Friday, June 06, 2008

Cheaper Gas On The Way?

Speaking of oil prices, here’s an article that is super-duper optimistic that the oil price spike we are seeing now will collapse in short order and soon we will again be paying a lot less at the pump. I think the article is way too optimistic but I’ve believed for some time that the speculation bubble currently driving up the cost of oil will burst and prices tumble.

I don’t think we’ll ever see gasoline under $2.00 a gallon again but the $4.00 price soon may disappear for a while. However, we’ll all start using more gas again and the slow climb back up to higher prices also will return. In the long run conservation and alternative energy sources are what is needed to keep energy cost stable and affordable. Price shocks like the one we are experiencing now serve as good wake-up calls and spur innovation, and that may be worth the price.


JeromeProphet said...

Falling dollar reduces investment in stocks, and shifts investment into commodities - like oil.

Increased oil prices, driven by speculation, leads gouging at the pump by evil gasoline distributors.

Corrupt government does nothing.

What to do?

Increase value of dollar?

Goes against longstanding policy of Bush Admin.

Find another safe place to invest?

Say maybe real estate - that's going to be a problem right now.

Other countries?

Well that will hurt the dollar too.

So what will end the cycle?

Waiting until oil production, and gasoline production increases and reduces prices.

This could take several years.

And in the meantime we have China, India, the Middle East, and the rest of the world gobbling up more oil than ever before.

Factor the possibility that we might be at peak oil, and it could just be that we'll never see cheap gasoline again.

We may in fact come to believe that we are now buying cheap oil.

Best, and I mean best way to approach this is to buy cars that get good MPH, and to subsidize industries which create renewable domestic substitutes - like cellulosic ethanol, and algae bio diesel.

That way when petrol goes to six or even ten dollars a gallon we will at least be able to get used to it.

See, the Saudis don't depend upon us as much as before - except to protect them - which we'll do even if they double the price per barrel. So they can maintain production at current levels.

They are the only nation that can actually significantly increase oil production enough to flood world oil markets, and drive prices down like they did in the 90s.

They won't do that again. They need the revenue to grow their domestic economy.

geek_guy said...

Another cause is instability in the Middle East. Of course, Exxon is real happy with the Bush/McCain talk of bomb, bomb, Iran.