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. :grumpy:

 

[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. :grumpy:

:rofl: :rofl: :rofl:

 

[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... :rofl: 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.