Will oil price ever come down?

[moghopper]

Gosh, Bush has been drilling as many new wilderness areas as he can get his hands on. How many more alternative energy sources do you think he could find?

When the price gets high enough, people won't care if we have to drill right through the caribou.

I'm still holding out for a car that runs on spotted owls.

 

[justin]

When the price gets high enough, people won't care if we have to drill right through the caribou.

I'm still holding out for a car that runs on spotted owls.

I may be wrong about this, but I think about 100 years ago, we had cars that were powered by horses. One solution to our nation's energy crisis is cars with more horsepower.

 

[HFWR]

When the price gets high enough, people won't care if we have to drill right through the caribou.

I'm still holding out for a car that runs on spotted owls.

I wouldn't object to drilling in ANWR is actually had an impact...

 

[TromboneAl]

Most people buy hybrids not because gas is expensive but because the buyers want a more environmentally friendly vehicle. Simply because you pay so much more for the vehicle vs a similar gas model that you'd never, ever make up the difference in cheaper gas.

I get the impression that most people don't do the math, they just think "gas is expensive, I better get me one of those hybrids."

 

[Whakamole]

I may be wrong about this, but I think about 100 years ago, we had cars that were powered by horses. One solution to our nation's energy crisis is cars with more horsepower.

Did you know that back then, people were concerned about horses? Seriously. Too much horse manure, not enough fields to grow food for horses, overcrowding in cities, etc.

 

[justin]

Did you know that back then, people were concerned about horses? Seriously. Too much horse manure, not enough fields to grow food for horses, overcrowding in cities, etc.

So you have heard of these horsepowered automobiles?

Seriously though, horses produce a lot of emissions. Carbon dioxide from respiration and methane gas from digestive processes. Not to mention solid waste! The manure piles up, and dried manure turns into dust, so you have particulate matter in the air as well. The manure also allows breeding of bacteria and insect carrying bacteria. Also, the feeding and caretaking of the horses must have consumed a lot of resources as well. On the bright side, I don't think the horses produced much NOX.

Good thing we have cars to clean things up.

 

[cute fuzzy bunny]

I get the impression that most people don't do the math, they just think "gas is expensive, I better get me one of those hybrids."

Recent broad based survey of hybrid buyers shows (survey says......); note more than one selection can be made.

Reasons for buying a hybrid:

89% Less pollution
77% Emit less CO2 that may be changing the environment/global warming
73% Appealing technology
71% Save money on gas

Once purchased, 68% said they liked the technology, style and handling best, with 51% saying mileage was the vehicles best feature. On the not-so-good side, ~8% said their mileage was much lower than they expected, and ~5% said the car was too small and storage space wasnt adequate.

Surveys of auto dealers show that the average hybrid buyer is the traditional 'yuppie' that wants to help the environment. They do get lookie-loos that think they're going to get savings out of a hybrid but when they see the cost premium (even after tax benefits) they usually opt for a less expensive, frequently equally economical, regular model.

When the price premium is gone and the reliability/track record is better established, I'd expect this will change.

 

[brewer12345]

Don't look now, but oil is down more than two bucks today.

 

[Calgary_Girl]

Oil will come down but the days of $30/bbl is long gone. $40/bbl may be the new "minimum".

 

[Whakamole]

Here is the survey that th referred to :

http://www.hybridcars.com/survey.html

It's got a newer survey that lists these reasons for buying a hybrid:
74% Save money on gas
71% Pollute the air less
68% Appealing technology
64% Reduce foreign oil dependency

Higher gas prices have had a definite impact.

I would have bought one when I recently got a new car, except I did the math and figured I could buy a lot of gas with the money I saved. Depends on what you are comparing it to.

 

[cute fuzzy bunny]

The survey I referred to had a meaningful number of respondents from a broad customer base; the one you noted was a web site survey of an insignificant sample size of a very specific slice of customers.

If you like, I can go back to the rest of the unsupported claims you continue to try to bolster and show real data that says why they're wrong too.

Or would you like to stop trying to 'piss in my morning coffee' now?

 

[Whakamole]

The survey I referred to had a meaningful number of respondents from a broad customer base; the one you noted was a web site survey of an insignificant sample size of a very specific slice of customers.

If you like, I can go back to the rest of the unsupported claims you continue to try to bolster and show real data that says why they're wrong too.

Or would you like to stop trying to 'piss in my morning coffee' now?

All I did was point to the survey you mentioned, and brought up their own survey.

If you think everything I post is an attack on you, then you really do need to calm down.

 

[BUM]

How about some reasons NOT to buy a hybrid, while I'm enjoying my (piss-free) morning coffee.

1. High cost of total ownership
2. Replacement batteries overpriced
3. Dealer service and parts only....no aftermarket parts....can't pimp your ride

Don't get me wrong, I'd like to see commuters in BOS, NYC, LA forced to use hybrids. I just don't want to be in Podunk when my hybrid's do-hikkey decides to go kerflooie. I'd rather buy one after the first gazillion recalls are over.

 

[cute fuzzy bunny]

All I did was point to the survey you mentioned, and brought up their own survey.

If you think everything I post is an attack on you, then you really do need to calm down.

All you did was reference a web site that referenced the study I mentioned.

Lets recap this, since you insist.

Cut-throat mentions that of the many ways we spend money, putting it into alternative energy programs would likely have been more beneficial. While one could argue the merits of which things we should or shouldnt have done, the basic point is tough to argue with.

But you did, specifically saying
"Higher energy prices will do more to spur innovation in fuel efficiency and alternative energy sources than any government program.

The reason hybrid cars are selling so well is because of gas prices.
Similarly, the reason that wind energy got a big boost a few years ago was because of high utility prices."

I pointed out that every point is factually incorrect.

In fact, virtually NO effort to increase fuel economy or develop alternative energy sources has taken place without government stimulation of one sort or another, even in the face of skyrocketing energy costs. I provided an example of CAFE laws (the industry, on its own, gave us the pinto and vega back in 1974 in response to the first oil 'crisis', then went back to big cars. Then fought the cafe laws almost every year). Your counter example, when read, fully supports exactly what I said.

Hybrid cars, by every statistically valid survey I can find do not list 'high gas prices' as a cause at all, but I'll let that slide to 'better fuel economy', which usually comes in 3rd or 4th on the list of reasons, rather than the highest. I would suspect that without government tax incentives, that very few people would buy hybrids at all.

Lastly you mentioned wind and I noted that virtually no project based on wind based energy has or would have been put in place without government supported tax programs and incentives. Your further editorializing doesnt provide any information to alter that finding. Although I will point out that wind, at ~50% duty cycle in most areas, and with a cost figure that is far higher than yours because yours does not include energy storage costs and potentially high land costs, isnt really a strong contender for a replacement energy source. In short, there is virtually no correlation whatsoever between wind based programs and higher oil costs.

Hence, your original points are invalid and generally unrelated to the original point cut-throat made, unless of course you're simply trolling or trying to be argumentative, which does appear to be your 'strong' suit. All subsequent discussion is nothing more than distracting rat holing, which is typical of your standard trolling effort.

As far as 'attacks' go, for someone who has a sig 'pissing in ths morning coffee' and who has consistently attacked me for no reason that I can fathom, I think my level of calmness is appropriate.

It does occur to me though that you appear to want attention and have decided to use this approach to get it, and i'm just feeding the troll.

 

[shiny]

I think many Hybrid users, like organic vegetable buyers, spend more just to feel they are doing something that is within their power to help themselves and the planet even though it costs more money.

Its like that saying: How you spend your money is how you vote on what exists in the world.

I am not so naive, however, to think big changes will be made in our energy situation without some major support from the government. The special interests/oil companies just have too much power right now. (Has anyone seen that movie "The Corporation"?)

 

[cute fuzzy bunny]

Well, you have to look at the profit motivations, and the cost of adoption.

Most 'alternative energy' schemes require a fair amount of r&d along with a huge amount of capital costs and expenses to implement even modest schemes. Profitability from most of these approaches is simply not there now and may not come to fruition until either technology cuts the costs or oil prices simply become so high that the alternate methods become more attractive.

So what company will lay out hundreds of millions or billions of dollars to develop these technology improvements with a profit window thats 5-10+ years away? Not one I'd be investing in.

Then you have to incent consumers to accept early adoption of some of the individual opportunities like solar and wind. I'd bet a good chunk of change that Nords wouldnt have implemented his solar system if he wasnt getting a tax credit and if the government hadnt legislated that his electric company had to buy back his extra generated energy.

There are big problems with a lot of the alternatives that need to be worked out. Nukes leave too much spent fuel. Wind requires a lot of real estate in places people like to live, hence high RE prices...and then you have those pesky bird lovers. Solar is too expensive and often uglier than local HOA's will permit. Even in aggregate, with decent technology improvements, its tough to see these alternates providing even 20% of our needs within the next 10 years.

Unfortunately our current pace is slow and incremental when we need fairly large and rapid change.

None of this mentions that we've taken a stance on electing people to high office lately that have a vested interest in keeping the oil gravy train running as long as possible. Thats a whole 'nother can of worms.

 

[HFWR]

http://www.eia.doe.gov/cneaf/electricity/page/prim2/chapter3.html

 

[Nords]

Then you have to incent consumers to accept early adoption of some of the individual opportunities like solar and wind.  I'd bet a good chunk of change that Nords wouldnt have implemented his solar system if he wasnt getting a tax credit and if the government hadnt legislated that his electric company had to buy back his extra generated energy.

Survey respondents & focus groups lie.

People claim that high gas prices or high utility costs would drive them to alternative transportation or power sources... but then they don't actually give up driving their car (alone) or pay the capital expenses of a system.  Every survey of consumer attitudes has failed to find a financial commitment to that stated belief.

Hawaii has the nation's highest per-capita generation (~35%) of hot water from solar collectors.  That's because the state gives a 35% tax credit (CREDIT, not just an income deduction!) and HECO gives a $750 rebate on a $1700-$2500 system.  So an actual owner's cost is only $620-$1150 and it's paying back at an average of $10-$15/month per household occupant.  When the enabling legislation had nearly run out in 2003 the installers were overwhelmed with work but there were no jobs scheduled for after the expiration.

Business Week has an interesting article on the economics of alternative energy.  Despite $60 oil, consumers are addicted to subsidies, either by tax breaks or by purchasing the extra power.  HECO only does net metering-- you can drive your electric bill down to the $16 minimum monthly "customer service" charge but HECO doesn't buy more than you consume.  Germany, Japan, & Spain's photovoltaic programs actually pay four times the rate for residential power.  (The logic is that encouraging more homeowner's generating systems will delay the utility's painful, lengthy process of building additional generating plants.)  The surge of subsidized PV consumers has also been driving down system costs by 5%/year, so PV panels are quickly becoming another electronic commodity.  (I'm gonna have to factor that into my spreadsheet and my decision on when & how much to pay for that additional 2 Kw of PV panels.)  HECO is slowly working with the state & installers toward a pay-for-production system instead of net metering, but the whole project hinges on whether they're buying power at retail rates (16 cents/KWhr) or wholesale (4 cents/KWhr).  That's a big impact on whether I stop at 3 KW of PV panels (our inverter's capacity)... or 30.

HECO has just started paying Oahu customers to install a load-shedding box on their electric water heaters (assuming you don't have one of the above solar collectors).  They pay you $3/month for the privilege of shutting your water heater off for up to an hour if load shedding becomes necessary.  I doubt they can even tell whether the box is still hooked up to our water heater!

 

[windsurf]

Notth:  I understand your critique;  what is your suggestion?

 

[cute fuzzy bunny]

Obviously not an easy one. It starts with leadership that recognizes and is willing to act on energy and pollution problems. I dont and havent seen many electable candidates that would take that step, and of the candidates that are serious about it, I dont think they'd be very good at other matters presidential. Nader comes to mind, but aside from good entertainment value watching him screw up the old boys club at capital hill and bumble his way through foreign affairs, somebody like him might be exactly whats needed for 4 years just to get the ball rolling.

Without that leadership right from the top and belief and conviction at many levels in the govt, I think we get squat. We're a mercenary military trying to grab for the oil under the guise of 'spreading democracy'.

 

[haha]

We're a mercenary military trying to grab for the oil under the guise of 'spreading democracy'.

If our soldiers are mercenaries, I think they don't know it yet. I do believe that the "leadership" has the oil grab in mind. Similar plans were a big part of how WW2 got started; and this may be of how the next big war gets started too.

Living within our means just doesn't seem American of late.

Ha

 

[windsurf]

Obviously not an easy one. 
Without that leadership right from the top and belief and conviction at many levels in the govt, I think we get squat.  We're a mercenary military trying to grab for the oil under the guise of 'spreading democracy'.

You're right;  there are only a handful of outlying (no pun intended) congressmen who ever talk about this issue in a straightforward, knowledgable manner.

 

[cute fuzzy bunny]

Without good leadership proactively turning the ship, I suspect it'll hit some rocks here and there. I trust in our ability to get over stuff but these slow creeping problems tend to get well out of hand before they get better.

The tough part is the conversion time. While cars can be turned over in a decade, busses and trucks are in service for a lot longer. We might be looking at 10-20 years once a viable alternative energy source for homes and transportation is available before its widely implemented.

I'd focus on advancing hydrogen separation, fuel cell development and trying to push solar technology efficiency up and cost down.

I've read some other papers that suggested that the cost and complexities of broad onesy-twosy alternative energy implementations wouldnt work at all, that we'll all end up migrating to semi-urban central mini cities that grow their own food and produce all their own local products and services. I kind of doubt that will happen, we're just too married to independent transportation.

 

[haha]

For a moment I want to return to the original question-"Will oil price ever come down?"

Ever is a long time, and if the oil price has permanently gone up it will be a first for any major commodity. Certainly a big recession ought to pull it down, or a "hard landing in China". A nuclear war between India and Pakistan might be amazing, but it could as easily send oil up as down.

An interesting thing to ask is "have we moved to a considerably higher trading range, more or less permanantly? I see no reason why this is not possible, even likely.  Even if the US and Europe manage to cut down on the growth rate of usage, it is highly unlikely that China or India will do that(barring recession) for many years. I read recently that China now has the largest road system of any nation other than USA. You don't build roads for bicycles and mo-peds.

Also, the bid by Chinese oil company CNOOC for Unocal indicates that for their needs and expectaions anyway, today's oil price, to the extent that it is reflected in Unocals asking price, seems OK.

So demand should continue to increase. That leaves supply, a very knotty problem. My own non-specialist opinion is that supply will have a  hard time keeping up, and so overall prices should stay relatively high. Whether that is $60 a bbl seems unlikely, but what it might be I don't know. I also think that it is likely that the real price of oil and natural gas will increase over time. I owe a lot of my retirement to oil and gas investments. Still, $60 seems pretty high in the near to intermediate term.

I am holding, not buying, and O&G is somewhat less than 20% of my invested assets.

Ha

 

[cute fuzzy bunny]

Ha...I think we'll bounce up and down but $50 may be our new floor. I have a funny feeling the supply isnt going to be as good as a lot of people think.

Very odd...my morning coffee tasted a little weird so I had it tested. Extremely high concentrations of estrogen. How strange.