Oil firms slash U.S. Gulf of Mexico output by 91% ahead of Hurricane Ida | Hacker News Reader

Oil firms slash U.S. Gulf of Mexico output by 91% ahead of Hurricane Ida

cnbc.com

30 pointsnimbius34 comments

This is bad, it's really really bad but it has nothing to do with the misleading "money printing" that people think is happening right now.

This is good. It’ll drive EV uptake. It’s the next best thing to a carbon tax.

Isn’t that further going to increase gas prices?

Sure, but is it a bad thing altogether?

It's probably bad if you're living paycheck to paycheck and you're struggling to get by. Then on top of already extremely high gas prices they increase further. On top of prices for everything else going up and the value of the dollar going down. Sure, it's probably a bad thing altogether.

> It's probably bad if you're living paycheck to paycheck and you're struggling to get by.

That's precisely what kickstarted the Gilets Jaunes movement in France almost 3 years ago now.

Gas prices are comically low in the US compared to other countries.

If they're living paycheck to paycheck, it doesn't matter that it's "comically low in the US compared to other countries", because that would already be factored into their budgets.

But Americans drive substantially more miles each year than people in other countries do.

https://policyadvice.net/insurance/insights/how-much-do-amer...

In cars that burn substantially more fuel per mile than cars in other countries..

Note that this is not just due to geography but to actual urban planning/architecture. Post-WWII US cities were explicitly designed for cars, and that's a disaster ecologically and practically.

See also Ivan Illich's Tools for Conviviality which has a long analysis on why car-oriented cities has a terribly-low efficiency.

It's a disaster financially. Especially in california with prop 13 people don't pay enough property taxes to maintain the suburban infrastructure in front of their houses.

Well you know what they say... no pain no gain.

Higher gas prices incentivize more exploration.

Though this shutoff will only be temporary while the storm passes.

They also incentivize different consumption patterns, such as owning a more fuel efficient car, flying less or installing better isolation in a home.

Looking at the chart of US Prius sales the last time oil prices went up a lot is really telling

The problem there is that you can’t really save money upgrading to a more fuel efficient car. If you fully own a car (paid off, etc.) there’s not exactly many situations where your new car payment is less than the difference in fuel price. Even if you buy it completely, the break even point is long past the average time an American typically owns any given car.

For instance: I drive an 18 year old Ford Expedition (2004). It gets 20 miles per gallon highway if I respect the speed limit and 12 city. My average per tank is about 15 mpg. It’s been paid off for more than a decade. It’s still in good shape will probably last another last another 100k miles before the engine dies.

Let’s take a 3 year old used Prius for comparison. Most of my friends who have them tell me their average fuel economy is anywhere from 35 to 40 mpg. You can get a 2018 full size for ~$27k.

How far do you have to drive before going from 15 mpg to 40 mpg saves you $27k? If we use the price from the gas station down the street, which is charging $4.40 per gallon for 87 octane, you’d have to drive (27000 / 4.4) * (40 - 15) = 153,409 miles before you broke even. Most cars don’t get to that age before getting destroyed one way or another.

If you’re bored of your car, sure, get one that’s better for the environment. But it has not and will not (at least for awhile) make sense (financially) to buy a new car purely based on fuel economy.

Edit - for the non-Americans, mpg = miles per gallon, which is our customary unit for fuel efficiency. The larger the number the better. The conversion to L/100km would be 235.214583 / mpg.

I entirely agree with your analysis, the "new car efficiency" pitch is outright propaganda from the industry, pretty much like in the PC world where running old machines is usually (unless running 24/7 at full power) much more energy-efficient (and cheaper) than buying a new one.

Just wanted to point out "mpg" and other american-centric units left me confused and i had to look it up. Spelling it out would have helped me understand, coming from Europe where we used standard decimal units. For anecdote, the domain where Europe doesn't use a decimal system is time. A decimal calendar was introduced during the French revolution, but shortly removed from history (like many other progresses of that era): https://en.wikipedia.org/wiki/French_Republican_calendar

That’s fair.

I had written it out initially, but it ended up appearing enough times it felt redundant. I should still have know better though, considering I work with a bunch of European expats who constantly poke at me for it. I then have to remind them that Fahrenheit was a Polish born German living in the Netherlands at the time he came up with the unit :)

But the money you spend on a car is not gone as with gas, since the car still has sales value. Isn't a more accurate comparison to compare average gas price per mile + average depreciation per mile?

The "value" falls off quickly and dramatically though. Unless you have a desirable car that is well known to be just as good used as new (examples: Tesla, Jeep Wrangler, etc.), the second owner isn’t likely to get much of anything for it. If they bought it used at 3 years old, they probably paid 80% of the price it was new, and the dealer probably paid the original owner 60% of what it was worth new. If they hang onto it long enough to pay off a standard length auto loan (5 years) and drive it for a bit after that, you’re probably looking at a ten year old vehicle. They aren’t worth much to trade in. The dealer will pay you 5% of what it was worth new. At 20 years, be happy that they’re willing to dispose of your car for free. I’d be lucky to get a dealer to give me $2k for my ‘04 expedition, but they’d only give me $5k if it was a ‘12 with half the mileage.

That all being said, most cars in the US aren’t replaced because they’re not working or serviceable. People get bored of driving the same car every day. Either that, or they don’t trust a car after an accident, or the insurance company declares your car totaled because they think they can make a profit by fixing it a bit and selling it in a country with less stringent safety requirements.

I still drive my SUV because I’m a 6’4 dude who has a lot of trouble finding a comfortable vehicle. Most crossovers have my knees jammed into the dash or the entertainment system.

> examples: Tesla

I am curious how electric car batteries will fare in the long run. Lithium batteries in the computing world (eg. smartphone batteries) are well known to lose charge after a few years. Considering battery is a considerable cost in manufacture/maintenance of an electric car, i'm not sure how that would play out. I guess we'll have to wait another decade to find out whether that's a disaster or not.

I shot myself in the foot there a bit.

I was really thinking "used cars that sell for so close to what they cost new you might as well buy the new one" (Tesla) and I mentally leaped to "that should mean the car is built so well, being a few years old should cause any wear worth mentioning" (I.e. well built off-road capable vehicle that 90% of owners purchased to merely masquerade as someone who does things that justify owning one)

I too wonder what the range loss will do to the value over time. If lithium doesn’t get substantially more expensive, I know that for the Nissan Leaf my parents owned, getting a new battery + the labor was like $4,000. Admittedly the Tesla battery has 3x higher capacity, but I don’t know much that actually effects the end price after accounting for all of the other stuff that goes into those packs.

The original Tesla roadster came out in 2008, and while it was a very niche vehicle, we can still learn from it being 13 or so years old. Even ignoring the life of the cells themselves, everything around them has changed, as Tesla's learned a lot about making electric cars. eg the plate on the underside of the vehicle to protect the batteries has undergone some reworking. It would be foolish to think a Tesla from 2031 wouldn't have similarly advanced from something from this year.

> it being 13 or so years old

That's very young for mechanical equipment. Traditional cars , washing machines and fridges could be operated for several decades with little maintenance.

> Even ignoring the life of the cells themselves

That was the point of my argument, though. That a great part of the car's production cost is due to the battery, which has a rather limited lifespan.

Traditional cars are owned on average for 6 years.

And maintenance is definitely required along the way and will just keep climbing

> Traditional cars are owned on average for 6 years.

I have no clue about such statistics, but in any case they don't mean the car itself becomes useless after that period.

> And maintenance is definitely required

Yes but that's an entirely reasonable cost, at least compared to new cars. Even if you need to change significant parts of your car every few years (which is usually not the case), it would cost you a few thousand euros at most. A budget of, let's say 1000€/year maintenance (high estimate) is still an order of magnitude cheaper than buying a new car (20-100k€). That 1000€ yearly budget estimate is a very high estimate which accounts for expensive parts to change at most once every decade.

Of course, many people who buy second-hand cars will just buy another second-hand car for 100-1000€ instead of changing expensive/hard-to-reach parts for over 1000€. It all depends on how easy finding the parts are, and whether you or a person close to you has the equipment and knowledge to change the part for free (or in exchange for other services).

Eventually, your car will die. Or the cost of maintenance will exceed the value of the car. At that time, you'll likely consider buying a car to replace it.

If gas prices are high when the time comes for you to replace your car, then you're more likely to take fuel consumption into consideration and buy a hybrid (or EV).

The point is not to replace your perfectly fine existing car with a fuel efficient vehicle; the point is that if you're going to buy a car anyway then it makes sense to consider the next 15 years of fuel costs and carbon emissions.

> Or the cost of maintenance will exceed the value of the car.

How do you measure the value of the used car? In all cases, it's very unlikely that the cost of maintenance will ever exceed the value of a brand new car. If it ever does, it sure is a demonstration of planned obsolescence (voluntary bad engineering to push sales).

> If gas prices are high when the time comes for you to replace your car, then you're more likely to take fuel consumption into consideration and buy a hybrid (or EV).

Not sure about that. Manufacturing cars, whether electric or gasoline-based, takes considerable amounts of fuel from extraction of materials to assembly to distribution. Higher fuel prices means higher parts prices overall, and the reason we have cheap electronics is because they're manufactured in China where energy is cheap and local governments mostly don't care about pollution. I have yet to see a study comparing the amount of fossil fuel necessary to produce electric vs ignition cars, but in the "renewable" energy world the picture isn't as clear cut as you suggest. As much as i dislike the director, "Planet of the humans" documentary has interesting overview of that topic.

>In all cases, it's very unlikely that the cost of maintenance will ever exceed the value of a brand new car.

If this is true, why is the average age of cars in the US only around a decade? If it really is more economical to constantly repair old cars, you'd expect the average car age to be in the decades.

>If it ever does, it sure is a demonstration of planned obsolescence (voluntary bad engineering to push sales).

AFAIK cars have gotten more reliable in the past few decades, not less.

> If it really is more economical to constantly repair old cars, you'd expect the average car age to be in the decades.

I don't know about the US, but in general there are strong financial and marketing incentives to upgrade to a new car, in the form of government subsidies (to keep the market alive, despite sometimes masquerading as green new deal) and marketing (advertisement, social status considerations).

Manufacturers make it almost impossible to order parts for older vehicles, and make sure they keep releasing new models whose parts are slightly incompatible with one another (like smartphone manufacturers do).

Cars sold in the last 10 or so years make it impossible to change parts without a manufacturer-approved (or a foreign-language pirate) debugger firmware.

Also, modern cars are equipped with tons of electronics who each have their own ways of failing over time. Dozens/hundreds of different chips and processors serving questionable purpose makes your product overall less durable. The era of "my cousin will fix my car given the right part i can order from the store" is long gone.

Maybe the original parts from a brand new car are overall more reliable than in the past (i'm sure they're more energy-efficient, but i'm not convinced they're more durable) but the car as a whole is much less durable and the car industry is a very good example of subtle planned obsolescence.

Planned obsolescence does not only mean designing a specific part to break over time, see also https://en.wikipedia.org/wiki/Planned_obsolescence#Variants

> If this is true, why is the average age of cars in the US only around a decade?

Because new cars are being constantly sold and you said "average age of cars" when you really should have said "average years of total use", which is about 20 years and is growing. Not 10 years.

Right. But even the whole "maintenance exceeds the value of your car" thing is a bit murky. Taking a car worth $2k and paying $4k to have the power train replaced with a new one isn’t going to make it worth $6k, sure. But if that means your car will last another 200k miles and you aren’t bothered by driving a vehicle that old, you’re still coming out on top. I think that mostly comes from advice saying "look, if you’re like most other people, you’ll get bored of the car before what you’re replacing fails. So you’re just throwing money into the fire if you sell it in the next few years".

Not in the Gulf of Mexico if the reason for the spike is the increasing frequency of major hurricanes and tropical storms. Last year, hurricanes Zeta, Delta, Sally, and Laura all disrupted offshore oil production in the Gulf. Though I don't think these claims should be taken too seriously, investors increasingly claim to price the 'physical risks' of climate change into their portfolios.

Isn't that going to happen anyway?

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