[Pops]

I thought about this yesterday after the oil market sustained a 15% reduction in "demand" over the week...

Or was it a 15% increase in supply...

Or was it just speculation?


Shoulda knowed...

The Group of 20 nations should negotiate a benchmark “fair” cost of oil with the Organization of Petroleum Exporting Countries and limit price movements within a band, the United Nations said.

Bloomberg

[DomusAlbion]

I lived through the "wage and price controls" in early 70's. Luckily I was at university and lived in poverty anyway; however, it was not a fun time for the average wage earner, including my parents. Inflation was very bad during that period and the controls did little to alleviate the problem. I remember my mother's outrage when a loaf of bread reached one dollar.

What is it now? Over $3 a loaf and more.

[crude_intentions]

Do these idiots ever learn price controls = shortages
My mother was complaining about the cost of gas the other day. I told her to be thankful that she could at least still buy it. She asked what I meant and I told her imagine if you could'nt get any gas at all at any price. She got that odd look of realization on her face and said "Oh Yeah" as if remembering something.

[Pops]

Yep, I think the public (like some of our fine members here) will demand that government DO something and eventually it will.

Murdock and the Koch boys can hire all the personalities they want to prosthelytize for "Free Markets", austerity for the middle class and tax breaks for the capitalist class. But just as sure as Texans gave up secession to ask for bailouts, at some level of personal discomfort I gotta think J6p will defect and the pendulum will swing way over in the other direction.

And as I've been saying for a while, somewhere after that we'll see nationalization on a wide scale.

If you don't believe that, just take a look at the health of the fourth amendment.

[nobodypanic]

Do these idiots ever learn price controls = shortages

which is what you get when you can't afford something anyway. in other words... price controls mean that even if you have money, you may not be spared the privation that should rightly belong to only the unwashed plebes. poor patricians.

[Quinny]

Already here to an extent.

[lper100km]

Moves like this are the staged precursors to eventual nationalisation of resources. When conditions are judged right, expect to see price and quantity controls in the form of rationing of gasoline, natural gas and electricity, courtesy of your friendly Bureau of Resource Management. Can ‘food management’ be far behind? At least it would get rid of those TV weight loss ads.

It’s amazing how under shortages and times of national stress, a capitalist society will discover socialist theory.

[davep]

It’s amazing how under shortages and times of national stress, a capitalist society will discover socialist theory.

If a capitalist system can't function under resource constraints, surely something else must take its place?

[Pops]

Moves like this are the staged precursors to eventual nationalisation of resources. When conditions are judged right, expect to see price and quantity controls in the form of rationing of gasoline, natural gas and electricity, courtesy of your friendly Bureau of Resource Management.

I'm always skeptical anything is being staged, if that's what you're getting at (if not sorry). Too many moving parts, too much room for human error for most centralized conspiracies to pass the sniff test - for me anyway. The system is self organizing for the most part, just trying to make a buck.

The thing is we are way into the Gordon Geco Era and I'm thinking there is going to be an abrupt lurch to the left.

Same result tho...

[Loki]

I agree w/ Quinny about how we already have some degree of price control on oil, at least here in the US.

Rationing is also a distinct possibility down the road. If we do see rationing, it'll probably be oil first (and it'll be wildly popular after enough gas stations close for lack of supply). Then we'll see food rationing. Of course this will mean the development of a black market. Possible future career opportunity?

[Pops]

We have quite a few price "subsidies" via oil tax breaks and credits, direct ethanol subsidies plus tariffs, etc; low CAFE standards, non-existent public transit, sprawl and on and on - but I was thinking more about controls as in "caps" on price.


What kind of price controls does the US have?

[Fiddlerdave]

I lived through the "wage and price controls" in early 70's. Luckily I was at university and lived in poverty anyway; however, it was not a fun time for the average wage earner, including my parents. Inflation was very bad during that period and the controls did little to alleviate the problem....

How do you know that?

Prices could have risen even faster, and more people could have been driven homeless and wiped out without some limitations on critical need costs.

[Fishman]

Fiddler, Domus lived through it. First hand report. Yours is speculation. The market found ways around price control. As mentioned, price controls and rationing usually lead to larger criminal organizations. You can get it at the price the market bears, or do without. Or you can live under rationing, not get it due to shortage, or pay inflated black market prices. One is based on reality, the other is based on an illusion of "equality" or something. One is open, the other leads to criminal setup.

[Fiddlerdave]

Fiddler, Domus lived through it. First hand report. Yours is speculation.

"Lived through it?" By his own admission he was a student who missed it all.

At that time I, on the other hand, was running my own businesses, AND working a job, AND helping my mother out, who was having a hard time after my "Chirstian" dad bailed out on her, leaving her with several kids to raise while only getting minimum wage ($1 an hour) even though she had a Bacelors degree, because dear ol' dad insisted she be a stay-at-home mom for 30 years, until she got too old. (No, dad is NOT Newt Gingrich!)

The market found ways around price control. As mentioned, price controls and rationing usually lead to larger criminal organizations. You can get it at the price the market bears, or do without. Or you can live under rationing, not get it due to shortage, or pay inflated black market prices. One is based on reality, the other is based on an illusion of "equality" or something. One is open, the other leads to criminal setup.

Indeed there are shortages sometimes, with criminal organizations and black markets and price cheating with price controls.

BUT! The poor can get SOME! SOME food, SOME gas,SOME survival, rather than the Malthusian rewards the wealthy like impose on the poor of NOTHING for all but the wealthy who can buy all they want to waste and still pay the rent.

The 5 gallons of gas limit on purchases gave her enough gas to go to work for a week and keep making a living without spending ALL her money on gas. The unrestrained "Market" would happily have watched her become homeless.

[DomusAlbion]

How do you know that?

Prices could have risen even faster, and more people could have been driven homeless and wiped out without some limitations on critical need costs.

Hey, Fiddler, everything I write here is personal opinion based on my experiences. I was at university in the early 70s and when I did start drawing a salary I continued to live like a poor student so the money was all gravy to me. While a student my rent was from $50/mo to $100/mo and I lived on somewhere around $200/mo. After my first computer job my salary kept climbing at a rate that far outstripped inflation so I didn't feel the impact of inflation personally. What I experienced was my parents generation's reaction to the inflation. These were Depression era folk who grew up poor but at least they had a stable currency and a dollar was a dollar for decades.

[dinopello]

How to ration a scarce good is one of the fundamental decisions a society makes. A key consideration is whether the good is a necessity as it might affect your views on things. Oil/Gas in some sense is like water, it is a necessity to some extent but then becomes a discretionary use. So, in areas where there is drought, the government often steps in to limit people's 'right' to water their lawns or wash their cars so others have enough to drink. But, I think water is basically price-fixed so the shortage situation develops leading to the need to ration by government-mandated allocation. If water was allowed to be priced at market during drought, the use would be fairly uneven. Rich people would take showers and wash their cars and play in slip'n slides and the poor may or may not have enough to drink. I can't see any popularly-elected government allowing people to die of thirst while the rich live in such luxury. Nixon instituted price controls.

[Pops]

The increases in oil price and reductions in production by OPEC in the early '70s were a direct result of Nixon's decoupling of the dollar from gold and the dollars fall in value, that was before Yom Kipur.

The mistake with controls in the US back then was they were aimed at promoting exploration and "new" oil (Drill Baby...) but the net effect was they made oil already in production relatively more expensive and so it was taken off the market causing the artificial shortage - and of course it also made alternative fuels less competitive as well!

http://en.wikipedia.org/wiki/Chronology ... %80%932005)


--
So back to the present, what would this proposed group of oil using countries use as a bargaining chip? Would they say, "keep your price at $80 or we'll build a bunch of light rail?" Or "Keep the price at $80 or we'll make all our citizens stay home this summer?"

The only way to lower the price is to lower demand - unless you are king of the world.

.

[dinopello]

I'd focus on policies that support the idea that daily travel over (say) 5 miles a day will be a dicretionary choice rather than a mandatory act of survival for most Americans. The new American Dream - more freedom. There are many dimensions to this, some obvious.

[Pops]

Right Dino. Even here in my little town of 5k very few people you talk to who work here, live here and vice versa. Everyone commutes up the road 40 miles to Springfield or 40 miles from Springfield to work at our courthouse or whatever.

Obviously not everyone literally, but my point is people haven't simply elected to commute from the outer 'burbs to the inner ring, they go in every direction. And they didn't made that decision in a vacuum, it was based on cheap gas and an available job.

Hopefully, before they go demagoging again (like the gas tax holiday proposal) I hope a majority of the pols will at some point be forced to get honest and come up with a plan to allow the existing happy motoring subsidies to expire - that's happening now albeit not for the right reason, and institute some kind of use tax on consumers. A tax on travel using proceeds to "modernize" infrastructure away from "commuting to work" and toward live/work/shop neighborhoods. We all know that is where we are going to wind up if there is any truth at all to peak oil.

[DomusAlbion]

I'd focus on policies that support the idea that daily travel over (say) 5 miles a day will be a dicretionary choice rather than a mandatory act of survival for most Americans.

Nice idea but how could this be regulated? It seems to me to be nearly impossible to do. What is more likely is to have a set amount of fuel that can be bought. That's where the Black Market comes in to supply those with the cash all the fuel they desire. Also we'd see gas theft go up, tankers hijacked and drained to feed the thriving, illegal trade.

It's best to let the market take care of it; let the prices rise and those that can afford it or through subsidies from their employers (state/private). A lot of hardship is coming from a problem that cannot be solved by dictate. The system (that is we, the people) has to change and restructure and there will be a lot of pain while that processes works itself out. There's no avoiding it. It's best to make the changes now on a personal level to lessen the impact of the massive changes coming.