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Obviously, demand is down as a result of the financial meltdown. But I am not the only one who thinks that the high prices this summer were due to speculation.
It’s a game of chicken.
Its $2.87 at Costco in Wilsonville
Where is all that demand from China and India?
Looks a lot like peak oil is just another internet rumor from paranoids.
Make that Wilsonville OREGON
I’d like the Oregonian to re-print some of the articles and letters from nuts that said the peak has passed and that we would never see $100/barrel again.
It is fine to predict but another to demand a policy response that costs real money, freedom and opportunity based on those predictions like these writers did. They should be called out now.
When gas prices go down, the Antiplanner concludes that there’s no gas shortage.
When housing prices go down, the Antiplanner concludes that there’s no land shortage for housing. Right?
http://www.voanews.com/english/archive/2008-06/2008-06-17-voa34.cfm?CFID=53041377&CFTOKEN=28569463
Well this is what ROT’s friend said back in June.
A lower price will touch on production too. Again it’s a game of chicken.
Though my self I’ve never liked the idea measuring the production cost of oil in money which is also volitile, some thing like calories would be more stable.
On the surface it looks a lot like peak oil is just another internet rumor from paranoids. Under the surface it’s a different story with the mean, variation from the mean and speculator premium spike all increasing by $15 every 18 months for ten years straight.
Though this also has to be compared to inflation, dollar value, S&D, etc.
I’ve got family who worked on petroleum projects, they’ve told me at times the price has to reach a certain level for some stuff even to be viable to recover.
Some argue that “peak oil” is mythical:
Confessions of an “ex†Peak Oil Believer
Outside of artifical government-created scarcity, there is no land shortage.
Sounds a lot like the artifical government created scarcity of rail service.
http://upload.wikimedia.org/wikipedia/commons/d/d6/Ambrussum_voies_marqu%C3%A9es_10-04-2006.jpg
Things go back quite a bit.
$2.94 today at a Safeway grocery story with a gas station out front in Edgewater [Anne Arundel County] Maryland.
That’s about five miles south of the state capitol at Annapolis for those not familiar with Maryland geography.
http://www.cholesterol-and-health.com/Hydrocarbon-Tail.html
Hydro carbons are closer to us than you think.
While I am not overly concerned about the price of oil skyrocketing to $10-$20/gallon, I do think that we are slowly but surely running out of oil, and, to that extend, the Peak Oil people are right.
What they continue to seem to miss is how the price of oil interacts with demand. Some people claim that the world will demand 100 mbpd, but only be able to supply 80 mbpd. That’s nonsense, because that demand for 100 is based on price.
What we’re seeing now is practically textbook – the high prices of oil caused people to change their behaviors and led to various corporate innovations that helped reduce demand. And, now that the economy is slumping, the ability to pay $4/gallon for gas has gone down, which further reduces prices.
At the end of the day, just about anything can be characterized as a crisis if you don’t think logically about how the world will respond.
At the end of the day, just about anything can be characterized as a crisis if you don’t think logically about how the world will respond.
Certainly folks limited their freedom by driving less when price went up. Quite a few also saw what a bad idea it now is to live way out in East Bumf*ckia and drive for 3 hours a day. But they’re free!
DS
johnbr wrote:
“At the end of the day, just about anything can be characterized as a crisis if you don’t think logically about how the world will respond. ”
All of what john wrote is true – despite this, the USA oilfields experienced peak oil. This was where the theory of peak oil was first developed.
Peak oil occurs when 50% of it is extracted. We’ve had no new major finds for a long time, despite accelerating extraction. Usually an oil field is propped up (so you can tell when it is running out) by pumping in water to flush the oil out. Saudi Arabia has been pumping in water from day one. No-one really knows how much oil is left, but it is likely to be much less than the stated position.
As the oil is depleted, prices will rise, and one of two things will happen. 1 – people adapt, driving less, just generally using less of it. 2 – people don’t adapt, and then their way of life collapses.
Adapting is far and away the smarter thing to do. But it requires some fore-thought, some effort which extends beyond an electoral cycle.
I don’t think we’re going to see $10/barrel again.
Any ways regardless of peak oil, if you’re squandering natural resources, you’re squandering natural resources.
highwayman: Hydro carbons are closer to us than you think.
JK: You’re just now learning that!! That is grade school chemistry.
I guess you are one of those people who will do anything to save the earth EXCEPT take a science course!
Karlock, I’m glad you know this, just posted this as a reminder in general.
Hey a lot of people still don’t know that the Diesel engine was invented by Rudolf Diesel. http://en.wikipedia.org/wiki/Rudolf_Diesel
Though Mr.Karlock you still have to get over your irrational fear of passenger rail.
the highwayman claimed:
> Though Mr.Karlock you still have to get over your irrational fear of passenger rail.
Have you met Mr. Karlock? I have. More than once.
He happens to be one of the cooler and more-rational people that I know.
Why don’t you leave your personal attacks elsewhere?
Ditto!
If you guys want to keep pushing double standards, fine.
Just don’t complain over nothing like a diva!
JK may well happen to be one of the cooler and more-rational people that C. P. Zilliacus knows but that’s not the impression that JK gives with his contributions to this blog. Maybe he’s playing the role of Devil’s advocate to force people out of their comfort zones. In which case it’s understandable and perfectly acceptable. To the best of my recollection JK always plays the ball not the man.
#2 on this thread is a good example. The answer to JK’s question is, if I may take the liberty of paraphrasing a once popular catchphrase, “it’s the global economy, stupid”.
The growth in demand for oil from China and India has slowed because when the USA sneezes the low wage export nations catch cold.
Since peak oil, in theory, occurs when 50% of reserves are consumed there can never be a fixed or predictable date when it will happen. In much the same way that freeway planners can never predict when a freeway will reach capacity with any great certainty. They know how much supply there is, how quickly reserves can be added and they may even know some technical fixes that may become viable in the future so the supply side of the equation has a fairly high degree of predictability. But demand growth depends on economic and population growth, and they could do almost anything in the future. Sometimes the planners just get lucky. The predictions of traffic growth made in the 1950s assumed the baby boom would continue. It didn’t, but we got feminism in it’s place and that doubled the driving population. But, at least in New Zealand, a decade of stagflation following the oil shocks delayed economic growth which of course delayed traffic growth. Which was rather fortunate as politicians deferred spending on freeway capacity during the stagflation period.
So, rationally, it is difficult to see how JK’s question could lead to the conclusion “Looks a lot like peak oil is just another internet rumor from paranoids.”
I am sceptical of the predictions of dire consequences. When North American whale oil production peaked in the 1840s, due to the limits of ship technology rather than an a lack whales, production plateaued for a decade before collapsing. During that decade prices fluctuated wildly from year to year. Yet the limited availability of the only source smokeless artficial lighting didn’t cause the US economy to collapse or even slow down to any noticeable degree even though kerosene lamps and Pennsylvania parafin didn’t become available till a few years after whale oil production collapsed. Innovators always find profitable solutions to problems. It’s something America used to be really good at, and Britain during the industrial revolution.
When the supply whale oil dried up America didn’t enter the dark ages, they simply switched to other sources of light, eventusally going all-electric. The same thing will happen with automobility. Although their may be a period where communal travel becomes a popular solution in the same way that gas streetlighting was popular in the mid-1800s.
oil prices == speculation?
If we go back to high school econ 101 price is a function of supply and demand.
end of story right? –> not quite
It’s my observation that on the surface life appears to be ruled by logic and order, but once you dig deeper there’s just a lot of things that do NOT make any sense. Why is a woman’s bra priced at $25 while a man’s pants sells for only $15? You’re not going to tell me sewing a bra is more difficult then sewing a pair of pants! The price should be the other way around.
Why don’t all the pants manufacturer’s give up on making pants and go into the bra making business. That seems like a much more lucrative business.
How do humans put a price on a product? –> I honestly have not figured it out yet.
But I do know that speculators can NOT control prices.
There’s a popular myth amongst people that when you become rich, you join a special fraternity where everybody takes turns scratching each other’s backs. And because of this your position will be secured for life.
My gut feeling says this is false however there’s only one way to find out.
If I ever become rich I’ll tell you. *grin*
There is also the fight or flight aspect with peak oil too.
One can deal with stuff head on and reduce the demand, or nothing at all.
A few months ago even I wrote that there was no energy crisis either, just cheap lazy people whining over the price of gas.