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Comment by JavaBatman | Hacker News Reader

A lot of this is due to fuel prices. The price of fuel affects the price of everything else. It's a benchmark since everything requires fuel. Manufacturing, transportation, agriculture, etc. It all requires fuel. It doesn't help that OPEC refuses to increase production in order to make up for their budget shortfalls last year. Also doesn't help that the US government is sending signals that it is no longer on board with fossil fuels. The shutting down of pipelines, ending of fossil fuel leasing, etc. sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits.

Best option would be to have a diverse portfolio of energy production: oil, natural gas, solar, wind, hydroelectric, and nuclear. Don't go all in on one, that's how you arrive at the situation we are currently in.

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> sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits.

Great! Puts us one step closer to slowing global warming and giving us a chance to turn this boat around.

Rising oil prices makes the market naturally move away, which is really really good in the long run.

Having the economy crash would just speed up global warming. You can't have clean energy and reduced pollution without investment in new tech.

That will disproportionately affect lower income households who can't as easily withstand these rising costs, which further drives income inequality.

> Rising oil prices makes the market naturally move away

This is trivialization of the transition as the worlds depends oil in many ways: development of cars (electric or otherwise), airplanes, solar panels, vaccines, acetaminophen, etc. -- these are all petroleum-derived products.

I recommend this article on the difficulty of the transition https://www.theatlantic.com/international/archive/2021/11/en...

Given this dependence, axing our production just means we have to rely more on other countries and given that climate change is a global problem -- what's the difference? If we do it here, perhaps we innovate on making its extraction more eco friendly (which has been the case for the last 20 years)

> That will disproportionately affect lower income households who can't as easily withstand these rising costs, which further drives income inequality.

I see your compassion, but income inequality isn't driven by prices, it's driven by the employers not paying enough to their employees. Prices can't fix that.

> This is trivialization of the transition

Is it? I read it more as this being an important step toward addressing the climate crisis.

> as the worlds depends oil in many ways

How much oil is used in making acetaminophen? Why even bring it up? Nobody is saying "no oil," they're saying "stop polluting so much".

> perhaps we innovate on making its extraction more eco friendly

The extraction is a small problem. The global warming it causes is the large problem. Less pumped oil means less burned oil which means fewer greenhouse gases.

> I see your compassion, but income inequality isn't driven by prices, it's driven by the employers not paying enough to their employees.

Not exactly, it's also driven by price increases. If employers give their employees a 50% pay increase, but prices increase by 50% then that pay raise is rolled back by inflation. Wealthier people more often have their money in assets, with values that increase alongside inflation. This is largely the dynamic we're seeing in the US: labor shortage means people get paid more, but those increased wages are getting eaten by higher prices.

Very low income people frequently have more debt than assets. They also see their net worth increase from inflation.

Also the sources I see show nominal wages growing faster than inflation for low income households, meaning that their real wages are actually increasing.

> I see your compassion, but income inequality isn't driven by prices, it's driven by the employers not paying enough to their employees. Prices can't fix that.

The two are intertwined. Every big-ticket item costs at least $1000 round numbers these days. If you halved that threshold to $500, you would put more valuable goods in reach to more people without adjusting wages.

You can do the same by increasing wages, but that threshold might go up in response to $2000.

It’s all about prices relative to wages, not either in isolation

this is why focusing on the wage part of inequality is the wrong approach.

Figure out how to make products cost less and cheaper -> more can enjoy them and everyone becomes richer.

Print more money to give to people to fight inequality? If you don't invest to make supply more efficient, all you'll get is inflation.

Rich people don't buy the same products as poor people. In fact, most rich people (Elon) own capital that is being invested in part to make production more efficient.

If you were to tax all of Elon's wealth and give it to the poor, it's just not the case that everyone could suddenly afford a Tesla. What would happen is that nobody could afford it, even people that can afford it today, because you are moving capital away from investment and into consumption.

"Welfare spending doesn't help poor people due to inflation" sounds pretty dubious to me...

it does, but you also have to tax some people so that they spend less.

Recent narratives is that you can do welfare for 'free', either by printing money and not worry about inflation or default, or by taxing 'billionaires' so nobody feels it except 100 people.

Climate change will also disproportionately lower income households.

> perhaps we innovate on making its extraction more eco friendly

Wait what? Fossil fuels will never be eco friendly. The best thing for renewable energy is to be more economical than their competitors, which is far more achievable when oil is expensive. It should be obvious that oil prices doubling do not cause electric cars or solar panels to double in price, even if they do become slightly more expensive.

Well that's just false. As of 2020 US reduced its emissions by over 20% below 2005 levels which was mostly due to fracking natural gas instead of coal.

Not saying that's all rainbows either but you're suggesting there can't possibly be any improvement here. Sounds like a bad bet.

You claimed that the best way to make oil consumption more eco friendly was by reducing the environmental impact of extracting it, rather than letting high cost motivate consumers to switch to renewables. Now you've backtracked to supporting natural gas to replace coal. It is true that switching from coal to natural gas is a big win for CO2 emissions, but there are clear diminishing returns on that. Since 2005, the US has already gone from 50% coal power to 20%. The problem is that our current levels of oil and natural gas consumption are incompatible with hitting emissions targets. The mere act of burning those fuels at the current rate already puts those targets out of reach -- before even considering the cost of extracting them.

Great for rich people on HN. Bad for middle class and poors who need to drive right now, not 20 years in an imagined future.

Those middle class and poor people need to just suck it up and cut expenses so they can buy the $35,000 electric cars. /s

> The shutting down of pipelines, ending of fossil fuel leasing, etc. sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits.

That's the point isn't it? From an environmentalist perspective, policy that discourages fossil fuel production makes renewables more economically attractive by comparison, encouraging attrition away from fossil fuels into renewables, thus reducing emissions.

> Best option would be to have a diverse portfolio of energy production: oil, natural gas, solar, wind, hydroelectric, and nuclear.

Pretty much everyone can agree with this statement, the devil is in the details as usual.

Interesting, I thought the US was now "energy independent" but Forbes is claiming we're now short.

> However, thus far the price surge is primarily a result of 3 million barrels per day (BPD) of oil production that was lost in the spring of 2020 that hasn’t fully recovered. Demand has fully recovered, so that is the fundamental reason for the surge in prices. Further, that surge began in the fall of 2020 — five months before President Trump left office.

The shutdown hit oil production quite a bit. Recovery and startup lag by months.

All the Democrat candidates put themselves forward as anti-oil. If you thought Trump would lose, it would be smart to buy oil and then hold for a while.

When Biden won, the speculation took off. Signals matter.

Biden signaled that everyone must move away from gas-driven vehicles. He banned a pipeline (getting sued by Canada over that one). He banned as much fracking as he could. Even worse, he defied congress and the law by allowing the Russians to build their pipeline which will pipe money straight into Putin's pocket

The result of these changes (and others) was a lot of people shutting down oil production. Others speculated even more that the pipeline and fracking decrease would mean less supply, so they bought up the oil while the prices were still down.

With OPEC refusing to up production, there's even less reason for the speculators to sell. Biden released part of the strategic reserve, but it amounted to less than two days supply of oil for the country and nobody who knew anything about the oil market cared very much.

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