U.S. Takes Baby Steps While Oil Price Spike on the Horizon
It has been about three years since gas prices jumped over $3 during the most recent spike, yet we seem no less materially dependent on this volatile, polluting, and corrupting resource today than we were before the price run-up.
Underlining the idiocy of our failure to take transformative action, the International Energy Agency warned on Monday that there could be another oil supply crunch beginning in 2010 if the global economy recovers. Yes, this is about as insightful as noting the ’sky is blue,’ but given the little baby steps we are taking on this issue, it seems even awareness of the obvious isn’t enough to motivate the American public to fundamentally change.
While the IEA’s solution to the problem is, of course, to increase capital investment in oil production, real change will only occur when we fundamentally change the way we live and power our transportation needs. Nothing less than a big tax on gasoline, coupled with massive investment in public transportation, urban planning, and alternative fuels research, is what is needed. Unfortunately, it looks like we may need the shock of another price spike before we make these hard choices.
Gasoline Prices Magically Rise as Oil Stagnates
The entire oil production chain stinks. From the cartel of petro-states that drill it to fund their illegitimate regimes, to the traders that hoard it and play market games, to the allegedly independently operated refineries that mysteriously require unexplained maintenance all at the same time, the path to the pump is to corrupt and too easily manipulated. Practically every step along this chain there is the will and the ability to artificially decrease the supply in order to prop up prices.
Despite the fact that a barrel of crude has been sitting around $40, the average price of a gallon of gas is now $1.92, up from $1.79 a month ago.
Gregg Laskoski, managing director of public relations for AAA Auto Club South said that some of the increase in price can be attributed to lower output by U.S. refineries. Laskoski noted the odd situation where “A recession and rising unemployment translates into fewer motorists on the road and diminishing fuel consumption, and yet, retail prices climb higher.”
The sooner we transition off of this corrupt and polluting commodity, the sooner our economy, planet, and way-of-life, can regain some security.
Gasoline and Oil Up, Future Price Direction is Murky
The price at the pump is continuing to rise. Numbers released on Wednesday show that the average price per gallon for regular gasoline in the U.S. rose 6.3 cents to $1.85 and the California average rose by 7.6 cents to $2.06.
The price of crude also rose on Wednesday, climbing 6% to $43.55 a barrel for March delivery. The LATimes notes that there is currently a conflict among oil experts regarding the future price direction for oil. READ MORE
A Critique of the 60 Minutes Oil Speculation Report
Barry Ritholtz at The Big Picture takes issue with the 60 Minutes piece on oil speculation from Sunday night. Ritholtz does not argue that speculation did not play a role in the high prices, but instead he thinks it was only a small component of the overall picture. He argues that 60 Minutes basically missed that picture by focusing solely on the role of speculators.
Here are the 10 factors that Ritholtz believes the 60 Minutes analysis missed: READ MORE
Oil Falls and Gas Shoots up
Despite the precipitous drop in oil on Wednesday, the average nationwide price of regular gasoline at the pump increased 3.9 cents to $1.727 per gallon. According to AAA, this was the biggest single day price increase since September.
This comes on the heels of recent price spikes in California.
According to the Energy Department, fuel consumption in the U.S. is down nearly 3% from this time last year.
California’s Mini-Price Spike for Gasoline Continues
California, which traditionally has some of the highest gasoline prices in the nation, is continuing to see a mini-price spike that began a few weeks ago. On Friday, the average price per gallon of gas in San Diego County rose to $1.865. This marks the 16th day out of the last 18 that the price of gas has increased in that region. In comparison, the national average price is at $1.626 per gallon.
Although California prices are still way below record highs seen during the summer (San Diego peaked at $4.63), the recent volatility is a reminder of the continuing vulnerability we have as a society to this finite and polluting resource. Maybe this little price spike will act as a reminder that we cannot enter another phase of complacency.
New York Times Editorial Board in-Favor of a Gas Tax
The NY Times editorial board on Saturday followed the lead of co-worker Tom Friedman and endorsed the concept of a gas tax. Here are the highlights:
“…for all the conditions attached to it, the multibillion-dollar aid package for Detroit’s carmakers approved by the White House (with Mr. Obama’s support) fails to address one crucial question: Who will buy all the fuel-efficient cars that Detroit carmakers are supposed to make?
“The danger is that too few will, especially if gasoline prices remain low. Therefore, it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession. READ MORE
Oil falls but gas prices increase in San Diego
San Diego, which traditionally has some of the higher gas prices in the country, is experiencing a new increase in gas prices. Strangely enough, this increase is occurring as the price of oil continues to fall.
With oil hovering around $35 per barrel this week, the average price for a gallon of gas in San Diego has risen to $1.81. This is up ten cents from a week and a half ago. This increase is being attributed to a decrease in supply from California refiners. The refiners, who have complained about losing money on sales of gasoline, have cutback their production by 6.4% in the last week. This has created a situation where refiners are apparently back in the black for their wholesale gasoline sales. READ MORE
Report: U.S. sees the biggest decline in miles driven in history
According to the Federal Highway Administration, for the 12 months between November 2007 and October 2008, the U.S. saw the biggest sustained decline in miles driven in our history. Drivers on U.S. roads drove 100.6 billion fewer miles during that period than the previous year.
The drop can be attributed to two factors: high gas prices for the first half of that year and a slowing economy in the second half. According to Transportation Secretary Mary Peters, “The fact that the trend persists even as gas prices are dropping confirms that America’s travel habits are fundamentally changing.” READ MORE
Could gas hit $1 a gallon? Party like it’s 1972!
With global demand continuing to decline, some energy analysts are predicting the price of oil will bottom around $25 a barrel with $1 a gallon of gas. Oil closed on Monday at $43.71 a barrel, with average gasoline prices at $1.70, the lowest since February 2004.
Oil held steady yesterday on the hopes that the Obama stimulus package could restore demand and that OPEC might bring additional production cuts. READ MORE
Gas falls below $2
As of Friday, the national average price for a gallon of gas had fallen below $2 for the first time since March 2005. The rapidly falling price of gas has created a unique situation, where for the last seven weeks, the wholesale price for refined gasoline has been lower than the price of crude oil. This means that refineries are losing money on every barrel of oil they turn into gasoline. This market condition is, of course, unsustainable, and may lead to an even greater cutback in refining capacity.
All of this could be setting up the conditions necessary for another price spike in the future. Decreased gas prices will eventually encourage more driving, and decreased refinery capacity will decrease the supply of gas. However, due to the terrible economic conditions facing the nation right now, a substantial increase in driving habits will likely be deferred until better economic times.
Falling gas prices may be reversing ridership growth in public transit
One of the great public transit stories of the past decade has been the surprising success of the light rail system of the DART (Dallas Area Rapid Transit). For the past couple years, ridership has been so high that parking at some DART rail stations has been nearly impossible to find.
However, according to the Dallas Morning News, it appears that the recent fall in gas prices has been taking a toll on DART ridership. While the DMN notes that the recent slowdown has not yet shown up in statistics, since they lag a couple months behind real time, anecdotal evidence has shown a significant drop in passengers.
Sadly, we will not be surprised to see more stories like this one coming out in coming months. Rising gas prices did what national security and environmental concerns couldn’t do– which is, cause the public to consume less oil. Unfortunately, falling gas prices may undue much of these gains.
Warning: this is not an Onion article, this is real…
An op-ed on FoxNews.com today argued that Detroit is to blame for their current situation because… wait for it…
They did not challenge the “Green attack on cheap gasoline.” What???
Yes, really, that is what the editorial actually argues. And the earth is flat, dinosaurs and humans co-existed, and tobacco is not unhealthy… Oh, and I have a nice bridge to sell you while we’re at it.
Without spending too much time picking apart the inanity of this writer’s argument, the basic gist is: because environmentalists have opposed drilling and supported environmental regulations, gas became expensive, which decreased consumer demand for the Big Three’s cash-cow, the SUV, thereby drying up their major revenue source. The writer argues that if Detroit had been more effective at opposing these policies they would not be in their current mess. READ MORE
Price of oil update: down
With fears of a growing economic slowdown, the price of oil fell briefly below $50 on Thursday for the first time since January 18, 2007. Oil closed the day at $50.27. AAA also announced that the average price per gallon at the pump has fallen to $2.02.
Has the time come for a gas tax?
This is the question CNNMoney asks (somewhat rhetorically) today. With the average price of gas falling to around $2.30 per gallon the article wonders if it is now finally possible to implement an across the board gas tax.
While peaking gas prices over the summer caused Americans to change their behavior by driving less and buying smaller cars, with recently falling prices at the pump, there is evidence that we are once again driving more and buying bigger cars. READ MORE
