If oil production is capped (even with huge reserves) at its current rate and consumption rises. Suppliers would be able to charge whatever price they wished. Even if we have a steady supply of oil the law of demand no longer exist (becomes a straight line) and the suppliers can sell for whatever price they wish. If so wouldnt WW3 be inevitable when the suppliers get to greedy? How can you stop greed?

The law of supply and demand works best in a free market. If you refuse to sell me your strawberries at a reasonable price, the farmer down the road will be happy to take my business. If I don't want to buy from you because I think you're cheating or just because I don't like your politics, the next customer will be happy to buy the last basket of strawberries.

It doesn't work that way when the buyers and sellers are corporations or entire countries, or in the case of OPEC multiple continents. If one of a handful of suppliers decides to charge more for his oil, the other suppliers don't have enough to sell to everybody who needs oil. There isn't enough time for those buyers to change their habits and use less, so they're stuck having to pay the inflated prices.

When Adam Smith described the functioning of the Free Market and the Invisible Hand, he never envisioned corporations. As I have posted elsewhere, corporations are artificial entities created by governments to take the place of the aristocracy that faded away as democracy replaced feudalism. Adam Smith didn't see that coming, bless his naive little heart.

To the extent that avarice is a natural human emotion, you can't stop it. You can try to build a civilization in which people's other wants and needs (love, health, security, fun, freedom, etc.) are better satisfied so they don't focus all of their desires on material goods and other luxuries. Contented people are not as motivated by greed as people are when so much of the intangible good things in life elude them. The reasons for that are of course topics for another thread, but we can't deny that a lot of people in the Western World are not very content right now.

But the kind of greed you're talking about is specific to corporations. Corporate greed is in a class all by itself. People who have the power to become filthy rich are often intoxicated by that power and choose a path that they perhaps don't even need to because they might be lucky enough to have life's intangible pleasures available to them. We can only curb that by doing away with corporations. Which is also a topic for another thread. :)

Warren Buffett is a good example. He is well endowed with life's simple pleasures--family etc.--and he still lives in Nebraska of all places and by all accounts runs his corporate empire with honor. And just announced that he was giving almost all of his wealth to charity because nobody's children need to hit the ground as billionaires in order to be happy people, not even his.

Cartels are everywhere...That is why there are tons of PAC in Washington...

If oil production is capped (even with huge reserves) at its current rate and consumption rises. Suppliers would be able to charge whatever price they wished. Even if we have a steady supply of oil the law of demand no longer exist (becomes a straight line) and the suppliers can sell for whatever price they wish. If so wouldnt WW3 be inevitable when the suppliers get to greedy? How can you stop greed?
Oil suppliers can't charge more than what it would cost customers to switch over to other energy sources. For example, you can mae gasoline from coal...it just costs more to do it than it does to simply buy oil. If oil prices get too high, people will start doing that.

When Adam Smith described the functioning of the Free Market and the Invisible Hand, he never envisioned corporations. As I have posted elsewhere, corporations are artificial entities created by governments to take the place of the aristocracy that faded away as democracy replaced feudalism. Adam Smith didn't see that coming, bless his naive little heart.


Do you know any general literature on this (doesn't have to be internet)? It would be nice to read up on it.

Do you know any general literature on this (doesn't have to be internet)? It would be nice to read up on it.

I had the same idea

http://www.blupete.com/Literature/Biographies/Philosophy/Smith.htm

just look at a gas station and you questions will be answered

Both the oil producing nations and the refiners are artificially reducing supply in order to increase thei respective profits. Refining margins have never been higher. It appeers that the refiners are also coordinating some sort of strategy to make sure that refining capacity does not exheed the demand for refining. A profitable refinery near Bkersfield CA was closed down, very suspicious.

Even with the market manipulation the law of supply and demand still funtions. Artificially reducing supply does not stop the market for oil, it just changes the market for oil.

If oil production is capped (even with huge reserves) at its current rate and consumption rises. Suppliers would be able to charge whatever price they wished. I know what you mean but, if production stays level than consumption also stays level. You don't mean consumption rises, you mean demand rises while supply stays level.

The price comes from supply and demand. the price will rise either if supply goes down or demand goes up. The suppliers don't get to charge whatever they want under any circumstances. They get to charge whatever price the market will bear.

Other sources of BTUs will start taking market share from petroleum products if the price of the petroleum products rise much. Cars can burn ethanol so if oil prices rise people switch to ethanol. In india some people cook on small kerosene stoves while their neighbors cook on fires made of twigs and trash. If oil prices rise poor Indians switch from cooking on Kerosene stoves to cooking with twigs and trash. The polution created from thousands of people cooking by burning trash is very nasty and hurst my priviledged American eyes nose and lungs when I lived in India. People will do whatever they have to do when oil prices rise. We will ride busses and bicycles. We will turn down the heat in winter and turn down the AC in summer.




Even if we have a steady supply of oil the law of demand no longer exist (becomes a straight line) and the suppliers can sell for whatever price they wish. If so wouldnt WW3 be inevitable when the suppliers get to greedy? How can you stop greed?

In 1973 OPEC reduced supply and prices went up without starting WW3. OPEC will not push prices so high that the worlds comfortable upper middle class people demand the start of WW3 to in order to get more oil. The oil produces also don't want to spur the craetion of a alternative fuel industry that would reduces their future profits.

Keep in mind that Texas is a non-voting member of OPEC. The US oil companies have a very powerfull influence over the US government and the US oil companies prefer a higher oil price. The United Kingdom and Russia export oil. Now who is going to lead this war of fat middle class oil consumers against the greedy market manipulating oil producers? Will China and India and France and Gemany go to war against the Muslim oil producers, Russia, the United Kingdom, Norway, Nigeria and Venezuela. The USA would sit the war out because the will of the US consumers to lower the price of oil would be balanced by the better organized will of the US oil companies to raise the price of oil.


KNOWN OIL RESERVES, 2005
Oil & Gas Journal , Vol. 103, Iss. 47
Rank
Country
Bil. Brls
1 Saudi Arabia (OPEC) 264.3
2* Canada 178.8
3 Iran (OPEC) 132.5
4 Iraq (OPEC) 115.0
5 Kuwait (OPEC) 101.5
6 U.A.E. (OPEC) 97.8
7 Venezuela (OPEC) 79.7
8 Russia 60.0
9 Libya (OPEC) 39.1
10 Nigeria (OPEC) 35.9
* 174.1 billion barrels are oil sands.





Oil exporters. One would expect the
largest oil exporters to be in the Persian Gulf
given the low cost there. But, among the top
five net oil exporting nations, only three are
OPEC members and only two are from the
Persian Gulf. Ranked second and third are
Russia and Norway, which have higher
costs. Most of Russia’s production is in
Siberia and all of Norway’s is in the North
Sea.
Fig. 4
WORLD OIL EXPORTERS, 2004
EIA, Non-OPEC Fact Sheet
Rank
Country
Mil.Brls/Day
1 Saudi Arabia (OPEC) 8.73
2 Russia 6.67
3 Norway 2.91
4 Iran (OPEC) 2.55
5 Venezuela(OPEC) 2.35
6 U.A.E. (OPEC) 2.33
7 Kuwait (OPEC) 2.20
8 Nigeria (OPEC) 2.19
9 Mexico 1.80
10 Algeria (OPEC) 1.68
* United Kingdom .4 Mil Brls Day

Oil producers. A ranking of countries by
crude oil production reflects the restrictive
output policies of the OPEC cartel. Among
the top ten producers only four are OPEC
Fig. 5
World Oil Producers, 2004
EIA, Non-OPEC Fact Sheet
Rank
Country
Mil.Brls/Day
1 Saudi Arabia (OPEC) 10.37
2 Russia 9.27
3 United States 8.69
4 Iran (OPEC) 4.09
5 Mexico 3.83
6 China 3.62
7 Norway 3.18
8 Canada 3.14
9 Venezuela (OPEC) 2.86
10 U.A.E. (OPEC) 2.76

Nikar,
By these figures and assuming gas consumption does not rise, Saudi Arabia would have 83 years at current production and Russia 24 years. Would the price follow Hubbert's Peak or The Laws of Supply and Demand?

Assuming we only have 24-83 years of current oil production and rising gas prices, won't GDP growth be 0% while real cost increase?

Originally Posted by Fraggle Rocker

"When Adam Smith described the functioning of the Free Market and the Invisible Hand, he never envisioned corporations. As I have posted elsewhere, corporations are artificial entities created by governments to take the place of the aristocracy that faded away as democracy replaced feudalism. Adam Smith didn't see that coming, bless his naive little heart.”

Do you know any general literature on this (doesn't have to be internet)? It would be nice to read up on it. Sorry, I've never even seen or heard this idea discussed anywhere else. Maybe it's original. Although I did see the artifact of the corporation singled out as the flaw in capitalism on another thread in Sciforums, but it wasn't pursued to this level of detail.

I'd like to see it discussed more. Maybe I'm right.

You can certainly look up my other postings here on the subject. My theory is a little more fleshed out than this.

The documentary The Corporation (http://imdb.com/title/tt0379225/) does a good job of explaining the history of corporations, I think.

It is certainly true that the corporation is not something that Adam West would have foreseen. It seems to me that the current emphasis on "the bottom line" is a rather un-free interpretation of capitalism.

It is certainly true that the corporation is not something that Adam West would have foreseen. It seems to me that the current emphasis on "the bottom line" is a rather un-free interpretation of capitalism.

I didn't know that the Mayor of Quahog R.I. was also an economist... And this, after learning that he was the caped crusader of Gotham. Wow. Talk about man of many talents.

When Adam Smith described the functioning of the Free Market and the Invisible Hand, he never envisioned corporations. As I have posted elsewhere, corporations are artificial entities created by governments to take the place of the aristocracy that faded away as democracy replaced feudalism. Adam Smith didn't see that coming, bless his naive little heart.

I think you're on the right track, however, I think you give the government way too much credit. Try not to confuse ignorance with ill intent. Governments certainly didn't create corporations, seeing as how corporations and the government often clash. The rise of the corporate aristocracy is analogous to the rise of the feudal aristocracy during and after the final collapse of Rome. You are correct, I think, to place them in the same category. I'll raise up a half-assed comparison between the two. Be patient:

Rome is falling. Bandits and foreign tribemen are roaming the countryside, sacking cities and burning undefended villages. What do you, a simple, city craftsman do to escape the chaos? You head to the hills. The strong amongst you, and those with military skills, become your leaders. You and everyone else in your small community needs protection, full time. Thus, the feudal aristocracy is born. It's rough, I know, and it diddn't happen in that dramatic a fashion, but you get the idea.(And now to something a little closer to now...)

Feudalism is dying. Monarchs are crafting Nation-States out of the remains, slowly destroying the political power of the same aristocrats who brought them to where they are. Under this strong, central government, trade is booming. People are getting rich. Really rich. You want to be a part of it, but you can't. Where are you going to get the money for that kind of venture? Well, other people. You band together. None of you are wealthy, but if a lot of you pool your money and invest it in this new, booming economy, that will change very quickly. Again, I know it's rough and doesn't do it justice, but I'm sure you understand.

The point is, while I agree that the corporation has replaced the old feudal aristocracy, it seems obvious to me that it is not an economic condition imposed upon the world from the top, but rather risen from the bottom. It is an unconcious process, to be sure.

I didn't know that the Mayor of Quahog R.I. was also an economist... And this, after learning that he was the caped crusader of Gotham. Wow. Talk about man of many talents.
Not a typo! Would you not agree that this man (http://ualuealuealeuale.ytmnd.com/) could not have foreseen the hegemony of corporations?

Yes. Yes, I agree completely.

Good save, baum.
Thanks man. You rock.

Nikar,
By these figures and assuming gas consumption does not rise, Saudi Arabia would have 83 years at current production and Russia 24 years. Would the price follow Hubbert's Peak or The Laws of Supply and Demand?

Assuming we only have 24-83 years of current oil production and rising gas prices, won't GDP growth be 0% while real cost increase?


Price won't correlate to Hubert's Peak in a way that you can see on a graph. There are two reasons why price is not the inverse of supply given constant consumption. First, we take the oil that is easiest to take out of the ground before we take the more difficult oil. The Canadian oils sands for example were too expensive to produce oil in the past when oil was cheaper. So the last half of the oil left on earth will have a much higher production cost than the first half of the oil had. This factor says oil prices will be rise more than Hubberts bell curve.

Second, Ethanol, solar, wind, tides, a return to coal without consideration of pollution and other yet to be discovered energy sources will take over for oil as oil becomes more expensive. This factor says that oil prices will rise less than the bell curve. This factor also says that at a particular price of oil and a particular readyness of the other energy sources to compete, the production of oil will drop off at a faster rate than Hubert's bell curve. The remaining oil will be used more slowl than Hubert's curve would show as the remaining oil would be used in roles in which other energy sources can not be used.

You can't make plastic from sunlight but perhaps we can make plastics from cellulose.

Also the deep ocean's seabed probably has more oil than the above sea level land ever had. Deep ocean oil will be expensive oil.

Also, the current bottleneck in natural gas is transport, not supply. They still burn off natural gas as a nuisance in oil fields rather than than sell it as fuel because off how costly it is to transport natural gas. Expect more LNG tankers and terminals to be built.

If oil production is capped (even with huge reserves) at its current rate and consumption rises. Suppliers would be able to charge whatever price they wished. Even if we have a steady supply of oil the law of demand no longer exist (becomes a straight line) and the suppliers can sell for whatever price they wish. If so wouldnt WW3 be inevitable when the suppliers get to greedy? How can you stop greed?

Supply demand law will be ALWAYS valid. Under capitalism, demand is a demand only and only if it's backed with something ($, usually). Supply will match such a demand. If supply shrinks (oil), demand will be shrunk to match the supply and, at the same time, provide suppliers with all the finer things in life. However, since the oil is a necessity #1 of the modern life, it's not only economics which will dictate its price in the long run. In other words, beyond $X/gal, old good fashioned rationing will kick in to preserve the social fabric.

However, if one believes free market ortodoxy, exorbitant oil prices will encourage an invisible hand to develop all those replicators, warp drives and fusion reactors. Not to worry. All increasing consumption foreeavaar.

The reason that the "Laws of Supply and Demand" are an unsatisfactory basis on which to conduct human affairs, in the matter of exhaustible resources, is that the demand (the need) of future generations is not factored into the equation. Beside this, other imperfections of the marketplace are insignificant.

Surely our grandchildren's granchildren will curse this Age of Profligacy and the attitudes of this present generation of mankind (though they are what is to be expected).

By the way, Fraggle, if you think Adam Smith did not foresee the corporation, you should acquaint yourself more closely with his writings.

Supply demand law will be ALWAYS valid. Under capitalism, demand is a demand only and only if it's backed with something ($, usually). Supply will match such a demand. If supply shrinks (oil), demand will be shrunk to match the supply and, at the same time, provide suppliers with all the finer things in life. However, since the oil is a necessity #1 of the modern life, it's not only economics which will dictate its price in the long run. In other words, beyond $X/gal, old good fashioned rationing will kick in to preserve the social fabric.

However, if one believes free market ortodoxy, exorbitant oil prices will encourage an invisible hand to develop all those replicators, warp drives and fusion reactors. Not to worry. All increasing consumption foreeavaar.

Brilliant post.




Oil producers. A ranking of countries by
crude oil production reflects the restrictive
output policies of the OPEC cartel. Among
the top ten producers only four are OPEC
Fig. 5
World Oil Producers, 2004
EIA, Non-OPEC Fact Sheet
Rank
Country
Mil.Brls/Day
1 Saudi Arabia (OPEC) 10.37
2 Russia 9.27
3 United States 8.69
4 Iran (OPEC) 4.09
5 Mexico 3.83
6 China 3.62
7 Norway 3.18
8 Canada 3.14
9 Venezuela (OPEC) 2.86
10 U.A.E. (OPEC) 2.76

I use this list all the time, just to shock people into reality a bit. Most people think that Iraq is in the top 3, when they aren't even in the top 10. And most people think that the USA imports most of their oil, when they still pump most of what they use. And most people think that of what we do import, most comes from the Middle East, but most comes from Canada.

Most people think that Iraq is in the top 3, when they aren't even in the top 10.

That's simply because people are confusing oil reserves with oil production. Iraq has the 4th most proven oil reserves, and would easily be a top producer if the political situation were to be straightened out. You may recall that getting Iraqi oil production back up to par was one of the much-touted benefits of overthrowing Saddam (although it hasn't worked out, obviously).


And most people think that the USA imports most of their oil, when they still pump most of what they use.

False, as I just pointed out in the Iraq pullout thread. Domestic production accounts for less than 1/3 of American oil consumption.


And most people think that of what we do import, most comes from the Middle East, but most comes from Canada.

Also false. Here are the latest numbers:

http://api-ec.api.org/filelibrary/MAY%20IMPORTS.pdf

While Canada is the largest single supplier, it accounts for less than 20% of oil imports: this is hardly "most" of the imported US supply. We import about as much oil from Persian Gulf countries as we do from Canada. Almost half of American oil imports come from OPEC states.

False, as I just pointed out in the Iraq pullout thread. Domestic production accounts for less than 1/3 of American oil consumption.


False, as I also pointed out in the other thread (this is getting confusing). Current production is 40% of consumption, which is much more than we get from any other source.

And half of 60% is still less than we produce on our own. Goes to show that stats can be said in many ways, depending on what you are trying to prove. 30% of consumption coming from OPEC sounds much less than "half of our imports", eh?

We can only curb that by doing away with corporations. This is simply not feasible. There are a lot of industries that are just not possible as a small-business mom-and-pop-shop type of enterprise. For instance, the amount of effort required to design and manufacture a MRI machine is measurable in man-millenia. With your approach I sure hope nobody gets sick in the next several generations. :rolleyes:

-Dale

False, as I also pointed out in the other thread (this is getting confusing). Current production is 40% of consumption, which is much more than we get from any other source.

When you say "most," I (and most reasonable people) understand you to mean "the majority of." It should be clear that, under this standard definition, America does not pump "most" of its own oil, nor does "most" of its imported oil come from Canada.

You seem to be using "most" to mean "the single largest element." That is, the single largest supplier of oil to America is America, and the single largest supplier of foreign oil to America is Canada. This, however, is not an accepted usage for the word "most," and so causes confusion.

I would suggest that you spend more time considering your own diction, and less scrutinizing mine for propaganda.

http://www.energybulletin.net/19420.html

"Based on EIA crude + condensate numbers through May, world oil production is down by 1.3% since December. However, as I have been predicting, production from the top 10 net oil exporters is down more--3% since December. Since domestic demand in the exporting countries has to be satisfied first, and since domestic consumption in most exporting countries is rising quite rapidly, the effective drop in net exports from these 10 countries is probably more than 5%. In other words, net exports are probably dropping about three to four times faster than world oil production is falling."

Both the oil producing nations and the refiners are artificially reducing supply in order to increase thei respective profits.Hmm. Last year Saudi Arabia had roughly 80 rigs developing their fields. This year it will reach 120. Next year they are targeting 150 rigs. Can you explain in what way this constitutes an artificial reduction in supply?

They may need more rigs to maintain a steady or reduced supply. As oil gets pumped out, the pressure drops.

Hmm. Last year Saudi Arabia had roughly 80 rigs developing their fields. This year it will reach 120. Next year they are targeting 150 rigs. Can you explain in what way this constitutes an artificial reduction in supply?

Maybe I should phrase it differently. Opec used to restict supply to raise the price. If the price falls in the future they will restrict supply again. Perhaps when Iraq resumes pumping at full capacity the the Saudis may reduce their production. At the current time Opec gains less from restricting supply than they gained in the past from restricting supply.

You can only push prices to a certain point before alternative energy sources start taking energy market share away from oil.

They may need more rigs to maintain a steady or reduced supply. As oil gets pumped out, the pressure drops.As a general observation of oil production that is accurate. As a reflection of the situation in Saudi it is not. Their aim is to increase prodution rapidly to meet the global demand.

Maybe I should phrase it differently. Opec used to restict supply to raise the price. This is accurate history. It is not the current situation.