No suprise that the parties in power say not or duck the question. They’re programme is based on expected tax revenues, so loosing revenue will mess things up.

To say the Greens are trying to screw poor people is just silly. Everyone knows they want to minimise the use of private transport, they would argue that cars are owned disproportionately by the wealthier and hence investing in public transport, not subsidising those who can afford cars anyway, helps poor people. You might not agree – buts its a perfectly consistent position.

You might not agree – buts its a perfectly consistent position.

And these positions of theirs consistantly screw the poor.

only if your premise is that everyone should have some “right” to a car, and that access to public transport isn’t an alternative. That’s fine but then expect to be asked about how the social costs of private car ownership are shared. Why should a non-car owner pay the same taxes as you when some of that goes toward road maintenance? Should car owners pay more tax to cover the cost in healthcare related to pollution caused diseases like childhood asthma? etc etc.

In the face of Peak Oil, keeping the fuel expensive has a very positive impact on society as a whole because it keeps our dependence on oil in check. It would be horribly unfortunate to increase our petroleum dependence any further in the current situation. Lowering fuel taxes now would be akin to peeing in one’s pants to keep oneself warm in cold weather.

Note to Finnpundit: the fact that EU has taxed the use of gasoline very heavily has suppresses demand for it and enabled Americans to buy their gas more cheaply than they otherwise could have. European restraint has enabled irresponsible American waste.

only if your premise is that everyone should have some “right” to a car, and that access to public transport isn’t an alternative.

No, no one has a “right” to a car. And in yesterday’s Hesari, they mentioned that bus tickets will have to rise thanks to the gas prices, and even the buses pay gas taxes.

Why should a non-car owner pay the same taxes as you when some of that goes toward road maintenance?

Good question!! Now can I use that question for other things? Why should a non-student pay taxes towards schools? Why should a healthy person pay taxes towards sick people?

Phil who proclaims to be a libertarian, apparently want’s the government to take an active role now and change the taxation in order to hide the truth that oil is an exhaustible resource and that within the lifetime of cars sold today the price of oil will most probably at least double, quite likely more than double. That, I say, would be screwing everybody and especially the poor. Market mechanisms induced by political decisions (eg. taxes) for encouraging beneficial and intelligent developments and discouraging harmuful and stupid developments are known to be by far more efficient and well perceived than command and control policies. Economists call these practices ‘correcting market failures’. Phil, however, in his anti-intellectual ideology seems to oppose every effective and/or sophisticated action taken by the government. Is it because you’d rather see the government make mistakes so that you could keep preaching how government is evil?

Let’s just lower income taxes so everybody would be able to afford expensive gas..

Phil who proclaims to be a libertarian, apparently want’s the government to take an active role now and change the taxation in order to hide the truth that oil is an exhaustible resource and that within the lifetime of cars sold today the price of oil will most probably at least double, quite likely more than double.

Oh, so not cutting gas taxes temporarily will effect that in ANY way?

I agree, we need an alternative energy source, but if the government keeps gas prices artificially high, we won’t have those alternative energies because there’s no real demand for it.

Is it because you’d rather see the government make mistakes so that you could keep preaching how government is evil?

It doesn’t matter whether I’d like to see the government make mistakes or not make mistakes, my opinion of that effects nothing. The truth is that the government will keep making mistakes and I am one of those people who believe things will get worse before they get better.

“so not cutting gas taxes temporarily will effect that in ANY way?”

Excuse me, I’m not quite sure if I understood this. Temporarily?
Generally, supply and demand meet up at a certain point and there’s a price built into both. If the government chooses to cushion changes and especially trend-like changes in supply side to ease it’s citizens lives, it chooses to interfere with the incentive mechanisms. Instead of various well intentioned wishes, economical incentives are usually the driving forces that DO make differences – also in the area of new energy sources and technologies.

I’ve written about this many times, and I think Markku summarizes the main points well.

The market equilibrium is what it currently is, with demand and supply balanced. Wherever there is a reasonable amount of competition and no price control or production quotas etc. the price is such that demand and supply meet. This is basic economics 101.

The demand for gas/oil responds poorly to changes in the price, so when supply is compromized, prices skyrocket. The reason why this is so, is that there really is no large scale substitute for gas/oil, or they are too expensive to compete with oil – yet.

The tax makes the substitutes competetive with oil at an earlier point in time, thus making the economy less dependent on oil in the long run. At the time tax-free oil really is too expensive to burn, the countries where taxation was high have already developed a market for the substitutes.

There are other issues as well, not the least of which is the inherent inefficiency caused by taxation. Since the economy is dependent on oil, taxation of oil constitutes a fairly neutral transfer of income, since people consume the oil they need even when the price is high.
It’s really a win-win, since if people use less money on oil as a result, it means there is incentive for investment in substitutes. If they use more money, then a good deal of income is collected without disturbing the market too much. Collecting the same amount of income as taxes for example as income tax may cause people to work less and as a result make a worse impact on the economy.

Saying that gas tax screws the poor is silly. It screws some poor people, namely those who have cars or in some other way use a lot of oil-dependent transportation. Most poor people don’t have cars.

“Most poor people don’t have cars”

Because the car taxes are so high…

Lower the car taxes, lower the fule taxes, lower the income tax.

Then the working class will enjoy a life similar to west europe.

And the non working class, can still get their benefits as the working class will spend more, thus creating more indirect tax revenue…

….

And I do not see the point why the government pays the unemployed, or the like, so much money that they easily enter a ten euro nightclub, where even I have to think twice. And that, as a working person, spending one third of my life in office, and giving half of my earnings back to state. Students though, should be given more aid.. Poor sods…

Phil:

“I agree, we need an alternative energy source, but if the government keeps gas prices artificially high, we won’t have those alternative energies because there’s no real demand for it.”

Phil demonstrates here a startling lack of understanding of basic economics. I would expect better of a libertarian of all people.

By making oil less competitive, the taxes boost the competitiveness of alternatives. All viable alternatives to petroleum like coal liquification, gas-to-liquids, or nuclear power involve VERY long lead-times. Suppressing price signals at this point is extremely dangerous.

“so much money that they easily enter a ten euro nightclub, where even I have to think twice”

I wonder what kind of a job is it that you devote one third of your life and yet make less money than the unemployed? The ‘peruspäiväraha’ is 23.24 euros per day and it is payed for 5 days a week. Oh, and you have to pay tax of that, too.

Temporarily?

This wasn’t meant to be a permanent fuel tax decrease, was it? If it was, then I am mistaken.

It screws some poor people, namely those who have cars or in some other way use a lot of oil-dependent transportation.

Exactly.

Phil demonstrates here a startling lack of understanding of basic economics. I would expect better of a libertarian of all people.

Let’s see how quickly companies are busting their asses to make a real fuel alternative. When there’s 50 years of oil left, or 10.

Let’s see how quickly companies are busting their asses to make a real fuel alternative. When there’s 50 years of oil left, or 10.

They can bust their asses all they want, but despite your na?ve faith, the Holy Free Market does not perform miracles. You (and other free market fundies) simply refuse to see the grim facts of the matter.

You also seem to be unable to grasp the essence, so to speak, of Peak Oil: we won’t just suddenly run out of oil one day, rather it will be more and more expensive (and energy-consuming) to drill oil. When the energy cost of a barrel of oil exceeds one barrel, we’re terminally screwed.

I wonder what kind of a job is it that you devote one third of your life and yet make less money than the unemployed?

Here’s a fun little excercise for all those people who envy the poor’s welfare benefits: set a budget for yourself that equals e.g. Kela’s basic unemployment benefit: 350 EUR/mo. Then live on that for 500 workdays (you may spend the money left over on stocks, mutual funds or what not – just don’t consume it). When you’re done, come back whining how well the unemployed have it. See you in a couple of years.

Phil:

“Let’s see how quickly companies are busting their asses to make a real fuel alternative. When there’s 50 years of oil left, or 10.”

Companies can’t perform miracles. Sasol is building two coal-liquification-plants in China that can produce a total of 60 million tons of synthetic crude oil per year. The project is planned to be complete in 2008 or 2009. That’s the equivalent of 440 million barrels. The cost of each plant is $3 billion each. Global oil consumption per year is about 30,000 million of barrels per day. Demand is growing rapidly. About 70 of such plants would need to be built during the next 30 years to offset the decline in oil production. I haven’t heard of any plans to build those plants other than the Chinese deal.

My main worry at this point is how fast Saudi production falls after it peaks. If the Saudis have used secondary recovery techniques too aggressively on their key fields that produce the bulk of their oil, the price of crude oil might rise above the $200 dollar mark per barrel within the next 50 years. That would spell a severe global recession.

Clearly the problem in Finland is the big Neste and lack of competition!

In Sweden fuel prices didn’t go up so much. Big Neste boss tells in the evening news, how much every station can pump up the price. And precisely it went down too 10 cents as the big boss from Neste ordered.

Although the idea of China as the ultimate superpower of the world in the future might sound a bit scary at first, they seem to do some things much more intelligently than the traditional world dominators. Regardless of many unacceptable practices and conduct of power in China at least the direction seems to be good in many aspects and because of China’s size some of their decisions will have positive spill over effects on the rest of the world as well.

http://www.taipeitimes.com/News/worldbiz/archives/2005/08/27/2003269396

“Most poor people don’t have cars”
Because the car taxes are so high?

Oh yes, it’s all because of the car taxes. As we can see from NO, where all the poor people zoomed away in their SUVs, leaving the rich white guys defending their property.

Incidentally, I recall the average price of a new car in the U.S. being around $27,000. Wanna bet if it’s higher in Finland?

Incidentally, I recall the average price of a new car in the U.S. being around $27,000.

The average is only so high because people have more money. Let’s compare the prices of a little VW Golf or Toyota Corolla.

Fascinating how people are again trotting out the old “Peak Oil” hoax, unaware that it serves the interests of, not conservationists and environmentalists, but oil corporations themselves, who don’t mind one bit that silly, deluded Europeans and liberal Americans are once again sounding the alarm.

Again, when one becomes concerned about the “major problems” of the day, one should wonder whose interests they mainly serve. On the one hand, the Peak Oil hoax will bring pressure to bear on the US Congress to relax environmental laws that are seen as a major obstacle by the oil lobby in Washington. On the other hand, Peak Oil serves the interests of European welfare states, who hope to make this a yet another issue through which to “tie Gulliver down” (constrain American independence through “international” treaties governing oil quotas), so as to make the US less competitive, in the hopes that Europe can thus get some time to catch up (those Americans just work too damn hard!)

A perusal of any business journal will reveal that most of the American business community doesn’t display that much of a concern. On the contrary, there’s more of a realization that new opportunities are presenting themselves, now that high oil prices seem to be becoming the norm. The race is on to see who can adapt and profit from these new realities, – the classic way America has responded to every “worldwide problem” that it encounters.

And this is the difference between Europe and America. Where the former sees a problem, the latter sees an opportunity. And far from being more vulnerable than Europe to oil price shocks, the fact that America is not committed to expensive statist commitments makes its economy not only more resilient, but probably the best placed economy in the world to adjust to the new market realities presented by higher oil prices. According to the London-based Financial Times (registration required):

?The eurozone economy is suffering chronically weak demand, is more vulnerable than the US to an oil price shock, and could be at risk from deflation, the Organisation for Economic Co-operation and Development warned yesterday?

?Mr Cotis argued that coping with the oil price shock was likely to be easier for countries such as the US, where the economic expansion was broader based. In the eurozone, the shocks had been milder but “resilience is below that in the US”.’

Whoops, let’s try that again.

“The eurozone economy is suffering chronically weak demand, is more vulnerable than the US to an oil price shock, and could be at risk from deflation, the Organisation for Economic Co-operation and Development warned yesterday.”

Mr Cotis argued that coping with the oil price shock was likely to be easier for countries such as the US, where the economic expansion was broader based. In the eurozone, the shocks had been milder but ‘resilience is below that in the US’”.

Finnblunder:
Fascinating how people are again trotting out the old “Peak Oil” hoax

Just like they keep on trotting out the old “natural selection” hoax. Damn liberals!

On the other hand, Peak Oil serves the interests of European welfare states,

Oh yes, it’s the attack of evil little freeriding Finland over again. Watch out for ‘em black choppers, Billy Bob! Yeee-haww!

Finnpundit:

“Fascinating how people are again trotting out the old “Peak Oil” hoax, unaware that it serves the interests of, not conservationists and environmentalists, but oil corporations themselves, who don’t mind one bit that silly, deluded Europeans and liberal Americans are once again sounding the alarm.”

Spoken like a true fundamentalist. Physical realities apparently don’t exist in the little world of Finnpundit.

Markku

It’s always nice to see a Finn like Markku take such a concerned interest in issues that touch the US: that’s very thoughtful. His worrying over the problem is much needed, as someone has got to do it.

Too bad that all that worrying cannot be bottled, and sold at the market.

It’s always nice to see a Finn like Markku take such a concerned interest in issues that touch the US: that’s very thoughtful. His worrying over the problem is much needed, as someone has got to do it.

Would it ever occur to Finnblunder that issues such as global warming and the scarcity of oil might affect other nations besides the U.S.? Nah, it seems that he lacks the mental capacity to grasp such concepts.

Spoken like a true fundamentalist. Physical realities apparently don’t exist in the little world of Finnpundit.

Since most free market fundies are scientifically and technologically illiterate, they will resort to chanting religious liturgy whenever confronted with a scientific or technological problem: “The market will find a way…the market will find a way…the market will find a way…”

Finnpundit, you might want to read a book “Twilight in the Desert” by Matthew R. Simmons. (http://www.simmonsco-intl.com) The book’s available for example at Amazon. I know your likely verdict is that this guy must be a non-productive welfare state elitist and a probable communist and an enemy of the USA and the american way of life. However, he might have at least a little bit of information that you, an omnipotent expert in every field could be interested in.

I’m very well aware of Simmons’ and Hubbert’s arguments. In fact, there’s not that much to dispute when it comes to their analyses (well, except for some of Hubbert’s). What one can take issue with, though, are their conclusions, as to what will happen in the future.

Furthermore, what one can really dispute are the arguments of those Peak Oil alarmists who elaborate responses to the coming depletion of oil reserves. So many of these arguments simply do not take into account market behavior. It is this lack of interest in simple laws of supply and demand that, in the end, works against the credibility of Peak Oil alarmists.

issues such as global warming and the scarcity of oil might affect other nations besides the U.S.?

And exactly why should the US need to care how it affects other nations, given the anti-American bigotry espoused by those nations? If you take a hostile stance against the US, don’t expect any cooperation in return.

And exactly why should the US need to care how it affects other nations, given the anti-American bigotry espoused by those nations?

Yup, that just about wraps it up. Nuke ‘em all! Yeee-hawww!

So many of these arguments simply do not take into account market behavior. It is this lack of interest in simple laws of supply and demand that, in the end, works against the credibility of Peak Oil alarmists.

The Peak Oil “alarmists” do take into account market behaviour. However, they do not chant the mantras of free market fundamentalists inspired by blind faith in the market’s ability to perform miracles.

Finnpundit:

“It’s always nice to see a Finn like Markku take such a concerned interest in issues that touch the US: that’s very thoughtful. His worrying over the problem is much needed, as someone has got to do it.”

Actually I’m concerned about Peak Oil for mostly selfish reasons. Since crude oil provides 40 percent of the world’s primary energy, the peaking of oil production worldwide is obviously detrimental to the economy. Since I’m a participant in the economy, as are all of us, my own future is profoundly affected by the economy.

“Too bad that all that worrying cannot be bottled, and sold at the market.”

Actually, knowledge of Peak Oil has lead me to take it into account in my personal investment strategy. I have written about PO on the net since last January. I consider this a public service. Hundreds of people have heard of PO from me. At least one top level politician has heard my arguments from me. I have advocated viable alternatives primary energy sources to oil like nuclear power.

” I have advocated viable alternatives primary energy sources to oil like nuclear power.”

..if only nulear fission in a traditional way was a solution, an energy source or viable….

http://upload.mcgill.ca/economics/981.pdf

http://www.control.com.au/bi2005/266nuclear.pdf

From energy market point of view I would prefer modular pebble bed reactors to the traditional fission reactors. Yet, they are not a solution to the worlds energy needs either in the end because of the limited uraium reserves. Breeder reactors could be, but they are not economically feasible yet. Fusion would be adequate in terms of fuel availability but it has the same cost structural problems that the traditional monolithic fission reactors have and might not ever be competitive economically.

Tom, those articles only consider uranium while ignoring thorium.

And as you say, breeder reactors have great potential, but are not commercially feasible yet. At some point, they will become commercially feasible.

Coal is the king of fossil fuels and will continue to provide energy for a long time. Even if coal accounted for all our primary energy needs, it would last yet another 50 years or more. But I’m not sure it’s a good idea to dump as much carbon into the atmosphere as the entire global coal resource contains.

Renewables like solar, wind and even biomass will certainly play a part, although marginal at best, barring signifigant technological breaktroughs. (Solar energy is currently at best in producing low-grade heat, and wind is hampered by a lack of adequate electricity storage technology; wind is currently pretty much only useful combined with large-scale baseload electricity generating capacity. Biofuels on a global scale are limited by fundamental thermodynamics.)

Fusion is not something we can count on within the next 30-50 years. Even if ITER achieved break-even as planned, which is 10 years into the future, it’s a very long way from break-even to high Eout/Ein and thus capital costs in an even remotely practical realm. In other words, while fusion research must continue, fusion will play no part in solving the energy problems that we’re facing now and in the next few decades.

More information on uranium supply:

http://www.uic.com.au/nip75.htm

I have omitted one major potential fossil fuel resource: methane hydrates. Methane hydrates are composed of methane molecules captured within ice lattices. Methane hydrates form under low temperature and high pressure. They are found on the ridges of continental shelves at depths between 500 and 1500 metres. Methane hydrates also exist on land in polar areas. The amount of methane that exists in hydrates countains more energy than all other fossil fuels put together. The Japanese among a few others are working on methane hydrates because they have large deposits just off their coast.

The problem with methane hydrates is that currently no technology exists to recover the methane in them. Methane ice has the tendency to release the methane it contains rapidly under normal atmostpheric conditions. Moreover, marine deposits are fragile structures that could be severely upset by the removal of large amounts of material from them, the formation of gas bubbles in them etc. Should a large methane hydrate structure lying on a continental slope collapse rapidly, an enormous amount of water would be suddenly jerked into motion, resulting in a tsunami.

Markku, what you said about potential nuclear energy sources basicly just complemented what I already said. With all nuclear technology the greates barrier and problem of it in competed markets is it’s size and investment structure. Only pebble bed reactors have somehow solved this problem. Breeder reactors are equally unlikely to become commercially feasible as fusion reactors are any time soon. Therefore that basically leaves us with renewables. Their share of energy used in man made systems is far from marginal at the moment if you include them all, actually much more than nuclear. Yet they have an enormous unused potential which could be harnessed with fairly robust technology that already exists or is at the labs – no need to base future plans on technology development forecasts as with all forms of nuclear power.

Talking about forecasts, solar will at least double it’s efficiency in a decade and it’s cost per kW will drop by at least an order of a magnitude. Wind also gradually improves it’s cost/kW when it’s set up off shore. That also reduces fluctuations in output. What you said about wind power needing baseload next to it actually isn’t true. Instead, it does require adjustable powersources by it’s side to level the fluctuations. In practice that often means hydro or gas. Top load base power plants instead require reserve capacity to cover the scheduled or unscheduled shutdowns. The bigger the units the more significant a problem this is.

“Markku, what you said about potential nuclear energy sources basicly just complemented what I already said. With all nuclear technology the greates barrier and problem of it in competed markets is it’s size and investment structure.”

Are you sure? Why is it that India has embarked on a massive nuclear power program aiming at using it’s vast thorium reserves together with breeder reactors? Among countries in the process of building more nuclear power are France, Finland, Taiwan, China, and Japan (if I recall correctly).

“Only pebble bed reactors have somehow solved this problem. Breeder reactors are equally unlikely to become commercially feasible as fusion reactors are any time soon.”

You either have a very pessimistic view of breeder reactors or a very optimistic view of fusion. It’s going to take another *decade* before ITER is completed, and the very humble goal of ITER is just to attain the break-even point energy-wise. I’d say commercial fusion providing even a tenth of the world’s primary energy is at least 30 years into the future.

Breeders aren’t nearly as undeveloped as you appear to think. There is already a liquid-metal fast-breeder reactor producing 600 MW of electricity in Russia, the BN-600:

http://eng.rosatom.ru/?razdel=160

Russia is planning to build more of those soon.

“Therefore that basically leaves us with renewables.”

You’re totally forgetting coal, the fuel that already accounts for a fifth of the world’s primary energy. Coal liquification and gasification are mature commercial technologies already in use. The South African corporation Sasol is building two coal-liquification plants in China capable of producing a total of 440 million barrels of synthetic crude oil per year, the equivalent of about 2-3 percent of global crude oil production per year.

“Their share of energy used in man made systems is far from marginal at the moment if you include them all, actually much more than nuclear.”

That’s actually true, hydroelectric power included. Unfortunately, hydroelectric power cannot be expanded very much because most of it’s potential has already been tapped.

“Yet they have an enormous unused potential which could be harnessed with fairly robust technology that already exists or is at the labs – no need to base future plans on technology development forecasts as with all forms of nuclear power.”

Please quantify this estimate.

“Talking about forecasts, solar will at least double it’s efficiency in a decade and it’s cost per kW will drop by at least an order of a magnitude. Wind also gradually improves it’s cost/kW when it’s set up off shore. That also reduces fluctuations in output. What you said about wind power needing baseload next to it actually isn’t true. Instead, it does require adjustable powersources by it’s side to level the fluctuations.”

Well, that’s what I basically meant. You need adjustable large-scale sources of power.

“In practice that often means hydro or gas.”

Or coal or nuclear.

As I wrote, wind power is limited by it’s intermittant nature barring technological breakthroughs in electricity strorage or transportation technologies.

Phil, I am somewhat annoyed by the foul language in these articles. It just doesn’t fit the style of this blog…