[OwnerOfCalifornia]

The essence of the Peak Oil issue is production rate. Once you have gone to secondary and tertiary recovery methods (i.e. ‘technology’), the field is played out and flow rates are forever diminished. Hence, you are post peak. Or if you believe Matt Simmons, you are merely applying a ‘super-straw’ and making the problem worse. Managing the tail in this way solves nothing for a world that demands 86M barrels today and even more tomorrow.

For me, the PO debate plays out very simply:

Pessimists: facts, data, more facts, more data.
Optimists: Golly we’re smart and we’ll figure it out. We have Technology(tm)!
Pessimists: more facts, data, reality.

It’s already been said, but The Oil Drum is the best energy blog in the world.

[OwnerOfCalifornia]

I lived in Austin for nine years and have been stuck in San Diego for three. I generally do not understand why housing is so much more expensive here, but I suspect many posters have already hit on the main points, availability of land (though less true for central Texas/Hill Country), less regulation, income disparity (though again not applicable to the Hill Country region).

I’m rather puzzled by people who do not think the outdoor recreation is there–that is one of the main reasons (besides housing expense) I want to move back to Texas. Hiking, camping, mountain biking, scenery, more trees, everything green–all better in the Hill Country. The only thing not available is surfing, though you can still make a weekend trip to South Padre, Corpus Christi, or Port Aransas if you miss the beach.

As for the greater Los Angeles/inland empire area, I will never understand why people live there. You might as well spend 1/3 the money for the same crap in Houston (with slightly worse weather).

[OwnerOfCalifornia]

I vote my wallet; the ideals fall in place naturally.

By voting your ideals you are inevitably forcing your world-view upon others who may not be compatible with your world-view. For liberals, this means the unfair confiscation of wealth and property for distribution as they see fit, in order to cure some perceived social ill. Ridiculous social engineering, thought-policing, and the suppression of free-expression result from their “ideals”. For (neo-)conservatives, this means spreading “democracy” at the barrel of a gun, disastrous foreign policy, and intrusion into the personal lives and bedrooms of Americans.

So instead of tax-and-spend or borrow-and-spend, how about thinking outside of the box? How about neither? Vote your wallet, and the bloated Federal government, state and local governments will hopefully shrivel up to a more constitutional disposition. Everyone gets to keep their ideals to themselves without forcing them upon others.

Oh yeah, legalize the constitution, RON PAUL 2008!!!

[OwnerOfCalifornia]

I vote my wallet; the ideals fall in place naturally.

By voting your ideals you are inevitably forcing your world-view upon others who may not be compatible with your world-view. For liberals, this means the unfair confiscation of wealth and property for distribution as they see fit, in order to cure some perceived social ill. Ridiculous social engineering, thought-policing, and the suppression of free-expression result from their “ideals”. For (neo-)conservatives, this means spreading “democracy” at the barrel of a gun, disastrous foreign policy, and intrusion into the personal lives and bedrooms of Americans.

So instead of tax-and-spend or borrow-and-spend, how about thinking outside of the box? How about neither? Vote your wallet, and the bloated Federal government, state and local governments will hopefully shrivel up to a more constitutional disposition. Everyone gets to keep their ideals to themselves without forcing them upon others.

Oh yeah, legalize the constitution, RON PAUL 2008!!!

[OwnerOfCalifornia]

I think $5400 take-home pay is too high for $85K. A single person/no kids earning that would likely have about $4300-$4400 take-home pay after all taxes, insurance and 6% to 401k.

[OwnerOfCalifornia]

There is hope.

Ron Paul may run for President in ’08

[OwnerOfCalifornia]

These are my thoughts exactly. Being the cynical libertarian whack job that I am, I am kinda glad the dems took congress. This way, there will be gridlock, and nothing will get done. And that is a good thing 🙂

[OwnerOfCalifornia]

Jay,

I never suggested that oil production will decrease. Production of existing fields will continue to be constrained by geology and infrastructure. The global price of WTI, or any local CA crudes, has no affect on production at this point.

Your challenge is specious reasoning. I cannot list any projects that will receive reduced investment as a result of prop 87, but you cannot list any projects that won’t receive reduced funding. I am not on the BOD of any major oil companies so I have no idea how they will allocate their production budgets. Furthermore, we don’t know the results yet from prop 87 so oil companies don’t know either.

As to points #2 and #3, I don’t think you read the essay I posted, so I’ll quote from Robert Rapier on The Oil Drum:

Each year, oil companies decide where they will allocate capital based on expected returns for various projects. After the initiative passes, it will be less profitable to extract oil in California. The expected returns for some capital projects in California will decrease. California will get just a bit smaller capital allocation from corporate budgets, which over time will squeeze supplies. Not only will the returns from California be lower, but initiatives such as this are viewed as hostile toward the industry, providing another disincentive for investing capital in California. As investment slows and gasoline capacity fails to keep up with demand, higher prices will result.
Some proponents have declared this scenario unrealistic, because oil and gas prices are set on the global market. For example, in a recent report, ABC news reporter Mark Matthews asked the following question: “But will 87 raise the price of gas?” He then answered the question with “The price of oil is set on a world market, not state by state.” What many people don’t seem to understand is that there isn’t a single price for oil. Oil prices vary greatly in different locations based on a number of factors, as Ana rightly pointed out in her previous essay. Prop 87 will improve the economics for importing oil into California, simply because it will increase the operating costs for California oil producers. So, even though West Texas Intermediate, for example, is set on the world market, the price for crudes produced in California will reflect California’s specific circumstances. And those specific circumstances are set to change with passage of this proposition.

I suggest that the report you showed indicates that while we are not wholly dependent on CA crudes, we still get a large enough chunk (37% in 2005) to affect gasoline prices here. Additionally there is a cost basis for higher gasoline taxes here in CA since we pay some of the highest taxes in the nation when considering the complete gasoline taxation picture. When taxes on 37% of our crude input goes up, that can only make matters worse. For reasons of infrastructure, we cannot simply whisk cheaper crudes from all over the world to compensate and expect to receive it for the spot price of WTI. There is time, infrastructure, tanker royalties, pipeline royalties, etc. that dictate the reasons why we acquire 37% of our crude from in-state. I suppose we could eventaully readjust our fuel portfolio but…that’s will cost money :).

Finally, as this assertion:
In fact, fuel costs go down with prop 87 because alternative energy research funded by prop 87 brings new cheaper technology.

This statement is too vague. There is no guarantee that prop 87 will bring any new technology. Some research efforts succeed, some fail. When one looks at progress in the energy industry, you can see that research has been going on for decades in all sorts of niche sources. Yet we still use ever-increasing amounts of oil in the world. There are no alternatives currently in place, or none of the drawing board, that will make us less dependent on oil. Only conservation will.

[OwnerOfCalifornia]

Josh:

I hear you about higher gas prices encouraging conservation. Unfortunately, it has been made quite clear that a huge chunk of the research dollars would go to developing e85 as a transportation fuel. This would be, IMO, worse than if we did nothing. We would find ourselves 10 years into the future, having wasted precious remaining time and resources, no better off and with no one to hold accountable for a failed energy plan. The final link in my original post summarizes my thoughts quite well on this subject.

Oil companies are not our friends, indeed. They are massive corporations that supply us with a perceived need, which we voluntarily purchase. All of us have the power to change our lifestyles and cosume less of their products, whose price we may find disagreeable.

Jay:

Yes, oil is a global commodity. But gasoline produced for the California market is not. There are many grades of crude; you only see the benchmark ‘West Texas Intermediate’ quoted in the mainstream media. The raw material for gasoline, crude oil, is only a part of the final price we pay at the pump. Further, rising prices don’t necessarily mean that production will increase. To quote Matt Simmons: “Oil is not a concept. It must be discovered and produced.” It is a matter of great controversy and debate these days about exactly how quickly the remaining oil can be produced. Currently no producer anywhere on the planet can regulate their production to affect prices. Hence the volatile (read: mainly rising) prices we have seen these last few years. California, and the United States as a whole, has only seen declining production for 35 years (Yes, environmental regulations and NIMBY issues may have affected production rates here in CA, but the cheap, high-flow stuff is gone).

As to exactly why gas prices will go up, start by reading this essay. Essentially, oil companies will pack up their E&P budgets and seek greener pastures in the face of a more hostile business climate. Specific CA crudes will become more expensive to produce. We must then acquire crude from elsewhere, refine it elsewhere, transport it greater distances, and combined with our more expensive local oil, the cost of the end product at the pump must go up.

[OwnerOfCalifornia]

Since the ‘yes on 87’ view has been represented, I’ll share my thoughts on the subject since I voted no.

Let me start by saying that I am ambivalent about passage. If it passes, and it probably will, that will cause gasoline prices to go higher than they would have otherwise, which should encourage conservation. Energy conservation is the only true solution.

Prop 87 was essentially written and paid for by venture capitalist Vinod Khosla, who’s ethanol ventures stand to benefit from its passage. Any significant push to implement E85 as a mainstream alternative to gasoline would be a disaster for California and our country, given the very difficult challenges in the years ahead with regard to energy. E85 is arguably a net-energy loser, and a terrible waste of arable land, fresh water, and natural gas.

In general, prop 87 represents more government, larger government, and more wasted public monies. On this principle alone, I voted no. Intelligent use of alternatives like solar and wind, coupled with massive conservation and lifestyle changes, are the answer. Unnecessary government bureaucracies allocating ill-gotten tax-payer money (incorrectly, no doubt) will solve nothing.

Like I said, I won’t be terribly disappointed when it passes. The inexorable climb of all types of energy prices will be amplified here in CA, and that may finally force the consumer to seriously conserve. Prop 87 is a base emotional appeal to “stick it” to those “greedy oil companies” who work diligently so that we may all have our cheap energy entitlement. If you are unhappy about oil company profits, we have the power to 1) purchase less of their product, and 2) purchase shares in the “greedy oil companies” so that we may claim title to a small bit of these profits. (disclaimer: I own CVX and XOM)

There is a TON of writing about prop 87 on the blogosphere, especially my personal favorite blog The Oil Drum (sorry Rich, this is my 2nd fav:). But here is a tidbit, just written today:

linky

[OwnerOfCalifornia]

The California -> central Texas migration is nothing new. It happened once recently in the late 90’s as folks moved from ‘Silicon Valley’ to ‘Silicon Hills’ and drove a runup in real-estate that mirrored the tech bubble. Once that was over, the high-end real-estate was crushed while the entry-level stuff stagnated for a few years.

There is definitely extreme growth on the I-35 corridor, but it has been going on for over a decade now. If the bubble tour is just now rolling into town they fashionably late to the party.

[OwnerOfCalifornia]

Too many health nutty, vegans leads to less physical football teams?

heh, you know that could describe Austin-based football teams as well? Pretty even match-up if you ask me 🙂

[OwnerOfCalifornia]

This portion of thread gives new meaning to the forum topic “lowballing”.

Win. Post of the month.

As an aside, I am curious if you are all voluntary censoring yourselves or if the board is doing it for you. Well, let’s give it a try, shall we:

penis

edit: indeed, it is voluntary! kudos to all.

[OwnerOfCalifornia]

link

Whoa, that’s an interesting concept. I never knew such a thing existed. Admittedly I’ve spent 30 seconds looking at it so far, but I’ll read up on it some more.

[OwnerOfCalifornia]

Right….so in that second year when I had about $6500 in total itemized deductions, my only real tax benefit kicked in for the last $1500. My taxable income was only $1500 less than what it would have been if I was still renting.

I don’t have the tax tables in front of me, but obviously, I didn’t save much money at all (to say nothing of all the other factors we discuss here; maintenace, opportunity cost, etc., etc.)

[Author]

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