Anybody truely worried about gas prices and its effect on the economy?
05-22-2008, 07:09 PM
#1
Anybody truely worried about gas prices and its effect on the economy?
Im not talking about the 4.56/gal I paid a couple days ago that has me worried its the effect that price has on everything else in the economy. Ive been laid up for going on 6 weeks now due to my broken leg and have had alot of time to watch the news shows and read alot on different blogs/news sites. As Im sure everyone knows the price of gas effects everything whether it be a gallon of milk, the price per kilowatt for electricity or how much you pay per night to stay a motel. What alot of people dont realize is that we may have already passed "peak oil" which is not a good thing. It means the oil left in the ground is the oil that is harder to get to therefore more costly and less oil will be produced which means more per barrel. Now I dont believe that, that is what is causing the high prices right now as that is more of a long term effect kind of thing. This post from another forum explains it the best as to why we are in the state we are, as I am not the most articulate with words.
http://www.dieselplace.com/forum/sho...16&postcount=3
I would have just quoted it and posted his post but the graph wont carry over when I try and repost it.
I love my truck to death but in my honest opinion I think this country is in for a rude awakening over the next 10ish years, I hope gas prices dont hit 10+ a gallon but I can honestly see it happening. Im going to continue to watch this stuff closely and if things dont change Ill be trading my truck in on a 4door civic si. Im a true truck guy at heart my first vehicle was a truck and thats all Ive had but with prices going the way they are and my truck getting less and less valuable by the day I dont want to wait to sell it when my 30K will only fetch 15K due to gas prices.
Am I the only one with this pessimistic outlook on things? Im not just worried about the vehicle I drive Im worried about the country/world as a whole. Maybe Ive had too much time to watch CNN and read....
http://www.dieselplace.com/forum/sho...16&postcount=3
I would have just quoted it and posted his post but the graph wont carry over when I try and repost it.
I love my truck to death but in my honest opinion I think this country is in for a rude awakening over the next 10ish years, I hope gas prices dont hit 10+ a gallon but I can honestly see it happening. Im going to continue to watch this stuff closely and if things dont change Ill be trading my truck in on a 4door civic si. Im a true truck guy at heart my first vehicle was a truck and thats all Ive had but with prices going the way they are and my truck getting less and less valuable by the day I dont want to wait to sell it when my 30K will only fetch 15K due to gas prices.
Am I the only one with this pessimistic outlook on things? Im not just worried about the vehicle I drive Im worried about the country/world as a whole. Maybe Ive had too much time to watch CNN and read....
05-22-2008, 07:19 PM
#2
Can't read the post in the link without signing in...It's not gas prices that are going to impact this country as much as diesel. Diesel drives this country, thru trucking, freight train and shipping everything depends on diesel fuel.
I can imagine a society and land something similar to the "road warrior" movies. I am surprised we do not hear about tanker hijacks yet.
I can imagine a society and land something similar to the "road warrior" movies. I am surprised we do not hear about tanker hijacks yet.
05-22-2008, 07:20 PM
#3
Here's the way i look at it, we have been spoiled with low gas prices for a long time and they are finally catching up to inflation, and we are still less than half what the UK, spain and europe pay a gallon. the reason it's gonna have such an effect on us is that we are victims of urban sprawl, especially houston, people keep moving farther and farther out and it's just gonna cause more traffic and higher gas bills, petroleum prices hit everywhere, i manage a major party store in houston and my costs on plastics have gone up almost triple in 6 months, and my customers complain to me when my prices go up
05-22-2008, 07:32 PM
#4
Can't read the post in the link without signing in...It's not gas prices that are going to impact this country as much as diesel. Diesel drives this country, thru trucking, freight train and shipping everything depends on diesel fuel.
I can imagine a society and land something similar to the "road warrior" movies. I am surprised we do not hear about tanker hijacks yet.
I can imagine a society and land something similar to the "road warrior" movies. I am surprised we do not hear about tanker hijacks yet.
05-22-2008, 07:36 PM
#5
Oh, yup, I forgot
Copied from the other site...
Copied from the other site...
Unfortunately, he is probably correct.
This is NOT being caused mostly by "greedy speculators" or "greedy oil companies" although they certainly do play a minor contributing role. The commercial oil companieslike Exxon-Mobil, Shell, etc., do not set the price of oil. The OPEC member countries do not set the price of oil either, although since pride is a reflection of the supply relative to demand, they CAN indirectly control price by limiting the supply. This is what they might do for political reasons (e.g.: Arab Oil Embargo in the early 1970s, or Iran in the late 1970s) or if the price dropped so low that it was not profitable to produce it. It is not something normally done in the face of record high prices like we have right now.
Anything that tends to reduce the available supply, like a shortage of drilling rigs, or politicians who refuse to allow drilling for political reasons, reduces the supply and if the demand is high enough, a small shortfall in supply can cause a big increase in the price.
The price of oil is set almost entirely by the trading in London and New York commodity exchanges. This is basically just an auction. As a nation, we could decide through our elected representatives (if they were worth a sh*t anyway) to pay a much lower price for all the crude oil we import or for that matter, produce domestically. It would work, and we would get a lower price, but there would be one big problem with that: we wouldn't get much oil at that lower price. Other countries would routinely outbid us.
The MAIN driver is the fundamental fact that global demand for oil is outstripping the ability of all the world's drilling rigs, as they are currently in service, to supply. Even if more areas were opened up to more drilling (which would certainly be helpful to the extent that it could make better use of the available rigs by using them in more productive areas), right now there is also more global demand than supply for drilling rigs, especially advanced offshore rigs.
This generally fits in with the projections I made, and posted about, here:
http://www.dieselplace.com/forum/att...1&d=1202003984
A lot of this is based on economic models that compare the current situation to similar phases in the past, as depicted on the chart above.
My forecast from late 2004 (which I did not post in this forum) at which point fuel prices had already roughly doubled from the ~$1.10ish price we had grown accustomed to for many years, was that in the next (second) leg up, fuel prices would probably double again, to $4, probably hitting $5 /gal. by the end of this decade. It seems to be ahead of schedule, especially for diesel.
And as for further out... yesterday's high price is tomorrow's bargain. And if we do nothing... I like to put it this way: you know all those fancy new electronic gas price signs that most stations started putting up over the last few years when prices started changing so often? You know what they didn't allow for? Two numbers to the left of the decimal place. (that's almost the same mistake they made back in the early 1970s, when the new gas pumps couldn't accommodate more than 99 cents). That would amount to the third leg, the third doubling of price from the starting point, and that's where I expect this will end over the next decade or so.
In some places in Europe, notably the U.K., fuel prices are already approaching US$10/gal. due to their very high taxes, and the weakness of the US dollar. But if crude oil was universally traded in a Euros instead of U.S. dollars, we'd be paying even more now.
The only caveat in the short term is that, the price of crude oil is extremely overstretched right now due in part to both overheated speculation in the futures market (bubble phase) and unusual short-term "one-off" demand in China, and is due for a short-term correction, maybe back down to "only" $100/bbl. But unfortunately the long-term trend is still up.
This is NOT being caused mostly by "greedy speculators" or "greedy oil companies" although they certainly do play a minor contributing role. The commercial oil companieslike Exxon-Mobil, Shell, etc., do not set the price of oil. The OPEC member countries do not set the price of oil either, although since pride is a reflection of the supply relative to demand, they CAN indirectly control price by limiting the supply. This is what they might do for political reasons (e.g.: Arab Oil Embargo in the early 1970s, or Iran in the late 1970s) or if the price dropped so low that it was not profitable to produce it. It is not something normally done in the face of record high prices like we have right now.
Anything that tends to reduce the available supply, like a shortage of drilling rigs, or politicians who refuse to allow drilling for political reasons, reduces the supply and if the demand is high enough, a small shortfall in supply can cause a big increase in the price.
The price of oil is set almost entirely by the trading in London and New York commodity exchanges. This is basically just an auction. As a nation, we could decide through our elected representatives (if they were worth a sh*t anyway) to pay a much lower price for all the crude oil we import or for that matter, produce domestically. It would work, and we would get a lower price, but there would be one big problem with that: we wouldn't get much oil at that lower price. Other countries would routinely outbid us.
The MAIN driver is the fundamental fact that global demand for oil is outstripping the ability of all the world's drilling rigs, as they are currently in service, to supply. Even if more areas were opened up to more drilling (which would certainly be helpful to the extent that it could make better use of the available rigs by using them in more productive areas), right now there is also more global demand than supply for drilling rigs, especially advanced offshore rigs.
This generally fits in with the projections I made, and posted about, here:
http://www.dieselplace.com/forum/att...1&d=1202003984
A lot of this is based on economic models that compare the current situation to similar phases in the past, as depicted on the chart above.
My forecast from late 2004 (which I did not post in this forum) at which point fuel prices had already roughly doubled from the ~$1.10ish price we had grown accustomed to for many years, was that in the next (second) leg up, fuel prices would probably double again, to $4, probably hitting $5 /gal. by the end of this decade. It seems to be ahead of schedule, especially for diesel.
And as for further out... yesterday's high price is tomorrow's bargain. And if we do nothing... I like to put it this way: you know all those fancy new electronic gas price signs that most stations started putting up over the last few years when prices started changing so often? You know what they didn't allow for? Two numbers to the left of the decimal place. (that's almost the same mistake they made back in the early 1970s, when the new gas pumps couldn't accommodate more than 99 cents). That would amount to the third leg, the third doubling of price from the starting point, and that's where I expect this will end over the next decade or so.
In some places in Europe, notably the U.K., fuel prices are already approaching US$10/gal. due to their very high taxes, and the weakness of the US dollar. But if crude oil was universally traded in a Euros instead of U.S. dollars, we'd be paying even more now.
The only caveat in the short term is that, the price of crude oil is extremely overstretched right now due in part to both overheated speculation in the futures market (bubble phase) and unusual short-term "one-off" demand in China, and is due for a short-term correction, maybe back down to "only" $100/bbl. But unfortunately the long-term trend is still up.
05-22-2008, 07:43 PM
#7
Thanks Bill
Yeah one of the socal guys on dp paid 5.19, its up to a little over 4.60 here, if this keeps going my big diesel truck will be gone soon, I can afford to pay it I just dont want to anymore. Thank god for company trucks with commuting priveleges.
Yeah one of the socal guys on dp paid 5.19, its up to a little over 4.60 here, if this keeps going my big diesel truck will be gone soon, I can afford to pay it I just dont want to anymore. Thank god for company trucks with commuting priveleges.
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05-22-2008, 07:52 PM
#9
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I am not worried, it can only go up as much as the economy can support it. If anything will go down in price first it will be diesel. Look at the past with the gas wars, prices came down. I have faith in our country and economy.
