Why $120 oil is good

I'm fairly convinced we will see a very severe recession, possibly a depression, in the US and Canada. A lot of Canadians smirk at the problems in the US, but they forget the vast majority of Canadian exports go to one country

Canada and the US have a lot in common: fairly dispersed urban areas, personal vehicle commute, fairly primative mass transit - compared to the EU

I frequently travel to the EU on business. A lot of Europeans are surprised that folks in North America think nothing of hopping into a full size SUV or 4 door pickup truck, and driving +2,000 km ONE WAY on a little vacation

 

Problem is the power of the supplier in that there are very few of them, they don't exactly compete with each other, and our entire infrastructure is based upon the product they sell largely in part to our government's collusion with said suppliers (I mean the oil execs meeting on energy policy? No one sees the conflict of public interest here?), and before you say vote in new blood... it seems government is itself a corrupting agent. Get rid of one monkey, in comes another.

So the power of the consumer is really reduced. Not many live close enough to bike or walk to work, those who don't probably can't afford to move near work.

This whole power to the consumer takes the broad sweeping example with everyday other goods where there are literally hundreds of suppliers (brands) and they do compete in price with others. Saying stop buying oil related products is kind of like saying, stop buying food to protest the high food prices.

 

You are correct. Most of the suppliers act as one, OPEC. While the bidders, the consumer, usually represent multiple countries and corporations all bidding against each other. U.S. Corporations are bidding against corporations from China (they have several agent corporations that bid for China in general), India, European corporations as well as those from Africa and the numerous countries from South America.

Also there are companies and individuals who bid on oil to hold it and later sell it to trade for more dollars than they paid for it. But the numbers of these brave but foolish people are small and don't really affect the price of oil.

 

What the hell are you talking about. Where did I advocate government control? You are the epitome of the average american education and you simply do not understand English.

I'm glad the oil companies are greedy and maximize the profits for their shareholders. I've been buying exxon and BP throught their monthly DRIPs for the better part of 10 years. I bought UGA(United States Gasoline ETF) as soon as it went online. If I had the keys to the oil companies for a day, I'd use one of their standard MO excuses(war, pipeline rupture, hurricaine in florida, unfriendly oil dictator grumpy mood, lack of refineries, memorial day driving, labor day driving, winter heating use, summer vacation driving, basically anything) and raise the prices so high people would be begging for the low prices of today.

 

No, we need to change by bending, not breaking. Oil above $200-$300 will cause a lot of hardship. I'm willing to improve my home's efficiency and buy an electric car in a couple years when they become available, but I can't do all that if I lose my job and there are no new ones to get.

But we do need to change. That much is clear.

 

I Nerfer and Hill both make valid points. We haven't seen hardship in the US for a very long time. The closest thing was the oil crisis in the 70's and that was minor. And even that was only truly experienced by people fifty or over. Most people today still view the price of gas simply as an expense, not as a hardship. People still feel the NEED big vehicles -- that there is something fundamentally wrong with using a smaller/smallish car. We have become too jaded. I even had someone ask me why I hated large cars the other day.

I think we are talking about the wrong numbers here. It's not the price of a gallon of gas or the prices of a barrel of oil. It's the price of the daily commute. I don't think that we will see people change their ways until the price of their daily commute is significant. When the daily commute starts to be greater than $10, I think we will see people paying a lot more attention. At $10 and a 30 mile commute with a 20MPG vehicle, the price of gas would be $6.67/gallon. For that, oil needs to be in the $250 range. Anything less then that will only scare the smarter ones.

 

I agree with both posters above. Unfortunately the increases in the price of oil are what is necessary to get alternative transportation technologies moving and into the mainstream.

You didn't need a crystal ball to see this coming. It was spelled out nicely in a June 2004 National Geographic feature article "The End of Cheap Oil". http://ngm.nationalgeographic.com/ngm/0406/feature5/

Some like to argue that government involvement is not the answer. But when it comes to things like energy and transportation infrastructure the private sector really can't affect the big picture to the extent required on its own. The private sector will respond to incentives. Economic incentives are forming out of the current situation. But these solutions will be reactive rather than proactive. And, like I said, we didn't need a crystal ball to see this coming. As a result, we will have more pain and damage to the economy.

It sure would have been nice to have national leadership with just a little vision and insight to put the incentives in the right places. We focus on the economic pain and damage. The flip side is that there could be tremendous economic opportunities for new technologies and industries. Historically, this is what has made the U.S. economy so successfull. We could be fostering new economic opportunities in moving the transportation infrastructure away from petroleum. Petroleum will still play an important role - air travel, agriculture, miitary, etc. But 60% of our petroleum is used to power our vehicles. Moving the transportation infrastructure off petroleum would strengthen the economy. The country would have a chance of being able to elliminate our dependence on foreign oil. And, new technologies and industries would be created in the process further stimulating economic growth. By lacking vision and insight, the federal government has missed this opportunity. Instead we have the current economic situation, with the current so called "stimulus" packages.

Think about a U.S. not dependent on foreign oil. Think about how that could impact our foreign policy... about the Middle East. And, again how that would impact the economy.

We can put rovers on Mars. You think we can't put EV's on our highways? (Actually, we have. But then we took them off.)

 

we had that leadership that saw the writing on the wall unfortunately, his opposition had a brother in Florida who basically decided the election. his brother didnt do a great job of it... (first two counts had Gore winning) but with a lot of help from oil interests, he still got the job done.

what happened next in just over a year, bush eliminated the strides made toward alternative vehicles; namely hybrids and BEV's, then put all the money and support behind a technology that NO ONE THOUGHT WAS VIABLE in hydrogen... and coincidently, just as his administration is coming to an end, nearly all support has been pulled from the idea. no small wonder since without him, no one in their right minds would bank on hydrogen going mainstream for at least another 20 years and we simply dont have that much time.

 

It just pains me to still see hydrogen being mentioned in the articles where a car company like Ford or Honda is still pretending that they will have a viable product in a few years. I hope that oil prices continue to rise to shock people and governments out of there complacency. The price of oil has gone up dramatically in the last while and if the vested interests could I'm sure they would like to stop its rise, to prevent alternative energy from getting more of a foothold. If they can't increase production enough, and so far they haven't, then we must be getting past the peak.

The millions of people that purchased gas-guzzlers in the last few years clearly didn't see the writing on the wall and unfortunately are going to have to suffer. But I can't say I feel too sorry for them.

I am really encouraged by the gaining momentum toward electrification of transportation. Utilities and municipalities and car companies are really getting behind PHEVs. It really seems inevitable now.

 

I agree. Now that it's summer, most days I ride my bike to work. Which means my wife has a choice for her 20+ mile commute (it varies from day to day) of either "her" Honda Accord or "my" Prius. 28 mpg vs 52 mpg. Unless I pressure her, she takes the Honda every time. Gas is $3.80/gallon here so that could be $4/day she spends on the drive, and apparently it's not enough for her to change her habits even though it would be easy to do so.

 

So why don't you pressure her every time? At least get her to agree to drive the Prius half the time you don't drive it.

Does she realize she's spending an extra $80/month on fuel every month by driving the Accord? Or that that is enough money to pay for that grande latte on the way to the office every day?

It sounds like her commute is longer than yours - wouldn't it make more sense to make the Prius "her's" so that she is always driving the fuel efficient vehicle?

If she doesn't like driving the Prius for whatever reason, have her drive the Accord a couple times a week instead - but if we can't get a PriusChatter to convince their significant other to drive the more fuel efficient vehicle more often it just highlights the problems we are facing the country as a whole when it comes to reducing our dependency on foreign oil.

 

As my husband and I drive in to work each morning, we take a look at who/what is on the road.

Still lots of SUVs. OK, I can buy that it's expensive to get a new vehicle and not everyone can afford to trade in on something more efficient.

But what gets me is that the vast majority of those SUVs are being driven by a single person, no other people in the car. So while they may be complaining about the price of gas, they aren't doing what they could be doing to lower their costs.

We've also noticed an increase in the number of bikes on the road.

We've calculated our daily cost - 50 miles round trip is roughly 1 gallon of gas. So for the three kids to get dropped off at the sitters and for me and my husband to get to work, it's $3.50 per day - only $.70 per person. Even riding the bus would be more expensive, and the bus doesn't go within 10 miles of our house.

I don't think most people have made those calculations, though. And you will always have those for whom the inconvenience outweighs the savings - if I can take a bus and it's $2.50/day but takes 2 hours to go there and back, or I can drive and it will take 1 hour but cost $6/day, for a lot of people it still won't be worth it. Give up an hour of my time to save $3.50? No way! And yes, it can and does take 2 hours on the bus around here because we just don't have a great mass transit system.

 

Neither do we. But our look quaint, like Trolley cars. Useful huh? And that means they are short too. But they take you where you want to go, so long as it is the mall. I thing I'd have to drive to the mall to take the trolley-bus to another mall.

 

They are building a light rail here in Phoenix, it will start operating in a couple of months. The avg speed is something like 13mph - which sounds slow, bu when you compare it to the avg speed on the freeway at rush hour, it's not.

In the beginning, it goes from downtown to the east valley. Since that is where the traffic is, that makes sense. But it's going to take years before it gets as good as London, NY, or Paris - if ever. I think the only way that would happen is if gas does go up to the point that people are willing to ride it. I don't know how many riders they'll have when it opens.

 

BINGO!!

you hit it on the head. we are disadvantaged as americans.

1) we live in a huge country. 3rd largest in the world.
2) in the era of cheap gas, we migrated out of the cities into the country and suburbs and did not want the "riff raff" that rode the bus. so it was banned in many areas
3) we have cheap gas, so no reason to look at alternatives.

what we need to do...

gas is still WAY TO CHEAP. we need to add a very large tax (i say $2.00 minimum) use that extra money to fund mass transit, alternative fuel vehicles. "car sharing" etc.

your example of the small difference in transportation costs is pretty inaccurate. in real life, if you were struggling to make ends meet, you would realize that. its actually 2-3 times cheaper to take a bus.

"your" bus fare includes gas, oil, bus payments, insurance....

"your" personal expenses includes gas... gas... and ya...so umm...anyway you get the point

but still boils down to not making mass transit work as a personal choice. now that gas is getting more expensive, people are changing their personal choice. i feel your pain... i live in town... but the bus would drop me off 45 minutes AFTER the start of my shift... around here because of cutback, our bus service is just over half of what it was 15 years ago.

 

That right there has so much truth to it. Where I live, in order for us to have our horses, I have to live 80 miles from Chicago, that is where we could find the least expensive property. The closest train is 10 miles away, and for my wife, thats fine since she is a few blocks from a train station. For me the closest train station is 5 miles away, and no bus service, I would need a cab. I wouldn't be able to walk it either since there are no sidewalks or a straight shot for that matter. The thing is, my wife works near where I work, we could ride in together, but I have no means to get to my office once we get there. We really don't have an option but to car pool in, plus the fact we drop the kids off everyday, and that is no where at all near a train station, so we are in a must drive situation. What I have noticed is no matter how high gas prices get, people are still speeding, passing others, tailgating, etc. as if they don't care. I drive conservatively I don't like wasting money, and since I drive a hybrid that is showing me how much gas I am using, I can see how others waste it. People are wasteful, and those that waste it have nothing to complain about.

One of the downsides, and those who boast, oh tax it more, make it higher aren't realizing the overall impact that high diesel costs are having on the overall economy. I said it years back when diesel hit $2 a gallon, we are going to be paying for it with everything we buy, from a gallon of milk to the clothes on our back. Feed for our horses has tripled in the past 3 years, shavings have nearly doubled, grain has doubled, and it all is due to the cost of diesel. What used to cost me $1 in diesel to do, IE cut the grass, now cost $4. I don't bother buying fertilizer anymore, too expensive, so my grass looks terrible. Upkeep on the home is suffering because it costs too much to do anything on it now, prices of materials have gone up, a sheet of drywall, used to cost $2.50, now is over $5. The high price of oil has a trickle down effect and will affect every single consumer whether they have a car or not, and that is the plain fact. Alternative energy sources, like ethanol are having a huge impact on food costs, and ethanol is not the answer to oil, in fact it is a boondoggle. The best viable source of energy that is not Petro is bio-diesel, but in the US, the vast majority of vehicles are not capable of running on diesel, because there are very few diesel powered cars. In the EU and other countries, there are more diesel powered vehicles than gas, so bio-diesel is a better alternate for them. More attention needs to be spent on viable means of creating bio-diesel, than ethanol, at least it wont take away from food sources. Bio-diesel can be the interim fuel until cheap sources of electricity in the form of either battery packs, or power cells can be produced, it is cleaner, has more power, and takes less to make than ethanol, done properly an increase of nearly 300% input to output can be achieved. The biggest thing is, the technology to use it efficiently is already out there, and cleaner burning engines that can use it are in production right now. Older engines can use it with NO modifications!

Alternate sources of energy is out there, the problem is no one is going for them whole heartedly, instead we all just sit back and bitch about the price of gas. I for one would like to see some bio-diesel plants being built to make it more accessible.

BTW, if Ethanol only uses 15% gasoline, why is it the price climbs at the exact same percentage as gas? Shouldn't it be only 15% of the price? So much for that as an alternate fuel source, especially when you take a 27% loss of fuel economy right off the top. To make it break even with gas, it needs to be at least .50 a gallon less than gas, but current rates show it only .30 less. In the long run it costs far more to use E85 than gas, and at that rate, no one will want to use it.

 

Even if gas jumps to $10/gallon, how many people will be stuck without a choice?

Sure, it's great to say "tax it and build public transit!" - but it doesn't happen overnight. I'm all for building a nice transit system, but how many years until it actually works and I can use it? In the meantime, how am I going to get to work?

We've discussed how to get to work/school on as little fuel as possible. The bus doesn't run near us. So our options must include some driving.

With as little car usage as possible, our 25-mile commute would be -
Drive 6 miles to drop kids off at daycare/school. then
Bike 5 miles to nearest bus stop. then
Ride bus for 8 miles east. then
Transfer to second bus, finish trip into work.

And how long will that take? About 10-15 minutes to get to the sitter's house.
The bike ride will be 20-30 minutes, depending upon how much construction we have to avoid and how many red lights we hit.
Waiting for the bus - 10 minutes, assuming the first bus has an empty bike rack.
Bus ride - 20 minutes.
Waiting for second bus - another 10 minutes.
Bus ride - 20 minutes.

Our 50 minute commute (including the time it takes to walk the kids into the sitter's house) just became almost 2 hours! My time is worth more than the money we would save by taking a bus/bike.

The sad thing is that my district would pay for my bus pass. So no cost to me at all, except that I'd lose a huge chunk of my already-limited time. Instead, we do the best we can but I can say the majority of people in the parking lot are still driving in alone. Our secretary comes in from the same area as me, driving alone in a huge 4X4 every single day. We could carpool, but I don't think she wants to - and I don't have an empty space in the Prius for her!

This shouldn't be the only way. We've put all of our eggs in the basket of cheap gas, and now we're finding out that the basket is the wrong one. A lot of people simply don't have the option of public transport, and unless they can use it there is going to be a lot of resentment about having no choice - you MUST pay taxes for the public transport, but you can't use it yourself.

 

With gas going up, I see many dealer plates on the road... on Priuses, hybrids, Fits, high MPG cars. Gee - less SUVs. Go Figure.

Also, my commute is getting easier... it's almost like rolling the clock back a few years when I could leave my house by 6 and be at work by 7. For a while there it was more like 7:30 to 8.

 

losing time commuting is one option of course, but if not driving, can you make better use of your time besides sitting fuming about the time you have to take to get to work? many cant, many can. exploring those options might be something, but without end to end transportation, it would not be viable and that is the point i was trying to make.

i am not advocating taking the bus.... heck I CANT DO IT AT ALL so how is it i can justify telling someone else to do it. the whole point is that gas is still too cheap.

 

I just wish something were in place to give people options. Right now, it's a PITA to not drive because we have to drop off kids, etc. But once the kids don't need to be taken to the sitters - will there be options then?

I love to read, and I'd rather sit and read on a bus/train than drive. But it's not even an option.

On the other hand, I go to Paris and I can get anywhere I need to go quickly, efficiently and fairly cheaply. I can read or talk or relax on the way. I would never, ever drive in Paris - too expensive, too scary, too much traffic.

That's the way things need to be. When mass transit is easier, cheaper and more convenient than driving, we'll see people give up their cars.