"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude"
This is all you need to know.
If we had an oil export tariff, then we would very quickly become oil independent. Buyers in other countries are in competition with Americans for this oil, so if you really want to keep the price low in America, we should have such a tariff. Why should we give away our natural resources like this?
Additionally: in these emergency times, a reasonable argument could be made for price controls.
Energy independence does not mean “only uses domestically produced energy.” It means “energy is not a significant lever that other nations have over us.”
And that is true for the U.S. today. We could meet our domestic fossil fuel energy needs, but we find economic advantage in trading energy anyway. But when we want to use energy as a tool of policy, we have the option.
This happens in personal finance too. I can pay off my mortgage: I have enough capital to do so. So I don’t fear the bank. But with mortgage interest rates so low, I’ve found comparative advantage by keeping my mortgage and investing my capital elsewhere.
Exactly, trade tends to build trust and good relations (or at least respectful relations) so it's a good Net-Net thing. However, if in stressful times like war the government can pretty easily enact tariffs and even dictates that all domestic production stays here. That is of course for only emergency conditions.
I know I shouldn’t respond to comments like this, they’re uninformed and conspiracy ridden so not HN material, but “arms companies” have no need to “generate conflict.” People are fairly efficient at doing that regardless.
Given the objectively and publicly known huge part of the US destabilizing other countries overtly and covertly, and similar stories from innumerable other powers throughout history, I would say it takes damn much energy from third parties to generate a conflict between people I would love to see a comment defending US actions, in a way that makes sense, using only its official public narrative. Every damn official point made for justification is full of holes and counter examples.
Do they (serious question)? Do you mean like actively lobbying for the US to enter into wars? Or is this more like "I have a tank so I might as well invade".
> We could meet our domestic fossil fuel energy needs, but we find economic advantage in trading energy anyway.
I’m sorry, but what do you mean by “we”? You and I benefit nothing from the current status quo. A small group of people get rich off resources below our collective feet and we all pay more for practically everything.
"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude"
If that were really true, the US would not be able to export oil, which it does.
There may still be a tax break for some imported oil. Saudi oil was taxed by Saudi Arabia, and this was tax-deductible for US buyers, even though ARAMCO is owned by the Saudi government and that "tax" is the government taxing itself. Not sure if this still applies.
Some export is geography. Alaska has good access to Japan. There isn't enough pipeline capacity through the Sierras. Stuff like that.
Not sure about the refinery argument. Here's a study made during the last oil glut, so the technology is the same but the economics are different.[1] (Start at page 7.) Refineries can crack heavy crude down to lighter fractions, but they don't have to. Turns out that's not the problem. The problem is getting out too many light fractions - propane, methane, butane - for which markets are limited. Some distillation columns can't handle too much of the light fractions. It's possible to add a reformer stage to combine light hydrocarbons down to at least the gasoline level, but most refineries don't have those. All those problems are solveable on a scale of five years.
The refineries made a bet a few decades ago about what type of oil they'd be refining - the stuff from Venezuela, Canada and Russia - heavy sour.
This was advantageous for a while, but with fracking, there's an abundance of light sweet crude in the US... that the refineries aren't equipped to process. So, we export that oil.
Changing to light sweet crude is a significant investment to the point where switching over isn't economically viable.
They could change over in a matter of days, but choose not to because processing heavy sour oil is more profitable - since it can be purchased cheaper.
If heavy sour were suddenly unavailable, they'd use light sweet in a heartbeat.
If you’re going to claim there’s a factual problem here it would be helpful to point to the correct figures and make clear the change in inference we need to make. As it is, this just sounds like a cheap political jibe.
Price controls are almost always a terrible idea. Economists agree on this as much as dentists agree that sugared gum is bad for your teeth. If the price of a good increases, several things happen:
- People reduce their consumption of that good.
- People find substitutes.
- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.
- On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on.
Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1]
Though with carbon fuels there's an extra layer of trying to avert global catastrophe where some of those affects are good.
I would love if we could use this crisis to get investment in renewables and EVs/batteries.
I could see Congress passing an emergency subsidy before the election if gas stays above $4 especially if it rises above $5. I would hope we can spend an equal amount or more for longer term 'green' investment, regardless of what happens.
IMHO we do need those high prices to discourage driving. It is after all probably closer to the true cost with externalities of global warming. Could spur more investment in renewables too if done right.
BUT would need to help lower earners during transition or will just get pummeled in the election and Republicans will do the opposite of what's needed on climate.
I personally think most equitable solution would probably be raise corporate rate back up a bit + on very high earners/get rid of some wealthy deductions.
Then do something akin to the child tax credit mailed out each month for maybe <50k households. An energy credit. Scale up slightly if have a bunch of kids.
Are you taking $5/gallon? That is still way lower than the prices in Europe have been for years. Society still functions here and has not transitioned to green alternatives. Anything below $10/gallon is not an 'emergency' and insufficiently high to force a transition if people do not want it.
Prices in Italy are currently at the equivalent of 8.3$/gallon, so I think that even your 10$/gallon threshold is too optimistic (keep also in mind that if the prices of everything rise together, and so does labor compensation, it might be hidden away in the inflation).
Maybe 20$/gallon would be what it takes for a quick transition?
Yeah I think symbolically that would have good chance of triggering political action before the election.
And yes it's not even that high relatively! I would love to see an analysis taking into account cost of global warming just that we are already feeling.
I read an article earlier today analyzing cost per mile driven in real dollars.
We're actually a good amount lower than 2007 recession. And way lower than 80s.
But people don't see that. They see $5 and $80 to fill up a giant pickup truck.
> I would love if we could use this crisis to get investment in renewables and EVs/batteries.
> IMHO we do need those high prices to discourage driving. It is after all probably closer to the true cost with externalities of global warming. Could spur more investment in renewables too if done right.
And you believe the right time to do this is when we have record inflation?
For energy, it's hard for people to either hoard it, find substitute, or producing more of the good. Reducing consumption is possible only to a limit (when you start freezing and getting sick).
Short term, it's a problem in the US, but long term, we have a lot of ways to trim some fat. Like those gigantic, deadly trucks that get used to ferry a kid to school or a dad to the office. Or re-legalize things like corner stores so people can walk or bike to do some of what they need on a day to day basis.
Much of the new developments for residential are single family residential. A house, a garage, and a yard - on a street where you need to then go and drive to get {stuff}. Whatever you need, you need to drive there.
The older style with business on ground level and residential above that isn't as profitable for developers and so isn't made as much. Cities, in bowing to demands of developers likewise zone for single family residential and it is thus illegal to build a commercial spot (other than the strip mall along one of the busier roads - that you need to drive to).
it's not like those metals are _only_ found in Russia. The upfront capital expense of opening new mines somewhere else is high, so doesn't make economic sense when Russia has already made this investment in the USSR era, and can pump it out cheap(er) now.
But if the need arises, other sources of such metals can be acquired in the medium to long term. Same can be said for the rare earths from China.
While that’s true from a purely economic perspective, nations and their goals aren’t always geared towards that economic perspective. For instance the trade war is economically ignorant but geopolitically it makes sense. Another example is the US in the 1800s. They used a ton of tariffs to force American companies to build out infrastructure within the US instead of importing everything we needed. This worked to create the economic juggernaut we see from the Spanish-American war onward.
This wouldn’t have made economic sense to an economist because the goals here weren’t entirely economic. Yet it built a giant economy.
>- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.
This is only true when reduced consumption is possible, when substitutes are available, and when sufficient stockpiles exist to be sold.
If my only driving consists of the 20 miles I drive to work every day, I don't have the option to reduce my consumption if I want to pay my bills and keep from becoming homeless. If there is no mass transit and no opportunity to carpool, there is no substitute. Stockpiles of oil are generally insignificant when compared to overall consumption (which is why releasing oil from the strategic energy reserve is more of a pr move than something which has a substantive or lasting impact on prices).
The fact is that most of the US has been designed for people with cars. Outside of a very few cities mass transit is extremely limited or non-existent.
Dentists have an excellent track record when it comes to predicting tooth decay and treating decayed teeth. Economists have a terrible track record when it comes to predicting economic activity and prescribing sustainable solutions to economic problems that arise.
Two or more computers in a network become and behave as a single PC, so if you buy any client-server software you are literally stealing programs for yourself. Because all programs are the same to a PC. AKA all programs executables can be divided into two or more exe's and run over a network it's called the client-server or mainframe dumb client model of computing and you don't want that because that's the end of the personal computer you own and control. Client-server apps are the ultimate security risk because you can't audit the code.
The last 23 years there's been a war to kill the general computer.
It's not, the average gamer and PC buyer has been stealing software from himself for the last 23+ years. Straight, steam/mmo's are just back ended c applications, there's no reason for any piece of software to require a "internet connection" (aka a second computer) half a world away.
The 1990's were great because it was before the computer illiterate got internet. Everyone was expecting level editors and free maps, mods and skins
... to continue in all the big budget games but that didn't happen because the computer illiterate masses gave up game ownership giving birth to all the evils of modern gaming (shut down games, mtx, always online drm, which is the same as mmo's, aka client-server back ended c apps). So we're losing game history down the shitter and games just disappear from history because stupid got internet.
Pub g and Apex, are just back ended quake 3 and UT2004, minus game ownership.
When the computer illiterate started buying MMO's (which were just rebranded rpg's with stolen networking code), the game industry started stealing PC games on a massive scale, notice how Transformers fall of cybertron a game from 2014, doesn't have basic features like dedicated servers and server lists like every fps from 1996-2004. (aka pre-steam, pre-mmo).
Once game developers realized gamers were stupid in 1997, there was a war on on local applications.
Ultima 9 was cancelled for the scam game ultima online, so there was no ultima 10, ultima 11, ultima 12, with dedicated servers and level editors. So we didn't get the awesome future of PC gaming, we got the computer illiterate dumbass future that undid the personal computer revolution taking us back to mainframe computing of the 60's and the average gamer is unaware of it.
Everyone was expecting diablo 2+ to have server browsers and level editing and huge modding, that never happened because they started stealing RPG's and rebranding them mmo's and just started back ending the shit out of every PC game, once they realized the public was stupid as fuck at computers.
Don't think so? We already had infinite multiplayer game sin the 90's with quake 2, until the shit for brains who bought UO and everquest fucked up the future of the personal computer and gaming more generally, taking us back to mainframe computing of the 60's.
We could take quake 2 engine an clone all "MMO's and have those same games run locally with ability to host multiplayer from your machine with no logins, subscription fees.
If you have to infinity multiplayer videogames, one allows you to own it and costs $60, and the other has an upfront costs + sub.... guess who got swindled?
> If we had an oil export tariff, then we would very quickly become oil independent.
We had an oil export ban until 2015. Lifting it is at least part of the reason oil production has increased as much as it has over the past 6 years. If you look at production graphs, oil production was already on a sharp upswing between 2010 and 2015. But it kept going between 2015 and today, even though domestic oil consumption declined over that period.
If you consider grades of oil and geographic locations (i.e. for what and whom various production areas are best suited), it might even be possible that the only reason we could be hypothetically import independent without substantially increased prices based on today's undifferentiated extraction volume is because of the export market. Without the grade and geography arbitrage provided by trade, current production might not be viable without substantially increased prices. (Though, if global prices become extreme and remain so, then at least we could limit the price increases. OTOH, it's probably just easier--and certainly quicker--to make nice with Venezuela rather than restructure our extraction and refining infrastructure.)
Exactly this. The US could make iPhones too, but we import them. Unfortunately we don't have a "strategic iPhone manufacturing reserve", so we have to keep it cool with China.
Apple could not make I Phones in the US. The cost of living is too high. Either you bring the cost of living down or you make technology incredibly more productive. Which in itself make the price of the product go down and generates less profits as a tendency. Think of the shareholders my man, what would they do without?
Where have you been for the last two years? If it was just a matter of margins we wouldn't have world wide shortages of components, production lines shutting down, etc.
Even with massive multibilion investments in fabs all over the place it's going to take years to bring up fab capacity - in the ideal case. And that's just for one component.
Apple doesn't even do manufacturing anyway - they outsource every step of the way. What US alternatives are there to Samsung displays or Foxconn assembly ?
Apple is too high up the chain to bring about this kind of change, best you could probably do is US assembly if you imposed India like tariffs. Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
Systematic destruction of industrial capacity is not fixed in a single year.
Even the outsourcing of capacity to PRC, didn't happen in a single year. It happened slowly motivated by margins, not due to some technical breakthroughs that were happening in PRC.
> Apple doesn't even do manufacturing anyway - they outsource every step of the way.
That's again a conscious choice because of margins. Apple used to manufacture stuff themselves in US.
No one is saying Apple has to make display tech as well. Buying stuff from allies like SK, Japan and Taiwan shouldn't be an issue.
> Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
Last I checked Apple had over 40% margins on their iPhone. If Apple shared the same concerns as their parent country, they wouldn't work to maximize their profits, even if it comes from labour working in inhumane conditions.
The systematic destruction of US industrial capacity has been in chase of profits.
> Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
Apple sells iPhones in Mexico at 30% over the US price and you still see iPhones everywhere, even considering the purchasing power of the average Mexican is about 1/10 of an American.
Mobile Vendor Market Share in Mexico - February 2022
Apple 17.12%
In the US apple is regularly above 50%, not to mention that the US market app store revenue per user should be higher as well. There's a reason Apple has segmented their products where they previously only sold flagship devices.
Not only that - the price increase from the iPhone 8 to the iPhone X, adjusted for inflation, was sightly more than 20% and people still bought iPhones.
It’s both. It is a matter of margins, and it has been that way long enough now that it is also a matter of long-term investment in manufacturing capabilities. Nobody wants to make less money, and they definitely don’t want to make less money over a long period of time. Especially when those who make that decision are legally required to maximize the amount of money they make for their investors.
Which market research document did you get this factoid from?
Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. It’s not apples mistake, it’s the governments. And the people who vote for them. Which includes you if you’re American (and sitting in a liberal state voting democrat doesn’t count; if you care that much move to a swing state and vote there).
> Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US.
This is circular reasoning. We can't make them here because we don't.
Yes, obviously it would take time to build capacity, but it's silly to argue China is fundamentally capable of something that the US is not. This is purely a question of cost (and, therefore, motivation).
What should probably be countenanced, in my opinion, is "supply chain readiness": make _some_ of the iPhones domestically, so that if it becomes necessary, it is much faster to ramp domestic production. That hurts profits in the short term, but it probably does enhance long term expectation profits (conflict with China is less disastrous).
Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics.
It is like 1000$ more expensive than the China version of the same phone. Could Apple and their volume get their price down? Probably but it is still going to be significantly more expensive.
If the US was desperate, we could maybe switch to this phone in an emergency?
The ICs aren't made in USA, I doubt the passives are either (conveniently not mentioned -- glossed over by saying "USA distributors"). Sure, it's assembled in the US, but it isn't built of parts made in the USA.
Though, most of these parts were first made in the USA so there's no doubt we couldn't do it if we wanted.
I don't think modern passives, pcbs, screens, flexes, and small hardware was first made in the USA, especially not at scale. So that's most of the components that have never been made in the USA.
>Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics.
While it may not originate from politicians, politics and corporate short-sightedness have been so tightly coupled since at least the Reagan admin that distinguishing the two is arguably missing the forest for the trees.
But yes, the root problem is the people controlling the levers of Capital for short-sighted greed, as is often the case.
Blaming "crony" capitalism implies the issue is too much regulation, not too little. Since I'm asserting that most of the issues stem from the period of deregulation following Reagan, that's clearly at very different conclusion.
Short-sighted pursuit of profit is a failure mode inherent in capitalism in general, no cronyism required.
The US can't make iphones the same way that China can't make their own Silicon Valley (god knows they've tried - they ended up with Shenzen, which to be fair, is called the Silicon Valley of electronics).
Adding to what the other commenter said. A lot of electronics manufacturing is automated. US is costly because of mainly cost of human labour, but a lot of component design is anyway happening in countries outside China where human labour is not cheap. Reducing reliance on PRC doesn't mean, doing everything at home.
Take the example of processor, it is ARM, a British design company's spec followed by Apple, a US company to design their chip, which is made by TSMC, a Taiwanese company with equipments from ASML, a dutch company.
Can you elaborate? From my vantage point, the impetus of this was globalization and there are many hands in that pot.
Consumers like cheap goods. Manufacturers like cheap labor. Governments enact policies that effect both.
The result is an outsourcing of manufacturing over the last four decades. It's odd to me that you give a company a pass but seem to blame constituents and governments, exclusively.
Governments make laws, and constituents vote to choose who is in the government. Companies can do neither.
Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long.
Now what benefits might you get by manufacturing in the US? Certainly, it could be good for marketing. And consumers, particularly those at the high end, might be willing to pay more for a product manufactured here. Apple has, in fact, tried to do this. Remember when they made a big deal about moving manufacturing of the Mac Pro to Texas in 2019 [1]? Unfortunately, this hasn't worked out as well as they'd hoped due to the expertise and supply chain issues that others have mentioned [2].
You're acting like laws are the only decisions that matter. Laws constrain business decisions, sure, but they don't dictate them. In some cases, they may constrain them enough to effectively dictate them (like the Buy American Act) but those are relatively rare.
>Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long.
This gets to my earlier point. Voting at the ballot and voting with your wallet are both ways to evaluate what people value. Both individual consumers and businesses vote with their wallets. Have you never paid more for something because it better aligns with your value system? Or do you strictly make purchases solely on the input of price? I see many people on HN who refuse to buy Amazon Basic items precisely for this reason, even though they are often the cheapest option.
As I previously said, American consumers largely value cheap shit. Companies largely value profits. Both of these, taken to an extreme, can come at the expense of other things like economic stability or strategic independence. The difference is, I hold all three (individuals, companies, and governments) accountable for those choices. It just seems weird to me that so many people are willing to hold a subset of them to task while giving the other subset a free pass.
>Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long.
Let me reframe this. If I instead said, "Any politician who doesn't take millions of dollars from lobbyists will not be able to stay in office for long", would that make accepting of that money somehow justified in your mind? For most people the answer is no. The difference is we've been hoodwinked into thinking morally ambiguous or outright immoral behavior is somehow ok in one sphere while acknowledging a moral burden elsewhere.
I'm not arguing that we can simply start making things in America on the drop of a dime. Anyone who has been involved in manufacturing knows that there is a lot of manufacturing expertise that has left and can only be done (at the current time, at least) overseas. What I'm poking at is that this is the logical progression of offshoring manufacturing over the last half-century. That strategy is due in part to corporate influence on laws, as well as the government who put those laws in place, as well as the constituents who put those civil servants in place. I'm old enough to remember Ross Perot's quip about the "giant sucking sound" from jobs (and expertise) being sucked out of the country and to witness firsthand the decline of the rust-belt. To act like corporations are blameless in the undermining of local manufacturing is naïve IMO.
> It just seems weird to me that so many people are willing to hold a subset of them to task while giving the other subset a free pass.
it's not weird - it's human nature. Holding the "government" to account absolves themselves of the individual responsibility and sacrifice. it becomes "someone else's problem" to solve - after all, why would I sacrifice my own self benefit?
True, I guess it makes sense from a cognitive dissonance standpoint to help one feel good about oneself. But it's "weird" from the standpoint of wanting to actually fix the problem.
It's less about cost of living and more about the fact that all the expertise and parts all the way through the supply chain are in Asia. Bringing that industry to the US requires bringing many of the supporting industries too. It's no simple task and probably won't happen at this point.
Everything you need to build an iPhone is in one city. This is quite a bit like Detroit of the 50s - where the manufacturer and the entire supply chain for it is geographically compact.
Today, it is hard to find a geographically compact industrial chain within the US.
Is iPhone production very polluting? I don't think that factors into it very much really. More cost of labor, proximity to suppliers, and domain knowledge.
Chemical etching, perfluorocarbons, and massive water consumption is cheaper where pollution regulations are weak. Most of the lines are automated, so labor costs of a running line aren't the big cost issue. Environment and human health have few protections over there.
> There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is.
And how much do they pay to extract the oil from public lands?
This is very relevant because of this new thing that just happened. There was an auction for rights to install an off-shore wind farm. The final price was $4.3 billion. This tells you the value of green energy: it's so valuable that you could convince investors and banks to pony up the money.
State commitments in New York and New Jersey mean that off-shore windfarms are guaranteed to be profitable. The cost of extraction doesn't equal the cost of the land or right to drill for oil.
> If we had an oil export tariff, then we would very quickly become oil independent.
We typically export refined oil products (think gasoline from WA to BC) that have lots of value add (refined gasoline rather than just oil). A lot of it goes to our allies (Japan), or even China. Cleaner American crude might go to other countries who mix it in with dirtier local crude to create something that is refineable. The trade has a net benefit if you don't treat oil as some homogenous resource. This isn't even to mention geography conveniences: we export to Canada, Canada exports to us because the USA is a big country (and lots of Canadian shale goes to Texas to be refined).
IF we had an oil export tariff, the industry would get messed up quickly. It would survive, we would just have to shoulder higher costs for less efficient usage of resources.
Price controls shift the pain point from the price to availability. USSR had planned economy and fixed prices for most merchandise, but you had to call in favors to "procure" many wanted items from buddies working near the supply lines, since officially they were practically always out of stock.
That only makes sense if you're looking at a snapshot in time and try to make sense of it. It's too simplistic to explain this situation if it persists over time. Which, well, it's too early to tell. US domestic oil production ha so only matched import volume for the first time ever in 2020[1]. I expect that if the US keeps production high, eventually the cost of domestic production will reach an equilibrium and the benefit of locality and less transport costs will force the US to use its own oil.
A lot of oil produced in the US cannot be used in the US. It's too dirty and so gets shipped to countries with less environmental protections in place.
It's not this simple. Petrodollar is contingent on supplying dinosaur-juice to the world's wealthiest country.
An isolationist America that resorts to price-controls or money-printing in order to keep its oil producers afloat risks run-away inflation. Not only due to the issue of EROEI, but also due to threats to its primacy in the global order.
Of course many of think its unfair that the world pays for the US warmongering and general debauchery, but I imagine there are enough people in the State-dept. and the Fed to understand this even if they pretend this whole thing is a "conspiracy theory" to be punished with blasphemy.
Generally, supporters of price controls see them as a way to reallocate wealth from producers to consumers. Economists point out that manipulating the market price distorts the market by reducing producers' incentive to supply and increasing consumers' incentive to consume, leading to a less efficient outcome.
It turns out that efficiency isn't the be-all and end-all of all of society! The objective is not necessarily to maximize efficiency/production/have costs be as low as possible for every product under the sun!
And of course there are duals to price controls such as production subsidies that can smooth things out. And policies that can otherwise influence things. Money is fungible, after all! And thanks to taxation as a general concept, the universe of people paying for all of this is not necessarily the universe of people buying it, so it's not necessarily "the consumers pay in one way or the other".
During a shock, when there exists sufficient productive capacity, price control together with forced production (as on fines for stopping it or worse) do really work.
For obvious reasons (and very good ones), this is something people won't accept unless the shock is really serious, like a war. Anyway, there isn't sufficient productive capacity either, so the shock importance is a moot point.
> For obvious reasons (and very good ones), this is something people won't accept unless the shock is really serious, like a war.
No kidding.
But again, it depends on what the goal of the price control is. In a war the goal is not to make life easier for the consumer -- the goal in that case is to get the consumer to stop consuming what the war machine needs for itself.
On the case of war, conscription. It's disturbingly similar, but it's different. In peace times it's usually on the lines of "keep producing or your business will be closed", what is not that similar as the working people are not the ones facing the ultimatum (if it's ever done to a small company, then yes, it's like slavery).
> In a war the goal is not to make life easier for the consumer -- the goal in that case is to get the consumer to stop consuming what the war machine needs for itself.
Economies are large complicated beasts that move all kinds of products. When governments intervene, they do it in more than one way and with more than one goal.
Price fixing also goes with rationing so that the population stays fed.
That works for getting labor for the military. It doesn't work for getting producers of things to produce more for less -- unless you put a gun to their heads, they won't do it, not even during war time.
Counterexample: WW2, where most of US industrial capacity was repurposed to win the war. Producers got paid, but the amounts they got were limited. They didn't get to just name their price.
Right, and in times where price controls were imposed this principle (you can't force people to operate at a loss, but you can limit price gouging) have been applied.
During a shock is exactly when price controls are most destructive as they prevent an efficient allocation of the scarce supply to those with the greatest need (assuming willingness to pay is a proxy for that).
Eg. in a desert with a supply of 9 water bottles and 10 potential buyers. All buyers have the same need (buy a bottle of water or die of thirst). In an efficient market, the price of a water bottle would go to the amount of savings of the poorest person + 1 cent. The poorest person will die of thirst.
Sorry, do you have a citation for this? I know price controls are generally not liked by economists but I don't know that any have said flatout that they will never work.
How about every standard economics class you can find at a reasonable school? This is covered in high school and university economics courses. Oh, it's not usually stated as "price controls don't work", but it's covered.
It's quite simple: forcing the price of some good while allowing supply and demand to adjust accordingly necessarily causes them to adjust accordingly. Set prices too low and supply shrivels, leading to shortages. Set prices too high and demand falls off and searches for substitutes.
The ostensible goal of price controls is always just that: to set the price of some good so as to alleviate the burden on some class of people (either the producers or the consumers, depending on whether the price is set too high or too low).
The actual goal of price controls, if it's anything other than propaganda value ("look! we care about you! we're doing something you want!"), does get met. So in that sense price controls may work, of course, if the target of the propaganda is too dumb to understand they've been had or if they have no way to reject proposed price controls. But that's not the sense people want -- every consumer wants lower prices, and every producer wants bigger profits (which often, but not always, means higher prices).
All that said, you can make price controls work. Like, if you enslave some people (generally that would be producers, when you want to set an artificially low price on some good or service). Or maybe if automation reaches such levels that marginal costs are zero for most goods in most goods baskets -- I'm not sure if this has been studied.
I took high school and university economics, and they talked about rent controls and a few other price controls, and I agree that generally they probably aren't a good idea, but they never said that they could never work in those classes. Maybe I just went to a shitty school (Florida State University) but it wasn't a diploma mill or anything.
That said, your big rant isn't a citation, and saying "LOL IT'S IN YOUR HIGH SCHOOL CLASS YOU GOOFBALL" doesn't really count. I'm looking for one prominent economist that has stated the price controls can never work.
Generally it's not a great idea to rely on high school or entry-level university courses as the final word on anything... for starters, what about situations where the price is already distorted by bad actors fucking with the supply levels, such as cartel or monopolist situations?
You've been replying to questions about specific situations with generalities! That's not compelling.
Hell, oil was at $100+ a barrel for years within the past decade, without the same level of gasoline prices seen today in the US: that suggests there's more to the current situation then just econ-101 "high input prices mean output price has to be high too".
Why do manufacturers sometimes set retail pricing, aren’t those price controls? AIUI, some products have minimum contractual prices that retailers have to sell for.
I’m not an economist, and I tend to see economics “laws” more akin to social science than physics. Ie, economists describe plausible mechanisms and principles, but they are not very useful to make predictions.
Manufacturers are not interest in maximising their social benefit: they want to maximise their profit and this is done by producing fewer items but at a higher price (to be technical, a monopoly would produce until marginal revenue = marginal cost).
Manufacturers can set recommended retail prices but their are limitations to how these can be enforced.
> Why do manufacturers sometimes set retail pricing
depending on how it is set - most manufacturers set a recommended price, rather than contractually obligate the retailer to sell at a particular price. It's an attempt at price-fixing (without it being price-fixing), but other manufacturers of the same goods could choose to lower their price for competition. It's not the same as price-control.
+1 in fact there are situations that definitely call for price controls. For example wartime price ceilings to prevent gouging. Or COVID vaccine pricing. Price controls work in these cases if companies have some reason (e.g. governmental mandate) to not seek the highest price. Successful deployment of price controls just have to come with a host of other policies to mitigate downsides. For example, if you enact a price ceiling, you get shortages. You deal with it by employing things like triaged distribution (e.g. early COVID vaccines go to medical professionals, N95 masks go to hospitals, etc, gas gets rationed with much of it going to the military in wartime).
Wartime price controls don't help the consumer -- they help the government keep the consumer from consuming goods and services needed for the war effort, and they do so by discouraging consumption.
There is always a sense in which price controls work. It's just never the actual publicly ostensible sense.
Prices are too high! -consumers
Ok, we'll set a price ceiling -government
Yayayayay! -consumers
Hey wait a minute! Supply has vanished! -consumers
<crickets> -government
> Price controls have never worked, and never will work, because they cannot work.
You after this comment:
> There is always a sense in which price controls work.
That's all I was trying to get at. We agree they work. If you know what effects they're going to have, and they match your intentions, then they work. If you know the general populace will have a shortage of N95 masks but hospital workers will be getting every mask produced in the country at a reasonable price, then it works. If your state has a cold snap and your citizens don't see $100k bills for a few hours of power (even though many folks will experience blackouts), then it works.
FWIW black and white statements like "price controls never work" ring of a certain "rah-rah unfettered capitalism is always the answer" mentality that lacks nuance. Just because you've taken some macroeconomic classes doesn't mean that how things work is all that simple.
It's no contradiction. Price controls do not work for the purpose that is generally given for them. The stated purpose is generally to reduce prices seen by consumers, or to subsidize producers of some particular good/service. It's extremely rare that the stated purpose is "to stop consumption of the product in question"!
> Price controls do not work for the purpose that is generally given for them.
> stated purpose is generally to reduce prices seen by consumers, or to subsidize producers of some particular good/service
I thought I gave examples that fell outside of this?
* Wartime/Emergency: stated purpose is to shift supply toward military/medical uses. Shortages and black markets are acceptable negative side effects.
* Energy: protect citizens from gouging in time of crisis. Lack of price controls did not prevent blackouts to Texans in the US last year. It did cause many folks to be saddled with insane bills.
You can also implement rationing to further mitigate imbalances. So price may be low, but you can only buy 1 per day, or something like that.
> You can also implement rationing to further mitigate imbalances. So price may be low, but you can only buy 1 per day, or something like that.
Generally it goes the other way around. First government imposes price controls, which cause scarcity. Then they impose rationing.
> Lack of price controls did not prevent blackouts to Texans in the US last year. It did cause many folks to be saddled with insane bills.
Price controls are not the only way you get to end up with limited supply, that's true, and that situation was temporary, also true, and there was no rationing (some areas did not lose power because they were "privileged") while all others did lose power. The people who were "saddled with insane bills" were those who had a specialty spot-price utility.
> Wartime/Emergency: stated purpose is to shift supply toward military/medical uses. Shortages and black markets are acceptable negative side effects.
I acknowledge the wartime thing, but that is quite exceptional. We've had lots of price controls during peace time here and all over the world, and they have never worked for their ostensible reasons. When was the last time we had wartime price controls in the U.S.? Not since WWII.
> Generally it goes the other way around. First government imposes price controls, which cause scarcity. Then they impose rationing.
So if price controls + rationing were implemented at the same time, you think it could work to avoid scarcity? If not then why even bring up the order in which things are implemented?
+1 this is my point, you can frequently implement multiple overlapping policies whose combined effect is better than an individual policy. Order doesn't matter.
When you say "price controls don't work" you lack imagination for the space of possible policy problems and solutions. Sometimes price controls will be a useful part of a policy solution and likely more often than some randos on the internet can think of off the top of their heads. In general I would not bet on the idea that "mechanism X is shit because it's not the free market." Our societies have implemented many engineered economic mechanisms, some of which are easy scapegoats because they fail, but many of which are overlooked because they work quietly in the background.
> Lack of price controls did not prevent blackouts to Texans in the US last year. It did cause many folks to be saddled with insane bills.
You're conflating two distinct sets of people:
- Most consumers pay a fixed price for electricity set by their utility. Many of these people experience blackouts when there was insufficient supply at that price.
- Some consumers opted into paying a variable price for electricity. As supply decreased, the price they paid massively increased. But in exchange for the high bills, these customers did not experience blackouts, or at least experienced them later than others.
Some in the second group, in retrospect, would have preferred the blackout to the increased price, or perhaps didn't understand the implications of their decision when they originally signed up for a variable and uncapped price. But overall, this situation perfectly illustrates the tradeoffs of controlled vs. uncontrolled prices in the face of supply shortage.
I'm not conflating them, I'm explicitly talking about the latter group.
> But in exchange for the high bills, these customers did not experience blackouts, or at least experienced them later than others.
Yeah, so regardless of timing or how much blackout they experienced relative to everyone else, they did experience blackouts. And still paid a lot of money too. Lack of price controls didn't help them in the short term, and in the long term hurt them a lot.
> so regardless of timing or how much blackout they experienced relative to everyone else, they did experience blackouts. And still paid a lot of money too.
free market doesn't guarantee anything. You're assuming that the free market without price control is supposed to guarantee the access to electricity, even at exorbitant prices.
Those who paid a high bill who did eventually got cut off - they got a bad deal because they weren't savy enough to do risk management, and didn't have enough information on such rare events.
Free markets _do_ presuppose supply being available if given enough money! Free markets assume atomic actors, instant feedback loops, and nothing like a supply ceiling.
The Texas blackout had a supply ceiling, but no price ceiling (and low elasticity in choice from the consumers, because people didn't want to freeze). It's a far cry from a free market during that week.
Of course the details are more involved, but the refiners will modify their plants to optimize profits on their own. The time-frame involved could be an issue for sure. What kind of oil is in the Strategic Petroleum Reserve? It could possibly help with the time issue.
The tweet-sized post is useful as a counter to the oil company talking points. They like banning Russian imports (eliminating a competitor), but want to link it to expanded drilling and the reinstatement of Keystone XL. Both of these also take time. Yet they say that they can immediately increase production, so I'm not sure the rush for their other requests.
Well, there's that and the fact that historically oil is an (economic) weapon. Some ecomonies are more susceptible to price changes than others. Some can use that weapon proactively, others can so nothing but reactively suffer the consequences.
For example, when the USA allowed fracking production to hockey stick (started under Bush #2 and took off under Obama), the international price dropped significantly. That hurt countries such as Venezuela and Russia.
Oil is like a drug. Once you're hooked you're no longer free.
Why? Geopolitics. You can't influence others without leverage and you can't tariff oil and expect others not to tariff other things you need. You tariff crude export but maybe you need to export gasoline/benzene and they tariff you back. There is also the consideration of reserves, when consuming more you want to consume others' more so your finite crude supply won't run out before theirs (decades from now). Either way, death to fossil fuels!!
It reduces the earnings for the exporter from selling it abroad, effectively capping the internal price for the commodity so it cannot go higher than a certain price (it works on anything that can be exported)
Price controls are economically destructive. They cause shortages. Were you alive in the 1970's? Lines going for several blocks? Even and odd days? Price controls are a bad idea.
Tariffs here would lead to other countries putting tariffs on trade we do care about. Trade wars have been shown to cost countries, not help them. We'd be no exception.
That's a really nice summary of imperialism in the capitalist era. It really shows the need business has in economically dominating other countries in search of profit through the low production costs in other countries. The cost of production and of living (think poverty) is essential in the formula for generating capital.
The reality of this article points out the contradictions inherent in capitalist economies.
If there was a tariff how would that impact the rest of the economy. If anything it would only solidify the position of the already big enterprises who are the only ones able to withstand such a hike.
"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude + domestic shipping cost" (emphasis mine).
One reason that domestic shipping cost is so high is that 1920 Jones Act[0] prohibits shipping between US ports with non-US ships. This drastically reduces competition and increases prices. Hawaii are particularly hit by this, with estimate $1800 per year per family in extra cost [1].
>> One of the primary impetuses for the law was the situation that occurred during World War I when the belligerent countries withdrew their merchant fleets from commercial service to aid in the war effort. This left the US with insufficient vessels to conduct normal trade impacting the economy. Later when the U.S. joined the war there were insufficient vessels to transport war supplies, materials, and ultimately soldiers to Europe resulting in the creation of the United States Shipping Board. The U.S. engaged in a massive ship building effort including building concrete ships to make up for the lack of U.S. tonnage. The Jones Act was passed in order to prevent the U.S. from having insufficient maritime capacity in future wars. [1]
I’ve never understood the Jones act argument. If there was really an opportunity here, SOMEONE would have a US-flagged ship running oil up and down the coastline, but existing pipelines and trucking and foreign exports are easier. Can’t speak to Hawaii, maybe that it has 100% import and no natural gas?
"Oil" isn't one product. It differs widely in chemical and physical properties (viscosity, how much sulfur and arsenic is present, etc.) depending on how/where it was produced. Different refineries are setup to refine different grades of oil and the oil is often blended before shipment to meet the specs the refineries expect. It is often cheaper for the US to import the right grade of oil than it would be to reconfigure the domestic refineries to process all the domestically produced oil.
This is also why there are several oil "prices" that you will see quoted, the most common two being WTI and Brent.
Not to mention that the vast majority of the imports are from western Canada going to refineries in the Midwest (which makes sense that the cost to import is cheaper than because the distance is actually closer than other producing areas of the US where there is more refining demand (gulf coast). Not to mention no one has built a new refinery in the past ~60 years (Guesstimate) and two thirds of the refining capacity is on the gulf coast - which means in some cases a cargo from Venezuela is cheaper than shipping oil from alaska (as a stupid example.
Yes. The color and the smell vary a lot. Venezuela and Canada sell a heavy crude that is basically roofing tar. Some spots in west Texas and Malaysia produce something close enough to diesel to just put in your truck and go with no refining.
Yes, the feedstocks for petrochemicals are distilled as part of the refining process and different varieties will have different amounts of the various compounds that are distilled out.
So if I understand correctly, US refineries are built to process imported oil, rather than the domestic oil drilled out of US land. Which means that if the US stops importing, it will not have a way to meet domestic consumption demand without building new refineries, or making (presumably) substantial modifications to existing processing infrastructure. What’s the lead time and cost to build that out?
A new major refinery? Give or take, a decade. From planning, basic engineering, to permitting, detailed engineering and construction.
The fastest, easiest way to solve the issue is to blend our light crude with heavy crude to have something usable in our refineries.
The cheapest, fastest and safest way to move oil is through a pipeline. The most geopolitically stable supplier of heavy and super heavy crude oil is just north of our border. Canada. The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked.
The con of Canadian oil is that some of it is produced by Steam Assisted Gravity Drain, a process were steam has to be injected into the reservoir to heat up and reduce the heavy oil’s viscosity, allowing it to drain into a horizontal well, drilled closely below the steam injecting well. This is an energy intensive process, and if the energy to produce the steam is derived from fossil fuels, it’s carbon footprint is large.
Another potential suppliers of heavy crude is Venezuela, but it’s dictatorship has mismanaged the industry to the point that they are importing crude and distillates.
Venezuela oil industry is literally falling apart, the real amount of oil they could produce with lifted sanctions doesn't make much of a dent in global demand.
Oil markets are pretty tight to begin with- they're finely tuned to react to even marginal shifts in supply/demand. Have massive changes like the lockdowns or turn off a major supplier, you see equally massive swings in price, backwardation/contango levels, etc.
Absolutely! Venezuela's oil (or any) industry is not viable. And you are absolutely right. Oil markets are incredibly inelastic in the short run.
Think about your individual energy consumption. I assume you have to drive and heat your house, and how much you drive, and weather you heat up your house, does not, in the short run, vary much weather gas is 2 dollars or 3. Many many people behave the same way, thus we deem demand to be inelastic.
Something similar happens on the supply side. Oil projects are incredibly capital intensive, sometimes taking years to come online. Thus oil companies, in the short term, can only extract so much oil from the ground, regardless of the price.
A supply or demand shock, that is, displacement of either curve to the right or left, leads to a much larger change of the clearing price.
I'm genuinely curious about this, because it sounds like you have some first hand experience. My understanding is that this is not entirely true.
Capital intensive projects like Refineries, Storage and Shipment are inelastic, but actual drilling is relatively elastic. To the point where they leave wells sitting, pre-drilled ready to turn on in the event that they become profitable at some point. I'm assuming there is also excess capacity available in the inelastic parts of the system given that a lot of these infrastructure was built during times when the US was a larger extractor of oil.
Like many things, it depends. I think the pre-drilled thing was an artifact of relatively cheap money coupled to low oil prices. Some sort of underground contango hold. I remember this was a thing around 2015, when oil prices were below 50 dollars. The thing is, those wells were not ready to go, they needed to be completed (the process of perforating the casing to have contact with the formation) and fracked. I don’t know if we have a significant backlog of uncompleted wells anymore.
Wells vary much depending on the reservoir. For the most part, easy oil has already been tapped. There are still some places with low geological risk, in the Middle East, Venezuela, and such. A driller friend of mine in the Middle East was drilling a well a month, so there is that. This is why, every time there is a disruption, one hears discussion about OPEC’s spare capacity.
But even then, before the drilling actually happens, there needs to be a well design, and studies done on how better to drain a reservoir to maximize recovery. All that also takes time.
And all that assumes that these companies operate on fields that are already discovered. Fields have a production curve, the area under the curve is the recovered oil. They all, at the end, decline.
Doing a full field development can take decades after discovery, and discovery can take years too. From prospection, to seismic, to the drilling of wildcat and delimiting wells. Moreover, investment in exploration has declined, and more and more new discoveries are in remote places, needing great investments in infrastructure.
A potential stopgap could be the adoption of fracking in places like Europe, but it is banned over there. It baffles me. The simple exercise of calculating the enthalpy of combustion of methane vs carbon (coal) makes it incredibly obvious that natural gas is a much better fuel from a carbon emitting perspective, and this is without accounting for the efficiencies of combined cycle vs steam cycle.
Their equipment is in bad shape because sanctions have prevented them from buying supplies, parts, tools, and services. When they're able to purchase those (which could be soon [0]), the equipment will be fixed.
All it took to get rid of sanctions on a nation that has never harmed or threatened anyone was for one of their competitors in the petroleum market to invade another nation...
Industry sanctions started in 2018. Their production had been declining since 2014. It's not just an issue of equipment. Its also a brain drain, corruption, lack of a functional justice system, legal guarantees, property rights...
Competent Venezuelan oil professionals have been fleeing the country and can be found in Colombia, Brazil, and other oil producing countries farther away.
The Venezuelan regime is far, far from being harmless and nonthreatening, their human violations are numerous and nobody is suffering the consequences of their actions more than Venezuelans themselves. I've seen the plight of their people on the immigrants who fled to my own country.
Even their own PDVSA stars don't drink the Kool-aid... It was sad to share a table with disillusioned young, bright, venezuelan engineers at the SPE Latin America Heavy and Extra Heavy Oil Conference, so ask me how I know...
Sanctions on PDVSA started in 2014. Sanctions that effectively limited the import of medical supplies started in 2015. [0] The Venezuelan emigrants you see in your nation are fleeing the depression caused by those sanctions. After that stops, many of them will return to Venezuela.
> The most geopolitically stable supplier of heavy and super heavy crude oil is just north of our border. Canada. The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked.
If we get really desperate, expanded drilling off the coast of California along with building another refinery near Santa Barbara could also be part of the solution. Of course many of us in California would oppose this, for understandable reasons.
There probably are ways to do it using modular components. They did this with natural gas power plants (see Wartsila power plants for example.) In that case, you can probably get it down to 2-3 years.
Natural gas power plants are relatively modular, and we can chain together units to make a bigger power plant. There is no such equivalent modular unit for petroleum processing. Each plant is highly customised to deal with a specific mix of different kinds of input oil, and to deliver a specific mix of output petroleom products. They can be reconfigured within a narrow range, but they're not highly flexible.
We have an EPA. China doesn't. It's easier to build these things in places where people are too poor to care about the environment or don't get to (because their governments don't) care about the environment.
China has environmental protection agencies, they just aren't so incompetent that they take a decade to process a application.
"The competent department of environmental protection administration under the State Council shall conduct unified supervision and management of the environmental protection work throughout the country."
If the Chinese agency plays the delay, deny and harass game they will likely be replaced by an agency that is capable of protecting the environment without standing in the way of industrial progress.
When the EPA plays the delay, deny and harass game they amass brownie points with politicians.
Likewise it's probably safe to assume that the Chinese agency is much more set up (and well practiced at) making sure things actually get done on defensible timelines.
It's more than just the environment. The more engineers & scientists you have, the faster you can build it. The more people you're willing to crush beneath your wheels, the faster you can build it.
> The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked.
The Keystone XL pipeline was meant to take Canadian oil to the Gulf of Mexico to refineries intending to export it. Very little of the refinery infrastructure at the terminal end of the pipeline was equipped to redistribute it domestically. Something like 70% of the oil transported by Keystone XL would have been for export.
I was curious about this so I looked around. From what I can tell it looks like what you're saying is part of a political disinformation campaign started by Kirsten Gillibrand.
1. Countries in Latin America are developing and therefore using more oil so they have less to share with us.
2. We are consuming slightly more oil.
3. Oil obtained from hostile and unreliable regions should be replaced.
The effects would be that oil consumed from the pipeline would be cheaper, it would be more reliable, and while not being totally for domestic use would make a significant dent in our oil consumption in the right categories.
Edit:
Opposition to the Keystone XL likely would have been more effective if it focused on (potential) environmental impacts as well as the spill that occurred in 2017. I think that's what the Biden administration focused on when it cancelled the permits.
PolitiFact's article is foolishly splitting hairs. The concern about Keystone XL's exports was never about the oil but the refined products (gas, etc). The Texas refineries that would have been at the XL's terminus already export a majority of their refined products.
They're not the only refineries that handle heavy crude but they are the ones with the easiest access to the export markets of Central and South America.
> It is true that exports of petroleum products from Gulf Coast refineries have increased considerably in recent years. That’s part of why PolitiFact rated a similar statement by Obama Mostly False in 2014. While the trend adds a grain of truth to her claim, it does not mean all of the oil that will come from the Keystone XL pipeline will be immediately exported.
I don't think it's splitting hairs, that's the main point of the conclusion. What she said:
The Keystone XL pipeline "doesn’t even have any oil for America."
Well, the Keystone XL doubles our capacity in the US but pales in comparison to overall demand. Based on what I read I'd expect that most of the pipeline would be used to replace hostile and unreliable sources at a minimum.
Also as a Canadian I'm a little baffled why we should be prioritizing building pipelines that run north to south to export our oil when we can run pipelines east to west to supply our own people and export on our own shores.
Why do you think this is not already the case? Just curious, because it seems like many people in my birth province of Alberta aren't aware that we already have these pipelines, and think that people here in Ontario and in Quebec are burning Saudi oil.
Line 9 runs practically right behind my house, and since it was reversed some years ago it feeds facilities in Ontario (and Quebec) with Alberta oil. Line 5 runs under the great lakes, all the way from western Canada to refineries in Sarnia (and is currently under threat from Mich. governor, but that's a separate topic)
90ish percent of Ontario's oil consumption is domestic oil depending on time of year and so on. The remainder is mostly from the US. Small % from middle east.
Oil from Alberta makes it all the way to refineries near Montreal. Last I looked 70% of Quebec's oil is domestic origin.
Politicians in Alberta have become masters of ignoring this key fact in their rabble rousing.
Could capacity be increased? Maybe. Is it strictly necessary? I don't know. Should we be reducing consumption anyways? Yes.
See map here, on Enbridge's website, zoom in to Ontario:
>Because Quebec is powered by hydro and doesn't need oil and doesn't want the pipeline going east because they sell power.
Quebec uses tons of oil every day, whenever they fill up their cars. Most of it comes from Saudi Arabia, brought into the Irving Refinery in New Brunswick. Irving would use Canadian oil if they could get it.
Sorry but this is factually incorrect. The majority of Quebec's oil is from Alberta, with some small amount being from the US and only a tiny portion coming from the Irving refinery.
"Line 9 has been delivering crude oil from Sarnia, Ontario to Montreal since its reversal became operational in December 2015. The line has a capacity of 300 Mb/d and transports a combination of oil from western Canada and the U.S. Midwest.
In 2018, deliveries of imported and eastern Canadian crude oil on the Portland-Montreal Pipeline fell to an average 2.5 Mb/d, less than 1% of its capacity." (italics mine)
That being said, GPP is partially correct: Quebec is the highest electricity producer and consumer in Canada, but it's almost entirely hydroelectric and their electricity is cheap. "Quebec’s emissions per capita are the lowest in Canada at 9.4 tonnes CO2e – 52% below the Canadian average of 19.6 tonnes per capita."
With the highest electric vehicle uptake in the country, and the lowest greenhouse gas emissions, seems Quebec has the right to be smug (see https://www.youtube.com/watch?v=AnFAAdOBB1c)
Anyways, please don't spread political disinformation. Quebec is not a significant consumer of Saudi oil, despite what Jason Kenney has to say about it.
>Quebec’s emissions per capita are the lowest in Canada at 9.4 tonnes CO2e – 52% below the Canadian average of 19.6 tonnes per capita."
Only because they don't count any emissions that come from Hydro. We have no idea what they actually producing because they don't test any of the dam reservoirs for methane emissions.
>Quebec is not a significant consumer of Saudi oil, despite what Jason Kenney has to say about it.
Not my province, so I don't consume anything he says. Considering the biggest refinery in Quebec (Valero refinery in Levis, 265M barrels/day) refines sweet crude, I sincerely doubt it's getting the majority of it's oil from Alberta.
As a non-Albertan, I'm baffled by why Alberta thinks that building east-to-west pipelines to prop up their economy, while saddling their neighbours with all the risks is good policy.
I mean, I understand that may be a good policy for an Alberta, but there's no reason why anyone else should think it's a good policy for them.
Alberta mines & refines oil that every other province uses, and is saddled with all the pollution from that. Why should Alberta prop up the economies of all the other provinces and have to deal with the actual consequences of that?
Huh? No. The refining of Alberta oil generally happens elsewhere. The Albertan oil consumed in Ontario and Quebec is refined in Sarnia and the port of Montreal, respectively. Comes in via line 9 and is refined in province.
The chemical industry pollution in Sarnia is pretty bad from what I hear.
Largest refineries in Canada that refine Canadian crude are in Alberta, Imperial's 191M barrels/day and Suncor's 142M barrels/day, both in Edmonton and then you can add on Fort Saskatchewan's 100M barrels/day, just outside of Edmonton. There's a west coast city that is nearly entirely dependent on Albertan crude oil & refining.
Sarnia is refining an already upgraded bitumen though, so it's only getting half of the garbage. Also Line 9 goes from Sarnia to Montreal, Enbridge Mainline goes from Alberta to Sarnia.
False dichotomy. It's not a choice between pipeline and rail, it's a choice between pipeline, rail, and nothing. Since its neighbours receive nothing but liabilities, regardless of which option is taken, I'll go with nothing.
Tar sands oil is an endless, pointless jobs program. It's barely afloat when oil prices are high, and a rock around the neck of the Canadian economy, and GHG commitments when they aren't. I'm not interested in drastically cutting back on my energy usage, to balance the books with one of the dirtiest fuel producers in the world.
Pipelines do nothing for me, but encourage this economically-destructive industry to expand. For every dollar of wealth it generates, it destroys a dollar and a dime.
Absolutely, 100%. And the distortions that "rip and ship" makes in the economy aren't worth it when oil prices are high. It makes some people rich but most of us just suffer net effects and I'm not even talking about climate change.
I've lived in Edmonton during oil-boom times, and during not-oil-boom times.. and the corrosive effect of the boom and bust cycle on the Albertan economy, it's not pretty.
And a high per-barrel price in Alberta does nothing good for manufacturing in the rest of the country, dragging our dollar up and making our exports less attractive and the costs of production higher. When the dollar is high also makes my labour as a software engineer more expensive, without much benefit to me.
Ah well, enough ranting, off to go pick up sushi in my electric car and I'm not even joking.
I'm looking at it through a lens of least impact overall and totally agree about the tar sands. Trucking is wasteful, shipping and trucking don't have a very good ecological safety record. A good step in reducing environmental effects of oil is to stop exporting it as that just moves the problem elsewhere. Being self sufficient and weaning ourselves off of oil & gas is a step in that direction.
We need to fix the problems at home before telling others what to do.
Given that break even for the tar sands has been in the $100/barrel range only recently (with process upgrades) may be as low as $40 (very optimistic in my books). It's certainly appears to need subsidies to survive.
Typically when oil prices drop (they were <$40 in early 2020), the oil sands companies put production on standby. It's like most oil exploration - it's either feast or famine depending on global prices.
It's not just a matter of building more refineries to process it. The different API Gravities of the oil are used to output different products. Gasoline, jet fuel, etc.
So yes, you could modify refineries (at significant expense) to process different grades of crude, but in order to target different outputs we still need to import the different grades of oil because the refineries end up mixing/matching to get the levels they need. The US produces a lot of light oil, but less of the medium/heavy grades you'll find in Canada or the Middle East.
You seem to be the first to mention, something that I think is of supreme interest: How adaptable are the refineries? All oil must have variations in its properties, and every refinery must be able to cope with a certain amount of variation.
If you have a refinery that's built for heavy sour oil, how much lighter and sweeter can it handle without any modifications at all? And how much time and money does it take to broaden its range further?
What are the heavier grades used for, I'd imagine stuff like bunker fuel and asphalt? If the prices of those end products went up, wouldn't the market adapt to a certain degree, say using more concrete and less asphalt, etc?
Lighter oils get used for gasoline, diesel, and aviation fuels. Heavy oils get used for plastics, petrochemicals, and road surfacing.
I wish there was an easy answer to your refinery question. They're all different, but there are three basic types of refineries:
The simplest is a topping plant, which is basically just a distillation unit. The output you get is basically whatever the natural yield of the oil is. These refineries can typically only process light crudes.
The next level refinery is a cracking refinery. These take the gas oil output from the distillation and breaks it down further using high temperature, pressure, and catalysts. This allows for the breakdown of slightly heavier crudes.
The final level is a coking refinery. This takes all the residual fuel and "cracks" it into a lighter product. This increases the yield of higher value gasoline, which allows a refinery to take in cheaper heavier crudes.
Building a new refinery is a 5+ year process that costs about $7-10 billion. I'm not sure what upgrading an existing one costs, but it's somewhere in that ballpark. Keep in mind that a large influence on the type of refinery is their geographic location. They're built to accept the type of oil that flows in the pipelines.
Would they also be built to produce the type of products needed by the local-ish market?
So one in Europe will have a higher fraction of diesel (used in most trucks, some cars, and some trains) compared to the USA (trucks and almost all cars use petrol).
Yes, to a certain extent. But refined products get piped all over, so it isn't a very tight coupling. Delta Airlines bought their own refinery for jet fuel. It didn't work out too well, but it was still interesting.
It's nearly impossible to build or expand refineries in the US anymore due to environmental laws, real estate costs, and local opposition. And I can't really blame the NIMBYs: living next to a refinery sucks due to the air pollution, and risk of spills or fires.
Refineries are like nuclear plants- no new ones in almost a half century (1976), but significant upgrades of existing ones. Both due to environmental regulations and cost.
Tangential to oil, the US government tracks the availability of "strategic resources" ("critical minerals") via the USGS [1]
For example, the US produces no rare earths, mostly because the process of extracting those is enfironmentally-unfriendly and we've closed all our mines that produced them, preferring to outsource production to places that don't care about the environmental impact, like China.
From what I remember from the USGS talk many years ago, a lot of the critical minerals required for our modern technology comes from unstable regimes. The US could produce mine many of those locally, but of course it'd take many years to ramp up production (not even mentioning the local environmental impact)
Seems disingenuous to not mention that most of that US oil (65%!) comes from environmentally destructive practices, which is a damn good reason to prefer imports.
Or, put simply: how much US oil comes from fracking? Not a small number - the aforementioned 65%. Source for this data: the U.S. government.
Remember, these aren't small amounts of water either. I live in California, where we have drought conditions. How much water do you think a typical well uses? "Up to 9.6 million gallons of water (!!!!) per well." For just one well!
Oil and natural gas fracking, on average, uses more than 28 times the water it did 15 years ago, gulping up to 9.6 million gallons of water per well and putting farming and drinking sources at risk in arid states, especially during drought.
So, here's the thing. The "cost" of that water in the market is just the cost in dollars. But to Americans, and future generations? It's much higher. You can throw a stone at a US map and hit a state that's experiencing drought conditions right now (and that well water is permanently off limits for drinking).
If we can slash the real cost - the externality cost - by just buying it from elsewhere, we should. And we do. And that's the right choice, despite what NASDAQ thinks.
>comes from environmentally destructive practices, which is a damn good reason to prefer imports.
I'm sure Russia, Venezuela, Iran, Saudi, etc. really care about the environment and their reports about environment sustainability* are totally true.
The average oil producer is a dictatorship, and I suspect the impact of lack of transparency is more important than the drilling method - they have every motivation to cut corners, while American oil is openly regulated. So from the global perspective I doubt American production is more polluting.
Other countries might be less sustainable however that lack of sustainability doesn't impact the US as much. The real cost of oil drilled within the US is higher than the real cost of oil drilled outside the US.
We're just seeing a real live demonstration that the real cost of oil produced by the typical non-US oil producer has its own externalities and they're not pretty. With the money saved by preventing these issues one should be able to solve the water problem (waste recycling? desalinization? other liquids?).
> comes from environmentally destructive practices, which is a damn good reason to prefer imports.
This globalist-centric way of thinking is why we’re currently paying $5/gallon, the highest amount ever. Such a “hidden” tax on the working class is why we should shun imports and be self sufficient both with oil as well as manufacturing - or at least as much as humanly possible.
> Seems disingenuous to not mention that most of that US oil (65%!) comes from environmentally destructive practices, which is a damn good reason to prefer imports.
This reads like the NIMBY stance of oil production. “Make whatever mess you want, keep it where it is! Can’t have that happening in my state/country!”
So you’d rather export pollution instead of being energy independent and trying to fix fracking laws?
The point is that we need to use fracking to extract much of the oil in the United States, as opposed to less destructive techniques that can be used in other oil fields. It’s not NIMBY if it truly is worse when it happens in your backyard.
I'm not sure that was the original point. If extracting oil results in $x of long term damage to the local environment, but that cost isn't passed along, it makes economic sense to buy oil from somewhere else so you don't end up footing that bill. Sure it would be better overall if that other place could extract oil without that cost but that doesn't make the decision less rational even if that environmental cost is as much or more than it would be to extract it locally.
This just hints at how toxic the fracking chemicals used are. It's not just the water, it's the pollution that is compounding this issue. Water always has, and always will recirculate - but pumping dangerous contaminants into our water tables is a big problem that effects current generations as well.
A spot check shows item 15 in the list, published 2014, is based on work from 2011-12 and the abstract concludes with:
> This study provides a baseline of water-quality conditions in the Monongahela River Basin in West Virginia during the early phases of development of the Marcellus Shale gas field. Although not all inclusive, the results of this study provide a set of reliable water-quality data against which future data sets can be compared and the effects of shale-gas development may be determined.
That is to say, this is a baseline measurement from the start of exploration, not a demonstration that fracking goes not contaminate groundwater.
===
The MIT report listed as item 26 on the list does say the process is mostly safe, which I respect, but also page 39 lists counts of incidents over a four or five year period, including 20 incidents of "groundwater contamination by natural gas or drilling fluid". So it's not like problems do not happen.
You’re asking for evidence that oil exploration and extraction leaves contaminants in water tables? The US EPA gives 5 easy to understand situations where fracking destroys drinking water through toxic chemicals making it into groundwater.
• Spills during the handling of hydraulic fracturing fluids and chemicals or produced water that result in large volumes or high concentrations of chemicals reaching groundwater resources;
• Injection of hydraulic fracturing fluids into wells with inadequate mechanical integrity, allowing gases or liquids to move to groundwater resources;
• Injection of hydraulic fracturing fluids directly into groundwater resources;
• Discharge of inadequately treated hydraulic fracturing wastewater to surface water; and
• Disposal or storage of hydraulic fracturing wastewater in unlined pits, resulting in contamination ofgroundwater resource
Those are all listed possibilities. Not evidence for its occurrence.
Contrast this to the evidence for coal contaminating water supplies with mercury. Fracking, despite its reputation and scary name, is safe. Like, flying airplanes safe.
Drilling companies are able to treat the toxic soup that is pumped into the ground as trade secrets, so it’s difficult to publish definitive data.
Fracking leaks methanol, salts and other compounds into ground water. Operations often contaminate water from leaky pits with diesel and other compounds.
Coal is probably the nastiest fuel by any measure. But that isn’t to say that fracking operations are not problematic, and since industry has fought tooth and nail to prevent meaningful, peer reviewed study of the issue, it’s absurd to compare to a well understood, well measured thing like air safety.
> Fracking leaks methanol, salts and other compounds into ground water. Operations often contaminate water from leaky pits with diesel and other compounds.
No, the evidence from peer reviewed studies show that this does not occur often. You are presenting this as though fracking leads to ground water contamination. That is simply not the case. Agriculture and urban activities are much bigger sources of contamination.
This recent review says:
“ A perceived risk, that fracking chemicals may migrate from the 0.5- to 3-km depth of injection to upper shallow aquifers used for water supply, is not considered to be significant (90, 91). The lack of baseline data on aquifer conditions is cited as a major limitation to the detection and attribution of the impacts (90–92). Wide variations in methane concentrations in groundwater are noted in areas with intensive gas production as well as in areas with limited activity.”
https://www.annualreviews.org/doi/full/10.1146/annurev-envir...
Here is a very recent paper describing three worst of the worst situations, where a casing was improperly cemented. Even then it is really unclear how bad the contamination was. Keep in mind there are over a million fracked wells in the USA.
Hammond, P. A., Wen, T., Brantley, S. L., & Engelder, T. (2020). Gas well integrity and methane migration: evaluation of published evidence during shale-gas development in the USA. Hydrogeology Journal, 28(4), 1481-1502.
How commonly do you think that flammable tap water issue occurs outside of anti-fracking propaganda films? Also you're aware that it is an occasionally natural phenomenon, right?
Well water is often naturally pretty nasty even without fracking. I am generally anti-fracking, but take those videos you’ve seen with a grain of salt. Those things happened routinely even before the fracking boom.
There are better criticisms of fracking like the higher rates of disease around well sites, and improper dumping of waste.
I will summarize those paragraphs - as long as USA can afford to export manufacturing pollution to poor countries that allow excess pollution, we should continue to have the pollution dumped over there.
I don't agree with that. I support pollution import duties to remove some of the economic advantage of dumping pollution over there.
The US exhausted fields in Pennsylvania, New York and Ohio 100+ years ago and has depleted the big western fields as well - production in the US requires fracking.
Yes, though still lots of oil in the western States. USA can be energy independent, and was just a couple years ago. The tech is cleaner than ever and laterals reduce pad impacts.
I heard politicians bleating on about that, but my lying' eyes told me a different story.
My office during this period was next to an inland port and rail facility. Every day, hundreds of Canadian National Railway cars with explosive tar sands oil lumbered by to be loaded on ships bound for refineries.
High commodity prices drive expensive oil production. That includes fracked gas and oil and other "exotic" sources. An extended war in Ukraine will certainly trigger a domestic oil boom.
Putting a price of $6.5 for a gallon of gas (this is how much gas in Europe normally costs €1.58/liter = $6.5/gallon) is a right thing to do.
Hopefully this would diminish consumption, reduce carbon footprint and wouldn't require purchasing extra crude. May cause a revolt though, if advertised to the main street improperly.
For a smooth transition, you need to "make before break". If we take away people's cars overnight, then people will be stranded with no way to buy food or earn income. (Raising prices on gasoline is a slower means of effecting change, but people don't have the opportunity to just throw away their home and home equity to move somewhere with public transportation. This just makes people miserable; it doesn't help them out of their miserable situation.) We can't undo 100 years of terrible urban planning with one stroke of the pen.
Not sure about European cities or if they directly compare to US. Most major metropolitan areas in the Midwest and East coast region are seeing people leave for suburbs or even small town America.
It's because suburbs are subsidized in the current system. Roads, infrastructure, and other upkeep costs are paid by the entire city but since the denser regions are more productive/profitable, they end up paying for the services that suburban residents are using. If suburban residents had to pay for the real cost of their housing, then I think it would be a lot less appealing. Building suburbs is terrible city planning and it's sad that cities are continuing to endorse them.
I consider cramming millions of people in tiny city apartments terrible planning as well. I want to smell the roses, not human waste. The root cause I guess that there are too many of us
Why would you support a regressive tax scheme that impacts the poor and middle class far more than the wealthy? To be clear, I'm not trying to be argumentative. I just don't understand this viewpoint at all.
They already suffer, and the benefit is to free the poor and middle class from personal income tax. The rich already escaped as generally their money is not personal income for purpose of income tax.
When the king takes a portion of my labor 'because he can', then I am a slave. The rich generally understand how to escape the income tax slavery. Let's free the poor.
Personally I'd rather see the loopholes get closed instead of adding a tax on consumer goods.
Remove some of the loopholes for trusts that let people avoid inheritance taxes. Add another tax bracket or two for capital gains. Get rid of the carried interest loophole.
There is merit to closing loopholes. It seems difficult to implement considering how codes and laws are actually crafted. Huge business of leeches creating tax code and then helping people to utilize the tax codes to maximum effect.
Straight consumption tax (excluding uncooked food) and it becomes very simple to implement. And nobody would file a personal income tax again. Employers would not do payroll tax withholding so wage slaves would get an immediate increase of take-home pay.
How is it weird the top 20% of income tax payers pay the most? Is that by definition what makes the top 20% of income tax payers the top 20%?
The very rich can structure affairs to have capital gains, minimize income, and therefore not be in the top 20% of income tax payers.
Poor and middle-class wage slaves have income (per IRS definition) and generally don't escape income tax beyond the standard deduction which applies to everyone who files.
The rich understand these phrases: "capital gains", "everyone who files". Those with minimal wage income may not even need to file.
Capital gains are assessed when recognized, not like a yearly schedule so rich can defer this and choose when to recognize it. Will certainly take many fun 'business' trips that year to offset.
Remove payroll taxes (which support collection of income tax) and employee take-home pay increases. Employers can stop hassles of the withholding accounting. Employees can stop hassles of yearly income tax filing to IRS.
There would be a temporary increase of unemployed payroll tax bookkeepers and storefront tax prep people. Hopefully they will find something more productive to do.
Yes, add on to the tax which is already around 55 cents per gallon. Would you support $6 gallon fuel tax while relieving everyone from fear of IRS audits? (It's for the children!) And add $10 to aviation fuel.
As long as public transportation in the US continues to be unsafe, dirty, and slow people will continue to drive cars. It doesn't matter how much public transport you build out, if I have to sit next to a guy smelling like piss I will never get on the subway when I have a car.
Your rationale makes sense in a paradise world where there are no wars and no countries vying for hegemony. There is an immense national security aspect and domestic economic situation you are ignoring which could not be anymore relevant today.
I think a lot of oil import comes from countries which don't need these practices? Saudi Arabia being an example of a place where the oil almost comes out of the ground on its own, no need for fracking.
it seems also disingenuous that the environmental impact at origin of the imported oil is completely ignored, and the same applies for other imports including consumer goods or even "green energy" related devices and materials (batteries, solar panels, etc)
also the US has a variety of conditions for prospection, CA being one of the worst places for new prospection projects - so this also needs to be taken into account
PS: at 3$/gallon I suspect the majority of consumers were already not taking gas consumption lightly, so while it's true that energy savings are a crucial part of the picture, they were already very heavily incentivised for a while in the US and certainly here in Europe as well
The US is a leader in oil refinement technology, such that there are oil rich Latin American countries (Venezuela and Mexico) that rely on exporting crude and importing refined products from the US to meet THEIR energy needs.
This isn't about the US going full 'no import oil', it's about finding the entire west non-Russian sources of crude.
Oil isn't a uniform thing - it's closer to marble than limestone. People import tuscan marble all the time due to the grain and qualities of the piece itself - it's quite the same with oil - not every barrel was created the same and America has some processing facilities specialized to consume a quality of oil not found domestically in large volume.
The answer is simple: America is not a monolith, and it is a free country. It's not a single entity that imports x, exports y, and figures out that it can net out inflows and outflows and just export y-x in the end. It's hundreds of companies, each trying to optimize their own business operations, and ultimately profits. If there are no restrictions from purchasing oil from Russia, or Venezuela, or Libya or whatever, and they find it advantageous to do that, they'll do that. The day the US puts some sanctions, they'll have to scramble and find an alternative. That's the way it is, and it can't be any other way.
Obviously the extra gets exported, so it doesn't actually work that way.
Also Peak Oil doesn't seem like it's going to happen anymore. It looks like we'll phase it out long before we actually run out.
Demand will decrease at an ever quickening pace and investment in oil extraction will pretty much die. Most of the cheap to extract oil has already been exploited, so that could lead to oil becoming pretty expensive, pretty quickly. Despite crashing demand.
"Peak oil" is literally just whatever moment in time oil extraction peaked. It never implied we'd run out, and what you're describing is the expected outcome.
When I first heard the term ~20 years ago, there was speculation that we would use up the easily extracted oil, and it would just get more and more expensive to produce as we were driven to more challenging sources, to the point that consumers would be driven to other energy sources. And so "Peak oil" referred to the peak of supply, as in the GP's usage. You are implying the peak will be whenever demand tops out, which technically would still be "peak oil" but not in the way it's been used for a couple of decades.
Peak oil implies that the demand actually reached a level to justify that peak level of extraction and with a decline[1] of the production that level of demand will be unsustainable. If peak oil is reached due to a temporary situation (like a war briefly driving up demand numbers) then maybe it's not an immediate issue - but we'd never have the same supply capacity again. It could be that in the 41st century earth is still producing 100 barrels of oil a year - but that's not a useful amount.
Running out isn't the issue - the issue is that we've got an economy geared to consume a specific fossil fuel and constantly growing with a dependency on that fossil fuel - if we suddenly outstrip supply we could be left in a lurch where we have a reduced capability to run the machines that'd let us build machines that are less reliant on oil.
1. The common understanding peak - but even if things just remained level supply-side and demand grows it'd be the same outcome
Short range fights might go electric. Long range fights may still use jet fuel, but hopefully jet fuel created using carbon from the atmosphere using renewable energy. That's carbon neutral.
that's not it at all because A) we produce it and export it and B) we will never, ever, EVER, run out of oil - we will however stop using it - so C) the incentive it to pump as fast as possible while it still has value.
Can somebody double check some numbers here for me? Because something seems Twilight Zone levels of weird. This article states we use 18.12 million barrels per day, and produce 18.4 million per day. Of course some of that gets sent over to the strategic petrol reserves, but for the most part that is all being used or exported. That's 6.72 billion barrels per year. We have proven reserves (as of the end of 2020) of 38.2 billion barrels. [1]
That gives us less than 6 years before we completely run through reserves. But it feels like this can't be true because it would have a huge impact on domestic producers, domestic oil prices (especially given the US' relationship with most oil producing nations), and much more. But this article didn't even bother mentioning this fact.
Of course at some point there must be a limit, but thus far when there's been sufficient incentive to look, more reserves have been found (including via new technology such as fracking).
"Most of the oil produced in the U.S. fields in Texas, Oklahoma, and elsewhere is light and sweet, compared to what comes from the Middle East and Russia. The problem is that for many years, imported oil met most of the U.S.’s energy needs, so a large percentage of the refining capacity here is geared towards dealing with oil that is heavier and less sweet than the kind produced here."
Canada, Alberta specifically, produces precisely this kind of oil. In his speech announcing the ban, Biden listed several alternatives to Russian oil that the U.S. would rely on, including Saudi Arabia, but pointedly left Canada out. This is after one of his first acts as President was to scrap a (heavily politicized) pipeline that would have transported heavy Alberta oil to U.S. refinery centres.
It's worth asking what is going on here. Why does the U.S. seem to prefer relying on oil from regimes that are as morally questionable as Russia while snubbing a long-time stable supplier that is right next door?
Politically, Biden is committed to green energy and, of course, is not going to want to reverse his decision on a pipeline that Trump backed. However, reality is a thing. The U.S. needs heavy oil and isn't getting it as efficiently or environmentally friendly as it could because, as in Canada, infrastructure approval processes have become heavily politicized. Oil will indeed flow from Alberta to U.S. refineries, but mainly via tanker cars. This increases transportation costs and, hence, fuel costs. It also makes spills and accidents, such as occurred in Lac-Mégantic, more likely.
It may be time to look at ways to free long-term infrastructure planning and approval processes from the short-term needs of politicians looking for a quick boost in the polls before an election.
Why is nobody mentioning peak oil [0]? Seems to me that is the reason the extraction costs in the US is so high. Because the oil reserves are drying up, and it becomes harder and harder to squeeze out the oil. They are starting to employig techniques like fracking [1] to squeeze the oil out, but that costs a lot more energy, so the produce is lower, so the oil is more expensive. And will keep becoming more expensive as the reserves dry up and the extraction becomes more and more expensive.
A good resource on how this works is The Crash Course [2] from Peak Prosperity, where it discusses this in relationship with the financial and environmental factors.
Not mentioned in the article, the US is actually a few different oil markets.
For example, the east coast has refineries, but they are geared for oil from the middle east. Why?
One reason is the Jones Act, which prohibits shipping between US ports except by US crewed/flagged vessels. There basically aren't any of those.
So, we ship liquified natural gas from Texas to Europe and Asia, but are not allowed to ship to the east coast or other US ports.
The other reason is that pipeline capacity to the east coast is severely constrained. Many planned pipelines have been cancelled. It takes decades with all the NIMBY laws to build one, but only one president to throw all that work out with a decree.
Pipeline capacity is further constrained due to regulations for boutique fuels. The gas you can use can vary from state to state. If you start a run of said fuel on the pipeline, you can't serve the whole intended market for when the pipeline was designed.
And then there is the whole ethanol thing. It has to get shipped at great expense from the midwest to the coasts where regulations say it must be used.
oil is too good a resource that any major economy could just move away from it without wrecking their competitiveness, certainly in 2022 still and for the foreseeable future
This (the various types of crude) is not the real reason, based on what I read before. The US is a major (biggest?) exporter of refined oil products. I think even western Europe gets a significant portion of refined product from the US. There is simply a lot of capacity, built in the 2010s. So the imports of crude are used for refining.
We only produce enough oil to meet our needs via fracked shale wells, enhanced recovery methods, etc, all of which comes at great cost, both financial and environmental.
I wouldn't expect an economist or an American Jingoist cheerleader to ever crack a geophysics book, but someone should look at the production decline curves of these wells and then take a wild-ass guess how much longer the shale miracle will last.
We import oil because "energy independence" (at least from an oil & gas perspective, renewables and coal may be another matter) is a fleeting, rose-colored dream, from which we will soon awake.
The simple answer is that oil isn't fully fungible. Sweet vs sour crude, different grades, serve different needs. Different extraction methods are also viable at different price levels, many domestic sources only become profitable at higher levels. (Like the levels we're seeing now. Which are stratospheric.)
A good contrarian argument for energy independence is it'll impose a higher floor cost on oil prices, making renewable projects more viable. It would also make expensive one-time upgrades that enhance energy efficiency look better on paper when compared against opportunity costs.
There is a flip side to this... We are refining other peoples heavy sour oil, which in turn means many other countries won't have much capacity for such refining.
It gives us leverage - if we choose to, we can stop refining heavy sour and stop exporting light sweet, leaving other countries with shortages of refined products, while we still have plenty.
“Crude oil” is not one thing with standard specifications. It varies wildly from almost mud (e.g. Canadian tar sands) to wine like (Arabic crude). Different refineries are configured for different kinds of crude and it is not easy to switch. So the supplier matters.
When the gas shortages happened in the 70s, a law was pass limiting the prices of US sourced oil sold domestically. It was put in place to lower the "oil shock".
I do not know the status of that law, but I assume it still exists.
So, US source oil can be sold at a higher price if exported and that forces the US to import to make up the difference.
I think there was a loophole that allowed this to happen, probably it was not thought at the time it would be viable to export US oil or US would never have the oil to export.
Oil-rich companies pay enormous money to "climate change" politicians and lobbies in the US to halt progress in oil extraction... so that the value of their oil is higher.
I think it is time for those in science and technology to start to demand we stop lying to ourselves. Anyone who has reasonable command of basic mathematics, basic physics and, as a bonus, manufacturing and supply chains can do the math and verify that we are floating in a sea of lies.
What are these lies?
We can save the planet:
When computed as the planetary-scale problem this is, it is very easy to see that the energy and resources we would need to affect change are in a range between impossible and massive. The scale of this fallacy is such that, even if we could do something, it is far more likely to kill all life on earth than to save anything.
Fix Climate Change:
Same as above. At a planetary scale it is nothing less than laughable to think we can do a thing about any of it. It takes natural processes an unimaginable amount of energy and resources over 50K to 100K years to drop atmospheric CO2 by 100 ppm. We actually have people believing in this religion that says we can affect climate change and save the planet in a 50 year time scale. In other words, 1000 to 2000 times faster than the natural rate of change. Nobody EVER asks them to "show the math". If they did, they could not. This is ignorant nonsense.
Stop using oil (petroleum):
Impossible. Impossible at a massive scale. The ignorant among us (which is to say, as it pertains to this problem, most people) think gasoline when they think of oil. Well, that's not what we use oil for exclusively. Petroleum is one of the most highly processed materials on this planet. We derive everything from lubricants and plastics to fuel from it. Secondarily, we derive almost everything you can touch and use in your daily lives. Almost everything at a hospital or the company you work for. Manufacturing of everything, from food to medical equipment, computers and clothes would grind to a halt without petroleum. I think I can say that we could not support 7 billion people on this planet without oil and its byproducts. In other words, once again, this is ignorant nonsense.
Migrate to electric cars:
In the US alone we have somewhere around 300 million vehicles. If anyone with the requisite knowledge took the time to do the math, you would quickly come to the stark realization that a migration to electrics is --from our current context-- impossible. About five or six years ago I wrote a relatively simple simulation model to try to understand this problem.
My model told me that we would need to ADD somewhere between 900 GW and 1400 GW of power generation capacity in order to go fully electric. For context, we currently generate about 1200 GW. In other words, we would have to double our capacity.
For further context, a single nuclear power plan produces about 1 GW. This means we need to build somewhere in the order of a thousand nuclear power plants, or, on average, twenty per US state. We can't build ONE in 25 years and we are actually talking about doing something that would require a thousand of them as if it were possible.
I never had confirmation of my model until Elon Musk was asked this very question not too long ago. For those who think what I just said is nonsense, I'll let him confirm my findings and statement:
As Elon says, it's worse than having to double our power output. Our infrastructure cannot handle this. It isn't built to carry and handle twice the power draw. Which means we have to rebuild almost all of it. Imagine having to replace almost every cable and transformer distributing power in the US as a starting point (it is far more complicated than that).
So, once again, this is ignorant and stupid.
There's more, but I'll stop here.
I just heard the US President go on TV and pretty much get behind all of the above, again. The Prime Minister of Canada did a similar thing during a press conference with the leaders of UK and Netherlands (side note: How diluted is he that he decides to talk about this nonsense when Ukraine is going on? I don't understand.
Yes, I know, these words are put in front of them in a number of cases to read off a teleprompter. However, we keep living in this "Emperor has no clothes" scenario where everyone is repeating and getting behind a collective set of lies both emotionally and financially. Lies that are easily proven to be so with some of the most basic of mathematical analysis. And, here we are, driving society mad with imaginary nonsense indistinguishable from religion.
None of this is to say that cleaning-up our act isn't a good idea. However, the way we are going about it is to lie about both the reasons and plausibility of it.
Electric cars are a good idea, but we need a 50 year plan to radically enhance our power generation and delivery infrastructure. A plan that would require a doubling of our generation capacity. It's like building an entire duplicate of all of the power infrastructure in the US. Not a small endeavor.
While that happens oil will be crucially important. And oil has to be CHEAP or that infrastructure will be impossible to build. Oil has to be cheap because it is needed not just for the massive transportation requirements of all of the materials, components and systems that will go into doubling our energy production infrastructure, but for all of the byproducts that will be essential for the manufacturing and transportation industries (lubricants, plastics, etc.).
And so, we have the US President (and other world leaders) reading what someone else put in front of them, likely from a purely ideological perspective, while completely ignoring the fact that what they are saying, what they want to do, is absolutely impossible form that ideological framework.
The first thing a country like the US has to do in order to be able to reach for some of these ideas is exactly contrary to this ideology. We have to drill, extract and transport oil from everywhere in this land. Oil has to be $20 a barrel, not $130. Without cheap oil you cannot have a future full of electric cars. Which means not a chance in hell of "saving the planet" or affecting climate change.
And, yes, we need HUNDREDS of nuclear power plants. Solar and wind can't do it alone. If you want to challenge that, be my guest. Do the math on the insanely massive number of batteries and solar panels we have to produce in order to match the output of a 1 GW nuclear power plant (24/7/365 for 50 to 100 years). Calculate all the materials, resources and CO2 that would be consumed and produced in the manufacturing and installation of such a system. And then multiply that by a thousand, because we need about 1200 GW.
Get real.
We need to start to speak the truth so we can put forth realistic plans for a cleaner future.
FWIW, I'm not one of those people who think we'll save the planet if only everyone drove EVs. Changing over to EVs is only a fraction of GHG emissions and other pollution issues. There's tons of other stuff we can be working on as well instead of spending all our focus trying to get everyone to buy EVs and pat eachother on the backs. I do think we should work on making more sustainable cities and reduce the need for cars for those who don't want them. I just don't know why doubling our generation capacity over 20 years is seemingly impossible when we were doing it pretty much all the time except for the last 20 years when demand leveled off.
The average age of a car is 12+ years already. So, even if people stop buying gasoline cars tomorrow, we’ll probably still more than keep up even if we only manage to continue to double output over 20 years. Which there’s no way in hell people are going to switch that quickly anyway.
Two things. First, these charts are for energy generation, measured in billions of kWh. That is very different from the problem for electric vehicles, which is power generation and delivery.
Since I can't know if readers understand the difference (you might, others may not), here's a simple example:
You have to lift 1000 kg of metal to the top of a massive 1000 meter tall skyscraper being built. It's a thousand 1 kg pieces. Let's say it takes 10 minutes to walk up to the top.
You can do this at least two ways:
One person moves each 1 kg piece up to the top, one at a time. That will require 1000 times 600 seconds, or 600,000 seconds. That's roughly seven days.
The other way is to do it all at once. We get a thousand people, each one of them grabs a 1 kg piece and, ten minutes later the entire load is at the top of the building.
Anyone can understand that these problems require vastly different scenarios.
Energy is about the total amount of work done. In this case it is the same for both scenarios.
Power, on the other hand, is a measure of how quickly this work was done. In this hypothetical, the fast delivery scenario required a thousand times more power than the slower version.
Electric cars require power. Energy is delivered over time. The problem with our grid and power generation is that it simply cannot handle this beyond a very small deployment. People driving electric cars today are enjoying the fact that they do not pose a significant threat to the existing infrastructure and generation capacity. As the numbers increase we will start having problems.
The idea of having a million or ten million cars simultaneously fast-charging today is likely an unthinkable reality.
Put a different way (just pulling hypothetical numbers out of my behind, these are not real numbers):
If we could charge electric cars over, say, 30 days, we might not need even one bit of additional power generation capacity or changes to the infrastructure. Sure, nobody would be able to drive more than once a month, but, hey, we don't need to build nuclear power plants.
However, that is not a practical reality. Tens of millions of cars will need to quick charge in 20, 40, 60 minutes. And another set of millions of cars will want to be charged over, say, 8 hours, overnight. This requires the ability to deliver power --large amounts of it-- in a way we are not prepared to do. This is both true in terms of power generation capacity as well as infrastructure, from the cables all the way to the power plants.
What the page you linked shows is an increase in energy consumption. It says nothing about power. Also, the increase you point out is only 60%, not a doubling from 1980 to 2020. Still, this is somewhat meaningless. I can consume 60% more energy if I keep the lights on 12.8 hours per day, instead of 8. I would not demand 60% more power out of the grid, I would just use the available power for a longer period of time. That's why speaking in terms of energy isn't relevant to the electric car problem. The problem is power, not energy. People need their cars charged now, right now. That requires power we cannot deliver.
I will acknowledge the above chart is delivery not peak power generation, but to an extent the two are related. If you don't have generation capacity, you can't increase consumption. I wish I had a chart of generation capacity over time, but I couldn't find one. Still though, it still seems to me the change from 1980 to 2000 probably indicates a pretty large change in power capacity, it's not like they managed to deliver a ton more power without making any changes to the grid and production capacity. You really think the only change in our usage in that time period is we left the lights on 60% longer?
I will acknowledge I did only eyeball the chart and saw it was about 2k going to about 4k, the values are 2,290/3801 so about 60% as you say and not doubling. My bad.
Still though, your argument of leaving the lights on longer and power capacity points to how EVs are still possible even with this kind of usage vs power argument. Charging my EV at home doesn't increase my home's peak power much at all. It's another 50A circuit on at my house, but it's not like it's running all the time. It's mostly running when most the other appliances in my house aren't running. So there's already plenty of capacity to serve my house 50A, my neighbor's house 50A, on and on, even with the current hardware because it was already built with the idea a lot of people are going to get home from work and start cooking dinner with an electric range and electric oven together use considerably more power than charging my electric car. For those who can charge at home, it really shouldn't change the math on power at all.
I do agree power demands would increase a good bit with DC fast chargers, those would be the biggest change in our grid infrastructure. Some of the arguments of having a good bit of local battery storage to smooth out those peak power loads sounds incredibly expensive to me. However I don't think those would necessarily make up the bulk of actual charging usage. The majority of Americans live in single family homes, implying they have some kind of garage where they can charge their car and would thus have the same power argument made above. Decent L2 chargers at offices can provide adequate charging to those commuters without charging capacity at home. Obviously this wouldn't have the same time of use shift as above, but L2 charging wouldn't impose nearly as much power demands as DCFC. While DCFC is somewhat important for mass adoption of EVs, I think you might be overestimating the actual usage of DCFC. The majority of Americans would rarely need them. I haven't used one once in the many thousands of miles I've put on my EV so far. A huge chunk of the power charging so far was 12A@120V, would you really argue every home having a load like that running overnight is going to melt all the transformers?
And FWIW I'm still a proponent for using diesel/petrol where it makes sense. Please don't take me as an EV fanatic thinking that Elon's self driving pure EV semi's are going to completely change the trucking industry anytime soon.
> You really think the only change in our usage in that time period is we left the lights on 60% longer?
Of course not. This was just an example to attempt to drive the point that there's a very real difference between energy and power. You can deliver more kilowatt-hours (energy) without changing kilowatt (power) generation capacity. The bottom line is that energy metrics or charts are impossible to use in this discussion.
> your argument of leaving the lights on longer and power capacity points to how EVs are still possible
In small numbers, sure. At scale, 300 million vehicles. No. Nobody is going to wait 16 hours to charge their cars. The infrastructure has to be able to deliver double the power we can deliver today.
I read through your reasoning about the 50 A circuit at one or many homes. The problem with this reasoning or story is that, while it is easy to say these things, until you sit down with Excel and quantify it all with a reasonable model of reality, it is just words. Once you do that you will very quickly realize a full migration to electrics is absolutely impossible with the current power generation and distribution infrastructure.
As I said before, I wanted to understand this in some detail. I kept hearing these claims about going electric, yet nobody showed any calculations. As an engineer, I had to put numbers to the claims.
The model I created about five years ago simulated a fleet consisting of 300 million vehicles of various types. This being US-centric, I divided the fleet into six time zones based on current population distribution figures. And, within those time zones, I created variables to manipulate utilization scenarios. For example, a percentage of the population would only drive 20 miles a day and would be happy slow charging over eight hours. Another portion of the population required fast charging a few times per week (pretty much as one might get gasoline today). Some would be hybrid: plug in at home every night and top-off with fast chargers during the week as needed. Yet another part of the model looked at some percentage of those vehicles being mid and long distance trucks, which simply cannot afford to sit idle for eight or more hours while charging. Etc.
The point is, the model wasn't a simplistic statement of the kind that is often offered in these discussions, things like "We have more than enough solar to do this" while nobody bothers to put some numbers to it.
Having said all of that. The best confirmation of my numbers I can offer is Elon Musk himself explaining in that video that we need to double our power generation capacity and redo our entire infrastructure. Until Elon was asked this question I was, to be dramatic, entirely on my own making these kinds of claims. People want to religiously believe that these things are possible. They are not. So, don't believe what I say, but, please, do believe what Elon Musk said --which happens to confirm my findings from many years ago.
Assuming both Elon and I are not completely full of shit, well, reality is that the fully-electric transportation dream will require leaving this cult-like delusion behind to put into place a realistically attainable plan. This plan requires --absolutely requires-- cheap oil. Oil is what we have to use to build the very infrastructure required to support electric transportation. Without cheap oil we cannot get there. That is VERY important to understand. Without an admission and an understanding that petroleum is critical in making the all-electric dream a reality, there is no way to make it happen.
And so, the plan must include a well-defined and intensely funded period, about 50 years long, where we drive local petroleum costs as far down as possible in order to be able to engage in a massive construction project to revamp power generation capacity. This plan should also include a vey serious commitment and a solid plan to build hundreds of nuclear power plants. We cannot do it without nuclear. And, yes, solar and wind must be a part of this.
The precise proportions and sequencing of the above will be a matter of detailed analysis and, yes, math. None of this is particularly difficult --outside of the politics and ideological delusions we must leave behind. It's just a matter of starting to bring the truth to the forefront and having the adults in the room lay out a clear, attainable plan for a transition to all-electric transportation within the next 50 years.
To drive the point home: If you feel you still need to argue against my claim that we need to double power generation and infrastructure, you need to argue against Elon Musk. You are free to discount me as some nutcase on HN. Elon, on the other hand, well, he is confirming what I am saying. Not sure how anyone can argue against that one.
> a full migration to electrics is absolutely impossible
I'm definitely not one to argue the full migration to electrics. As mentioned elsewhere I think diesel/petrol/similar kind of fuel vehicles will be around in at least some capacity for quite some time. Its incredibly energy dense and the ability to just pump up gallons of it from pits in the ground is quite handy.
> Some would be hybrid: plug in at home every night and top-off with fast chargers during the week as needed.
I really can't imagine this would make up any large fraction of the EV fleet. If someone can charge from home, the extreme majority of their charging will be overnight or potentially during a weekend if they need to do some catch up. The vast majority of commute cars which can charge at home will not need this hybrid approach save for the extremely rare long road trip when comparing the total number of miles.
> percentage of the population would only drive 20 miles a day and would be happy slow charging over eight hours
That 20mi commute would generally use ~6kWh. Over 8 hours, that's 750W of power. During a time where power at people's homes is often at its lowest point. Delivering that power would barely be a blip. If our grid collapses because a few million people plug in a tiny 750W space heater overnight we've got some serious problems.
> If you feel you still need to argue against my claim that we need to double power generation and infrastructure, you need to argue against Elon Musk
I would, especially when it comes to long-haul trucks. Arguing against Elon is then easy in this regard, where's the long-haul driverless trucks which were going to revolutionize the entire trucking industry in 2017? EVs in this kind of capacity don't make sense without massive changes not only to the grid but also to our battery technology. Just making the batteries a little fatter isn't going to change the math on these kinds kinds of trucks. So you should pretty much just completely eliminate these kinds of vehicles from your model, its a moonshot to even think these kinds of things are really going to switch to EV-only anytime soon for many reasons.
I don't doubt we'll need to make a lot of changes to our grid. I agree it will take a lot of energy to make those changes and it will use a lot of petroleum based products to make those changes. There's oil in practically everything we touch, so I agree its short sighted to praise the idea of expensive oil. I also agree this won't be something that happens overnight, it'll be something that will take an effort over decades.
I agree moving to EVs is overly praised and there's quite a cult mindset of if we just put an EV in every garage we'll have solved some big problem. As you mentioned its often a question of power, and well at least down here in Texas overnight we often get to the point where there's not even enough load to match the generation available for free. On many grids there's already a good bit of slack in the power distribution in off-peak times, probably enough to support every average commuter car in every single family household. Note that term, average commuter car. Not the people which somehow are still sane after a 100+mi daily commute, they're extreme outliers and yeah it will probably take a lot of work to get to the point where all of those people are reasonably served with EVs.
I think there's a bit of a disconnect between us here. You're arguing about the full migration to EVs, while I mostly agree a full migration to EVs isn't really practical anytime soon. While a large part of the average commuter car and short haul vans can probably make the switch to EVs today, it seems there are plenty of use cases where EVs are still impractical vehicles. This is before even figuring in your grid arguments. So once you then eliminate those vehicles where EVs are currently a somewhat impractical case at the moment, the math of how reasonable grid upgrades get becomes a much more practical number.
Also, FWIW I do agree there will need to be some amount of an upgrade to the grid, and it will probably be a large one. Shifting all that energy which used to be handled by fluids running through pipes into cables overhead will inherently mean some amount of capacity upgrades. However, I think for average commuter cars, this really won't be that much of an impact. There are definitely cases where there will need to be a large change (DCFC corridors) but I doubt the average suburb would need some radical change. Its just adding load to a time of day that routinely experienced its lull.
> If our grid collapses because a few million people plug in a tiny 750W space heater overnight we've got some serious problems.
Again, if you want to understand this well, I urge you to stop and create your own simulation model. This can be done in Excel.
The point is that it is very easy to make statements such as your when one does not make an attempt to actually model reality and see what this might mean. When you do (if you do) I assure you there will be an "Oh. That's what he was talking about." moment.
I very much understand that a full migration to EV's isn't likely to be possible for perhaps as long as fifty years, if not more. Yet, that's not the point here. What we are being asked to do to this nation and the world is motivated by the delusion of clean energy and pink unicorns. They are selling this delusion as if it were reality. It is not.
Let's assume that only a third of the 300 million vehicles convert to electric power in, say, 25 years. That means we need to increase our generation capacity by about 400 GW. For context, that means 400 nuclear power plants, each operating at 1 GW. I use nuclear power plants because this is a good measure of the scale of things as well as the impossibility of achieving such a goal in just 25 years. We can't build one in 25 years, much less 400 of them.
Even worse, the power distribution system, the "grid", would have to be rebuilt to at least double, if not triple, its power transport capacity. This due to a few realities, one of them being that you have to build it for present (once the upgraded version goes online) peak demand as well as future requirements.
To be clear, I am not proposing that going electric is a bad idea or that we should not do it. In a very much for the transition. What I am saying is that the delusion we are selling does not describe a path to a reality where even one third of vehicles can be electrified. In order to get there we have to abandon ideology and focus on math and science. Then we can plan a path that will get us there. Whatever "there" means, whether that is 25% electrics or 75%. We can't get there without a stop to all this ideological nonsense.
The perfect example of this is the insanity of our current oil production policies. Here in the US, the current government is doing all it can to kill our oil production and processing infrastructure. They hate it. Ideologically. They just hate it. Irrationally. Because they have all bought into the delusion.
What's reality? Well, if we want, say, 25% of our vehicles to go electric in 25 years, we have a massive job ahead of us. We have to build a massive amount of additional power generation capacity. We have to execute a decidedly non-trivial upgrade of our entire power delivery infrastructure. We have to build somewhere between 50K and 100K charging stations throughout the nation. We have to manufacture batteries, solar panels, cables and all the materials and components that go into such systems. We also have to build nuclear power plants faster than ever in history. And more. I can't possibly list all the dependencies in the tree that leads to being ready for 25% of our vehicles becoming electrics. Not to mention actually manufacturing the vehicles.
What do we need in order to accomplish the above? Cheap oil. What I mean by "cheap" is $20 oil, rather than $130 per barrel. Why? Because EVERYTHING we will have to make, move, install, manufacture requires oil. Everything. You can't build a power plant without a massive amount of fuel. The cables that move the electricity? You can't make them without oil. You can't install them without oil. Manufacturing parts, and structural materials (beams, etc.) out of steel and aluminum? You can't do it without oil. Plastics, electronic components, microprocessors, displays, computers, motors, car bodies, etc. Everything is based on industrial processes that depend on oil. Humanity cannot exist in its current form without oil.
And so, the paradox here is that, if we want a future where ground transportation is significantly less dependent on petroleum, we have to make petroleum as cheap as possible for somewhere around twenty five years, if not more. Only after making that kind of a monumental effort will we be able to start detaching from oil. We can't get there from here because, at $100+ per barrel these projects become insanely expensive and likely unattainable.
We need a real plan of action based on real math and science. And then we do everything we must do to make it happen. We have to leave this delusion behind us in order to move forward. If we don't, electric vehicles will be doomed to being an oddity for decades upon decades.
> Let's assume that only a third of the 300 million vehicles convert to electric power in, say, 25 years. That means we need to increase our generation capacity by about 400 GW.
Can you point me to the actual math and not just a YouTube video of a guy habitually wrong about technology and talk of a spreadsheet model of probably inaccurate usages which really claims such needs? Because in practice I've got an EV in my garage tonight which doesn't increase our overall power demands at all. In fact, it's only finally using the negative generation costs that we've had in my area for years. That's right, right now as my EV charges the wholesale cost of energy in my area is negative USD. There's not enough load to meet the generation demand! My retail provider is making money buying power at negative cost on me charging my car at the moment. Adding more cars charging right now would only bring balance to that mismatch of generation to demand, not overload demand at all.
The model you've mentioned above has a lot of questionable assumptions baked into it. It didn't take a new transformer for my home to support an EV, nor my neighbor, nor the person next door to them. So when thinking of vehicles, and especially not miles or per pound of payload delivered, it's really not that crazy.
Please feel free to share your magical spreadsheet model which explains everything. I'd love to see it. It sounds like it makes a lot of assumptions which may or may not be realistic. But until you share that I'm going by my actual use cases I've actually seen in person with EVs, where it didn't increase my peak power at all, and between myself and my neighbors was absorbed by the grids capacity without any issue at all.
So let's take your example of building out a model based on usage I've actually experienced. How much peak load has my EV actually added to my home's usage? 0 additional kW peak? Cool, so we extrapolate that to all the other single family houses, so we can easily add over 15 million EVs to our fleet before we even need to upgrade a single line. Given we've only managed to produce a few hundred thousand EVs in several years it'll probably take many decades before we even each that 15 million figure, so we're probably fine to slowly roll out upgrades to our grid if we're really only targeting upgrading commuter vehicles at the moment.
> "Let's assume that only a third of the 300 million vehicles convert to electric power in, say, 25 years. That means we need to increase our generation capacity by about 400 GW. For context, that means 400 nuclear power plants, each operating at 1 GW. I use nuclear power plants because this is a good measure of the scale of things as well as the impossibility of achieving such a goal in just 25 years. We can't build one in 25 years, much less 400 of them."
Hinkley C is the first public nuclear power plant in the UK in decades. At current rate it will be 27 years between announcement and completion, at a cost of $30Bn USD equivalent, double the earlier cost and a decade later than planned. Brazil is building a 1GW solar farm [1]for a total cost of $750M USD equivalent. Algeria is aiming to build 15GW of solar in the next 15 years[2]; that's a country with a GDP of $150 Billion USD compared to USA's $21 Trillion.
+400GW of Solar in 50 years at Brazil's prices would be $20Bn/year. Solar has been dropping in price significantly in the past two decades and may do so in coming decades. Compared to +400GW of nuclear power at these prices, which would be $240Bn/year. Hinkley C has doubled in cost in a decade, and it's not certain it would be significantly cheaper if done again several times.
That's still not easily /doable/ for all the other reasons you've discussed about materials needed and power used in supply chains and manufacturing and limits of places to put it, etc., but it's a more plausible to commit a-COVID-response-per-year than an-entire-Apollo-Moon-landing-program-per-year for the next dozen presidential terms. The Elon Musk interview you linked, you say "We need to double power generation, it can't be done! It's impossible! Elon says so!" but Elon says "we need to double power production and distribution, which isn't going to work, that's why we make solar roof tiles, we need more local power generation, blah blah". He didn't seem to agree with you that it was impossible.
USA uses 21 million barrels of oil every day, Google tells me there is about 1.6MWh equivalent in a barrel of oil, or 33million MWh per day equivalent; over 24 hours makes about 1.3TW, approx the same as USA power generation. To replace all the oil use (in pure power terms not counting plastics, etc) with electricity would require doubling the power output of the country, yet a lot of the oil isn't used for transport, maybe half is used for transport. So replacing transport should be a chunk less than doubling power output. And it's not the case that transport needs to stay the same efficiency for the 50 years, e.g. how many of the 300M cars you talk about get less than 60mpg? Less than 40mpg? How many of them stop their engines at traffic stops? Elon commented that wing mirrors on Teslas cost up to 5% drag but can't replace them with cameras for regulatory reasons which could be changed. What if road speed limits were reduced to mandate more efficiency? What if delivery shopping was subsidised? What if work-from-home was given a tax break? What if double-car-ownership was taxed more? 50 years is enough to drive a lot of other changes in society if there was collective will.
I'm not handwavingly saying "it can be done easily", maybe it still can't; but I am saying that you are thrilling over the-sky-is-falling. It's not the case that the only possible variable is power production; power use can be incentivised to change.
The UK national grid is currently producing[3] 30GW, half of that from wind. There's 33M cars in the UK, if they all charged at the other commenter's suggested 750W, and needed charging every 5 days each, that would add 5GW of demand. The UK built 2.4GW of wind power in a single year in 2019. You're modelling 5x the population with 10x the cars and getting to 100x the power demand.
> "What do we need in order to accomplish the above? Cheap oil. What I mean by "cheap" is $20 oil, rather than $130 per barrel. Why? Because EVERYTHING we will have to make, move, install, manufacture requires oil. Everything. You can't build a power plant without a massive amount of fuel. The cables that move the electricity? You can't make them without oil. You can't install them without oil. Manufacturing parts, and structural materials (beams, etc.) out of steel and aluminum? You can't do it without oil. Plastics, electronic components, microprocessors, displays, computers, motors, car bodies, etc. Everything is based on industrial processes that depend on oil. Humanity cannot exist in its current form without oil."
I often think the only way out is through. We cant revert to pre-industrial life without billions dying and quality of life plummetting. Still, oil is finite even if you discount the CO2 burning. Making it 1/6th the cost would lead to increasing use; would you, and how would you, stop it being used for motor racing and plastic junk making, in 5x the quantity?
I would like to say your argument is well thought out and eye opening. The people downvoting you are political and tribal. Don't be discouraged - even if the truth is on the bottom of the thread. It is still there.
Thanks. Yes, I understand this very well. I have this image of a petulant child downvoting without an ounce of thought or understanding. This is purely done on an ideological or (spoken as a child throwing a tantrum) "I don't like it! I don't like it! I don't like!" attitude.
What I am saying isn't a matter of personal opinion at all. I make this very clear. This is about mathematics, physics and elementary calculations. Yet, nobody bothers to devote anything but a trivial amount of time to check what they are sure they know and question it.
Just today I saw a press conference with the Vice President Harris and Pete Buttigieg. She went on an on about this idea of imagining that all of our heavy transportation systems became electric. Pink unicorns and bubble gum for everyone. Except, the entire thing is a pile of --sorry-- pure horse shit. Nobody wants to question this delusional drive into the disaster these people are going to create.
Despite what this might sound like, I DO, want electric transportation. I want 100% of our ground and air transportation systems to go electric...eventually. The thing is, for that to happen we need to extract ourselves from the mass delusion/religion this has become and put down a solid plan to make it happen. It will take somewhere in the range of 25 to 50 years. That is, if we execute to perfection.
The first thing we need is cheap oil. Which means producing as much of it as possible here.
The next thing we need is a solid --as if our lives depended on it-- commitment to build as much nuclear generation capacity as possible. That means a minimum of 500 nuclear plants, likely of 1 GW class. And they can't take 25 years to be built.
And, yes, solar, wind, renewables and batteries. Responsibly. With attention to total cost of ownership as well as total environmental cost. These things are not magical. They are not clean. These are dirty technologies, in different ways, but dirty just the same. You have to look at manufacturing, transportation, installation, maintenance and lifetime (replacement) costs and consequences.
We can do this, but we have to stop lying and believing these lies first.
Having energy independence is critical for a nation to control its own destiny.
Note that Japan attacked Pearl Harbor bringing the US into WW2 because the US cut off their oil supply. And note that Germany invaded the Soviet Union in order to ensure a supply of oil. Successfully blocking Germany's oil access was a crucial factor in winning WW2. Britain would have sank in WW2 if not for US shipments of gas to it.
Even midwestern farmers continue to shill for corn ethanol to hold on to their subsidies as EVs destroy demand for gasoline and the corn ethanol additive. It's entrenched interests all the way down.
If anyone is to blame for our troubles, it's you for trying to make this an us vs them issue. There are valid reasons for and against domestic oil production.
This is all you need to know.
If we had an oil export tariff, then we would very quickly become oil independent. Buyers in other countries are in competition with Americans for this oil, so if you really want to keep the price low in America, we should have such a tariff. Why should we give away our natural resources like this?
Additionally: in these emergency times, a reasonable argument could be made for price controls.