U.S. Eyeing Ways to Boost Gas Supplies

Discussion in 'Politics, Religion, Social Issues' started by Thanatoast, May 26, 2004.

  1. Thanatoast macrumors 6502a

    Thanatoast

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    #1
    link

    The first thing about this article that caught my eye was the title. I'm not really surprised that the administration's first thought is to boost supply rather than to curb consumption, but it's still disappointing.

    Promises for boosting supply have already been received by us from the Saudis. Prices have continued to rise anyway due to instability in the region and a downward sloping supply curve. I think that this should be clear to everyone: Gas prices will never be lower than they are today. Prices will only rise from this point on. There may be as much play as 25 cents in either direction, but I suspect the days of sub $2 a gallon gas are gone.

    I find it short-sighted of the administration to push for loosening environmental standards (a favorite tactic) when the best way to lower prices across the spectrum is to reduce domestic demand. With China an up and coming economy, oil supplies which are already being pumped dry at near capacity will become more scarce, and more expensive.

    If Bush were a good leader, he'd be looking for alternative ways of keeping the business of the nation moving. Investing in renewable technologies, rather than non-renewable resources which will soon reach their limit, is a much smarter plan, and will cause less trouble in the long (and short) run. The Bushies, who claim to be for free-market competition, certainly show no signs of wanting any competition for the oil and gas industries, which (gasp!) might actually lead to lower, more competitive prices, and in the long run a more efficient economy.
     
  2. zimv20 macrumors 601

    zimv20

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    #2
    i'm wondering, if gas averaged $3/gallon, how everyone here would change their transportation habits. more public transport? more walking/biking? buying a higher mileage vehicle (and what would that target mileage be)?
     
  3. dopefiend macrumors 6502

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    #3
    It wouldn't change habits at all....

    Its already pretty close to $3
     
  4. Backtothemac macrumors 601

    Backtothemac

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    #4
    I have changed my ways. Sold my mini-van that got 12 to the gallon, and my Probe GT that got about 15. Now my wife is in an accord getting 25 in the city, and I am in a Golf getting 24. Both are over 30 on the highway. Once we are in our house we are going to buy two Prius's.

    I have had it with gas prices, and people friggin wasting fuel.

    One of the greatest quotes ever was "I believe in freedom, and individual rights. Up to the point that the individual starts to operate at the expense of society."

    That is what the SUV has become. An expense on society.
     
  5. blackfox macrumors 65816

    blackfox

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    #5
    Well, I am not sure how the price of a barrel of oil converts into domestic gas prices here at the US pumps, but oil prices (per barrel) now at about $40, are about as much as they were briefly during the first gulf war invasion (Oct. 1990), and probably for the same reason, a disruption in normal supply channels. Currently, prices have jumped about 10% since an April 24th failed attack on an Iraqi offshore oil terminal, and the killing of oil workers in Saudi Arabia the following week. Various other attacks on oil infrastructure (mostly in Iraq) have also destabilized production, or at least threatened to. The possibilities of future attacks have added a "risk premium" of about $4 to $8 a barrel, according to traders. OPEC has been called upon to increase production, but mostly to calm the market and make more money with the inflated prices. It should also be noted that Americans spend a smaller % of their income on energy, with inflation taken into account, and gas prices remain lower than they were in the 1980's. It should be mentioned, however, that some wages have not kept pace with inflation, so gas may be proportionately more expensive to these individuals.

    So, although I do not see gas prices being 77 cents a gallon again (remember late '98 and early '99), it is a volatile market, and if production fears can be allayed, we will see prices drop down considerably, perhaps back to $30 a barrel or less. It has been noted that the considerable demand of the US and of China, may keep oil prices at these levels ($30), but that translates into about 70-80 cents less per gallon, (if memory serves). There are also the developing suppliers/distributions around the Caspian, in countries ending with -istan, and Venezuela, which depending on politics will contribute to supplies in the short to mid-term...

    I do agree that this is a prime time for the US to re-assess its' energy policy, but I do not see that happening with Bush and Co.
    In fact, it is destined to be a rather painful and expensive transition away from oil dependency, as it requires a complete overhaul of our energy infrastructure and a retrofitting of most machinery (eg cars)...still, it happening is enevitable...

    (Thanks to the NYT, for most of the info in my first paragraph)
     
  6. mactastic macrumors 68040

    mactastic

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    #6
    Where are you at?? I thought I was in pretty much the most expensive market, and I paid $2.41/gallon this morning. And as far as the $3/gallon goes, I think zim's speculating what would happen if the national average hit $3/gallon. Seeing as how the national average is just over $2 now, there's still a long way to go before it hits $3. And that would make my gas cost about $3.40/gallon or so.
     
  7. dopefiend macrumors 6502

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    #7
    People will still continue to buy trucks, sports cars, ect. even if gas prices average $3.

    Cool site I found --> http://198.6.95.31/ Check out that graph! :eek: Thats a pretty insane slope. Makes it seem that it won't be long until $3 if trends continue.
     
  8. LethalWolfe macrumors G3

    LethalWolfe

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    #8
    Americans love our cars and our cheap gas. IMO the first Pres to take a hard stand *against* doing everything w/in reason to keep US gas prices low will be hated and not get relected (assuming it's a stance taken during the first term). I hear b*tching and whinning about the high gas prices left and right, but I hear relative few people going, "gee I think I need to get a car that gets better milage" or "Gee I guess I better change my driving habbits." It's more like, "Why isn't the government doing something about these super-hi gas prices?"

    It's going to be long, hard, ugly road to change American, and Americans, in this regard.

    Anyway, adjusted for inflation gas prices now are still much cheaper than they were during the energy crisis periods of the '70s.


    Lethal
     
  9. Dont Hurt Me macrumors 603

    Dont Hurt Me

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    #9
    adjusted for inflation gas is cheap but cars have turned into SUVs and get half the mpg they did say 10 years ago. its time Govt used a little of that power to get the automakers back on track in building non gas guzzling machines. Reagon years and the Bush years is why we forgot all about energy. Bush has been horrible when it comes to oil and other sources of energy. why not close all those stupid loop holes for trucks, suvs and cars instead of the game they play with automakers. what happened to making the automakers increase mpg on vehicles? cheap gas made them forget all about it. 70's revisited and what has the U.S. learned? not one thing. here we go again.
     
  10. zimv20 macrumors 601

    zimv20

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    #10
    ...which works out to be a 50% increase. in any market, that's a big jump. i think it would change a lot of behavior. in the past two weeks, i've seen two nightly news reports on buying trends for higher mileage cars (hybrids were highlighted).

    i do relatively little driving, plus it's a high mileage diesel, so i fill up every 10 weeks or so. i don't see that behavior changing too much, as i am pretty good about walking places and/or taking public trans.
     
  11. Voltron macrumors newbie

    Voltron

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    #11
    Those who can afford SUV's and the gas prices that go with them help increase demand for gasoline and can end up pricing the market too high for those who work bottom level job even tho they drive economy cars. Something I do worry about in the Middle East. Can a Democracy or a Capitilistic system actually work where a resource is limited like in their case water. Where under a free market enterprise it could be priced so high that those on the bottom can't afford to survive even if they are gainfully employed. I also worry about stuff like this where gas is concerned. Our gas prices are at the rates that they are and almost everyone is already at 100% capacity. We here in the US need to build more refineries even if it means relaxing environmental rules, and drill for oil in Alaska. Nobody really knows how much oil is there for we aren't allowed to use modern testing techniques to find out.

    I said I wasn't a very good libertarian.

    I believe most people who drive SUV's do so because they are more likely to walk away from an accident. In fact they are more likely to be able to drive away from an accident. While the one they had the accident with ends up in the morgue because they weren't rich enough to afford an SUV. Problem is these SUV drivers start driving with no fear. Run that red light, no problem worse that will happen is I might get my paint scratched. Thus making the road a much more dangerous place than it use to be.

    Allot of people who drive SUV's are really incapable of handling a vehicle of that size. They park taking up 2 spaces where a more capable driver can squeeze it in to one space. They take up two lanes of a road down the center of Cocoa village because the lanes are real narrow. If they are incapable of driving these things between the lines then they shouldn't be driving them.

    Yes there are trucks out on the road but those are what I would call a necessary evil for without them our economy would ground to a halt. Without SUV's it would simply be a minor inconvienience for a few individuals.

    However in a free society how do you prevent free will. SUV's are considered trucks and anybody is legally allowed to own a truck.
     
  12. IJ Reilly macrumors P6

    IJ Reilly

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    #12
    This morning I paid $2.55 for premium in LA. We are close to the "magic number" of $3.00/gallon because any small disruption in refining capacity this summer will tack on another 25%, easily. How many summers have we been through lately without a refinery shut-down, for one reason or another? In California at least, none that I can recall recently. Yes, I think three buck gas is inevitable, no matter what OPEC does, because the real squeeze is coming from the refiners, who aren't interested in building more capacity. And why should they, when they can rake in the dough just by raising the price?

    FWIW, I decided to downsize my car a couple of years ago because the trend was clear even then. I now drive one the smallest cars on the American road, I drive it only about 5,000 miles/year, and I'm not a lead-foot. I also use my bike for around-town errands whenever I can, if only because I can use the exercise.
     
  13. mactastic macrumors 68040

    mactastic

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    #13
    We're close to a $3 gallon of gas here in California, and you are probably correct that we will see prices peak at or over that number at some point this summer, but most of the rest of the country is much farther away from it than we are. A $3 gallon of gas here in the Golden State won't be half the problem a national average of $3/gallon will be.
     
  14. zimv20 macrumors 601

    zimv20

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    #14
    what about $4? $5? at what point will you change your habits?
     
  15. IJ Reilly macrumors P6

    IJ Reilly

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    #15
    The first of those $3.00 gas price signs will be an important psychological event, even if they're not widespread and the prices don't stick. The pattern over the last few years has been quick jumps up three notches in price, then drifting down two, much more slowly. I'm predicting, that by the end of this summer, $2.50 will look cheap. If I did a lot of driving, I'd be planning accordingly.
     
  16. zimv20 macrumors 601

    zimv20

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    #16
    assuming there's nothing funky going on w/ that site (even *I* can afford a domain name :) it's interesting to see that diesel prices have remained fairly steady. looks like my investment in a diesel car is paying off in ways other than high mileage.
     
  17. IJ Reilly macrumors P6

    IJ Reilly

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    #17
    Some shift in consumer habits, however small, appears to underway. I also noticed in my paper this morning ads for rebates as high as $5,000 on the big SUVs.

    $2.36 a Gallon? Honey, I Shrunk the SUV

    The high cost of gasoline — which averaged $2.36 per gallon in Los Angeles County on Wednesday — priced him out of the market for a bigger sport utility vehicle. With six cylinders instead of eight, the smaller 4Runner could cost Sanchez as much as $720 per year less than the Chevrolet Tahoe or GMC Yukon he had wanted to buy.
    ...
    Sales of the largest SUVs dived last month from the previous April, according to research firm Autodata Corp., which tracks sales nationwide: Ford Expeditions dropped 34%, Lincoln Navigators were down 25%, and Chevrolet Suburbans drew 21% fewer buyers.

    Overall SUV sales continue to climb, up 2.5% last month over the previous April, largely due to the soaring popularity of smaller, more fuel-efficient SUVs. Sales of Saturn's Vue rose 59%, Chevrolet's Blazer jumped 55%, and Ford's Escape rose 49%.
    ...
    At that price for gas, and based on 15,000 miles a year of stop-and-go city driving at the Environmental Protection Agency's estimated city mileage, it would cost about $2,600 for fuel to drive the largest sport utility vehicles, including Chevrolet's biggest Suburban and Tahoe models.
    ...
    "I wasn't as concerned about the gas mileage the last time I bought a car," the 59-year-old Marina del Rey resident said. "It was not in the forefront of my consciousness as it is today."

    High prices at the pump are also leading more motorists to buy gas-electric hybrid cars, according to market analyses by Toyota and Honda, which make the two most widely available models.

    At Toyota of North Hollywood one recent morning, Shane Ross and his wife took turns cradling their new baby as they discussed the automaker's Prius hybrid with a salesman. The car had initially seemed too expensive to the 33-year-old Ross, who has three children, but now he is considering buying one.
    ...
    Jesse Toprak, director of pricing and market analysis for the online research firm Edmunds.com, said consumers have been concerned about gasoline prices since last summer, when the usual seasonal spike in prices failed to subside.
    ...
    His customers are not rejecting SUVs altogether, Nicholas said, but they are increasingly choosing the half-ton Suburban over the three-quarter-ton version, or moving from the Suburban to the Tahoe, which has several models with a smaller engine.
    ...
    Raul Gutierrez, a father of two from Eagle Rock, had been considering buying a Ford Expedition or a Toyota Sequoia, both large SUVs that the EPA rates at about 14 miles to the gallon in city driving.

    Last Friday, on the day that the nationwide average cost of self-serve regular gasoline hit $2.06 a gallon and California averaged $2.32, Gutierrez decided to buy a Toyota Sienna minivan, which is rated at 19 miles to the gallon in city driving.​

    http://www.latimes.com/news/local/la-me-cars27may27,1,5684314.story
     
  18. mactastic macrumors 68040

    mactastic

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    #18
    I certainly don't disagree with what you're saying, but I'm thinking more nationally than locally. Imagine what happens if the national average hits $3/gallon and stays there for more than a few months. We'll be paying $3.50/gallon out here if that happens, but more importantly it will put a serious damper on our economy, not to mention the world economy. Everything becomes more expensive if gas prices go up like that. Products will rise in cost across the board from food to durable goods. Wages will have to rise just to allow people to stay even in purchasing power. And all because we can't seem to find the collective will to do something about the efficiency of our energy use, particularly our vehicles.
     
  19. zimv20 macrumors 601

    zimv20

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    #19
    if the eventual reward is less congested roads, higher use of public trans, and smaller vehicles, i'm all for it
     
  20. mactastic macrumors 68040

    mactastic

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    #20
    Sadly I don't think any of those will happen. At least not as a result of higher gas prices. Roads won't become less congested unless people start to move back into high density city living instead of commuting from suburbia. And that takes years of planning and foresight by cities, as well as a tax structure that encourages housing as opposed to businesses within city limits.

    Higher use of public transit would help relieve some of the congestion on the roads, but that also takes foresight not only by cities, but by regional authorities. It also requires a huge capital outlay, not something easily gotten in these tough economic times for state budgets. Sure the areas that already have a decent public transit system will probably see increased ridership, but that's only the major cities and some forward-thinking towns. Regional conflicts and poor planning tend to make it very difficult to put an efficient public transit system in.

    Smaller vehicles? Maybe, but if hybrid technology can increase mileage while still keeping the SUVs rolling off the assembly lines people will still buy them. Not everyone can use a small car. I know I can't. I kept my little car for as long as I could, but there came a point where it just wasn't an option anymore.
     
  21. IJ Reilly macrumors P6

    IJ Reilly

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    #21
    Be careful what you wish for, you might just get it. I'm all for these things, but as we learned the hard way once already, reducing energy consumption without causing widespread economic damage requires a gradual and well-planned weaning off of dependance, not a sharp price shock. I don't know if you're old enough to remember the decade of '70s -- a lot of necessary changes occurred, but trust me, the way it came down really sucked.
     
  22. Backtothemac macrumors 601

    Backtothemac

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    #22
    I agree 100%. I remember the long, long lines to get gas, and stations actually having signs that said no gas till monday, and it was a thursday.

    The problem is consumption. Period. We have to change our habits as a society. It would do us some good. I just bought a new house, and there are two a/c's, but there is so much insulation that the energy bill averages about 90$ per month. I also bought a bike so that I could ride the mile up to the store for small items that we may need from time to time.
     
  23. zimv20 macrumors 601

    zimv20

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    #23
    i do remember, and i say let's bring it back. that'll change consumer demand in a hurry.

    it'll suck, yeah, but i think it's the kick in the butt the collective drivers of this country need.
     
  24. IJ Reilly macrumors P6

    IJ Reilly

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    #24
    Yeah, red flag-green flag. Those were the days....

    We're not having to endure shortages, but these could yet happen. Still, I was thinking more of the decade of stagflation. We need to start asking ourselves if our economy can digest sharply higher energy prices over a sustained period of time, along with huge budget deficits and the rising interest rates that will be required to float the federal debt and snuff out inflation. Some of the key elements of '70s economic debacle are coming into place again.
     
  25. IJ Reilly macrumors P6

    IJ Reilly

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    #25
    Not worth it, sorry. I don't think we need to go through another decade of pain like the '70s when the majority of the hurt was felt by working-class people who either lost their jobs or became downwardly mobile. The infrastructure isn't in place to give many people alternatives.
     

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