Why gas is going to $10 per gallon

Trainorders.com ^ | March 4, 2012 | Ed Ellis

[CedarDave]

There has been a good discussion on the All Aboard group about gas prices, and this is my point of view. It's long....

The single biggest factor is China, and the free market. Very little is related to politics (either red or blue), the oil companies or Iran. Here’s a simple fact: The Chinese are buying about 20 million new cars a year. Those cars replace bicycles, or carts, not other cars. They represent new consumption of oil. If you look at the International Energy Agency Oil Market Report for February ( www.omrpublic.iea.org/currentissues/full.pdf ) you will see that demand for the developed (OECD) world will be down 2.6% this year while demand for the rest of world will be up 2.8%. China, up 3.9% this year, will drive the non-OECD growth. So this means that every gallon of gas you don’t buy is replaced by a gallon of gas bought somewhere else in the world. Demand is going up even if US vehicle-miles-traveled peaked in 2007 and will continue to go down this year.

But supply isn’t going up. Production is around 90.2 million barrels a day, and either production has to grow by 800,000 barrels a day this year, or demand won’t be met. Unless the price goes up. Of course, US crude oil production is growing again, after years of decline, thanks to the frenetic drilling in the Bakken and Permian. US crude production should increase by 250,000 barrels a day this year. But it’s expensive oil. It can take up to $1 million in frac sand to frac a single well in the Permian. And it’s getting more expensive to produce oil in fields around the world. And even with that it’s hard to move the needle on production.

[CedarDave]

Ed Ellis is founder and president of Iowa Pacific Holdings, which is operator of numerous short-line railroads, both freight and passenger. In addition, IPH's operations include freight car storage, car repairs, car leasing, and property development.

The opinion appeared in the subscription Trainorders.com forum, however his remarks and some following comments are free to browse.

[null and void]

I've been putting this sticker on gas pumps:

"Somehow we have to figure
out how to boost the price of
gasoline to the [$8-$10/gal]
levels in Europe." - Barack Obama's
Energy Secretary Steve Chu. Had enough yet???

I've sized mine to fit twelve to a sheet of bumper sticker stock...

[napscoordinator]

120 dollars to fill up the car. It will cost 240 a month. Won’t completely destroy my budget but it won’t be fun. We do have two cars but I work 4 miles from home and my wife is stay at home. We are lucky. I know others who are not.

[CedarDave]

To cut down the article somewhat for excerpting, I left out this important prediction by Ellis:

We will see $6 this year or next, and $10 by 2015. The era of highways may not be ending, but it is certainly in twilight.

[Jack Hydrazine]

And who’s fault is it gonna be?????

Any one? Any one?

[Yorlik803]

Looks like it would be time to buy a locking gas cap.
What is it about stupid democrats and locking gas caps? Last time they were big was when Jimmy Carter was screwing up the country. Now we have this walking cesspool and his minions.

[CommieCutter]

[achilles2000]

If we have $10 gas it will be because of politics and regulation, not a lack of supply.

That aside, I would welcome $10 gas for August, September, and October because it would be the end of Obamalini’s regime no matter how much the MSM shills for him, how many illegal contributions he gets, or how many votes he steals in Detroit, Chicago, or LA.

You can think of $10 gas before the election as just an extremely effective kind of campaign contribution.

[Red6]

Because the government wants more money, oil companies want more money, and the consumer thinks that it's inevitable and has resigned to this reality.

Just promise the masses a “free lunch” and they will surrender their freedom of their own free will. Ignorant, apathetic, selfish, shortsighted, unprincipled, secular, far away from the ideas expressed in the US Constitution, Declaration of Independence and by our founding fathers.

[corlorde]

bookmark

[allmost]

That's a difficult headline to not click. China's stability is questionable imo.

Start with the elected US representatives. I read nothing in that article about the politics involved. $10 a gallon under a pelosi/obama/romney/pelosi... machine is entirely predictable. I think that even the hardcore lib/left/dems are getting frustrated that their fairytale hasn't worked out like they planned. That darn market reality, human motivation, which has befuddled every single communist since it's inception keeps the price target down around $7. ;)

[Rashputin]

The fascist democrat party will loudly proclaim that we have to have Federal gas rationing once it hits five dollars. That's part and parcel of making it expensive, being able to limit the fuel available to those not in favor and grant additional fuel to those who please the fascist nobility.

JMHO

[Oatka]

Looks like it would be time to buy a locking gas cap.

Didn't help in rural areas. In the '70s crunch, mt wife's dad had people sneak in his yard, jam a sharpened object into the tank, and drain out the gas. Nothing short of a 12 gauge will deter these people.

[frankenMonkey]

Nothing short of a 12 gauge will deter these people.

You say that like it's a bad thing.... ;-)

[Freddd]

Why is gas going to $10 a gallon? One word.

Obama.

[frankenMonkey]

Cuba	Havana	$3.03
Taiwan	Taipei	$2.84
Lebanon	Beirut	$2.63
South Africa	Johannesburg	$2.62
Nicaragua	Managua	$2.61
Panama	Panama City	$2.19
Russia	Moscow	$2.10
Puerto Rico	San Juan	$1.74
Saudi Arabia	Riyadh	$0.91
Kuwait	Kuwait City	$0.78
Egypt	Cairo	$0.65
Nigeria	Lagos	$0.38
Venezuela	Caracas	$0.12

I think the point that Bill O' Blowhard has been trying to make is that gasoline is not necessarily dependent upon global markets, but can be kept and sold locally. See the last few entries in the above table.

[Jack Hydrazine]

Leftists’ new fighting chant...

10 bucks, 10 bucks
10 bucks per (gal.) can,
If Obama can’t do it,
Nobody can!

Rah! Rah!

[TomGuy]

This morning on Meet the Press, David Gregory editorialized a comment to Rep. Cantor regarding gas prices:

MR. GREGORY: And part of that, of course, I wonder as a, as a leader in the Congress, if you would counsel Republicans running for president not to use gas prices as a political club against the president when it really is a failure of leadership, is it not, on the part of Republicans and Democrats going back decades here, to fail to achieve energy independence and then be subject to the winds of--whims, rather, of instability in the Middle East that makes gas prices go up and down.

MSM will do all they can to provide cover for Obama. That is most of the reason for all the flapping over contraceptives and Fluke -- to distract attention away from joblessness, the economy, and other 'real' issues.

[kabar]

[Michael Barnes]

That aside, I would welcome $10 gas for August, September, and October because it would be the end of Obamalini’s regime

I wouldn't; that will literally kill a lot of people as those months are when home heating oil purchases are in full swing. People will buy far less and the price will steadily rise the coming weeks and people will literally be too broke to buy fuel to heat their home in the dead of winter.

Probably won't matter either way in the North East anyway. PA alone is slated to take six coal fired electric plants offline in the coming months (what "were" towns around those plants are now effectively dead).

There is no reason for all of this other than liberals and marxists purposely killing the United States of America.