Gas Junkie - Gasoline Prices Questions

Question: Where will the common GASOLINE fuel price be in one year by your sincere and educated...?

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Answer #1:

Uncontrolled futures speculation on crude oil is one of the big reasons for the start of the current world economic problems. Anyone who trades in commodities should be required to take physical possession of the products they are buying.

Answer #2:

The Strategic Reserve is just that Strategic, to be used in the event of a major oil supply disruption. It is not a tool to manipulate the market oil price. It could only influence the price for the short term, once the reserve was exhausted, the oil price would go to its normal market price.
The second part of your question was about gasoline price, the demand for oil in the US doubles every 20 years, the supply of oil does not. The price has nowhere to go but UP. The lower demand during the current recession is a small hiccup in the energy price picture.

Answer #3:

These are just my opinions and I have no inside information that make my guess any more relevant than anyone elses estimate.

At $4 a gallon, people are complaining about the price of gas, but not really changing their habits. They may combine a few errands into 1 trip, but for the most part, they are driving almost as much as they always have. A few more people are looking at hybrids, but there is still limited availability of them (2-3 month wait on a Prius).

I think at $5 a gallon, more people will consider public transportation, but this could be problematic as well. Cities have already established budgets and a level of service based on current ridership. I sudden influx of riders requires more buses, trains, etc. and more operators, all of which hasn't been budgeted. Plus the cities are feeling the pinch of rising fuel prices and are actually looking at cuts in service to stay within budget. I also think at $5 a gallon, more people will consider alternate fuel vehicles, but the manufacturers generally work on about a 5 year product cycle. Did they see this coming 4 years (or even 1 year ago) when they were selling every SUV they could build? I suspect there will be a gradual increase in hybrids over the next couple of years, but we're probably looking at 4-5 years before there is an ample supply.

What about ethanol? It's a boon to farming conglomerates because it's rasing the price of corn, but look at what it's doing to food prices. Fuel cells? The technology is developing, but is still a few years off plus the need to build a refueling infrastructure. The Strategic Reserve? It would be a minor short term fix, but would leave us vunerable to another supply disruption. Other reserves (like the Arctic National Reserve or the Gulf of Mexico)? There are environmental concerns that need to be addressed and even ignoring them, it would take a few years of development before supply is available. Alternative energy sources for generating electricity (instead of oil fired turbines)? These are becoming more viable, but still aren't really competitive with $4-5 oil. As oil prices continue to rise, I suspect we'll see more solar or wind technology used.

We got a taste of this 35 years ago with the Arab oil embargo. We have no one to blame except for ourselves for not weening the US from foreign oil over the past 35 years.

Answer #4:

As you noted, the price of crude oil is $30 to $50 a barrel above what supply/demand would put it. People are using oil as an investment and speculation and the price is not tagged to supply/demand but what investors think they can get as a profit as more and more people buy oil futures. Will they continue to do so? If they do, then gasoline prices will continue to rise. If they don't, then gasoline prices will fall.

I think it is time to rejoice that the price of gasoline has risen to the point that people will conserve. They will buy smaller cars and get rid of the huge SUVs that they really don't need. They will make fewer trips and more will carpool or use mass transit. In the long term we may even see a reduction in suburban sprawl and may even see "designed" communities where supermarkets, restaurants, theaters, etc. are deliberately put within walking distance and within existing cities. One such community is now in Atlanta. Oil is a finite resource. Someday it will run out. Also, oil is used to make other products that we really, really need -- such as plastic. Using less will postpone the day that there is no more oil.

This is offset by the offers I see from SUV manufacturers guaranteeing $3 per gallon gasoline prices for up to 3 years at 12,000 miles per year. Obviously they want to sell their stock of SUVs, but this doesn't help us in the long term.

There is also the bottleneck of oil refineries. The USA hasn't had a new refinery in over 25 years. Thus, while the consumption of gasoline has tripled in that time, production has stayed the same. So it's not only a matter of supply of crude; it's the supply of gasoline. We need to build more refineries to increase the supply of gasoline. However, that will take at least 5 years and, therefore, doesn't fall within the time frame of your question.

If conservation wins out over gimmick offers, eventually the speculation bubble in crude oil prices will burst. When that happens, the price of gasoline will drop again. Will people go back to SUVs? I hope not.

As to the strategic reserve, I honestly do not know enough about the quantity of oil already in the reserve, the amount going into it every day, the percentage of consumer consumption this represents, and the threat evaluations for possibilities that the supply of oil could be disrupted. That last is classified. From past experience, I don't trust our current President to make accurate threat evaluations, but I have no data (right now) to say that the threat is low enough that we can "prudently" stop putting oil into the strategic reserve. Also, since I don't have the figures on the percentage of consumer consumption the amount we are putting in the reserve per day represents, I cannot make a good guess as to the economic impact of letting that amount go to consumers. Will it be enough to burst the speculative bubble? I don't know.

The rise in food prices around the world tells us that biofuels isn't the answer. We only have a finite amount of food we can produce, and apparently we don't have a huge surplus such that we can divert a lot to the production of biofuels. Hydrogen fuel cells look too expensive. Diesel costs more than gasoline by $1/gallon, so that is out. I think the short term solution is a massive shift to hybrid vehicles or plug in electric cars to drastically increase the miles/gallon and increase conservation.

Answer #5:

for research. I predict families will do alot more together and alot more bike riding will occur since that is already happening. I think it will change how society acts since it can't afford this amount. I don't think the world will want to share the limited supply of oil with us.

Answer #6:

You think you have problems, what about $8.00 a gallon? If you live in a remote village you just have to drive to get out of it. Of course we don't have the vast distance to cover as in USA, so can still sympathize, its all relevant.

Answer #7:

BeachD1:
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I expect by the end of this year unleaded regular gasoline will be averaging around $4.50 a gallon and in a year it should be around $5 a gallon. Though the price keeps rising, its not along a linear line with the rise of oil (which is skyrocketing upwards). So you have to ask yourself why this relationship is not linear?
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In March of 2007 oil was ~$60 a barrel. Just last month it hit $133 a barrel. And they are estimating by year’s end it will be around $200 a barrel.
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Oil had stayed at the $20-$40 range for about two decades (oil ranged from about $28/barrel in 1980 to about $30/barrel in 2000). So here’s the SIGNIFICANT FACTOR in oil price changes:
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Since the Arab oil embargo of the seventies, oil prices were fairly steady, (in a fluctuating range of about $10 a barrel in 1975 - $30 in 2000).
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What caused such a dramatic change in prices after the year 2000? What happened in 2001? September 11, 2001? And what happened in March of 2003? After the towers fell, and we invaded Iraq, fuel prices went through the roof.
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Here’s a good site with oil price changes displayed in charts, though they are a bit dated:
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Click Here
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Everything affecting the price of oil is political. Don’t believe anything they tell you about supply and demand, or the limitations of the oil industry to adapt, or just that its just natural swings in the market. This is all manipulation on the part of the oil industry and the oil rich nations in concert with our Republican - corrupt, and Democratic - inept government, to keep the price elevated, because it is advantageous for them to do so.
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Yes, India and China are using more oil than ever before, and that is pushing up prices. But fuel is still 40 CENTS a gallon in the Arab nations, so we can’t blame India and China for fuel being CHEAP THERE, can we?





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