What If - Gasoline is $5 a gallon in 2010?
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You forgot post #1. If gas is expensive, people will switch from a 25 mpg car to a 60, 70, or 80 mpg car:
25 mpg "old car" = $4000 a year
50 mpg prius/civic = $2000 a year
88 mpg lupo 3L tdi = $1100 a year
People will find a way to keep the FREEDOM (private transport), FLEXIBILITY (able to start work at 6 a.m. or 9 a.m. to fit home schedule), CONVENIENCE (can leave home instantly, without waiting), and SHORTER TRIP TIME (car is roughly one-third as long), before they will choose a bus or train.
Still, it would have to be a 50 mpg car that I like and can use. I can't use a Civic, because they're too small for me. And I don't like the Prius, although that has mainly to do with its styling. If they made it look more like a normal car, I might bite.
And somehow I can't imagine that anything that gets 88 mpg in anything other than a laboratory is fit for adults to use, unless it's a motorcycle or moped, or something like that!
Might still be more cost effective to use mass transit, but it won't be the big savings that many people might think.
That's NOT what we were discussing. We were discussing the choice of 50mpg or 90mpg Car vs. Mass Transit.
I think people would choose the car, because of all the reasons I mentioned before (freedom, convenience, flexibility, speed).
What we began discussing was $5.00 gas by 2010. What we are finding out is that that scenario leads us into some other interesting directions. For instance I just found out from you that I can switch to a car that will get 60, 70, or 80 mpg. You just made my day. Lighten up on old andre brother.
In densely populated urban areas such as Boston, New York, Chicago, San Francisco and Los Angeles, Freedom, Flexibility, Convenience and Shorter Trip Time are all in favor of, not against, the mass transit rider.
The large cities I mentioned all have bus and train systems that run very frequent schedules, making flexibility at least during the week on par with autos.
An auto lends neither freedom nor convenience when you have to drive for blocks to find a parking space and often wind up paying a fortune to either the parking lot, the parking meter, or for that parking ticket when you overstay your visit.
Shorter trip time in a car over mass transit? In Chicago and New York City where I travel most frequently, the few times I drive during business hours I am inevitably stuck in traffic. Fixed rail does not have that problem. Buses are now being equipped with transmitters that control traffic signals as well, meaning they more than compete with cars. And when a commuter gets off the bus, there are no parking issues.
Your four points may be correct in less densely populated areas. More than a quarter of the nation's population lives in densely populated areas. The trend is for increasing density as well. This suggests ther is more in favor of mass transit than auto.
I think we will see serious progress on the hybrid cars now that gas prices are getting out of control. The free market drives technology not government mandates.
I think you are right. Unless a person chooses to live in a very restrictive urban environment such as NYC, they will only use mass transit if they are forced by other circumstances. I see people driving old beat up cars from one end of San Diego county to the other for work. They could ride the Trolley and maybe save some money. They choose to drive their cars. Right now it costs $2.75 one way from one end of the greater metro area to the other. In a car that gets 25 mpg it will be a toss up on cost when gas reaches $2.75. If you have a 50+ mpg car mass transit gets to be more expensive. It will be interesting to see if the higher gas prices impact the mass transit that San Diego taxpayers are heavily subsidizing. Mass transit is a nice idea, just not real practical for most communities. The Trolley only covers a very narrow corridor. Most of the white collar office buildings are many miles off the Trolley route. It is like car pooling, a good idea if you have someone that is on your schedule. I don't see it ever becoming effective in spread out suburban style cities.
Instant gratification in my hybrid Prius though. I saw a Ford Excursion for sale today but no buyers. Could it be the fact that it gets 9 MPG'S. 3 Hummers for sale in the bargan finder... 2 Suburbans...& a Caddy Escalade @ the local school parking lot w/ 4/SALE signs in the window. It's like these vehicles have the plague now. Of course it appears that a gallon just might hit the magic 3 dollar level long B/4 this fall. If you're in the market for these thirst quenchers there are quite a few on the market as of late.
Culliganman(things are getting serious ya think?) :sick:
My Dad used to take public transportation to work for years. I think he said it took him about an hour each way, and daily commuting costs ran about $5.00 (this was a few years back, I know it would be more now). He finally got fed up with the crowded buses and trains with people who looked and smelled like they hadn't showered since they went to the Who concert in 1983, and bought a car. Now his commute into work is 10 minutes. 15 on a bad day! And my Dad lives maybe 2-3 miles from the DC border, if that, so public transportation is abundant!
Sometimes public transit works, sometimes it doesn't. My Dad was really thrilled about having the freedom of a car again, though!
Free parking is the key in your scenario. Many garages in Manhattan charge $10.00 for a fifteen minute stay. Chicago is not much better. LA, San Francisco, equally dear to park in many areas.
I run into a few soap challenged people on my commute. But when driving I've also run into exhaust challenged cars.
I don't think anyone would argue that the locations you laid out are made for mass transit. Mass transit is already a way of life for those people, so the price of fuel for cars and getting better mileage will not make much difference. Maybe not the greater Los Angeles area. Many people commute more than 100 miles each way to work in the LA & Orange county megalopolis. It is the 3/4 of the people that are driving that you would like to see in some sort of mass transit. That is not going to happen. Many smaller towns have found they cannot support one bus let alone a mass transit system. Someone posted earlier. The places that can benefit from mass transit already have the system in place.
I am looking across the valley right now and the houses that are being built just keep moving up the far hillsides. The city just had a referendum vote to limit building on the steeper hillsides. It lost by a 3 to 1 margin. That means much more urban sprawl in my edge of the San Diego area. There is not a chance they can cover those areas with mass transit. I have to drive 3 miles to a Trolley station when we take it to go downtown. Mass transit does not eliminate the need for cars in most places.
Let me just say this, when fire and mudslides wreck those homes being built up the steep hills, I darn well hope FEMA and the local emergency response teams send the homeowners and developers the bill for their efforts. I sure as heck do not want my taxpayer dollars underwriting irresponsible lifestyles.
Also, my Dad has free parking where he works in DC, which is probably a rarity. I'm sure if he had to pay whatever an average daily fee is, he'd think twice about it!
I cannot imagine someone owning a Hummer, Excursion or Escalade being worried about the price of gas when it gets to $3 per gallon or even higher. That is ludicrous. They are still getting a $5000 premium for a Hummer2 in Anchorage Alaska. I know people that have all three and they don't even discuss the price of gas. They are more interested in the price of real estate and the stock market.
That was the exact reason for the referendum. It was opposed by city hall and they spent a ton of our tax dollars defeating the measure. We have to pay the added costs of fire protection also. The only thing that is saving the land around my 5 acres is it is covered with California coastal sage which is protected. It also means I cannot build anything more on my land. I can live with that, and enjoy the buffer from the encroaching masses. I can afford the gas to get to my hilltop even when it gets to $5 per gallon. I just worry about my children trying to make a living with that kind of inflation and the depression it will throw us into.
When the [non-permissible content removed] marched into the various ghettoes of Europe those living in the ghettoes were told "Pack one bag." Know what they did? Most packed one bag. Then they walked down to the train station and dissapperared into the haze of pure, mechanized evil.
What I keep hearing is the Saudis or the government, or big oil are the problem. It reminds me of how some want to blame the the poppy farmer in Afghanistan because some moron wakes up one day in LA or NY or Muncie, Indiana and decides he's going to put a spike in his arm. We have degenerated into a nation of crybabies that point our fingers at everyone and everthing except at the person staring back from the mirror. Sacrifice? Forget about it. Why should I do x when everybody continues to do y?
I got news for you gang. If you are lucky enough to be in touch with someone who lived through the Depression or WWII or lived in a country from the former Soviet block ask them about some of the things that they had to give up. I'b be willing to bet that regarding things of true importance driving around in a car would fall pretty low on the list.
Really? I thought that 'urban sprawl' was defined as a city LOSING overall density as the land area grew way out of proportion to the population increase. I wasn't aware this problem had been solved.....
We drive to DC and let the valet at the hotel park the car and then forget about it until the end of our stay. Since we usually stay at the JW Marriott which is a block from the White House, pretty much everything is within walking distance, and for those things that aren't, we use the Metro rail system. That's a convenient mass transit system in my opinion. It goes where I want to go pretty much whenever I want to go. It might not have the versatility and freedom of my car, but given the traffic and parking issues I'd face with the car in DC, the Metro makes sense.
Back home here in State College, PA, our 100% natural gas powered bus system, while being very green, isn't very practical for me for anything. There's a bus stop very close to my home. It comes once in the morning, around noon, and twice at the end of the day.I can catch a bus there at 8:19AM if I want to head into town. If I want to do anything useful like getting groceries for example, I'll have to transfer to another bus.Here's how the timetable would look:
8:19 AM bus into town
8:55 AM arrive in town
9:02 AM transfer to bus to shopping center
9:09 AM arrive, about a 5minute walk to the store
I can either rush through the shopping to catch the next bus back or not, you'll see why shortly
9:47 AM catch the next bus to return downtown
10:01 arrive downtown
Realize that I forgot to bring a good book along since the next bus home won't be here for a while
11:35 AM transfer to bus to return home
11:59 AM arrive back home
Now for the stats:
$2.50 bus fare ($1.25 fare, one transfer for free each way)
3 hours 40 minutes round trip
The grocery store is 7 miles from my house. And just for good measure, I can guarantee you that I will be ALONE on the bus from my house until I get into town, and chances are it will be me and the bus driver when I return home.
Since I'm getting about 35 mpg with my car driving around locally, that 's about a half gallon of gas (about $1.10 at current prices) and probably 60-90 minutes to get the groceries using my car. Let's double the cost of using my car for wear and tear, that gets me to roughly the same "cost", but in well less than half the time, not to mention avoiding having to carry groceries from bus to bus and control them in the bus.
Honestly, I don't know why they still run a bus route out my way. I'm glad they do since I'll use the bus about twice a year to go pick up my car from a regular service. But sitting alone on that bus I always wonder how much more than the $1.25 fare it's costing to have that bus and driver come out and pick me up.
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The cities I mentioned all have rapidly escalating populations. Check the census data. On the other hand, many other cities in the US, continue to see declining populations.
In most of the growing cities, you have both problems happening at the same time. City proper Chicago, New York and LA all saw large population jumps. At the same time, the suburbs and exurbs around these cities saw even larger population jumps. Many suburbs around Chicago and New York have population densities greater than you may find in some of the less responsible cities like Las Vegas and Phoenix. They are seeing increasing mass transit use in those suburbs as well.
I have no idea how you thought what I was saying meant any of the problems with mass transit and renewable energy had been solved.
I just cannot understand how communites allow risky development. Sounds as though you were pretty smart. And that is what home buyers have to do. Don't rely on the government or the developers. Do research and think before you buy. Insurance may pay for your house, but it cannot replace lost loved ones or memories.
Speech - Chairman Alan Greenspan
National Petrochemical and Refiners Association Conference, San Antonio, Texas
What I'm more concerned about is the long term inflationary effects of higher energy prices that the $5 gas would be a part of. Obviously, lack of refining capacity and transportation infrastructure (pipeline v RF gasoline incompatibility in some areas) is also a problem, regardless of the price of oil. But rather than mess with my cars or driving habits, I would probably invest some money in making my 103 year old house more energy efficient to offset inflation over time. I'm already doing some research in that direction.
This is a very interesting discussion. As others have shown in previous posts, existing energy alternatives, and those in development, will become competitive as oil/NG prices increase. These will mitigate the effects of rising prices somewhat. Consumers will also respond to rising prices by changing their behavior, further impacting the supply vs demand curve. I don't see a "CRISIS!!!", but some people will have to make changes. There will be some real pain for people on low or fixed incomes.
Recession? Maybe. Check this out. Pre 73-74 embargo, oil accounted for 5% of GDP, natural gas 1%. There was the shock, then things fell back to earth. It's currently around 3.5% and 1%, respectively. So we're doing well. But, energy was a leader of the inflationary spike that contributed to the most recent slowdown that we're currently coming out of. The kicker is that the data show that the last three really big shocks - 73-74, 79-81, 90-91 - have all been followed by recessions. So keep an eye on how high oil is, and for how long.
Mass transit vs. car? There's no right answer - depends entirely on personal situations and the mass transit options. Cities looking to build new systems, or enhance existing ones, need to carefully research the consumers in their areas to see if it really makes sense for enough of the population to be worth it.
There's more food for thought on oil prices from today's news.
Here's the conventional wisdom that prices will remain near current high levels for the next few years.
Here's a contrarian view that prices will drop back to $28 by this summer.
Both views have merit. I tend to think that the "war premium" is a bit too high, and that we'll see a significant decline in prices soon. All those traders who were buying in the mid-$40s last fall have got to be wondering if there's anything left. Why not take some profit now?
On the other hand, the growth in global demand isn't going away. And while I personally place the over/under on Global Peak Oil at 2020, there is no doubt that the growth in supply is at best struggling to keep up with the growth in demand. The underlying economics favor higher prices than OPEC's desired range of $23 - $28.
For what it's worth, and I'm no analyst, I'd guess oil prices will steady out somewhere between $35 and $45 over the next six months, and the long-term trend will be upward.
So should we give up cars and go back to horse and buggy because that was enough for our ancestors? Or give up ultrasounds for pregnancy because our grandmothers did without them? Or computers because typewriters and file systems were good enough for our parents? Are we crybabies if we don't?
Cars aren't a pure luxury item, like a big stereo. They make our lives easier. I think you're working yourself up over a crisis that isn't there.
Now if you'll excuse me, I'm going to go back to my bomb shelter that I built to get ready for the Y2K crisis...
My 'urban sprawl' comment stems from the fact that the overriding problem (facing successful implementation of various forms of mass transit) for all the OTHER big urban centers in this country has always been 'urban sprawl'; ie. the ever increasing area being developed compared to the rise in population. Again, I'm not talking about areas in which mass transit DOES work (which appears to be where you spend the majority of your time), but for the extremely large percentage of the country where mass transit DOESN'T work.
My comment about the problem of urban sprawl apparently being 'solved' was (obviously?) sarcastic. My point is that, on a nationwide trend, the trend is to LOWER density rather than HIGHER density.
Loved your posting. Solid facts and level headed. The contrarian view you posted, however, doesn't give me much comfort . Tim Evans, the analyst cited, said this in November of last year (the article was speculating what the price of oil would be if Bush re-elected and can be found here: http://money.cnn.com/2004/11/03/markets/eia/)
"A Bush status quo results in somewhat higher oil prices both in the short and the longer term in my view," Tim Evans, an analyst at IFR Energy Services, told Reuters.
"In the short run, it means more oil drained from the market into the Strategic Petroleum Reserve."
I'm not certain what long term means but when I think of long term it is usually "longer" than 8 months. These analysts re-invent the world every morning while completely forgetting what they said yesterday.
me: I don't know where you were going with those historic examples because no one is being forced to do anything. If you want oil you buy it, if you don't you don't buy it; if you can't afford it, get another job or a better paying one, or reduce your other expenditures.
As long as the oil/energy markets are basically kept operating (no embargoes) and the price set fairly (supply and demand) I don't have a problem with then paying a fair price for oil. I don't see many other people here "crying" about the price of oil as long as the market forces are fair. Oil goes to the high-bidder; we simply have to outbid the Chinese factory for the oil. ;-)
It then comes down to are you willing and able to pay for the oil, given the vehicles you have and your lifestyle. As gagrice just stated there are people who could care less about the price of oil. It is people who don't have much, or who drive for a living who will be hurt. For many people, they'll continue to drive the same vehicles, and lead the same lifestyle.
I didn't say there was a crisis. I merely made the observation that everybody is making proclamations about what they would never give up based on the state of the world today. Your posting has only proven my point.
You ask should we give up our cars and ultrasounds and I say at this point in time...no. But for someone to say that they would never or could never give up x is silly and short sighted. When the doctor says you have cancer, its time to quit smoking, most people give up smoking. The very people that a month earlier said, " I could never give up my cigarettes. They are too much a part of my life."
Get rid of our cars today? No, bad idea. Assume that everyone will be able to continue their current consumptive patterns indeffinitely? No, badder idea.
me: read your example. That applies to everyone. The cost of gasoline being a concern at least with regards to $5/gal in 2010 is NOT a concern to everyone. It is dependent on your income or wealth.
So there will still be a large population of people who do consume just as they do today. There still will be the people who burn 100gal. of gas a day in their boat, and there still will be people with private planes. Sure some people will give up or cut back on those things, but $5/gal will not motivate everyone to conserve, or affect others equally.
Good research on Evans. That puts his views in some perspective. In November of 04 when he was quoted, crude was trading in the mid-$40s, so his prediction of "somewhat higher", near and long term, has basically been borne out. As you note, words like "somewhat" and "long term" are squishy terms at best for analysts.
The apparent change in his position is that he no longer appears comfortable with the "war premium" being as high as it currently seems. There is good reason for that, and I basically agree, but you are right not to be comfortable, as he's made about, what, a $20+ swing in his assessment over a period of just a few months?
The last time oil was near $28 was November 2003. The insurgency in Iraq was getting more lethal and the US and global economies were slowly racheting back up. Oil prices went up steadily from there. With everything we know now that we didn't know then, I can't see how he can justify anything less than $35. But he gets paid to guess and I don't, so I must assume he has his reasons. And even if he's off by $7 or so this summer, he's going to look a lot smarter than many other people.
Anyway, back to what I think is key: inflation resulting from higher energy prices. Obviously, petroleum and natural gas is only part of the equation. Has anyone been tracking coal prices? Not enough time to look them up right now...
Once again. For anyone to make a statement that $5.00 gas in 2010 isn't a concern to them is based on their current circumstances. Income and wealth are time specific. The guys diving out of windows in 1929 because the market crashed were millionaires the previous morning. Guess what I'm aware their were people who still drove right on through the Depression. I am merely pointing out that to those who are so cocksure that they will never have to make changes because "today" they are sitting in the catbird seat don't be so certain of what you might have to sacifice down the road.
I mean for crying out loud haven't there just been a dozen or so books ('The Greatest Generation", etc.) that have documented what a great thing our elders did in sacrificing all that they did so we could live a better life?
You're saying "So there will still be a large population of people who do consume just as they do today." I'm saying you're right. But these are not the actions or the mind-set of the generation that came before us and got them through some pretty tough times.
Coal going up. You betcha. Seems like everything is running up right along with oil. The explosive growth in China & India is putting demands on almost all commodities. After all they aren't putting all the oil they've been buying into running to the corner to buy a 12 pack. They are using it to build factories and all the infrastructure that that demands. China is currently the largest consumer of concrete by a long shot.
Oh great, now I gotta worry about concrete futures too.....
Buses and fixed rail transit only work where there are masses to transport.
This is why I don't go into D.C. except once in the last 7 years. There's plenty of places to visit *outside* in the suburban malls, that I don't need to go into the city.
One city that is auto-friendly is Baltimore. They have placed many parking garages that are open for about $10 a day, and within walking distance of the harbor. I wish more cities would do that.
250 MPG Car
BTW, those State College buses? They carry a lot of students who would otherwise be driving. So they solve Penn State's limited parking space problem.
Someone mentioned that, as prices rise, domestic oil (like shale) becomes economically feasible to extract. This is quite true and would lead to less foreign dependance. However, his further implication that 'therefore the price rise will be temporary' makes no sense. Even if that oil could replace the cheaper oil that became less available, if the price went down, the shale oil would no longer be economical to extract! Now realistically, the price would have to go above that level, then drop somewhat as the shale oil hits the 'pipeline'. Either way, if $5 gas makes shale oil profitable, we wind up with $5 oil just the same.
Another mention was made of coal gasification. Yes, I think this is where we are going, longer term. There are 2 major problems, however...one is that the most practical way to utilize this process is to produce hydrogen and we are years from enabling that technology in vehicles. The second is the environmental impact of burning all that extra coal, beyond what is burnt today. A third issue is that gasification plants are extremely expnsive to build.
As we've seen, one of the first reactions to this sort of thing (like death) is denial. Takes a while for some to get to the next stage.
One thing that it means, unfortunately, is something that is off topic here, but I think it will change our lives dramatically. Oil prices will kill the airline industry long before it maimes the passenger vehicle industry. I fear that our myopia and the waste it fostered has hastened the day when relatively cheap air travel will go away.
Well, yes. But who said gas had to hit the $5 mark before shale oil became profitable? Who says that it isn't profitable at $2.50 to $3.00 /gallon?
In any case, the comment was that shale oil 'becoming economical' was going to roll back $5 gas, and that was what I addressed.
April 5 (Bloomberg) -- U.S. Federal Reserve Chairman Alan Greenspan said rising oil inventories may ``damp the current price frenzy,'' which lifted crude to a record yesterday.
Prices at all-time highs have slowed oil demand growth ``only modestly'' in recent months, Greenspan said, according to the text of a speech delivered via satellite to the National Petrochemical and Refiners Association in San Antonio. Improvements in energy efficiency in cars and factories are more likely over the longer term, he said.
``Much will depend on the response of demand to price over the longer run,'' Greenspan said. ``If history is any guide, should higher prices persist, energy use will over time continue to decline, relative to GDP.''
``Markets for oil and natural gas have been subject to a degree of strain over the past year not experienced for a generation,'' Greenspan said. ``Increased demand and lagging additions to productive capacity have combined to absorb a significant amount of the slack in energy markets.''
Wha??? Greenspan offers absolutely nothing in this assessment. 'Higher prices will cause energy use to decline.' Really? "Improvements in energy efficiency in cars and factories are more likely over the longer term, he said." No kidding? O.K. Al. Thanks babe. I'll leave the money on the dresser.
This time out, though, China is the trump card, and prices once they settle may not come back down that much. Probably won't.
I paid $2.79 last night for premium. I'm assuming that, plus about a quarter more, will become the new status quo.
me: we're not talking stock market crashes and disasters which can wipeout people's savings; we're talking about a commodity that is not going to disappear tomorrow or next year, that will not wipe out hundreds of thousands or millions of $'s of wealth from EACH individual. BIG Difference. Unless people lose their money otherwise a person who is worth $1M is not going to be seriously concerned whether their oil bill is $5,000 or $7,500 next year. They are going to be more concerned on how to get a 10% return on the $1M rather than a 5% return, and how to keep it tax-free.
The reverse of this is OPEC, which likes to make some extra money in income each year from selling oil; but considers this secondary to the amount of money they already have and its return. Saudi Arabia has no desire to see an extremely high oil price, as that could hurt the global economy. The Saudi's have several hundred billion dollars invested around the world. They know that if the price goes too high they'll start losing more money then they are bringing in. In essence their stock/investments would lose value faster than the profits from their oil.
Shale is only expected to contribute 14% to that amount.
me: Funny how in Post 444 before his speech, you called him Chairman. I guess you didn't like what you heard, so now you're making him out to be a moron?
I'm glad to see you won't let your bias be influenced by expert opinion that doesn't support your view.