News Something's gotta give - Gasoline Prices

[mpm]

"Something's got to give" - Gasoline Prices

I'm currently an engineering student in college and having a very hard time afford these gas prices. I figure I am not the only one in this boat though. If gas prices keep rising or even stay at the current price ($3.00/gal where I'm at), it seems to me that something will have to bend/break/give whatever you want to call it.

The economy isn't getting better and salaries aren't getting raised. I remember hearing about gas shortages in the late 70's I believe but don't really know much about it.

Could this be comparable?

I'm just curious if anyone has ideas of what that something might be that's going to have to give. It seems to me like people/companies will go bankrupt trying to afford gas. They can't raise prices too much or else people won't be able to afford those services as well.

It sounds like the economy is going in the wrong direction. The rich keep getting richer and poor keep getting poorer, and now even the middle class (in my opinion) is suffering tremendously.

Anyone care to give their opinions?

 

[selfAdjoint]

Yup. And with Katrina, gas prices are just going to go up. The (jiggered) employment level is at record lows, but the poverty level is going up. The US is going in hock to China because we won't stint ourselves on what they sell us and we are, I believe, complicit in their strategy of keeping their money at a fixed low rate to ours. The Economist believes it too. This makes international trade warped, especially trade in oil.

 

[stoned]

look at gas prices in Europe, they are much, much higher and people still live and prosper there.
one question: who with a properly fuctioning brain would buy and drive big SUV or truck ?

 

[kdinser]

I'm not sure how accurate this stat is, I heard it on one news show or another, but supposedly, the number of suv's for sale in autotrader has gone up 500% since this time last year. People will adapt and deal, so will companies.

 

[mpm]

I currently drive a truck that my parents bought me about 5 years ago. At the time it wasnt a big deal becuase I lived in the country and used the truck a lot. Plus gas was a lot cheaper. Its a really nice truck, and I hate to see it go, but i may have to find another vehicle. I simply just can't afford it anymore.

In my eyes, if people would consciously stop using so much fuel at least for a week or maybe even a month, demand would go down and so would the prices.

I think it will take something like that to put a stop to this, but I don't know that the American people have enough discipline to do this.

 

[Ivan Seeking]

There is now talk of $4.00/gallon.

 

[Q_Goest]

The cost of energy has a lot to do with America purchasing goods from China, just as SelfAdjoint mentions. People want the best value for the lowest cost, so corporations such as Walmart are purchasing just about everything from China, and to a lesser extent from India and other third world countries, due to the lower cost of labor there.

There are few drawbacks to moving jobs and industry to third world countries so large manufacturing corporations are moving their operations to China and elsewhere. Even industrial companies that are not selling directly to consumers are moving a large amount of work in an effort to reduce cost and be more competitive. With this shift of labor to China, the Chinese have more hard cash which means they want more of everything as well. And just about everything you can want is somehow dependant on oil, so essentially China and other countries such as India, are becoming more and more industrialized which improves the standard of living there, but at the same time requires a huge amount of additional energy.

Petroleum reserves are not increasing, the oil in the ground that is 'easy' to extract is mostly known about and being drawn on right now, though there are some additional energy sources that can be tapped into at a higher cost. These sources are likely to be tapped into as the cost of energy continues to increase, but we won't see them being exploited for at least 5 years as that's about how long it will take to build any significant infrastructure to exploit them.

So in short, the reason for higher energy cost in the US is due to higher demand for oil from abroad which comes from the movement of manufacturing and industry to third world countries, especially China. No additional oil is readily available, so with higher demand and no additional supply, costs increase. One shouldn't then expect there to be any significant drop in oil prices ever.

This is very different from the 1970's when oil supply was curtailed by the Arab nations. Then, the supply was plentiful, but the producers of oil were joining ranks and reducing the amount of oil on the market artificially.

As a side note, I believe the primary reason for the higher cost of fuel in Europe has little to do with the economics. I've heard that most of the difference in cost is due to government taxation. Perhaps someone else has other info on that one. . .

 

[ohwilleke]

The frightening thing about the current situation is that while the hike from $2.50ish range to $4 (already reached in a few places) is mostly short term and caused by hurricane damage to insufficiently redundent pipelines to the SE, the rest of the price increase is driven by long term issues like increasing demand from China and decreasing supply growth, rather than the short term embargo/war issues associated with the early 1980s peak. Sure, the Iraq War and other conflicts are a factor in current prices, but the current increase is far more long term.

 

[russ_watters]

Um, this has what to do with engineering...? Moving to politics.

 

[Evo]

There is now talk of $4.00/gallon.

(looking up phone number of ex boyfriend that owns an oil company)

 

[Pengwuino]

(looking up phone number of ex boyfriend that owns an oil company)

*starts planning his campaign of sucking up to Evo*

 

[Pengwuino]

The economy isn't getting better and salaries aren't getting raised. I remember hearing about gas shortages in the late 70's I believe but don't really know much about it.

Could this be comparable?

I notice how only 1 person here responded to this guys actual question and I'm sure a few people here were around during the Oil Embargo.

I'll give it my best shot as to what I know.

This is nothing like the oil embargo. At that point, oil was pretty much cut off. Our current situation is just temporary because of the hurricane (the $4 figures). Long term increases will come from China and India and "rising tensions in the middle east".

 

[Skyhunter]

look at gas prices in Europe, they are much, much higher and people still live and prosper there.
one question: who with a properly fuctioning brain would buy and drive big SUV or truck ?

A carpenter.

Although, I am trying to fix my VW Rabbit that runs on bio-diesel and gets 40mpg. It is small but will haul my tools and some materials. It is much more efficient and less polluting than my Ram.

 

[Pengwuino]

and soccer moms

 

[Evo]

I remember hearing about gas shortages in the late 70's I believe but don't really know much about it.

The problems were caused by stupid people that were afraid they wouldn't get gas, so they stopped and filled up once a day. This caused others to panic and everyone would stop and fill up, causing long lines at the pump.

 

[Pengwuino]

The problems were caused by stupid people that were afraid they wouldn't get gas, so they stopped and filled up once a day. This caused others to panic and everyone would stop and fill up, causing long lines at the pump.

 

[Mattius_]

Good thing I just got a bike!

Really though, I can't see how the entire world cannot produce/refine enough oil, it is almost everyhwere, it is a cash cow, and yet we are still having problems?

The one point I don't understand is how it has increased so drastically over the last year. China can't be booming enough to create a 100% increase in such a short time, there has to be more critical problems than just rising demand. Hurricanes aside, what other problems do we have on the supply side? How much is Iraq producing at this time? How much of it is coming to the US?

 

[Skyhunter]

and soccer moms

Minivans are just as spacious and a lot more economical and maneuverable.

 

[Pengwuino]

Minivans are for morons.

 

[Skyhunter]

Good thing I just got a bike!

Really though, I can't see how the entire world cannot produce/refine enough oil, it is almost everyhwere, it is a cash cow, and yet we are still having problems?

The one point I don't understand is how it has increased so drastically over the last year. China can't be booming enough to create a 100% increase in such a short time, there has to be more critical problems than just rising demand. Hurricanes aside, what other problems do we have on the supply side? How much is Iraq producing at this time? How much of it is coming to the US?

I know this is a generality but Clinton was an economist and we had a great economy.

Bush is an oil man, and we have record profit for the oil companies.

I know, I know, I am being bad.

 

[Skyhunter]

Minivans are for morons.

 

[Pengwuino]

Who buys a minivan? Thats like saying "hey, I am a guy whos a woman" or "hey I am a woman who has a wimpy guy" or "hey I am none of hte above, please shoot me".

Or something like that.

PS, i originally wrote "Who guys a moron?" insteaed of "who buys a minivan"... haha wooo

 

[Skyhunter]

I just heard on the radio that gas is $5 a gallon in some places already because people are panic buying like in 1979.

 

[Pengwuino]

Good thing i filled up last night at only $2.89

 

[loseyourname]

Who buys a minivan? Thats like saying "hey, I am a guy whos a woman" or "hey I am a woman who has a wimpy guy" or "hey I am none of hte above, please shoot me".

Or something like that.

PS, i originally wrote "Who guys a moron?" insteaed of "who buys a minivan"... haha wooo

This reminds me of a television ad for the US Army that I just saw a couple days ago. It showed guys jumping from helicopters, wading through rivers in camouflage, carrying big guns, and all that, then said "just think, somewhere some poor guy is buying a minivan." I couldn't help but think 'yeah, how terrible that a father would want to get a spacious and cost-effective vehicle for his kids and wife. Way to promote family values, Army.'

That said, I hate minivans, and the ad did get a chuckle out of me. You guys would hate my girlfriend. Her family owns three SUVs and a yacht.

 

[Pengwuino]

The point that the ad was trying to get across was:

Army rules, that guy with the minivan is not a man at all. Simple.

Oh and guys rule, girls drool!

 

[Skyhunter]

This reminds me of a television ad for the US Army that I just saw a couple days ago. It showed guys jumping from helicopters, wading through rivers in camouflage, carrying big guns, and all that, then said "just think, somewhere some poor guy is buying a minivan." I couldn't help but think 'yeah, how terrible that a father would want to get a spacious and cost-effective vehicle for his kids and wife. Way to promote family values, Army.'

That said, I hate minivans, and the ad did get a chuckle out of me. You guys would hate my girlfriend. Her family owns three SUVs and a yacht.

I don't hate my family.

Why would I hate hers?

Of course they are are careful not to get me started and have made many changes because, I do raise their awareness.

 

[vanesch]

look at gas prices in Europe, they are much, much higher and people still live and prosper there.

Uh, it hurts too :-)
1 gallon = 3.7 litres ; 1 litre of gasoil costs about 1.1 Euro (between 1.0 and 1.2 depending where you go), so that would make a gallon here cost 4 Euros, or about $5.00.

 

[vanesch]

The one point I don't understand is how it has increased so drastically over the last year. China can't be booming enough to create a 100% increase in such a short time, there has to be more critical problems than just rising demand. Hurricanes aside, what other problems do we have on the supply side?

Read up about the "oil peak":
http://www.energybulletin.net/primer.php

 

[Lisa!]

(looking up phone number of ex boyfriend that owns an oil company)

Don't be selfish, Evo! Please share it with us.

 

[FredGarvin]

The panic buyers are the ones you need to beat with a stick. These are the same idiots that, in the threat of a snow storm, go out and buy 3 years worth of milk, eggs and bread thinking they will be safe. The hoarding mentality of the dolts that do this should be grounds for severe beatings.

In regards to the original post, I can vauguely remember sitting in my parents' car waiting for gas during the 70's. I think some of Carter's policies had a pretty big role in the disaster as well, but who cares. Today it is a different story. One would like to think times like this will change our usage habits but it won't unless it stays this way for an appreciable amount of time. If this is indeed a short term problem, we'll brush this aside and maybe make some t-shirts to commemorate the gas shortage of '05.

 

[outsider]

Who buys a minivan? Thats like saying "hey, I am a guy whos a woman" or "hey I am a woman who has a wimpy guy" or "hey I am none of hte above, please shoot me".

Or something like that.

PS, i originally wrote "Who guys a moron?" insteaed of "who buys a minivan"... haha wooo

The ignorant side of me laffs my ass off... but i don't need to be ignorant and cool anymore... I'm so done with that... time to be responsible and fair... you think that makes me a wimp?

why don't you go and rent schindlers list?

 

[russ_watters]

I know this is a generality but Clinton was an economist and we had a great economy.

Bush is an oil man, and we have record profit for the oil companies.

I know, I know, I am being bad.

Clinton is a lawyer and we had a great economy due to the Internet boom - which ended (the great economy, that is) before he left office.

A little more on the gas issue - I read that inflation adjusted, we are already paying more than in the crisis in the '70s. The difference is that at the time there was a severe, artificial supply crunch, coupled with, as Evo said, basic stupidity. So I'm not that worried about our gas supply.

I'm also not worried about the economy. Yes, gas prices are holding back economic growth, but all that means is that the growth is a little slower than it would otherwise be - it is still growing at a respectable rate. And medium, steady growth keeps us from spooking Mr. Greenspan into jacking up interest rates too much to keep inflation down. Also since faster growth generally corresponds to a bigger recession, this little ounterweight may just keep the next recession from being too big.

 

[Art]

As a side note, I believe the primary reason for the higher cost of fuel in Europe has little to do with the economics. I've heard that most of the difference in cost is due to government taxation. Perhaps someone else has other info on that one. . .

The cost of gas in the UK is currently about $1.60 per litre or roughly $8 per gallon (though I believe a UK gallon is slightly more than a US one)
European gov'ts have been following a policy for some years now of using taxation to deliberately push up the price of fuel to the motorist to persuade people to use more environmentally friendly mass transit systems / public transport in an effort to reduce pollution and congestion.

 

[vanesch]

The cost of gas in the UK is currently about $1.60 per litre or roughly $8 per gallon (though I believe a UK gallon is slightly more than a US one)

Ah, that's "essence" (what's the correct English word ? Gas ?). I was talking about gasoil for diesel engines. Yes, gas is more expensive, about 1.3-1.5 Euro, corresponding to Art's number.

 

[Art]

Ah, that's "essence" (what's the correct English word ? Gas ?). I was talking about gasoil for diesel engines. Yes, gas is more expensive, about 1.3-1.5 Euro, corresponding to Art's number.

In the UK it's called petrol (petroleum) which is the same as the US gas (gasolene)

 

[russ_watters]

So wait - is diesel fuel cheaper than gas in Europe?

 

[Astronuc]

This morning in Georgia and North Carolina (and apparently across the southern US from LA to the Carolinas) gasoline prices are hitting up to $6.00 / gal.

Locally, near NYC, I have seen prices increase 10% this morning alone - to just over $3.00 /gal

The area hit by Katrina has 30% of domestic oil production (20 rigs/platforms are gone) and 50% of the refining capacity (I don't know if that applies to the gasoline supply). So nationally, gasoline production is down about 10%.

Economists are expecting a general drift in gasoline prices to about $4.00/gal.

The release of strategic oil reserves will have a limited (and possibly insignificant) impact.

It is time to think of high mileage cars (Honda Civic sedan gets 35-40 mi/gal), and get rid of SUVs (10-15 mi/gal). Use synthetic oil and replace every 5000 miles and that keeps the mileage up.

Also, fuel prices in Europe may increase if the US is forced to buy gasoline and diesel from European refineries - a real possibility.

 

[vanesch]

So wait - is diesel fuel cheaper than gas in Europe?

Sure ! It's taxed less.

 

[faust9]

Read up about the "oil peak":
http://www.energybulletin.net/primer.php

Argh! People need to stop with the peek oil!. What happens when fuel cost go up? We transition to clean diesel. What happens when that goes up? We transition to a newer or more refined product. The cost of energy has been going down for a 100+ years. There is and occasional spike upward but when that occurs, we transisiton to a different fuel. The doom and gloom chicken little peak oil scare is the exact same doom and gloom peak coal scenerio painted at the turn of the century. Guess what, coal became more expensive than petrolium thus we started using gas/oil/diesel/LP and what not.

As a more recent example look at the oil crisis of the late 70's. What happened to the auto industry? Well big fat V8's went the way of the dodo only to be replaced by small 4 bangers which got better milage. Enter the mid 80's and the return of cheap gas. We saw a resurgance of V8's and larger vehicles. What do we see happening now? Well SUV sales are slumping and Prius sales are exploding. When clean diesel hits the mass US market I guarantee VW's and the like will sell like hotcakes---my wife's Beetle gets around 50MPG and you'd never know it was a diesel.

Things we'll see in the short term: direct injection gasoline engines. I'm playing with one right now. These things run with a 30 to 50:1 afr while cruising and at the same time lower emissions. You're looking at a 2 to 3x increase in fuel effeciency from a GDI engines over a classic manifold design.

I can go on, but there really isn't any use in it I know. Those who have bought into peak oil usually do so without looking at historical precident or current technological advances. All they see is the cost of energy "going up"; however, when weighed against inflation the cost of energy is not going up as quickly as one would expect as we approach the limits of a commodity.

It's simple supply and demand. We have technology available to lessen our dependence on oil now but what needs to happen is we need to hit a break even point where the added cost of new technology is countered by the increased costs of current technology.

 

[revelator]

Around Toronto, gas prices seem to fluctuate around $1.0? CAD, although it's recently jumped to $1.1? CAD due to Katrina. So I guess we pay something like $3.8? CAD / gallon.

Thank God I don't drive. Buses and bikes and feet for me! Comebine the money I don't waste on gasoline with the money I don't waste on car insurance, and I'm laughing all the way to the bank (on foot).

 

[Art]

So wait - is diesel fuel cheaper than gas in Europe?

It used to be about 10% cheaper but in the past few years diesel has become more expensive than petrol in the UK and Ireland by a few cents per litre.

 

[vanesch]

Argh! People need to stop with the peek oil!. What happens when fuel cost go up? We transition to clean diesel. What happens when that goes up? We transition to a newer or more refined product. The cost of energy has been going down for a 100+ years.

Yes, because never in recent history we RAN OUT OF ONE before a new one was in sight. As you say yourself:

Guess what, coal became more expensive than petrolium thus we started using gas/oil/diesel/LP and what not.

So it was in fact the other way around: a new thing became available that pushed the old one off the market. We didn't RUN OUT OF COAL. It was just not economically reasonable anymore to still prefer coal when oil was available. So I ask you: what's pushing oil now out of the market ?

As a more recent example look at the oil crisis of the late 70's. What happened to the auto industry? Well big fat V8's went the way of the dodo only to be replaced by small 4 bangers which got better milage. Enter the mid 80's and the return of cheap gas. We saw a resurgance of V8's and larger vehicles.

Sure, you can push down somewhat the demand by being more economical. And thus push a bit farther out the oil peak. So instead of in 2015, it will be in 2020. However, there are ONLY SO MANY JOULES IN A LITRE OF CRUDE OIL available. You cannot push up indefinitely the efficiency of the things that use it. My car (a monovolumer) consumes something like 30 mi/gallon (if I did the conversion right). Now I can imagine that 10 years of research on that car could improve it to say, 60 mi/gallon but that will be it. I will never have a car that does 300 mi/gallon. That's physically impossible.

Things we'll see in the short term: direct injection gasoline engines. I'm playing with one right now. These things run with a 30 to 50:1 afr while cruising and at the same time lower emissions. You're looking at a 2 to 3x increase in fuel effeciency from a GDI engines over a classic manifold design.

Most of these engines are already in use in Europe and yes, rather small cars (my wife's Peugeot) has a diesel engine with direct injection and consumes about 60 mi/gallon. You cannot do much better.

It's simple supply and demand. We have technology available to lessen our dependence on oil now but what needs to happen is we need to hit a break even point where the added cost of new technology is countered by the increased costs of current technology.

What technology ? For instance, I recently heard a radio program where it was stated by some experts that with current technology, to produce ethanol from mais and use that as a fuel to replace oil would need 4 times the surface of France growing mais to cover the entire current consumption of gas by cars in France.
The only serious option out is the nuclear way, but it doesn't work for everything. What technology will replace kerosene in airplanes, and be commercially available in 10 years from now ?

 

[faust9]

Yes, because never in recent history we RAN OUT OF ONE before a new one was in sight. As you say yourself:



So it was in fact the other way around: a new thing became available that pushed the old one off the market. We didn't RUN OUT OF COAL. It was just not economically reasonable anymore to still prefer coal when oil was available. So I ask you: what's pushing oil now out of the market ?



Sure, you can push down somewhat the demand by being more economical. And thus push a bit farther out the oil peak. So instead of in 2015, it will be in 2020. However, there are ONLY SO MANY JOULES IN A LITRE OF CRUDE OIL available. You cannot push up indefinitely the efficiency of the things that use it. My car (a monovolumer) consumes something like 30 mi/gallon (if I did the conversion right). Now I can imagine that 10 years of research on that car could improve it to say, 60 mi/gallon but that will be it. I will never have a car that does 300 mi/gallon. That's physically impossible.



Most of these engines are already in use in Europe and yes, rather small cars (my wife's Peugeot) has a diesel engine with direct injection and consumes about 60 mi/gallon. You cannot do much better.



What technology ? For instance, I recently heard a radio program where it was stated by some experts that with current technology, to produce ethanol from mais and use that as a fuel to replace oil would need 4 times the surface of France growing mais to cover the entire current consumption of gas by cars in France.
The only serious option out is the nuclear way, but it doesn't work for everything. What technology will replace kerosene in airplanes, and be commercially available in 10 years from now ?

I don't want to sound too much like an ass but diesel engines have always been direct injection. GDI is different is different because petrol is much more volitile and much harder to get the timing correct. I never mentioned methanol or ethanol because you cannot run these directly. 10% is as much as you can run without causing discomfort to people(alcohol buring engines emit an eye and nasel passage burning exhaust).

There are only so many Joules in a ton of coal. The very same arguments you are using now were used BEFORE oil became a viable energy source. How much coal is there on the plant now? Quite a bit. We've become more efficient at mining it, cleaning it, and burning it. The same thing will happen to gasoline. We'll probably see mor long-haul trucks with gas turbines before too long. We'll definately see more nuc-plants here in the states. I'd expect to see diesel hybrids in the not too distant future as well. As for the next super source of energy---I don't know. They didn't know in the 1870's what would replace coal. No one expected 1960's technology to change our lives in the early 90's either. The technology may be around already---it's not my field. I do engine controls right now and I'll say the engines being made now and around the block will be smaller(a liter or less) that can and will make 80 to 150Hp.

When the cost of gas exceeds some preset value we will transition. Fuel cells are under development. More efficient solar cells are under development. Nuc,s and windfields are becoming more and more enticing. We have other sources of energy available right now, it's a matter of economics as to when we will move from Otto cycle engines to something else.

 

[vanesch]

When the cost of gas exceeds some preset value we will transition. Fuel cells are under development. More efficient solar cells are under development. Nuc,s and windfields are becoming more and more enticing. We have other sources of energy available right now, it's a matter of economics as to when we will move from Otto cycle engines to something else.

I would still like to see how these things are going to come to the market and allow us entirely (or up to 80%) to replace our current oil consumption by, say, 2015, when extrapolating our current ways of life (and those of the Chinese and the Indians). I would like to see how our entire industry will switch to other stuff than oil in 10 years time, thanks to wind and solar !
The transition from coal to oil was totally different ; I'm not aware of any "coal peak" before oil came on.

EDIT: also, oil was first successfully drilled in 1859 in the US...

 

[russ_watters]

Yes, because never in recent history we RAN OUT OF ONE before a new one was in sight.

You misunderstood the "peak oil" issue. Peak oil is not about running out of oil, its about a production peak and a long, slow decline, which could last a century or more (edit: actually, such things never run out completely, they just approach zero hyperbolically). It isn't saying that oil production is going to drop to zero in a matter of years, just that it'll stop increasing and start decreasing. Its a common misperception, and I don't know why: the first paragraph of your link is quite explicit:

Peak Oil means not 'running out of oil', but 'running out of cheap oil'.

Where people disagree with the concept is simply in the timeframe and the impact of the change.

 

[vanesch]

You misunderstood the "peak oil" issue. Peak oil is not about running out of oil, its about a production peak and a long, slow decline,

I know, Russ, I know. You can consider the peak as roughly the last date when the ressource "can be counted on". After that, of course for some specific applications you can still use it, but the elasticity in the price is inversed, meaning: the higher the sustained demand, the MORE THE PRICE RISES, which is normally the opposite: the higher the sustained demand of something, the better the production processes and the higher the production capacities, so that in the long term, the price lowers. Before the peak, sustained high demands tend to increase the production, hence re-balancing demand and offer. After the peak, this goes the other way around, making the market more and more unstable (with constantly rising prices).
Of course, in 2050 there will still be oil. But at $7000,- a barrel. Which might be worth it for certain specific applications, in the chemistry industry or so.
But, how will you cope in 2015 when a gallon of gas will cost $50,- ?

Have a look at:
http://www.fromthewilderness.com/free/ww3/052504_coal_peak.html

http://www.energybulletin.net/4483.html

 

[faust9]

I would still like to see how these things are going to come to the market and allow us entirely (or up to 80%) to replace our current oil consumption by, say, 2015, when extrapolating our current ways of life (and those of the Chinese and the Indians). I would like to see how our entire industry will switch to other stuff than oil in 10 years time, thanks to wind and solar !
The transition from coal to oil was totally different ; I'm not aware of any "coal peak" before oil came on.

EDIT: also, oil was first successfully drilled in 1859 in the US...

So what, one well does not a commodity make. Also, oil had been drilled as early as the 1820's for lamp oil in the US. The first oil refinery was made in 1856. These first accomplishments in no way shape or form allow oil to replace coal as the fuel of choice. We have the technology to puwer cars from U-238 as we speek. We have mines for U. We have labs to refine U-238. All that aside U is not a commodity and oil wasn't a commodity until the turn of the century. By that time the industrial revolution was in full swing and powered by coal. That is when the coal scare began---before oil was considered a commodity.

I'm not going to argue peak oil anymore because we are not going to run out of the stuff in 2015. We may approach some production level that allows an alternative fuel to become viable but we will never actually run out of oil. The world will not shut off December 31 2014 or some other arbitrary date simply because a few articles on the internet say so. Hell, we have not even reached the $90/barrel cost of oil(adjusted for inflation) we saw in 1973. We may get there soon, but we've been there before and over a decade the way we used oil changed. Clean coal electric plants replaced oil fired plants. We moved from SD 455's(actually the SD455 was available in 73 and 74 that's a different story though) to Pinto's and Cosworth Vegas. We added insulation to our homes to reduce energy costs. We did a lot on the industrial side and the consumer side to reduce our oil consumption by IIRC about 20%.

I working with engines that can get 50 to 60 MPG with no loss of 'apparant' power. The push the gas peddal and feel the car accelerate power. It all boils down to simple economics. New developing economies are LESS likely to become oil dependent because it consumes a GREATER portion of their incomes than in developed countries. Virgin markets are more likely to develope and adapt new fuels because they have less free cash to spend on costlier fuels, so the argument that India and China will consume the worlds oil is false. Those who can pay for a commodity and are willing to pay for a commodity are the ones who get the commodity. Developing countries are less able to pay for commodities than already developed nations.

 

[faust9]

I know, Russ, I know. You can consider the peak as roughly the last date when the ressource "can be counted on". After that, of course for some specific applications you can still use it, but the elasticity in the price is inversed, meaning: the higher the sustained demand, the MORE THE PRICE RISES, which is normally the opposite: the higher the sustained demand of something, the better the production processes and the higher the production capacities, so that in the long term, the price lowers. Before the peak, sustained high demands tend to increase the production, hence re-balancing demand and offer. After the peak, this goes the other way around, making the market more and more unstable (with constantly rising prices).
Of course, in 2050 there will still be oil. But at $7000,- a barrel. Which might be worth it for certain specific applications, in the chemistry industry or so.
But, how will you cope in 2015 when a gallon of gas will cost $50,- ?

Have a look at:
http://www.fromthewilderness.com/free/ww3/052504_coal_peak.html

http://www.energybulletin.net/4483.html

Oh, c'mon! $7000 a barrel? Lame. Nuclear cars will be on the road before we see $7000 a barrel.

 

[BobG]

The cost of gas in the UK is currently about $1.60 per litre or roughly $8 per gallon (though I believe a UK gallon is slightly more than a US one)
European gov'ts have been following a policy for some years now of using taxation to deliberately push up the price of fuel to the motorist to persuade people to use more environmentally friendly mass transit systems / public transport in an effort to reduce pollution and congestion.

European fuel taxes are a good idea. They even work in an area of the world that has long lacked anywhere to expand to. The US would have a much harder time transitioning to taxes as high as Europe's (even though I think the market would have endured some artificial increases in price through the 80's and 90's).

Cheap fuel has gone hand in hand with the 'Go West' mentality (early pioneers dealt with overused farm lands by migrating rather than land management). The US has had seemingly endless room to expand and few economic reasons not to. Urban sprawl has reached a point where a sudden transition to mass transit would be impossible for most cities. It would take a couple decades or more for US culture to reverse the process and for cities to become dense and compact enough for mass transit to work.

Those high European fuel taxes also provide a buffer against short term spikes in price. The taxes can always be lowered to prevent economic hardships. The US doesn't have much buffer - short term crises are felt immediately. Yet another reason the US should have prevented fuel prices from reaching their cheapest prices ever relative to other goods.

To be honest, overly cheap fuel reduced the security of the US. It's an absolutely essential resource for the US, forcing the US to rely on some countries we'd probably rather not entrust our future to.