Ignoring the fact that this article doesn't clearly state the "evidence" that the FTC found in this "conspiracy", it misunderstands what occurred with US Shale producers from 2010-now.
In the 2010s, US Shale Producers got hyped up on strong oil prices and the explosion of fracking. They massively overproduced, leading to the price cratering and a large majority of producers going out of business. Oil and gas was in severe distress from the late 2010s to the negative price drama in 2020.
When prices rebounded in early 2020s, there was a lot of scar tissue in the industry about overproduction. Producers are now extremely conservative. They are also well aware that clean energy is on the horizon and want to draw out this good cycle as long as they can.
Opposite to what the conspiracy theory states, OPEC and US Shale do not want prices to go too high in the short term, as this shock would accelerate the clean energy transition. They definitely want strong prices, but this $80-100 range is probably the sweet spot. Below $80, they might pull back, which is what we see from OPEC. But this certainly isn't some "conspiracy" to elevate oil to $200/barrel. These participants are sophisticated and are not that shortsighted.
I think the typical Democrat-Party view that "oil bad" and "oil corrupt" lacks nuance. It also ignores the profligate government spending that is driving excessive consumption (travel, etc.) causing a lot of these market dislocations the past several years. Now, they want to point the finger at some grand conspiracy. This seems not far off from Q-Anon on the other side of the political aisle.
> When prices rebounded in early 2020s, there was a lot of scar tissue in the industry about overproduction. Producers are now extremely conservative
In corporate America generally, it seems to be a widespread strategy to limit supply and drive up prices. Sometimes it's done explicitly and illegally, such as in rental housing (look up RealPage). Is there evidence that it's particular to shale production?
> I think the typical Democrat-Party view that "oil bad" and "oil corrupt" lacks nuance.
I distinctly remember reading back in the day[0] the shale oil industry complaining how OPEC would drive up production with the sole intent of making shale oil extraction too expensive and bankrupting companies.
Apparently they went with the old "if you can't beat them, join them" defensive strategy.
A lot of the small outfits also went bankrupt and had to bail, leaving only the big players. It's much easier to cartel/collude when there are a lot fewer competitors. I think all the big guys got the message that slow and steady was the way to go, so they keep the prices high and simply don't pump more than they planned on. I saw one oil man on TV saying the days of razor-thin profit margins were over for his company and they were going to stick to their slow and steady strategy.
> This seems not far off from Q-Anon on the other side of the political aisle.
You either didn’t pay much attention to the sheer insanity of Q-Anon, or you view the world through an extremely partisan lens. Mentioning these two things in the same sentence is itself insane.
There's a common mental exercise I see where smart people will engage in armchair economics to explain what "must have" happened in some situation, or the way the word must work. It all sounds very convincing, but the problem is that there are dozens of other equally convincing macroeconomic explanations. Somehow the ones people tend to pick happen to excuse every rich person from any accountability and foster a "greed is good" outlook, even though the other equally good explanations (left unsaid) would imply the opposite.
You shrug off the FTC's evidence here, and put the word "conspiracy" in scare quotes to discredit it. But the FTC claims "Sheffield sought to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+." and "Sheffield, for example, exchanged hundreds of text messages with OPEC representatives and officials discussing crude oil market dynamics, pricing and output." It feels to me like you're disregarding any actual facts and evidence in this case for your favorite macroeconomic explanation instead.
I think what you're witnessing is a defense mechanism that comes about as a response to cognitive dissonance that is related to their deeply held personal beliefs about how the world works and their role in those workings.
To admit such a level of failure of the global system that they identify so strongly with is like admitting a personal weakness to some people. so they reject that possiblility any way they can.
"If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,” he said, adding: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.”"
There are obvious charitable interpretations of OP's meaning, but you ask for effort without any yourself. Could you explain what you're unclear about? Could you explain if you ask for clarity at all, or because you have an underlying unexpressed disagreement? Is it about the definitional existence of "excess consumption" or is it the precise details you quibble with?
A definition of Excessive consumption would be in order, because it suggests that there's a "right" level of consumption other than what the market settles on, gp did not quantify what counts as excessive, or why. This concept is new to me and warrants more than a single parenthetical example that raises more questions.
On what basis can the bankruptcies be blamed solely/mostly on consumer behavior, versus the viability of many fracking companies being staked on an impermanently high oil prices? The oil industry is notorious for boom-and-bust cycles.
Who's culpable for the bankruptcy of businesses that were only viable under a Zero Interest Rate regime? Should we blame consumer exuberance - or excessive consumption - for pushing up interest rates and causing bankruptcies?
The Fed dropped the ball by keeping rates low. Their choice to keep them artificially low created mountains of problems that we’re still suffering from.
Notably at least partially due to political pressure from Trump - including threats to fire the chairman of the Fed - to avoid higher interest rates and even defaults on his and his families extensive real estate holdings.
In the Antithesis of a trump supporter but don’t make it seem like Obama couldn’t have done anything when he benefited from the low rate environment too.
Consumers are not responsible for macro-economic changes that make a subset of businesses unviable. I was likening Shale Oil companies that could only be profitable at >$95 a barrel to companies that were only viable when capital was cheap - both groups should have known and planned for the respective numbers changing.
This entire thread is interrogating whether consumer behavior (excessive consumption ) is to blame for business failures as suggested, but never explained by the original statement.
It’s trying to describe excessive consumption, which is always going to be subjective - except perhaps if we use the description ‘drives up prices beyond historic norms’. Which is why they put it in quotes.
And excessive production is also always going to be subjective - except perhaps
if we use the description ‘causes a glut of product which drives the price of a product below the reasonable/historic cost to produce that product’.
So excessive production is that which bankrupts producers. And excessive consumption is that which drives up prices unsustainably. Yeah?
> ... except perhaps if we use the description ‘drives up prices beyond historic norms’. Which is why they put it in quotes.
This makes little sense for oil - there are no "historic norms" for the price of oil; just a very wide band of prices. The OPEC cartel was formed was to coordinate production to tame price swings and increase profitability.
> So excessive production is that which bankrupts producers. And excessive consumption is that which drives up prices unsustainably. Yeah?
These cycles are normal, and self-correcting, lagging positive-/negative-feedback cycles are a recurring theme in many disparate fields. Governments, businesses and consumers may not like the implied instability, but picking a single point on the sinusoidal plot and declaring that "this is the optimal amount of consumption/production/profits"[1] seems misguided to me, simply on the basis that its inherently unstable.
1. Or declaring an optimal number of predators and prey if it's a prey-predator cycle.
No, we are don't agree. I challenge the existence of a "correct" level of consumptions, and how it's derived is still ambiguous - all I have gathered so far is that it's below whatever it was when the shale oil companies went out of business. I can think of a couple of confounding factors, so I'm confused why consumer behavior should be assumed to be the primary driver here.
I don’t think it was? And the original quotes (looked like ‘scare quotes’ to me) showed the author wasn’t being very solid about it, or maybe even making fun of the idea.
IMO, the only way to ever even attempt to judge these things is in hindsight for the reasons you state.
My dude, people are allowed not to know what phrases mean. It regularly happens to all of us. And it is normally unclear what someone means on HN; usually we're all stirring the tea-leaves from 1-2 paragraphs of text and there are a lot of misunderstandings.
In this case I think he meant that government is taxing people who would avoid using oil and giving money to people who do use oil, distorting the market to use more oil than it would in a counterfactual world where policy was consumption-neutral. But given we're talking about government policy that is far from the only interpretation - in context he might mean a specific area, for example.
I knew a trader in Texas in the 00’s. Worked with to oil traders. Total hearsay but heard stories from this person of traders in TX calling friends they grew up with who worked in Cushing Ok (large pipeline exchange or w/e the technical term is) to adjust the flows a bit over lunch and then change it back.
It happens, Enron traders were turning off power plants in California that Enron owned to drive up electricity prices (and cause rolling blackouts). They only got caught after the implosion, i'm sure things like that happen all over the place in many industries.
Governments have two broad ways of fighting inflation.
The first way is to raise interest rates. This is essentially a wealth transfer to banks and their owners while hurting individuals and businesses to stifle economic activity. This is what we always do. Why? Because capital owners demand it. The other way cannot be tolerated or entertained.
The second way is taxation. Some countries (eg Spain) enacted a windfall profits tax. Unlike interest rate hikes, taxation only targets profitable corporations. It allows a government to redistribute wealth to those who most need it, fund infrastructure and so on. And it disproportionately affects those who price gouging for massive profits, such as in the case of the oil and gas industry. Companies may reinvest profits into their business to avoid these excessive taxes. Great. Perfect. Love to see it.
This latest price-fixing scandal is going to turn into a huge deal. This is just the beginning.
But it's not th esole reason for price hikes in 2020-2022. A lot of that was because the then Trump administration browbeat OPEC into cutting production in early 2020 [1], which was a truly disastrous policy. You can see the effects on the 5 year view [2] very clearly.
> If you insist on controlling the noise in monetary phenomena through fiscal policy you'll have a really bad time.
Isn't that more a political problem than an economic insight though? We know fiscal policy impacts monetary phenomena (PPP loans, stimulus checks, the child tax credit, etc had inflationary effects), but it's too politically easy to spend more, and too politically difficult to raise taxes, and it's definitely too hard to do either in a timely manner in response to changing economic conditions.
But if we had given a politically independent body like the Fed control of tax / spend knobs instead of interest rates, and allowed them to evaluate whether to change those things on a scheduled basis as economic data arrive ... maybe that would also work, we'll just never get the opportunity to try it.
Nope, it's a completely mathematical reality. If you ditch monetary intervention you'll lose control of the economy by the simple fact that the noise in monetary markets is orders of magnitude larger than the economy.
You'll regain your power after you destroy enough of the economy that it runs with a smaller monetary market. Your government will certainly get bankrupt a few times in the process.
The fiscal and monetary interventions are almost independent things. One can not really replace the other.
The claim: "there’s now evidence that price-fixingp in the oil industry alone may single-handedly be responsible for a little over a quarter of the total inflationary increase in 2021."
Ignoring the typo, which makes me completely confident in their ability to accurately report on these events, the claim is: that price fixing / collusion happened.
--
Their evidence: "Yesterday, the Federal Trade Commission released evidence confirming that collusion played a serious role in hiking oil prices at that time."
They claim that the FTC has evidence of collusion, and they link to a release from the FTC.
--
The FTC evidence: "The Federal Trade Commission took action to resolve antitrust concerns [..] the proposed consent order seeks to prevent Pioneer’s Sheffield from engaging in collusive activity that would potentially raise crude oil prices"
So .. they took action to resolve "concerns", to be preventative so that "collusive activity" that could "potentially" raise prices doesn't happen, in the future.
"The FTC alleges in a complaint that Sheffield has, through public statements and private communications, attempted to collude" .. "Sheffield sought to align oil production"
So .. he "attempted" to collude, he "sought" to collude, or he did collude?
--
So, to summarize, the evidence uses wording like "concerns, prevention, in the future, attempt", but nowhere states that anything actually DID happen, whereas the author of this article interprets that as evidence that it absolutely did happen?
I was also just reading the FTC complaint [1] because this article reads as painfully biased.
And perhaps somebody else can fill in the blanks here, but so far as I can tell, the FTC is not alleging any sort of wrongdoing, but instead filing a complaint against a proposed merger between Exxon and another company, which could enable larger scale constraints on competition. Their evidence are the messages and comments from the head of the to-be-merged company, who made efforts to follow along with OPEC price standards (or even take the lead) as a means of maximizing profit.
Where 'strategic pricing' ends and price fixing begins is not at all clear to me, especially in a field like this where global prices are actively controlled by a price fixing cartel. But it seems to me that the main article is engaging in some extreme speculation, hyperbole, and sensationalism - while presenting it all as matter of fact.
in the actual FTC release:
"Through public statements, text messages, in-person meetings, WhatsApp conversations and other communications while at Pioneer, Sheffield sought to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+."
"Sheffield, for example, exchanged hundreds of text messages with OPEC representatives and officials discussing crude oil market dynamics, pricing and output. In discussing his efforts to coordinate with Texas producers under a production cut mandated by the Railroad Commission of Texas, Sheffield said, “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,” he said, adding: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.”"
"NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions."
This is also legalize, so he hasn't been PROVEN to yet; but it's obvious they have a lot of things to go through here.
TBH - this sounds like a very weak counter-point. The pertinent information is that oil production declined in the US during the 2021 inflationary period. A point in time where under classic money theory - either investments should have been happening too quickly or too many dollars were chasing too few goods.
Something happened in the oil industry which is unexplained by economics (at least to my knowledge), and trivially explained by collusion/price-fixing.
if the producers went bust, wouldn't their equipment/assets be bought for cheap? Particularly if the price of oil and profitability of those assets is rising?
> Matt Stoller is the Director of Research at the American Economic Liberties Project. He is the author of the Simon and Schuster book Goliath: The Hundred Year War Between Monopoly Power and Democracy, which Business Insider called “one of the year’s best books on how to rethink capitalism and improve the economy.” David Cicilline, Chairman of the House Antitrust Subcommittee, has called Stoller’s work “an inspiration.” Stoller is a former policy advisor to the Senate Budget Committee.
> He also worked for a member of the Financial Services Committee in the U.S. House of Representatives during the financial crisis. While a staffer, he wrote a provision of law mandating a third party audit of the Federal Reserve’s emergency lending activities. He also helped cut part of a $20 billion subsidy to large financial institutions. His 2012 law review article on the foreclosure crisis, The Housing Crash and the End of American Citizenship, predicted the rise of autocratic political forces, and his 2016 Atlantic article, How the Democrats Killed their Populist Soul, helped inspire the new anti-monopoly movement. His writing has appeared in the Washington Post, the New York Times, Fast Company, Foreign Policy, the Guardian, Vice, The American Conservative, and the Baffler. Stoller writes the monopoly-focused newsletter Big with tens of thousands of subscribers, which you can subscribe to here.
I don't see how any of that lends him credibility. If anything it just paints him as more of an ideologue. A career dependent on a preset agenda. No thanks.
I feel like I recall watching something where an oil exec literally said they were doing this. He was basically saying this was a way to get some profits back after they lost a ton of money during the lockdowns.
Oil industry profits got vaporized by the decline in prices in the aftermath of the shale revolution. Prices fell sharply from 2014 to 2016. So after this, capital discipline became the watchword. That meant they wouldn't overinvest in new wells, keeping supply constrained. While oil futures had some really weird behavior during the lockdowns, the market demand for capital discipline proceeded it.
How did it cost the average family $3,000 extra for gas in one year? I drove 12,000 miles last year and spent less than $2,000 on gas (480 gallons @ 25mpg, $4/gal), does the average family drive 100k miles a year or am I missing something.
I suppose if you add in all the gas (and diesel/bunker fuel) that you pay for indirectly through transportation costs, you could come up with $3,000 per family.
It is more or less impossible to collude with the Saudis to raise the price of natural gas in the United States (lack of transport), so they must be talking about gasoline.
It is in the article how the cost is not necessarily just from a family’s use of oil but the additional cost added to other things (like food, goods) because it costs more to transport those because of higher gas prices. Those costs are passed on to families so your grocery bill is higher because of it too.
Ok, so any time bad corporate behavior causing inflation comes up, I have to wonder -- how much oil stock would you need to own for this contribution to inflation to be good for you (outweigh your increased costs)?
When price increases cause greater revenue to asset holders from consumers, there's some spectrum of spending to asset holding, and most people that own nothing are losing out, and Warren Buffett who owns a lot but is famously modest in his lifestyle is benefiting ... but how would you estimate where the breakeven point is? Is a lean FIRE person benefiting? Exxon stock has had a really strong 3 years, but we don't get to observe the counter-factual of how it would have behaved without this price-fixing.
all that assumes perfect selfish behavior by each individual investor. Most stocks are not held by individuals, and most individual adults are not invested in stocks.
The rational question raised here is not terrible, but several assumptions in it, together, make the mental model that has enabled rampant destruction of the one and only natural Earth in the past two decades with full knowledge of it.
Asking who benefits does not require us to assume perfect selfish behavior from all investors, nor does it require us to assume that people who benefit from this behavior to want it to continue.
I don't think it requires the mental model you're alleging at all. I'm fully in favor of taxing carbon at a rate which reflects its actual externalized costs, as well as other emissions. I've argued that DAs should charge oil companies with manslaughter when people die in heat waves. I don't drive a car, I don't eat animals, and I plant native wildflowers. Being opposed to the destruction of the planet does not mean I should not ask "who actually benefits from economic trends that everyone complains about?"
Piketty argued that the share of growth that goes to capital vs labor will determine a great deal about how inequality changes over time, and insofar as artificial price increases are just increased revenues to asset holders, this behavior has importance not just today but in shaping the future.
> Most stocks are not held by individuals
Isn't that a distraction? Even when stocks are held by, e.g. an insurer, another company, ultimately ownership of most wealth tracks back to some collection of natural persons. Even in cases where 'ownership' doesn't track back to people, there are still beneficiaries, e.g. people who have pensions don't directly own the assets that the pension fund holds.
> ... nor does it require us to assume that people who benefit from this behavior to want it to continue.
that really is stretching belief.. addiction is literally implied by money flows.. the realms of the conscious and rational are easily left behind at this stage, by millions of people, and through generations.. The tides of humanity versus a small rationalization...
> I'm fully in favor of taxing carbon at a rate which reflects its actual externalized costs, as well as other emissions. I've argued
yes, I believe that you could be different.. most people, most of the time, are not different
> Piketty argued that the share of growth that goes to capital vs labor will determine a great deal about how inequality changes over time
agree Piketty is deep, and worth more attention.. so much detail however! one lifetime is not enough.. glad to see second sources on that as a whole
> artificial price increases are just increased revenues to asset holders
as if any price is not artificial !! but OK, some theory can be useful.. are markets rational, really?
> Isn't that a distraction? ... wealth tracks back to some collection of natural persons.
This emphasis might be satisfying psychologically, but no, really no. Game theory or management theory or even warfare in uniform, all predict that organizational behavior of humans is not just a bunch of individuals. This statement is a tip of an iceburg to economic thinking that sees companies and governments and other groups as having a "life of their own" and significantly and fundamentally changing the trajectory of outcomes.
> people who have pensions
see above. not at all the whole story of finance flows
> yes, I believe that you could be different.. most people, most of the time, are not different
I dunno, I think a lot of people want money but not at any cost. To me the problem is that it's so hard to actually invest in line with one's values. Businesses with carbon neutrality goals are mostly just buying into fake carbon offsets, etc.
> as if any price is not artificial
Certainly increased prices due to actual supply or demand shocks, or increased prices of inputs or labor are different from execs quietly price fixing. Maybe "artificial" isn't the right word to express that difference.
> This statement is a tip of an iceburg to economic thinking that sees companies and governments and other groups as having a "life of their own" and significantly and fundamentally changing the trajectory of outcomes.
I'm not claiming that institutions behave as just the sum of the behavior of the humans involved. And I'm not seeking an explanation of the behavior of companies or institutions. My point about stuff ultimately being held by people is only that there is a group (one might even call it a "class") of people who benefit from price increases like this, even if they are not directly owners of shares in specific companies.
I don't understand your position at all. From what I can tell you think that people who do benefit from harmful behaviors must want those behaviors to continue (I might call this "complicity") but simultaneously to believe that seeking to even describe this group of people is itself harmful. It's almost like you want the moral certainty of saying that rich people are bad, but forestall actual change which might require a lot of work and uncertainty.
no complete theory is presented by me! responding to snippets only.. systems thinking is called for, and also effects on individuals, actions by individuals.. the individual point of view explanation is certainly not sufficient nor complete
The US has no control over OPEC. It absolutely has control over monopolies and cartels within its borders. That’s part of the story; something can be done about this behavior in this jurisdiction and situation.
> The FTC just found evidence that American oil companies colluded with the Saudi government to hike gas prices, costing the average family $3,000 last year. The question is, what can we do about it?
Electric cars and heat pumps.
This is why people paid a premium (until about a year ago) for electric cars. Fixed costs are better than variable costs.
Doesn’t work if you’re in most of California unless you have solar. Price fixing oil is bad, but you can switch to electricity for some uses. If everything is electric and electricity is a monopoly, it’s the worst possible situation.
There's a state monopoly on hydroelectricity in Québec and we pay the lowest rates in North America while Hydro-Québec pumps a billion dollars into provincial government coffers every year.
I’m not sure of the other two provinces mentioned, but in Ontario we pay artificially low rates for hydro (aka electricity) because the rates are subsidized.
I always thought it to be a ridiculous policy; show people the true cost of their usage and stop hiding taxes all over the place for everyone to make up the difference.
You can brag about low rates via monopoly, but someone else might be paying for em
As best I can tell[1], BCHydro isn't subsidized, unless you count the land usage grants from the province (but the water flow stability is useful for irrigation, so it has other benefits)
Either you generate it yourself or you pay. PG&E is not paying the third party electricity suppliers exorbitant rates, they're just charging enormous amounts for distribution. Without a political change, electricity will continue to be monopolized and extremely expensive.
So make or buy your own generator. Or better yet startup an energy supply company. That's the point of it never beeing monopoly. The market is ripe for entry.
So... the electric company can't become a monopoly because you can spend the money and effort to create your own electric company? How can that not be said for anything anywhere that becomes an obvious monopoly?
I think there are legal prohibitions on just putting up solar panels and going off the grid in CA. Like I said, it's the same cartel behavior over a different resource. You cannot start an energy supply company in California, only PG&E can supply power to people in California
So fix California's absurd energy policy. They "deregulated" by giving PG&E a monopoly, paid Enron an absurd ransom when Enron did what should have been considered fraud and made Californian's pay the state back, routinely harm individual solar owners, and refuse to give PG&E any reason to actually maintain their century old infrastructure that sits in a dry forest etc.
People repeatedly point at California fucking up "X" and then say "look how bad X is" ignoring that the other 48 states in the union (Texas also likes to find innovative ways to fuck things up) are doing various amounts of "alright" to "quite well actually" at "X".
For example, Maine also "deregulated" it's electricity sector in the 90s, and is only recently facing problems from the state sanctioned monopoly doing bullshit, and they have an actual excuse that we haven't built out new generation capacity since deregulation, and climate change means we have had an entire year of windstorms destroying the grid, including multiple storms taking out distribution to 1/3rd of the state.
Where I live, heat pumps suffered insane price hikes because production couldn’t keep up with demand during the Russian gas scarcity scare. I‘m talking increases of €10+k.
And electricity prices are especially sensitive to gas/oil prices due to how European energy market prices are set. We still haven’t fully recovered from the insane gas price hike that caused all electricity to 2-4x in price (with huge downstream effects on overall inflation).
I have an electric car, and I'm starting a hugely expensive remodel that will involve migrating to a heat pump and electric tankless water heater, but even with solar, it's a laugh to say that my PG&E rates are a fixed cost!
I live in the Bay Area, and candidly my choices for solar, inverters, batteries, heat pumps and any thing that will make a home eco friendly are abysmal.
I have a fairly unique roof for the area. There has only been one solar installer who did not run when I explained what I needed. They all have a cookie cutter approach to minimize costs and maximize profits. There is no variance or selection. It's a onesie fits all solution to a dynamic problem.
Electric water heating is interesting. You should look to install a tank and a tankless heater. It's called a booster configuration. Set the tank up to run during the day when you have free power and then only hit the tankless when it runs empty (or your variable costs are low).
Good luck finding a plumber who knows how to set it up.
- electricity can be generated many different ways
- many generation sources aren't dependent on resupply. Spiking the price of lithium doesn't prevent existing batteries from working, it only makes new ones more expensive. Solar, wind, hydro and nuclear (to a lesser extent)
- electricity supply is heavily regulated, for better or worse.
What does matter though is if you can affect the distribution with your vote. I would guess it is harder to affect oil companies, that are often located in other countries than your own.
It's not that it currently is immune, it's that there's a compelling story for the energy sector to become immune from it as we reduce our dependence on fossil fuels.
And guess what the fossil fuel lobby is pumping millions upon millions of dollars in propaganda against.
It's been utterly nuts to watch in Germany - our local tabloid rags and their relentless campaign against heat pumps (as well as a botched communication regarding an energy-efficiency law from the government) actually worked good enough to put local manufacturers into a serious crisis [1]. Electric cars are in a similar bind - barely any government subsidies combined with falling gas prices, a lackluster / too expensive offering by everyone but Tesla and Tesla focusing more on the Cybertruck (that can't ever be certified to European standards) than on boosting Model 3 quality combined means that the % of electric cars on new registrations went downhill from 16% to 12% [2].
On top of the fossil fuel lobby spending comes heavy smear campaigning from Russia and its 5th column (aka, parts of the far left, as well as the most popular far-right party), who have identified anything "green" as a fracture point of society.
What to do about it - hit these oil companies, including the Saudi ones, with a huge class action law suit. Additionally US government must fine heavily instances of collusion and oligopoly so that others thinking of following path will be deterred.
Except, last year electric prices were so high in Europe. As in 10 times higher. If it wasnt for thr government stepping in, our family business would've been decimated.
Depending on how much you drive a day, a propane powered generator pack for a few thousand bucks (chinesium ones start at ~1000 $ [1]) in your shed should be enough to charge during the night and keep your home powered as well, and unlike gas/diesel, propane doesn't go bad during storage.
Because you'll only need the grid backup like, what, a week or two in the worst case every two or three years? A LPG-powered vehicle will incur all the typical ICE vehicle costs during these three years.
So us renters who drive long distances every day - when can we expect to come home to a 1k mi range EV and discover our landlord installed an EV charging system and new heat pumps? Because that sounds like a pretty awesome day.
This is me, I'm a renter and my complex will never install chargers. I've tried, it's a no-go.
That said, 50MPG vehicles are common these days. My '07 Prius gets 48, measured, a newer Camry/Accord/Sonata hybrid will get ~50MPG as well. Add an openpilot driving system and it's almost like a private train car.
I drive 80 miles round trip, 5x a week for work. That works out to ~$2000/yr for gasoline. That's really not that bad at all! Just don't drive a crossover or truck as your daily.
I'll probably never buy electric, because I don't want to buy a house (just not for me) and I don't think apartments will install a charger-per-spot (personal requirement). That's OK, hybrid is pretty great.
On the heat pump side, I only have to heat 700 sqft - it requires little energy and is so little cost-wise I don't even track it.
Ban oil exports. Why are we selling our oil overseas?
I would also be OK with tariffs on exports, but they are not legal (it's in the constitution: concession for southern states, protecting their cotton exports).
Ok, but please don't post unsubstantive comments to Hacker News.
I understand the reason for repeating these sentiments—it's the same reason why they get upvoted to the top of threads*—but repetition of this kind is what we're trying to avoid here.
Do they? Her story sounds exactly like what happens in authoritarian regimes with people who fall out of favor, nothing more. She controlled the largest bank in Vietnam for 10 years and then suddenly gets sentenced to death? In Russia, these people fall out of windows. This isn't justice.
We're getting there. Now we have Boeing whistleblowers dying suddenly. But let's not forget the fact that a president was killed in daylight and nobody knows what really happened even after some 50 years since the fact.
For me the best part was everyone telling us that nothing like this was happening, that something like this wasn't even possible, that corporate greed could NEVER have ANYTHING to do with the price of everything going up.
I wouldn't quite rely on this article as a game changer. The author's evidence for his shocking headline is exclusively him assuming his own conclusion, and then adding a healthy helping of fudgery on top of that. From the article
---
How do you aggregate just the oil industry? Well, it’s pretty clear that in 2021 and 2022, the industry did fantastically well, with the “the top 25 companies [making] more than $205 billion in profits in 2021,” and an “even more astounding” amount in 2022. Of course, not all profits are due to price-fixing, but $205 billion is just the top 25, not the whole industry. And profits got much much better the next year.
So let’s layer on a rough guess of a $200 billion increase in profits in 2021 that Scott Sheffield implies, which is 27% of the total corporate profit increase that year. That’s a pretty astounding amount, more than a quarter of the total inflationary increase being a result purely of a price-fixing scheme.
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So he's assuming that 100% of inflation is caused by corporate profits (which is beyond absurd), and then stating that since the oil industry made up 27% of total corporate profits (using evidence that seems to be wildly hand-wavey at best, even though the exact numbers are readily available), that they therefore caused 27% of all inflation. And somehow, the giant price-fixing conspiracy (which is a gross misrepresentation of what the FTC is saying) was the reason they made these 27% of profits (which is absurd).
It’s pretty absurd that the US government talks out of both sides of its mouth on this issue. There’s an effort to divest from oil, shut down permitting, and discourage investment. And when companies respond to this by reducing investment, there are claims about “windfall profits” and “price-fixing”.
There’s no grand conspiracy here. Shale companies over-invested in growth, lost their shirts in 2015, and got punished by investors (or went bankrupt). Then prices recovered, they over invested in growth, and got demolished again as oil prices crashed and even briefly went negative in 2020.
Fresh off these two crashes, it’s not surprising at all that companies are exercising capital discipline and not taking on debt to drill. Shareholders don’t want them to do that!
I traded crude oil professionally until early 2022 and I remember that was how we justified low domestic production in mid 2021 as well (i.e. "producers think these prices are temporary, so they aren't investing").
In retrospect (and these are all guesses with hazy memory) we probably overestimated the cost of turning an oil well on and off.
But exchanging text messages with OPEC to price-fix is damning. An active right wing party would decry this as foreign interference and communism (where's the free market?). Even ignoring the market impact, how can you let domestic producers collaborate with foreign governments to control such a serious macroeconomic input like this? It's like China paying Intel a bribe to produce worse chips.
And our government has literally made it its mission to limit domestic oil production (canceling keystone, blocking permits, ceasing to lease federal land. I’m guessing all the net zero regressives were quite happy about the high prices too
I remember at the time Biden was asking (failingly) Saudi & even China to pump more oil lol
If the prices mean that we move off of oil... we'll it's painful medicine.
The planet's capacity to absorb CO2 is limited and too many people are too happy to be deficit spending on that account because it's not as visible. When that bill comes due, it won't be as easy to pay it off with green rectangles.
>If the prices mean that we move off of oil... we'll it's painful medicine.
I'm know I'm an odd duck, but I think the price of gasoline in the US is way too cheap. Even at the highest price per gallon in the US, that's about the same price per liter in Europe. I'm not considering bigOil profits in saying that. I'm saying that until the price of gasoline hurts, nobody will care about the ramifications from using it (if even then). People are less concerned about the environmental effects as they are their personal financial effects, but I'll take it either way if it reduces the use.
The US federal gas tax has gone down since 1993 in any way you measure it except nominal dollars per gallon (since it has been fixed in nominal dollars per gallon since 1993). It's low enough now to neither be an effective excise tax (it's lower than sales tax in some places), nor fund the federal spend on highways.
Nominal dollars per mile: gone down by about 10% on average since cars have gotten more efficient since 1993
Real cost per gallon: gone down by more than half, since we've had ~116% inflation since 1993
Real cost per mile: just multiply the two together and it's about 60% lower than it was in 1993.
Percentage of spend on gasoline: Gas was $1.11 per gallon in 1993, and it's about triple that today.
That's political suicide. As much as I wish for what you write to become true, look at how stupidly unimportant (or unsolvable) items made people like trump from 0 to hero. This is majority of US voters, and same applies in many other countries. This would hurt literally everybody and cost given political side couple of elections.
Look at how every single politician across all spectrum is playing politics and PC and is on full PR mode 24/7 when on camera. That's not the kind of people who make good long term decisions just because... they are good. Not when they massively hurt back.
> That's political suicide. As much as I wish for what you write to become true, look at how stupidly unimportant (or unsolvable) items made people like trump from 0 to hero.
Or look at how the carbon tax is killing the ruling party in Canada. It reduces GHG emissions, is structured in a progressive way that's a financial benefit to most people, is strongly supported by most economists, and is wildly unpopular at large.
> structured in a progressive way that's a financial benefit to most people
I think most people are unable to draw a line from the carbon tax to how it financially benefits them
It has had a very visible surface level impact of making gas more expensive at gas stations, which is very clearly not a financial benefit for individuals who drive gas cars
People need a concrete reason to believe that this puts money in their pocket. Not some just some vague assurance of "This financially benefits you"
Instead of sending the money to oppressive regimes, we should send it to atmospheric carbon capture facilities.
It costs about $1/gallon (maybe $2/gallon, with recent inflation) to suck the CO2 emitted by gasoline out of the air, and put it back in the ground.
That's a heck of a lot less expensive than dealing with the consequences of climate change, and certainly less than the amount gas prices fluctuate due to price gouging, etc.
As long as you (and the Democratic Party) are honest about it during elections. I’d love for you to say this publically, see how the American people want to suffer and go back to a lower standard of living so that you can feel better about yourself.
Aye? And are Republicans gonna be honest with farmers about the long-term consequences of not swallowing this bitter pill?
Are your politicians prepared to talk about the real welfare queens in this country, the truck-driving rural population whose lifestyle is propped up by oil & gas subsidies?
I'm ambivalent towards American politics, but that's an argument to be made that voting people (and media) don't think in timescales longer than 5 years, and it will be the humanity downfall if we don't focus on the Earth's long term problems. There are no easy solutions, and I don't pretend to have an answer, but "close your eyes and wait for our doom (or a miracle)" is not one.
You sound like a real snowflake. Dealing with 3x the amount of 100F days where I live is a far lower standard of living than any boogie man you can come up with.
I don't grasp this sentiment. It's clear it's not about feeling better about oneself but being preoccupied about a materially predicted catastrophe that can tear the fabric of many societies if left without action.
Even if it means lowering some standards of living for a while, and spending money to move us out from the high consumption of fossil fuels, it's worth it long term both in economical and social aspects.
You don't want a world where social strife due to mass starvation, mass migration, destroying societies that want to protect themselves from the potential millions that will seek refugee elsewhere where they can have food, is possible because it would be a little bit inconvenient to some of the richest folks on Earth. Those will also cause massive economical impacts, broken supply chains, less supply of some raw materials, more protectionism from nations wanting to hoard resources, wars between nations when water sources move borders or disappear altogether.
Yeah, there might be some inconveniences that are required, but previous generations had to deal with much worse inconveniences: wars, famine due to crop failure, etc.
It sounds really entitled to be offended by being asked to not drive your car so much, shop more locally produced food (and even stuff in general) if possible in your budget, change some ways of business to not require so many flights for simple meetings, so on and so forth.
There are lots of low hanging fruits, there's also massive societal changes required, we should be brave enough to be inconvenienced a little to avoid much more suffering in the lives of our kids, grandkids and so on.
Even if this were true, China, Russia and India aren’t going to reduce their emissions. So they will thrive with the cheap energy and overtake the west.
China does not produce enough oil to run its current fleet of cars and trucks. They get most of their oil from the Persian Gulf and they correctly worry that that supply line will be pinched (or cut off entirely) if the US gets angry at them (similar to how the US is angry with Russia now) or if some actor like Iran stops the flow of oil out of the Gulf. Most of the oil and oil products China gets from Russia leave Russia on ships from Russia's European ports -- another long supply line.
So for sensible national-security reasons that do not apply to the US (namely, making sure it can continue to transport things like food to all its citizens if its national-security competitor gets angry at it or if the Persian Gulf becomes unstable) China is interested in electrifying its vehicle fleet since China has plenty of coal with which to generate electricity.
Because coal is the fossil fuel that produces the most carbon dioxide per unit of heat produced, it might be the an electric car in China will more greenhouse gas than a gas-powered car in the US.
That’s a bit of a red herring. Their rate of growth in coal has fallen dramatically over the last 15 years and other sources are growing rapidly. As a share of the total coal is declining as is oil and renewables is increasing. Assuming this trend continues over the next 20 years coal will become a distinct minority share. But their overall demand for energy is so immense that they’re still adding more coal power plants - and every other source of energy as well. The metric you quoted is pretty devoid of broader context and tells a story that’s pretty skewed when the reality is fairly nuanced.
Reality is G7 is getting rid of coal and have carbon taxes, China and India are still building new coal.
China is already first world polluter and will be much more with new coal. There are no nuances in this.
It's almost as if you have absolutely no clue what you're talking about.
Keystone was about pumping oil straight from Canada to the Gulf Coast for the export market, crossing key aquifers to get there. It literally never mattered with respect to US gas prices and never will regardless of what occurs in the future.
The US literally produces more oil today than any country has in the history of the world. One of the main reasons its doing so is because oil prices are high enough to sustain production. Making oil cheaper REDUCES production. Wells become unprofitable to pump and maintain. When Trump negotiated a deal to crash the oil market, thousands of people in the industry lost their jobs.
More than that, the Keystone pipeline would have increased oil prices in the US. Canada exports most of that shale oil to refineries in the US. The pipeline would have bypassed the US and forced us to compete with other buyers for the oil. The pipeline could only have had negative impacts on the US.
https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/ma...
In the 2010s, US Shale Producers got hyped up on strong oil prices and the explosion of fracking. They massively overproduced, leading to the price cratering and a large majority of producers going out of business. Oil and gas was in severe distress from the late 2010s to the negative price drama in 2020.
When prices rebounded in early 2020s, there was a lot of scar tissue in the industry about overproduction. Producers are now extremely conservative. They are also well aware that clean energy is on the horizon and want to draw out this good cycle as long as they can.
Opposite to what the conspiracy theory states, OPEC and US Shale do not want prices to go too high in the short term, as this shock would accelerate the clean energy transition. They definitely want strong prices, but this $80-100 range is probably the sweet spot. Below $80, they might pull back, which is what we see from OPEC. But this certainly isn't some "conspiracy" to elevate oil to $200/barrel. These participants are sophisticated and are not that shortsighted.
I think the typical Democrat-Party view that "oil bad" and "oil corrupt" lacks nuance. It also ignores the profligate government spending that is driving excessive consumption (travel, etc.) causing a lot of these market dislocations the past several years. Now, they want to point the finger at some grand conspiracy. This seems not far off from Q-Anon on the other side of the political aisle.