Gas Prices

Hello all,

I noticed that in the general discussion area there are no threads pertaining to the high price we pay for petroleum products nowadays - a very hot topic.

I am encouraging open discussion on the subject; why are prices so high now and what can be done about it...

Let me start it off.

WHY PRICES ARE SO HIGH - i'm not entirely sure but here are some thoughts.

In order of probability:

1. Due to more decentralised oil fields of poorer quality, and a global shortage of skilled workers, aging equipment and under-investment over a 15-20 yr period issues with oil supply in the future will be mainly logistical in nature.

2. Market collusion by OPEC - its $75 a barrel and rising, but demand isn't slowing down, so there is a good reason not to let the price drop. If you knew you would get $80 for something, would YOU put in extra effort (i.e. pump more) only to see the value drop down to $30? I wouldn't...

3. Speculative commodities boom - oil has gone up nearly 300% since early '02 but so has copper. Gold, silver, platinum have all also gone up. Geopolitical factors adds to the speculation.

4. World oil production is peaking, and we will soon be paying $5, $10, $20 a gallon for gas.

I reckon its a mix of 1-3.

What to do about it? Currently, oil prices are in the realm where alternatives are competetive. Whilst we may not get E85 unsubsidised for under $3 a gallon ever, oil consuming nations are only limited by their imaginations in replacing their entire oil supply with ethanol, methanol or biodiesel. I believe that oil production will, before 2050, peak and we will need alternatives, but I beleive humans can replace oil and live indefenitely in a greenhouse-friendly and economically sound manner. As the dollars stop flowing to the middle east, islamic terrorism and violence will die off and everything will be sweet

Here in Guelph Ontario today, the price was $1.10 per litre. I wonder why people had to syphon gas way back when I was younger. They didn't know how good a deal they were getting if they had to pay for it.

About $3.20/gal here in North Illinois.

You vote in a Big Oil president, you get high gas prices..duh...

Gas is only $2.95 a gallon here - gee I am glad it is less than $3 a gallon!!

Maybe it should go down in price so I can be even gladder?

I filled up just now with an E10 blend for $3.95/gal (after conversion). This is cheap. In sydney this week prices climaxed at $4.22/gal. Cheap compared to, err, the UK where it is about $6.80/gal. When I bought my '00 I filled up to the tune of $2.44/gal

What I don't understand is how "they" get away with raising the price pretty high until the public objects and then only lowering it until there is a false satisfaction with the public and the price never returns to the original amount.

I think it is all a scam!

I think it is all a scam!

Congratulations. You've reached the 2nd Plateau of enlightenment.

Here in Montreal, Quebec, Canada, this week regular gas went up to $1.25/liter or $4.73/US gallon...

Sales of big SUV's and trucks are apparently going down. Go figure!

Here in Montreal, Quebec, Canada, this week regular gas went up to $1.25/liter or $4.73/US gallon...

Sales of big SUV's and trucks are apparently going down. Go figure!

Is there a correlation?

 

I thought that people will buy whatever they like (they make more money than me), regardless of gas prices.

Well, the news is in - Corolla is the best selling car for the 2nd month in a row. The resale of muscle cars (Ford Falcon XR6 Turbo, Holden Commodore SS) is going thru the floor - back in '03 a 2 y.o. ss commodore would cost $42k from a holden dealer - now they are going for about $35k. BTW corolla sold about 5000 units last month in australia.

This week we got our 2nd intrest rate rise this year. I am not sure what will happen to global supplies in the future but in the short term I reckon within 12 months we are going to have a recession; a surging price and reduced demand could hit head on and we could have an oil glut, lowering prices markedly. However, all the fuel efficient cars people are buying will still be puttering about, kepping demand and therefore prices noticeably lower than what they have been, for a while.

Well, the news is in - Corolla is the best selling car for the 2nd month in a row. The resale of muscle cars (Ford Falcon XR6 Turbo, Holden Commodore SS) is going thru the floor - back in '03 a 2 y.o. ss commodore would cost $42k from a holden dealer - now they are going for about $35k. BTW corolla sold about 5000 units last month in australia.

This week we got our 2nd intrest rate rise this year. I am not sure what will happen to global supplies in the future but in the short term I reckon within 12 months we are going to have a recession; a surging price and reduced demand could hit head on and we could have an oil glut, lowering prices markedly. However, all the fuel efficient cars people are buying will still be puttering about, kepping demand and therefore prices noticeably lower than what they have been, for a while.

In the U.S the trend is similar - only at a slow rate. The interest rates are going up, SUV's cost a lot to keep and fuel efficient cars are more in demand. Corolla will do alright.

 

 

IMO, gas prices are still too cheap. For a lot of people, including people who drive less fuel efficent cars, gas is cheaper than car insurance. The price of gas can only increase more and likely exponentially. Demand is increasing at a faster pace than new oil fields are discovered.

We have built a fossil fuel dependant society, everyday there are more and more ''things'' that are automated and run on fossil fuels or electricity, when less than 50 years ago, none of this existed, and human energy, or simply time was used to perform such tasks:

Doors that open by themselves (although one door per store or mall for handicapped people is a good thing)

Nail guns

Electric screw drivers

Wiper snipers (weed eaters)

Hair dryers

Clothes dryers

Microwaves (used to defrost food)

Electric pepper mill

Electric garage door opener

There's my rant (and gas is $1.25/l) and I think driving 650 kms for $50 of gas is a good deal

IMO, gas prices are still too cheap. For a lot of people, including people who drive less fuel efficent cars, gas is cheaper than car insurance. The price of gas can only increase more and likely exponentially. Demand is increasing at a faster pace than new oil fields are discovered.

We have built a fossil fuel dependant society, everyday there are more and more ''things'' that are automated and run on fossil fuels or electricity, when less than 50 years ago, none of this existed, and human energy, or simply time was used to perform such tasks:

Doors that open by themselves (although one door per store or mall for handicapped people is a good thing)

Nail guns

Electric screw drivers

Wiper snipers (weed eaters)

Hair dryers

Clothes dryers

Microwaves (used to defrost food)

Electric pepper mill

Electric garage door opener

There's my rant (and gas is $1.25/l) and I think driving 650 kms for $50 of gas is a good deal

I think people need to be less dependent on fossilized fuel and that will bring the price of gas down - supply and demand principle.

 

 

IMO, gas prices are still too cheap. For a lot of people, including people who drive less fuel efficent cars, gas is cheaper than car insurance. The price of gas can only increase more and likely exponentially. Demand is increasing at a faster pace than new oil fields are discovered.

We have built a fossil fuel dependant society, everyday there are more and more ''things'' that are automated and run on fossil fuels or electricity, when less than 50 years ago, none of this existed, and human energy, or simply time was used to perform such tasks:

Doors that open by themselves (although one door per store or mall for handicapped people is a good thing)

Nail guns

Electric screw drivers

Wiper snipers (weed eaters)

Hair dryers

Clothes dryers

Microwaves (used to defrost food)

Electric pepper mill

Electric garage door opener

There's my rant (and gas is $1.25/l) and I think driving 650 kms for $50 of gas is a good deal

I think people need to be less dependent on fossilized fuel and that will bring the price of gas down - supply and demand principle.

 

That is actually how prices came down in the last big oil shock (1979-1985). With high prices and recession/stagflation, people saved their pennies and by 1985 the demand for opec oil slumped to only 9mb/day, the high prices during 1979-81 brought much non-opec supply into the stream. In march 1985 oil was about $55 a barrel, adjusted for today's dollars. Pumping out only 9mb/day, less then a third of their capacity, opec nations were going broke. So in an effort to stimulate demand they opened the taps, which took the price back down to $10 a barrel, or about $18 a barrel in todays money.

An interesting fact is if the USA reduced its oil consumption so that, per capita, it is the same as somewhere like canada or australia, the reserve capacity would go up from 1.5 mb/day to about 8 mb/day.... this would take gas down to $1.50 a gallon once more...

IMO, gas prices are still too cheap. For a lot of people, including people who drive less fuel efficent cars, gas is cheaper than car insurance. The price of gas can only increase more and likely exponentially. Demand is increasing at a faster pace than new oil fields are discovered.

We have built a fossil fuel dependant society, everyday there are more and more ''things'' that are automated and run on fossil fuels or electricity, when less than 50 years ago, none of this existed, and human energy, or simply time was used to perform such tasks:

Doors that open by themselves (although one door per store or mall for handicapped people is a good thing)

Nail guns

Electric screw drivers

Wiper snipers (weed eaters)

Hair dryers

Clothes dryers

Microwaves (used to defrost food)

Electric pepper mill

Electric garage door opener

There's my rant (and gas is $1.25/l) and I think driving 650 kms for $50 of gas is a good deal

I think people need to be less dependent on fossilized fuel and that will bring the price of gas down - supply and demand principle.

 

That is actually how prices came down in the last big oil shock (1979-1985). With high prices and recession/stagflation, people saved their pennies and by 1985 the demand for opec oil slumped to only 9mb/day, the high prices during 1979-81 brought much non-opec supply into the stream. In march 1985 oil was about $55 a barrel, adjusted for today's dollars. Pumping out only 9mb/day, less then a third of their capacity, opec nations were going broke. So in an effort to stimulate demand they opened the taps, which took the price back down to $10 a barrel, or about $18 a barrel in todays money.

An interesting fact is if the USA reduced its oil consumption so that, per capita, it is the same as somewhere like canada or australia, the reserve capacity would go up from 1.5 mb/day to about 8 mb/day.... this would take gas down to $1.50 a gallon once more...

I think that if there were a united effort across the world to only buy gas from the cheapest place, the price would go down. It would force the more expensive places to lower their price to stay in business. Unfortunately there are people who don't care what it costs and would never be part of anything that would help them in the long-run.