Gas to hit $4 a gallon in August

This is why I'm moving to Frankfort. Driving 60 miles (round trip) to work is getting to be too much. I will miss living in Lexington, but I can barely afford to keep my tank on full anymore.

I was at a gas station tonight getting some drinks and chips when I found out they were out of unleaded fuel. The guy that owns it has his prices set at $2.89, $2.99 and $3.09, 10-15 cents lower than anyone else on this side of town. And this isn't the first time he's ran out and had to wait a few days to get more fuel. Back when the first price spike happened he was still charging $2.49 or so and ran out in a few hours' time after everyone around him raised prices to $2.60 and above. I pulled in to get gas, and was next in line, only to find out from the lady ahead of me that they were out. I wasn't a happy camper that night.

 

A) That's assuming you can afford to go out and buy a new car/trade in your old one.
B) Most of the affordable low-milage cars fall into the compact division - Some of us just don't fit into compact cars.
C) those of us living in rural areas are still screwed with no public transportation and having a working car being a prerequisit to the job.

 

Well, it would stand to reason that if you own oil, and the price of oil goes up, you'll get more revenue AND profit, since your costs of production don't really change.

Put it this way: with oil at $78 a barrel, how much is a fair price to pay for a gallon of gas. If you had the mythical job of gas price setter for a major oil company (I know it doesn't work this way, but play along), how much would we pay for gas?

 

This concept is the fulcrum on which the whole issue see-saws.

Back in January, I posted a Wall Street Journal column by a man who said that if we want to reduce our dependence on oil, we should abandon any thought of trying to "conserve." I vehemently disagree, but a point he made has stuck with me.

He argued that, if we all conserve oil, supply will go up, and we will simply begin buying more oil. But if we guzzle to our hearts' content, supply remains tight, and we begin to ask less from the Middle East.

This man had zero concern for the environment, obviously.

But he has a small point in there somewhere. Americans are greedy, slothful "hogs of habit." Oink, oink.

Example: Most of us realize driving the speed limit conserves gas.

Let me ask you guys something: Have you seen a reduction in speed on the road? I haven't. If anything, it seems Americans are driving FASTER. I did an experiment last night and drove the speed limit from A to B over the course of what's normally an hour drive. It took me an hour and 10 minutes to make the drive-- so I lost 10 minutes-- but I picked up over 6 miles a gallon. But impatient America doesn't want to lose that 10 minutes-- no matter what it costs them.

So my point in all this.......... ;D

The doctor and the lawyer are ultimately right. The only thing that will get us, The Oinkers, to change our habits is something drastic. Something like being diagnosed with lung cancer is the only thing that gets a guy to quit smoking. If it's something non-drastic (like government intervention, release of the oil reserves, etc. ) that only temporarily drives down prices-- it will be what WSJ guy said-- we will guzzle even more.

Americans need incentive to change our habits for good.

 

I think the rule of thumb is $1 per gallon of gas for every $25 per barrel of crude. Thus, $78 per barrel would equal about $3.12. (It's still in the $2.80 range locally, but it takes a few weeks for the oil to move through the pipeline and make it into your tank.)

But that is with supply and demand taken out of the mix. If a major refinery or two goes down, it won't matter how cheap or plentiful crude oil is ... gas will skyrocket because of the tight supply.

It works both ways, though. After Rita last year, gas prices reached the point where people cried uncle, demand fell off, and prices dropped. This year, prices will continue to go up until the same point is reached. Where that level will be — $3.50 or $4 — is anyone's guess.

 

How about oil drilling in Alaska and building more refineries? That would be a nice start. Can't have that though. Wouldn't want to harm the Lumpadumpa squirrel.

 

Oh, I always promise to keep my free market heart out of these "discussions."

Here's a link that provides some of the basic information:
http://www.usatoday.com/money/industries/energy/2006-07-11-gas-forecast_x.htm

Here's the salient point in the story:
Despite high prices, gasoline demand is up from a year ago, according to government data.

So the answer to how high will prices go is how much are we -- collectively -- willing to spend? Apparently $3 a gallon is no big deal. And really, it isn't. We were paying a $1.50 a gallon when I started driving in 1982 and a fuel-efficient car got 21 miles a gallon.

American oil companies are in business to make money. They do it well at times, not so well at other times. Want to nationalize them? Ask any economist how efficeint Pemex is.

And by the way, big, fat guys out there, I'm 6-3 and 330 and have no problem fitting in my Toyota Echo. It gets 40 a gallon. We take the 15 a gallon Trooper when we go somewhere we're going to need that extra space.

I've said it on here before. If you thought gas was going to stay under $1.50 a gallon the rest of your life, you weren't paying attention. And -- at most -- aren't we talking about an extra $20-$30 a week on gas? You can't carve that out of your budget? Less takeout and more cook at home? Raise the thermostat to 80? Consolidate trips in the car? Give Starbucks the finger? Stay off Itunes? Get rid of HBO? Stop taking the paper because it's all free online anyway? Switch to Natty Light? Invite people over to play Monopoly instead of going out?

There. that feels better.

 

Great points (hey, I've paid the $5 per gallon — actually $1.25 per liter— in Europe in the past.) I used to laugh at people who bitched when gas here got around $1.50.

You illustrated well the things that can be done to offset the price rise. The problem is, money that goes into our gas tanks is money that's effectively been taken out of the general economy.

Last I checked, I was taking home about the same amount of money as I was in February when gas was back down in the low 2's. That means more of my paycheck is going to Exxon Mobil and less of it to Safeway, or my savings account, or the Boston Brewing Company. Something has to give.

That extra $30 a week adds up when you multiply it by 150 million American workers. When that $30 becomes $40, $50, $60, etc. ... it becomes a problem that can tip our economy into a recession.

I probably should point out that 1982 was the year of one of the worse recessions since the Depression years. Most likely caused by the oil price spikes of the year before.

 

Nobody's going to want to hear this, and I feel like I'm saying something horribly obvious that will open me up to a full-on dart attack........

But one way to make a dent in the oil problem would be to elect Al Gore.

(ducking)

Say this for him-- he's given an incredible amount of thought and study to the complex problem of what it will take to get Americans "off the tit."

 

can you tell me how much oil is there? it's certainly not an infinite supply. how much of a difference will it make?

can you tell me when these refineries will be producing at a rate where we don't depend so much on foreign oil?

there's a bigger issue here than just drilling for more oil. it's not entirely about 'saving the planet.'