Low Oil Profits are Bad. Here's Why.
Posted by deleted 8 years ago to Economics
Low oil profits are bad. Here's why. We all want and need power and we all want and need to minimize climate change. In order to do so, we need a long-range plan to change our infrastructure to a sustainable model. That is going to require a lot of cash. Cash that we can't raise through taxes alone. Think of a rocket ship blasting off from the earth and penetrating into space. It has to reach "escape velocity," the minimum speed and trajectory required to overcome the earth's gravitational field. Our energy future is no different. The oil companies need to invest in technologies, processes, and infrastructure to change the energy landscape. They need to beyond the mechanistic process of refining the "black gold" and embrace more sustainable sources. The oil companies need to diversify their portfolios of products to include the lighter stuff: natural gas, natural gas condensates, etc. To do this, they need to reach a minimum "velocity" of cash flow and minimum “elevation” of profit.
To expand on the notion of diversification in terms of energy, I note that it is a huge benefit to emissions and controlling pollution to change to the newer natural gas fuel source. In fact, it is possible that these fuels are better than even electric cars, depending on where the power to charge them comes from. (Think of a coal-fired power plant with all the innumerable inefficiencies of coal being used to charge a Tesla Electric Vehicle. Not the picture of green we want to see.) We know it is clear that LNG and CNG contribute to climate change 25 percent less than oil does. So, if we want more responsible companies to come out on top and deliver a sustainable future around the globe, we need to know that it is OK to spend cash on oil now so profits go to LNG initiatives and - better yet - alternatives. Certain companies are involved in huge gas projects in the Middle East and Southeast Asia and have recognized climate change as real. I would recommend choosing gasoline not based on price alone, but on companies' energy portfolios, on their environmental records and their prospecti on how they plan to deal with climate change. To summarize: Next time you just want to buy Mobil gas because you don't want to do a U-turn and go to a more expensive supplier across the street, maybe pull the G’s and spend a little extra cash on fuel and a lotto ticket inside. It could make a difference between defying gravity and falling back to earth.
To expand on the notion of diversification in terms of energy, I note that it is a huge benefit to emissions and controlling pollution to change to the newer natural gas fuel source. In fact, it is possible that these fuels are better than even electric cars, depending on where the power to charge them comes from. (Think of a coal-fired power plant with all the innumerable inefficiencies of coal being used to charge a Tesla Electric Vehicle. Not the picture of green we want to see.) We know it is clear that LNG and CNG contribute to climate change 25 percent less than oil does. So, if we want more responsible companies to come out on top and deliver a sustainable future around the globe, we need to know that it is OK to spend cash on oil now so profits go to LNG initiatives and - better yet - alternatives. Certain companies are involved in huge gas projects in the Middle East and Southeast Asia and have recognized climate change as real. I would recommend choosing gasoline not based on price alone, but on companies' energy portfolios, on their environmental records and their prospecti on how they plan to deal with climate change. To summarize: Next time you just want to buy Mobil gas because you don't want to do a U-turn and go to a more expensive supplier across the street, maybe pull the G’s and spend a little extra cash on fuel and a lotto ticket inside. It could make a difference between defying gravity and falling back to earth.
And, why pray tell, are the existing energy companies the ones who need to fund the "new energy". Why not new companies without the old.
What our economy needs is low cost energy -- which drives everything. Bumping up the cost of energy and siphoning off the resources that everyone needs to fund your cause hurts everyone.
Of course "environmentalists" don't actually like the environment and are complaining about forests taking over grassland.
http://www.amazon.com/Moral-Case-Foss...
Your argument about rights covers all imported goods, not just petroleum. Are all the imported solar cells being made in factories that protect human rights? Why focus on oil?
I seem to recall seeing an article about an impending ice age based on current cooling trends. It was bit sarcastic but interesting.
It may be that you simply do not like plant life and would like it to die, but otherwise CO2 is needed.
I tend to lean more in the direction of when Oil and Coal becomes expensive due to shortages of supply man will pretty quickly come up with other ways to make energy. We all ready have them and they will get refined very quickly when needed.
In the meantime the globe will not stop turning, and if it did, I think we could find a way to start it back up again. We are pretty resourceful when it needed and things like governments get out of the way when its something that big, then things really move.
So if you are part of the crowd that sees attempted government global temperature controls as a good thing, low energy is bad. On the other hand you think, like everything the government attempt to control, attempting to control global temperature is more likely to nip us in the butt if the government tries (and it all ready has) then I suspect lower oil prices is simply good for as long as it lasts.
Another thing that climate alarmist nations do to mess with us is to sue us from prior emissions. India and China want to do this. But we didn't know about it. So we can't really be held accountable for climate change before we knew it was happening, if it actually is. They just want to industrialize without being taxed for it, and at the same time to hold us accountable for their land loss (man-made or natural). Although some more detestable individuals want to destabilize our extremely competitive economy. In the extreme case, this is the story behind 911.
I hope the global cooling trend is real. Thanks for your insight. Remember: we can't allow a mineshaft gap!
https://www.youtube.com/watch?v=ybSzo...
Property includes land. Wide swathes of Florida will be underwater in 2100 according to the maps we saw during the GOP debates. Is it up to the landowner to build dikes, levies, and dams? Is it up to those who pull oil from the earth? Is it up to the end users of carbon fuels? This is the argument behind the "carbon tax".
Do you trust the individual landowners will be compensated for their loss? No? Then are you willing to pay a little bit to every land owner in Florida for the gasoline you use? No? Then property rights are not your concern. Maybe that's why the government feels free to tax you?
Don't like that much? Then your options are to continue doing what you are doing and deny climate change, hopefully with the various articulations about trees needing carbon dioxide or about natural climate change, or about the lack of data. But obviously no one understands it well enough to deny it with total scientific conviction. Unless you think climate change is equivalent to "gremlins are studying Hegel's logic on the planet Venus".
If you think carbon dioxide emissions do not explain the increase in temperature, then what does? Until there is a better theory, no one will accept it. And I'm sorry to say, science does not follow "innocent until proven guilty". It explains facts with conceptualization and attempts to integrate theories to predict outcomes. Just as a DNA test shows with some degree of certainty that the smoking gun belongs to a suspect.
Anyone with a degree in physics in the room? Not me. I'm a chemical engineer. I studied chemical reactions, combustion, and environmental chemistry.