Party like it's August 2007: oil falls to 14-month low
Photo by Michael (mx5tx). Licensed under Creative Commons license 2.0.
The bad news continues for fuel efficient vehicle technologies. The AP is reporting that yesterday's oil barrel price of $74.54 was a 14-month low, and that price is half (half!) of the high price earlier this summer. The main reason for the drop is the tanking U.S. economy, which "stoked fears that a significant global economic slowdown will undermine demand for crude," as the AP so clearly puts it. One potential uptick in prices could come in November, when OPEC meets and might decide to reduce output.
We're getting kind of close to the point where it makes less and less sense for automakers, on a purely cost-based level, to invest heavily in alternative fuel technologies. There are still plenty of reasons for them to continue doing so (environmental concerns, popular pressure, government pushes), and I can't imagine they'll stop, but the rapid climb and fall of gas prices has got to be worrying a lot of people. Can you imagine a U.S. - or a world - where we are not reliant on one type of fuel to move us around and where stories like this one just don't matter?
[Source: AP]
Reader Comments (Page 1 of 1)
Matt 4:14PM (10/16/2008)
I can't believe we don't hear any whining about speculators driving down the price of oil because they foresee supply outpacing demand in the near future.
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Serge 4:52PM (10/16/2008)
It makes sense for automakers to continue with pushing for fuel-efficiency / new fuel powertrain development precisely due to unprecedented volatility in oil market. Oil prices will go back up and wise automakers better prepare, so as not to be caught with their pants down as in the current cycle.
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fnc 6:11PM (10/16/2008)
If an automaker is dumb enough to think the oil guzzling party is back on forever, they deserve the future financial strain they'll surely earn as a result of such a delusional train of thought.
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Steve-O 7:00PM (10/16/2008)
Exactly, to the writer of this entry - WELL SAID. I suppose petroleum will always be used for auxilliary stuff like plastic bags or whatever.
The goal we should all be thinking about is when the price of petroleum "doesn't matter". Because we don't use any for fuel. Myself, I can't wait.
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Ra Conteur 7:34PM (10/16/2008)
Oil prices are plummeting because the world is catching on to the idea that petroleum is a thing of the past. Thus, in desperation the oil cartels, sultans, and clingons are scrambling to lower the price and preserve their failing commodity. Don't be fooled again people! It's a simplistic tactic taught in third rate business schools:
Drive market prices down til you've got a huge share - then crank 'em back up once people are addicted. Those who cannot see this, please take a number and go to the back of the line.
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Ra Conteur 7:51PM (10/16/2008)
My God, you don't suppose the price of oil is being manipulated do you? Any more than the stock market and economy are being manipulated? Heaven no! Say it ain't so Joe (the plumber.)
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rob 11:56PM (10/16/2008)
The RMI's 2004 "Winning the Oil Endgame" found that it would cost $12 per saved barrel to eliminate the first 50% of US oil usage, and $18 per saved barrel to eliminate the remaining 50%.
You'll note that both numbers are quite a bit less than even the most bearish predictions for future oil prices. We can quibble over the exact costs of saving a barrel, but I can guarantee that it's still going to be less than the cost of buying that barrel at just about ANY foreseeable future price.
If you're interested, "Winning the Oil Endgame" is a free read (registration required) at http://www.oilendgame.com/ExecutiveSummary.html (Click the "Read the Book" link at the top of that page.) I have no affiliation w/ RMI, I just thought Amory's numbers would be interesting applied to this posting...
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Robert 9:44AM (10/17/2008)
Didn't they JUST justify the $120+ price with something about the US market not determining the price of oil because the larger, global market demand was on the rise? These guys are worse than the RIAA.
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BarryD 3:18PM (10/17/2008)
I wouldn't be too worried.
A year ago, when gas prices were similar to what they are now, it was QUITE clear that we had to do something to decouple our economy and our standard of living from oil, gas and diesel prices.
In fact, a respite can be a really good thing. All the efforts to build alternative infrastructure, no matter what kind, rely on diesel and gasoline.
We got our shot across the bow, and it was a big, scary shot. We don't necessarily need gas to pass $5/gallon this year to get the message. Most of us (for some reason not GM, but most of us) understood years ago that gas wouldn't be getting CHEAPER in the future.
Believe me, $3/gallon gas is enough to make people buy different cars and seek other alternatives, and producers will either sell what consumers want, or go under.
I wouldn't lament this opportunity. It's an opportunity to build what we know we need, but at a more acceptable price.
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