[MustaphaMond]

As I understand it the price of oil is determined by 2 factors:
A) Supply
B) Demand

Increasing or decreasing either of these factors will have an effect on price.
Assuming that the goal of the government is to reduce the price then it can proceed in two ways. It can increase supply or decrease demand. If we are at peak oil then increasing oil supply is not possible*.
This leaves us with decreasing demand.
Saying that the government cannot reduce demand is nonsense. The government could put a moratorium on driving licenses, that would reduce the number of drivers, which would reduce the demand for oil. This may not be a particularly effective or fast method but the government could in a great number of ways reduce demand, and therefore price (and not necessarily via bribes and fines).
However decreasing demand will lead to a recession.
You would think that the Government should not do this, but if the Govt. does nothing then the price of oil will increase until it decreases demand and causes a recession.
In short the Govt. has two choices;
Cause a recession through selective culling of industries, or
Cause a recession through a non-selective culling of industry.

I think it is clear that the government will reduce the price of oil eventually through recession, I am interested in which form of recession induction the people of peakoil.com would prefer:
Camp A - Believe that certain large industries can be identified which are needlessly wasteful of oil. They therefore think that said industries should be targeted for destruction, so reducing demand, stabilising oil price and enabling people to make wise long term investments.

Camp B - Believe that calculating the energy use of any industry is impossible due to too greater interconnectedness or that well connected lobbyists would subvert the process. They therefore think that half of everything should be destroyed through use of credit and commodities markets and what is useful will grow back regardless of volatility/size of the market.

*Camp C - Believe that although peak oil means less oil for everyone we can secure more oil through resource wars/blockades or threats of such things and therefore reduce the price for ourselves. (cause a recession through serious disruption to world trade)

Camp D - None of the above, I would .....

[BigTex]

Read up on Jimmy Carter's Presidency.

He did things that would sound smart in the laboratory, but in reality they just didn't work very well politically. Thus, we are unlikely to see a President in the future focus too much on reducing demand in serious ways.

Dick Cheney's comment about the American way of life being non-negotiable are very instructive.

Don't rely on the government to ever do anything smart. This rule will serve you well if you always remember it. In those rare cases where the government does do something helpful, it will just be a pleasant surprise.

[smallpoxgirl]

Camp D.....Price is the most effective tool for identifying and curtailing wasteful uses of petroleum. Given what we know about the future of oil supplies, the current price of oil is far too low. What we need is a spike in oil price to $200 per barrel for a month or two follow by a pull back to current levels. That would give us the necessary incentive to reform our waste and the economic breathing room to re-tool and make it happen.

[deMolay]

The oil companies only control about 7% of known reserves. Most of the world's oil is controlled by state gubmints mostly unfriendly. How can anyone control the price of oil?

[dinopello]

It can raise the price through taxes.

[deMolay]

And they would face riots like Indonesia, Norway etc. Already here in Canada, taxes make up 38% of the cost of a litre of gasoline. Everybody is still driving. Taxes reach a point of diminishing returns.

[Byron100]

I do think the government can slap iron-fisted mandates on the car companies...let's set a deadline for next year, 100% of ALL cars MUST get 40 mpg or better...if they can't make muster, too bad. Time to shut the factories down and recycle the scrap metal.

Same for boat builders...fuel-efficient motors only, onerous "luxury taxes" on boats selling more than let's say $30,000, etc.

Raise taxes on gasoline by a dollar (more to come later, you just can't do it all at once), halt all new road construction *immediately*, and completely fund mass transit, nationwide. Make it free for everyone to use to encourage the switch-over to public transit.

We can't make more oil, but we sure can find plenty of ways to reduce it...another simple method would be to raise interest rates to Volker levels and leave them there for a few years...that'll "demand destruct" the economy in tune with oil depletion...hehe.

[smallpoxgirl]

$this->bbcode_second_pass_quote('dinopello', 'I')t can raise the price through taxes.

[Cog]

Any government action is apt to be not very well thought out. Look at the last week's ideas floated by our Congress of suing Opec and Maxine Waters wanting to nationalize the oil companies.

If I have any preference, it would be to let the oil prices continue to rise naturally and let the market place reduce consumption due to the higher prices.

Any suggestions to raise oil taxes even more, to cut consumption are not going to get anywhere in Congress. They like being re-elected.

[vision-master]

$this->bbcode_second_pass_quote('', 'C')an the Government do nothing about the price of oil?

[dinopello]

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('dinopello', 'I')t can raise the price through taxes.

[vision-master]

$this->bbcode_second_pass_quote('', 'I')f I have any preference, it would be to let the oil prices continue to rise naturally and let the market place reduce consumption due to the higher prices.

[bonehead]

They could make all my gas and heating oil purchases tax deductible,but that's not gonna happen!

[Aaron]

You cannot legislate intent.

[vision-master]

$this->bbcode_second_pass_quote('bonehead', 'T')hey could make all my gas and heating oil purchases tax deductible,but that's not gonna happen!

[RedStateGreen]

Not sure why 'the government' should do anything. We pay way less for oil than we rightly should be paying, considering it's a finite resource that we use by destroying it.

Oh, they will 'do something', when it's helping them politically. But it won't be anything useful.

[Kylon]

The government could do a LOT of things, but they aren't going to, as it would hurt their profits.

If the government started mass producing nuclear reactors, and setup schools to train nuclear engineers and technicians, that would solve the energy crisis eventually.

[BigTex]

When flat or declining supply meets increasing demand, there will be price increases until you reach a new equilibrium. Those price increases will reduce economic activity in other areas, since the dollars committed to higher energy prices are not available for other consumption or investment.

If the government raises taxes on energy, it will aggravate this problem.

Additionally, the additional tax revenue generated by higher energy taxes would quickly become a revenue item on which the government would rely and budget. Thus, when demand destruction did eventually begin to kick in, there would be higher government deficits as a result of the energy tax shortfall.

There is no government solution, only creative ways of aggravating the problem.

I invite anyone to point to a government program that is an exception to this rule. It's harder to do than you think.

Modern government is much like modern economies--it requires continual growth for survival, whether or not it is doing anything useful.