BusinessWeek - Oil: OPEC in Charge, $90 on the Way?

http://www.businessweek.com/globalbiz/content/jul2007/gb20070720_223326.htm?chan=globalbiz_europe+index+page_top+stories

 

They said the same thing last year and it was back around $55 at the end of August. Lack of hurricanes helped, of course.

 

$90 a barrel would make the price per gallon what, $5.00 plus a gallon? Let's hope not.

 

Why not? $5.00 a gallon might force automakers and drivers to get serious about ways to reduce fuel consumption. It would be good for the enviroment and make us less dependant on the Middle East.

$90 a barrel would be the best possilble thing to happen.

 

Yeah, but changes by the automakers wont happen overnight,.. in the short run, it's a crippler.

 

$90 a gallon might raise our mileage to, what? 35 cents a gallon?

 

This argument always pisses me off. Long-term, higher oil prices will spur interest in alternative fuels and make car companies increase gas mileage. Consumer demand will force it.
Short-term, it will absolutely, positively nuke our economy.
Not everybody lives in an area with good (or any) public transportation. At $5 a gallon, getting to and from work will cost a lot of lower-income people half their paychecks. Spending more money on gas means less on other things.
Even if they do live in big cities, and can get to or from work relatively cheaply, higher fuel costs are passed down every link in the economic chain. Look at what's happened already with food prices. It costs more for farmers to harvest crops, more to get the stuff to market, and more to buy it. In short, you end up with a recession because people can't afford to buy anything other than gas. Once it corrects itself, you get a nice case of inflation.
Anything over $3 a gallon makes it rough on the vast majority of Americans.

 

You really have to think of the greater good though. $5 gas in long term would be better for the country. People would adjust and mass transportation would get caught up. We would be free of our middle east dependency on oil.

 

There have been too many decades of suburban sprawl and zero investment in public transportation in most of the nation. In Dallas, for example, public transportation is almost non-existant and people routinely have 45-60 minute commutes.

 

What about ethanol - I believe that holds great promise as alternative.

 

So do we make a series of small, wrenching adjustments now - higher prices at the pump, mass transit bond issues, meaningful research into alternative fuels and technologies - and suffer the rotten economy and inflation in brief, but bearable, intervals?

Or do we stand pat and do nothing until the oil's gone?

Option 1 is uncomfortable.

Option 2 constitutes a global economic meltdown a lot of people - even in developed countries - wouldn't survive.