Oil prices

[John K]

An article from USAToday. Basically says there is no reason they know for oil to be this high, but if it continues expect $4 gas...

http://www.usatoday.com/money/industries/energy/2007-11-20-oil-tues_N.htm

 

[G-MAN]

I've been saying this all along. The price of oil right now is the product of speculation (i.e., fear and greed), nothing more.

 

[Schmoe]

Everybody is buying oil to protect themselves against the falling dollar. Plus, there always seems to be inventory reports that say they have "dropped." Funny how three little words can costs ka-billions.

 

[bob_ninja]

Well in that case if the price is too high then don't buy it. Real simple. Simply don't purchase gasoline over $3/gal. There. All the speculation and so called artifical price increases will cease instantly.

In the meantime, the market will push ever higher prices as long as there are buyers who accept higher prices. Simple supply/demand stuff. So the article and all of you are wrong. THE REASON for higher prices is that WE ARE ACCEPTING higher prices and keep buying.

 

[Bill in Utah]

Originally Posted By: bob_ninja
Well in that case if the price is too high then don't buy it. Real simple. Simply don't purchase gasoline over $3/gal. There. All the speculation and so called artifical price increases will cease instantly.

In the meantime, the market will push ever higher prices as long as there are buyers who accept higher prices. Simple supply/demand stuff. So the article and all of you are wrong. THE REASON for higher prices is that WE ARE ACCEPTING higher prices and keep buying.


Agree 100%

I don't use alot of fuel since I drive 4 cyl cars that get well over 25 mpg and have tried to cut back the mileage driven.

But you see the yahoos driving their jacked up turbo this trucks @ well over 80 mph in a 65 just going to town. Weaving in a out and just being total idiots.

Sadly, there are more of them than responsible operators. And for them, gas is cheap.

Watch next driving season. $3.50 with ease and $4 from late May till early Sept. :???:

Bill

 

[Gary Allan]

Most of the consumption of petroleum in this nation cannot be altered in any short amount of time. Most driving ..of any merit ..let alone home heating oil ...etc..commercial boilers that are forced to switch to liquid fuel from NG during cold seasons when they outstrip the carrier's capacity ..etc...etc is MANDATORY.

The consumption nut can't be cracked (mostly) by conservation at this time. By the time you DO effect any meaningful alteration to our hunger for energy ..there will be a billion others who are more than happy to suck up your drippings of savings.

My wife does 260 a week to work ..maybe 315 if she does a 6 day week. She does around 18k a year. How much of her driving can be reduced? I drive, normally, less than 100 miles a week. How much are either of us going to effect our total demand?

We go through about 900 gallons of home heating oil for heat and hot water annually. How much can I shave off of that and have a sensibly warm house?

I think you've got it backwards on the supply and demand thing when it comes to energy. Only lack of affordability will lower demand ..and that's only after all the other corners have been swept out in terms of available revenue (food, clothing, etc.).

There will never EVER be an oil glut again that will substantially lower the price of fuel.

 

[bob_ninja]

Gary,

There are many uses/behaviours that cannot be eliminated but can be easily and quickly changed to reduce significantly oil consumption. Driving style is the obvious one. There is also the choice of a vehicle. My neighbour is still buying new pickup trucks, then his kid buys one as well, etc. all major overkill. Besides the single snow clearing machine others are just not needed.

What is the thermostat temperature setting at home? Changing air conditioning/heating settings alone can easily save a lot. And so on.

The truth is people are lazy. We are spoiled, used to our nice comfortable lives and refuse to yield an inch. It is very selfish and will end one way (reasonable lifestyle compromises) or another (higher oil prices).

Bill, exactly. Still everyone complains that fuel is expensive and one must have it, but is clueless about their vehicle efficiency or consumption.

Gets worse than driving styles. I had some work done on my fireplace. They left the van engine running while parked in my driveway. Why I asked. Van's alternator is broken, so battery doesn't recharge and once stopped they cannot start it again. Apparently they "didn't have the time to fix it" so kept it running all the time!?!?!

We are blatantly wasting oil everywhere. Frivolous trips, fun racing, useless trips to the mall, etc. What really bothers me is that the same people are crying and complaining about expensive fuel. We have no right to complain, really.

 

[jsharp]

Originally Posted By: bob_ninja
Well in that case if the price is too high then don't buy it. Real simple. Simply don't purchase gasoline over $3/gal. There. All the speculation and so called artifical price increases will cease instantly.

In the meantime, the market will push ever higher prices as long as there are buyers who accept higher prices. Simple supply/demand stuff. So the article and all of you are wrong. THE REASON for higher prices is that WE ARE ACCEPTING higher prices and keep buying.


They tried this in California a few years back with electrical power. They refused to buy above a given price. They discovered that there was no power available at that price.

Refusing to buy sounds sensible but in fact it's silly. It only works if there are alternatives. Unless you want to walk to work and sit in a cold and dark house, you're forced to pay the price.

And frankly, I've no interest in living like a Chinese peasant just so another Chinese peasant can get his fuel .1% more cheaply...

 

[wavinwayne]

The thing that continually frustrates me is this: Let's say that EVERY BITOGer did all the right things to conserve energy. The price of a gallon of gasoline isn't going to change ONE CENT!!!

 

[jsharp]

If everyone in America "did the right thing" the price is unlikely to change much. The word Oligopoly is applicable here.

http://en.wikipedia.org/wiki/Oligopoly

and

http://www.investopedia.com/terms/o/oligopoly.asp

Interesting the example they use at the latter link -

The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market.

 

[gtx510]

Originally Posted By: bob_ninja
Gets worse than driving styles. I had some work done on my fireplace. They left the van engine running while parked in my driveway. Why I asked. Van's alternator is broken, so battery doesn't recharge and once stopped they cannot start it again. Apparently they "didn't have the time to fix it" so kept it running all the time!?!?!
But wouldn't it still use more electricity to keep the van running?

 

[bob_ninja]

Originally Posted By: gtx510
Originally Posted By: bob_ninja
Gets worse than driving styles. I had some work done on my fireplace. They left the van engine running while parked in my driveway. Why I asked. Van's alternator is broken, so battery doesn't recharge and once stopped they cannot start it again. Apparently they "didn't have the time to fix it" so kept it running all the time!?!?!
But wouldn't it still use more electricity to keep the van running?


Hmmm, yeah you are right. I forget the details. I was too dumbfounded at the time.

 

[bob_ninja]

Originally Posted By: jsharp
Originally Posted By: bob_ninja
Well in that case if the price is too high then don't buy it. Real simple. Simply don't purchase gasoline over $3/gal. There. All the speculation and so called artifical price increases will cease instantly.

In the meantime, the market will push ever higher prices as long as there are buyers who accept higher prices. Simple supply/demand stuff. So the article and all of you are wrong. THE REASON for higher prices is that WE ARE ACCEPTING higher prices and keep buying.


They tried this in California a few years back with electrical power. They refused to buy above a given price. They discovered that there was no power available at that price.

Refusing to buy sounds sensible but in fact it's silly. It only works if there are alternatives. Unless you want to walk to work and sit in a cold and dark house, you're forced to pay the price.

And frankly, I've no interest in living like a Chinese peasant just so another Chinese peasant can get his fuel .1% more cheaply...



You are missing the point. Do you think that Chinese rode bicycles by choice couple of decades ago?
Do you think that we'll have THE CHOICE to keep driving and buying fuel in the future? Chinese now hold over trillion$ of US debt. Guess who will have money in the future to fill up.

You can refuse to pay today or go broke in the future.

Of course, there are alternatives. Not as pleasant or comfortable or fast, but there are. In fact in just 3 years you can get one of these and not use any gas at all:

Chevy Volt

 

[bob_ninja]

Originally Posted By: wavinwayne
The thing that continually frustrates me is this: Let's say that EVERY BITOGer did all the right things to conserve energy. The price of a gallon of gasoline isn't going to change ONE CENT!!!


Why not? Many people could easily replace their pickups (on average guessing 25 mpg) with a hybrid (50 mpg) for commute to work and other general driving. Right there you are cutting demand in half. Of course that would have a very big impact on the price.

 

[bob_ninja]

Originally Posted By: jsharp
If everyone in America "did the right thing" the price is unlikely to change much. The word Oligopoly is applicable here.


I watched Blood Diamonds the other night. Diamond industry is a oligopoly of course. They talked about the big diamond companies stashing away a lot of product into storage to reduce supply thus increasing price.

Oil companies don't have that choice. OPEC has some impact on supply, but limited. Besides they don't need to create an artifical shortage. We keep using more oil every day. So despite the oligopoly, there is little they need to do today to push prices up. We are doing it for them.

If anything, now OPEC is alarmed at the fast price increase and seem to be trying to stop it at $100/barrel. Oddly enough they are actually trying to help us.

 

[Jason8691]

Originally Posted By: bob_ninja
Originally Posted By: wavinwayne
The thing that continually frustrates me is this: Let's say that EVERY BITOGer did all the right things to conserve energy. The price of a gallon of gasoline isn't going to change ONE CENT!!!


Why not? Many people could easily replace their pickups (on average guessing 25 mpg) with a hybrid (50 mpg) for commute to work and other general driving. Right there you are cutting demand in half. Of course that would have a very big impact on the price.


I wish my truck got 25mpg, on a real good day I get 18. Plus its not that easy to unload a $35k truck without taking a huge loss, Id end up paying $600 a month for a Focus. I dont mind paying the price for gas really, its just means I run around less and thus stay out of trouble.

 

[jsharp]

bob_ninja - I think it's you who's missing my point. Refusing to pay today's prices won't get you the energy you need to live any kind of modern lifestyle. It buys you a trip back to 1800. Because someone else is willing to pay today's prices so they don't have to live like it's 1800.

What about your other choices? That we all dump our uneconomical vehicles and buy new ones? Make the numbers work for me because I can't. Here's an example using round numbers for easy calculation -

I have a paid for 7 year old SUV that gets about 18 MPG and I live 35 miles from work. So lets say I use a bit over 2 gallons of gasoline to get to and from work every day. Maybe 600 gallons a year given 250 working days per year and some side trips along the way.

So I take my money and buy a fancy new 48 MPG hybrid and cut my consumption by 2/3. An unlikely possibility but I'll give it to you. How long until I've saved enough in fuel costs to pay for that hybrid purchase?

The answer of course is - Never. Unless your believe their life is 20+ years with no higher maintenance costs than what I have now.

So again, saving 400 gallons of fuel a year at $3.00 "saves" me $1200 a year. And I had to spend how much cash right now to "save" that $1200?

It seems your choices really are spend much more and go broke now or go broke more slowly later.

Yes, I ignored that I could get something for my SUV to offset my new purchase and maybe get quicker pay back. But I'd also need to rent a truck at least 2X a month, maybe 4 or 5 times per month. A truck that uses a lot more fuel than my current SUV and has a much higher cost per mile. So without going into that cost/benefit calculation, I chose to ignore it.

As far as continuing to have the choice of buying fuel at the current price levels or higher, I believe we will for our lifetimes anyway. The oil companies don't need to contrive a world oil shortage and I don't believe there is any real shortage. Everything I read says world reserves and production are higher than they have ever been, and higher vs. world consumption. Nor has the cost of oil production grown much in the last few years, certainly nothing compared to it's price increase.

So something else is at play here over and above the supply/demand issues. The obvious answer and the likely one IMO is - Speculators and oil companies with their speculators are maximizing their profits.

Those things aren't illegal, they may not even be immoral depending on how you feel about things. But they don't bode well for your "lets all get hybrids" and that'll make the price drop scenario.

The price will only drop if very few in the world are willing to buy energy at a given price. Not a likely occurrence in my estimation. Every gallon and watt we save here with small cars and cold homes, some undeveloped country will now be able to afford and be willing to buy because the price dropped $.15 a gallon or $.01 a kilowatt.

Myself, I'm not complaining about it. It'll correct soon enough when these energy costs start to make it heavily into the things we spend our money on. Food, finished products, etc. etc.

At that point the price might well go down thanks to a decrease in demand. Financing the 3rd world's march into this century will slow. And we won't need to worry about them buying fuel with the money we give them to make lead painted plastic trinkets and poisoned pet food.

That's of course provided the oil companies and assorted others responsible for the current prices determine that lower prices will once again maximize their profits...