Gas to hit $3 a gallon again?
How much is filling up going to cost you this Summer?
Gas prices are once again steadily climbing with Spring approaching, the possibility now looming for prices to equal last year's highs of $3 a gallon. Prices in Detroit are up 38 cents in just the last month and are now as high as they were in early December. While prices may fail to reach the $3 level, the fact that Summer prices have for two years running now indicates that the market can sustain such prices during the warmer months.
Analysis: It almost feels like people have come to terms with high gas prices in the same way that most people now believe that climate change is well under way. Why would the oil companies do anything but push the prices to $3 a gallon over Summer if they know everyone will keep filling up?
Related:
[Source: Detroit News via Wired]
Reader Comments (Page 1 of 1)
tikirob 3:08PM (2/21/2007)
Of course, as we get used the cost people will continue to buy fuel thirsty cars. I hope this will however keep the momentum on for a alternative.
Rob
http://www.autoshortlist.com
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Robert 6:59PM (2/21/2007)
We will pay because there are no real viable alternatives available right now. I walk to work almost every day because it's close enough. If it were 5-10 miles away, city driving, I might consider biking. Much further than that or in different terrain, I'd drive my car. Unfortunately, the car I have is gasoline powered, as with the majority of Americans. The oil companies have a monopoly on our transportation right now. Americans that drive might drive less if gas prices are higher, but they will still drive.
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Mark_H 4:36PM (2/21/2007)
"Why would the oil companies do anything but push the prices to $3 a gallon over Summer if they know everyone will keep filling up?"
Well, I'm not happy with you spreading the notion that oil companies just arbitrarily declare a price for their product; it doesn't work like that. However, we have shown fairly remarkable inelasticity when it comes to gasoline demand. That's to say that at $3 per gallon we just kept on driving, kept pushing our vehicles down the highways at 70-80 mph, kept idling in parking lots, etc. The price should be what we're willing to pay and if it's $3 then so be it.
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Rick Lyon 6:05PM (2/21/2007)
Sorry but this is all eschewed. Gas hit $3 and what happened? SUVs sales TANKED. Ford, GM hurt in a major way gushing losses. Hybrid cars are popular, smaller cars are making way into the states. People didn't go to the mall as much, didn't spend much at WalMart and they took a hit. No $3 didn't stop us from buying gas, but it did have a major impact. If we hit $3 again and sustain it I think you'll see a more serious effort to fight prices by Americans.
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charlie 5:29PM (2/21/2007)
"Analysis: It almost feels like people have come to terms with high gas prices in the same way that most people now believe that climate change is well under way. Why would the oil companies do anything but push the prices to $3 a gallon over Summer if they know everyone will keep filling up?"
Someone really need to step up and be an editor for you guys. Statements such as the above destroy any credibility this blog might want to have.
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frank78 6:13PM (2/21/2007)
I agree with the 2 comments above. The same words caught my eye when reading the blog entry. People get all worked up at oil companies because they sell a product we all still (unfortunately) need. With the revenues collected on gasoline, less than 10% is profit for the oil companies.
Want to get furious about oil prices??? Write your Congressman. In North Carolina, the state tax is 50 cents per gallon. PER GALLON. That's far more than the profit the oil companies make per gallon and they are the ones searching for petroleum in dangerous or diffcult areas, refining, delivering to the customer. There are a bunch of states with higher gas taxes too- CA, NY, MI, FL and a few more.
But that won't stop the stupid, ignorant masses from crying bloody murder about ExxonMobil, etc.
Get mad at the governments first.
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Jimmy 7:38PM (2/21/2007)
frank78: "Write your Congressman. In North Carolina, the state tax is 50 cents per gallon. PER GALLON. That's far more than the profit the oil companies make per gallon"
Yes, but someone must pay taxes to fund the highly subsidized public transportation system. A UNC Charlotte prof. of transportation studies says it costs the taxpayers $2.56 in subsidy every time someone takes the bus :)
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Tim 7:47PM (2/21/2007)
GOOD! Maybe this will spur innovation and efficiency which will help us kick our dangerous addictions to foreign oil. Isn’t there such a thing as a “windfall profits” tax?
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Vickie 7:43AM (2/22/2007)
So how is it that less than 10% is profit for the oil companies, but since gas prices have risen they are now showing record profits? Sorry, no way will I complain about the government taxes that repave my roads unless that crap stops.
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frank78 9:26AM (2/22/2007)
The less than 10% profits is what they have averaged over the years. If gas goes up to $3 again, I'm sure they'll make more than that. Probably more in the 15% neighborhood (lots of states have a tax that is tied to the total gas price, thus lowering the pure profit for oil companies when prices jump).
This means that when prices are relatively low, they are making a far less percentage profit, if any at all.
We are at a time of record demand thanks to exploding economies in China and India, where 40% of the world's population lives. Combine that with weakening supply- Mexico's biggest oil field is withering, so is the North Sea, we all know Saudi Arabia has been lying about its supply for 25 years, domestic production is very slowly dying down. Remember basic Econ 101 you learn about the intersecting supply and demand curves? Lowered or static supply and an increased demand equals price increases.
With record demand you're going to have record profits. In any industry. If the demand for yellow t-shirts suddenly becomes huge, you'll see record profits in the yellow t-shirt suppliers.
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Mark 12:12PM (2/22/2007)
Frankly, I hope gas hits $3 and stays there. Maybe $4 in a year and $5 after that. Behavior is influenced by pocketbooks and not by "good" citizenship. Make it expensive and we won't buy as much. National security will be improved, the environment will be improved, better technology will come to market faster. If we need a safety net for people that can't afford it, I would support that too. In another post the comment that "coal is killing us" was made. Cheap gas is killing us, too. Where is my Chevy Volt!
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