It's being reported that Canadian households will pay an extra $950 for gasoline this year, and since the Loonie and the greenback are at virtual parity and fuel prices are rising a like percentage, American families can expect to fork out an extra grand this year to put gas in their tanks.
Experts are calling for $5 a gallon gas by summer (gas prices have already hit $5 a gallon in D.C.), and that mean Americans will have to cut back elsewhere, because they sure won't drive less if history is any indication.
We know that $5 a gallon for gas is a hardship for most families, but not enough to cause a major shift in consumer habits. People cut back on dining out, vacationing, and SUV purchases, but it's mostly business as usual.
But what about $6 a gallon? $7? At that point, Americans will be coughing up an additional $3,000 a year for gas, not to mention the higher prices across the board for everything delivered by trucks (food, consumer goods, etc...).
America has long been spoiled (relative to the rest of the world) with cheap fuel prices. For a number of reasons, that isn't likely to change. But the American population is not accustomed to fuel representing such a significant portion of their annual budget, and that does seem likely to change. I'm paying right around $10 USD a gallon for gas here in Paris right now, and it definitely makes me think twice about unnecessary trips.
If the direst of predictions come to pass and oil crosses the $200 a barrel threshold, how will that impact the American economy? The falling dollar sure isn't helping things on that front. Will natural gas finally get a serious look?
Posts like this scare the shit out of me. Thankfully, working in the city, there will be no driving. There's something that bankers can say they help society with.
Can you say demand destruction?
I do think CNG will finally get a serious look, there are already a handful of fueling stations in my city. The only problem will be they won't be able to manufacture the vehicles quick enough.
The flip side of high gas prices is less people on the roads (fewer unnecessary trips), so less traffic for those of us who can afford to pay the higher prices.
See, that's what common sense would dictate, but that wasn't the case last time oil was at $150 a barrel. According to the statistics, people didn't curtail their driving at all, and just made cuts in other parts of their budget.
This is great news-along with higher food prices. Inflation is up, and we're going to see a wealth transfer from the coasts to middle-class families in the rural parts of the country. This is going to help shore up American values and give the US and Canada more clout throughout the world.
For the most part, if the US can learn to live within its means, we have a very resource-rich nation.
Eddie, according to the EIA, US fuel consumption has decreased 10% since 2005 while real GDP has increased significantly even if you follow shadow stats. This is the same trend we saw in the '70s. High oil prices -> less oil intensity in the economy -> more US clout. Obviously we still have some more work to do, but in the long run, we control the world's food supply, the world's postsecondary education system, and have some of the biggest solar, U-235, and wind resources in the world in a non-9.0 magnitude earthquake prone region of the world. The US may be a very boring place that the pundits need to try and make interesting to sell news, but the fact is that the geopolitical stability and food stability is a very very good thing. And we can always convert our surplus food into fuel if gas prices get high enough.It's already over seven dollars, close to eight, per gallon in some countries.
its close to $10 in the UK
IP,
I think you're right on the money about everything but the wealth transfer from the coasts to flyover country. You're probably right about that, too, but you can bet your ass that the coasties will do everything to rig the game in their favor before turning over any economic or political clout to the unwashed masses in the middle.
The odd thing about rising oil prices is that, again, you're correct - demand has dropped in aggregate since 2005 while supply has actually increased. It's almost an inverted market supply/demand-wise, which leads me to believe surging prices are all speculators. If there is an inflation-concern component to it, I think it's been overplayed at this point (the same can probably be said of gold and silver, but I wouldn't tilt at those particular windmills now either).
-Makes your styrofoam coffee cup. -Is all over your Iphone -Probably powers your car -Can be used to heat your home. -Runs the global travel industry -Runs the global shipping industry, except for maybe a few cases with electrified railroads in Europe and a handful of CNG delivery trucks.
The economy doesn't need gold to operate. It used to need silver for film development. However, it needs oil. And that oil doesn't get recycled like silver used to when we used it and copper/steel/fertilizer still do.
Best of all, the European oil companies pay some serious dividends- to the tune of about 4-5%. Oil companies are a lot like gold- the only difference is that the oil companies pay 5% interest and gold isn't getting used up by the economy. So at the very least, it might make some sense to hedge your fuel consumption with dividends from French, Dutch, Italian, and UK oil companies.
IP,
Can you expand on how you think gold and silver have no intrinstic value, especially silver?
Just wondering what you think about the 10,000 different and vital industrial uses of silver which is only superseded by oil when it comes to the range of applications. You don't need to look further than Libya to see how it's used. Libya has something like 150 tonnes of gold and I bet that America's actions weren't only motivated by prevention of a developing genocide or upholding human rights and being "the world's police". Want to take a guess at how much silver is used up in those rockets that were launched towards Libya and other countries throughout the past decades? Try recycling that.
Both are very important commodities but to say that gold and silver have no intrinsic value...well, I'd like to hear why you think so. The day you can bring a barrel of oil to the supermarket or offer one as a medium of payment to your plumber is the day I'll concede that gold has no value. Seems like people were able to get by without oil for centuries, but gold and silver have been universally recognized for thousands of years and will continue to do so.
I'm not saying gold and silver have MORE value than oil, just hoping you can share your thoughts on your comment about the two metals having no intrinsic value. Our opinions on this might differ a little but I always welcome the chance to learn from the more mature and respected forum members such as yourself, even if I can't bring myself to agree with some of your points.
I always giggle when I read the word 'loonie' in reference to the Canadian Currency.
It's time for the US to stop subsidizing corn-based ethanol and start importing Brazilian sugarcane-based ethanol.
Yup, we're at $10 a gallon and going higher here in France.
I don't think CNG will get much of a good look, no distribution system really (your household pipeline wouldn't supply the demand).
Fuel cells will never happen.
Electric cars are a stop-gap measure, but I like them longterm.
The best bet is better development patterns. Less sprawl. Need more cities like Alexandria, Charleston, Boston, New York, SF, etc. Just using less gas will erode demand much easier. Granted this takes a long time.
This is the kind of thinking that literally ENRAGES me. I was born in Alexandria Hospital and lived the first 26 years of my life in that godforsaken shithole known as D.C. Now I live in Kansas, and out here we have a different way of life--we have affordable homes, overpasses, open roads/lots of highway. Somebody may live 25 miles away from me, but they're about 25 minutes away--all I have to do is jump on I-35 and do the 70 mph posted speed limit and I'm there in no time.
You goddamned coastal elitists don't recognize that the rest of the counry doesn't want to live like you fucking physically unattractive, boring, insufferable losers on the coasts. It pisses me off to no end that the coastal elitists in this country don't recognize that not everyone dresses in a 1970s suit with suspenders and spends an hour a day on the goddamned metro or subway. WE LIKE DRIVING. OUR VERY WAY OF LIFE DEPENDS ON OUR CARS AND GAS. WE HAVE AN AMAZING LIFESTYLE OUT HERE AND WE ARE TIRED OF ELITISTS WANTING TO SEE GAS PRICES RISE SO THAT EVERYONE CAN CONFORM TO THE SHITHOLE LIFESTYLE OF UGLY, COASTAL ELITISTS. WE DON'T WANT TO BE CRAMED ON A FUCKING TRAIN. WE WANT FREEDOM. WE DON'T WANT TO BE LIKE YOU. YOUR LIFE FUCKING SUCKS.
This is why I say thank God for our representation in the U.S. Senate. If not for the Senate, the myopic bastards in D.C., NY, SF, LA, etc. would no doubt crush the lifestyles of everyone else.
EDIT: And Alexandria fucking sucks.
I may not be as extreme about it as you but I agree with what you're saying to some extent. I can't imagine living in a city my entire life.
Hahahahahahahahaha you do know that we're quickly running out of cheap oil and demand from non-OECD is skyrocketing, right? Gasoline will easily be seeing sustained prices of $10+ a gallon by the end of the decade. The lifestyle you love so much will be forced to change by Mr. Market, not the coastal "elitists".
I live in a city where I can walk everywhere and I love my lifestyle. Mine's sustainable, yours isn't. I own a lot of oil, which I'll gladly sell to idiots still willing to drive 80 miles each day in their pickup trucks. In fact, I hope you morons try tooth and nail to hold on to your lifestyle, it will just mean more money for me.
Go ahead, be infuriated. You're the stupid ones... :)
I think gas cost more than $5 a gallon in Paris when I was born. This being said, the swings are much milder over there due to the tax cushion (the taxes on gasoline in France are well over 100%)
$200 is not the direst predictions out there. My price target for 2020 is $300+...
We will start buying very efficient gasoline/diesel powered cars. $300/bbl is hardly the end of the world, that translates to $10/gallon for gasoline. Europe gets by on that right now. We will adjust our lifestyle to be more like Europe's. On a per capita basis, Europeans use half the energy of Americans but have roughly the same standard of living. It's about time we stop being such pigs when it comes to energy consumption.
This is why I want to avoid living in car-dependent areas, i.e. the suburbs.
i own oil companies atm this is helping me ;)
Interesting post. I say if there wasn't so many 22 year old meat heads living with their parents with V8 four door trucks that have massive tires and lift kits, we'd be a lot better off. Take notes from Europe. Why the fuck are you driving a massive 5 passenger 2 tonne truck when you've never hauled anything or put anything in the bed and you're the only one that is ever in it? And it's not even like you stand out with it, they're everywhere. I don't get it.
So would it be safe to deduct that you think oil will not be replaced in either medium- to long-term? You're absolutely right: gold won't power my car, but it will buy one that doesn't need oil to run. I'm not debating the merits and demerits of oil vs silver. I just don't agree that silver has no intrinsic value. If you own a battery, anything with a printed circuit, a mirror, anything with an electrical contact you own silver. Sure, silver was used in photo development before digital cameras and it's still used.
Either way, you can make money on either commodity so I'm not complaining that the price of oil is going up. Plenty of ways to minimize your own indiviual use of oil although I admit most people are probably too lazy,uninformed, or don't have the neccessary capital.
Thanks for expanding on your original opinion, brought up some good points.
LOL.
When I hear politicians say that they'd like to see gas prices rise over time so that Americans will readjust their lifestyles and use more public transportation, it just pisses me off to no end. These people don't stop for one second to think that there is an ENTIRE CONTINENT out there outside of Chicago, NY, D.C., SF, etc. of people whose very lives are dependent upon affordable gasoline. Literally, the way of life of Kansans, Nebraskans, Oklahomans, etc. is at stake with $6, $7, $8 gasoline. The vast majority of the land mass in the United States will never ever have access to public transportation. We just want our freedom out here--we're goddamned tired of Washington politicians and the Fed devaluing our currency and fucking up fuel prices.
I'm rich. I'm from a rich family. I have a lot of money. My neighbors don't. They are hurting and $7 gas will severely hurt my neighbor. Fuck San Francisco. Fuck Alexandria.
You could buy more efficient vehicles man. You think all the truck driving people in the midwest give much thought to fuel efficiency when they purchase a new car? Aside from farmers, no one has an excuse to buy a huge truck or an SUV that can seat 9 people.
Umm, obviously you haven't seen the birth rates out here. There aren't a lot of families of 4. People have kids. People have big families out here. And what kind of "efficient" cars can we buy? SmartCars? Chevy Volts? You don't buy low performance cars to manuever 60-mile round trips with 70 mph speed limits. This isn't Washington, D.C. This isn't Boston. This is the Great Plains.
Ok, so they have huge families but bitch about the cost of maintaining them? Us pretentious liberals on the coast don't give a crap that the only car your freakishly large family can fit in is a Suburban that get 15 mpg. I am not hoping that these families struggle due to high fuel prices, but come on, don't have a family of 7 when you are pulling in 40k per year in Kansas.
LOL. I hate KU. Go K State!
Sure, but the new Ford Explorer gets 35 mpg and lots of minivans are getting 30 mpg vs. 20 mpg ten years ago. And a lot of these folks in rural areas are getting rich off of high agricultural prices that us city folks are going to have to pay.
High resource costs, in the long run, are good for America and good for democracies everywhere on a relative basis. They re especially good for rural areas. When times get tough, it's a lot harder to point your finger at a government official and say "It's his fault" without first pointing at yourself for voting the idiot into office.
Well, there's a larger population in Northern Virginia and Suburban Maryland than there is in Kansas. It's not like we have a lot to say in the matter. What is the stat? The dollar has depreciated 27% since Obama took office? Yeah, don't blame us for high gas prices.
If you're not making it in the US, you have nobody to blame but yourself.
Fuck you, man. As long as you're not on welfare, this is a free country and you're free to live your life how you want. How about our politicians represent the American people in a way that's beneficial to the electorate rather than a way that feeds the egos of you pretentious, elitist pricks? It's those "7 kids" who will be servicing the debt on 100 years of your welfare state. You'd do well to thank them.
Or a huge chip on their shoulder.
Everyone age 13 and over should be issued a personal vespa. That will solve it.
Hahaha.
How about we just give everyone in the country an unlimited rides NYC Subway card? :-)
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