Should the US government put a price FLOOR on gasoline v.friedman????

[6SpeedTA95]

Well guys and gals as many of you know I'm a big economics guy and a big fan of the free market. However, I think Friedman may have had it right when he wanted 2 dollar/gallon gas in the 90s.

The planet is not short on oil, however, 40 dollar/bbl oil is about the cheapest I could see it going maybe briefly to 35 in our lifetimes. Reality is automobiles are a huge waste of oil. Oil goes into almost everything in our daily lives and we hardly realize it. Using roughly 45% of our oil consumption for automobiles is a huge waste in my opinion. Our dependancy on foreign oil makes our economy especially vulnerable to outside sources of influence aka oil prices.

My solution or potential solution the government keeps a price floor on gas. The floor because if it goes up a lot we obviously dont need to have the government inflating prices to outrageous levels. However, 2 dollars per gallon is a fair price for gasoline when you look at what is truly involved with getting it to the consumer. I would propose a price floor of 2.25 cents so whenever the market price for gas is 2.10 or 2.00 or 1.95 the excess monies would be put directly to alternative sources of energy. Some of these alternative sources would be developed by oil companies and some by farmers or even government entities (but preferrably companies). This "floor" would be adjusted with inflation each year. So next year it might be 2.31 the year after 2.40 then 2.43 etc etc etc...

Thoughts on this? Have I completely lost my mind on this issue?

[Ardentfrost]

The biggest problem with central planning (that is, government people making a decision about anything that affects everyone) is they can never make the decision quick enough (and when they do make a decision, the market will only adjust to that decision, which may make them need to make another adjustment, and back and forth). $2, $2.25, $10/gal... no one is fully able to say what is and what is not a good price. Claiming $2 is the secret number doesn't make it so

So when the real price drops under your chosen number, you're proposing sending the extra money into alternative fuel research, but there are already taxes on fuel. You're suggesting taxing it twice? And it should be the government who decides what alternative fuel is the best? You can't just put money into blanket research, because there are a lot of areas of alternative fuel. Right now the fed gov't is supporting corn-based fuel, but I've read that sugar-based fuel is even easier to make. That means that the corn industry is getting subsidized when it shouldn't be... and this is already happening.

I can't support sibsidization (we already do that way too much), I can't support another tax on gas, plus price flooring gas will only make the oil industry make sure the real price never drops below that point (because people will be paying more for it anyway, and they don't get the money if it's under).

Those are my thoughts on it

[Dumpy Dooby]

I disagree. A price cap would make more sense, but I would support neither positions. OPEC is going to do what it wants, and there's nothing we can really do about that.

Besides, hydrogen is going to replace gasoline so this is pretty much a non-issue.

[PetriW]

Originally Posted by Dumpy Dooby

Besides, hydrogen is going to replace gasoline so this is pretty much a non-issue.

Based on how stuff works in sweden (etanol vs gasoline here) hydrogen doesn't stand a chance in hell unless it's cheaper than gasoline. People are motivated by how much it costs first and foremost, enviroment comes a very distant second.

Current gas price here is about $1.50 / liter.

I believe the oil price will keep rising until a significant enough amount of people / industries have switched to alternatives, then it'll fall again and eventually get rare enough to be unfeasible compared to the alternatives.

[JaJae]

Originally Posted by PetriW

Current gas price here is about $1.50 / liter.

Ouch that's like $6 US a gallon. Is your $1.50 / liter in US currency?

[PetriW]

Yeah, 1.5 USD / liter so about 5.7 USD / gallon, so we tend to use cards that use less gasoline.

[Dumpy Dooby]

Originally Posted by PetriW

Based on how stuff works in sweden (etanol vs gasoline here) hydrogen doesn't stand a chance in hell unless it's cheaper than gasoline. People are motivated by how much it costs first and foremost, enviroment comes a very distant second.

Current gas price here is about $1.50 / liter.

I believe the oil price will keep rising until a significant enough amount of people / industries have switched to alternatives, then it'll fall again and eventually get rare enough to be unfeasible compared to the alternatives.

Hydrogen is extracted from water, which I'm told is one of the most abundant and easily accessible molecules on the planet.

To be a little more serious, Japan has already developed a method for people to extract the hydrogen themselves, and the machine that does it is powered by solar energy. So no matter how you look at it, dependency on oil is about to go.

[Ardentfrost]

I've been meaning to watch that movie called something like "Who killed the electric car" or whatever. About fuel efficient cars getting pwnd by the oil industry or something.

[6SpeedTA95]

Originally Posted by Dumpy Dooby

Hydrogen is extracted from water, which I'm told is one of the most abundant and easily accessible molecules on the planet.

To be a little more serious, Japan has already developed a method for people to extract the hydrogen themselves, and the machine that does it is powered by solar energy. So no matter how you look at it, dependency on oil is about to go.

You're wrong

If we woke up tomorrow and 100% of all new cars were hydrogen cars it'd still take approximately 15 years for it to replace most of our gasoline usage due to the life of modern vehicles.

[6SpeedTA95]

Originally Posted by Ardentfrost

The biggest problem with central planning (that is, government people making a decision about anything that affects everyone) is they can never make the decision quick enough (and when they do make a decision, the market will only adjust to that decision, which may make them need to make another adjustment, and back and forth). $2, $2.25, $10/gal... no one is fully able to say what is and what is not a good price. Claiming $2 is the secret number doesn't make it so

So when the real price drops under your chosen number, you're proposing sending the extra money into alternative fuel research, but there are already taxes on fuel. You're suggesting taxing it twice? And it should be the government who decides what alternative fuel is the best? You can't just put money into blanket research, because there are a lot of areas of alternative fuel. Right now the fed gov't is supporting corn-based fuel, but I've read that sugar-based fuel is even easier to make. That means that the corn industry is getting subsidized when it shouldn't be... and this is already happening.

I can't support sibsidization (we already do that way too much), I can't support another tax on gas, plus price flooring gas will only make the oil industry make sure the real price never drops below that point (because people will be paying more for it anyway, and they don't get the money if it's under).

Those are my thoughts on it

Overall I still lean in your direction on this. But if some sort of temporary intervention weens us off foreign oil that might be a better thing for the market in the long run, which is why I'm kicking this around in my head...not that I can do anything about it anyways

[Diesel66]

Originally Posted by Ardentfrost

I've been meaning to watch that movie called something like "Who killed the electric car" or whatever. About fuel efficient cars getting pwnd by the oil industry or something.

watch how they ignore the faults of electric cars. Range is ~80miles in nice weather, with no hills, no speeding and no extra weight. Add those in and the range decreases fast. True electric cars arent going to be viable until battery technology increase a lot. Only way elec cars can work is if the power source is on the street(like subways) or they are plug in hybrids.





Then you still have the pollution at the electricity source.

[Dumpy Dooby]

Originally Posted by 6SpeedTA95

You're wrong

If we woke up tomorrow and 100% of all new cars were hydrogen cars it'd still take approximately 15 years for it to replace most of our gasoline usage due to the life of modern vehicles.

Of course I understand that. But once hydrogen vehicles hit the market, there's going to be a sudden drop in dependancy.

[6SpeedTA95]

Originally Posted by Dumpy Dooby

Of course I understand that. But once hydrogen vehicles hit the market, there's going to be a sudden drop in dependancy.

There will be a drop when hydrogen comes along but its not going to be significant. It will be a steady decline over the course of two decades.

[PetriW]

Originally Posted by Dumpy Dooby

Hydrogen is extracted from water, which I'm told is one of the most abundant and easily accessible molecules on the planet.

To be a little more serious, Japan has already developed a method for people to extract the hydrogen themselves, and the machine that does it is powered by solar energy. So no matter how you look at it, dependency on oil is about to go.

Hydrogen as car fuel still face many hurdles, I'd recommend reading:
The Truth About Hydrogen - Popular Mechanics

9.50 USD / Gallon of Gas Equivalent (GGE), you ready to pay that for your solar powered hydrogen station? Wind power generated hydrogen has a "bit" better economy at 3 USD / GGE.

However, while that is all nice and dandy hydrogen fuel generated through coal power would cost 1 USD / GGE... Now how do you think most hydrogen would be made? The bright side is at least that coal power plants can handle the co2 emissions far better than a car would on liquid coal fuel.


Notice, I'm NOT saying hydrogen sucks, I'm saying I doubt people will convert to it unless there's an economic incentive to do so. That it happens to be made out of water, which happens to covers most of the planet, doesn't make it somehow super abundant for cheap.

[Ardentfrost]

Yeah, no one will change to alternative fuel to a large degree til it's economically viable. That can occur in one of two ways: alternative fuel becomes cheaper, or oil-based fuel becomes more expensive. Which alternative catches on will just depend on whatever the cheapest and most widely available is when one of those things happens

[Dumpy Dooby]

Originally Posted by PetriW

Hydrogen as car fuel still face many hurdles, I'd recommend reading:
The Truth About Hydrogen - Popular Mechanics

9.50 USD / Gallon of Gas Equivalent (GGE), you ready to pay that for your solar powered hydrogen station? Wind power generated hydrogen has a "bit" better economy at 3 USD / GGE.

However, while that is all nice and dandy hydrogen fuel generated through coal power would cost 1 USD / GGE... Now how do you think most hydrogen would be made? The bright side is at least that coal power plants can handle the co2 emissions far better than a car would on liquid coal fuel.


Notice, I'm NOT saying hydrogen sucks, I'm saying I doubt people will convert to it unless there's an economic incentive to do so. That it happens to be made out of water, which happens to covers most of the planet, doesn't make it somehow super abundant for cheap.

Maybe you skipped this, "Japan has already developed a method for people to extract the hydrogen themselves, and the machine that does it is powered by solar energy. So no matter how you look at it, dependency on oil is about to go."

Honda has ALREADY developed it. Consumers will purchase the panel and put it on their garage or whatever, and then rain or ground water will be be used for getting the hydrogen. Considering the abundance of water on the planet, and the fact that it's solar energy that will be used for converting it, I don't see how one could accurately figure the price per gallon on it.

Also, it should be noted that there are hydrogen stations in California. Perhaps someone here that knows of one can tell us how much they charge.

[Diesel66]

Originally Posted by Dumpy Dooby

Maybe you skipped this, "Japan has already developed a method for people to extract the hydrogen themselves, and the machine that does it is powered by solar energy. So no matter how you look at it, dependency on oil is about to go."

Honda has ALREADY developed it.

link ?

Also, it should be noted that there are hydrogen stations in California. Perhaps someone here that knows of one can tell us how much they charge.

President Tours Hydrogen Fueling Station, Discusses Research

equivalent to ~double the price of premium at the DC station

[6SpeedTA95]

Originally Posted by Diesel66

link ?






President Tours Hydrogen Fueling Station, Discusses Research

equivalent to ~double the price of premium at the DC station

It is impossible to accurately compare prices of hydrogen to petrol today. The infrastructure isn't there the economies of scale is basically nil. Estimates show hydrogen being a valid souce for energy costing between 1.30 and 2.50/gallon equivelant.

[Dumpy Dooby]

Originally Posted by Diesel66

link ?

The showed it on either Top Gear or Fifth Gear. I always get those two shows mixed up. But it was on the show, along with the vehicle.

Hence, it's already been developed.