Prius Problem: Could Using Less Oil Make Oil More Expensive?

And that would be bad because... ? More expensive oil would just drive innovation and conservation faster. Let's keep it moving!

 

Oil can be used for many things besides just burning it. This is an industry that took goo from the ground and was able to make it into everything from plastics to fuels to roads. The list of petroleum products is too much to list.
Put it this way, as long as there is a profit in it, its going to be needed and searched for and worth money and hence have an industry, thats just the fact of the matter. The applications is the question. Will it become to valuable to just burn? I hope so. I am sure 1000 years from now we will still be drilling for and useing oil or what little is left. But new technologies that we can not even comprehend at this time will be the reason for it.

 

Well, yes.

Locally, the utility company asked us to use less electricity. We did. They then went to the PUC and whined that they were losing money and asked to raise rates. Approved. So we used less but paid the same. This had continued in a cycle. Every time we cut back the rates to up.

Same for water.

Does anyone really think the same won't happen with oil?

Of course, for those that don't cut back, they pay even more.

 

Wow - that was one of the most poorly reasoned articles ever. Next we will hear about the Lung Cancer Dilemma - will people who stop smoking make smoking even more expensive for the next guy.

Edit:

As for the price of oil, the large oil companies in essence have a monopoly, so they will charge whatever they want. It is our choice to use or not use oil. I still can't get over this basic premise - we need to use more oil so that we pay less. Wth - if we don't use oil at all, then we definitely pay less and the world is a better place. Was this "study" sponsored by Exxon?

 

Oil needs to become much more expensive and the world economies including the US need to be crushed before true innovation can occur and break the cycle of OIL addiction.

A depression is coming. Nothing can stop it now. How long we remain in depends on how quickly we can get off of fossil fuels.

 

Here is the thing the article is correct in the sense that the Oil producers have the ability to manipulate supply. If they manipulate it too much, eventually people will move on to new energy sources. Big Oil knows this and it seems to me that their new "Stable" price is going to hover somewhere around $100 per barrel (+-$10). Big Oil and OPEC know that the current high prices are dragging down the worlds economy and that isn't going to be good for them in the long run either.

 

The price of any item is determined ultimately by two main factors; the demand/supply ratio and the cost to produce. If 95% of society converts to electric vehicles, for the oil companies to maintain their income, they will have to charge $100 per gallon to the remaining 5% right? To maintain their income, yes, BUT they will not be able to sell the gasoline for $100 per gallon if that remaining 5% refuses to buy it at that price. They will have no customers and will be forced to lower the price. Another scenario would be two concert performances; one group is in high demand and the other group is not. Let's say both tickets go on sale for $30 a few months prior to the performance. For the popular band, in the days leading up to the concert tickets appear on eBay for $100s, but for the less popular band, even as the deadline is approaching, the tickets are still $30 because even though supply has dwindled there is less demand (and the ratio remains low). With Oil, the demand/supply ratio will ultimately determine the price.
The second factor, cost to produce, says that if it costs a given company $50 per product to produce the product, they can't possibly sell it for less than $50. Let's take a Chevy Aveo in 2003 for example. There was very little demand but if it cost GM $8000 (example only) to make the car, then regardless of demand it couldn't possibly sell it for less than $8000 without taking a loss.

The price of oil, in the future, will be determined by these two fundamental market principles that all products have been determined by throughout history. (price fixing nonwithstanding)

 

Exactly. If the oil companies charge too much, people will look for alternative fuels. If the price point is right, people will be satisfied with the current energy source. The oil companies know this. Unfortunately (for them), they have become too greedy at recent ... not "perhaps," but "in fact" too greedy for their own good ... as hybrids are becoming all the rage (and the evolutionary technology of hybrids is ... plug-in hybrids and EVs). In the oil companies, "someone should lose their job for letting this happen." No wait. This is reminiscent of ENRON. Hoard money now, and who gives a fu#k if the company survives in the future.

(of course we all know that oil will always exist as a feedstock for plastics, polymers, chemicals, medical and sanitation products, and the myriad non-fuel products that we rely on every day)

 

That is deserving of the PC Quote of the Week (if such a thing existed).

Ouch, a slight step back. I'm use to ALL businesses charging as much as they can get. When did the oil companies back off to only charging what they want?

 

Yeah - sorry about that - this kind of stuff is very irritating to me - kind like a "swift boat" tactic. My point is that oil production is very unique in that it is by no means an open market. It is very difficult for any new competitors to step in, so the current players definitely have the ability to play with pricing more than say a candy bar manufacturer. Oil is like tobacco - we all know it is bad for our future to continue to drill for and consume oil, but we can't stop the addiction. I drive a car, albeit a Prius, so I am as bad as anyone else.

 

If everyone started driving Priuses tomorrow morning (instant decrease in demand) and the demand for oil plummeted, oil reserves and inventories would overflow and oil companies would be scrambling to offload the excess supply.

Every week, the govt. releases a report on oil inventories. When inventories are up, the price goes down. When inventories are low, the price goes up. This is an observable fact.

 

The big oil companies have like 6% of the worlds reserves. They do not control the price. The national oil companies and OPEC produce the other 94%. So if you need to blame a person or an entity there you go. Believe me big oil would love to drill everywhere and gouge us but they can't. There is a reason why they only pay out big dividends and buyback shares. it is the only way they can give value back to their shareholders. they are unable to expand their reserves because every time they do the oils get nationalized and they are stuck. ( See Russia and Venezuela)

Me? I blame supply and demand. In February of this year we started consumed more oil then we produce conventionally. That is the first time that has EVER happened.

 

If the oil companies want to stay in business, they want the price of oil lower, to keep demand up.
Right now, the price of oil is in the hands of speculators--not people who actually buy oil--and Congress is stalemated because the Republicans want off-shore drilling as a concession to curbing speculation. Typical Washington--sticking it to the taxpayers. Special interests first.

And in the meantime, the stock market is languishing because investors don't know what the price of oil will be tommorrow. And the price of oil is hitched to inflation.

 

anyone remember the 70's? oil price shot up, people used less and Carter said that we should get alternative energy. then oil suddenly decreased and alternative energy dropped. THE JUNKIE STAYED HOOKED

P.S. if the oil price has shot up, shouldn't the price of plastics, propane and asphalt go up too??????

 

The spike in prices served as a wake up call for those who were not expecting a big price jump. It shocked me when so many bought into the concept that it was "just" speculation or the inevitable "big oil greed" or "rigged market". However, I was not fully educated on oil pricing and how the NYMEX operated. So I did my homework. As usual, I learned that I was mistaken in some assumptions.

The first mistake was expecting steady escalation in prices. When the supply-demand driving factor changes, the prices do not rise consistently, they fluctuate significantly for some time. (e.g look at US Natural Gas prices). Now I know that we are going to have some big and small price jumps and declines. Hold on. The bumpy ride is just starting. The first bump has passed.

The second mistake is expecting that political action is needed to address the progressing oil shortage. For better or worst, the economic forces leading to electric vehicles and major transportation shifts is now starting. The bad news is that instead of paying $60K for an giant SUV, the $60K is going to need to by an electric car. The good news is that a solution will be arriving. No amount of political "whatever" will change this much.

 

You're joking, right? Perhaps you didn't fathom how much energy would be consumed in making hundreds of millions of Priuses 'tomorrow' ... and the spare parts, and the energy to scrap out all the transportation they replaced. Fact is that as long as society grows (necessary to keep it that way ... sell more homes, office space, etc just to keep the system up & running) the supply of oil will shrink. Millions more people wanting petro power, even as the supply spirals downward.

Useing less oil raises the price? We'll never know, because we necessarily have to use more & more power just to sustain what we have (social security example ... the pyramid's base has to sustain the retiarees), much less continue to grow society.

 

According the one story I read on the internet (I know, I know) building a Prius has a pretty small carbon footprint, as do most vehicles. The carbon footprint is in using the vehicle. Reducing my Blazer's miles driven by 90% will pay for the building of my Prius in about 7 months. Now if I was going to scrap the Blazer that's another factor. My guess is that it can't be that much greater than building a Prius.

Long and short? Gas prices are high because refineries don't want to make more gasoline, because speculators have driven up the price for crude oil to levels that the market doesn't call for (unless Israel does attack Iran and President McCain orders our attack on Iran for closing down the Persian Gulf- look for $250-300/ barrel and $12/ gallon). As Americans we can only conserve our way out of this one.

And conserving is not so tough if you can afford to buy something smaller. It's not like the 70s (I remember) when your choices for small cars were pretty meager. Between BMWs for the richer, Minis and Prii for the in-betweens and Smarts and VW New Beetles for the rest, smaller can be more fun.

 

Yikes! If ExxonMobil just reported that they profited $12 BILLION last QUARTER (An all-time record for any U.S. company), then it just makes me wonder how much the Middle East took in last quarter!!!!!!!!! (assuming your figures to be accurate, (94/6)($12B )=$188B for JUST ONE QUARTER!!!!

They have gone up.

I wasn't driving back in the 70s, but I have a general knowledge of what happened. If you were around back then, I have a question for you ... was everyone talking about "going green," and although I know that automakers shifted production from large to small vehicles (my dad drove us to school in an ~1980 Civic hatchback), was there a widespread demand for the ultra-efficient vehicles (the way we have waiting lists for the Prius) and were people talking about "the day that oil runs out permanently" ?

I totally agree. I don't know why the current presidential candidates are talking about spending billions on developing alternative fuels. Oil prices are already up and Toyota has already sold over a million Priuses. Automakers are scrambling to release hybrids onto the market. It has already happened.
Now as far as electricity and power plants go, that is a different subject (which I know less about, other than the fact that the Hoover Dam was built by the govt, nuclear power plants are highly regulated by the govt, and that I pay my electric bill to a private corporation. If someone wants to explain this to me more, I would be glad to listen)
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Hill, you apparently forgot to quote the second paragraph, where I typed "Every week, the govt. releases a report on oil inventories. When inventories are up, the price goes down. When inventories are low, the price goes up. This is an observable fact." Take a look at the market sometime. This is an observable fact! (go to finance.yahoo.com, and click on "finance search" and search for news stories about it. It happens every week)

 

The Prius, while using using less oil, IMHO, would nor cause io to become more expensive. If the U.S. saw a overall dropoff in oil consumption, global markets would consume what we are not using.

Dbcassidy