Posted on 04/05/2011 8:06:37 AM PDT by Red Badger
As an investor with significant exposure to oil prices, I’m always worried about something like the financial panic of 2008 that might trigger a quick drop in the commodity. One thing I’m not overly worried about is the American public kicking its addiction to oil any time soon.
For years I’ve always gotten a big kick out of analysts on CNBC talking about how $2 then $3 and now $4 per gallon for gasoline would kill the demand for the product in the United States.
[snip]
And that is a bit strange, considering that Canadians pay quite a bit more than Americans at the fuel pump. Last week AAA’s fuel gauge report showed that the average price per gallon in the United States was $3.59. In Canada we are at $5 per gallon in many parts of the country.
You would think that $5 per gallon would change your fuel consumption habits. It hasn’t. And $4 per gallon or even $5 per gallon in the United States isn’t going to change much, either. Sure, if the price of gasoline jumps from $3.50 to $5 in the span of six months, there will be some short-term reaction. But over the long run, Americans aren’t going to be willing to significantly stray from the personal freedom a car allows.
And if you think Canadians have it bad, consider some of these prices per gallon where citizens still drive cars on a regular basis (from AAA):
Turkey: $9.63 per gallon Norway: $9.27 per gallon Greece: $8.50 per gallon Denmark: $8.42 per gallon Sweden: $8.18 per gallon United Kingdom: $8.17 per gallon
(Excerpt) Read more at seekingalpha.com ...
Oil has advanced our civilization to heights that no other material or element ever will. It's a simple and undeniable fact. Take even a small portion if it away, and our whole way of life would change dramatically.
Whoa. The UK Imperial gallon is slightly more than the US gallon. The diesels with direct injection are closer to 55 mpg for an Accord sized vechicle.
Clarkson actually likes European Ford’s including the Mondeo. Ford and GM Opel actually have very good diesel technology. GM should have gone into chapter 11.
Jaguar was a pile of s**t before Ford spend billions fixing the old factories. Ford then needed the money and sold jag to Tata.
The Germans - VW, BMW and Mercedes plus Audi are among the best in diesel as they invented it.
I'd second that, and add a third and fourth: the internal combustion engine, and plastics (made from oil) Upon this power trifecta (oil, IC engines, and plastics), we have built our present standard of living. Oil is the fuel of our civilization. "Drill, baby, drill!"
If European standards for automobiles are anything like European standards for aircraft those European cars would probably be at the top of the list for crash worthiness. JAR standards for airworthiness are far more stringent that FAA standards......
Yep, gasoline prices are somewhat inelastic and the gov’t takes advantage of that with taxes. They stand to benefit from higher gasoline prices. Obama also wants to push his green initiative and wants to make it cheaper than gas for that reason. It’s about $4.20 here in So. Cal and at these prices, they are Obama’s wet dream.
All the more reasons that the people that control the auto industry in America need to be bitched slapped around and pointed out that its time to offer something different other than obese-mobiles that are draining our minimal reserves of income to feed them.
Although I personally drive a Silverado dually with an 8.1 liter engine that gets HORRIBLE gas mileage its also a tool in my trade, and when I don’t need it for work I want something else.
Our greedy dysfunctional government is turning America into a 3rd world country at a record pace and we have allowed this nonsense to go on.It’s hard to even believe how things have changed in 20 years and my life long friends moved on to other countries for a better life and have become very successful.
” Econ 101 reminder: “
High School Econ reminder: “Opportunity Cost”, which observes simply that money spent on one thing can’t be spent on something else...
In a quick search, I came up with a figure of roughly 140billion gallons of gasoline consumed in the US in 2009 (unclear if this includes Diesel and other Petroleum motor fuels - but for the sake of this demonstration, it’s close enough)...
Raising the price of gasoline by 10cents means that $14 billion is no longer available to be spent on other things - and then ya have to figure in the ‘multiplier effect’ that increased production and transportation costs causes in the price of food, and everything else....
So, a 10cent raise in gas prices may not feel like a big deal when you fill your tank, but it’s a significant hit to the economy in toto....
Higher gas prices are causing all of us to find ways of using less gas. Look at all of the small cars and more fuel efficient cars now on the road compared with 20 years ago.
We can cut the use of gas tremendously by increased car pooling and use of mass transit. We will do these things on our own — no need for government edicts.
I agree the conversion does tend to be inaccurate at times.
But mostly they are vehicles that scavenge the fuel much better, yes they cost more especially the Mercedes. They also don’t view vehicles as disposable items like we do here in the states either.
I drive a Ford F-250 (3/4 ton) crew cab with the IH 7.3L Powerstroke. With an aftermarket chip mod I get 24-26 mpg on the highway. With my 2200 lb truck camper mounted I still get 18 mpg and pass most people going up hill, even though I’m very near gross. This truck is 14 years old with 348,000 miles on it. There ought to be diesel powered light trucks (1/2 ton) that get well in excess of 30 mpg if my old truck can do that kind of mileage. I had a VW diesel pickup in 1981 that got 48 mpg. The technology is there. We’re just not using it. I suspect bleeding heart Libs at the EPA are a large part of the problem....
Mass transit is a great way to get sick and have a pile of medical bills.
Do not fear! Obamacare is here! Obama will pay your medical bills from his "stash"....../s (as if a sarcasm tag is even necessary!)
I already limit my driving ;the extra $2 or $3 a day mean less for everything else.
Given that our thirst for gasoline will not be quenched with higher prices, I wonder if auto sales will decrease. The money has to come from somewhere.
You are correct concerning weight of todays vehicles. MY wifes new Honda Accord is 3,600 lbs!!!! WHATTTTT? Yeah, it is a V6 and the Accord is now a larger car than before. Weight is a primary killer to fuel mileage in town, during acceleration. Weight can often times be offset by aerodynamic stlying on the highway but no offsetting can be done in town.
3.600 lbs is the approximate weight of my old 1967 Dodge Charger with a cast iron 383 engine, a car I wish I had back. My wifes V6 is ALL aluminun.
Cardboard in Food Won't Dampen America's Appetite
< /currency destruction is Great!>
As one financial adviser with a radio talk show pointed out a couple of years ago, high oil prices are "counter-inflationary" in some respects because they drive down demand for a whole bunch of different things like consumer electronics, cars, new homes, college education, etc.
When oil was trading over $140/barrel a couple of years ago, we saw huge discounts on a lot of things because demand had dropped precipitously. Huge rebates were offered on new cars, home entertainment gizmos, etc. For commuting, the higher price I paid for gasoline was largely offset by a big discount offered on my monthly parking pass, as so many people stopped driving to work due to unemployment or changing commuting habits.
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