not saying this will happen any time soon…but it would be interesting to see what would happen to prices if most SUV/Truck owners started driving smaller, more fuel efficient cars in the US.
What if all 15 mpg suv’s were replaced with 30mpg cars? Assuming people drive the same amount, what would happen to the price of gasoline if the demand were cut in half?
and to go a step further, what if cars had to have a governor on them, so you can’t go over a certain speed (70-75??). That would probably go a long way to cutting down on fuel demands as well.
My prediction is that we’ll never see cheap (as in $2 gallon) gas again. But I’m a tree hugging green and I’ve been brainwashed by some books I have read … Sorry to be the jerk but its our own damn fault. We have had 30 years to plan and transition to an economy that uses alternative sources to fuel our transportation network, and we haven’t done a whole heck of a lot. Meanwhile those in power in about a dozen measly countries have laughed all the way to the bank. No one thinks beyond next week in this country. It sucks.
AMEN! I love all this bitching about the price of the NONRENEWABLE NATURAL RESOURCE. People think prices are high now? Yeah, just wait until the Saudi can’t pump more oil instead of won’t. Go ahead - keep relying on a nonrenewable resource to fuel this country, but then quit fucking bitching about the price of fueling it.
Taken from an article…
“In 2002 we imported 57 percent of our oil. Our cars, SUVs, and other light trucks consume 40% of the oil used in the US every day.”
Basically in order to cut 10% out of our oil consumption we would have to increase total fuel economy or drop usage of all vehicles by 25%. Since SUV’s account for 25-30% of all US vehicles this would mean doubling the fuel economy of SUV’s would increase overall economy of the US fleet by 25%. Since cars, SUV’s and light trucks make up only 40% of total oil usage in the US the 25% increase in vehicle effeciency would mean roughly 10% decrease in overall oil usage.
Now since the US uses only 20.5% of global production this 10% decrese in usage would result in a total 2% decrease in global usage…so Assuming I did my math even remotly right, doubling the economy of all US SUV’s would drop your gas price from 3$ a gallon to 2.94$…or basically nothing.
My point is this. Yes teh US is a large consumer of global oil…but only 1/5 of it. Yes driving around uses alot of oil…but only 2/5 of 1/5 and on and on.
The oil problem is not one of “fuel” but one of energy as a total. Oil is used to make many other products as well and provide energy in other forms.
If you want to see real price drops we need to make real energy changes, not only domestically but globally.
~Matt
Thanks. Good info. Here is a link that shows some additional stats and the new regulations for vehicles.
http://www.townhall.com/columnists/alanreynolds/ar20050825.shtml
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You’re gonna have to update that…those prices are kinda low.
~Matt
The copyright on the bottom says 3.17. So it’s only 6 months old. Kind of sad as gas is over $2.70 here now. What really confused me is I just got back from LA and gas was actually cheaper there than it is here in the western 'burbs of Chicago. And here I thought CA gas prices were high.
I was surprised by that as well when we went to SF during July. Cost that the rental place was charging was actually cheaper than what we were paying here (Here being Rockford)…which is significantly cheaper that Chicago proper I believe.
But then everyone told me how expensive everything was in Hawaii to…which wasn’t really that true either…at least in 99 it wasn’t.
~Matt
Ok, maybe I am missing something here. Don’t usually spend a lot of time on this. But, I remember gas being over $1 a gallon back in '76. Why it was still $1 a gallon a few years ago, I am not sure. But $1 at 3.5% from 1976 to now works out to $2.71 a gallon.
Now, obviously items such as milk haven’t gone up that much, but housing and insurance seem to have made the difference.
Also seems to me I remember all the cars they gave away on the Price is Right in the early '70s were $4000. From '72 to now that would be less than $12k. I’d love to buy a new four door sedan for 12k.
All I am saying is, yes, $2.65/gallon sucks. Esp. when you drive 32 miles each way at 14 miles to gallon to get to work. But we’re not that much different that where we were 30 years ago.If I bought a car that got 30mpg and parked my truck(which is paid for), I’d only save in the neighborhood of $150/month. Not enough to offset the cost of the new car, insurance, etc. And how much natural resources am I saving by not causing another vehicle to have to be built?
It’s not really about the price itself, but the rate at which it changes. Budgets are made to account for commodity prices being within a certain range. When that commodity has a wild swing upwards in a short time period, it hurts because it isn’t accounted for.
If cars went from $5000 to $9000 in a year, people’s buying habits would change drastically. It would have a major impact on the economy, even if the price of automobiles was around $5000 for the previous 10 years.
Don’t forget that the family of the man who occupies the seat in the Oval Office are oil men from Texas.
Just a brilliant article from the always brilliant Larry Kudlow about the energy concerns: (highlights added by me)
Permit me to take a contrarian view on the economic outlook. It’s not the impact of high energy prices or the housing boom that worries me. Rising gas prices and home values represent the forces of good, not evil. My biggest worry is an ever-tightening monetary policy from the Federal Reserve.
On the oil-price shock, I say at least two cheers for higher prices. Why? Because I believe in markets. When the price of energy goes up, demand falls off and supply increases. This is the case today and it represents nothing short of a tectonic shift.
As Dan Yergin, president of Cambridge Energy Research Associates, recently wrote in the Washington Post, rising energy prices today will cause energy supplies to explode tomorrow. With gas prices moving toward $3 a gallon, the public is now even favoring nuclear power — by two-to-one, according to pollster Scott Rasmussen. Nuclear energy is the ultimate solution for clean power and reduced foreign dependence. And with the government giving the Federal Energy Regulatory Commission the authority to override localities that oppose nuclear power, liquefied natural gas, or other forms of energy, the likelihood of an energy explosion in the years ahead is even greater. Markets work if you let them.
The spread of global capitalism to places like China, India, and Eastern Europe is the main cause of the spike in energy prices. It’s a market signal that the new and prospering world economy needs more power. Consequently, this is not a recessionary supply crunch like we had in the 1970s. It’s a growth-oriented demand increase.
This is why the impact of high oil prices has been negligible, at least so far. Since the end of 2003, energy prices have more than doubled. But in annual terms the economy is growing by nearly 4 percent. Jobs are up and unemployment is down. Using the most accurate inflation gauges, the overall price level has increased only 2.5 percent yearly, and less than 2 percent excluding energy. Bond rates remain very low and stock indexes continue to appreciate.
Take this one step further - When was the last nuclear energy plant built in the US? (I have no idea.) Why aren’t there more?
There aren’t more because we haven’t figured out a way to dispose of the spent fuel without creating a superfund site. Pretty simple really.
Nuclear is the perfect energy source. It’s the waste that is the problem. Given the state of things I don’t see that preventing new build in nuclear in the not to distant future. The lesser of two evils I suppose.
A bright spot - We pay a little extra each month on our electric bill to buy electricity produced by a wind farm in Oklahoma. I route commercial ships globally, and I am pleasantly surprised by the number of very large wind turbine being transported to North America. That is a very good sign of change.
The problem with the math is that it ignores the state of mind of certain people in the population. A person who buys a Hummer, like my neighbor who has two, might be prone to waste in many, many ways, that when added up account for a lot more than just the gas they use.
Our neighbor, for example, has two Hummers. They have about 10 acres, with 20 or so large widely spaced trees up the driveway, each is lit up with a bright spot light. On garbage day each week, they put out 3 full containers. So it isn’t just the Hummers, it is their lifestyle that is using a tremendous amounts of energy. Forgot conservation, these people apparently just don’t give a shit about how much they use, or waste, or the repercussions of their actions. They can afford it, so they do.
- For comparison we put out our garbage can every 2 to 3 weeks when it is full. So they are throwing away between 6 and 9 times as much garbage as we are!!! 6-9 times!!!
It’s not really about the price itself, but the rate at which it changes. Budgets are made to account for commodity prices being within a certain range. When that commodity has a wild swing upwards in a short time period, it hurts because it isn’t accounted for.
If cars went from $5000 to $9000 in a year, people’s buying habits would change drastically. It would have a major impact on the economy, even if the price of automobiles was around $5000 for the previous 10 years.
Actually, it is the price itself.
The problem with oil/gas, in an economic sense, is that the price elasticity of demand is very low. That’s another way of saying that as the price of gas goes up, the impact on demand is comparatively small. I forget what it is, but it is way less than 1 (1 would mean that a 10% rise in prices produces a 10% drop in demand). The reasons are obvious - people need to drive, at almost no matter what the price is, at least in the short-run. The problem with this is if people aren’t going to demand much less as prices go up, then something else in the budget has to go down a lot. This is what happened in the 70s oil shocks - normally its very difficult to get inflation and recession at the same time. But a supply shock to oil is the textbook example - oil prices go up, pushing overall prices up, but aggregate demand for all other goods drops as people’s budgets get squeezed. The worst of both worlds.
In the long-run, people adjust - they drive less, carpool, conserve, or ultimately, find and research alternative energy sources. This is the economics 101 consolation prize. What they fail to tell you is that while things like solar, etc. are more practical in a high oil price environment, the dark side is that you still have very high priced energy out there, and that can cause a great deal of pain for quite a long time.
Well, expect a big shock this week. That damn Katrina is going to create a big disruption. People have been saying that the price has not reached historic highs YET. We are going to get close and god forbid anything else happens it could get very ugly.
Your neighbor represents America. You represent some smaller, poorer country (take your pick) 
Our lifestyles are not sustainable at the rate we are going. We need to make some incremental changes before we are forced to make lots of big changes all at once. The U.S. more than anywhere, really. No one uses or wastes as much as us. We really are No. 1 !!! It would really be cool if we were also soon No. 1 in alternative energy.
And, therefore…
You didn’t happen to read the recent article in “IEEE Spectrum” about wind energy, did you? Quite good. Talked about the growth of wind turbine technology and how companies such as GE are buying up smaller companies then using their own capital and engineering resources to build larger & more efficient turbines. There was a picture of a stand alone North Sea turbine that was HUGE. Incredible.