The Specter of Gasoline At $5 a Gallon 1205
Hugh Pickens writes "The NY Times reports that gas prices are already at record highs for the winter months — averaging $4.32 in California and $3.73 a gallon nationally. As summer approaches, demand for gasoline rises, typically pushing prices up around 20 cents a gallon. But gas prices could rise another 50 cents a gallon or more, analysts say, if the diplomatic and economic standoff over Iran's nuclear ambitions escalates into military conflict or there is some other major supply disruption. 'If we get some kind of explosion — like an Israeli attack or some local Iranian revolutionary guard decides to take matters in his own hands and attacks a tanker — than we'd see oil prices push up 20 to 25 percent higher and another 50 cents a gallon at the pump,' says Michael C. Lynch, president of Strategic Energy and Economic Research. A sharp rise in the prices of oil and gas would crimp the nation's budding economic recovery would cause big political problems at home for President Obama, who is already being attacked by Republican presidential candidates over gas prices and his overall energy policies. On the other hand, environmentalists see high gas prices as a helpful step toward the development of alternative energy. Secretary Treasury Steven Chu notably said in 2008 'we have to figure out how to boost the price of gasoline to the levels in Europe' to make Americans trade in their 'love affair with the automobile' for a marriage to mass transit. In the meantime President Obama is in a bind because any success in tightening sanctions on Iran could squeeze global oil supplies, pushing up prices and causing serious economic repercussions at home and abroad."
Welcome to our world (Score:5, Informative)
we already top that in the UK:(
Re:Welcome to our world (Score:5, Informative)
I was going to say - if I only payed $5.00 a gallon I'd throw a party. Right around $8.50 (give or take based on the exchange rate) a gallon is what I consider normal. Between this and the Americans I heard complaining yesterday that the Raspberry Pi boards didn't look to be available in the US -- I have to say that it comes across as petty whinging to the rest of the world.
Re:Welcome to our world (Score:4, Informative)
My last fill-up of diesel was £1.429/litre, which is £5.41 for one of your tiddly US gallons (£6.50 for a real gallon).
At today's rate of £1 = $1.5942, that's $8.62 per US gallon.
Re:$5? that's nothing (Score:5, Informative)
Largest GDP per capita? More like 7th (nominal) or 15th (ppp) depending on how you count.
What is it with you having to believe you're the best in everything?
Liar (Score:5, Informative)
You are a liar, http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita [wikipedia.org] shows the US at around 10 or lower. But then, you quote Reagan, I suspect facts and figures just enrage you.
Re:Shale is coming (Score:2, Informative)
the hard reality is that fossil fuels are not going away soon, thanks to technological advances such as "fracking"
The hard reality is that dumping more CO2 into the atmosphere will cook us all.
Ah, another confused driver (Score:4, Informative)
The idea that road and fuel taxes pay for the total cost of road maintenance is a persistent myth. It is totally and completely untrue. The cost of road maintenance, construction alone is far higher, add the costs for emergency services dealing with road/car related issues and it goes even higher. Add policing for safety and the costs skyrockets.
Not that we have a choice, we need roads but we ALL pay for them from our ordinary taxes. Money from fuel tax might go somewhere else but that just means money flows from somewhere else to the roads.
Re:This is an americano-centric joke (Score:5, Informative)
Wrong you are over 3x above average. The average American drives less than 30 miles per day:
http://www.bts.gov/programs/national_household_travel_survey/daily_travel.html [bts.gov]
Social engineering works (Score:5, Informative)
The effect of the European tax regime has been to encourage efficient vehicles, and both European and Japanese manufacturers benefit. It also pads the effect of fuel cost, since taxes can be adjusted to slow the rate of increase and so reduce economic dislocation.
When the great American jurist Oliver Wendell Holmes remarked that taxes were what he paid for civilisation, he was in effect pointing out that all taxes whatever are social engineering. Small Government Republicans always claim that they want to reduce taxes, but somehow it turns out that as soon as the economy has a bit of slack representatives will vote for pork barrel (your bridge in Alaska in exchange for my bioethanol subsidy). Personally I think it is better if people without an axe to grind work out how to use taxes in a socially beneficial way and politicians only get to vote on it.
Your world is smaller than ours (was Re: Welcome.) (Score:5, Informative)
How often do you need to drive from Dundee, Scotland to Poole, England?
646 km seems to be about as far as one can drive in the UK --- that's just 400 miles --- not a terribly long trip by U.S. standards and for me, located in a town which takes advantage of its central location as an argument for businesses to locate here, or do business w/ businesses here, won't get one to more than a small portion of the U.S. (and part of Canada --- New York, Pennsylvania, New Jersey, Delaware, Virginia, West Virginia, Connecticut, Massachusetts, Rhode Island and most of Ohio, Vermont, and parts of Kentucky and North Carolina --- there are 50 states, and that's not even the original 13 colonies (but includes parts of territories and subsequent additions).
I've hopped in a car and made a solo trip of 900 miles one way in one 18 hour haul (had to finish a shift working, then appear at a conference and there wasn't a convenient airline connection) --- even that wasn't half-way across the country.
When I was stationed in Texas we'd get students in from Europe and the Middle East and they'd have purchased 30-day Greyhound bus passes thinking that they'd be able to see the U.S. on the weekends --- had to explain the reality that if they hopped on a bus Friday at 5:00 p.m., they'd reach the boundaries of Texas just in time to have to turn around to return for class Monday morning (that same 400 mile radius doesn't quite cover all of Texas (but does most of Oklahoma, almost half of New Mexico and small bits of Arkansas and Louisiana (and a portion of Mexico)).
William
Re:America is a BIG Country (Score:2, Informative)
Look at what the world pays and stop whining (Score:4, Informative)
Check out what the rest of the world pays per litre, look at how far down the US is on the list -- even lower than Canada, which produces the damned stuff.
http://www.nationmaster.com/graph/ene_gas_pri-energy-gasoline-prices [nationmaster.com]
Now STFU and pay like everyone else -- WITHOUT government subsidies!
Re:Welcome to our world (Score:5, Informative)
For the most part, people have been moving to mass transit and more cycling (better cycle lanes), rather than renewable fuels. Also, people are moving more into cities, and investments are being made to make them more livable.
All the mass transit / cycle lanes, etc investments are paid for by ... fuel taxes.
In the event of a sudden crunch (eg. oh, a war in the middle East) and oil rises dramatically, it becomes possible for (more) people to switch from cars to buses. Also, the government can temporarily drop the fuel tax to stabilise matters for its citizens; and/or subsidize the poor (e.g. for home heating oil). These actions aren't available otherwise.
Dramatic moves to renewable fuels weren't expected this side of the Atlantic (by anyone sane). Do the numbers: there's no way of growing that much biofuels without substituting for food. Its really only pushed as an answer in the US where solutions of moving away from automobiles is not seen as politically possible.
Re:Cognitive dissonance (Score:2, Informative)
Gingrich has directly stated he plans to invade Iran and take their oil. He's not dancing around the idea, he's very blunt.
Re:Welcome to our world (Score:5, Informative)
The United States is a big frikkin' place.
So is greater Europe - if a German salesman chose to cover Northern Norway through Southern Italy as his territory, he's be doing a lot of travelling too.
You drive about as much as you choose to drive, if you don't like driving so much, get a different job - possibly in a different town. In America it is popular to live in your car 2 hours+ a day (sometimes 8+ hours, as in your case), but it is not required, or necessary.
When I lived in a suburb of Houston, my house was 4 miles from the office and 1/2 mile from the grocery store - the idiot in the cubicle outside my office commuted 3 hours a day, he could afford a house in my neighborhood, to rent or buy, he just chose not to.
Get out more (Score:5, Informative)
Re:Welcome to our world (Score:5, Informative)
Mass transit is better suited to the higher population densities of European cities, much of the USA is too spread out.
Cycling doesn't work in some parts of USA due to weather extremes. You can't bike when its 40 below zero wind chill, or on snow and ice.
(and parts of the south are too hot.)
Re:America is a BIG Country (Score:4, Informative)
If someone is passing a number of doctors during that 75-mile trip then you make a very good point. There are rural areas of the US, however, in which there may be no medical services in that distance. Fewer than 600,000 people live in the US state of Wyoming, an area roughly the same size as the UK.
US Population Density Map [time.com]
Is is true of the entire US? No. It isn't true for the majority of the population (since the majority live in the dense areas- that's why they are densely populated).
Re:let's normalize and remove taxes from discussio (Score:3, Informative)
According to http://www.petrolprices.com/the-price-of-fuel.html
Price of UK fuel:
With no fees - (UK£ 0.478) per litre = 3.46468209 US$ per Imperial gallon
With retailer/delivery fees - ((UK£ 0.478) + (UK£ 0.05)) per litre = 3.82709653 US$ per Imperial gallon
With regular VAT as well - ((UK£ 0.478) + (UK£ 0.05) + (UK£ 0.2215)) per litre = 5.43259252 US$ per Imperial gallon
And the full price with added fuel tax - ((UK£ 0.478) + (UK£ 0.05) + (UK£ 0.2215) + (UK£ 0.5795)) per litre = 9.63297594 US$ per Imperial gallon
Re:Welcome to our world (Score:4, Informative)
Re:This is an americano-centric joke (Score:4, Informative)
It's not as clear as you describe. I live in France. Gas prices here work out to $7.50 to $8.00 per gallon of diesel. However, while I have the option to take the train instead (an option that is often missing in the US), the train ticket for just myself is more expensive than burning the fuel would have been. Taking a family on the train is ridiculously expensive. It's not even the high-speed train.
Yes, we have options in Europe due to better mass transit infrastructure. However, they are *all* expensive.
Re:Welcome to our world (Score:5, Informative)
Re:Welcome to our world (Score:4, Informative)
Actually, the City of London is pretty much a sovereign city-state operated as a for-profit corporation.
(It's only a central square mile in the rest of London, though.)
Re:This is an americano-centric joke (Score:5, Informative)
Trust me, with our current socialist trends...
Warning: misinformation code phrase!
The US fed refuses to allow any new refineries.
The US federal government does NOT have a moratorium on building refineries. New refineries are currently being built in Arizona (Arizona Clean Fuels Yuma, LLC) and South Dakota (Hyperion). Additionally existing refineries are being upgraded in place, like the Motiva Houston refinery that doubled capacity.
Here [factcheck.org] are some facts about US refining capability.
Re:Welcome to our world (Score:5, Informative)
No. Just no. While thats true for some people, many people live in places well suited for public transportation, they just dont have it.
I live in LA. Winter means I might want to put on a scarf early in the morning, but I still may want short sleeves by the afternoon -- that's not weather extremes. Its also densely populated. This place would be great to have public transportation --- but they filled in half the light rail lines decades ago because they decided to be a 'car town'. Now, I'm fortunate to be able to take a bus to work only because my (large) employer subsidizes the city to keep my line open, and though I live on a metro station it doesn't seem to go anywhere I'd actually want to go -- the beach, the airport, etc.
While that excuse may work for Wyoming, the excuse of us being more spread out is nonsense for most Americans, just as it is when we talk about our flagging broadband market.
Re:Welcome to our world (Score:5, Informative)
You're not being berated for paying less. You're being berated for whining about it while abdicating your responsibility to the international community by being fuel hogs.
The US imports 10,270,000 bbls per day. The EU imports 8,613,000 bbls per day.
It appears that US is not the only hog in the pen.
The US has 300M people, the EU has 500M. So that's .033 barrel/day/person in the USA, versus 0.016 barrel/day/person in the EU.
Who's the gas hog now?
Re:Welcome to our world (Score:4, Informative)
40 below is 40 below.
It is the one temperature that is the same in both Celsius and Fahrenheit.
Re:But this price rise is artificial.... (Score:5, Informative)
You're correct that the price rise is artificial. It used to be that while unleaded gasoline and oil were traded as commodities, there were limits on the exchange that prevented the sort of out-of-control prices we're seeing. When those regulations were removed, traders were free to drive up prices, and here we are.
The solution to this isn't necessary drilling more. Any undeveloped lease has a lag time of 10 to 15 years before stable production is reached. The tar sands and shale oils in Canada and the Dakotas are amazingly difficult to produce. You don't simply drill a hole and dance around like an 1870's prospector when the oil comes raining down on your head. To get oil from tar sands you have to strip mine the sand, then heat it to a couple hundred degrees until the tar liquifies. Once liquid, you run the tar though the distillation and cracking process like any other crude oil. The kicker is that tar sand oil is mostly heavy ends and is amazingly high in sulfur.
When you talk about ends in oil, that is a measure of quality and viscosity. Light sweet crude from the wells in the Brent North Sea fields is far easier to refine than West Texas crude because the Brent oils already have a low viscosity, are low in sulfur, and have a naturally occurring percentage of light and medium end products like petrol and diesel. In fact, Brent Light Sweet crude is so light that it can be used as six oil, also called bunker fuel which is the main form of liquid fuel for large ships, right out of the ground. This means that Brent North Sea crude requires fewer steps to distil the product you want and will leave less residue products. Less steps means cheaper refining means higher profits.
Tar Sand and Shale Oil require a massive amount of refining. At room temperature, both products are about as viscous as glass and need to be run through the coking process to even get up to the status of a heavy fraction. From there, additional cracking (adding heat and hydrogen to chemically change the oil) is required to produce medium and light ends which are then distilled to diesel and kerosene which can be distilled or hydrocracked to produce petrol, naphtha, octane, or natural gas.
This is why tar and shale are usually left alone until per barrel prices reach a certain level. They simply aren't profitable to extract and refine without massive investment. You've also got all of the sulfur to deal with, and that stuff recombines to form all sorts of nasty products that tend to be highly corrosive and acidic and require a whole new set of industrial processes to convert in to useful products.
The real kick to the testicles in all of this is that the tar sands oil that Canada produces is already on contract to China. The Keystone XL pipeline that is in the news would connect the tar sand fields of Canada to the refineries at the Port of Houston and the Port of Houston would be shipping all of the refined products to Asia.
Should we have laws that say domestic oil stays domestic? I'm not sure, but I do like the idea. The problem with that is that Canadian oil isn't domestic and they produce more than the US. The other problem is that cheap oil is only going to encourage the kinds of things we should be working to prevent. Namely, I hate being able to see the air I breathe.
What I'd really like to see is all of this drilling technology and know-how be re-purposed for harnessing geothermal energy. Less pollution and it all stays domestic.
Re:But this price rise is artificial.... (Score:5, Informative)
Both you and the GP seem to have no idea how the world oil markets really work. The big oil corporations make record profits on volume not on price gouging. The people making the killing are the Wall Street speculators investing in oil futures. They typically bring a stable price to the oil companies who would otherwise would potentially suffer from fluctuations in price. They would rather take the guaranteed amount from the speculators than accept potential risk from market fluctuations.
Likewise building a pipeline doesn't really affect the price of gas in the US. It doesn't even affect supply, it just decreases the transportation cost from getting oil in tar sands from Canada to refineries in the US and makes it so that oil companies don't have to invest in building any new refineries (which consequently, would create a LOT more jobs than building a pipeline). These are all costs that only have a modest affect on the price of oil and even then it just increases the supply on the global market more meaning that China could still double demand in the next 10 years and the price of oil STILL goes up!