View Full Version : Coming This Summer: $5.00 Gas!
By now everyone's heard the news. There are lots of factors including tensions with Iran and a somewhat phantom recovery in the US. From what I've read it looks like the market is trying to factor in the possibility that Iran will pull a stunt of some kind in the Straight of Hormuz. It does not appear the global market has any consideration of a conflict between Israel and Iran built in. There seems to be a fair chance that will happen if cooler heads don't prevail. So what's everyone think? Will there be events significant enough to spur the US to action? Will we finally demand a national energy policy? Will we finally begin to earnestly support alternatives? Will nothing happen beyond gas getting a little more expensive? What's your prediction?
Will we finally demand a national energy policy?
I suppose the unofficial policy is best revealed in Energy Secretary Chu's wish that "“Somehow we have to figure out how to boost the price of gasoline to the levels in Europe (http://online.wsj.com/article/SB122904040307499791.html)", tempered somewhat with that goal's drastic affect on the economy.
In the coming years I just don't see how US gas prices reaching European levels will be a problem.
I do see a lot of tiny cars and bicycles in my work parking lot so I guess people are catching on that it is time to get rid of the SUVs. I also read that a country in Africa that supplies 1/5 of the US supply (can't recall the name) is undergoing a strike so that source is also interrupted.
That depends largely on whether the political right ever decides to stop fighting tooth and nail against public support for alternative energy research. Oh, and against a forward-thinking, comprehensive national energy policy that minimizes our dependence on foreign imports and non-renewable sources. Oh, and against the price of gasoline reflecting all of the externalities inherent in its acquisition and use. It's difficult to make any progress toward long-term energy independence when half the country's trump card is "drill baby drill." There is no foresight in this country's government -- we are a nation of kneejerks. Luckily I'm not as directly gas-dependent as some, but I hope those whose livelihood depends on driving are paying attention and planning appropriately. I know we are.
I predict the Keystone XL pipeline will be getting a lot more pressure for sign off. If it's president Mitt, it will probably be a no brainier. It is interesting that with all off the new methods of extracting natural gas, natural gas futures have declined something like 50% in the last 6 months, so maybe T. Boone will start realizing his dream of a natural gas powered transportation future. I predict with gas in the $4-$5 range there will be increasing pressure for electric vehicles, but also a lot of pressure to produce less environmentally sound fossil fuel alternatives.
In the coming years I just don't see how US gas prices reaching European levels will be a problem.
Agreed! It needs to be $50 a gallon for full cost pricing. I'm hoping to sell my hybrid, as we just don't need two cars. I think I'll hold off till the summer gas prices hit, then list it.
$5 isn't anything special.
Here's what I was paying in November:
https://lh4.googleusercontent.com/-EPPpmTUPKUo/TshgsntxjmI/AAAAAAAAEQw/wg9ijmFc6TY/s640/IMG_0255.JPG
ApatheticNoMore
1-17-12, 12:55pm
We need higher gas prices but war with Iran is NOT the way to acheive that (or anything worthwhile IMO). It's rather like we're inflicted self-inflicted wounds at this point with our foreign policy (hey I know, let's crash what remains of the world economy by a war with Iran, sounds great, eh?). Although I guess it's all about resource control in the long run.
I'd favor carbon taxes as the way to acheive higher gas prices, it can be revenue neutral and offset with lower income taxes or something. See I'm not so much arguing for more money for the government, I'm arguing for taxing bads rather than goods.
It has been $5 in California before, I am driving more than I would like currently, but I really don't consider it that big a deal.
Will we finally demand a national energy policy? Will we finally begin to earnestly support alternatives? Will nothing happen beyond gas getting a little more expensive? What's your prediction?
I predict nothing will happen beyond gas getting a little more expensive. Maybe ridiculous voices will yammer on about how drilling in Yosemite or something is the solution :~) (The U.S. just doesn't have enough gas reserves left for drilling anywhere here to be the solution, but it CAN do a lot of environmental damage to drill environmentally sensitive areas - like in the gulf).
The quick easy false solution is always an easy political sell though. I mean honestly looking at the U.S. political scene how many political voices do you see that argue anything with depth that has any real potential of working long term etc. (I don't mean commentators, there are good commentators out there, I mean politicians). It's the most pathetic thing to admit Obama might be the best bet for that and with Obama you never know at what moment he's going to sell out yet something else to the corptocracy because that seems to happen more often than not.
What we "need" isn't higher gas prices, necessarily. That's just hairshirt environmentalism.
What we need is transparency in pricing/costing, so people can make rational economic decisions. When the true production cost of petroleum is hidden with subsidies, cheap leases of public lands, and mind-numbingly-expensive military actions, and when the cost of environmental mitigation for waste products resulting from the use of petroleum is invisibly foisted off onto the public at large instead of the petroleum consumers, it isn't surprising to me that the results are suboptimal.
Spot on, bae. If we were to ~simply~ eliminate all the subsidies doled out by the federal government (and a few states) the true price of oil and gas could be realized. Matt Simmons was always a little heavy on conspiracy theories for my tastes, but nonetheless a very sharp guy. I remember reading a paper of his years ago in which he pegged the real cost of oil in the US at somewhere around $450. I could not immediately find a link to that paper so the figure may not be entirely accurate (attributing to declining memory function), but the point is valid. The PRICE of oil in the markets and gas at the pump in no way reflects the actual COST of those commodities.
Kind of a curious tangent to think about what it would be like if all the governmental subsidies were eliminated. Even if oil prices TRIPLED to $300+/bbl we would still be saving money! Unfortunately the economies of the rest of the world would probably be in a tailspin if that happened.
We have been paying this for a while up here in BC Canada.
A gallon has 3.78 litres in it and each litre is over $1.37 in our town
3.78 x 1.37=
so over $5.
already there by far. Ours is $2.11 per liter so 3.78 x 2.11 = $7.98 per gallon.
i do not weep for you.
Greg, I can't argue with your figures, but I would guess that Simmons has included a number of market externalities above and beyond government subsidies, like the effect of auto emissions on health and maybe the cost of climate change on the economy. Plus, there's the military cost of protecting a strategic resource. I doubt we would have much to do with Iran, Iraq, or the rest of the middle east of they were rich in bananas rather than oil. Not arguing your main point, but just saying it's not all subsidies.
We seem have gone back and forth over energy independence ever since Carter started things and Reagan reversed them. Things seem like they are slowly changing, but I still think most Americans have a love affair with the automobile and it's going to take more than $5 gas to change things.
already there by far. Ours is $2.11 per liter so 3.78 x 2.11 = $7.98 per gallon.
i do not weep for you.
It is worth remembering that the relative 'security' gained from US military expenditures provides a benefit to a lot more than just the US. Sidestepping the debate about whether or not the US should have a presence in the Middle East, for now it does. That presence has a significant impact when Iran decides to blockade the Straight of Hormuz or Iraq wants to invade Kuwait or... The price of OPEC oil is around $100/bbl on the global market, not just the markets in the US. Off market deal making aside, we're all paying basically the same price for OPEC oil and that price is subsidized globally through US military actions. If that price were to double or triple because of tensions in the Middle East to which the US military did not respond the prices would escalate for everyone. Gas, food, any consumer good that is transported, most manufactured goods, etc. would increase in price regardless of whether you are in the US, the UK, NZ, China or anywhere else that imports anything. If it takes oil to make it or move it the price would/will go up. There is no need to weep for us, everyone else will have their own reasons to cry.
Greg, I can't argue with your figures, but I would guess that Simmons has included a number of market externalities above and beyond government subsidies, like the effect of auto emissions on health and maybe the cost of climate change on the economy. Plus, there's the military cost of protecting a strategic resource. I doubt we would have much to do with Iran, Iraq, or the rest of the middle east of they were rich in bananas rather than oil. Not arguing your main point, but just saying it's not all subsidies.
We seem have gone back and forth over energy independence ever since Carter started things and Reagan reversed them. Things seem like they are slowly changing, but I still think most Americans have a love affair with the automobile and it's going to take more than $5 gas to change things.
Rogar, I didn't find any link to the paper that stood out in my mind so can't speak to the specifics. I don't think Matt Simmons spent as much time calculating the environmental impacts of fossil fuels as many others do, but I do remember his big emphasis in that paper was the cost of military interventions needed to keep the spigot open. I could not agree more with the notion that we would have no interest in the Middle East at all if not for their oil.
uhm, I was really only commenting on the relative price of gas, not the geo-social-political context that leads to security and what not.
not really sure how your response follows. i wasn't commenting on that, merely the price of gas comparatively.
OMG! gas is going up above $5 this summer!
OMG! gas is already above $5 here and has been since I got here!
it's not that big of a deal. And i'm not speaking on the military/whatever side of things.
uhm, I was really only commenting on the relative price of gas, not the geo-social-political context that leads to security and what not.
not really sure how your response follows. i wasn't commenting on that, merely the price of gas comparatively.
OMG! gas is going up above $5 this summer!
OMG! gas is already above $5 here and has been since I got here!
it's not that big of a deal. And i'm not speaking on the military/whatever side of things.
In a world economy based upon oil, gas prices will ineviable bring up the geopolitics of it all.
To answer the OP's question, no, I don't think $5 gas will make a significant change happen. Truthfully I don't see a change happening until, assuming that peak oil is real and its effects end up being felt through much higher oil prices, other energy sources get developed to the point that they end up being cheaper even without subsidy. The military industrial complex and the oil companies have a MAJOR vested interest in maintaining the status quo as long as possible. We've been talking about this since the Carter presidency, so I'm fairly certain it'll take much more than $5 gas to change things. Also, by the time peak oil really affects us (assuming as I do that it is going to) the reality, that there is no alternative that can supply transportation fuel as cheaply and abundantly as oil has for so long, will probably also be grudgingly accepted and the necessary changes to our lifestyles will be made.
After seeing the prices of gas NOT go down, I already predicted this in my head over this winter. I'm not surprised. I'm waiting for a longer day with a later sunset and vowing to bicycle at least 2 days a week to work.
$5 isn't anything special.
Here's what I was paying in November:
https://lh4.googleusercontent.com/-EPPpmTUPKUo/TshgsntxjmI/AAAAAAAAEQw/wg9ijmFc6TY/s640/IMG_0255.JPG
Buddy, you live on an island! That's what's special. I remember the price of everything and its markup by having to be hauled over from Amerika.
Buddy, you live on an island! That's what's special. I remember the price of everything and its markup by having to be hauled over from Amerika.
True, true. But I can see the darned refinery right over on the mainland.
Do you remember lessons in the finite quantity of resources? Population increases? etc. from school.
We visited India in the 90s and China in 2003 or so. After those visits and actually seeing what is happening, there is no doubt in my mind that resources, water and oil among them, will be the race in the future and the costs will continue to go up.
Until we are pressured with higher than $5 gas, my pessimistic attitude leads me to believe nothing will be done. Our midwest area is still full of huge SUVs, vans, etc. and they continue to be sold.
Our family has decided to go back to one car, an efficient one, when the oldest one dies. We did it for years and it only involves compromise, planning, and patience.
uhm, I was really only commenting on the relative price of gas, not the geo-social-political context that leads to security and what not.
not really sure how your response follows. i wasn't commenting on that, merely the price of gas comparatively.
OMG! gas is going up above $5 this summer!
OMG! gas is already above $5 here and has been since I got here!
it's not that big of a deal. And i'm not speaking on the military/whatever side of things.
I wasn't picking on you zoebird, sorry if it felt that way. People all over the world have gas prices that are significantly lower than they could be if the US military didn't keep a lid on certain Middle Eastern activities. It's actually kind of amazing that you only pay $7.98/gal.
I would, however, argue that the price of gas at the pumps IS a big deal. The absolute dollars for you and I to complete limited driving every year may not be such a big thing, but that's not the end of the equation. Where it starts to mushroom is when that higher cost starts to show up in everything else. Look at one of the most basic categories, food. Most people don't have the option to grow all their own food so have to shop at the grocery store. Most of the raw materials for that food are raised using industrial farming methods that are extremely petroleum dependent. Machinery, herbicides, pesticides, fertilizers, etc. all either run on oil or are produced from oil. Processing those raw materials into the finished goods on the shelves is oil dependent. Shipping raw materials to a processor and processed goods to stores is all done courtesy of oil. All that takes place BEFORE you and I hop in the car and run to the store. The same scenario will play out with all consumer goods. That's a big deal.
loosechickens
1-18-12, 3:47pm
I think that we'd better get used to it, because before too many more years, it's likely that we will look back on $5 gas as fondly as many of us look at the 29 cents a gallon gas of the early seventies......
Increased populations, rising middle classes in large developing countries, resistance to changing habits in the developed world.......and finite petroleum resources.....it's a given.
To me, the only thing is, are these things going to cause us to make changes that will make it easier to deal with dimished supplies and increased people, or are we going to continue to "fiddle while Rome burns" and have to make transitions the hard way, when we absolutely HAVE to, and when it causes the most disruption in economies, etc.
But, $5 gas IS coming, as is probably $10 gas.....the question is, how are we going to deal with it. JMHO
I loved this book, speculative as it is: http://www.amazon.com/20-Gallon-Inevitable-Gasoline-Change/dp/0446549541
It's harsh, dark, then....brighter. Which is what I see as well, at least for the developed world. There are some very sad times ahead for the developing world, I fear.
And now, there's no Keystone in our future - at least not the Keystone that was proposed (who knows what'll happen in the future? People who want to make money will find a way to push something through). Which I'm okay with, in most ways. But it will accelerate things, I think.
treehugger
1-18-12, 6:53pm
True, true. But I can see the darned refinery right over on the mainland.
Ha! We have 2 refineries in our town, and there are 5 major refineries in the Bay Area, and we still pay more for gas than SoCal. But a lot of that has to do with extra taxes here (air regulations) and general cost of living.
Anyway, yeah, sometimes I feel like Bay Area-nites shouldn't even look at the price of gas at the pump since it is always high. It's just life. Like bridge tolls. And crazy property taxes. And so, I try to drive as little as possible and just deal with it. But of course, like others have mentioned, high prices at the pump lead to higher prices on everythihng. More belt tightning: also a fact of life.
Kara
Ha! We have 2 refineries in our town, and there are 5 major refineries in the Bay Area, and we still pay more for gas than SoCal. But a lot of that has to do with extra taxes here (air regulations) and general cost of living.
Anyway, yeah, sometimes I feel like Bay Area-nites shouldn't even look at the price of gas at the pump since it is always high. It's just life. Like bridge tolls. And crazy property taxes. And so, I try to drive as little as possible and just deal with it. But of course, like others have mentioned, high prices at the pump lead to higher prices on everythihng. More belt tightning: also a fact of life.
Kara
US is a major gasoline exporter - price has nothing to do with a lack of domestic refineries.
100LL has dropped from $5.25 to $5.03 at the airport. And I'm already use to paying $4.00 plus for diesel. It doesn't cost me much more to fly than drive my truck, and the plane is quite a bit faster.
More tensions with Iran in the news today. More posturing from Israel. The President in the SOTU and Mitt Romney, the Republican front-runner, both saying Israel can expect US support in a conflict. Not a gloom & doomer, but I think we should be paying attention right now.
I work at a small fuel bulk plant. We sell gas, farm diesel and hwy diesel. We sell our gas for 3.49 (today :) and lose money on it. Just to let you know that there is not as much profit as some think. I cannot believe that Obama stopped the pipeline, we have the fuel. I really feel that if fuel would go down just $1 that we could really see an economic turnaround. It is just greed, plain and simple.
The high fuel prices has helped California get jobs back from Nevada. Amazon and two other companies are moving their distribution centers to Patterson Ca on the west side of the Central Valley to be near the Port of Oakland. The cost to ship goods by truck over the Sierra to Sparks Nv even with it being less costly to operate in Nevada, no longer made economic sense when price of diesel was approaching $5 a gal.
Good for 5 dollar diesel.
I saw gas prices at $5.00 for diesel, $4.25 for premium and $3.95 for regular at many stations this morning here in SoCal (Huntington Beach). $5 gas may look cheap come this summer. Time for a compact car again - or better yet a bicycle! have noticed a rise in the cost of most goods too. Food especially.
Regular gas with 10% ethanol is $3.24 here (Nebraska) right now. Not for long I'm thinking.
Ethanol will ruin small engines (lawn mowers, chain saws, weedeaters, etc.) We do not sell it because of this and the main factor that is it evaporates from our above ground tanks. Non-alcohol will also give you better gas mileage.
Off soap box now.....
Ethanol is, unfortunately, a way of life in the mid-west and plains states. Land of king corn. It is a net energy loser. Mono-crop agriculture has pretty much destroyed farm ground and shackled farmers. Subsidies cost tax payers tens of billions of dollars a year and yield nothing of value. If anyone wants to start a thread to hash through that it would probably be an interesting discussion. For now I'll just say the experiment failed and its time to move on.
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