problem, IMO, is the concept of 'the commons'. Someone's health is not a commons. A house on Tuvalu is not a commons. I can't see such a thing as meaningful harm to a commons; only to a person. Eliminate the commons -- make everything someone's personal responsibility -- and the externalities problem disappears.

The only way we've found to internalize externalities is by law.

Fine; if you need to remove whatever legal protection people currently have (whether by 'incorporating' themselves or by obtaining stamp-on-paper 'permits' or what have you) against experiencing the consequences of their actions. Otherwise -- as in the example of a tax -- you haven't really connected them to the true consequences of their actions at all; just added another layer of obfuscation.

Originally Posted by Child of Socrates

It just makes the thought exercise easier for me, for the time being.

Cybrarian! You know that the easy way isn't always the right way!

Originally Posted by Justin '77

Cybrarian! You know that the easy way isn't always the right way!

Arghh....do what you need to, then, and I'll muddle along in my own fashion.

FWIW, I think The Thread is approaching consensus on reducing the size and mission of the military, and doing away with subsidies for fossil fuels.

Can planting more trees be far behind (I hear the chorus warming up that "Kumbaya" variant of Godwin's Law somewhere in central Ohio )??

Originally Posted by Brian Rush

Since we have powerful and influential corporations (especially during the current administration) that profit from high oil prices, the goal is not to keep prices low but to keep them high but manageable.

This sort of answers the question in the negative. US policy doesn't keep prices low, in fact this may not even be the goal.

Originally Posted by Justin '77

The whole problem, IMO, is the concept of 'the commons'. Someone's health is not a commons. A house on Tuvalu is not a commons. I can't see such a thing as meaningful harm to a commons; only to a person. Eliminate the commons -- make everything someone's personal responsibility -- and the externalities problem disappears.

The problem with this is that, as physical reality, commons DO exist. And when the commons is damaged, the result is injury, not to SOMEBODY'S health (or livelihood or liberty or whatever), but to EVERYONE'S, equally. INCLUDING that of the perpetrator. This is one of the reasons for private property (although of course not the only reason). It serves to individualize responsibility as well as ownership. But as a practical matter, it becomes impossible to divide up everything into private ownership; some things (most obviously, the air) are far too cumbersome and chaotic to manage that way.

By the way, your premise argument is incorrect; we do not have to know the mechanism of anthropogenic global warming down to such minutiae that we can apportion individual responsibility and micromeasure individual harm. We only need to know THAT humans are responsible, beyond any reasonable or realistic doubt either that the effect is occurring or that some other agency may instead be responsible. I contend, of course, that we already do possess that degree of knowledge, but -- again -- we're not ready to argue that question. We're still talking politics and solutions to what will (for the moment) be treated as a hypothetical.

Tort law, which is the way that individual responsibility for individual harm is usually addressed, works fine as long as the situation really is an individual one, or at most one involving groups within a society. But what happens when you have an entire society doing things that are harmful to that same entire society? Who will sue whom? I suppose we could blame the oil companies here, but then again, do I not benefit from the cheap and abundant energy they provide? Have I not employed their products of my own free will? And am I not, therefore, also to blame?

Originally Posted by Mikebert

This sort of answers the question in the negative.

It also points out that it was the wrong question. Does it serve to keep oil being used, and forestall the drive to find alternatives (regardless of specifically how it does so)? That's the proper question.

Originally Posted by Justin '77

As their economics are currently constituted.

No. The advantages stem from the properties of fossil fuels, particularly hydrocarbons.

Which is to say: given a vast array of market distortions, ranging from disconnect between users and the harms caused by use to the outright transfers of socially-held wealth in order to 'keep supplies flowing' (without those costs being added in their entirety straight to the bottom-line price of the fuels).

Can you show any evidence that these wealth transfers actually keep supplies flowing? I think it is far more likley that the transfers are just that, transfers of public money to private hands. It's like Al Franken says, not everyone can be rich, but if all of you just send Al Franken a dollar, I can be rich.

Since these subsidies in all likelihood have no impact on the price of oil, it is not really valid to add their cost the the market price of oil to obtain a "true cost of oil" as if they actually did something.

As to their actual economics, when the entire undiluted picture is considered...

..they are still very good because of their superior properties.

Well, for the sake of the argument, we've considered the anthropogenic GW thesis to be fact. So I'd have to say, given that, that their cost is a fair sight higher than the marginal savings achieved in using them over non-fossil options.

There is no market mechanism through which any cost due to GW can be transmitted to the price of fossil fuels. As for torts, there is no court that can exact damages. You cannot sue a Chinese company in Micronesia and expect to recover anything. And if you go to a Chinese court they will find for the defendent. Same for all other big powers.

In the real world, fossil fuels are economically favorable to non-fossil fuel energy sources right now and this will largely remain the case for the foreseeable future. This is why there is an alignment between political ideology and one's skepticism of GW.

Originally Posted by Child of Socrates

Can planting more trees be far behind??

I‘m on board with that.

Originally Posted by Brian Rush

It also points out that it was the wrong question. Does it serve to keep oil being used, and forestall the drive to find alternatives (regardless of specifically how it does so)? That's the proper question.

If it doesn't affect price it doesn't affect development of alternatives. You want alternatives? There are plenty of alternatives. There's just no money in them. So aside from a few risk takers who research alternatives because they anticipate a change in the regulatory regime, or some effort by big concerns as insurance--little gets done. A good example is alcohol fuels from nonfood biomass, which at today's level of devleopment is about 10 years beyond its level of development in WW II.

Until there's money in it development is going to proceed at a snail's pace. A soon as there is money in it, the pace of technical development will increase 5-10 fold.

Mike:

Whether subsidies have an impact on price depends on whether the optimum price for a product is above or below the price necessitated by cost. If it's above, then a subsidy is only going to line someone's pockets. If it's below, then the subsidy will allow the price to drop towards (at most, to) the optimum price for revenue flow.

If we want to assess whether U.S. subsidies do anything in that regard, it might be useful to look at gasoline prices in the U.S. versus elsewhere.

If it doesn't affect price it doesn't affect development of alternatives.

That doesn't follow. Stability is also a consideration. Remember the OPEC embargo of the 1970s? That had no long-term effect on price, but because it interrupted supplies, it propelled considerable improvement in fuel efficiency, the development of other oil reserves (which was still possible in those days), and research into alternative energy. In terms of energy, our foreign policy seems more directed to ensure stability than to keep prices low.

Originally Posted by Mikebert

No. The advantages stem from the properties of fossil fuels, particularly hydrocarbons.

But are the advantages due their properties (which is what I was, through my awkward construction, trying to get at) worth more or less than their disadvantages as direct causes of civilization-ending global warming? Why is that even a question?

Since these subsidies in all likelihood have no impact on the price of oil, it is not really valid to add their cost the the market price of oil to obtain a "true cost of oil" as if they actually did something.

If you could just add or subtract them, they wouldn't really bad that obfuscatory. To pick a single example, public funds money is used to keep sea lanes relatively pirate-free. Absent that public-purse gift, the actual shippers of oil -- among other goods -- would have to either take on for themselves the cost of protecting their cargo, build into their business model a more appropriate risk premium, or more likely both. The fact is, that the price of oil does not clearly include the quantity of this cost that is incurred to the benefit of the production/delivery of oil.

That's just one of the probably hundreds of various places where the actual price of oil is obscured.

There is no market mechanism through which any cost due to GW can be transmitted to the price of fossil fuels.

Ever heard of liability insurance? And that's only just the first idea that comes off one guy's head. Stop looking for the Big Answer, and you'll probably get a whole lot of really good answers.

Originally Posted by Justin '77

That is a problem. But easily resolvable. If we understand that something is directly causing someone else harm, it is easy enough to find the perpetrators of the act personally liable for the harm.

In a theoretical sense. Practically, how would one actually do this? Specifically how would a homeowner in Tuvalu obtain recompense for his GW-caused damages from elite nationals in China, Russia, the United States or Pakistan?

Eliminate the commons -- make everything someone's personal responsibility -- and the externalities problem disappears.

No it doesn't. Say the person with the flooded home has suffered monetary damages of $600,000. The 300 million people in the US might collectively be responsible for $150,000 of this damage. Any one individual, even if he emits 100 times the average amount of CO2, would have liability of only 5 cents. Suing him isn't worth it.

What you propose is a purely theoretical personal responsibility. In reality there is none.

Originally Posted by Justin '77

To pick a single example, public funds money is used to keep sea lanes relatively pirate-free. Absent that public-purse gift, the actual shippers of oil -- among other goods -- would have to either take on for themselves the cost of protecting their cargo, build into their business model a more appropriate risk premium, or more likely both. The fact is, that the price of oil does not clearly include the quantity of this cost that is incurred to the benefit of the production/delivery of oil.

You are right it doesn't. But you assume that this cost would add to the price of oil, when it is more likely it would have no effect at all.

Ever heard of liability insurance? And that's only just the first idea that comes off one guy's head. Stop looking for the Big Answer, and you'll probably get a whole lot of really good answers.

Sure, but it too would have little effect on the price of oil.

You are getting into trouble because you are assuming a cost plus model for the price of oil. That is, the price of oil is the sum of the costs plus a profit. With this model, if you add additional costs like liability insurance and such, then the price would go up.

But oil is not priced in this way. Oil is priced in a futures market. Cost only matters on the extremes. Cost of production and transport puts a lower limit on the price of oil at around $10 a barrel. Suppose all these factors doubled the cost of oil. Then the lower end would be $20 /barrel. But as the current price is $60 a barrel so what? Do you personally believe that oil is going to get down to $20 again? As long as the market prices are well above the cost plus level (as it almost always is) increases to cost are irrelevant.

The "true cost" of fossil fuels (in the sense you are thinking) is much lower than the current market price. The fact that current prices are much higher is one of the reasons why there is an ethanol boom right now and there is considerable interest in high mileage cars.

It's like gold. The true cost or value of gold is about $350 per oz. Yet right now it sells for much higher. So do a lot of commodities (like oil). Remember what gold was selling at when oil was $10 a barrel in 1999?

Originally Posted by Brian Rush

Remember the OPEC embargo of the 1970s? That had no long-term effect on price,

Yes it did. The expectation was that oil prices would remain high. And as long as this expectation existed all sorts of improvements occurred. By the mid-1980's average mpg on autos was higher than it is today. Then, in 1986 oil prices fell, and shortly after the belief in the permanence of high priced oil dissipated. And little improvement has happened since. When was the last increase in CAFE standards enacted? I would predict that it would have been shortly after the 1986 price drop.

Exactly my point, Mike. Our diplomatic and military moves, designed to secure a steady and reliable flow of oil, seek to prevent a recurrence of the '70s embargo. As we approach (or perhaps have hit) peak oil, the oil supply becomes an ever tighter (and ultimately inadequate) fit to the demand. Regardless of what the global price may be, a disruption of oil supply to the U.S. would result in considerable economic hardship at home, and would spur the development of efficiency and alternatives just as the OPEC embargo did.

Is our oil diplomacy intended to forestall the hardships or the development spur? I tend to say both. The government wants to prevent the hardships because they would upset the voters, and it wants to delay the development spur because that would upset the oil companies.

Originally Posted by Justin '77

But are the advantages due their properties (which is what I was, through my awkward construction, trying to get at) worth more or less than their disadvantages as direct causes of civilization-ending global warming?

According to the free market, yes.

Originally Posted by Mikebert

According to the free market, yes.

What free market? There's barely even such a thing existing anywhere today; to say nothing of in any kind of scale approaching commodity-trading. Even the futures markets -- your apparent deus ex machina -- exist in a distorted-beyond-recovery economic context.

Far an example to counterclaim your statement that the market price of oil even remotely reflects the real price of oil, imagine what would happen on the oil futures market were the United States to announce that it was abandoning participating in, or otherwise supporting the maintenance of the sea lanes. Think the bottom would sit nice and low? Or that additional risk premiums would be added in by the several players up and down the supply/delivery chain?
The point is that there are a not-insignificant number of -- to use your term -- extreme distorting factors obscuring the price of oil. And to the last, all of them are distortions in the downward direction (that is, a form of subsidy). That alone justifies the assumption that the true free-market price of oil is far above what we currently see; even if we discount the subsidies in the form of legal shielding from liability GW.

Originally Posted by Brian Rush

By "net" greenhouse contribution, I mean to recognize that we breathe in oxygen and breathe out CO2; every animal does this. Also, we burn stuff to keep warm and do other things; before coal and oil we burned wood. But all of this only puts CO2 back into the air that was first taken out of it by plants either eaten by us, eaten by animals that we eat, or burned as fuel. It's all part of the normal carbon cycle. It's an increase but not a net increase. Fossil fuels are a special case, carbon stored up over millions of years that's being put back into the cycle in very quick time (geologically speaking). That plus deforestation is the anthropogenic source of global warming.

I've heard about the effect on global tempertures since agriculture was invented and the forests were started to be cut down to make way for farmland. They say if it wasn't for that the world would be around 0.8C cooler globally than it is now. The stablity of the earth's climate since the end of the last ice age, might have been a result of human activity. They also think the little ice age occured because of the regrowth of forests after the black death, when a lot of Eurasia (not just Europe) population was wiped out.

It is explained in this paper http://stephenschneider.stanford.edu...ddiman2003.pdf
In the last 8000 years greenhouse emissions have increased by 20-25 parts per million. The interesting thing is that since 1800 greenhouse emissions have risen by 100 parts per million and could rise by another 100,200 or even 300 parts per million. The interesting thing is that temperatures have risen by 0.8C since 1850.

Originally Posted by Justin '77

imagine what would happen on the oil futures market were the United States to announce that it was abandoning participating in, or otherwise supporting the maintenance of the sea lanes. Think the bottom would sit nice and low? Or that additional risk premiums would be added in by the several players up and down the supply/delivery chain?

In the short term there would be a spike because markets hate uncertainty. Then the market would weigh the true impact and prices would then continue to fluctuate pretty much in their old range with a new bottom level reflecting a higher base cost of oil.

The point is that there are a not-insignificant number of -- to use your term -- extreme distorting factors obscuring the price of oil. And to the last, all of them are distortions in the downward direction (that is, a form of subsidy). That alone justifies the assumption that the true free-market price of oil is far above what we currently see; even if we discount the subsidies in the form of legal shielding from liability GW.

Asserting this doesn't make it true. You are sounding like HC now.

The evidence that most directly counters your assertions is the volatility in the price in oil and gas. Oil price has fluctuated seven-fold over the 1999-2006 period. The physical properties of oil did not change making it seven times more difficult to pump or ship crude oil in 2006 than it was in 1999. Actually the properties remained about the same, and so did the costs of production (expect for perhaps a 20% rise due to inflation).

The discrepancy between a 600% price rise and 20% cost rise clearly shows that cost factors were not responsible for these large price swings. If cost changes are not responsible for price changes, then this means that cost does not determine price in the oil market, at least over the 1999-2006 period. And it doesn't, except when the market price is in the lower end of its trading range.

So as I said before, all these changes you are talking about will affect the cost of producing oil. And like other commodities, the cost of producing the commodity puts a floor on the market value.

Warren Buffet attempted to use this fact in his first venture into commodities trading. In the late 1990's he bought silver at $7 because the price of silver had fallen below the cost of producing it. The idea was since in the long run, cost puts a bottom in the market, silver would have to rise in the long run (Buffet is a long run kinda guy). It did finally rise, silver is $14 now. But for a long, long time it did not rise and rumors were he finally gave up and unloaded it at cost. (I don't know if that really happened).

So while this idea is true and it does work eventually, eventually can be a pretty long time.