Strawfoot
Flagstaff, AZ, USA
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macira wrote:Strawfoot.. Supply and demand are neat words to use..But thingss are are worth what they cost to produce plus a reasonable profit. Oil at it's current price does not fit that scenario. If you want to substitute "charge what you can get" for supply and demand, I'll buy your story.
If you check around a bit you will find there still is production above demand.
It may not continue to be so but at the moment it is. Price now is based on betting on what you can sell for. Price control is not needed but gambling control is needed. I think the ante for the bet should be increased dramatically.
"Charge what you can get" is supply and demand, when demand is high and supply is low. Show me where production is above demand. A source of your claim.
Of course the prices are reflecting the future, and it's projected costs, based on what everyone knows; the demand will quickly double in the next decade and the supply will drop from the current 84 million barrels a day. So what will the pump price be when the world demands 150-200 million barrels a day and production is at 75 million barrels a day? That's right, somewhere between $300-$400 a barrel. But it's not the cost that will be the big shock to people. Just listen to our fellow RVers. They will pay whatever it takes to get them down the road. The shock will be when the U.S. can no longer find 13-15 million barrels a day of crude oil to supplement the 8 million barrels of domesticly produced oil. Those people who invest for a living that are getting wealthy buying futures at $140 a barrel, have done their homework. They are actually buying cheap compared to where we're headed. They will double their money. The rest of us will be seeing shortages of supply, higher (much higher) fuel prices, lines at pumps, and inevitably we will ask/beg the next President and Congress to step in and save us. They will step in, all right. They will make arbitrary decisions about how many gallons each American family can get by on and issue ration coupons, or some other WWII type system, while attempting to protect the trucking industry and other essential services.
I'm a bit sad, since we recently purchased our first fifth wheel camper. Like most here, we'll use it locally and enjoy it until it becomes ridiculously expensive, or when gas is rationed. Then my fall-back plan is to use my bike and my own two feet to get around.
Strawfoot
2007 Keystone Cougar 244RLS
520 watts solar, 790 amp-hr @ 12v, 2000 watt Magnum, Winegard Slimline HD, 32" LCD, Onkyo 7-channel surround + sub-woofer, JT Strongarms, 16" HiSpec Wheels, BFG Commercial T/A's, Yamaha EF3000iSEB (propane), Thule T2 Bike Rack
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AO_hitech
SF Bay Area
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Strawfoot wrote:Isn't it just possible that the demand for crude oil has finally surpassed the maximum output.
No. The price of oil has more than doubled. The demand just isn't going up even remotely enough to justify that increase. And, lately the supply has likely increased more than the demand (the real demand for use, not the demand by those purchasing it without ever using it).
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AO_hitech
SF Bay Area
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Strawfoot wrote:Show me where production is above demand. A source of your claim.
It's been posted in this thread several times.
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Strawfoot
Flagstaff, AZ, USA
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I remember Jimmy Carter speaking to the nation and saying we'd never see gasoline at $1.00 a gallon. Two weeks later it was $1.00 a gallon. It's nice to be reassured. It's better to be told the truth and forced to deal with it. Since the first chart I looked up was a couple years old and said that crude oil was going to cost $45 a barrel in 2025, I found something more current. It doesn't mean any of this will happen. It might or it might not. It might be twice as bad. I think since the U.S. gets over 60% of it's crude oil from countries that don't necessarily like us and could cut us off one day, it is difficult to make predictions about supply. One Israeli jet flying into Iranian airspace with a few well targeted missiles, could change the whole supply scenario overnight. My guess is that none of us really knows what will happen and all we can do is search the internet for some reassuring news to comfort us. Let's hope for the best and prepare for something much less than that.
Must read CIBC report:--"an average price of $200 per barrel by 2010." That "should translate into a near -- $7 per gallon pump price within two years
Must read CIBC report: $7 per gallon gas by 2010
Ten million cars off the road, 1970s style GDP growth
CIBC World Markets has just released a stunning yet detailed economic analysis of near-term oil prices and impacts.
![[image]](http://climateprogress.org/wp-content/uploads/2008/06/cibc-prices2.jpg)
The two key pieces are "Getting off the Road -- Adjusting to $7 per Gallon Gas in America" and "Oil and Growth -- That 70s show Re-Run". Main points:
* "That additional 200,000 barrels per day pledged from Saudi Arabia is a pittance compared to the four million barrels per day this year that depletion will hive off world production. What little increase in production Saudi is capable of will probably all be gobbled up by that country's own voracious appetite for energy."
* China's recent oil subsidy drop? Another yawner: "Most North Americans would gladly line up at the pumps for China's now $3.25 a gallon gas."
* "The only supply response to date has been yet another round of cost overruns and lengthy project delays running the gamut from Canadian oil sands to deepwater Gulf of Mexico wells."
* "With the basic laws of supply and demand no longer operative in crude oil markets," CIBC is "compelled to once again raise our target prices for oil" to "an average price of $200 per barrel by 2010." That "should translate into a near -- $7 per gallon pump price within two years, a 70 percent increase from today's already record levels."
* "Higher oil prices spell stagflation for the US economy next year" and beyond. The report has a good analysis of why "The US economy has managed to avoid feeling the full brunt of oil prices over the last few years, but 2009 will be the year that its luck runs out."
The analysis seems very solid and suggests the only thing that can "save" us from near -- $7 gas by 2010 is a major global recession, but even that would only be a temporary respite. The implications for Detroit are staggering:
![[image]](http://climateprogress.org/wp-content/uploads/2008/06/cibc-suv.jpg)
* "Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America's highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today -- a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks." The report has a very interesting analysis of vehicle scrappage trends versus new vehicle sales that I hadn't seen before. This is going to be a double whammy on Detroit -- lower overall vehicle sales and plummeting SUV and light-truck sales.
![[image]](http://climateprogress.org/wp-content/uploads/2008/06/cibc-10m.jpg)
It looks like plug-in hybrids will be introduced not a moment too soon. And certainly not soon enough to avoid a steady decline in vehicles miles, according to CIBC:
![[image]](http://climateprogress.org/wp-content/uploads/2008/06/cibc-vmt.jpg)
CIBC says we're going to become like (shudder) Europeans and Canadians! (Although this particular production should probably be taken with a grain of salt, since the CIBC analysts are, after all, Canadians.)
![[image]](http://climateprogress.org/wp-content/uploads/2008/06/cibc-europe.jpg)
This will ultimately require a major investment in public transit, an area that this country lags enormously behind Europe:
![[image]](http://climateprogress.org/wp-content/uploads/2008/06/cibc-transit.jpg)
I do believe this country is going to be dramatically changed by our failure to plan ahead for the inevitable. As CIBC notes, this will be different from most previous oil shocks in that the duration of the price shock is likely to be much longer:
The longest running continuous oil spike in U.S. history lasted seven quarters, while we expect oil prices, at least on a trend basis, to be headed higher right through 2012.
CIBC also points out another reason this oil shock will be different:
Moreover, one of the earlier arguments for why oil might matter less these days is rapidly disappearing. Until recently, it was commonplace to dismiss the oil shock by pointing to the fact that the US economy, with its shift into services, had become signifi cantly less energy intensive than it was in the 1970s, when oil shocks did so much damage. But although US crude oil expenditures currently make up only 4 percent of GDP, this share will grow to 9.5 percent over the next three years as crude prices hit an average of $200/bbl in 2010. In terms of oil's share of spending, we're right back where we started from.
Doh!
I would also add that this is different from previous oil shocks in that in the 1970s many different sectors of the economy relied on oil, including industry and the power sector. Now it is primarily one sector of the economy, transportation, that is an oil monoculture -- and that sector as had a much more difficult time transitioning to alternative fuels than other sectors.
One last note: The other industry that is going to be devastated by high oil prices are the airlines.
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AO_hitech
SF Bay Area
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Strawfoot wrote: * "With the basic laws of supply and demand no longer operative in crude oil markets,"
Well, if you believe your own posts, then you have shown that the price is not related to supply and demand. ![[emoticon]](http://www.coastresorts.com/sharedcontent/cfb/images/awink.gif "awink")
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RetiredArmy
Zephyrhills
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Here's another scary thought. Problems in Nigeria and Iran. Today, oil went back up another $5.00 a barrel to $141+. Iran is testing missiles and rebels in Nigeria are acting up. America needs to get or increase its own oil supplies. Everyone has his/her idea on what's going on. Thats good. It's what makes this a great forum. I only wish the powers that be are looking at this forum. Quite frankly even if you or I would contact our representatives in Washington, all we would receive would be lip service. We have some serious problems in this country and Big Oil is one of them. Keep on keeping on. Larry G.
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Sea Dog
Ontario Can.
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"CIBC says we're going to become like (shudder) Europeans and Canadians! (Although this particular production should probably be taken with a grain of salt, since the CIBC analysts are, after all, Canadians.)"
Ah yes, the Canadians, what do they know?
After all how much fuel can it take to power a Birchbark canoe?
Life is short,Death is long,
Take a vacation.
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bobhar41
nth wales uk
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Hi Seadog its Bob from Nth Wales again sorry about the delay in my reply .We have an advert for a Lexington 300 on ebay it returns 34 mpg due to it having LPG fitted starts with gas then switches over to LPG price of LPG uk 50p lt in Spain 32p lt I havent seen any posts about LPG conversions cost in UK £2500 Now regarding uk gallon vs usa gallon I am your averige tradesman (iron worker)on £11 per hour on information ,I have been informed americans on about the same $22 ph when you consider goods in usa half price of uk I still say all is not lost On average we have 2 or 3 wks summer vacation a lot of folks drive down France Spain Portugal ect 3000 to 4000 mls towing caravans trailors ect you can only drive so many miles in 2/3 weeks vacation thats if you want to see the place your heading for My boss has just returned from USA and speaking to friendly americans in resturants and bars on cost of living in UK they dont know how we manage over here As i say stick in their all is not lost Bob Har
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macira
bullhead city,Az
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Having done work with statistics,I assure you you can cook up a chart to show most anything. But fact is production still exceeds demand, not by a lot but does.
""Charge what you can get" is surely not "supply and demand". It amounts to robbery.
Supply and demand is business between honest folks based on the honesty of both. What we are seeing today as evidenced by the "oh my god the black rag gang in Iran fired a missle" lets boost the price is crooked. Sort of like a business deal where one party has a Pistol.
Final point IF demand exceeds production find me the empty storage tanks!!
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Sea Dog
Ontario Can.
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Hi Bob.
Good to hear from you!
I am a little confused by your mpg figure.
I am sure that you do not expect thirty four miles per.
Did you mean to say three to four miles per gallon?
As far as miles driven, I realize that many of your campers do drive long distances.
It seems to be a popular myth in both Canada and America that only short and local trips are taken, thus the higher price of petrol is not as big an issue.
Keep in touch.
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