So much for Dick Cheney's famous belief that, "[c]onservation may be a sign of personal virtue but it is not a sufficient basis for a sound, comprehensive energy policy."

I would suggest that we use this interregnum in the rule of petrodollars to organize a proper revolt of personal virtue.

I'm just glad to know that the price of gasoline will never be an issue again as long as I live. Now that's it's down, I won't have to worry about being able to buy gas. What a relief! My prayers have been answered. Thank you, Jesus.

The speed of fall in oil prices caught me off guard. We all knew that the market was getting more volatile; seeing just how much was another thing.

Talking about 20 years, or another pause like 1984-2000, seems wildly overoptimistic. Already there are cancelled projects, falling output, & the IEA estimate of a general decline rate of 6.7% that needs massive investment to make up.

The rest before we're off to the races again could easily be 20 months, or 20 weeks, even if there is little economic recovery.

A project to radically restructure this country's energy infrastructure should be a central part of Obama's stimulus plans, otherwise any economic recovery will be weighed down by rising oil prices. I hope he has the vision to think big.

The first test will be to see how the Dems handle aid to the automakers. If they just hand them a blank check, forget it, we'll have just thrown away a huge opportunity to do real good.

Expanded coastal drilling? Arctic drilling? Gas tax holiday? I thought all three went into effect and that is why prices are down. Er..what's supply and demand mean?

If you really believe that we will have $100 oil in the next 5 years then you can make a lot of money in the futures market because the market is NOT predicting oil that high. Do the math. $60 oil and a $30 difference in futures means that the market is predicting less than $90 oil in 5 years.

Of course, remember, I was the one who predicted $100 oil before $200 oil on Carpetbagger and everyone thought I was nuts.

- g. powell
That's genius - I'm serious in this post btw. I hear the auto industry is about to get a bailout now after being in the sack w/ oil companies and building pos [sic] gas guzzlers. F*ck them. I say let them fail..remember GOP.."market forces" and all that. Anyhoo..wanna bailout..then minimum >25mpg in the city - and I could care less how you do it, hybrid, stick shift, all gas, no gas, rubber bands. Personally I think 30mpg city should be the butt minimum and that's being nice.

American political leaders have the attention spans of goldfish. We are going to have to move fast before they are distracted by some new bright shiny object.

The price of gas will shoot right back up as the world economy recovers, and it will recover. Now is our chance to do something in anticipation of that coming price rise.

No, our policy makers will try to devise ways to consume ever more oil, just in increasingly efficient ways. Still drive cars, just with higher CAFE standards. Still heat with oil, just with more efficient furnaces. Still lubricate with petroleum products, just longer lasting petroleum products. An economy without oil consumption is like sex without pussy and cocks. Difficult to imagine, even more difficult to come to terms with and still ask the girl at the end of the bar if she wants a drink. Why bother?

6 months ago all the experts were telling us that a substantial portion of the high price of oil was due to speculators. Now that oil prices have crashed one expects that some of these speculators must be experiencing spectacular losses. But I've seen nothing written about that.

Where are all the speculators who are losing their fortunes? And who are they? Individuals? Hedge Funds?

My immediate thought was that we could do something about the deficit and keep the pressure on by slapping a $2 a gallon tax on gasoline with the idea that the tax would drop as the average price of a gallon exceeded $5. This would be a terrible idea for two reasons: First, we have a very depressed economy and everyone expects it will get worse before it gets better. If the government takes the tax dollars away from consumers it may never get better. Second, whatever political capital the Dems and Obama have at the moment would be gone in an instant. A better idea would be for the government to more agressively buy oil for the strategic oil reserve or whatever it is called. Not only would it prop up the price of oil somewhat by increasing demand, but it would give the government more capacity to ease future oil shocks and make a profit in the future. Buy all the oil they can now at $60 so when it goes back up to $150 they can make $90 a barrel and keep it from going to $200. Consumers will feel little immediate impact so the economy won't suffer and people never worry as much about deficit spending as they do about the high price of gasoline. The effect of keeping the pressure on to develop alternative energy sources will not be as great but it is better than doing nothing. I just do not know how much storage capacity we have in Louisiana

I agree that any aid to or ownership of the auto industry by the government must be strictly tied to changes in fuel efficiency, as well as hybrid and electric vehicles.
A clear plan and clear deadlines, otherwise they succeed or fail on their own.
Why they don't just bring back that EV-1, which worked fine, is beyond me--although I'm guessing it's because they don't really want to change. One problem is that the dealerships rely on their service shops for a lot of their income, and electric cars don't require much maintenance or repairs aside from inflating the tires and checking the washer fluid.

A project to radically restructure this country's energy infrastructure should be a central part of Obama's stimulus plans, . . . Posted by: g. powell

Energy independence that decouples the country from oil should be seen as a national defense issue as well as an environmental one. However, it is a task that will probably take 20 years to complete. It isn't something that can be seen as part of an economic stimulus package. These need to be things that put people back to work within a few weeks or months.

Whatever the price of oil, we need to resist the marketing propaganda from any auto maker telling the consumer that 25 mpg is "great" gas mileage. Many of the crossover vehicles fall into this category.

What we really need to be shooting for is to get about half of today's current number of cars off the road in 20 years. End the construction of new road building. And make the car of the future no car at all. The amount of personal wealth and public investment in road infrastructure that is wasted on the automobile is staggering and simply not sustainable.

An economy without oil consumption is like sex without pussy and cocks. Difficult to imagine, even more difficult to come to terms with and still ask the girl at the end of the bar if she wants a drink. Why bother? Posted by: steve duncan

You forgot assholes.

However, it is very easy to imagine an economy without oil at its center. We need oil derivatives for manufacturing various durable and semi-durable goods, the most important component being plastics. At the same time we are shifting away from oil (and coal) as primary fuel sources, we need to require industries to create entirely recyclable plastics.

Given all of this, TNR's Brad Plumer noted, "[I]t sounds like a stellar idea for us to spend the intervening years becoming less reliant on oil, so that when the price jets back up to $100/barrel and beyond, we're not all buckling at the knees again.

Why, that's a great idea. Here's hoping policy makers are thinking the same thing.

Yes, what a great idea. An idea that's been around for well over thirty years, and gets rediscovered everytime there's a spike in oil prices or a dip in supply. Basically we've had 35years to get it sorted out and we haven't. Why would we do it now? What has changed in the American psyche that would start us, seriously, down the road to less dependence on foreign oil, or just oil in general?

The price of gasoline has declined more quickly than the price of oil. This suggests that there was supply of gasoline that was being held back in anticipation of higher prices. Now that prices are declining, the gas that was being held back is being dumped on the market before the price declines further. Hopefuly, the new administration\congress will take on the industry and require honest reporting of oil/gas levels. Right now, the oil market is prone to manipulation by providing questionable numbers. Also, regulating the futures market to limit the impact of speculation will help significantly.

Jeff II,

Agreed that energy plans would take decades to implement and we need to create jobs now, but these are not mutually exclusive goals. If we can still get to work on infrastructure now. Besides, an energy plan should be a central part, not the only part.

My fantasy sitmulus package:

1. Immediate aid to state and local govts.

2. An American Development Bank to build public infrastructure.

3. A energy initiative that will lead this country away from fossil fuels in gradual steps.

4. A more progressive income tax schedule.

It's pretty sad that this is what now occupies my imagination. It used to be a lot more interesting.

As terry suggests above, this would be a great time for the Federal government to aggressively buy petroleum for storage in the Strategic Petroleum Reserve.

I don't know if there's room enough in there to allow Uncle Sam to purchase enough petroleum to drive the price up to, say, $75/barrel, but if that were possible, I think there'd be a compelling case for us to use the SPR to act to stabilize oil prices (and bring in some revenue) by buying low and selling high.

intelligence

foresight

political will:

3 things you will NEVER see put to use on a national scale in the US.

It's pretty sad that this is what now occupies my imagination. It used to be a lot more interesting. Posted by: g. powell

LOL! All worthy if not steamy thoughts (unless I missed the geothermal component).

"You forgot assholes."

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Oh, c'mon, unless you're a fairy or live on the set of a porn film we all know muddy turtles are a myth. Ask your wife or girl friend, they'll tell you so (and don't be getting any ideas to the contrary, buddy!!!!!!@*&$!%).

More exclamation points!!!!!!!!!!!!!!!

You never know what's going to fall out of the sky these days. How about fuel from fungus:

"Gary Strobel introduced the world to "myco-diesel," a volatile gas generated by a Patagonian tree fungus called Gliocladium roseum, or G. roseum for short. It has many of the characteristics of diesel fuel and grabbed the attention of the national media last week as the American news media focused on the general election."

Read the full article here:

http://billingsgazette.net/articles/2008/11/10/news/state/18-fungus.txt

Hard to say if this will really work or not, but if it does the days of Big Oil as we know it may be over sooner than we think.

While we're all having fun speculating here, let's speculate on what might happen if, for unforseen reasons, oil plunges to $25 a barrel.

We will be asked to bail out Exxon, BP, Shell.

I mean, aren't they "too big" to turn in negative earnings?

Only speculating.

Crankily yours,
The New York Crank

Oh, c'mon, unless you're a fairy . . .Posted by: steve duncan

Don't ask, don't tell.

"Fairy"? Steve, you living in the 1950s?

Oh, c'mon, unless you're a fairy . . .Posted by: steve duncan

Don't ask, don't tell.

"Fairy"? Steve, you living in the 1950s?
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Oh man, harshing on my Tinker Bell fantasy. Not cool..........

What we should do is to use taxes to boost the price of gasoline back up to about $4 per gallon, and to use the tax money either to fund alternative energy/public transportation, or just refund it to taxpayers. Of course, that's not going to happen.

Cheap gas at this point is harmful to US efforts to use energy more efficiently.

Perfect tie time raise the gas tax, by a buck a gallon, and use the money on a road and bridge program and create jobs, while we're at it.

Use some of the money on the "Manhattan Project" research.

Oil prices will rise over the long run because demand will continue to expand, and the cost of producing oil will increase as well. At some point, what they call "peak oil," production will level off and then begin to descend as extractable oil is depleted. If we're not prepared for this, which some believe has already occurred at 85 million barrels a day, costs will skyrocket and not come down, because it will be due to fundamentals, not speculative market fluctuations.

In the short run, oil prices will rise and fall, sometimes gradually, sometimes precipitously because that is the nature of markets. They invite speculators, gamblers, who play the market and cause short term volatility. The stock market is one example. You can't get away from the fact that many buyers and sellers are simply traders, betting on how the market will behave. They are not betting on how the underlying corporations will do, but on how the market itself will do. Markets have their own dynamics, their own lives, independent from the securities or commodities that underlie them. That's capitalism.

The price of gasoline has declined more quickly than the price of oil. This suggests that there was supply of gasoline that was being held back in anticipation of higher prices. Now that prices are declining, the gas that was being held back is being dumped on the market before the price declines further.
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I don't think so. Something most don't know is that refined fuels (especially gasoline), unlike crude oil, has a short "Shelf life". Once gasoline is produced, it almost immediately starts to separate & deteriorate. I think we see gas prices dropping so fast because the oil companies had produced gas , diesel, & fuel oil as fast as they could refine it to keep up with demand. When the demand sharply declined, they were stuck with full tanks, no room left for new product, and a short time span to get it distributed & sold. So they kept cutting prices in the attempt to sell it faster at the same time many of us had to cut back consumption due to financial problems/ lost jobs, etc. If prices stay at these levels much longer, I think you will see a sharp drop in Big Oil profits in January. When supply & demand again stabilize, the price will rise, & so will the profits.

Since supply has peaked, oil is governed by the same laws that Henry George described for land. Changes in price are driven entirely by demand fluctuations. There is also a strong tendency toward boom-bust cycles because of the incentive to hold oil or land off the market based on speculation on future vs. present price, and the incentive to dump it on the market when the bubble collapses.