Cheering for high gas prices?

[burnfromwithin]

Is anyone else secretly cheering for higher gas prices?

It seems like so far the higher prices have led to people consuming less. I have been consuming less for a couple years, but that is out of concern for the environment, not because of gas prices. When I do drive, I drive a really efficient car, so I don't mind higher gas prices as much - they don't affect me.

I would like to see more people cut back on driving or find other ways to get around - and if high gas prices are the way to do it, then I guess I support higher gas prices!

[BobTrips]

Well, if we had higher gas prices only for those who are in pretty good financial shape and can cut back on their discretionary driving.

But there's the 'working poor' whose budgets were already strained and are now facing significant increases in the cost of gas to get to work and in the cost of food for their families.

[mikebeavis]

There may be some societal good that comes out of them in the end, and I recognize that, but I can't cheer high gas prices for the same reasons Bob mentions. It is hurting a lot of folks. Maybe they'll be forced to make better choices, but in the meantime they are going through some heartaches and headaches.

[organgrinder]

No. Big oil wins. They have closed working refineries and not opened any new ones for several years. Gouging at its finest.

[tonedblue]

In one sense, yes, I secretly snicker whenever I fill up for $35 and the guy next to me can only manage to squeeze in $50 in his huge SUV -- not because of lack of space, but lack of funds. However, I do realize my disdain for huge SUVs, which for many serve no real purpose, is one thing. The less fortunate that are really feeling the increased price in fuel are who I feel sorry for.

It shouldn't take increased fuel prices to cause people to realize their wasteful ways. I've tried to apply the concept of supply and demand to fuel prices without much luck. Companies such as Exxon continue to post egregiously profits, so my disdain it really directed towards them.

When it's all said and done, I hope my snickering is founded, and those that can live with less wasteful vehicles do so, and those that can't afford to fill up there fuel efficient vehicle can.

[hillsidedigger]

Much higher gas prices is likely for the better and will help make America energy independent

for

#1 - Consumption will be lower as people, corporations and government adjust their spending to involve less fuel consumption

and #2 - The more expensive energy resouces in America will now be worth developing.

It will create many high paying domestic jobs particularly in the Great Plains and Rocky Mountains.

I still think the unroaded wilderness at ANWR is worth more left as it is than the little bit of oil that might be there.

[BobTrips]

Corporations and governments will continue to consume and recoup their costs in normal ways.

We'll pay at the pump and we'll pay at the cash register.

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Higher petroleum prices are likely to speed the development of alternative fuels.

That could be good if we're talking solar/wind -> PHEVs/BEVs.

That could be terrible if we're talking ethanol from foodstocks.

--

If the new jobs are wind farms in the Great Plains and new HVDC grids to tie everything together, well, that's good....

If the new jobs in the Rockies are extracting oil from shale, well, lord help us all....

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There may be a lot more motivation for the oil companies to open ANWR.

And a lot more public support for letting it happen.

--

This could play out good.

Or it could play out very bad.

[wolfspirit]

No. Big oil wins. They have closed working refineries and not opened any new ones for several years. Gouging at its finest.

This would be gouging if the refieries were operationg at full capacity. As it stands currently, there is excess refining supply, so much so that the idle pieces of it, instead of stocking up gasoline supplies for the summer months.

Gasoline consumption is decreasing in the US. However, the is slightly edged out by an increase in the rest of the world, continuing to drive the price of gasoline up more.

The profit margins on oil refineries have not changed significantly (they are still 10-20%, which is a normal margin for most any company). The reason they are having record profits, is due to record demands. Many of the refinery companies point out that their margins are lower than a few years ago. Maintaining a decent margin is extremely important for any company to stay in buisness.

There are many issues with the oil market today (including rampant investor speculation), but price gouging from the oil companies is not one of them.

Oil is $110 a barrel. That is something around $2 a gallon of crude oil, not to mention the costs and product losses of refining it into gasoline. This is what drives the price of gas. The "gasoline crack" (price spread between gas and oil, in percentage terms) has not moved in any meaningful amounts over the last few years.

Steven

[guitarkidd94]

I'm pretty excited that oil is running low but I don't like seeing families struggle financially. I would also like to know what will happen first We run dry of oil or effects of global warming become horribly bad

[mikebeavis]

#1 - Consumption will be lower as people, corporations and government adjust their spending to involve less fuel consumption

Not to pick on you, hillsidedigger, because this is something I see a lot of people say, but there are real flaws to this argument.

Supply and Demand theory, as most people know it, means that as price goes up, consumption goes down. But this does not apply cleanly to every product or market. In the case of oil, we have about the most inelastic demand curve one could imagine. There is no easy substitute - who among us drives an EV or could go get one tomorrow? Now consider we're the TreeHuggers! No, the economy of today is based on oil and we can't easily or quickly escape that. As price goes up, consumption remains basically the same - because their is no alternative we can easily switch to (in Econ terms, a "substitute good"). Yes there are electric cars and natural-gas buses and hybrid delivery trucks coming into the market, but for the near future they will continue to represent a tiny minority of the total US fleet.

This is evidenced by the fact that this past year is the first time since the recession in the early 90s that there was any downward movement on consumption. Even so the movement was only 1.1%. I submit that since that time, gas has roughly tripled in price. Therefore we've had a 300% price increase and about a 1% decrease in consumption. As I said before, that's about as inelastic as demand ever gets.

Even if the trend continues, and we assume that it drops 2.5% by the time it hits $4/gallon, that means for every 1% decrease in consumption the price must go up by 60% before we get 1% reduction in consumption. Now I know that 1% of US consumption is a lot of gallons/barrels, but it's hardly going to mean we've arrived in the future and are all driving Priuses and EVs and taking mag-lev trains to work. It means you take vacations closer to your home, smartly plan out your Saturday shopping errands, and some more freight shifts to rails versus trucks (a trend that began awhile ago when gas got "expensive" around $2.25/gallon.)

There's a lot of good points in this thread, but I think we ought to be realistic here. Gas is about to quadruple this summer from where it was 10 years ago, and we've managed to reduce consumption (during an economic pull-back, mind you) only by 1.1% from the numbers I've read. That's hardly going to change the world as we know it.

[Ian Gordon]

Well, as was put to me recently, there's always car pools for poorer individuals. It was also put to me that large increases in fuel costs wouldn't really add up to much other than some financial prioritizing and juggling. I didn't really buy into that since there's a lot of people living on the breadline as it is, but then again what do I know I'm not living in the States. Other people, on the ground as it were, can and do tell a different story.

[stevenchen18]

Many of my friends are happy to see the price of gasoline goes up. Of course, we are not going to admit that in the public.

Yes, people (rich or poor) will suffer when the price goes up. However, the fossil fuels are limited resource. What do you expect.

The only solution for the poor people is carbon tax. The collected tax can be distributed to the poor people. That way, we will lower the use of fossil fuels and taking care of the poor people at same time.

Without carbon tax, the price of oil/gasoline will still go up no matter we like it or not. At that time, the poor people will really be in big trouble.

Think about it.

[NotConvinced]

Is anyone else secretly cheering for higher gas prices?

It seems like so far the higher prices have led to people consuming less.

No, I am definitely NOT cheering. as others have mentioned, the less fortunate I know of are really struggling with this. It is causing people to spend less on other items they would normally buy, which is bad for the economy.
If you do an analysis on the amount of C02 reduction if the entire nation cuts C02 output on cars by as high as 30%, the results are negligible, much less if people have only reduced this by a couple percent, as someone else has mentioned.
We can only benefit from lower fuel prices. Electric vehicles may be available in the future, but it`s going to be a long time before the less fortunate can afford these cars. So they will still need affordable fuel even after electric cars are readily available.

[Ian Gordon]

The price has to go up. It's the only way things will change. On the other hand it's tougher on those with less disposable income.

I could talk about the UK since that's where I'm from, but it doesn't really translate into the US experience because distances are much shorter, and public transport is less problematic because of higher population densities and government finance.

I took several classes on US history and society and it seemed to me from the readings that the situation was very bad for what we in Britain call Black people. That whole situation in the US is completely different from the way it is in Britain so it's a little difficult for me to get my head around. It's particularly strange given that I grew up in Glasgow and so barely saw a black person in the flesh until I went to London in my early twenties. I didn't think it was a big deal though some of the Jamaicans spoke English that was pretty difficult to understand.

But from what I hear in the US, there are black neighbourhoods, they're often quite some distance from where the jobs are, meaning a necessity for transport. So I wonder how much of that is the rising price of gas and how much of it is a societal problem.

My experience of black neighbourhoods can pretty much be categorised as Spike Lee movies. But even so movies like Boyz in the Hood, showed houses with substantial gardens for the traditional barbecue, even in poor neighbourhoods. If that is commonplace then there is scope for gardening. One thing that struck me was when the Secretary for Agriculture said that biointensive agriculture was potentially the greatest tool in the fight against poverty that he had ever seen. I'm not sure of the context, it may well be that he was talking with reference to Africa, but even so, there seems to be scope for low cost projects in poor neighbourhoods that could alleviate a lot of the pain that they are feeling.

It's worrying to me personally that the lifestyle that most people in the world aspire to is the US lifestyle. You can't tell them they can't have it so there'll have to be reductions in that lifestyle if we're all to continue living on the planet. I could come across as pontificating if I said that Americans should try to live like Europeans, but that isn't going to happen because even though Europeans are living with a smaller carbon footprint it's still too big.

Energy prices is really the only way I can think of to bring the excess down to something manageable. It's like going on a diet.

It'll hurt, but there are ways to provide succor to the less fortunate amongst us. If we're really talking about poor people hurting and not about our own pockets then there are things we can do. Paying employees more would probably be a good start, but that might contravene market principles. Adam Smith, the supposed prophet of the free market, always said that markets should be counterbalanced with sympathy. Sadly, this is not something you encounter much in red in tooth and claw capitalist systems.

So I guess what I am saying is that if you feel badly for the poorer people in society who are suffering from fuel price rises, then it's not really an energy problem, it's a societal problem. Oil reserves isn't something you can change with determination and a bit of elbow grease, Society however is something that can be changed for the better.

[mikebeavis]

Ian, you make some good points, but I have to say that your knowledge of poor black neighborhoods is dreadfully inaccurate. This really isn't the place to discuss such things, but suffice it to say that it is in the cities where you find most of that kind of neighborhood, and in the cities it is usually row-home or town-house communities (designed for walking cities and/or mass-transit) more than individual homes like in the movie you referenced. That is an odd situation from a town that boomed much later than most US cities and some of the poor developments are more akin to post-war suburbia than row-home communities which were built between 1870 and 1935 (before the car's popularity). Most row-homes are 20-25 feet wide and have a small backyard of equal width, in which you could grow a small amount of food but not very much. Still, since most don't grow any, there is room for improvement there.

As for Adam Smith I think he had it right. Economics is generally held up as this ideal in and of itself, as if the outside world does not and should not influence it. To me that's a lot of bunk. Market forces are one piece of the greater whole. You cannot separate economics from other human systems. And thus there ought to be a role for compassion, empathy, etc. However when you boil it all down to dollars - as is the case in most corporate boardrooms - you lose all sight of the humanity that the dollars will effect. There are some great companies out there who have not forgotten that treating people well tends to bring its own reward. But so many simply see "cost reduction in salaries leads to more profits for shareholders." What a crock - as if low-paid and unhappy employees ever produced more and thereby earned more than well-paid, happy, employees!

This is one reason why local shops and "mom and pop" are so important and so vital. They don't have the luxury of sitting in leather chairs around a massive table and deciding the fates of the hundreds of people who work so that they don't need to. Mom and Pop not only still do a lot of their own work, but they interface with real people and they know how their decisions will affect real people. In such a system there is still a role for compassion, empathy, and humanism in general.