Oil Prices

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Ok, not sure if this should go in AoLS or AoDA, but since it seems to be mostly international politics now, I figured I'd start in AoLS.

For me, and I think a lot of Americans, oil and gas prices really started to become a major issue after Katrina. Katrina caused massive disruptions of gas production and distribution (especially here in the SE). Because of this, prices soared. They didn't go back down because the oil industry argued it had to rebuild. After a while, people got suspicious of price gouging by Big Oil. Enter the international angle, and we start getting told that OPEC is limiting production and that this is no longer just a local problem, but that the world is going into a global oil crisis. Add to that increased demand from China and India and the like. More recently, some people criticising the Iraq war have claimed it's the Saudi's getting back at the US for invading Iraq. This is countered by others that say the Saudi's are happy we're in Iraq (I'd believe it). Now, the Saudi's have upped their oil production (apparently something they've been doing consistently, but we haven't noticed here).

You guys tend to get a lot more news than I do, between the international angles and just seeming to care more, so I was wondering, what do you think the problem is? Is it 3rd world development like China and India out-pacing production? Is it us reaching a peak in accessible oil? Is it OPEC holding out? Is it Big Oil? Is it some combination or some other factor I haven't heard of?

 

Oh, don't get me started on fuel prices. I can't imagine you paying more than we pay in the UK. Thevery cheapest I can get petrol now is 120p a lire, which is about 250 cents (or whatever the American equivilent of a penny is).
I don;t know how many litres go into a gallon, but I bet it's a few. We get ripped off royally and it's forcing a lot of people off the road.

It costs me £40 (around $80+ dollars) to put enough petrol in my car to last just over a week. It's really quite stupid now. I can't see how the price is going to come down either, because a car is something most people can't do without.

However, it's getting to the stage now whereby if it gets just a little more expensive I'll be able to afford to run my car.

 

My dear American friends, your gasoline still only costs roughly half of what it costs in Europe. Expect the prices to keep going up and up and up.

As for the reasons for the price raise, well, you named them but I think the biggest is that India and China demand more and more. Supply and demand and apparently the demand is getting a lot higher while the supply might even be diminishing.

Even the people who do not believe in man made global warming can see that it might be a good idea to break our dependance on oil for energy and try to find other ways.

 

Ok, additionally, how true is it that gas in Europe only costs more because of Mass Transit taxing? I know the US has a lot of refineries, how many does the EU have (geographically)? And what's going to happen to your mass transit systems when everyone ditches cars?

Oh, absolutely, but I've been saying this for years. Give me a Tesla Roadster and I'd be happy (except I have no where to plug it in, 'cause I live in a second floor apartment). Give me a Tesla Roadster with a supercapacitor in place of a battery and I'd be even happier (20 second charge time instead of 3.5 hours, plus more power in the charge). Unfortunately, the supercapacitors may be a few years away yet.

 

I agree with the China part, but the reason gas costs so much more in Europe is because of the taxes placed on it. In the US, we have a federal gas tax (18 cents per gallon), and a state gas tax (which obviously varies by which state you live in). Pennsylvania has the highest state tax at 36 cents per gallon. Therefore, worst case scenario in the US is that you are paying 54 cents per gallon in tax, compared to a couple of Euro for the same amount of gas in Europe.

Oh yeah, Barmy - there is approximately 3.8 litres in a gallon, so you're paying about the equivalent of aobut 9 dollars per gallon, or a little more than double what we pay in the US.

Again though, at least in Europe you're getting something for the money you spend. Mass transit in the US is horrifically underdeveloped compared to Europe.

 

NOG -- there was a slight bump after Katrina, but that has mostly corrected itself. The real issue is the value of the dollar. The dollar has been on a downward death spiral for the past few years. The cost of a barrel of crude has stayed roughly constant for the Euro -- but the dollar has lost 50% of it's value compared to the Euro (i.e., the cost of oil has doubles for the US).

 

Basically I blame all of the above.

Katrina did disrupt the Oil industry, but as mentioned, it has recovered.

Taxes on fuel are way too high.

Iraq's oil production may not be back online from the recent war.

China and India need more oil than before.

OPEC restricting quantities, the US dollar going into the crapper.

So in Short, Increase demand, reduce supply, devalue the currency that oil trades in.

What that adds up to is the average citizen getting screwed like a White House intern at the pumps...

 

All of which leads me to fall in line with old Glenn Beck, who is a pompous jerk a lot of the time, but dammit, drilling for oil locally instead of relying on a foreign supply seems to me to be a damned good idea! It will take some time to get it online, so it won't solve the short term problem, but it's better than wringing our hands and doing nothing. At the same time we should be developing other sources of energy -- ALL of them. Wind, hyrdoelectric, nuclear, geothermic, solar, . . . the list goes on. We need some short term pain for the long term gain or we're gonna have some serious long term agony.

 

Katrina has little to do with it. Two words: China and India. In this global economy, the US -- with its weakening dollar, sky-high debt and massive trade deficits -- is fast becoming a lesser-player. We Americans are not the Kings of the Earth (and probably never were) and just because Bush or Obama or whoever says he's going to "do something" about gas prices doesn't mean he can really do a damn thing. Welcome to the New Global Economy -- endorsed by both Bill Clinton and George Bush (how's that for bi-partisan?).

Bottom line: US and multi-national oil companies are not "price gouging." They are simply selling oil at a price their customers are willing to pay, and those customers are increasingly Chinese and Indian. Blame those countries' increasing thirst for oil (and everything else), not some US oil refiner who is making .03% margin on selling you gasoline.

 

Yes, but you guys were much smarter about it. Instead of just relying on your cars, you built some mass transit and built your cities around the notion of fuel efficiency. Guess who was not so smart?

 

Chandos,
thanks to the Euro being stronger than the Dollar, and because oil is traded in dollars, we pay less for the oil we burn, which is beneficial to the European economies in terms of competitiveness. Also, while the higher prices hurt us, they do so to a somewhat lesser extent than the US.

The second point is that our heavy taxation of oil is in itself an incentive for economic use of the commodity. Put German style taxes on oil and gasoline, and you'd see the number of SUV's on America's streets sink drastically. The problem is that with the current US tax distribution the revenue from such taxation would likely be spent on arms and not on (public) transport infrastructure, energy preservation or research.

Chances are that if that would happen, the idea of 'suburbia and long transits by car' would become infeasible, and people would move back into the cities, just because they have to. A lot of 'suburbia' would become ghost towns, and city real estate will get more expensive. The result would be a major restructuring of America's landscape. I have looked over the Houston area with Google Earth and I was amazed by the land use for such suburban outskirts, that drew intricate little patterns on the landscape.

 

Unfortunately, there are more problems than that. The US style of de-centralized living isn't just in our suburbs, its in the whole nation, which means that, apart from a few major cities like NY, mass transit isn't really feasable in the US. It never has been. Now, the money could go to fund research, but odds are it would go back into Big Oil hands that were doing 'research' (i.e. twiddling their thumbs) while the US consumer just payed more.

Actually, this is already starting to happen, and many economists predict it will continue. The suburbs won't become ghost towns so much as run-down ghettos (imagine 10 families living in one house). This would actually not be new for the US, though, it would be a throwback to pre WWII days. All-in-all, though, with the current economic push for alternatives, I don't see the oil problem sticking around long enough to do that to any major extent.

 

I don't buy this for a second, allthough in the most rural areas mass-transit would not be feasable most people in the US live in cities. If it's feasable in Finland then it's certainly feasable in most areas of the US.

 

That is a good point. It isn't as if Europe was born (I am absolutely aware that this is a poor metaphor) with pre-existing railways Just rebuild America

Drive the right-wingers into a foaming frenzy by calling it 'New Deal'.

 

Our mass transits are in quite poor state as well and it isn't like everyone can or want to take trains or buses. I think all countries would be well served by by extensive investments in mass transits, speed trains like the ones they build in Spain seem like a really good idea.

 

You watch too many movies based in NYC. I'm going to go out on a limb and say that there is no way the majority of our population live in cities. The U.S. is the king of suburban sprawl.

 

It depends on what you call a city. I live in Virginia Beach, a city, but it, Chesapeake, half of Norfolk, much of Portsmouth, and about a dozen counties around here are pretty much the biggest single suburb in the US (probably world). The only one that has a real, centralized 'city' center is Norfolk.

 

NOG is right. The very concept of a city is getting spread so thin here in the US that it's changing the definition of a city.

Ask me where I'm from; I'll say "Cleveland." What baseball team do I consider my "hometeam" ? The Cleveland Indians, of course! But I've lived mainly around the suburban outskirts of Cleveland most of my life here and only a few years in the city proper.

I'm getting ready to return to South Korea to begin a new job. There I'll be living in a typical Asian city, i.e. cheap public transportation that will take me anywhere in the city in minutes. It will take a huge chunk out of my usual cost of living thanks to the fact that I won't be making a car payment, won't be paying for car insurance and when people complain about high gas prices I'll ask "oh, how high are they now?" The savings potential is huge and, for me at least, the lifestyle change is preferred. I can go anywhere quickly, get as drunk as I want and not worry about drunk driving, not worry about driving around the block for 20 minutes to find a parking space, not worry about my car getting stolen, etc. The list goes on and on. Get me on that plane for Korea!

 

Y'see, I'd honestly prefer to live in a cave in the middle of a forest so long as it had power and hot water. I hate cities. I hate having buildings everywhere I look and maybe three trees between my living space and my job.

 

Then move to cities that have decent nature. I live in Sweden's fourth largest city, only three or four kilometres from the center of the city, and if I look out from the window here I see no less than a hundred trees at least and I'm having a hard time seeing pavement.

Cities != 100% concrete.