great news about gas prices!

[sephir]

There is far from dwindiling supply of oil that is causing this supply and demand effect. the thing that is causing oil prices to rise like they are is a combination of 4 factors:

1) the lowering of the US dollar.
2) OPEC being a cartel.
3) expanding economies of India and China
4) Speculation


the US dollar has lost a significant value on the international market in the last few years, and for years it was the standard world currency. Oil countries are looking at its international value and argueing that it isn't worth as much as it was 5-10 years ago and therefore the price in US dollars must rise to accodate this.

OPEC is a cartel because they control most of the worlds supply and therefore can manipulate the supply entering an exiting their nation. We saw this in the Oil Embargo in the 70's where they artificially raised prices to gross more money. Unfortunately for them they raised prices too high for the long run. This caused expanding markets in fuel efficient cars and less demand. This caused oil prices to collapse in the 80's to one of the lowest points in recent history.

China and India's economy is exploding. China has had a GDP growth of 10% for a few years now. 10% is HUGE. Most countries grow between 1-3% a year, and for China to achieve 10 is just astounding. Unfortunately there is a side effect, they need resources- badly. We saw this with precious metal such as Copper, huge demand sparked price spikes. But there is a key difference between Copper and oil. The supply of oil is controlled by a Cartel, and therefore they can manipulate it so that the price stays high. Where as with Copper the long run solution is to increase supply and price will lower into an equilibrium.

Speculation is another serious cause for oil prices. I had been hearing rumours in the stock markets of large activities occuring based on speculation long before Oil even hit 60 dollars a barrel. Because of integration of things such as the internet to the stock markets, more people are being involved. Many of these people are in a "get in get out" scheme. They throw money into a company if they speculate a possible merger/new product, then get out immediately after. Its these people that are jumping onto the oil bandwagon that is causing a bubble effect. We could see this sort of thing happen back in 2000 with the internet compoanies, and how the bubble burst shortly after 9/11.

But as I said, it isnt much of a "dwindiling supply" issue, but more of a "we want prices high for quick profit" issue. Infact the US is sitting beside a country that has oil sands that are said to house more oil than Saudi Arabia, and due to NAFTA we trade it to you at base price. So in a way be thankful to your neighbours to the north, we are pushing your gas prices down

[Zoot]

I disagree - supply does not necessarily mean that there is less than in previous years (which there is, at least in easy to reach places, oil wells in Texas are drying up at monumental pace -existing oil wells are in decline, and even Saudi's have created new ways to search for oil because the wells are in decline ) but that we do not have access or ability to produce enough to meet our demands - partly because of those expanding countries. Dependance on foreign countries for oil has been a serious crutch on our economy for decades.

While new technology and new areas to find the oil are going to be good for our economy, you will only see a rubberband effect in years to come if a more permanent solution is not found.

We don't need to drag this out until we're having oil wars over the tarpits in Canada. But yes, those are all aspects of why, which only cements the fact that haggling with these businesses isn't going to give us any relief in the long run.

[SwampdonkeyPLD]

There is far from dwindiling supply of oil that is causing this supply and demand effect. the thing that is causing oil prices to rise like they are is a combination of 4 factors:

1) the lowering of the US dollar.
2) OPEC being a cartel.
3) expanding economies of India and China
4) Speculation
5) Failure to drill for our own oil.

[Beckwin]

yeah lets dry up our reserves in 5 years.

in spite of gas prices sucking, consumers are making some demands that should leave us better off in the end. shitty gas prices are only going to speed up progress in alt fuel, and preserving what nature we have left + keeping an oil reserve is a good thing.

[SwampdonkeyPLD]

I meant drilling for new oil, not using our reserves.

I think we have two choices, drill for more oil and have cheaper oil until we develop alt. fuel, or have expensive as fuck oil until we develop alt. fuel.

[Beckwin]

or the more likely third choice: delay alt fuel progress because we have enough cheap oil to last for X more years.

And by reserves, I'm talking about ANWAR and whatnot. Do we really want to tap our natural reserves when we have no alternatives and a tenuous relationship with the middle east (and venezuela to boot, lol)?

[Gwynplaine]

Americans especially are going to just have to realize they can't have everything the way they want it Veruca Salt wise.

yes, our lifestyles need to change. But after fifty something years of being dependent on automobiles to keep the economy running, there's alot of renovation and construction to be done to allow us to break from our gas consuming ways. And in many cases, we simply have no alternatives, yet.

We have been hearing a lot of this right? Being told we all need to change to some formless, unnamed alternative which doesn't exist. That we need to just give up our lifestyles because we can't be that way any longer. But then what is there to replace oil? Well if alternative energy is superior, then good I think we'd all welcome it. But let them compete freely. If a new source of energy is truly superior to oil, there would be no need to help it along. Ironically enough one revolutionary source of energy has existed for decades. Nuclear power is massively efficient and the newest models and innovations produce very little pollution. However the totally irrational social stigma connected to nuclear power is so powerful it's not nearly as utilized as it could be.

There is far from dwindiling supply of oil that is causing this supply and demand effect. the thing that is causing oil prices to rise like they are is a combination of 4 factors:

1) the lowering of the US dollar.
2) OPEC being a cartel.
3) expanding economies of India and China
4) Speculation
~
This caused expanding markets in fuel efficient cars and less demand. This caused oil prices to collapse in the 80's to one of the lowest points in recent history.
~
Infact the US is sitting beside a country that has oil sands that are said to house more oil than Saudi Arabia, and due to NAFTA we trade it to you at base price. So in a way be thankful to your neighbours to the north, we are pushing your gas prices down

Nice post. I agree with almost all of that except for the bit about cheap gas during the 80's. The reason for the cheapness of gas in the early 80's onward, in my opinion, was the loosening of regulatory laws and price controls during that period. John Nassikas was relatively well known during that time as I understand it and led the way to gradual deregulation. You can read an article about him here:
http://query.nytimes.com/gst/fullpage.h ... A96E958260

You also brought up another good point. Which is that when the price of oil increases, once it hits a certain point, it becomes profitable to refine oil in other ways which otherwise it previously couldn't be. The one you mentioned is a good example, and I think that the new US Yuma plant is supposed to refine the tar from there through a pipeline (assuming environmentalists don't get it closed). And there are other ways as well but it hardly does any good in the U.S. seeing as how it is practically illegal to setup new production. There is the outer continental shelf, and ANWR, and the Bakken Formation, and shale. But all of these places and more are off limits, and there is a moratorium on shale, so politicians expect oil to appear essentially out of nowhere. So for the meanwhile we have to deal with the cost of high gas prices so that dirt, worms, and deer can enjoy a pristine wilderness.

[Zoot]

You probably shouldn't quote me on that, it was giving a bit of credit to that belief but it is not wholly what I believe. I in fact said for many there is no alternative, yet.

What I meant by that was taking public transportation where we can, walking and biking more. The recurring theme in many of my posts is that that is not a possibility for everyone, and specifically where it effects our economy.

And I think it is obtuse to believe any limited resource is unlimited. While I think that currently having access to new drill areas will give us a brief interlude, it is not the solution to the long term problem, which has to be an alternate form of fuel and better public transportation.

[SwampdonkeyPLD]

or the more likely third choice: delay alt fuel progress because we have enough cheap oil to last for X more years.

And by reserves, I'm talking about ANWAR and whatnot. Do we really want to tap our natural reserves when we have no alternatives and a tenuous relationship with the middle east (and venezuela to boot, lol)?

I would think it's better to drill for our own oil than to buy it from the middle east and Venezuela, and cheaper. I don't think were going to run out any sooner than they are. And hell, other countries are already drilling where we won't let our own companies drill. (The Gulf etc) If were going to run out of our own oil, isn't better that we run out because we used it? Not another country?

[Beckwin]

Uh, they have more oil than us. Lots more.

And we wanna use their oil because until we have widespread alternative fuel options, if relations deteriorate or w/e, we'd be shit out of luck if we still needed oil and didn't have our own.

[sephir]

One thing I did forget to mention was the long and short term efects of rising prices:

High prices in short run are very limited and will have very little effects. However long run price increases will result in a movement in conservation/effeciency. We see this in Europe and in Japan where high fuel costs have resulted in them finding ways to make more of what they have. I believe this is the way that we should always be thinking because it allows for sustainable growth that allows a company to survive in the long term.


Shortly after I typed that I was watching CNN and some republican from Florida came on talking about increasing the supply to ease the prices. He kept saying that there needs to be more refinaries in the US to meet the demand, which I disagreed with as I think the 3 main American car companies need to get their act together and realise what people are going to need in the future.

After watching this I turned to a Canadian station with the news and they were talking about some idea to build a nuclear power plant for $2B. They had this representative for the energy conservation or something like that (doesnt matter). Basically he brought out this information about how for the exact same cost of building the power plant, they could buy the residents in the immediate area more efficient furnaces/AC/Fridges. I thought that sounded funny, but he brought up graph that showed the power created by the plant over 10 years, and then the amount of energy saved by these more efficient products. Within 10 years we would save 25% more energy by having these products than the power plant would provide.

Now, I realised something, why are we so supply oriented until scarcity rears its head? companies like Toyota are probly laughing all the wy to the bank with the oil prices sky rocketing, and Ford, GM and Chrystler are going to most likely see a bad year.


Also, the US doesn't have alot of cheap supplies of oil. The US is one of the biggest Oil Slate holders, but until a more effective method of refining that is deveolped its not going anywhere. In MOntana as well is this very very thin Oil sheet (its like 1/4 of an inch thick) that is a good 600 feet underground. Only until these las few months has a method of drilling it has been found. Heck, even Canada's oil sands didn't really become a great option until recently. The oil there is supposed to be more than what the Saudi's have, but the cost of getting it out of the earth is immense. Also the environmental damage done by the Oil sands is huge, but its a cost we burden in the name of gasoline I guess.

[Beckwin]

some republican from Florida came on talking about increasing the supply to ease the prices. He kept saying that there needs to be more refinaries in the US to meet the demand

funny part is, demand/consumption is down over the past year.

[Jotaru]

Not gonna lie, reading all this has prompted me to just sort out just how much it costs me to drive to work a day (45 mile commute for next 2 months or so til they sort me out with a closer location) vs. taking the train...

And I'll now be saving about $80 a month, wear and tear on my car, and the environment taking the train \o/ Thanks, /bg/, you guys are the best!

[Jefe]

^Where I work lots of people are starting to use public transportation 'cause of high gas prices. The rail sys here in LA is not that shitty, some of the bus lines though... But yeah, cool they are saving money and polluting less ;o

[Correction]

Travelling by rail in LA is acceptable, as long as you live near a station.

Unfortunately this is not the case for a whole lot of people. There is no slower, dirtier or more unsafe way to get to and from work every day than to have to transfer from bus > rail > bus again. Especially if any of your routes cross downtown heading east or west. It's simply unacceptable. They're planning a new line to Santa Monica but that won't be done for a dozen years, at the earliest. Until the the difference between driving to work every day and taking public transportation remains at a solid 90 minutes, one way.

[Zoot]

One thing I did forget to mention was the long and short term efects of rising prices:

High prices in short run are very limited and will have very little effects. However long run price increases will result in a movement in conservation/effeciency.

On that note, this is an interesting article from a year ago: Why five dollar gas is good for Americans.

Directional drilling is coming along, too. I'm not a complete pragmatist, there are so many innovations coming out of this and I'm glad to see it.

[arus2001]

I have no trouble with the concept of nuclear power coming from plants, but if it's being suggested for cars, I'm a bit antsy. One drunk driver crashing and initiating some kind of mushroom cloud explosion isn't something I'd call a good idea, nor just simple radiation leaks if there is no boom.

I do remember watching Leno, of all things, and him mentioning being a sort of beta tester for a hydrogen powered car. This must've been a few weeks ago or so, but it has me thinking about trying to find some more info on it to see the pros/cons and potential mass distribution.

[Jefe]

Travelling by rail in LA is acceptable, as long as you live near a station.

Unfortunately this is not the case for a whole lot of people. There is no slower, dirtier or more unsafe way to get to and from work every day than to have to transfer from bus > rail > bus again. Especially if any of your routes cross downtown heading east or west. It's simply unacceptable. They're planning a new line to Santa Monica but that won't be done for a dozen years, at the earliest. Until the the difference between driving to work every day and taking public transportation remains at a solid 90 minutes, one way.

I understand what you're saying. When I volunteered for this old folk home in Alhambra, there was no fuking way to get there but either: take the local bus and walk 10 min, or ride the express line and walk 30. Went with the former and holy shit; let's just say I'm not easily disgusted any more.

I'm very lucky I can ride the express line to my University in about the same time as I would driving. Aren't they pushing like bike lanes or something? I wish we had a monorail or shit like in Disneyland ;3

[Ddz]

Uh, they have more oil than us. Lots more.

And we wanna use their oil because until we have widespread alternative fuel options, if relations deteriorate or w/e, we'd be shit out of luck if we still needed oil and didn't have our own.

Yeah, the US consumes about 20 million barrels a day iirc. If we went completely dependent on AK's oil reserves alone, it'd be depleted in less than two years. We're completely dependent on imported oil. I don't see the price being driven down any time soon. I'm really fucking glad I am able to walk to work. Everything I need is within a mile of my house, so the inflation isn't affecting me directly right now.

[Epincus]

The fact is that the high prices not only will persist, but will get worse at what can very possibly be an exponential rate. The price of oil recently (within a day or two ago?) had officially doubled in the last year, and it shows no signs yet of slowing down. The jaded part of me says however that this is a necessary step in order for the technology used to develop. Fact is, people will not adjust the ways in which they live their lives until there is a negative effect on them for sustaining it. We've seen this in the price of SUV sales. Sales of those vehicles fell off sharply a couple years ago during the hurricane katrina timeframe when the price of gas spiked, then went up again when the price dropped. Now with the cost being higher than ever, sales are divebombing in favor of smaller cars. Ford recently said that they won't return to profitability for awhile due to this and they plan on focusing on smaller cars. ( http://money.cnn.com/2008/05/22/news/co ... 2008052214 - most recent article I could find on this)

Adding to this is the fact that the more the price of gas rises, the more people will be coming up with innovations to make our daily lives easier. I've seen more articles on innovation in fuel conservation within the last six months than I had in the five years before that combined, and the research will only accelerate as the need for such technology develops. Shit like the shale deposits and the oil sand that I read about in this thread may be obscenely expensive compared to traditional drilling, but as the price goes up, and I've heard analysts saying $200/barrel within a year as a possible point, those options will become a hell of a lot more appealing as the cost/benefit ratio favors them. Interesting piece of all this, a bunch of gas stations (including ones near my house) had to shut down because their machines couldn't process gas prices of $4 or higher. I have to wonder about the one gas station within a small town that has to shut down, and what the hell the town will need to do about it. Some communities won't be able to front the 10-15k/pump to keep their only station within 20-30 miles alive, I'm sure.

Gas prices will continue to increase, I'd say it'll hit $8/gallon before other options start becoming mainstreamed. One thing's for sure though. Solar's going to be viable soon.

Okay, stopping there before I hit the tl;dr threshold for too many people.