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."
Re:Welcome to our world (Score:5, Interesting)
Most of us would love to use a viable and convenient mass transit system, and thus use as little fuel as you are able, but it's simply not practical.
I've tried to use the bus system in my city - I can drive 15 minutes to work, or I can bus for about an hour and fifteen minutes. It's not worth losing an hour each way.
Unfortunately, cities here are focused on building massively expensive 'boutique' mass transit that only gives current riders fancier options, and doesn't actually introduce new riders who used to be driving.
We really need more subways here in US cities, but even those might have limited use as so many people live in suburbs where an underground probably wouldn't run anyway.
Re:Welcome to our world (Score:5, Interesting)
There is a difference of scale.
How far do you in the U.K. drive in an average work day?
Here in the states, some days I drive 400+ (~640km) miles, especially when prospecting for new clients. Even when not prospecting the distance is around 100 miles per day (~160km) because I live in a rural suburb.
Any differences in price of gasoline (petrol :) might be partially accounted for by sales volume.
The United States is a big frikkin' place.
Re:America is a BIG Country (Score:5, Interesting)
Australia is a similarly big country, with a much greater amount of vast empty wasteland and having to travel 100miles plus to a doctor (flying doctors normally cover an area around the size of the UK each).
http://www.fuelwatch.wa.gov.au/fuelwatch/pages/home.jspx [wa.gov.au]
The prices are AU$ per litre. Multiply by 3.8 (ish) to get US Gallons. Hint: Diesel's gonna cost ya over 5 AU$ which is more than 5 US$.
If the US price were really hit that bad by petrol prices, you'd have rural petrol subsidies and/or inner-city petrol taxes to compensate.
The US may finally have to live in the real world regarding petrol prices and why European engines are "small" and yet can still do 70mph with a family of kids in the back and towing a caravan without even struggling.
Re:Welcome to our world (Score:5, Interesting)
Re:Welcome to our world (Score:5, Interesting)
here in Rochester, NY the buses run relatively on-time, they're not over crowded, text or email the bus stop number to the transit authority and you'll get a reply with the next arrival time, most of the stations in the city have lighted signs indicating arrivals and departures, and it costs a buck, and has for 20 years. Add to that the day passes, electronic passes, and the fact that the system extends to all the suburbs you find many people riding these buses.
Many of the problems you mention still exist, the hour long commute most obviously, but it's not the worst place in the world to catch a bus.
Re:Welcome to our world (Score:5, Interesting)
What's that?? Us English shout and scream every time the Government raise petrol tax. Occasionally we protest too.
As far as I know we're already diluting regular unleaded with up to (by law) 5% ethanol - with the resultant loss in MPG, and there's moves to increase this to 10%. Alas figuring out who's diluting regular petrol with this crap and selling it for 5p more than my current supermarket petrol is difficult.
I'm talking about a tank of fuel that one fill up takes 35mpg from station, to 25 from another ... same journeys, same weather. same week.
I drive a good 130 miles a day to work and back currently. Though in the UK that's not a normal commute.
Re:$5? that's nothing (Score:5, Interesting)
Is it any wonder why mass transit is mostly a big fail in the US? In Europe, we pay for it with taxes. You need to get over the idea that you have to drive your big SUV everywhere and use taxes to build the infrastructure to support a working mass transit system.
Gas is only going to get more expensive, at what point do you get off the gas-addiction wagon?
Disclaimer: As an American living abroad, let me say my view of the US has radically changed in just over 10 years. We were raised in the US that we were the best country in the world at practically everything. Let me tell you, most of it was dead wrong. Yes, there are some really good things about the US but on the whole, I have to say I'm happier, less overworked and enjoying life more in Europe. I would not move back the the US permanently at this point, it would be a downgrade in practically every category.
Re:Wind, solar (Score:5, Interesting)
Re:Liar (Score:2, Interesting)
You argue that the price of oil is less in the USA (based on a nominal exchange rate) because of its high GDP per capita and then use a PPP based GDP per capita calculation to back it up?
You're funny.
No. I'm GGxP said that the US is only 4% of the population and uses 25% of the world's oil. I pointed out that we have the largest economy in the world (or second if you count the EU as a single country) so it makes sense that we would use the most energy. Granted, we could be more efficient, but stop bitching that US uses more energy than Afghanistan, for example, because we produce more and live better lives than most countries that use less.
It should also be pointed out that the US is world's third largest oil producer. We just use much more than we produce. In order to fix this, the US must produce more AND use less. Personally, I would see nothing wrong with increasing production and taxing it to fund alternatives research. Unfortunately, neither side favors this. The left doesn't want to produce more and right doesn't want to tax it.
Re:Welcome to our world (Score:4, Interesting)
Better to pay a weight and odometer tax.
Set the per mile tax rate based on vehicle weight, going up with the fourth power of vehicle weight (which is one figure given for the damage done to roads by heavier vehicles). Then, tax the odometer based on that rate.
Fuel taxation doesn't cover alternative-fueled vehicles very well.
Of course, you could have an additional non-renewable fuel tax, to compensate for the cost of using up a non-renewable resource, and any health issues caused by the emissions.
Re:Inflation (Score:2, Interesting)
You do understand that global oil supply has nearly peaked,
- the output is growing, again, thanks to new technologies, like fracking and shale oil.
while global demand is growing rapidly.
- the global demand is down because USA demand is massively down, and USA actually used to consume near 1/3 of all production. When US consumption falls by 10%, that's significant for the global consumption.
Rising oil prices aren't caused by some liberal conspiracy to debase the currency.
- I don't believe it's a massive LIBERAL conspiracy, it's just a massive actual fact. They've been printing money and setting interest rates at near 0 for the entire Bush presidency. They set interest rates very low during Clinton and the other Bush before him. They printed so much money by the time Nixon arrived, that USA defaulted on the gold dollar.
I remember you from a previous thread, and I suggest you go to a community college and actually take a class on economics and pass it with a A/B before you start chiming in with your opinion on how the world should work.
- why would you want me to subject myself to worthless Keynesian shamanism? Economics classes are worthless pretty much all over the world, not just in USA. There is very little economics going on in those classes, there plenty of politics though.
Your idea of how the world works, and how it actually *does* work, don't intersect at any two contiguous points.
- I haven't been wrong yet.
Re:Welcome to our world (Score:3, Interesting)
Prior to the private automobile, settlement patterns in the USA were, in fact, rather dense - farmers and fur traders lived in villages, in many cases (pre-revolutionary) surrounded by wooden stockades, and that pattern of clustered, walkable villages, usually connected with a natural resource such as a river or key trail intersection, persisted until the early 1900s.
And while the initial impulses for suburbanization were fostered by mass transit (street car lines and trains), they were still walkable communities until the adoption of the private automobile - and that's when our pattern of living become grossly resource intensive.
It would be foolish to suggest this was some sinister plot by the auto companies - the public clamored for their little yeoman plots as much as anything, as they still do today - but it is also just as foolish to suggest the auto companies had no hand in encouraging this pattern. They were actively engaged in questions of urban & suburban planning, road design, etc, creating plans and model villages showing how one could live better with these machines. Never mind the cost in energy and public health (they remain the leading killer of children, kill over 40,000 Americans every year, cause hundreds of thousands of debilitating injuries, etc.)
We might say that people didn't know better a hundred years ago - but we can't say that anymore. Communities must evolve to become walkable, or the USA will continue to devolve into a military state who's sole purpose is to keep the SUV's and Prius's rolling from walmart to walmart.
Re:Inflation (Score:4, Interesting)
Supply is growing, but demand is growing faster. You do understand that supply-and-demand is about the imbalance between the two? As that imbalance grows, the price of oil will continue to climb.
- market is a balance game, that's why with increased demand, the prices will go up and cause more supply to come on line, and that's exactly what we observe with fracking and shale oil. Oil sands were not coming on line until the prices (but in reality inflation) allowed the companies doing it to become nominally profitable. The real innovation is of-course in fracking, not in shale.
America is no longer the primary driver of either the world economy as a oil, or the oil market. Again, you really need to open a newspaper and see how the world has changed the past 10 years.
- tell me something I don't know.
You do understand that supply-and-demand applies to cash as well as oil? The US didn't "set" the Fed rate low.
- that's a failing sentence. The Fed sets the rate based on what it perceives to be its mandate, but in reality the Fed sets the rate based on what the member banks and the Treasury and the government want.
The Fed is providing the member banks with 'credit' (it's fake) at 0%, while Treasury provide the banks with bonds (fake investment) at some 2-4%, depending on what they buy and how they buy it. They make the spread.
The Fed is actively buying US Treasuries, almost all of the new debt issued by the Treasury is bought by the Fed. That's how they attempt to keep the interest rates low, and they have no escape from this, the moment they allow the market to set the interest without creating the new currency, the interest rates will skyrocket and the US economy will be obliterated, all banks will fail (they are all bankrupt, only held afloat with fake 0% interest rate that allows them to show a fake 2-4% spread in the black).
The world economy is awash with capital looking for a safe harbor, and relatively little demand for that capital.
- the world economy is awash of fake money, not real savings, and this is exactly what inflation is, and that's why the prices are rising for oil and all other things that are not currencies.
However there is huge shortage of real savings that could be used as investment, and that's why nobody can get a business loan - real interest rates are enormous, real interest rates cannot even be imagined, millions of percent, nobody can get them. There is enormous shortage of savings and real capital. And demand/supply ratio sets real interest rates to be so high, nobody can afford them. All this while only governments are able to get credit from banks, but only because it's fake credit created by the central banks.
When the supply is high, and the demand is low, the price (in this case interest rate) falls.
- demand for savings and investment is higher than ever and that's why real interest rates are higher than ever, and that's why nobody can get any business loans.
Conspiracy nuts have a hard time understanding that the Fed doesn't "set" the rate. It looks where the market has shot the arrow, and moves the target there.
- talking to you, is like explaining to a microbe what the Sun is all about.
Because that worthless Keynesian shamanism has proven remarkably adept at making predictions on inflation and growth on an economy against the zero-bound? Just because you personally don't like Keynes, doesn't make it any less right, any more than hating the fact that 2+2=4 will make it suddenly equal 5.
- Keynesians are everywhere, and now they are faced with the final stage of their existence. No longer can the people stay blind to the fact that printing money is not good for economy and no longer can Keynesians explain why all of their theories are falling apart, including the nonsense about lac
Re:Welcome to our world (Score:4, Interesting)
We do subsidize our gasoline in the United States, to the tune of $10 Billion in tax breaks a year [ideonexus.com], with which the Oil Industry did nothing to lower prices, but rather maximized profits with record earnings.
I actually hadn't noticed gas prices going up here in the States. That's probably because my hybrid-electric nerdmobile can go 500 miles on a single 10 gallon tank of gas. In fact, everytime the price of gas goes up, so does the resale value of my car. Must suck to be one of the majority of Americans who didn't pay attention in science [wikipedia.org] or math [yahoo.com] class growing up. Ignorance is expensive.
Re:Welcome to our world (Score:4, Interesting)
Sure, GM paid to scrap a lot of streetcar systems that were in place - except in a lot of cases these were just barely hanging on anyway. In the Chicago area the decisions were pretty simple - massive subsidies to continue a failing mass transit system in suburbs or just scrap it. Ridership has pretty much fallen at a steady pace since the 1950s and nothing seems to be able to stop it. All of the suburban bus lines were discontinued and the service taken over by a regional bus company with considerably reduced service. Even in Chicago itself the mixed elevated/subway trains have been cut back because of lack of ridership.
I suspect most US cities have had similar experiences. The problem is really a chicken-and-egg problem: to have a large robust mass transit system you need a lot of ridership which will not materialize without a large robust system. There is no way to "build up" a mass transit system because until you have the geographical coverage and schedule people will just use cars.
Now, the way to force mass transit in the US would be to first mandate that all companies have to be located in the city center and not in far-flung suburban locations. Except in most US cities the city center is a decaying mess that has been abandoned. Even the police don't want to be there. So there is a lot of crime on people left over that didn't escape or have come to see the sights - muggings, rapes, and robberies. So you need a safe, clean and well-maintained city center before you mandate companies move there. Of course, over the last 80 years or so the infrastructure (restaurants, shops, etc.) all left the city center as well, so you need to figure out how to get them back too - or companies can't move there because there is no supporting infrastructure left.
OK, so after passing some draconian laws about where a company can be located and forcing other businesses to locate in the city center you now have a safe and secure city center all ready for workers. You can get rid of all the parking lots as well and mandate that people use mass transit to get to work. Except the transit companies sold off the train cars because they weren't needed with reduced ridership. So now you have to give money to the transit companies to rebuild their fleet of trains and buses to cope with the increased ridership. And you need to do that first before the people need it.
Sure, it could all be done. Except it would take a big city to spend billions on infrastructure and mass transit and still force - by rule of law - companies to spend billions collectively to relocate to city centers. I don't think there is that much money laying around right now to do that with. Certainly no city would be able to do that today without massive government support.
Should the US government enact a program like this to remake the country back to the way transit was in 1955? I would offer that a lot of people would say that instead of looking back we should be looking forward with whatever that means. So the decision is anything but clear. I'd say mass transit in the US is dead and or dying and destined to be permanently so. It has taken 60+ years to remake the cities the way they are now and it might take another 60 years to move in a different direction - if everyone could agree on a direction.
Re:Welcome to our world (Score:2, Interesting)
They do when it is safer to do so, which it frequently is in places with poorly designed infrastructure.
Before someone goes on about how it is not fair that cyclists expect drivers to obey the law but do not obey it themselves. . .
The laws were written to protect people from cars. Cars running red lights are dangerous. Cyclists running red lights hurt people extremely rarely, and even then it was not somebody who was riding safely, it was some brakeless hipster riding like an idiot. Drivers are apt to try what they think they can get away with because their cars protect them. Cyclists running red lights know that they are unprotected out there and do so carefully.
As a cyclist, it is much safer for me to run a light when nobody is coming then to sit in a left turn lane as cars pass inches from my right. It is safer for me to jump a light if I have to switch lanes ahead than to try to do it while being passed. Also, I do not want to sit there and breath the exhaust coming from your smelly polluting machine spewing out noxious fumes while not even going anywhere.
And cyclists have much better visibility than drivers.
It has nothing to do with feelings of entitlement.