Gas for $1.15 a gallon? It could happen again
If the gas stations around here we're selling regular gasoline for under $2.20 a gallon these days (when it was over $3 not too long ago), this article from MSN would seem even more ridiculous that it is. So perhaps MSN is right, and gas prices drop to about $1.15 a gallon again. MSN says it's not a fantasy. Here's why: First, the price drop won't happen soon, maybe in a couple years' time. Second, with all the recent pressure from high oil prices, all sorts of new oil supplies are being explored and "more supply is on its way". Third, drivers are changing their habits, which means demand will be (slightly) lower.
All this means a drop in the price of oil is coming, MSN says. Indeed, oil was costing about $63 dollars a barrel last week, down from over $77 in July. One energy consultant told MSN that oil could cost as little at $15 a barrel in the future. Unlikely? I think so, but we will have to wait and see. What would you do with the return of cheap gas?
[MSN]
Reader Comments (Page 1 of 2)
Tom 10:54AM (9/22/2006)
Laugh at the people who bought early $20k+ hybrids only thinking they would save money. $20k for a compact car that should be under $15k.
Maybe the oil industry will out smart people. If oil drops in price for a while the struggle to find alternatives may just go on the back burner. They can keep people hooked on petroleum.
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Dr. Woo 10:56AM (9/22/2006)
I will continue to do what I've done for years. Adjust my budget to accomadate changing gas prices.
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Jimmy 11:04AM (9/22/2006)
"If the gas stations around here we're selling regular gasoline for under $2.20 a gallon these days"
There is something wrong with that statement. Do you mean to say:
a) If gas stations weren't (were not) selling gasoline for under $2.20
b) If gas stations were selling gasoline for under $2.20
Locally for me regular unleaded is $2.17 a gallon at Sheetz and Costco.
Low cost petroleum is the best method to kill alternative energy startups. I like Vinod Khosla's idea of a tax to impose a floor price on petroleum at around $30 a barrel.
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Glenn 11:20AM (9/22/2006)
I'll keep driving my Prius hybrid and enjoy it - it isn't "just an economy car" - it is my everything car. It's comfortable. It just took me, my wife, my brother-in-law and sister-in-law on a couple thousand mile vacation through the mid-west. Comfortably, quickly, safely, and yes economically (up to 65 mpg at up to 65 mph at times, yeah, I was highly amazed and astounded, too).
I've gotten a 27" HDTV (in the box) into it, as well as a Honda snowblower (which I took to my elderly parents as a gift).
Sure, I'm using less money to fuel my vehicle now, and now I can probably enjoy a couple more meals out at restaurants per week compared to when gas was $3.20 a gallon a few weeks ago.
But I'm getting 45-50 MPG every day, instead of 20-22 MPG everyday (had I chosen my prior first-choice before deciding to "go Prius").
Thus, I'm sending 1/2 the money to those-who-would-kill-us-all, what about you? In a sense, the price of gas is "moot". Do we want to continue to live, or don't we care? That's one way of looking at it - and you could believe I'm referring to the islamofascists, or the environmental benefits of hybrids - actually, I'm referring to both.
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Tony Belding 11:46AM (9/22/2006)
I think Glenn has the right idea. Cars should be moving to electric drive trains for many reasons that have nothing to do with the price of gasoline. Even if gas became cheap again (which I personally think is highly unlikely) that would still leave us with global warming, it would still leave the USA dependent on other nations of doubtful friendliness -- and electric cars would still be cool and fun to drive. Cheap gasoline wouldn't somehow transform your Prius into a turkey.
Cheap gasoline could, however, undermine a lot of alternative energy research and investment, which would be a shame. We're going to need that technology someday, the only question is when.
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Mark_H 2:36PM (9/22/2006)
I guess the question is, are the "high" oil prices of the past couple of years an aberration or a sign of things to come? If you want to bet on the former, then run out and get you a 15mpg SUV. But, my guess is, you'll ultimately be sorry. The question, in the long term, is about exports. Will Saudi exports be able to keep up with world demand? What about Russia? What about Mexico and the apparent rapid decline in output of their huge Cantarell field?
I'll keep driving my 4-cylinder car, thanks, even if prices dip for a year or two.
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loikll 12:34PM (9/22/2006)
...and oil today is down to $60 and still falling. I've been an outcast of late saying that oil is wildly overpriced and in a speculative bubble, and I laugh my sac off every time another pundit on cable news sez "the era of cheap oil is over". Maybe, maybe not, but he certainly doesn't know.
In the short run, any crazy thing can happen. But in the long run, the price of commodities should hover not much above the cost of production. Everyone's forgotten that. Just 8-9 years ago oil companies were proftably selling oil for $13 a barrel, and American oil workers were demanding the government prop up the price of oil so they'd quit getting laid off. I don't think much has really changed since then except healthy econmies and demand at the margins.
Demand for oil isn't growing as fast as people seem to think. We're talking low single digits. (You can expect little or no growth from Europe and Japan, 2 of the 4 major economic blocs, b/c their populations aren't growing). Anyway, nothing here surprises me but I do think this blog should not neglect the issue of what happens if oil is cheap again?
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kballs 1:36PM (9/22/2006)
If gas prices do crash, instead of blowing the savings on eating out or buying more toys, people should really consider taking the money they save and put it towards their next vehicle (a more fuel efficient/hybrid/electric vehicle) and/or alternative energy for their homes (solar power, solar water heating, geothermally stabilized heating/cooling, more efficient appliances, etc.). Not only will it reduce your contribution to global warming and dependence on foreign energy resources, it will save you money in the long run (even if energy prices stay cheap for a while).
Oil companies always try to derail alternative energy by manipulating supply and pushing prices lower. We should all make it backfire on them and use the lower prices to help slingshot us out of the oil hole.
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Howard Lee Harkness 2:02PM (9/22/2006)
The low gasoline prices are a mixed bag. It lowers my cost of living, but it means that my money is still being sent to people that hate me, and it means that CO2 production will not decrease.
What will I do? I'm in the market for a new vehicle, and I will choose the most economical (from a TCO viewpoint) that I can. If there was a small diesel pickup, that would be my first choice. I think diesel/electric hybrid is the way to go, but the market doesn't see it my way.
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Mike 4:25PM (9/22/2006)
Energy conservation is always a good idea regardless of the price. Being a spendthrift is never a good idea.
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Galley 9:48AM (9/25/2006)
Gas is down to $1.98 here in Greenville, SC. I agree that $1.15 is pure fantasy, though.
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Phil 9:15AM (9/25/2006)
Tom Said:
"1. Laugh at the people who bought early $20k+ hybrids only thinking they would save money. $20k for a compact car that should be under $15k.
"
Some people actually buy hybrids to save the envirement! Oooh! New concept for ya! I will not regret purchasing my two hybrids even if gas goes down to a buck a gallon, because I'm actually helping the world.
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tariq 10:06AM (11/01/2006)
"Thus, I'm sending 1/2 the money to those-who-would-kill-us-all, what about you? In a sense, the price of gas is "moot". Do we want to continue to live, or don't we care? That's one way of looking at it - and you could believe I'm referring to the islamofascists, or the environmental benefits of hybrids - actually, I'm referring to both."
first of all, there is no such thing as islamofascists. islamofascists is an oxymoron.
secondly, the price of oil is high because of high demand in china and india, and because the oil left in the world consists of heavy oil. sweet crude is now scarce. If and when the world develops the technology to filter out sulphur from heavy crude, gas prices will drop like a stone.
if and when are big words, but there are chances such technology might be developed(efforts have been underway for a long time). and when that happens, your prius will be useless.
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Sal 12:56PM (9/25/2006)
It's not just about gas prices. It's about being addicted to oil that we HAVE to import it from someone who wants to kill you. It's about global warming. It's about what the world will be like for our children and their children. Will there be polar bears or just pictures of them?
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Steve C. 12:05PM (9/25/2006)
25 years ago, everyone was beginning to get used to the idea of $50/bbl oil, and then along came increased supply, decreased demand and "poof", oil prices plummeted.
Just a couple of weeks ago, everyone was talking about $100/bbl oil within a few weeks, so we now have . . . $60/bbl oil with talk of lower prices due to increasing supply and decreasing demand.
Of course the real common denominator in both situations has been fear-driven pricing without regard to either supply or demand.
If you removed ALL the fear from the market (Iran, Venezuela, etc.), you'd probably be back to $20-25/bbl in short order.
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dave 4:36PM (9/25/2006)
I'll take the savings over today's prices and buy beer!
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Armand 1:24PM (9/25/2006)
The present price of oil hangs on the decisons of 2 men.
Tomorrow Chavez and/or Akhmedinajian (or whatever you spelled it in the USA) could decide that they want euros for their oil... and pouf! US$100-200 a barril!
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BLS 8:52AM (9/26/2006)
Note: Driving a hybrid doesn't "save the world". It reduces your footprint. You pollute half as much out of you tail pipe.
Everyone should drive less no matter what car you are driving. Joy riding in a Prius is pure waste as is joy riding in a Mustang. Or racing a hybrid Lexus or Audi R10. Those are wastes. Pollution. Used up fuel.
However, I am not proposing that people don't take an enjoyable sunday drive or attend/participate in auto races. I just think that we could never say that we are saving the world when we pollute half as much. Moral hazard dictates that since you pollute less per mile you are probably driving more miles.
As for me I will take the train to work starting next week and when I get a sports car (of some sort Obvio!, RX8, C30) I will not use it for boring stop and go drives to work but rather enjoyable sunday drives and maybe some laps at a race track.
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Tormod Henne 5:26AM (9/27/2006)
"If and when the world develops the technology to filter out sulphur from heavy crude, gas prices will drop like a stone."
Keep dreaming. It will no doubt help supply, but those processes don't come for free. Producing gasoline from this crude will cost more because of the process itself. And remember your own words: If and When. And high demand from China and India is not going away either.
This is not only about price, just look at the other comments. No matter what the price is, fossil oil still produces co2. And even if the oil price should drop to 10$, a Prius does not get useless - it will work just fine like before - saving the environment!
High oil prices is healthy for the environment because it will make it economically attractive to develop alternatives of clean energy, and for the attitudes of how we waste oil just to display our horsepowers.
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Afi K. James 6:26PM (9/27/2006)
Both Gas Guzzlers & Hybrid/Electric cars & trucks are both unsafe for the environment and both are mass marketing scheme, where both of them sold the country to the highest bidder.
My Choice is Ethanol, now that's the real future.
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