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Domestic Drilling Doesn't Decrease Gasoline Prices 736

Posted by samzenpus
from the let-the-flaming-begin dept.
eldavojohn writes "As the political rhetoric heats up, there's something puzzling about drilling inside the United States. Essentially, it doesn't reduce what we pay at the pump. From the article, 'A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.' If the promises that politicians made when they opened U.S. drilling were true, then we should be paying about $2 a gallon now. Instead it's $4 a gallon. Minnesota Public Radio pulls some choice quotes from both parties and wonders why this decades-old empirical observation goes seemingly completely unnoticed."
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Domestic Drilling Doesn't Decrease Gasoline Prices

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  • Re:One word (Score:4, Insightful)

    by repapetilto (1219852) on Friday March 23, 2012 @08:12AM (#39449477)

    Outlaw speculation... how will the price be determined?

  • Re:One word (Score:2, Insightful)

    by Anonymous Coward on Friday March 23, 2012 @08:12AM (#39449481)

    Good luck legally defining what constitutes "speculation".

  • Obvious (Score:4, Insightful)

    by tbannist (230135) on Friday March 23, 2012 @08:16AM (#39449521)

    Personally, I would have thought this was obvious. Any additional oil generated by the U.S. is pretty much a rounding error compared to the major producers, with international markets, American oil well are going to want to earn just as much as international sellers, if they had to choose between selling for less domestically or getting more on the international market they're going to go for more. They're essentially required to do so by their shareholders. In the absence of an amazing discovery of vast reserves of cheap, easy to extract, untapped oil reserves, the only way to actually get lower prices would require price controls and subsidies to force the price of gas lower and, frankly, I think that would be much worse than high gas prices.

  • Absurd... (Score:5, Insightful)

    by cfulmer (3166) on Friday March 23, 2012 @08:16AM (#39449525) Homepage Journal
    This is the problem when journalists with political agendas pretend to be statisticians. Oil is sold on a global market and goes to many different uses. You cannot look at one part of the supply and say "well, increasing this particular part of the supply didn't affect prices in this other particular market." There are too many other factors to consider: How much oil did other countries use? How much oil was diverted to purposes other than producing gasoline, such as plastics or heating oil? What happened to production in other areas? NONE of this is accounted for in this silly "analysis." Most telling? The analysis excluded the oil shocks of the early 1970's. Why? That was the clearest time that domestic gas prices (and supply) are driven largely by the global oil market. Yet, this analysis is being put into papers all across the US. For what purpose? Could it be to deflect criticism from the Presidents' drilling policies? When an analysis concludes "therefore, the basic laws of economics don't apply," then just like one that says "therefore, the law of gravity doesn't apply," our first instinct should be to question the analysis, not the basic laws.
  • Re:One word (Score:1, Insightful)

    by Anonymous Coward on Friday March 23, 2012 @08:18AM (#39449549)

    Simple, require any bulk purchases of oil to be earmarked with purposing (Storing for refining x months in the future, filling demand when supply drops below x barrels, fleet use for large companies, etc). Additionally set minimum quotas for large corporations based on projected fuel demands. While this all sounds overly meddlesome, they keep talking about raising the taxes on gas due to soaring profits, so why not just put some checks into place to ensure pricing can not be artificially inflated?

  • Re:False Premise (Score:5, Insightful)

    by bunratty (545641) on Friday March 23, 2012 @08:19AM (#39449561)

    That wasn't hypothesis, according to TFS. The hypothesis was that drilling more oil in the U.S. would cause gas prices to decrease. In other words, the amount of drilling in the U.S. would be one factor of many, not the sole factor, for determining gas prices. The analysis showed no correlation between drilling in the U.S. and gas prices, so the researchers were not able to find evidence to support the hypothesis.

    I see a similar mistake when people try to "disprove" global warming by showing that climate changes naturally. Just because climate changes naturally does not mean that increasing the amount of carbon dioxide in the atmosphere artificially cannot also change climate. Natural factors (such as solar output or the orbit of the Earth) are some factors, and human-casued factors (such as more aerosols or carbon dioxide in the atmopshere) are others. Of course, there is no one factor that determines gas prices or climate.

  • by fotoguzzi (230256) on Friday March 23, 2012 @08:21AM (#39449573)
    Drilling domestically might not lower the price of gasoline, but perhaps it creates a buffer in case worldwide oil flows are disrupted. That is, if all oil is imported and there is a boycott against the U. S., we are back to 1973, waiting in gas lines. If a local industry had to begin from scratch, prices would presumably be high for quite a while.

    Having at least the ability to drill locally should prevent huge price swings every time there is a panic. The price might rise for a while, but presumably the large oil producing companies would return to the market with slightly lower prices.
  • Re:One word (Score:3, Insightful)

    by TraumaFox (1667643) on Friday March 23, 2012 @08:22AM (#39449589)
    Hopefully by actual supply and demand, rather than what speculators predict future supply and demand will be.
  • Re:One word (Score:4, Insightful)

    by jythie (914043) on Friday March 23, 2012 @08:24AM (#39449607)
    Via the market? Companies selling their product to other companies that use it, rather then speculators inserting themselves between buyer and seller.

    Speculation pulls money out of a market and raises prices without adding value simply because people with enough resources are able to force getting their 'share' of whatever is going on. Markets do just fine without speculation, in fact they generally do better with lower prices and greater stability... but fewer useless people getting very wealthy for no other reason then already being wealthy.
  • by arth1 (260657) on Friday March 23, 2012 @08:26AM (#39449623) Homepage Journal

    I think you're missing the point, which isn't to drive down oil prices, but to make the country less reliant on foreign oil imports and to improve trade deficits.
    That's a laudable goal, but unfortunately it doesn't help the consumer, it just helps the Rockefellers and Gettys.
    Why? Because it's a piss in the ocean. If you have a street full of limonade sellers who sell it at 99 cents per cup, and you have a limited amount that you can sell at 50 cents, you won't do so. There's not enough of your product to have an effect on the market price. So your price will converge towards the common price.

    How to make it benefit the public, then, in the short term? Regulation and taxation. The oil industries are given special privileges that they don't need. The US of A is no longer in a boom period where incentives were given to sustain the overall high growth. Start taxing them at a reasonable level for using up non-renewable resources that belongs to the country.

  • Re:Absurd... (Score:4, Insightful)

    by cfulmer (3166) on Friday March 23, 2012 @08:27AM (#39449637) Homepage Journal

    As I posted elsewhere, please spell this out, because it just doesn't make sense. How do speculators increase the price of oil? What are the mechanics involved? Recall that every time a speculator bets that the price will rise by buying a futures contract, somebody else is betting that the price will fall, by selling a futures contract.

  • Re:One word (Score:5, Insightful)

    by TheRaven64 (641858) on Friday March 23, 2012 @08:29AM (#39449655) Journal
    The same way it was before the USA deregulated commodities speculation about 15 years ago. A limited number of speculators were allowed, but mostly the price was determined by supply and demand, i.e. most of the people buying commodities were people who actually needed them, not people who were hoping that they could sell them for a higher price.
  • by OeLeWaPpErKe (412765) on Friday March 23, 2012 @08:31AM (#39449673) Homepage

    Ok, now implement this in China. If you do it in the US alone it will have exactly zero effect.

    Frankly, the link between oil prices and speculation is another thing that should be fact checked. Unless I'm missing something the only thing that adds significantly to the price of oil (aside from US sales and oil taxes, things that matter more than a few cents, however rich you think ExxonMobil is, their cut out of your $4 is 2-3 cents) is the money taxed out of it by the insanity that is the saudi government. And even that amount is dropping rapidly according to theoildrum.com.

    So pretty much the only action that would have any chance of dropping oil prices more than $0.10 or so would be to invade a few countries in the middle east. And China wouldn't let the US do that. Do you really think that the massive inefficienciency that these regulations would impose would be less than the 2-3% that speculation + refining + transport + ... is today ?

    Do not take this that I support speculation as an activity in itself. It's morally reprehensible when you think about the fact that a lot people need oil to avoid freezing to death. Then again, given that, speculation is not nearly as reprehensible as driving a Ferrari, or driving where you could walk or bike.

  • by eldavojohn (898314) * <eldavojohn&gmail,com> on Friday March 23, 2012 @08:32AM (#39449683) Journal

    Drilling domestically might not lower the price of gasoline, but perhaps it creates a buffer in case worldwide oil flows are disrupted. That is, if all oil is imported and there is a boycott against the U. S., we are back to 1973, waiting in gas lines. If a local industry had to begin from scratch, prices would presumably be high for quite a while.

    You're right but I would like to point out two things. One is that you seemingly forgot to mention the Strategic Petroleum Reserves [wikipedia.org] that were created after that boycott. Despite what pure capitalists say about its influence on the market, this reserve still exists and has come in handy for taking "loans" out of during catastrophes. This would help us transition from foreign dependence to massive drilling at home.

    The other thing is that we actually do a lot of our own oil refining (especially in Texas) [wikipedia.org]. So, it's not like we're missing that huge part of the infrastructure, we import the crude and refine it on our soil. So really what we're missing is just the crude pipeline. The "local industry" you speak of is actually mostly already here to support us, all that's missing is the source and transportation of the crude (since it would probably flip from cargo ships to trucks initially?). What it comes down to is how long would it take a company to drill and lay pipeline? Probably not very long ... they have crazy revenues.

  • Re:One word (Score:4, Insightful)

    by XxtraLarGe (551297) on Friday March 23, 2012 @08:34AM (#39449701) Journal

    Speculation. That's what it boils down to, folks.

    No. Speculators play a valuable role in the market, by taking on risk. They don't control the price of any commodity any more than than consumers do.

    Gas prices are going to stay at $4 a gallon as long as people are willing to pay it. It's supply and demand. If demand dropped by half overnight, you'd see a precipitous drop in prices as well.

  • Another word (Score:3, Insightful)

    by Goonie (8651) <robert...merkel@@@benambra...org> on Friday March 23, 2012 @08:35AM (#39449713) Homepage
    Rubbish.

    Storing large quantities of oil is very expensive, unlike, say, gold or diamonds. You can't hoard the stuff. Ultimately, the stuff has to be sold to consumers, and if high prices drive demand down (and demand for fuel is elastic, despite a lot of nonsense to the contrary) speculators will lose their shirt.

    The reason why oil are prices are at historicallly high levels, and have been for the past few years, is that global demand has not kept up with global supply, mostly because China and to a lesser extent other parts of the developing world is buying more of it. Incidentally, this is exactly the same reason why a bunch of other commodities, including other fossil fuels, metals, and agricultural products, have gone up in price.

  • Re:One word (Score:5, Insightful)

    by SomeKDEUser (1243392) on Friday March 23, 2012 @08:39AM (#39449735)

    That was the motto of the communist system. Just in case you weren't making your comment tongue-in-cheek.

    But there is an important point hidden there. In politics, you will hear "free markets are GOOD", "central planning is BAD". Or sometimes the reverse (in Europe). People forget that the point is to maximise the goods and services produced, as well as their access from everyone.

    If you have no idea what to produce, a market is a good idea. If you know exactly what to produce, a market is an idiotic idea: central planning is the way to go. If you know that this good or service will produce a natural monopoly, you should go for either a tightly regulated market (but due to regulatory capture, this is dangerous) or central planning.

    In real life, there are also externalities. Tax accordingly so that your market works better. Yes, taxes are a vital component of making markets work: you want the real price to be reflected, e.g. pollution must be paid for by the polluter.

    TL;DR : regulation and taxes on externalities are important. Monopolies should be public. Leave the rest to the market if you don't know what is optimal. If you do, get rid of the market. In the future, robotic overlords will and should plan the economy for us.

  • by weave (48069) on Friday March 23, 2012 @08:42AM (#39449753) Journal

    July 11, 2008 a barrel of oil topped out at $145.08, July 15th Bush lifts ban on offshore drilling and by December of 2008, oil was down to $37.71 a barrel... and that was nothing more than a threat.

    Oh come on. Are you telling me that nothing else significant happened in the last half of 2008 that might have affected the supply and/or demand for oil?

  • by AlecC (512609) <aleccawley@gmail.com> on Friday March 23, 2012 @08:43AM (#39449763)

    Not really, as long as oil is freely traded. If oil spikes from, say, $120 a barrel to $150 a barrel, do you seriously expect US-based producers to turn their back on $30 a barrel extra profit in order to please domestic consumers? They will either export their production or (more likely) expect domestic consumers to pay the market price. It is called the Free Market and the US is supposed to be keen on it. Oil is one of the most transportable, commoditized things around, and the market is world wide.

  • Oil vs. Gold (Score:2, Insightful)

    by AmazinglySmooth (1668735) on Friday March 23, 2012 @08:44AM (#39449767)
    A barrel of oil when priced in ounces of gold hasn't increased all that much. The biggest issue is inflation, which is 100% caused by loose monetary policy. Monetary policy is set by the need to borrow by the federal government. If the government didn't borrow so much, the Fed couldn't increase the money supply so much.
  • by Anonymous Coward on Friday March 23, 2012 @08:44AM (#39449773)

    The price of oil (and thus gas) is determined by the price of oil on the market.

    If, for example, you had a 1000 hectare farm in Idaho and found oil there, you couldn't just put in a well and get cheap gas or even sell it locally at a cheap price. It needs to be sold on one of the oil bourses at a price dictated by the market.

    The US government is pushing the price of oil (and thus gas) up by being aggressive with Iran and destabilising the Middle East (where a large amount of the world's oil comes from.)

  • by Archimagus (978734) on Friday March 23, 2012 @08:47AM (#39449803)
    I think the big thing we need to do is figure out WHY the prices don't come down from domestic drilling. I would bet it doesn't have nearly as much to do with the cost of drilling, and way more to do with the fact that people on Wall Street decide what a barrel of oil is worth, it doesn't matter where it comes from.
  • Re:One word (Score:4, Insightful)

    by icebraining (1313345) on Friday March 23, 2012 @09:08AM (#39449997) Homepage

    I don't really like the idea of the government having any excuse for taxes other than to fund itself. Maybe instead the rules should be changed so it is easier for corporations to be sued over externalities or something.

    If the externality is not supposed to happen (e.g. oil spill), lawsuits make sense, but if it's an expected event like the fact that you're using a limited resource that belongs to the common, how do lawsuits fit in? It doesn't really make sense to sue someone over that.

    If you don't like that the money from those taxes can be used for anything, a better option is to set up an independent organization that can only use the funds for a specific purpose, like one that receives the taxes from tobacco and can only use them for funding lung cancer prevention and treatment.

  • by theguyfromsaturn (802938) on Friday March 23, 2012 @09:13AM (#39450055)

    It's a global commodity. There is no way that domestic production can change the global price if global production is declining. Globalisation ensures that your suppliers can sell to the highest bidder, and as capitalists, they'd be crazy not to.

    Second, it IS expensive to drill in deep water. Not only in immediate costs, but in potential costs of litigation. You have to prepare you nest egg with that in mind. BP certainly convinced everyone in the industry of that fact. You cannot calculate only the immediate profit, but must consider that in the long term the risk of an evironmental catastrophe will hit you, and you can't reduced your profit margin, even if you were so inclined.

    The bottom line is, consumers have to get off the drug. The days of free fossil fuel are over anyways (whatever those idealistic economists who obviously still believe in the tooth fairy will tell you). Suck it up, plan in consequence. Give up the macmansion in the suburb and think of a more reasonable lifelstyle. Don't blame others for what YOU can change? Fuel is expensive? Don't buy it.

    (I know, we are all affected by indirect cots of other products we can't do without, but we can certainly reduce that impact by changing our behaviour anyways).

  • by DigiShaman (671371) on Friday March 23, 2012 @09:14AM (#39450063) Homepage

    Oil is fungible [cjr.org]

    "Oil is a fungible commodity, sold on the global market to the highest bidder, as McAuliff points out."

    It has nothing to do with some grand conspiracy. It's a simple matter of supply and demand. America is competing on the world market for cheap energy. The locality of drilling only determines who gets first sale profits and the quality of the crude. Other than that, the highest bidder gets the oil. Simple as that.

    Now personally, I think we should maintain our strategic reserve for times of natural disasters and regional conflict (war). The idea of tapping into it to spook the speculators is flat out wrong. It's also not working anymore. The hedge fund managers are starting to become immune to this political tactic.

  • Re:One word (Score:4, Insightful)

    by baegucb (18706) on Friday March 23, 2012 @09:24AM (#39450167)

    Incorrect. Big banks do invest in oil commodities, and are into it big time. http://online.wsj.com/article/SB10001424052702304563104576359704074143190.html [wsj.com]
    (I wish I could find the link that expresses it better, but the Wall Street Journal is the first link I could find quickly).

  • by Jawnn (445279) on Friday March 23, 2012 @09:38AM (#39450335)
    No.
    The term "buffer" implies an excess, something that would provide for the required flow during intermittent disruptions upstream. Given the numbers involved, the impact of any realistic amount of additional domestic production would not be a "buffer".
    Now, what actually would have an affect on the price of gasoline is reducing the amount that is exported. Yeah, that's right. We are the refinery for the world. We (the people who live here) get the mess AND the high prices. Such a deal we're getting in this magical "global economy".
  • Re:One word (Score:4, Insightful)

    by repapetilto (1219852) on Friday March 23, 2012 @09:46AM (#39450425)

    Maybe oil prices should be skyrocketing and the regulations on speculators is preventing this?

    There are two reasons we should expect prices to be higher 10 years from now:

    1) Inflation of the USD
    2) We are running out of oil

    What reason do you have to think the price should drop?

  • by landofcleve (1959610) on Friday March 23, 2012 @09:47AM (#39450445)
    What, and suddenly the 260,000,000 autos out there are supposed to become more fuel efficient? All the people that own those autos are supposed to suddenly buy a more fuel efficient auto? The people who can least afford this option are also the people that can least afford a new auto.
  • Here's the REAL question that rarely gets asked: why should fuel prices be lower? Fuel prices in other countries are much higher than in the US (with some exceptions in the Middle East where the fuel is subsidized to extraordinary degrees), mainly due to taxes. The taxes are there to limit consumption, while bringing in tax revenue to fund other services.

    Is there a good reason why fuel prices should be low at all? We know there are costs associated with high use that aren't baked into the price of petrol. Arguably, we've never paid the true price for the fuel we use.

    I understand that high fuel prices disproportionately affect the poor; rich people have more than enough money to pay for petrol. But that indicates other things wrong with the infrastructure of cities and how people move around.

    Virtually no matter how you look at it, prices for petrol should be higher. On the extreme capitalist side, they should be higher because the product is in demand, the supply is dwindling and public opinion is getting harder to buy (oil spills, climate change). On the more socialist side, prices should be higher through taxes, to move money into providing better infrastructure for all drivers, encouraging better city layouts, and funding already badly strapped local governments. 'Because I hate paying more for something that used to be cheap' isn't really a reason.

  • by Anonymous Coward on Friday March 23, 2012 @09:53AM (#39450531)

    Oh, the future's not going to be a happy place for you.

    Your nagging is already widely ignored everywhere but in the U.S. and Europe and even in those two places your tedious presumptuouness is eroding the support you garnered by taking on the pose of responsibility.

    Petroleum isn't a drug and we're not addicted. It's a worthless gunk that, given an admixture of the magic ingredient, free enterprise, turns into wealth.

    Since there never were any "days of free fossil fuels" those days never occured so aren't behind us. It's always cost money to find/drill/refine/transport petroleum but as the use of petroleum's made humanity wealthier we can access petroleum that was previously beyond our reach and, this is most important, at a profit. As for "giving up the macmansion in the suburb", how other people live isn't your concern no matter the clever rationalizations you devise to justify lecturing others on how to live our lives. Gasoline's expensive, in no small measure, because people with your conceits have managed to bend the political process to your demands which, I'm pretty sure, you're proud of.

    Now your palid saviour is looking like one of the results of those conceits might just be a problem for him as he stands for re-election. So the narrative has to be diseminated that piling all sorts of costs on the production of petroleum doesn't have any effect on the cost of one petroleum product. I suppose you've got to try that gambit but as the rising pitch of the rhetoric emenating from the White House indicates, it's not really that good a tactic. That's why President Obama's claiming that petroleum production's risen during his term.

    The fact is correct, it's just the implication, that he's in favor of increasing petroleum production, that's the lie. Care to guess why he has to make that claim? It's not because your enviro-nobility is a hot commodity any more.

  • by sycodon (149926) on Friday March 23, 2012 @09:59AM (#39450611)

    You may blithely dismiss Limbaugh's point but you can't argue against it.

    The AP study looks at actual oil coming out of the ground, which is but a small part of the price of oil.

    Since oil is a commodity market and markets are subject to the law of supply and demand, producing more oil will impact the market. Last I heard, U.S. production is part of the world wide market.

    Also, since speculation is a primary component of the cost of oil, actions that tend to calm the speculative market will undoubtedly reduce the price of oil at least to the extent that the price is driven by speculation.

    For you to argue against this is to argue against all the Democrats who were screaming for Bush to tell the Saudis to increase production. And you also would have to ignore the fact that after Bush opened the outer continental shelf to mere exploration, prices came down as speculators considered the fact that there could be more oil on the market. Lest you forget, when Bush left office, the price of a gallon of gas was less than $2 after being in the high $3 range prior to his executive order.

    As for job creation, for you to even suspect that additional drilling wouldn't mean tens of thousands of new jobs is like someone suspecting that water isn't wet.

  • by SuperKendall (25149) on Friday March 23, 2012 @10:01AM (#39450649)

    There are a myriad of excellent reasons to drill for oil locally which have nothing to do with gas prices.

    * Ethically Sourced is better
    Why should we be giving ANY money to cultures that treat women (or other groups based on sexuality or gender) unequally?

    That money is far better off going to either the U.S. or Canada.

    * Environmentally friendly
    It may seem counter-intuitive that more local drilling is better for the environment, but the simple fact is that we cannot trust other cultures to care as ugh about the environment around drilling as we can. Drilling or pipelines here can be monitored more closely and we can do more to clean up problems when they occur. There are hosts of environmental issues with wells around the world but you'll never know about them because they are swept under the run by tightly controlled government press.

    There is also a very logical component to the issue though. The longer you have to ship something, the more likely there will be accidents. Currently we have a vast quantity of oil coming in by ships, and one of which can and do leak. Moving to more local production means eliminating the shipping of a lot of oil from large distances across the ocean.

    * Local Jobs

    Producing oil locally means more local jobs, end of story. It takes people to build out wells/pipelines, and people to maintain them. Even if the number of jobs once built is not very high, it is non-zero and it requires skilled labor.

    That's a few, there are more (such as strategic or price leveling reasons). The fact is we have the oil and gas we need, we should start making use of it ASAP until alternative energy industries can come up to speed.

  • by berashith (222128) on Friday March 23, 2012 @10:22AM (#39450881)

    there have been documented cases where the global demand has gone down and the global supply has gone up, and yet the prices have increased. There is something else at work beyond simple supply and demand.

  • by swalve (1980968) on Friday March 23, 2012 @10:30AM (#39451003)
    I think he is pointing out that in spite of increased drilling in recent years, the price is still going up. Hence, increased production doesn't help. Because the world demand will eat up any "excess" oil that might reduce prices. The only way to "reduce" the price of gas is to not use as much.

    And I think the pipeline *will* get built, just not until it is done right. He only "blocked" the pipeline because the a-holes in congress tried to give him an ultimatum.
  • by afidel (530433) on Friday March 23, 2012 @10:42AM (#39451153)
    Risk, there is a very large risk premium built into the pricing of crude. It's kind of the inverse of how the value of a fiat currency fluctuates.
  • by repapetilto (1219852) on Friday March 23, 2012 @10:43AM (#39451173)

    Yes, it is called speculating on the future supply and demand. One is widely expected to go down and the other is widely expected to go up. The spot supply and demand estimates are only part of the equation.

  • by Anonymous Coward on Friday March 23, 2012 @10:59AM (#39451357)

    Who cares if it's a global commodity, the politicians said that home drilling would reduce the price of oil.

    It doesn't.

    Story: End Of.

    We KNOW they were lying, we KNEW at the time they were.

    But still it was demanded to be passed because it would reduce prices and help the poor out.

    Now that it has been shown to be a load of bollocks, why will you now excuse them for lying about it?

  • Re:One word (Score:5, Insightful)

    by SomeKDEUser (1243392) on Friday March 23, 2012 @11:23AM (#39451675)

    This is almost too easy. Energy production can easily be planned, and in fact in most of the world, is planned.

    Water utilities can be and are planned. When they are not, disaster ensues.

    Land development is planned. Try suggesting that cities should get rid of all zoning laws.

    Military procurement is planned. It is always better than a private army.

    Essential services such as hospitals are frequently planned.

    Money supply through central banking is planned.

    Initial telecommunication infrastructure was planned.

    Large-scale research is planned. The LHC is not the product of market forces, you know.

    Roads are planned.

    As to why the government may be better than the market? Easy: the market is trying to solve in an unconstrained way an NP problem (efficient market is true if and only if P==NP ; there is actual mathematical proof of that). However, many solutions are not acceptable to society. The government can avoid them, not the market.

    After the greatest economic crisis since the Great Depression, where the economy was basically saved by the intervention (planned) of the government, and in the slow-growth sluggish aftermath caused by the stupid "the markets know" mantra, how can anyone think that markets always know best? were you born this year or put into hibernation those last five?

  • by NeutronCowboy (896098) on Friday March 23, 2012 @11:27AM (#39451725)

    The point is that the US can't meaningfully impact the price of gas. Maybe a few cents here and there, but that's it. The reason the Saudis can do it is because they have an oil extraction infrastructure that is very broad and flexible, as well as oil that is easily accessible. And even they have a hard time to significantly do it on their own. The US has neither, and yet people seem to think that tapping the piddly extra reserves the US has is going to bring us back to $2 a gallon gas. Fucking ridiculous.

    The price of gas also came down during an election year, when some team won the Baseball World Championship, and when there were exactly 27 sun spots on the sun. Which one had the most impact? Show your work.

  • Re:One word (Score:4, Insightful)

    by Qzukk (229616) on Friday March 23, 2012 @11:38AM (#39451865) Journal

    Fundamentally, this is hard. Take, for instance, fracking. How do people prove that the antifreeze they are pumping from their wells came from the drilling when it could be either a crack in the well casing as it passes through the water table or it could have been dumped 50 years ago in some mechanic's backyard and finally seeped in?

    The solution we have chosen is for someone with power to say that if you want to drill a well or run a car shop, you have to follow these regulations. This isn't perfect and half the regulations were reactive and these days companies act like the regulations are the absolute minimum effort to make, but it helps keep disasters from happening before having to figure out who to sue to fix it.

  • by Svartalf (2997) on Friday March 23, 2012 @11:39AM (#39451883) Homepage

    Do you consider gold fungible?
    Silver?

    If so, your argument makes both of them non-fungible; which happens to be one of the silliest statements I've seen in a while.

    Not all gold is placer nuggets and flakes- you have to refine a lot of it. Silver, you have to process it to get to it.

    Gold is often extracted... [wikipedia.org]
    Silver is extracted and while it occurs in metal form has to typically be refined out of other things [wikipedia.org]

    It's a raw good. Raw goods are less fungible than the refined, but they're still fungible.

  • by cwgmpls (853876) on Friday March 23, 2012 @12:01PM (#39452259) Journal

    Lest you forget, when Bush left office, the price of a gallon of gas was less than $2

    Lest you forget, when Bush left office, the global economy, lead by the U.S., was heading toward a bottomeless crash of unknown proportions and everybody slowed their purchase of oil products significantly. That is why a gallon of gas was in the $2 range when Obama came in. I don't know how we can expect healthy economic growth *and* low energy prices, nomatter what the source of the energy, at the same time. Simple economics would seem inform us that we can't have both.

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