Road Warning: $7 Gas May Be Ahead

I think it will be at $5.00 by the end of this year! Our Home heating oil will be at $5.00, since that was the best price I could lock in last month.
Perhaps this will get people to at least slow down a bit on the roads. I do the speed limit and everyone flys by me all the time.

 

There's a nice op-ed piece in today's NY Times, explaining why its probably not correct to blame high oil prices on "speculation". It's by Paul Krugman, imho the smartest economist in the US. With links to a more detailed discussion.

http://www.nytimes.com/2008/06/27/opinion/27krugman.html?_r=1&hp&oref=slogin

Not to try to hijack the thread, but most people who blame speculators have no idea how the commodities futures markets work. To a pretty close approximation, the futures markets are a zero-sum game: for every speculator who bought a futures contract and saw the value rise, there's another speculator who sold that contract and has to buy it back in at a higher price (or physically delivery the oil). For every such paper trade, the sum of gains and losses is zero.

Reading the link from the NY Times piece is a decent introduction. The point is made several times: the only way speculators can increase prices is if they cause increased actual physical hoarding of the product. In this case, that means either increased oil inventories (not occurring, according to the data) or by keeping the oil in the ground rather than pumping it (impossible to assess).


Krugman characterizes the interest in blaming "speculators" for the current price of oil as just another form of wishful thinking. It substitutes for actually doing some to deal with the new reality of increasing demand and dwindling supplies of cheap liquid fuels.

 

Not 'may be' ahead ... it's just a matter of whether it's next year, or as far away as 3 years. Remember malorn? before he dissapeared? Claiming by this summer that gas would be back down to $2.50 ?? Even he woke up and smeled the coffee.

 

Less cars on road = more space for me and fellow cyclists!

 

Finally somebody else on this board that says what I've been saying. Thanks Chogan.

 

Furthermore,, from reportonbusiness.com: globeinvestor.com - U.S. is in recession, and getting worse: Buffett

 

I agree with the $5.00 prediction
my thoughts have been that around labor day the oil companies will make the jump from 4 to 5 dollars a gallon or very near 5....
strange tho that several people in my neighborhood have apparently purchased new suv's and pickup trucks because of the 0% deals and the lower sticker prices----with the dealers unloading them----apparently my neighbors are unable to look ahead at all...
Froley

 

Similarly, here @ work, we have co-workers that will not budge from their SUV driving pride, and love the thousands they 'saved' on their Denalis.

 

Well you are from Roswell, they might be aliens and don't have to worry about oil prices.

 

hah! quite right----
we all look at each other strangely here---checking for the long, long fingers you know....
regards
Froley

 

None of this will change or at least level off until Americans wake up and smell the coffee. I see some indicaions of it, but most of us are sticking our heads in the sand on this issue, hoping that our government will dig us out, while we stick to driving our pickups and suv's.

I've owned my Prius for 3 months now. I have a 72 month loan on it, although I swore I would never go beyond 60 months. That's ok, because I am accelerating the payments with additional principle payments each month.

Even with that, I am at least a little concerned that by the time it is paid off, gas will be so expensive that I won't be able to afford to drive even my Prius, and the value of it will be so low that I won't be able to trade it in on an electric or whatever else is available.

Maybe I'm a little paranoid.

 

In economics terms the market is now called a "scarcity market". People fear there will be no gas/oil available at ANY price, so they are willing to pay the higher prices that are charged. In a normal market, demand would drop and prices would go down to equalize again at the proper level to the current demand. In a scarcity market, buyers (speculators and commodities purchasers) fear that at some soon future date there will be NO commodity left at all, therefore rather than declining to buy and waiting for the price to go down, they pay the outrageous prices being asked. The fact they are willing to pay the current outrageous prices sets the stage for the next hike, and the one after that too.

In layman's terms, we're screwed.

:lock1:

 

Dang it! You beat me to it!

 

11 gallons @ $4.50 = $49.50.....11 gallons @ $7 = $77

I think we will survive, how will everyone else?

 

they will eventually.
i don't know at what price point - $5 gas, 6, 7, or wherever - but we're getting closer to the point where SUV's and pickups used for single person commuting will disappear.

but we're not there quite yet.

 

We are already paying $6.20 a gallon in Canada.
Someone in Germany parked his Mercedes in front of a government building,
poured gas all over it and torched it. I guess $10 a gallon does that to you.
I saw a report that said that in a few years there will be 10 million less cars on the road in the U.S.
I was in London for 4 days in December and after talking to a lot of people I realized that probably half the people in London don't own a car. The tube was so efficient for getting around the city hardly anyone travels above ground.

 

It was a BMW.. but essentially same gas guzzling car. And he torched it in protest of fuel prices after he quit his job, because he didn't want to pay the 250 Euros/month anymore for fillups. :lol:
German police fined him for polluting and mentioned that he seemed normal and not crazy at all.

The thing that amazes me... fuel prices had been at 6-7$/gallon when I left Germany 10 years ago. So the increase in gas is not as much as it is here from a percentage of price increase standpoint.

 

$4.60 today in Los Angeles. And that's at one of the cheaper stations.

 

A presentation on peak oil guaranteed to ruin your day.