Oil at $220 barrel?

[travelover]

.......... I would rather see the U.S. producing our own energy rather than depending in others, both friendly and unfriendly, for our energy.

Darn right, especially those Canadians.

Crude Oil and Total Petroleum Imports Top 15 Countries

 

[Independent]

Here's a fearless prediction on the topic "What will Americans do if gasoline prices spike?"

We will buy more cars.

The two car family with one SUV will become a three car family that parks the SUV during the week while someone communtes in the new Honda Civic.
They'll keep the SUV because its resale price has tanked and because it still works for Home Depot runs on the weekend. That's the way we do things in the US of A.

Of course we'll do some other things, too.

 

[MasterBlaster]

Quoting Lee Iacocca...

People want economy and they will pay any price to get it.

 

[teejayevans]

DW and I were talking about this the other day. If and when gas hits $5/gal, I don't think that high a price will happen as this country won't let it happen.

And we're going to prevent it from happening...how?
TJ

 

[BigNick]

The two car family with one SUV will become a three car family that parks the SUV during the week while someone communtes in the new Honda Civic.
They'll keep the SUV because its resale price has tanked and because it still works for Home Depot runs on the weekend. That's the way we do things in the US of A.

Well, given that the financial illiteracy of the majority is why most of us here, you could be right.

Let's take a 45-mile round-trip commute and a 15mpg SUV versus a 30mpg Civic at $5/gallon. The Civic saves $7.50/day in gas, or $1800/year. If it costs $18K to buy and $300/year to insure, you'll break even in 12 years. Oh, I forgot the interest on the loan to buy it; make that 20 years. Longer if $5/gallon gas is temporary, or if you only have a 25-mile commute.

People want economy and they will pay any price to get it.

Yep... they also won't adjust their driving style, that's for sissies and tree huggers.

 

[FinanceDude]

And we're going to prevent it from happening...how?
TJ

All it would take is lifting the moratorium on drilling. If we threaten to drill in Alaska, the price of oil would drop $20 a barrel overnight.

 

[Midpack]

Oil is unique in many ways. People don't change their demand for it much as the price goes up. Economists call that in-elastic demand or nearly in-elastic demand.

So when the demand is constant and the supply drops significantly, the price will shoot up.

The other issue is that it can take 10-15 years to bring a known oil field into full production. The lead times for these things are really long.

So even though the demand is there it can take years for the supply to catch up.

Somewhat in-elastic. The world, led by the US in 2008-09 and other countries besides China in 2009, reduced demand noticeably after the last runup. And if oil hit $220 per barrel, I would expect an even more noticeable decline. Let's hope we don't find out any time soon though...

 

[Retire Soon]

If oil were to go to $220 a barrel, I think we would something similar to what we saw during the Arab Oil Embargo of 1973-1974.

We didn't have SUV's then, but a lot of people did drive large American made cars, vans, and pickups with gas guzzling V-8's. This meant there was a sudden increased demand for market for smaller 4 cylinder Japanese cars such as Datsun, Honda and Toyota. Yes, new cars are expensive, but who says you can't buy a used one that can be nearly as dependable.

Theft of gasoline was a problem. Many people dealt with this by buying locking gas caps. There was a huge demand for these in 73-74.

Hopefully, we won't end up with gasoline rationing, as we did then. It's no fun to be told you can buy gas only on either odd or even days depending on weather your license plate number was odd or even. Waiting in line with irate motorists for an hour or more to fill up my gas tank is not my idea of what I want to be doing in ER.

I'm not too concerned right now. 90% of things that people worry about simply never happen.

 

[52andout]

Gas is skyrocketing in my area. I drove by a station today whose price was 3.59

I hope alternate technologies, carpooling and telecommuting all result from this. Whether or not you believe in peak oil there is a finite supply of oil and eventually if we want to continue our lifestyles we need to have alternatives developed.

 

[traineeinvestor]

It's not just the price of gas in the tank which is going up in tandem with the rise in crude prices.

The fuel surcharge which airlines add to the cost of airtickets is also rising: Hong Kong Approves Cathay Pacific Fuel Surcharge Rise For March | Real Time Market News | Dow Jones In spite of which, the total demand for air travel is also still going up.

 

[Ed_The_Gypsy]

I make my living in the energy business (technical side). I do very well when oil spikes. I love expensive oil.

But price spikes don't last long. People do adjust their consumption patterns. As I recall, after the first Oil Crisis, oil consumption in the US took 10 years to recover, and we got by just fine.

And more oil comes on-line. Yes, it takes a long time to develop a field, but there are a lot of fields that are already in development.

Personally, I would like to see the US produce nothing--keep it in the ground. This is a game of musical chairs. I want somebody else to run out of oil first. Read "Twilight in the Desert". I would love to see Saudi Arabia dry up. All they have is oil and sand and they are pissing away their oil and its benefits.

 

[Midpack]

Personally, I would like to see the US produce nothing--keep it in the ground. This is a game of musical chairs. I want somebody else to run out of oil first. Read "Twilight in the Desert". I would love to see Saudi Arabia dry up. All they have is oil and sand and they are pissing away their oil and its benefits.

+1. I've always thought this was part of our unspoken energy policy.

 

[FinanceDude]

Personally, I would like to see the US produce nothing--keep it in the ground. This is a game of musical chairs. I want somebody else to run out of oil first. Read "Twilight in the Desert". I would love to see Saudi Arabia dry up. All they have is oil and sand and they are pissing away their oil and its benefits.

I agree, and that has been the US energy policy for almost 40 years, capping wells like crazy. Funny, we almost never hear about the HUGE oil discovery in North Dakota a few years ago, because it's not light sweet crude that you only have to dig down a few thousand feet of sand to get............

 

[In-control]

There are alot of projections and tipping points. Below is a good article on the topic. What really burns me, ha ha, is the resistance to seeking, using, alternative energy. I believe that we should end the subsities that Oil gets and give it to all the alternatives. Sure it is painful now - but so is being held hostage by dictators. A mixed solution of Solar,Wind, Wave, Nuclear, Bio etc... is continually proposed and loses all of its momendum because it costs more then Oil, but what is the real cost of our dependance? Add the ME wars to the price of a gallon of gas as a war tax @ the pump and we will be driven away from oil! We, mankind, tend to wait till the crises is upon us before acting, rather than avoiding it and taking the actions years ahead to avoid it. Seems pretty stupid to me.

End of Cheap Oil @ National Geographic Magazine

Cheers

 

[FinanceDude]

There are alot of projections and tipping points. Below is a good article on the topic. What really burns me, ha ha, is the resistance to seeking, using, alternative energy. I believe that we should end the subsities that Oil gets and give it to all the alternatives. Sure it is painful now - but so is being held hostage by dictators. A mixed solution of Solar,Wind, Wave, Nuclear, Bio etc... is continually proposed and loses all of its momendum because it costs more then Oil, but what is the real cost of our dependance? Add the ME wars to the price of a gallon of gas as a war tax @ the pump and we will be driven away from oil! We, mankind, tend to wait till the crises is upon us before acting, rather than avoiding it and taking the actions years ahead to avoid it. Seems pretty stupid to me.

End of Cheap Oil @ National Geographic Magazine

Cheers

Well, to start with, get rid of the stupid subsidies for ethanol. Ethanol is one of the most energy intensive renewbale fuels out there, you have to use a ton of OIL to make ethanol, and a lot of water. Plus, you are using food crops to make a gasoline alternative that many experts feel damages modern engines...........

 

[MasterBlaster]

Well, to start with, get rid of the stupid subsidies for ethanol. Ethanol is one of the most energy intensive renewbale fuels out there, you have to use a ton of OIL to make ethanol, and a lot of water. Plus, you are using food crops to make a gasoline alternative that many experts feel damages modern engines...........

Ethanol is the new de-facto farm sudsidy. There is a political theme there also in support of midwest "red" states.

The other issue with Ethanol is that we are raising the demand for commodity food prices by making Ethanol. Some poor people and poor people in poor nations are double struggling now.

 

[utrecht]

This sounds bad, but what if we had to pay what Europeans pay now?

You realize that the main reason Europeans pay so much for gas is because it is taxed to the Nth degree to pay for Socialized Medicine and other things like that that we don't have, right?

 

[travelover]

You realize that the main reason Europeans pay so much for gas is because it is taxed to the Nth degree to pay for Socialized Medicine and other things like that that we don't have, right?

No, I thought they just didn't know how to shop.

Seriously, my point was that we have much lower fuel costs than most of the western world. I'm sure we can (and will) argue endlessly what the true cost is once all the incidentals like wars, subsidies, etc are factored in.

 

[Independent]

There are alot of projections and tipping points. Below is a good article on the topic. What really burns me, ha ha, is the resistance to seeking, using, alternative energy. I believe that we should end the subsities that Oil gets and give it to all the alternatives. Sure it is painful now - but so is being held hostage by dictators. A mixed solution of Solar,Wind, Wave, Nuclear, Bio etc... is continually proposed and loses all of its momendum because it costs more then Oil, but what is the real cost of our dependance? Add the ME wars to the price of a gallon of gas as a war tax @ the pump and we will be driven away from oil! We, mankind, tend to wait till the crises is upon us before acting, rather than avoiding it and taking the actions years ahead to avoid it. Seems pretty stupid to me.

End of Cheap Oil @ National Geographic Magazine

Cheers

I agree with the bold. If we put a $1/gallon tax on crude oil, we wouldn't need to subsidize alternative sources or conservation, we could just let the market work out the details. If we had done this back in the 1970's when it was first suggested, we possibly wouldn't have the ME wars today.

 

[Midpack]

I believe that we should end the subsities that Oil gets and give it to all the alternatives. Sure it is painful now - but so is being held hostage by dictators.

There's no question it sounds sensible, but what would the $ impact be on a gallon of gasoline, order of magnitude at least? If it's substantial, the short term consequences to the US economy could be significant, and not at a particularly good time. I'm not disagreeing, but I can see why it might not be a good idea to implement quickly. OTOH, I am suspecting the subsidies may be trivial in the overall.

 

[ERD50]

What really burns me, ha ha, is the resistance to seeking, using, alternative energy.

What resistance? I'm always researching alternatives, and I keep finding them to be expensive, bulky, unreliable, etc. I'm eager to take on any renewable - but it has to make economic sense for me.

I believe that we should end the subsities that Oil gets and give it to all the alternatives.

Just get rid of all subsidies. See the other posts on ethanol. This is what happens when we let Congress try to play in a technical field. Let the market decide. Which alternatives? I've seen cases where someone had a potentially better idea, but since other renewables got the subsidies, they couldn't compete. Maybe we lost out on the 'big one'?

Sure it is painful now - but so is being held hostage by dictators. A mixed solution of Solar,Wind, Wave, Nuclear, Bio etc... is continually proposed and loses all of its momendum because it costs more then Oil, but what is the real cost of our dependance? Add the ME wars to the price of a gallon of gas as a war tax @ the pump and we will be driven away from oil!

OK, tell me. What is the cost per gallon? I have no idea. I doubt that if the US stopped using oil, that things would change for us in the ME. I think we are worried because they have money and they don't like us. They can sell to others, and they might like us even less if we stopped buying their products.

We, mankind, tend to wait till the crises is upon us before acting, rather than avoiding it and taking the actions years ahead to avoid it. Seems pretty stupid to me.

People go about their daily lives. If gas is affordable today, do you really think that most people are going to stop and think - what happens if our supplies dwindle, etc? They have other things to worry about. If it is a problem, our leaders should be educating us and showing some leadership.

By the way - what is the crisis?

Here's some reading for you - renewables may not be all you think they are cracked up to be.

David MacKay FRS: Sustainable Energy - without the hot air: Contents

-ERD50

 

[MC1550]

Read $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better ...by Christopher Steiner. It offers an insight to the plights of higher oil prices in our future.

 

[DFA]

Maybe this would be good for the country in the long run. Not only would it make alternative energy sources more attractive to investors and consumers, but we might start drilling fro our own oil as a stop gap. Both create jobs and opportunity here at home. I would rather see the U.S. producing our own energy rather than depending in others, both friendly and unfriendly, for our energy.

Totally agree here; lets invest in the USA for jobs and energy the heck with the Middle east. Lets get creative like we were many years ago.

Go USA!!

 

[ziggy29]

I like the free market as much as the next guy, but I don't think energy policy can completely follow the free-market model. I say that because by the time alternatives make obvious economic sense, it will have already hit the fan so hard that we may not be able to afford the investment in an alternative infrastructure (even less than we can now), and because any private sector development would take years to bear fruit.

Plus, I see energy security and independence as a very real and legitimate national security and sovereignty issue. If we allow our dependence on foreign oil to go on because the alternatives don't yet make economic sense, oil producing nations that hate us can take us down without firing a shot.

 

[Ed_The_Gypsy]

There is an end to everything, Ziggy. Open land, plentiful clean water, cheap oil, good jobs. If the population of the earth keeps increasing--and it will--we will deplete resources one at a time, and lose species one at a time. We will become vulnerable to all kinds of upsets. Meanwhile, buy XOM.