Drivers Are Feeling the Pinch 21 comments
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USA Today reports on how high gas prices are causing motorists to drive less, a trend that looks set to accelerate in the months ahead.
A related story about how resale prices for gas guzzling SUVs are tumbling makes the Clinton/McCain "gas tax holiday" proposals look sillier than ever before.
If policymakers would be half as proactive during the gestation phase of the current problems - energy and housing - we probably wouldn't be in such dire straits today. Instead, while that tiny, informed sector of the population began screaming about peak oil and the housing bubble a few years ago, policymakers were oblivious.
Unfortunately, that's just the way the system appears to work. With plunging home prices people are certainly changing the way they think about housing. Now, four dollar a gallon gas is making people change the way they think about energy.
Record high gas prices are prompting Americans to drive less for the first time in nearly three decades, squeezing family budgets and causing major shifts in driving habits, federal data and a USA TODAY/Gallup Poll show.As prices near — or in some places top — $4 a gallon, most Americans say they are cutting back on other household spending, seriously considering buying more fuel-efficient cars and consolidating their daily errands to save fuel.
Americans worry that steep gas costs are here to stay: eight in 10 say they doubt today's high prices are temporary, the poll finds. It's the first time such a large majority sees pricey gas as a long-term problem.
The $4 mark, compounded by a sagging economy, could be a tipping point that spurs people to make permanent lifestyle changes to reduce dependence on foreign oil and help the environment, says Steve Reich, a program director at the Center for Urban Transportation Research at the University of South Florida.
Every time we pull up next to a middle-aged lady with some sort of a fast food-style uniform on who is loading up the Ford Expedition with $4 gas, it's hard not to feel some sympathy.
But, at the same time, unless some big new source of cheap oil is located, many changes by both consumers and businesses are needed that will not come about if policymakers step in and try to make things all-better.
It was nice to see the flogging by economists heaped upon the dopey "gas tax holiday," though, the unfortunate reality here is that most voting Americans probably don't give a damn about what economists think and just want someone to stop the pain.
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Lower prices mean more demand. More demand means higher prices.
The falling Dollar (with the Euro rising against the Dollar, Europe's oil bill to OPEC has been less than the United States'); demand in the rest of the world (China, India) has increased, and is becoming independent of U.S. economic growth; and the costs of exploration and production has gone up, with the best prospects for increased oil production being deepwater, deep-drilling, which is more costly than land based, 'conventional' drilling.
While prices for crude oil have gone up, mostly for political reasons (meaning: can be avoided), and non-political reasons: cost of exploration and demand growth in other countries, casual talk of "Peak oil" in a news article is misleading, and creates a self-fulfilling prophesy.
Peak oil too easily translates: It's like the weather, nothing can be done about it, so lay back and enjoy it. That's completely false.
There are plenty of steps that can be taken: Get America's financial house in order, take steps that protect the value of the Dollar; allow for oil exploration in the United States and its territorial waters, which reflects the necessity of oil production to America's economic security; and invest in new crude oil exploration that is going on in the deepwater, deep-drilling sector of the oil industry.
After all, with no new investment -- we're guaranteed less oil production -- which will guarantee even higher prices at the pump.
Peak oil is false and a dangerous notion to casually bandy about.
Good point. The Brazilian oil finds that you mention (Corioca, preliminary estimate, 33 billion barrels), 180 miles off the coast of Brazil, just beyond the continental shelf, is an example of the new oil that is out there for discovery.
These type geological formations are repeated all over the world.
And should American oil companies discover new, dramatic, large oil finds offshore of California or Florida, the energy picture would change dramatically, and, as you rightly point out, the value of the Dollar.
Also, another location for oil exploration offshore is called the Carolina Trough, located off the North and South Carolina coast line. This area is about the size of the State of South Carolina, and has been surveyed, but never explored for oil and gas (it's virgin), even though its geological indicators are very promising.
Another example of politics effecting oil production in the United States.
completely skip the second half of the Supply/Demand equation. I see tremendous waste of gasoline and diesel fuel here in Texas and around the country in summer.
1. Each summer nearly every county road and highway is sheared by gasoline and diesel tractors which pull huge rotary mowers to mow medians and shoulders of roads ( sometimes dozens of feet wide). When did this "beautification" or "fire abatement procedure" become so required of nearly every county in the country? How many millions of gallons of fuel are wasted. How many tractors sit idle 9 or 10 months of the year.
2. Each summer millions of households mow the lawan many times a summer. And how many millions of weed whackers/trimmers (gas/oil poluters) run hours each summer. Here in Texas $3-4000 riding mowers are common place. And there are A LOT OF THEM.
3. Texas Drivers routinely let their cars set in parking lots with engines running even on temperate days and nights. Diesel pickup drivers are the worst offenders. Texans are BIG WASTERS! I have lived in many other states than Texas.....! I even witnessed a brand new Volvo in the Post Office lot in Cedar Park, TX on an 80 degree day running for at leas 20 minutes while I was mailing a package. There was no person or animal in the car. Destroyed my illusion about Volvo drivers being "Tree huggers"
3. Independent truckers routinely let their rigs run for hours on end especially in summer overnight. A Kenworth size rig will burn near 2 gallons just running at idle. The independents bitch about fuel prices and yet they seem to be the worst wasters. Go figure. Hey guys check into an airconditioned motel and turn the engine off!
Conservation and wise use of a limited resource can help reduce the demand side of the equation. I have no real hope for counties to do the conservation thing.... they will just bury the increased fuel cost for mowing in the budget and then raise your taxes to cover it.
Rikiki
Round Rock, Texas
Every additional crude oil discovery puts another stream of supply into the market, effecting the margin.
The worst canard coming out of the crowd against oil drilling is the repeated, "such and such a new oil source will only add six months or four years to the world supply of oil -- so it's futile to drill at all." This ignores the reality that each discovery has a life span at a flow rate of a certain numbers of barrels per day -- you can't just magically add the new discovery into the market all at once.
Rather, supply is like a handful of uncooked spaghetti: Each additional noodle at the margin has a disproportional impact on price, where supply and demand are roughly in balance.
So, yes, be fuel efficient, but let's also focus on increased oil production.
Why are you so focused on increased production of oil instead of using that money to increase research and development of renewable technologies such as wind and solar power? Every dollar spent on discovering and producing oil depletes the amount of oil we have left to use, whereas that same dollar being invested into renewables will bring us closer to true "energy independence".
Drilling for more oil in places like ANWR and off the coast of Florida may help keep you and your generation happy, but future generations will be feeling the pain of our shortsightedness.
High oil prices are the best thing that could happen to us, because it will force us to change our habits and get us to really concentrate on developing cheap renewable energy!
"Why are you so focussed on increased oil production...?"
One, increased oil production will promote a more productive economy that will supply the investment into 'alternative' energy sources; two, the likely potential of energy 'alternatives' is not going to cover the gap between energy needs and energy production, for some time, if ever, if America diverts investment from oil production. Three, time is needed to research, develop, and increase energy output from "alternative' energy sources.
At present alternative energy simply is not advanced enough to provide the energy America gets form oil and gas.
If alternative energy does end up being as productive as you assume, that investment will be made without taking it from oil production.
You assume investment in oil production "diverts" investment in alternative energy, I don't make that assumption, rather, they can be complimentary if done by seperate businesses. You also seem to assume government should direct this investment by commanding oil companies to "divert" their profits to an enterprise (alternative energy) that is peripheral to their core business: Production and marketing of petroleum.
Do you think a strong economy will have more to invest in alternative energy or a weak economy? Oil production is key to a strong economy in my opinion.
"Energy independence" is a myth trotted out at election time. Starting back in the '70's, politicians have said, "under my administration America will be energy independent." It has never happened, it never will. It's better to be realistic and decrease America's reliance on foreign oil. Letting America's oil production fall, like you seem to suggest, will only make us more depedent on foreign oil, not less.
Why would future generations feel "the pain of our shortsightedness" because we explore for oil now? Again, you assume that exploration for oil and investment in 'alternative' energy is mutually exclusive.
Frankly, 'alternative' energy research, investment ,and development is going on as we speak. But time is also critical, technology advances over time, so the more time America has, the better off America will be in terms of developing the successful "cheap renewable energy" you want.
Prices for oil, even with stable and growing supplies are unlikely to drop back to where 'alternative' energy is uneconomical.
But again, we need a strong economy to afford the investment in alternative energy. High oil prices, to the point that it strangles the economy, is not going to promote 'alternative' energy, but, in fact, restrict investment in 'alternative' energy.
Unless, of course, you want the government to do all the spending on research and development, but even then the economy needs to be strong so the government can collect the taxes needed to turn around and spend on research and development.
I don't care how much you "demand' it, if companies aren't making money, they won't be able to invest in alternative energy.
Is that what you want?
By the way, you seem comfortable with "forc[ing] us to change our habbits..." I perfer voluntary choice to "forced behavior" changes.
Assuming Emminent Domain, suspension of the EPA and immediate granting of permits, incarceration under a National Security Decree of all protestors, State Of The Art Refineries will still take more than two years to build if started today.
It won't happen anytime that soon. What will happen is Governmental Price Gauging...thats why companies like Haliburton have started to move out of the US.
There is no long lasting short term fix on the horizon and the US will follow the lead of Hugo Chavez...
Ask not what the Country can do for the people, but what the people can do for the Country...too bad I really liked him.
the only thing proping up the dollar abroad is jawboning by other developed countries.
The penny and nickel are the only hard currency assets left here and they are about to be devalued.
Look for a reduction in Zinc and Nickel prices in the short term.