Would you accept a price floor of $4 per gallon for gasoline?

[Le Jacquelope]

Would you also like to see unemployment and food prices jump to the moon?

Man, they don't call 'em "the fool" for nothin'.

http://www.fool.com/server/printart.../06/10/why-you-should-embrace-4-gasoline.aspx

Why You Should Embrace $4 Gasoline

http://www.fool.com/investing/international/2008/06/10/why-you-should-embrace-4-gasoline.aspx

Morgan Housel
June 10, 2008

Everyone should want cheap transportation. Everyone should want to return to the days when filling up your automobile didn't incinerate your savings. Your 100-mile daily commute shouldn't consume half of your paycheck. You deserve better.

And that's exactly why you should embrace $4 gasoline.

Huh?
Nearly every "solution" to the current gas situation involves lowering prices. There are all sorts of proposed ideas, from establishing gas-tax holidays to scolding Big Oil companies to building more refineries. Some of those ideas would indeed lower prices. You can't blame people for wanting to pay less.

But reining in the assault on our wallets isn't the only thing to focus on. The ultimate goal is to wean ourselves from our love affair with oil altogether. And by "weaning," I don't mean making it cheaper to commute in Hummers. There's only one ultimate solution to the oil dilemma: to consume less oil.

Beyond the argument over who's to blame for $4 gas lies the reasoning that nothing will happen without higher prices getting us in gear. If gas were cheap, there would be no incentive to change. No one would care about developing new technologies, no one would bother driving more efficient cars, and no one would give a horse's patoot about conservation. If you can convince anyone that lower gas prices will entice people to cut back on consumption and give entrepreneurs an incentive to develop new technologies, you deserve the Ron Popeil award for ingenious sales skills. It just won't happen. Something as engrained in our culture as deeply as gasoline will cling to the "if-it-ain't-broke-why-fix-it" mentality until something, like higher prices, "breaks" it.

You can see the new mindset taking hold already. Ford (NYSE: F) and GM (NYSE: GM) recently announced plans to cut back production of gas-guzzling SUVs. Among the airlines, Continental Airlines (NYSE: CAL), United Airlines (Nasdaq: UAUA), and American Airlines parent AMR (NYSE: AMR) have all announced plans to scale back, all in response to higher fuel costs. So the transportation landscape is already moving in the right direction.

Easy there
But that brings us to a new road: If reducing consumption means having to walk to work, staying home on weekends, and waiting in longer lines at the airport, count me out. Americans will go out kicking and screaming before settling for a life of immobility. Unless, that is, they do something about it.

It's been done before
Back in 1798, a British economist and demographer named Thomas Malthus wrote a treatise titled An Essay on the Principle of Population. His theory was depressing: Food supplies wouldn't keep up with population growth, and the future thus held the promise of famine and starvation. Why, more than 200 years later, have his views been proved grossly pessimistic? Because he failed to realize that the same pressures pushing down on food supplies would cause people to push back with new technology and innovative agricultural techniques. The same can be said for energy.

For example, back in the 1970s, Brazil relied on the rest of the world for 85% of its oil. The result? Debt ballooned, and rampant inflation became the norm for decades. But those high prices pushed the need for change, and change is exactly what Brazil got. Innovation and commitment to overcoming the oil burden pushed Brazil to energy independence today by way of sugar cane-based ethanol (which is, importantly, far different from the corn-based ethanol made in America.) The oil embargo of the 1970s also pushed Denmark, which was 99% dependent on imported oil, to become one of the world's leaders in alternative energy, such as windmill technology. The important thing to realize is that it's highly doubtful that any of this would have happened if higher prices hadn't spurred people to action.

Here at home, higher gas prices will be one of the only things that ramp up both oil exploration and alternative-energy technology. The investment community is paying serious attention to companies such as Capstone Turbine (Nasdaq: CPST) and Sasol (NYSE: SSL), and attention is exactly what's needed to push the energy industry into the next inning.

Bite your lip. Suck it up.
None of this is to say gas pains are anything to scoff at. It's taking a serious toll on people. The more serious question to ask, however, is what the state of the economy will look like 10, 20, 50, or 100 years down the road if the issue keeps getting swept under the rug -- which is where it'll go if low prices return.

Yes, $4-a-gallon gas is painful, and $10-a-gallon gas could be catastrophic. That's why you should embrace $4 gas now, and welcome it for the changes it will inevitably bring. Problems correct. Markets work.

Hang in there.

 

[oggbashan]

Europe already has $4 per US gallon and higher.

Some countries also have punitive tax burdens on larger-engined vehicles. The UK is moving towards higher taxes for vehicles that emit more CO2.

The result has been an increase in more fuel-efficient cars, greater use of diesel engines, and some development of hybrid cars. The change hasn't been dramatic but gradual. The main difference is that SUVs have been treated as cars for many years. They are now becoming much less popular because of the higher taxation (in the UK retrospectively applied to older vehicles) and high fuel consumption.

The high cost of gasoline hasn't stopped people using cars. It has temporarily reduced overall journey miles and has made more fuel-efficient cars better sellers. A large US-style SUV is now seen as an unacceptable choice except for those who need the carrying capacity.

There has been evidence of a backlash from some who regard their large, expensive, or fast car as a raised finger to the rabid greenies.

Green fanatics can be as obnoxious as any other fanatics.

Og

 

[sr71plt]

When I last lived in Cyprus, we would have been quite happy paying only $4.

 

[freshface]

When I last lived in Cyprus, we would have been quite happy paying only $4.

That's a real bargain here, too. Even diesel is close to $5.

I don't know about the UK, but parking lots and city streets in Germany don't fit large SUVs and trucks. In fact, some European cars come with a nifty feature that allows the driver to automatically fold the side mirrors in for narrower streets and parking spots.

 

[JAMESBJOHNSON]

The presuppositions and premise of the article are flawed. Here's why.

When John D. Rockefeller organized Standard Oil in 1870, whale oil illuminated America. It cost 95 crents a gallon and had a serious impact on whales and whalers. Rockefeller sold kerosene for 5 cents a gallon and killed the whaling industry. It sucked to be a whaler, but everyone else did better.

Down the road, Rockefeller couldnt get wood for barrels. Most of Eastern America was cleared of trees. So he used steel drums and saved a bunch of trees.

Then the teamsters made life hard for him, and he created huge oil tanker cars to transport the oil.

Then the railroads tried to screw him, and he created pipelines.

Then the politicians in every town and hamlet tried to fuck him, and he consolidated all his refineries into regions. Less politicans to bribe.

So, you fuck the oil companies like Rockefeller did everyone else.

 

[Le Jacquelope]

Europe already has $4 per US gallon and higher.

Some countries also have punitive tax burdens on larger-engined vehicles. The UK is moving towards higher taxes for vehicles that emit more CO2.

The result has been an increase in more fuel-efficient cars, greater use of diesel engines, and some development of hybrid cars. The change hasn't been dramatic but gradual. The main difference is that SUVs have been treated as cars for many years. They are now becoming much less popular because of the higher taxation (in the UK retrospectively applied to older vehicles) and high fuel consumption.

The high cost of gasoline hasn't stopped people using cars. It has temporarily reduced overall journey miles and has made more fuel-efficient cars better sellers. A large US-style SUV is now seen as an unacceptable choice except for those who need the carrying capacity.

There has been evidence of a backlash from some who regard their large, expensive, or fast car as a raised finger to the rabid greenies.

Green fanatics can be as obnoxious as any other fanatics.

Og

There is all of that. Europe and the UK have frighteningly high gasoline taxes.

The other thing is, though, how much do you think this has affected the price of food in Europe? I don't see hybrid electric trucks delivering food there yet. This has to be a fairly crushing blow to the poor.

 

[freshface]

There is all of that. Europe and the UK have frighteningly high gasoline taxes.

The other thing is, though, how much do you think this has affected the price of food in Europe? I don't see hybrid electric trucks delivering food there yet. This has to be a fairly crushing blow to the poor.

The price of food is comparable to the US. The exchange rate makes it more expensive for people paid in dollars, but a gallon of milk is about $2.50 and the muesli I eat for breakfast is $1.50 for a kg. It's more convenient to buy food here. Grocery stores are located within walking distance of residential neighborhoods and there are lots of small bakeries, butcher shops, and cheese shops scattered around.

Of course, distances are shorter in Europe. Most of the food in German grocery stores comes from Germany, the Netherlands, Belgium, and France.

 

[Liar]

There is all of that. Europe and the UK have frighteningly high gasoline taxes.

The other thing is, though, how much do you think this has affected the price of food in Europe? I don't see hybrid electric trucks delivering food there yet. This has to be a fairly crushing blow to the poor.

I've mentioned this in Gas Price threads on the past... you can't compare transport costs straight off.

The EU region has a much different geography and infrastructure than the US region. That affects how we transport cargo as well as people. In the US, goods are hauled long range from point A to point B. The major part of it in roads. In the EU, most goods are hauled by truck only nationally (or regionally in larger countries), and goes by train or water most of the way. And like freshface said, shorter distances in general. Because that's what consumers want. "Their" beef, "their" milk, even "their" cars. You don't see many Californian snubbing off Detroit cars as "foreign". Europe is a region of loosely banded together nations, and consumers have a protectionist mindset.

In the US, communities, work places and other stuff have been planned or emerged from the premise that everyone has access to cars, roads and cheap fuel. Things are spread out. Most of you travel long distances to do everyday things. And you travel in all directions, there's always a road to take you north, south, east or west.

It's not quite the same here. For many Europeans, commodities and workplaces are either local within strolling distance, or easiest to access via public transportation. Urban and suburban areas are more compact and there are more and smaller local business centres.

So the gas taxes in both the US and Europe pretty much reflects the same premise - a government asking "how high can we tax this thing without breaking society's back?" The answer was just different here.

 

[ishtat]

Australia is about the same size as the contiguous USA (it's 32 square miles smaller) and the same fuel price issues apply. At the moment petrol(gas) is about USD 2.08 per us gallon with diesel about 5% more.

Interestingly although Australia has huge natural gas resources very few vehicles have been converted mainly because the government pitched the tax rate too high to allow for the economic conversion of engines to burn natural gas. It's only economic for vehicles which do huge mileages, like taxis.

 

[SlickTony]

Last summer, we did accept $4.00 gasoline. It put me taking the bus to and from work most days, and as for weekend road trips, I had to kiss them goodbye. Fortunately, prices had started to ease up by the time I broke my leg last fall, which was a good thing because I couldn't take the bus and had my guys take me to and from work. Even now, they sometimes do. Currently we are existing on just two cars among 3 people, because my son wrecked his, and we haven't gotten around to either fixing it or replacing it, and he uses mine.

 

[DeeZire]

Bring on the $4 gas! Where I live, the city traffic is gridlocked most of the day, a result of unrestrained growth that has doubled the population in the last twenty years. The geniuses who run things around here never thought to upgrade the infrastructure to accommodate the influx of cars. Their main concern was keeping the developers happy, since it was the developers who kept them in office with campaign money and dirty politics. So much for the free market - a few guys get rich while everyone else sits in traffic with their thumbs up their butts.

With our weather, bicycles are a viable solution. The problem is impatient drivers, and cellphone-impaired bozos who run over bike riders because the streets are so congested. The city needs to put in a few more bike routes, but every time they try, the conservatives whine about their tax money being spent on a stupid bike lane. The display of ignorance would be laughable, if it wasn't so sad.

 

[Le Jacquelope]

I've mentioned this in Gas Price threads on the past... you can't compare transport costs straight off.

The EU region has a much different geography and infrastructure than the US region. That affects how we transport cargo as well as people. In the US, goods are hauled long range from point A to point B. The major part of it in roads. In the EU, most goods are hauled by truck only nationally (or regionally in larger countries), and goes by train or water most of the way. And like freshface said, shorter distances in general. Because that's what consumers want. "Their" beef, "their" milk, even "their" cars. You don't see many Californian snubbing off Detroit cars as "foreign". Europe is a region of loosely banded together nations, and consumers have a protectionist mindset.

In the US, communities, work places and other stuff have been planned or emerged from the premise that everyone has access to cars, roads and cheap fuel. Things are spread out. Most of you travel long distances to do everyday things. And you travel in all directions, there's always a road to take you north, south, east or west.

It's not quite the same here. For many Europeans, commodities and workplaces are either local within strolling distance, or easiest to access via public transportation. Urban and suburban areas are more compact and there are more and smaller local business centres.

So the gas taxes in both the US and Europe pretty much reflects the same premise - a government asking "how high can we tax this thing without breaking society's back?" The answer was just different here.

Well, I'd heard of huge protests in, I believe, France and Britain, about high gasoline prices. Truckers blocking roads and all of that. If society's back wasn't breaking, the vertebrae sure were popping fairly menacingly...

 

[jeninflorida]

NO! never let the Gov set any freaking price

Would you also like to see unemployment and food prices jump to the moon?

Man, they don't call 'em "the fool" for nothin'.

http://www.fool.com/server/printart.../06/10/why-you-should-embrace-4-gasoline.aspx

Why You Should Embrace $4 Gasoline

http://www.fool.com/investing/international/2008/06/10/why-you-should-embrace-4-gasoline.aspx

Morgan Housel
June 10, 2008

Everyone should want cheap transportation. Everyone should want to return to the days when filling up your automobile didn't incinerate your savings. Your 100-mile daily commute shouldn't consume half of your paycheck. You deserve better.

And that's exactly why you should embrace $4 gasoline.

Huh?
Nearly every "solution" to the current gas situation involves lowering prices. There are all sorts of proposed ideas, from establishing gas-tax holidays to scolding Big Oil companies to building more refineries. Some of those ideas would indeed lower prices. You can't blame people for wanting to pay less.

But reining in the assault on our wallets isn't the only thing to focus on. The ultimate goal is to wean ourselves from our love affair with oil altogether. And by "weaning," I don't mean making it cheaper to commute in Hummers. There's only one ultimate solution to the oil dilemma: to consume less oil.

Beyond the argument over who's to blame for $4 gas lies the reasoning that nothing will happen without higher prices getting us in gear. If gas were cheap, there would be no incentive to change. No one would care about developing new technologies, no one would bother driving more efficient cars, and no one would give a horse's patoot about conservation. If you can convince anyone that lower gas prices will entice people to cut back on consumption and give entrepreneurs an incentive to develop new technologies, you deserve the Ron Popeil award for ingenious sales skills. It just won't happen. Something as engrained in our culture as deeply as gasoline will cling to the "if-it-ain't-broke-why-fix-it" mentality until something, like higher prices, "breaks" it.

You can see the new mindset taking hold already. Ford (NYSE: F) and GM (NYSE: GM) recently announced plans to cut back production of gas-guzzling SUVs. Among the airlines, Continental Airlines (NYSE: CAL), United Airlines (Nasdaq: UAUA), and American Airlines parent AMR (NYSE: AMR) have all announced plans to scale back, all in response to higher fuel costs. So the transportation landscape is already moving in the right direction.

Easy there
But that brings us to a new road: If reducing consumption means having to walk to work, staying home on weekends, and waiting in longer lines at the airport, count me out. Americans will go out kicking and screaming before settling for a life of immobility. Unless, that is, they do something about it.

It's been done before
Back in 1798, a British economist and demographer named Thomas Malthus wrote a treatise titled An Essay on the Principle of Population. His theory was depressing: Food supplies wouldn't keep up with population growth, and the future thus held the promise of famine and starvation. Why, more than 200 years later, have his views been proved grossly pessimistic? Because he failed to realize that the same pressures pushing down on food supplies would cause people to push back with new technology and innovative agricultural techniques. The same can be said for energy.

For example, back in the 1970s, Brazil relied on the rest of the world for 85% of its oil. The result? Debt ballooned, and rampant inflation became the norm for decades. But those high prices pushed the need for change, and change is exactly what Brazil got. Innovation and commitment to overcoming the oil burden pushed Brazil to energy independence today by way of sugar cane-based ethanol (which is, importantly, far different from the corn-based ethanol made in America.) The oil embargo of the 1970s also pushed Denmark, which was 99% dependent on imported oil, to become one of the world's leaders in alternative energy, such as windmill technology. The important thing to realize is that it's highly doubtful that any of this would have happened if higher prices hadn't spurred people to action.

Here at home, higher gas prices will be one of the only things that ramp up both oil exploration and alternative-energy technology. The investment community is paying serious attention to companies such as Capstone Turbine (Nasdaq: CPST) and Sasol (NYSE: SSL), and attention is exactly what's needed to push the energy industry into the next inning.

Bite your lip. Suck it up.
None of this is to say gas pains are anything to scoff at. It's taking a serious toll on people. The more serious question to ask, however, is what the state of the economy will look like 10, 20, 50, or 100 years down the road if the issue keeps getting swept under the rug -- which is where it'll go if low prices return.

Yes, $4-a-gallon gas is painful, and $10-a-gallon gas could be catastrophic. That's why you should embrace $4 gas now, and welcome it for the changes it will inevitably bring. Problems correct. Markets work.

Hang in there.

 

[PamCarolson]

Reminds me of the three stooges, give me a cheeseburger today and I would be happy to pay you on Tuesday

Would you also like to see unemployment and food prices jump to the moon?

Man, they don't call 'em "the fool" for nothin'.

http://www.fool.com/server/printart.../06/10/why-you-should-embrace-4-gasoline.aspx

Why You Should Embrace $4 Gasoline

http://www.fool.com/investing/international/2008/06/10/why-you-should-embrace-4-gasoline.aspx

Morgan Housel
June 10, 2008

Everyone should want cheap transportation. Everyone should want to return to the days when filling up your automobile didn't incinerate your savings. Your 100-mile daily commute shouldn't consume half of your paycheck. You deserve better.

And that's exactly why you should embrace $4 gasoline.

Huh?
Nearly every "solution" to the current gas situation involves lowering prices. There are all sorts of proposed ideas, from establishing gas-tax holidays to scolding Big Oil companies to building more refineries. Some of those ideas would indeed lower prices. You can't blame people for wanting to pay less.

But reining in the assault on our wallets isn't the only thing to focus on. The ultimate goal is to wean ourselves from our love affair with oil altogether. And by "weaning," I don't mean making it cheaper to commute in Hummers. There's only one ultimate solution to the oil dilemma: to consume less oil.

Beyond the argument over who's to blame for $4 gas lies the reasoning that nothing will happen without higher prices getting us in gear. If gas were cheap, there would be no incentive to change. No one would care about developing new technologies, no one would bother driving more efficient cars, and no one would give a horse's patoot about conservation. If you can convince anyone that lower gas prices will entice people to cut back on consumption and give entrepreneurs an incentive to develop new technologies, you deserve the Ron Popeil award for ingenious sales skills. It just won't happen. Something as engrained in our culture as deeply as gasoline will cling to the "if-it-ain't-broke-why-fix-it" mentality until something, like higher prices, "breaks" it.

You can see the new mindset taking hold already. Ford (NYSE: F) and GM (NYSE: GM) recently announced plans to cut back production of gas-guzzling SUVs. Among the airlines, Continental Airlines (NYSE: CAL), United Airlines (Nasdaq: UAUA), and American Airlines parent AMR (NYSE: AMR) have all announced plans to scale back, all in response to higher fuel costs. So the transportation landscape is already moving in the right direction.

Easy there
But that brings us to a new road: If reducing consumption means having to walk to work, staying home on weekends, and waiting in longer lines at the airport, count me out. Americans will go out kicking and screaming before settling for a life of immobility. Unless, that is, they do something about it.

It's been done before
Back in 1798, a British economist and demographer named Thomas Malthus wrote a treatise titled An Essay on the Principle of Population. His theory was depressing: Food supplies wouldn't keep up with population growth, and the future thus held the promise of famine and starvation. Why, more than 200 years later, have his views been proved grossly pessimistic? Because he failed to realize that the same pressures pushing down on food supplies would cause people to push back with new technology and innovative agricultural techniques. The same can be said for energy.

For example, back in the 1970s, Brazil relied on the rest of the world for 85% of its oil. The result? Debt ballooned, and rampant inflation became the norm for decades. But those high prices pushed the need for change, and change is exactly what Brazil got. Innovation and commitment to overcoming the oil burden pushed Brazil to energy independence today by way of sugar cane-based ethanol (which is, importantly, far different from the corn-based ethanol made in America.) The oil embargo of the 1970s also pushed Denmark, which was 99% dependent on imported oil, to become one of the world's leaders in alternative energy, such as windmill technology. The important thing to realize is that it's highly doubtful that any of this would have happened if higher prices hadn't spurred people to action.

Here at home, higher gas prices will be one of the only things that ramp up both oil exploration and alternative-energy technology. The investment community is paying serious attention to companies such as Capstone Turbine (Nasdaq: CPST) and Sasol (NYSE: SSL), and attention is exactly what's needed to push the energy industry into the next inning.

Bite your lip. Suck it up.
None of this is to say gas pains are anything to scoff at. It's taking a serious toll on people. The more serious question to ask, however, is what the state of the economy will look like 10, 20, 50, or 100 years down the road if the issue keeps getting swept under the rug -- which is where it'll go if low prices return.

Yes, $4-a-gallon gas is painful, and $10-a-gallon gas could be catastrophic. That's why you should embrace $4 gas now, and welcome it for the changes it will inevitably bring. Problems correct. Markets work.

Hang in there.

 

[Liar]

Reminds me of the three stooges, give me a cheeseburger today and I would be happy to pay you on Tuesday

Wasn't that J. Wellington Wimpy?

 

[Boxlicker101]

The most I ever paid for gasoline was something lke $4.479 per gal. and that was only about seven months ago. The price dropped drastically from there, and it has beeen creeping back up.

With the high prices, we started consolidating trips - not driving unless we had more than one place to go - and taking the Corolla instead of the Tundra, even though the latter is a more comfortable ride.


As long as the gasoline taxes go to help drivers, by road maintenance and DMV costs, etc. most people will accept them. If they were to start charging high excise taxes to discourage use, that would be another matter. The state of CA wouldn't be able to get away with it, and I can't see any politician anywhere raising taxes on such a basic necessity as motor vehicle fuel. Not if they ever want to win another election, anyhow. Notto mention how inflationary they woulkd be because everybody uses guel, at lasst indirectly.

This sounds something like the high excise tax on cigarets - both of them are intended to discourage the consumption. There are differences between the two products. One is basically a poison that serves no real purpose and the other is a necessity. You can get away with taxing the one, but not the other.

 

[Boxlicker101]

Quote:
Originally Posted by PamCarolson
Reminds me of the three stooges, give me a cheeseburger today and I would be happy to pay you on Tuesday

Wasn't that J. Wellington Wimpy?

That was my thought when I read that post, but it would have been a hamburger from Rough House's cafe.