SeaGypsy wrote: Cheap enough for Matt!
More to the point, cheap enough for folks who:
Use as their main vehicle, something around the 125cc range.
Live 8 people in a 10 msq house with no debt and nominal rent.
Eat a diet roughly: 75% starch (rice generally) 20% veg & in season fruit, 5% protein.
Work at the end of the pay scale which has gone from $2 a day to $5 a day over the plateau period (since 06).
SeaGypsy wrote:There are at least a billion like this and another billion waiting in the wings. Behind these are another few billion just trying to get $1 a day and educate their children.
thisisit wrote:In order to get out of the hole USA should impose a 50 dollars per oil for each barrel of oil. No more futures market on oil in USA just a plain price of 50 dollars, of course after a year or two of that medecine USA impose another cut to 30 dollars....Big oil companies get their usual cut and their share of the market, consumers see a drastic drop in the gaz price at the pump, industries start saving lots of money...and jobs reappear...of course Saudi's will get hangry at such a push but in order to obset the lost they encounter between present price and the so call 50 lets offer them investment priority in USA which should bring a source or revenue and new political power in the coutry day to day business...lets see it as a new kind of partnership and forget about peak oil...what's important is peak job, work today, eat today...think tommorow after a good night of sleep.
onlooker wrote:How is the discussion on POB lately P?
thisisit wrote:In order to get out of the hole USA should impose a 50 dollars per oil for each barrel of oil. No more futures market on oil in USA just a plain price of 50 dollars, of course after a year or two of that medecine USA impose another cut to 30 dollars....Big oil companies get their usual cut and their share of the market, consumers see a drastic drop in the gaz price at the pump, industries start saving lots of money...and jobs reappear...of course Saudi's will get hangry at such a push but in order to obset the lost they encounter between present price and the so call 50 lets offer them investment priority in USA which should bring a source or revenue and new political power in the coutry day to day business...lets see it as a new kind of partnership and forget about peak oil...what's important is peak job, work today, eat today...think tommorow after a good night of sleep.
+1AdamB wrote:Ideas like this are what got Venezuela into the mess it is in.
Price Controls Are Disastrous for Venezuela, and Everywhere ElseImages of citizens waiting in lines to get basic goods — toilet paper, flour, milk — throughout supermarkets in Venezuela abound across the internet. Such surreal imagery is the norm in present-day Venezuela. From the 1950s to the late 1990s, Venezuela was Latin America’s most economically and politically stable country. Fast-forward to the present, and Venezuela is not only undergoing an unprecedented economic collapse, but it is also on the verge of becoming a failed state.
Understanding Venezuela’s Shortage Crisis
How could a country that was once so prosperous fall to such lows? Basic economics dictates that goods do not just vanish out of thin air. To comprehend the phenomenon of shortages in Venezuela, a cursory analysis of the economic measures passed by Hugo Chávez’s regime and his successor, Nicolás Maduro, is needed.
The main culprit in Venezuela’s economic tragedy is government intervention, specifically price controls implemented during the Chávez and Maduro administrations. These controls have been the underlying factors behind the rampant scarcity of basic goods in Venezuela.
Venezuela’s Current Price Control Experiment
Emboldened after an unsuccessful coup attempt against his government in 2002, Hugo Chávez initiated a series of interventionist measures with the aim of preventing capital flight. These measures included expropriation of key industries, exchange controls, and price controls.
Despite the harmful nature of these policies, the flow of petrodollars thanks to high oil prices could give Venezuelan businesses the luxury of importing basic goods and raw materials as a short-term, fallback measure. Even with high oil prices, shortages of price controlled goods began to slowly pop up in 2006 due to the exchange and price controls.
When oil prices started to fall, harsh economic realities began to surface. Scarcity would soon become a nationwide phenomenon in Venezuela thanks to the combined effects of stringent exchange controls that did not allow for the free entry of dollars and a price control regime that prevents the price system from functioning in the economy.
With high levels of inflation coming into the mix, Venezuela’s socialist government would strengthen its price controls. Through its passage of the Fair Prices Act in 2014, the Venezuelan government aimed to tame shortages by banning profit margins over 30 percent and tightening price ceilings on basic goods.
The aforementioned law has only aggravated Venezuela’s shortage crisis and has put the country on the road to famine. In heavy-handed fashion, the government continued its interventionist policies with the establishment of CLAPS, local supply and production committees, that only ration food to government supporters. These measures will result in further misery and poverty.
The Laws of Economics Must Be Respected
In the free market, prices function as signals to both consumers and producers of how much of a product or service must be demanded or supplied respectively. For producers, prices communicate whether it is a good time to enter or leave a certain market. Falling prices and the potential for losses signal to employers the need to leave a market. On the other hand, rising prices and the potential for profit-making incentivize producers to enter a market.
On the consumer end, lower prices signal to consumers that it is a good time to buy said good or service. Higher prices generally discourage consumers from buying a certain product or incentivize them to look for cheaper substitutes. This dynamic ultimately leads to an equilibrium price that is the product of market forces, not government decrees.
When price ceilings are implemented, this price coordination mechanism is turned on its head. An artificially low price leads consumers to demand more of a good than producers are willing to supply. When demand outstrips supply, shortages emerge.
These arbitrary ceilings disrupt the productive structure of businesses and do not allow them to bring goods to the market in a cost-effective manner. Unsurprisingly, many businesses are forced to incur losses, especially if the legislated price falls below the natural market price that is needed to meet operational costs. Less fortunate enterprises will find themselves compelled to shut down their operations as they can no longer afford to supply goods to the market given the artificially low prices.
Price Controls: A Historical Analysis
Price controls have existed since time immemorial. No matter the time or place, the result of such measures has always been the same — shortages and black market activity. Under the rule of Roman Emperor Diocletian, price controls were imposed through the Edict on Maximum Prices in 301 AD. The purpose of this law was to combat the inflationary prices present throughout the Roman economy and reign in the avarice of merchants. A half-measure, at best, that did not address the underlying cause of the inflation — monetary debasement — this law resulted in shortages, businesses shutting down, and the emergence of black markets.
The US was not exempt from the harsh laws of economics either. In 1971, Richard Nixon issued Executive Order 11615 in order to “stabilize the economy, reduce inflation, and minimize unemployment.” Despite being passed under the premise of fighting inflation and curbing the effects of the Organization of Petroleum Exporting Countries (OPEC)’s production cuts, these price controls not only proved to be ineffective in curbing inflation, but they also created a new problem — shortages.
Analyzing the Nixon-era price controls, renowned economist Thomas Sowell noted that “price controls turned a minor adjustment into a major shortage.” Instead of letting prices rise, thus providing oil companies an incentive to produce more, the US government decided to impose arbitrary controls that delayed the necessary market adjustment.
Like clockwork, long lines resulted. Consumers that were frustrated with waiting hours in line would use black market means to buy gas at significantly higher prices. Consumers that are desperate to attain price controlled goods will resort to the black market, no matter how much more expensive the good is, given the stark reality that the price-controlled white market cannot meet consumer demand.
Gartman: 'Oil Heading Egregiously Lower'; Saudi Oil Reserves Will Be 'Worthless
Cog wrote:onlooker wrote:How is the discussion on POB lately P?
You should have asked him how the discussion is going on The Oil Drum.
No wait...
asg70 wrote:In defense of The Oil Drum, I think there was a genuine effort on their part to tease out the truth using scientific methods.
asg70 wrote: I think bias crept into their analysis but it was far more genuine an effort than you see today in the remains of the peak-oil movement.
asg70 wrote:With TOD it's sort of a hindsight is 20/20 thing.
asg70 wrote:
It's not a sin to be wrong.
asg70 wrote:
The right thing for the contributors to do there was to just throw up their hands, pack it in, and go home.
The right thing for the contributors to do there was to just throw up their hands, pack it in, and go home, before their professional reputation was damaged any further.
asg70 wrote: I don't know where any of the others "went", but Gail's response to go off and start her own personal cult, that lowers my opinion of her.
asg70 wrote: I have more respect for think-tanks that are about the issues than I do individuals who sort of pump themselves up as sages and too much of the doomerverse is populated by these egotistical figures. It makes it look more like an attention-grab. But with so few doomers left maybe it's unavoidable that it's these little individual mouthpieces with their megaphones.
AdamB wrote:http://www.theoildrum.com/node/10093
The role of high oil and energy prices in triggering the financial crisis, however, remains less certain
The financial crisis bares many of the hallmarks to be expected with the end of cheap fossil fuels, and the end of capitalism,
As for me, I may start my own blog on energy, climate, and policy - that will not be suitable reading for many existing TODers. For the 7+ years I have been involved with The Oil Drum I have not worked and so any new venture will need to be fully funded, somehow.
I do intend to put the evidence for man-made climate change under the microscope. There still exists a vast range of uncertainty in climate models and in particular in the data inputs, and it is quite simply impossible for climate science to be settled with the current state of knowledge and understanding.
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