More from the 'clueless about energy'...

[Larry Gude]

...camp:

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/22/AR2005082201114.html

If American cars averaged 40 miles per gallon, we would soon reduce consumption by 2 million to 3 million barrels of oil a day. That could translate into a sustained price drop of more than $20 a barrel.

And what, exactly, will happen if gas prices drop by a third?

Anyone here eat less steak when it's cheaper?

Go on shorter vacations when it's cheaper?

Eat out less when it's cheaper?

Why is this so hard to understand???

 

[Bustem' Down]

Americans like gas guzzling V8 SUV's. Until they make large powerful hybrids there won't be a change in that.

 

[Bruzilla]

Why do these pinheads continue to think that we live in an undynamic, static, World? Conservation will not cause oil prices to drop as the producers will decrease production so that the supply and demand factors stay the same. Dummies!!!

The only thing that will lower the price of oil is an increase in production and availability on the global energy market, which could be done if we would increase domestic production.

 

[SamSpade]

Exactly. Actually, that's also part of my puzzlement over why people want to BLAME SUV's for the high cost of gasoline - as if gas-GUZZLING vehicles have anything to do with prices.

DEMAND drives prices. Mostly.

And while it's true that to drive the same distance in an SUV, you need to buy more gas, studies from way back in the seventies until now show that people with gas-sipping cars tend to INCREASE their gas consumption, while those with gas-guzzling cars tend to curtail their consumption. People with larger vehicles are more likely to carpool and have passengers - people in smaller ones are more likely to have NO passengers - and they don't carpool.

Because people tailor their gas usage to their available BUDGET.

Not on some nebulous quantity of miles per day.


Heck some years ago, we decided we were going to adjust how the Consumer Price Index was evaluated, because too many things are fluid - when beef is too expensive, people will just buy chicken for a while. There was just this assumption that people buy the same stuff, and their costs adjusted. Hell no. There's just very little out there that can't be "adjusted". Can't afford a new car this year? Get a used one.

 

[Larry Gude]

No...

DEMAND drives prices. Mostly.

Supply AND demand.

There is a HUGE demand for french fries in this nation, everyday, that peaks at lunch time and the balance between supply and demand makes them the price they are.

Someone(s) will build more refineries because the demand is there to justify the cost plus profit and this new output will come on line in a few years.

Then, gas prices will slide back pretty good and we'll have a period of time of cheaper and more stable prices at the well and the pump.

It just takes more to respond to gas demand than french fries.

 

[SamSpade]

Supply AND demand

That's why I don't get the current situation - there seems to be absolutely no shortage of supply. At least, from this end. And demand isn't particularly outrageous either. Speculation appears to be moving it. And that drives me crazy.

 

[Larry Gude]

I thought we'd covered this...

That's why I don't get the current situation - there seems to be absolutely no shortage of supply. At least, from this end. And demand isn't particularly outrageous either. Speculation appears to be moving it. And that drives me crazy.

There is NO shortage of crude anywhere along the chain. Global refinery capacity is maxed out and both ours and Chinas demand have pushed it over the edge. It's all about gasoline right now.

 

[jazz lady]

There is NO shortage of crude anywhere along the chain. Global refinery capacity is maxed out and both ours and Chinas demand have pushed it over the edge. It's all about gasoline right now.

Exactly. The product is there but because refineries can't keep up with demand, the oil prices are soaring.

A good article from the Post about how this crisis based on demand is different than those in the past based on supply:

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/17/AR2005081700197.html

The biggest difference now, economists say, is that this surge in oil prices is driven by soaring demand for oil, not a sudden cutoff in supplies as occurred with the previous oil shocks.

When the problem comes on the demand side, it generally means that economic growth is occurring at a solid rate, rather than weakening. Problems on the demand side also have less of a negative impact on consumer psychology.

"When oil prices are pushed higher by demand rather than a supply shortfall, people have time to adjust. We just keep on trucking," said David Wyss, chief economist at Standard & Poor's in New York.

We Americans are NOT curtailing our use because we still have more disposable income because of lower-interest rates for home mortgages. Less mortage $$$ spent = more $$$ for gas. According to the article, the amount saved by refinancing at lower-interest rates is almost double the increase in fuel costs so we're still coming out ahead overall.

 

[Triggerfish]

DEMAND drives prices. Mostly.

One of the major reasons for the increase in oil is that our demand is going up but China's demand has skyrocketed. They are now number 2 consumer of oik in the world. Demand has skyrocketed but the amount that OPEC nations are producing has not.

I am not saying that this is the only reason but it is one of the main reasons.

 

[Triggerfish]

We Americans are NOT curtailing our use because we still have more disposable income because of lower-interest rates for home mortgages. Less mortage $$$ spent = more $$$ for gas. According to the article, the amount saved by refinancing at lower-interest rates is almost double the increase in fuel costs so we're still coming out ahead overall.

My house is paid for completely....does that mean I'm not coming out ahead?

 

[jazz lady]

My house is paid for completely....does that mean I'm not coming out ahead?

Yep, you're screwed.

 

[Triggerfish]

Win a few and lose a few.....:shrug:

 

[jazz lady]

Win a few and lose a few.....:shrug:

I think with not having a mortgage, you come out WAY ahead.