I will believe the Saudis don't see any upcoming problems with Ghawar when they cancel one of their projects due to low oil prices. If they continue to be full steam ahead with increasing their capacity then I think they are aware that Ghawar may not be as robust in 5 years time as they would like us to believe.
Joined: Jun 05, 2005 Posts: 363 Location: Portland Oregon, USA
Posted: Sat Jun 07, 2008 9:05 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
Agreed, Drifter. He's really not seeing the big picture. It won't just be a reduction in spending here and there on life's little luxuries. Think war. Think starvation. Think disease. It's coming at some point. Hmmm...better check my potatoes.
Posted: Sat Jun 07, 2008 9:08 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US)?
Quote:
Not if $10 per gallon, but when $10 per gallon. At $10 per gallon, things will be a lot worse than this guy believes.
Perhaps......just maybe not. Demand destruction might occur and costs might stabilize.
For me on a personal level oil at $10/gallon would mean nothing , assuming I still have a job. I spend $40 a month on gas. At $10 a gallon it would be about $100 a month. No big deal. _________________ I play the cards I'm dealt, though I sometimes bluff.
Joined: Sep 16, 2004 Posts: 4836 Location: Southwest WI
Posted: Sat Jun 07, 2008 9:17 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
I'd guess food prices would double at least, if not triple. So take your monthly grocery bill and double or triple it. _________________ Clothing should be optional.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sat Jun 07, 2008 9:18 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
IanC wrote:
Agreed, Drifter. He's really not seeing the big picture. It won't just be a reduction in spending here and there on life's little luxuries. Think war. Think starvation. Think disease. It's coming at some point. Hmmm...better check my potatoes.
Yes, it's easy to forget that increases in energy is built into the price of everything. The price of oil, natural gas, coal, etc., are basically moving up together, as they are alternatives to each other, so narrowly focusing on gasoline, for example, makes us miss the big picture.
Because so much of the US was built with cheap oil, the effects of oil going from $10 to $140 may not be fully felt for years. More specifically, on average only about 80% of the price gain for energy is past on within two years to consumer level. In my state, utility energy price costs are banked for up to four years, so my utility bill doesn't even fully reflect what happened a few years back.
Now that energy prices have risen for about 8 years in a row, at an a accelerating rate, we can unpleasantly look forward to two to four more years of accelerating price rises for almost everything - especially food, which has many energy inputs. _________________ It's already over, now it's just a matter of adjusting.
Joined: Apr 05, 2005 Posts: 1643 Location: Springsteen Country (NJ)
Posted: Sat Jun 07, 2008 9:38 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
The blindness of those high priests we call "economists" is plainly evident in this quote:
Quote:
"It would be a large recession, not a depression," says Michael Englund, the chief economist for Action Economics in Boulder, Colo. That would mean tight budgets and unemployment until the economy adapted and growth returned.
Pray tell how does "growth return" with decreasing energy, as would be the case at $10/gallon? Economists must get some really potent drugs to make the weird pronouncements that they make. One day each of them will have the revelation that growth is the problem, not the solution. _________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
Posted: Sat Jun 07, 2008 10:29 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
No mention of the specter of shortages just increased prices. I suspect that just when people are really starting to hurt shortages will appear and everything will accelerate. People who are expecting the best and planning for it are going to die or get lucky.
Posted: Sat Jun 07, 2008 11:01 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
IanC wrote:
Agreed, Drifter. He's really not seeing the big picture.
$10 gasoline would equal at least $300 / barrel oil (add in taxes and refining) to get gasoline
Almost the entire roadway system was built using asphalt that came from oil at $30 / barrel or cheaper.
I just love it how nobody bothers to factor in the cost of the roads when calculating the cost of driving.
//
Suburbia will die-off not because society could not afford gasoline but because society could not afford freeways.
Posted: Sat Jun 07, 2008 11:11 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
Folks mentioned how this would affect trucking, airlines, and retail. It would also lead to declines in rv, boat, and pickup sales, break the suv fad, be coincident with the ultimate decline of the big 3 auto makers, and lead to greatly reduced incomes for tourist-related operations.
g
Joined: Mar 26, 2008 Posts: 1358 Location: Seattle
Posted: Sat Jun 07, 2008 11:21 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
joewp wrote:
The blindness of those high priests we call "economists" is plainly evident in this quote:
Quote:
"It would be a large recession, not a depression," says Michael Englund, the chief economist for Action Economics in Boulder, Colo. That would mean tight budgets and unemployment until the economy adapted and growth returned.
Pray tell how does "growth return" with decreasing energy, as would be the case at $10/gallon? Economists must get some really potent drugs to make the weird pronouncements that they make. One day each of them will have the revelation that growth is the problem, not the solution.
The blindness of those low priests we call "peakers" is plainly evident in your quote.
Energy is just one of many factors in economic growth. It is possible to have economic growth while having flat - and even declining - energy use. Really!
Here is a chart showing Canadian energy consumption per capita. Notice that since 1980, it's essentially been flat. And yet, the Canadian economy has grown substantially since then.
source
Same thing with Denmark. Between 1972 and 1994, energy use per capita essentially remained flat. And yet, the Danish economy grew quite a bit during this time.
In fact, you may be stunned to learn that the same is true of the US between 1986 and 2004. If that weren't enough, energy use per capita declined in Germany during this time.
Posted: Sat Jun 07, 2008 11:26 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
cube wrote:
Almost the entire roadway system was built using asphalt that came from oil at $30 / barrel or cheaper.
If the roads last 20 years before they need to be resurfaced, and it costs 10 times the previous amount to do the job, .05x10=.5 = it costs half as much PER YEAR to maintain the roads as it did to build them in the first place.
Quote:
About 80 cents of the $4.50 retail cost of a box of cornflakes goes to transport it,
corn flakes are freaking $4.50/box???
for the price of 4 boxes of corn flakes I can buy 9 chicks, feed them weeds, and have 6-9 eggs/day (0-5 in the winter), organic with the weeds, mind you.
If I had no weeds, 2 boxes of cornflakes/month would get me 50# of scratch grains, would feed the hens for a month.
With wear and tear on the trucks on unmaintained roads, $10 gas, unemployed people looking for cheap versatile foods, I can see the cost of many foods increasing far more than the 30% this fool is saying.
Say a potato plant takes up about 2 sqft of space, puts out an average of 3-4 pounds. at $.50/pound, that plant is worth $2. Double the price of potatoes, that plant is worth $4, about $2/sqft for the 3-4 months it takes to grow. 500 sqft of garden space becomes prime real estate. If planted back to back with greenhouse starts, I can get 4 full crops/year, no problem at all.
This article, although not particularly mainstream, is starting to get the idea. _________________ If you want a picture of the future, imagine a boot stamping on a human face--for ever."
-George Orwell, 1984
Joined: Aug 03, 2006 Posts: 4329 Location: Graceland
Posted: Sat Jun 07, 2008 11:43 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
The devaluation of the dollar at the same time oil has been going up has distorted things a little. Without the dollar devaluation, $4.00 a gallon gas would probably be more like $3.00 a gallon gas.
Thus, to know what $10 a gallon gas would do, you would need to know where the value of the dollar was at the time. If we continue on the devaluation road, $10 a gallon gas might not be a big deal.
It's hard to say. Trying to analyze this situation is very difficult because at every price point for oil you have to ask yourself how much of it is dollar devaluation and how much of it is a real oil price increase.
I almost wish that the media (or someone) would report the price of oil in terms of an index of world currencies or something like that to help take out some of the U.S. dollar devaluation.
OTOH, since all world currencies appear to have too much liquidity floating around looking for a home, maybe the old gold/oil ratio is a good barometer for the real amount of price increase we are seeing for oil.
The idea that one barrel of oil will always be worth an amount of gold within some range is false. Since oil is consumed, and gold typically is not, over time a shortage of oil due to consumption should translate into a higher cost when measured in the amount of gold needed to buy a barrel of oil.
I think that studying the 1970s is probably the closest we can get right now to some useful lessons about where we are headed. You just need to take where we were in about 1979 and extrapolate that trend forward as if there hadn't been an oil glut on the other side of it.
Posted: Sat Jun 07, 2008 11:47 pm Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
kpeavey wrote:
cube wrote:
Almost the entire roadway system was built using asphalt that came from oil at $30 / barrel or cheaper.
If the roads last 20 years before they need to be resurfaced, and it costs 10 times the previous amount to do the job, .05x10=.5 = it costs half as much PER YEAR to maintain the roads as it did to build them in the first place.
Well technically that would not be right. Just because the material costs went up 10 fold that doesn't mean the entire project would. Labor costs should be constant. I'm not sure what the breakdown is but lets just shoot from the hip and say it costs triple price now to build or repave a roadway. That alone should be enough to kill suburbia.
//
*looking at this politically*
Raising taxes is impossible.
Diverting more money to the freeways is impossible because there's 101 other government programs (from education to social welfare) competing for the same economic pie.
As a politician you're being hit with a double whammy.
The cost of providing public services is going up and your tax base is shrinking because the economy is going south.
suburbia will die-off (and I haven't even mentioned the price of gasoline yet!)
//
*This is the cube scenario*
By law government MUST maintain safety standards for freeways or get sued by the general public. Therefore government cannot let the roads crumble. If somebody hits a pothole on a freeway, breaks an axle, spins out of control, and dies in an accident I smell a very $$$ lawsuit.
What will the State do?
Simply shut down part of the freeway.
If there's a 6 lane freeway (3 each way) then it will be reduced to 4 lanes. The middles lanes will be closed off. The money saved can be used to properly repave the existing lanes.
Now imagine what that's going to do to your commute!
Joined: Mar 26, 2008 Posts: 1358 Location: Seattle
Posted: Sun Jun 08, 2008 12:29 am Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
Drifter wrote:
Quote:
The blindness of those low priests we call "peakers" is plainly evident in your quote.
Energy is just one of many factors in economic growth. It is possible to have economic growth while having flat - and even declining - energy use. Really!
This has to be one of the most ignorant and stupid posts I have seen around here in quite a while. I am now convinced that OF2 is a troll. Here just to stir up trouble and get attention.
And the reason for your objection is . . . ????
Were my charts non-factual, and if so, do you have alternative charts or statistics showing that the per-capita energy usage in Canada, Denmark, Germany and the US have in fact risen dramatically during those time periods? Or, do you have charts or statistics showing that the economies of those nations were flat or declining during those periods?
If you cannot come up with data to counter the facts that I displayed, it is you who are a troll, who can do nothing but call people whose facts you cannot counter a troll. _________________ Abundance - what a concept!
Joined: Apr 05, 2005 Posts: 1643 Location: Springsteen Country (NJ)
Posted: Sun Jun 08, 2008 12:36 am Post subject: Re: What if gasoline cost $10 a gallon (in the US) ?
OilFinder2 wrote:
joewp wrote:
The blindness of those high priests we call "economists" is plainly evident in this quote:
Quote:
"It would be a large recession, not a depression," says Michael Englund, the chief economist for Action Economics in Boulder, Colo. That would mean tight budgets and unemployment until the economy adapted and growth returned.
Pray tell how does "growth return" with decreasing energy, as would be the case at $10/gallon? Economists must get some really potent drugs to make the weird pronouncements that they make. One day each of them will have the revelation that growth is the problem, not the solution.
The blindness of those low priests we call "peakers" is plainly evident in your quote.
Energy is just one of many factors in economic growth. It is possible to have economic growth while having flat - and even declining - energy use. Really!
Here is a chart showing Canadian energy consumption per capita. Notice that since 1980, it's essentially been flat. And yet, the Canadian economy has grown substantially since then.
Same thing with Denmark. Between 1972 and 1994, energy use per capita essentially remained flat. And yet, the Danish economy grew quite a bit during this time.
In fact, you may be stunned to learn that the same is true of the US between 1986 and 2004. If that weren't enough, energy use per capita declined in Germany during this time.
You're so full of crap it's pathetic OF2. (Hey, genius, you should be able to sign on as OF if you were smart enough, btw). You're ignoring the massive increased energy consumption the manufacturers that Canada, Denmark, Germany and the US have farmed out their production to, and the energy consumed in the shipping of those goods from China, et. al., just like an economist.
You really need an education in energy, you know. Offshore Brazil isn't going to solve anything, it's just going to make the problem worse. Obviously, you've never seen Dr. Bartlett's lecture.
Please view it now before you make more ignorant assertions.
http://www.updebate.org/phpBB2/viewtopic.php?t=11649 _________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
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