I was just thinking about my 1997 accord. If I remember correctly, gas was about around $1 a gallon. 11 years later, it's four time as much. More, but not fatally expensive. Do the math though. We aren't finding significant swaths of oil patches anymore. China and India demand is just starting to come on line in full force. I suspect the demand line is going to be more parabolic, but even if we just trend the price from the last decade's pattern, ten years from now the price will be $16/gallon and 20 years, it'll be $64/gallon. Will our children be driving gasoline cars as much as we are? I don't see how.
First, a huge oil field was just found off the coast of Brazil containing 33 billion barrels. Brazil oil find announcement spurs official rage - ABC News (Australian Broadcasting Corporation), not that this will really change the long term outcome. Second, The price of a gallon of gas will never get to the equivalent of $50 in today's dollars. Alternative fuels will replace it before that happens.
unless wages scale linear with fuel prices, no. Not that they are now really, people's wages are at stake from rising cost for everything. Especially people in my bracket the 30-40 range. I do see it hitting 8-10 dollor's here stateside in 5 years though. But 50$? no they wont make any money at all, because nobody would drive..plain and simple, except the well to do.
barring the breakout of general war in the middle east, a catastrophic failure of most of the oil pipelines in the world, and Bush amending the constitution to make it so he can run a third time, $50/gallon gas isnt feasible if you think about supply and demand. $5-$10 we'll see in the next 5 years or so, but at some point, we have to stop depending on oil for our energy needs. look at that, economics 101 and 102 came in handy. its possible to get a decent education at this school after all.
The thing with the Brazilian oil fields is that Petrobras (the Brazilian government company that has monopoly over petroleum in Brazil) knew they had huge fields off their shores for a while. They have been sounding the Atlantic shelf with sonars and, recently, robots, since the 1980s, but low oil prices of the 80s and 90s did not make it economical to drill as the sea is very deep there. As oil prices rise Petrobras starts to see a financial return on the substantial investment to develop new technology to drill that deep. I remember when I was growing up in Brazil (1980s) the country imported 70% of the oil it used, nowadays the country is near self sufficient in oil, and with this find it may soon be exporting oil.
33 billion? That's not even 1/3 of what Iraq is estimated to have. Iraq: Oil and Economy Considering that the world burns 86 million barrels of oil a day and growing ever more: Peak oil - Wikipedia, the free encyclopedia 365 days X 86 million barrels of oil a day= 31.3 Billion barrels of oil. So if that 33 billion reserve went online yesterday, the world would consume that in a little over a year. Is that what you mean by huge reserve? One year's worth of oil?
Well. If the supply and demand curve hits at $50/gallon. Then that's where it hits. The market rules don't say, maximize distribution of oil to everyone at an affordable price, it only cares about maximizing profit. Do you think Mercedes should lower it's prices so everyone can drive one at an affordable price? Of course not. If maximizing profit occurs by selling to only 5-10% of the world's population, then that's what's going to happen.
It is possible, on just inflation, if you live another 30-40 years. If I remember right, 1971, 1 gal of gas, a pack of smokes, and a gallon of milk, were close to the same price. 0.35 -0.45. Now just go x 10
If it were just due to inflation, then you could draw a straight linear line with the rise of oil costs. However, when you through in a decreasing oil supply and an increasing population/demand, then we'll just pray for a straight linear line.
I'm sure that is oil ever gets that expensive in today's dollar terms (that is, not counting inflation), then governments will start seriously restricting who, when and where we will be using oil...
I heard now that its $10 a gallon in UK. I paid $8 for diesel in France a couple of years ago. It will happen there before it happens here.
With oil prices as high as they are I heard on the news about some Canadian oil sands. Apparently the oil is near the surface and is mixed in with sand. In the past when oil was cheap it was not worth bothering with and the whole area was abandoned. But now that oil is as expensive as it is, the whole area is booming again. FUELING AMERICA / OIL'S DIRTY FUTURE / Canadian oil sands: Vast reserves second to Saudi Arabia will keep America moving, but at a steep environmental cost Thought that was interesting. It wont cause oil prices to drop since its expensive to mine, but its a huge amount of oil to have access to.
As the value of the dollar declines, the price of gasoline (and other imports) increases. So the question is: How low can it go?
I also heard about vast oil finds in Wyoming, Utah, and Canada. Something like comparable to the Middle east oil supplies. If I have to pay a lot for my gas I would rather NOT give it to Arabs. Last I heard Both Wyoming and Canada like the USA!
