Thank consumers for high gas prices

[Roxanne Appleby]

New York, April 21, 2006. The price of oil rose to record highs today on news that consumers were buying nearly as much fuel as producers could pump and refine. World demand for oil is approximately 84 million barrels per day, which leaves a margin of less than three percent compared to the current industry capacity of approximately 86 million barrels per day.

According to a comprehensive estimate of total world recoverable oil performed by the United States Geological Survey in 2000, the world "endowment" of conventional oil resources (which includes natural gas) is approximately 5.9 trillion barrels equivalent. Of this, 1 trillion barrels have already been consumed, leaving 82 percent still available. Non-conventional "frontier" resources such as tar sands could raise the total much higher.

Unfortunately, much of the immediately available capacity is located in nations characterized by unstable political environments. This has generated great uncertainty about supplies in the short term, which contributes to high prices despite the optimistic long term prospects. This is exacerbated by the fact that 77 percent of known oil reserves belong to government-owned companies.

In the long term, nuclear energy could supply all the energy required by an industrial civilization indefinitely. New technology makes nuclear plants built today far safer than past facilities. Worldwide, some 300 new plants are planned or under construction. France generates 77 percent of its electricity from nuclear power. In the United States, political opposition from environmentalists prevents any new nuclear plants at this time.

In contrast, under even the most optimistic projections of technical development, and even if current consumption were cut in half, given the magnitude of energy used by industrial civilization, alternative sources such as wind, photovoltaic, biomass, etc, will not be able to supply more than approximately 10 percent of world energy needs.

Politicians promote subsidies for these technologies to garner support from middle class voters who are uneducated regarding the magnitudes involved, and are influenced by anti-industrial romantic visions promoted by radical environmentalists. The appeal of such romantic visions would sharply diminish were voters deprived of climate controlled houses, convenient short- and long-distance transportation (meaning cars and airplanes), and abundant material goods. Without the magnitudes of energy currently produced these things would only be available to small elites.

Experts believe that fears of imminent doom and disaster are overblown. They agree, however, that we are indeed all gonna die.

 

[SEVERUSMAX]

Seriously, though, the consumers are a large part of it. I'm guilty. I know. Impossible to avoid in modern life, unless you live in a city with reasonable mass transit. Houston is NOT such a city. The prices are now at close to 3 bucks, damn it. Hmm.....

Remembers a little tea party out by Boston harbor....but I can't blame that on Native Americans this time, as they would actually be taking part too (at least one warrior lady, I imagine ). Plus it would be wrong of me. And where could it be buried? Plus the logistics, the fact that it would be highly illegal, and a lot of people would be further inconvenienced....nope, can't do that.

 

[Ulaven_Demorte]

I've personally been doing my part as far as fuel conservation goes. I own a small car, a 2002 Saturn SC1, that gets great mileage. I only drive 28 miles round trip to work 4 days a week.

I suppose I could buy a scooter or something and use even less fuel. But I'm not what anyone would consider a conspicuous consumer.

 

[Roxanne Appleby]

Seriously, though, the consumers are a large part of it. I'm guilty. I know. Impossible to avoid in modern life, unless you live in a city with reasonable mass transit . . . The prices are now at close to 3 bucks, damn it.

Of what are you "guilty"? Wanting to enjoy the comforts and conveniences of modern civilization? Is that an offence? If so, according to whom, and why?

To hell with that brand of puritanism, and piss on mass transit. Mass transit is a joke. I not only want a car, I want a comfortable car. I not only want a warm house in winter, I want a cool house in summer. I not only want stuff, I want abundant stuff at inexpensive prices. Not only do I want them, but I want my descendents to have them, and there is no reason they can't, in perpetuity. Yes, the oil will become too scarce to burn in 50-100 years, and the coal in 500 years or so, but nukes can provide all the energy we'll ever need forever, and we can use that energy to make portable fuel for long distance transportation if that's what we want.

Lighten up, people. Quit beating yourselves up about having moved beyond the hunter-gatherer stage. That doesn't mean be wasteful or accumulate vast quantities of material goods for their own sake, because that is not the way to live the good life anyway. But it is absurd to feel "guilty" for wanting to be comfortable, mobile, and well fed. And those things are only possible on a mass basis in an industrial civilization that produces and uses vast quantities of energy. Embrace it, love it, and piss on those who want to take it away and put us all behind the plow, living in yurts heated by cow dung.

$3 gasoline? It's still cheap in real terms. As a percentage of the average person's income the amount we pay to fuel our really excellent modern cars is almost as low as it's ever been. Quit whining. (I don't mean you personally, Sev.)

 

[SEVERUSMAX]

A lot of what you say is true. However, I do think that looking into alternative fuels is a wise investment, since fossil fuels will run out and do deplete the ozone. Of course, you don't want to botch it like they did in Arizona. A lot of top GOP officials were deep shit for that one, including the Speaker of the state House.

And 3 is a lot for me. I'm not quite used to that. And I know that you didn't mean me personally.

In any case, 6 months of fuel is not worth destroying one of the last wilderness lands in America. That can't be replaced. We can do without the oil.

 

[BigAndTall]

Hummer had a 400% increase in sales over the last year at one dealership in southern California.

 

[SEVERUSMAX]

Hummer had a 400% increase in sales over the last year at one dealership in southern California.

Holy cow! That's a statistic for you.

 

[Roxanne Appleby]

A lot of what you say is true. However, I do think that looking into alternative fuels is a wise investment, since fossil fuels will run out and do deplete the ozone. Of course, you don't want to botch it like they did in Arizona. A lot of top GOP officials were deep shit for that one, including the Speaker of the state House.

And 3 is a lot for me. I'm not quite used to that. And I know that you didn't mean me personally.

In any case, 6 months of fuel is not worth destroying one of the last wilderness lands in America. That can't be replaced. We can do without the oil.

Some alternatives have a place for "niche" uses, such as photovoltaic in places where grid power is not available. In general they are a joke, though, and have more to do with politics than energy. "Bio-fuels" are little more than bribes to farmers in return for votes. Wind turbines have a payback period of, well, infinity, because the maintenance costs are prohibitive.

There is an incredible amount of ignorance, foolishness and fantasy surrounding the whole energy issue. Alternative fuels are NOT a wise investment, because except for certain niches they will always cost more than fossil fuels or nukes. The ozone "threat" is hugely over-rated. We're not "destroying the environment," but cleaning it up in developed countries, and as wealth increases around the world the poor countries will be able to afford to do the same.

Fossil fuels won't "run out," but as they become scarcer in a generation or two nuclear power will become more cost effective, and they will be used more as feedstock for industry than fuel. Our economy will become electric-based as a result. We can use electricity to manufacture portable fuels for uses where that is convenient (like airplanes). Humans can sustain energy intensive industrial civilization indefinitely. We won't return to agricultural village life, or to hunter-gatherer bands.

ANWR is a sideshow. We can probably suck the oil out without "destroying" the wilderness, but whether we do that now, or 50 or 100 years from now is irrelevent.

"I'm not quite used to $3 gas." That's exactly it - we're become accustomed to lower prices. But we can afford higher ones without sacrificing our comforts and conveniences. Who doesn't prefer to pay less than more for any product? It's just not that big a deal in the big economic picture, either for individuals or society.

Global warming? The earth is in an ice age. We happen to be in an interglacial period, but that won't last forever, and eventually the glaciers will advance again. For most of the history of life on earth it's been much warmer. So what if it gets a little a little warmer over time? New York below sea level? Hell, New Orleans is below sea level, and it required a 100-year storm and 100 years of political corruption to upset that little acheivement. Bangladesh will disappear? It's disappearing anyway - we should send U-Hauls to the residents. I note that few speak of the benefits that higher temperature would bring. There would be many.

I'm not trying to be callous or cute, but just pointing out that these "end of the world" scenarios are nothing of the sort. The only sure prediction is that things will change. If you define that as "the end of the world," well - it's not. Over time the world will get warmer, and colder, and there is nothing humans can do about either. There will be costs and benefits to both (probably warmer is better on balance). Life will go on. Unless we behave really foolishly life will certainly get better for all humans in every way imaginable.

 

[gauchecritic]

I'm fed up wth argueing about this. I'll just ask you to consider one word; plastics.

Look around you, can you see anything at all that has absolutely no connection with plastics?

When the oil is gone, so is plastic. And no, you can't make computer cases out of used damping rods.

 

[zeb1094]

I'm fed up wth argueing about this. I'll just ask you to consider one word; plastics.

Look around you, can you see anything at all that has absolutely no connection with plastics?

When the oil is gone, so is plastic. And no, you can't make computer cases out of used damping rods.

Sure you can, it's just that they have a tendency to glow in the dark!

 

[Roxanne Appleby]

I'm fed up wth argueing about this. I'll just ask you to consider one word; plastics.

Look around you, can you see anything at all that has absolutely no connection with plastics?

When the oil is gone, so is plastic. And no, you can't make computer cases out of used damping rods.

Gauche, you are both right and wrong. Right in that oil is a great feedstock for plastics (and natural gas for other chemicals). In that sense it is a shame to burn it as fuel.

Wrong, because it is and will be possible to make the stuff we need out of other materials, including ones that can be grown. Plus, we won't burn all the oil - when the supplies start getting genuinely scarce in a couple generations other energy sources (nukes) will be substituted because they will be cheaper. The amount of remaining oil will be modest in terms of fuel, but huge in terms of feedstock for plastics and other stuff. Plus, there are those eight zillion mega-tons of coal that will still be around - more feedstock.

It will be OK, doll. We will do just fine. Humans are damned clever and will discover all kinds of new ways to make life better in every material way. To quote one of the great lefties of the past, "We have nothing to fear but fear itself."

 

[Pure]

Ok, so everything is fine. And where it isn't fine it's just the natural cycle and nothing can be done.

What starts as a paean to human daring and ingenuity come to this.

An alternate scenario. Humans drowning in their own waste. Gone fishing lately?

 

[CrimsonMaiden]

"I'm not quite used to $3 gas." That's exactly it - we're become accustomed to lower prices. But we can afford higher ones without sacrificing our comforts and conveniences. Who doesn't prefer to pay less than more for any product? It's just not that big a deal in the big economic picture, either for individuals or society.

Speak for yourself. It's a big fucking deal to those of us who barely squeak by as it is.

 

[entitled]

Speak for yourself. It's a big fucking deal to those of us who barely squeak by as it is.

Indeed.

 

[CrimsonMaiden]

Indeed.

The only good thing right now is that school will be over in about a month. So for at least two months, I can keep the van home most of the time and save that gas money. Of course, the down-side is that me and the kids will be stuck at home.

 

[cloudy]

The only good thing right now is that school will be over in about a month. So for at least two months, I can keep the van home most of the time and save that gas money. Of course, the down-side is that me and the kids will be stuck at home.

I know the feeling.

A different car is not an option right now, no matter how much I wish it was. I scrape by most weeks spending between $45 and $65 on groceries for all of us. We eat a lot of beans and cornbread, I promise.

Telling people that "we'll live" is hardly comforting, when a lot of us are barely living now.

 

[Pure]

Just to put a few facts on the table.

Esp. about the world's greatest consumers


http://www.federalreserve.gov/BOARDDOCS/Speeches/2004/200410152/default.htm

Between 1945 and 1973, [US] consumption of petroleum products rose at a startling 4-1/2 percent average annual rate, well in excess of growth of real gross domestic product. However, between 1973 and 2003, oil consumption grew, on average, only 1/2 percent per year, far short of the rise in real GDP

http://www.cia.gov/cia/publications/factbook/geos/us.html
Facts for the US, from CIA factbook:

Oil - production: 7.61 million bbl/day (2005 est.)
Oil - consumption: 20.03 million bbl/day (2003 est.)
Oil - exports: 1.048 million bbl/day (2004)
Oil - imports: 13.15 million bbl/day (2004)
Oil - proved reserves: 22.45 billion bbl (1 January 2002)

-------
http://www.earth-policy.org/Updates/Update45.htm

China replacing the United States as world's leading consumer


With steel, a key indicator of industrial development, use in China has soared and is now more than twice that of the United States: 258 million tons to 104 million tons in 2003. As China’s population urbanizes and as the country has moved into the construction phase of development, building hundreds of thousands of factories and high-rise apartment and office buildings, steel consumption has climbed to levels not seen in any other country. (See data.)

With oil, the United States is still solidly in the lead with consumption triple that of China’s—20.4 million barrels per day to 6.5 million barrels in 2004. But while oil use in the United States expanded by only 15 percent from 1994 to 2004, use in the new industrial giant more than doubled. Having recently eclipsed Japan as an oil consumer, China is now second only to the United States.

Looking at energy use in China means also considering coal, which supplies nearly two thirds of energy demand. Here China’s burning of 800 million tons easily exceeds the 574 million tons burned in the United States. With its coal use far exceeding that of the United States and with its oil and natural gas use climbing fast, it is only a matter of time until China will also be the world’s top emitter of carbon. Soon the world may have two major climate disrupters.

In addition to steel, China also leads in the use of other metals, such as aluminum and copper. Not only has China overtaken the United States in use of these materials, but it is widening the gap, leaving the United States in a distant second place.

In another key area, fertilizer—essentially nitrates, phosphates, and potash—China’s use is double that of the United States, 41.2 million tons to 19.2 million tons in 2004. In the use of the nutrients that feed our crops, China is now far and away the world leader.

In China’s consumer economy, sales of almost everything from electronic goods to automobiles are soaring. Nowhere is the explosive growth more visible than in the electronics sector. In 1996 China had 7 million cell phones and the United States had 44 million. By 2003 China had rocketed to 269 million versus 159 million in the United States. In effect, China is leapfrogging the traditional land-line telephone stage of communications development, going directly to mobile phones.

The use of personal computers is now also taking off in China. After a late start, the number of personal computers jumped to 36 million in 2002 compared with 190 million in the United States. But with the number of computers in use doubling every 28 months, it will only be a matter of time before China, a country of 1.3 billion people, overtakes the United States, which has a population of 297 million.

With household appliances, such as television sets and refrigerators, China has long since moved ahead of the United States. By 2000, for example, TV sets in China outnumbered those in the United States by 374 million to 243 million. With refrigerators, perhaps the most costly household appliance, production in China overtook that of the United States in 2000.

Among the leading consumer products, China trails the United States only in automobiles. By 2003, it had 24 million motor vehicles, scarcely one tenth the 226 million on U.S. roads. But with car sales doubling over the last two years, China’s fleet is growing fast.

And the race is far from over. With a per capita annual income in 2004 of $5,300, one seventh the $38,000 in the United States, China has a long way to go to reach U.S. per capita consumption levels. For example, despite China’s wide lead in total meat intake, the meat consumed per person is only 49 kilograms (108 pounds) a year compared with 127 kilograms (279 pounds) in the United States.
========


http://www.thebusinessonline.com/St...ectionID=F3B76EF0-7991-4389-B72E-D07EB5AA1CEE

Global economic growth best since the 1970s
By Allister Heath

16 April 2006

THE world economy is set for its best performance since the early 1970s, leading economists said ahead of this week’s International Monetary Fund (IMF) meeting in Washington. Countries around the world have shrugged off surging oil prices, mounting geopolitical tensions and higher long-term interest rates but growth in Europe continues to lag all other regions.

Richard Berner, economist at Morgan Stanley, said: “Global growth has improved significantly in the past few months, and the step-up appears to be sustainable.” Lehman Brothers said: “Global growth remains buoyant.” Barclays Capital this weekend hiked its world growth forecasts to 4.8% this year, following 4.6% in 2005 and 5.2% in 2004.

Other forecasters will this week make similar predictions. Official confirmation that the world is undergoing a global economic boom will come next weekend when the IMF will raise its global growth forecast to 4.8% for 2006. It would be the first time since the early 1970s that the world economy has grown at more than 4% for four years in a row and the strongest three-year period of global economic growth since 1972-74.

Asian gross domestic product (GDP) is expected to grow by 6.7% and Latin America by 4.4%. But the euro zone and the UK will continue to miss out on most of the action, economists are warning. They will expand at a relatively modest rate compared with virtually every other economy in the world. European companies, which are increasingly international in their outlook, are expected to continue doing well.

Michael Dicks, economist at Lehman Brothers, said many US-based forecasters were getting overly excited about Europe’s prospects. Dicks said: “The limited predictability of US short-term growth may be affecting how Americans see Europe – leading them to assume that the region is doing better than it really is.”

The euro zone is expected to grow by 2% this year and 1.8% next year, a poll of economists from MJ Economics reveals this weekend. Michael Sykes, director of MJ Economics, said: “The consensus continues to suggest that growth will slow slightly in 2007, largely in response to monetary tightening by the European Central Bank and a fairly substantial deceleration in activity in Germany.” The UK economy is expected to grow by 2.2% this year and 2.3% next year, according to a poll of City bankers by the Treasury.

 

[Colleen Thomas]

Nuclear may be the only viable source in the short term, but is should be pointed out that the supply of fissionable material is also finite. It too, will get scarce.

 

[BigAndTall]

I'm fed up wth argueing about this. I'll just ask you to consider one word; plastics.

Look around you, can you see anything at all that has absolutely no connection with plastics?

When the oil is gone, so is plastic. And no, you can't make computer cases out of used damping rods.

Not exactly correct. You can make plastic from other types of oils. It use to be made from cotton (for example).


But that is not nearly as easy and economical to do as with crude oil.

 

[Roxanne Appleby]

To the ladies who are beating me up for being insensitive to the pain they feel from high fuel prices, let me say I'm sorry you are hurting, but let me point something out. I copy this from a post on the other thread:

When you account for the cost of the car, the insurance, the maintenance, the financing and the fuel, over the lifetime of the vehicle the last item is not huge part of the total.

car: $20,000
insurance for 10 years: $10,000
Maintenance for 10 years: $4,000
fuel for 10 years (25 mpg, 10,000 miles/year, $3/gallon): $12,000

total: $46,000

Cost per mile: 46 cents

You can knock around $8,000 off that (8 cent per mile) by buying a used car (and accepting slightly higher maintenance cost), but you are probably fooling yourself with bad accounting to arrive a figure much lower than the 38 cents to 46 cents per mile figure.

If fuel costs $2 instead of $3 the total cost only comes down by 4 cents a mile, or $400 per year - around 10 percent of the total. The reason fuel prices get so much attention is that unlike those other costs they are paid out from week to week, so consumers are very sensitive to variations.

To the extent I have underestimated any of the non-fuel costs, that only reinforces the point, because that makes fuel an even smaller percentage of the total.

 

[Roxanne Appleby]

Nuclear may be the only viable source in the short term, but is should be pointed out that the supply of fissionable material is also finite. It too, will get scarce.

That is a long time away, doll, like thousands or hundreds of thousands of years, and we can still go out into space to get more.

Also, I suppose certain people are more liable to forget about breeder reactors.

(Double , because I don't know enough about the subject to say whether that is a real solution.)

 

[entitled]

car: $20,000
insurance for 10 years: $10,000
Maintenance for 10 years: $4,000
fuel for 10 years (25 mpg, 10,000 miles/year, $3/gallon): $12,000

total: $46,000

Cost per mile: 46 cents

My car: $3k
insurance for 10 years: a lot more than what you have suggested (also for two vehicles - RA's truck is on the same policy)
maintenence for the 5 years we've had it: pretty close to that $4k
fuel for 10 years (23 mpg, 100k miles a year, $3 a gallon): just over $13k

Using your formula, the price of gas for the amount of driving we do in that car is well over the amount it's taken to both get and maintain that vehicle. Including replacing the engine once, the transmission alone once, a u-joint, and the other assorted 'normal' stuff. You can not tell me the price of gas is insignificant and expect me to believe it.

 

[Roxanne Appleby]

My car: $3k
insurance for 10 years: a lot more than what you have suggested (also for two vehicles - RA's truck is on the same policy)
maintenence for the 5 years we've had it: pretty close to that $4k
fuel for 10 years (23 mpg, 100k miles a year, $3 a gallon): just over $13k

Using your formula, the price of gas for the amount of driving we do in that car is well over the amount it's taken to both get and maintain that vehicle. Including replacing the engine once, the transmission alone once, a u-joint, and the other assorted 'normal' stuff. You can not tell me the price of gas is insignificant and expect me to believe it.

Oh but I can, and you will, if you figure out the accounting for your own particular circumstances in a way that honestly captures and assigns all the costs.

Here's what I mean: The total cost per mile is like a balloon, in that if you squeeze one item others will expand. If you pay much less for a car you will pay more in maintenance. If you drive signifigantly more than the miles I specified you will use up more cars (buy two or three cars over ten years, rather than one).

If you are getting 100,000 miles per year for five years from a car you paid only $3,000 for and have only put $4,000 into over five years, then congratulations: You are either a genius or very lucky. If those numbers are correct then fuel is indeed a much higher percentage of your total cost. But I assure you, my numbers are much closer to what most people can expect.

PS. I think there's a typo in your numbers. "fuel for 10 years (23 mpg, 100k miles a year, $3 a gallon): just over $13k"

PPS. My standard of reasonable frugality is to buy a low-mileage (<30,000k) used Ford Taurus for around $8,000 or $9,000 and drive it into the ground.

 

[Pure]

i wonder

how in the world one shows that a given number,here $12,000 and a given percentage of total car-related expense --26%-- are reasonable for the consumer to pay? how do you show that 46cents/mile is reasonable?

what does public transit (per person pre mile) cost in a well-supplied city?

Since the price is set by cartels as what the market will bear and maximize profit, is that the source of its being a reasonable price?

I submit RA would make exactly the same 'this is fine and reasonable' argument were the price $3.50 or $4.00. what is the substance of the argument? 'you can afford a bit more'?

Look at the price issue from a public policy perpective. Given that consumption of oil must be curbed, what price would make most people cut their use by 10% or 30%? That is the correct price ('reasonable' given the circumstances)--and the extra income (profit or tax) should go toward finding economies and other sources. British Petroleum is already moving--albeit in a tiny way--"Beyond Petroleum."

PS: What is the source of RA's right to burn 400 gallons of gas per year for her work and play? Do all adult persons of her income and higher, each have a right to that 400 gallons? (because they're got the dough?)



RA: //fuel for 10 years (25 mpg, 10,000 miles/year, $3/gallon): $12,000

total: $46,000

Cost per mile: 46 cents
//

 

[entitled]

Oh but I can, and you will, if you figure out the accounting for your own particular circumstances in a way that honestly captures and assigns all the costs.

Here's what I mean: The total cost per mile is like a balloon, in that if you squeeze one item others will expand. If you pay much less for a car you will pay more in maintenance. If you drive signifigantly more than the miles I specified you will use up more cars (buy two or three cars over ten years, rather than one).

If you are getting 100,000 miles per year for five years from a car you paid only $3,000 for and have only put $4,000 into over five years, then congratulations: You are either a genius or very lucky. If those numbers are correct then fuel is indeed a much higher percentage of your total cost. But I assure you, my numbers are much closer to what most people can expect.

PS. I think there's a typo in your numbers. "fuel for 10 years (23 mpg, 100k miles a year, $3 a gallon): just over $13k"

PPS. My standard of reasonable frugality is to buy a low-mileage (<30,000k) used Ford Taurus for around $8,000 or $9,000 and drive it into the ground.

i have a brilliant mechanic that owes me big time. And it's being driven into the ground.

What i've got is a 94, so it's not all that old, and had low mileage when we got it. The only reason it was so cheap was because it had to be registered with a 'damaged' title - meaning it had been in a wreck at some point. i'm actually the third owner.

Now, if you would point out exactly where i've made a mistake in accounting for all of the costs involved with this particular vehicle, i would like to see it. i checked the records for this car. Everything is correctly stated. Insurance is approximated, since there are two vehicles on the policy, but it's still low.

And there is no typo. As of today (filled up and figured it out) my car gets 22.3 mpg. When we got it, it averaged about 24 mpg. Figure a steady decrease in gas mileage and come up with 23 mpg. We put about 100k miles on the two vehicles every year. The car is more fuel efficient and the truck is out of commission at the moment, so i figured 100k miles on the car. That makes the figure for gas less than actuality. Now take 100,000 and multiply by 3, then divide by 23, and you will get just over $13k.

i know my math. i know honesty and accountability. And i know that, in my particular case, it's proving your theory that the rising cost of gas not having a significant effect on anything is bullshit. Now quit being a know it all winking bitch and have a nice day.