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  1. #1
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    Default Oil and the budget deficit

    According to recent data from the Energy Department, stocks of crude at a key U.S. shipping point, Cushing, Oklahoma, remain near record-levels.

    The U.S. also has "substantial" oil reserves available, and "considerable" oil production capacity that can be tapped should there be a major supply disruption, according to Treasury Secretary Timothy Geithner.

    Current US oil production is about 8.8 million barrels/day.

    Current US oil consumption is about 19.5 million barrels/day.

    So, we spend tax dollars to purchase 10.7 million barrels of oil each day. If a barrel of oil costs $100, that equates to $1,070,000,000 Billion dollars a day. That equates to $390,550,000,000 Billion tax dollars a year spent buying oil.

    The U.S. is the 3rd Biggest oil producer, and we have 5% of the world's population, yet we consume 25% of the worlds oil production. Canada (yea!) is the 6th biggest oil producer and Iran (boo!) is the 5th by the way.

    If we ramp up production and reduce our consumption (the U.S. has actually reduced consumption per person in the last 10+ years, but our population continues to grow) by alternative energy sources (wind/water/solar/synthetic) we can cut the deficit substantially. Even if we spent $90.55 Billion dollars a year building and using alternative energy sources we could still drop the deficit by $300 Billion a year (and produce jobs for a lot of people out of work). Putting these alternative energy sources to work will reduce our consumption even further which will drop the deficit even further.

    We wouldn't even have to do this forever, we could do it for 5-10 years and still come out on top. Its not "drill baby, drill", its "drill and build baby, drill and build".

    Thoughts?
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  2. #2

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    Quote Originally Posted by Skinzfan View Post
    According to recent data from the Energy Department, stocks of crude at a key U.S. shipping point, Cushing, Oklahoma, remain near record-levels.

    The U.S. also has "substantial" oil reserves available, and "considerable" oil production capacity that can be tapped should there be a major supply disruption, according to Treasury Secretary Timothy Geithner.

    Current US oil production is about 8.8 million barrels/day.

    Current US oil consumption is about 19.5 million barrels/day.

    So, we spend tax dollars to purchase 10.7 million barrels of oil each day. If a barrel of oil costs $100, that equates to $1,070,000,000 Billion dollars a day. That equates to $390,550,000,000 Billion tax dollars a year spent buying oil.

    The U.S. is the 3rd Biggest oil producer, and we have 5% of the world's population, yet we consume 25% of the worlds oil production. Canada (yea!) is the 6th biggest oil producer and Iran (boo!) is the 5th by the way.

    If we ramp up production and reduce our consumption (the U.S. has actually reduced consumption per person in the last 10+ years, but our population continues to grow) by alternative energy sources (wind/water/solar/synthetic) we can cut the deficit substantially. Even if we spent $90.55 Billion dollars a year building and using alternative energy sources we could still drop the deficit by $300 Billion a year (and produce jobs for a lot of people out of work). Putting these alternative energy sources to work will reduce our consumption even further which will drop the deficit even further.

    We wouldn't even have to do this forever, we could do it for 5-10 years and still come out on top. Its not "drill baby, drill", its "drill and build baby, drill and build".

    Thoughts?

    1) Geithner is an idiot...but we already knew that. One doesn't magically transition reserves into production. There's a heavy investment involved and considerable time: discovery, drilling, extraction, refining capacity, transport, etc. There's a lot of risk involved.

    2) A new theme from the widgets framing Energy Policy for this country! We'll skip the minor detail that this policy "recommendation" conflicts with the policy execution we have been privileged to observe/suffer over the last two years. We all know their "strategy" is simply to drive up the marginal cost of energy to levels at which "alternative" energy sources - favored by Obama and his environmental voting block/lobbyists - become "competitive". The problem, of course, is that something has to be given up. And we all become collectively poorer to the degree that derivatives also become more expensive. Then again...it increasingly appears that immiseration is the true goal for this administration.

    3) The current US Strategic Reserve equates to about 55/60 days of consumption.

    4) I don't see any logic at all in this post on how the deficit would be cut:
    - the government derives a huge amount of revenue from oil taxes
    - what are the tax dollars being spent on? futures contracts?

    5) There have been many studies that suggest "ramped" up alternative production simply cannot reach significant levels. Moreover, each of these have associated costs of their own (water for solar energy farms being one example). In other words, polemics like this article over-simplify complexity.

    I don't believe these hokey numbers one iota...and have learned...post Obamcare...not to trust any numbers floated/advocated by this administration.

    "Clean Coal" anyone? Biden...you twit. Nuclear? This is just more window dressed ideology. Alternatives have a place (driven by what people are willing to pay).....but not in some convoluted argument where the recommendations are pre-determined by ideology and the government simply regulates what markets and the public aren't prepared to pay for.
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  3. #3
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    Smile Retort

    Quote Originally Posted by fansince62 View Post
    1) Geithner is an idiot...but we already knew that. One doesn't magically transition reserves into production. There's a heavy investment involved and considerable time: discovery, drilling, extraction, refining capacity, transport, etc. There's a lot of risk involved.

    2) A new theme from the widgets framing Energy Policy for this country! We'll skip the minor detail that this policy "recommendation" conflicts with the policy execution we have been privileged to observe/suffer over the last two years. We all know their "strategy" is simply to drive up the marginal cost of energy to levels at which "alternative" energy sources - favored by Obama and his environmental voting block/lobbyists - become "competitive". The problem, of course, is that something has to be given up. And we all become collectively poorer to the degree that derivatives also become more expensive. Then again...it increasingly appears that immiseration is the true goal for this administration.

    3) The current US Strategic Reserve equates to about 55/60 days of consumption.

    4) I don't see any logic at all in this post on how the deficit would be cut:
    - the government derives a huge amount of revenue from oil taxes
    - what are the tax dollars being spent on? futures contracts?

    5) There have been many studies that suggest "ramped" up alternative production simply cannot reach significant levels. Moreover, each of these have associated costs of their own (water for solar energy farms being one example). In other words, polemics like this article over-simplify complexity.

    I don't believe these hokey numbers one iota...and have learned...post Obamcare...not to trust any numbers floated/advocated by this administration.

    "Clean Coal" anyone? Biden...you twit. Nuclear? This is just more window dressed ideology. Alternatives have a place (driven by what people are willing to pay).....but not in some convoluted argument where the recommendations are pre-determined by ideology and the government simply regulates what markets and the public aren't prepared to pay for.
    Responses by your numbers:
    1. You say there is a lot involved in transitioning reserves into production: discovery, drilling, extraction, refining capacity, transport, etc. There's a lot of risk involved. Geithner is indeed an idiot; there is no arguing that. However, you are assuming we have to go out and find these oil reserves. I am speaking about tapping into known sources, not the strategic oil reserve. Their location has long since been "discovered", we know where they are. Drilling and extraction would happen much quicker than you think - these reserves are not 5 miles below the Gulf of Mexico. Refining capacity is already there; the U.S. has excess refining capacity in place. Transportation is also available. This is not something that would take a long time to happen; production and transportation to in-place refining facilities can be in process in less than a year.

    2. I couldn't agree more.

    3. Again, I am not talking about the Strategic reserve, which George Bush re-filled by the way, I am talking about known sources already identified. There are a lot; from Pennsylvania to Alaska.

    4. The deficit is reduced by decreasing our source of supply from foreign to domestic thus increasing funds through taxes. Domestic production allows for taxing of all stages of the process. Foreign governments tax companies who drill and transport oil from their shores, and make money selling the oil as well. The U.S. Government gets $0 from this, obviously. If it would make you feel better, we can also increase the amount we tax on gas now. Consumers spend about 1/2 to 1/3 what people are paying for gas in other countries. Look at the current cost of gas in Europe - regular is going for about $7.50 a gallon and diesel is going for about $6.50 a gallon.

    5. Look at the numbers regarding alternative energy sources; they are more expensive but viable. What I am saying is, they are a legitimate source for reducing our consumption of fossil fuels, and they can/will have a significant impact on this. The amount of money being invested in alternative energy sources is far far greater in other countries than ours. Complexity? Alternative energy sources are not as complex as you think. The process by which synthetic fuel is created has been around since before WWII. Germany developed a triving synthetic fuel capability out of necessity. Are we going to have to wait until it is a necessity before we make it a reality?

    Jack the cost of gas to $7.50 a gallon (do it through taxes!) and see how economically viable alternative energy sources become. Of course, that my be what this Administration has been trying to do; I wouldn't put it past them to use the budget debate and debt crisis as a justification for increasing gas taxes to European levels to increase revenue and reduce the deficit.

    As you probably have figured out, I don't advocate the current administration one iota. That doesn't mean they don't have the right idea in expanding alternative energy. What they should stop doing is thinking the Government can make us do what they want just because they say it is a good idea.

    Lastly, it was just an idea. Don't get your feathers too ruffled.
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  4. #4

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    not ruffled at all Skinz! I like your ideas. And am as unhappy as you with how information in circulation vis the energy debate is incomplete.

    I actually have a masters in....believe it or not...mineral economics....(dated as it might be!)....and took a hard look at basic industries like oil, coal, etc. Just pointing out.....ineptly....foggy memories of analytic complexity.
    Last edited by fansince62; 03-08-11 at 04:31 PM.
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  5. #5

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    Indiana

    Default

    Quote Originally Posted by fansince62 View Post
    not ruffled at all Skinz! I like your ideas. And am as unhappy as you with how information in circulation vis the energy debate is incomplete.

    I actually have a masters in....believe it or not...mineral economics....(dated as it might be!)....and took a hard look at basic industries like oil, coal, etc. Just pointing out.....ineptly....foggy memories of analytic complexity.
    Colorado School of Mines?
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    I'm giving it a 2-4 year window. Looking for improvement in all areas. Redskins, you're on the clock.

  6. #6
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    Default

    Quote Originally Posted by fansince62 View Post
    not ruffled at all Skinz! I like your ideas. And am as unhappy as you with how information in circulation vis the energy debate is incomplete.

    I actually have a masters in....believe it or not...mineral economics....(dated as it might be!)....and took a hard look at basic industries like oil, coal, etc. Just pointing out.....ineptly....foggy memories of analytic complexity.

    A Masters in Mines or a Miner in Mines?
    Ugh...forget it...that bad joke makes even my head hurt.
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  7. #7

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    Quote Originally Posted by servumtuum View Post
    Colorado School of Mines?
    Penn State
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