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Is $8 Per Gallon on the Way?

Posted by Matt Stoller, Open Left at 3:28 PM on May 22, 2008.


As gas prices climb higher and higher, everyone feels the pinch.
peakoil

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Atrios makes the point: "$4 gas is annoying. $8 gas, if it happens, will be... different."  

The Wall Street Journal has a piece out on the International Energy Agency substantially dropping its forecasts of global oil reserves.  Joe Romm, an energy expert at the Center for American Progress, points to this study by the Bush Department of Energy on peak oil, in 2005, which says the following.

The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.

The public sort of gets the problem, without any explanation from elites or the press.  Survey USA did a poll on gas prices, and found that 80% of respondents think that gas will rise to $5 a gallon before it drops to $3 a gallon.  The good news is that only 34% of Americans say they have no mass transit options, while 15% say that mass transit is a convenient option.  So there's lots of substituting away from driving with current infrastructure in place, and that's not even considering carpools and auto-centered ways to save energy.  But the problem is not simply energy-related, and much of the peak oil doomsday pronouncers are allowing the real villains to get off scot-free.  Here's the Cunning Realist, who has been pointing out the least-notices aspect of the story.

Last week, several indicators showed Fed-created liquidity at its highest level ever. Consequences: a new bout of dollar weakness, gold up about $70 in the past few weeks (are we "running out" of that too?) and of course oil at $130. And, most important for policymakers during an election year, a surging stock market (until Tuesday). While the Fed was doing its best imitation of Arthur Burns in '72, Bernanke, Paulson, and even Greenspan (not spending his days in a Venice gambling hall, apparently) all claimed that the worst of the credit crisis may be over. So why do the extraordinary measures continue? This madness is ripping the guts out of entire segments of society: wage earners, prudent savers, Social Security recipients and fixed-income retirees, independent truckers, mom and pop restaurants and retailers, the rural poor, long-distance middle class commuters -- basically anyone who doesn't own an oil well, corn field, or sit in front of a half-dozen trading screens in midtown Manhattan.

I was at an event put on by the New America foundation two nights ago with Senator Dick Durbin around globalization.  Most of his speech focused on the link between globalization and carbon pricing.  I asked him a question about economic statistics, considering that the real rate of inflation as per Kevin Phillips is between 6-9%, not the paltry 2% put out by various government agencies, and that unemployment is also goosed by not including prison populations and long-term unemployed.  Durbin relayed a story about his winning campaign, in 1982, when he could wait until new unemployment numbers came out and issue a press release attacking his opponent.  Today, he says, unemployment means nothing, the only statistic that matters to consumers is gas prices.  And then he said he was praying that prices would come down.

It would probably be better if Congress did some real oversight on the Fed, peak oil, and gas prices.  

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Tagged as: oil, inflation, credit crisis


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Bring it.
Posted by: ABetterFuture on May 22, 2008 10:27 PM   
Current rating: 5    [1 = poor; 5 = excellent]
My wife and I just lost both our cars and have replaced two autos with one.

She usually takes the car, owing to the better security, and I usually take a bicycle now.

Our insurance bill? Halved.

Our gas bill? Halved.

I don't know if we would have pared our cars if gas was still 1/3 the price of milk. I doubt it, honestly.

Yes, price increases necessitate adjustments in behavior. But I'm still coming home at night, and I'm still eating steak or catfish and drinking beer on the weekends (and still losing weight, thanks to my loss of my car).

If the price of gas gets ridiculous--and honestly, I don't think, at least at this point, that the Asian markets can compete with $8.00 gas--then so be it. We'll tighten our belts or loosen our cars as a nation appropriately.

I do worry that the sinking value of the dollar will drive up gas prices, but that's something we'll have to address as a nation, right after we get rid of our fat-cat congresscritters who have been complicit in devaluing our dollar, our nation.

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NATIONALIZE THE AMERICA OIL COMPANIES AND ALL HOLDINGS..
Posted by: TJ-stars4peace on May 23, 2008 5:12 AM   
Current rating: 3    [1 = poor; 5 = excellent]
If it takes $8 dollars a gallon gasoline for Americans to wake up and realize the only solution for now is to Nationalize The American Oil Companies and All Holdings..

Exxon-Mobil is not paying $135.00 dollars per 42 gallon barrel of Oil the American Oil Companies are 49% of OPEC..! As a matter of fact it was the American Oil companies who envisioned and convinced and taught the Oil producing nations to create OPEC..!

If we Nationalize these lying thieving bastards of Exxon Mobil and the rest we can cut costs immediately 30-35% and still have $50-60 Billion per year to develop Alternate Energy and New Technologies related to energy..!

This reduction in energyu costs would create an economic boom unlike any since the post WWII era..!

It would benefit every American and Promote Commerce...!

The status quo is killing commerce, it is part of governments mission and stated purpose to promote Commerce and the general welfare of We The People..!

61% of all this Oil run up is Speculation and has nothing to do with drilling for oil refining it or distribution is just Bullshit..

Greed Capitalism run a muck unbridled out of control under or unregulated capitalist cannibalism..!

If you care about America and want to sive it from the corporate fascist who are nothing less than traitors and enemies of the American people than start callinf for the Nationalization of the American Oil companies and All Holdings that includes, Halliburton that's a holding..Oil Services..

Remember the American Oil Companies are not in the business of putting themselves out of business..!

Get it..?

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» Another Emotional Rant Posted by: mtnclimber
» RE: Another Emotional Rant Posted by: boydranchitos
Gas in Europe
Posted by: benzene on May 23, 2008 6:00 AM   
Current rating: 5    [1 = poor; 5 = excellent]
Gasoline in Finland is steady, and has been for years, at ~2 Euros a Liter. The government taxes gas heavily, and as such absorbs fluctuations in the actual price of oil to keep the pump price steady for consumers. And then Finland uses all of that tax money to fund universal health care and free K-PhD education for all its citizens (18 months required in the military at 18, but then again Finland doesn't wage war, but peace).
There are probably other European countries with similarly logical and humanitarian schemes in place, but I am not as familiar with them. If only such socialist populist logic was not tainted with the scare of Reds here in America, perhaps we could all be better off...

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Thank gawd, we didn't re-elect Jimmy Carter
Posted by: sausage on May 23, 2008 6:03 AM   
Current rating: 4    [1 = poor; 5 = excellent]
Boy, can you imagine what the nation...the world, even...might be like if America had re-elected Jimmy Carter in 1980?

Man, electricity would be generated by windmills. OPEC would be powerless. Cars would be fueled by hydrogen, alcohol or rechargable batteries. Maglevs would crisscross the country.

Gee, of one, I'm glad we elected Ronald Reagan. Invading small countries is a lot more fun...

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» sausage Posted by: bobtr900
Some thoughts on high gas prices
Posted by: mpwilliams on May 23, 2008 7:36 AM   
Current rating: 5    [1 = poor; 5 = excellent]
1. Americans complain about high unit gasoline (and diesel) prices, but the real issue from a household (or business) economic perspective is not the unit cost (per gallon) but the monthly spend (units x cost/unit). Americans are not powerless to mitigate their monthly spend on transportation fuel -- in short, they can begin conserving their use of this increasingly precious necessity. It may actually be possible to substantially offset the effect of higher unit costs through serious and persistent efforts to mitigate consumption.

In that spirit:

-- Get smart about WHAT you drive. Drive the most fuel efficient transportation that is consonant with your REAL transportation needs. The notion that every soccer mom (or dad) in the country needs a three ton civilian armored personnel carrier to dispatch her (or his) daily duties is preposterous, as is the notion that ANYONE who doesn't regularly trailer horses or a boat needs a V8 vehicle with 300 or more HP.

-- Get smart about HOW you drive. Instead of racing from one traffic signal to the next, as if the first arrival to another dead stop wins a prize, learn to accelerate modestly and smoothly. Drive at moderate speeds -- the difference in arrival time for a daily freeway commuter who insists on driving 70 MPH instead of 60 MPH is usually, for most trips, less than five minutes. Set an example -- at five to ten dollars a gallon for fuel, you won't be alone very long. Increase the following distance you normally maintain, and automatically restore that distance when it is reduced by the action of another driver -- the single largest contributor to traffic congestion and delay (thus extended commuting time and increased gas consumption) is the constant brake tapping that goes on in closely-spaced traffic.

-- Get smart about HOW MUCH you drive. Rationalize your shopping trips to eliminate those back-to-back three-or-four-in-a-day single-errand forays out to the same shopping districts -- it IS possible to plan your household provisioning so that three, four, five or a dozen errands are all attended in one trip. Don't make a five mile round trip for a gallon of milk -- keep some powdered or irradiated milk in reserve for those occasions when you run out before your next regularly-scheduled grocery run.

-- Stop driving around just to do some driving around. Taking the family for a drive is no longer an exercise in low-cost entertainment -- it's an exercise in social irresponsibility. Get it?

2. The American Congress should enact legislation to increase the federal tax on gasoline and non-agricultural diesel to four dollars per gallon, with the proceeds going to refurbish and modernize ground transportation and electrical power distribution infrastructure. The consequence of this increase will be a dramatic acceleration in the socio-cultural and industrial transformation required to reverse the trend in America of generally increasing per-capita demand for hydrocarbon transportation fuels, imported or otherwise.

3. The American Congress should enact legislation that reopens the Atlantic and Pacific OCS (outer continental shelf) to exploration for oil and gas. Oil and gas E&P (exploration & production) activity in the UK, Dutch, Danish and Norwegian sectors of the North Sea have not brought ecological catastrophe to those waters and shorelines, and the only conceivable basis for continuing to argue against E&P activity off our own Atlantic and Pacific coasts is plain old not-in-our-back-yard protectionism, a position that may become very indefensible very soon. In any event, the first benefits to consumers if those waters were to be opened tomorrow would be at least five years in the future, so Americans need to get over their self-pitying 'pain-at-the-pump' indignation and start taking some serious personal responsibility for conservation.

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stop whining about 3$ a gallon....
Posted by: sidguppy on May 23, 2008 7:46 AM   
Current rating: 3    [1 = poor; 5 = excellent]
people in the States should stop whining about gaspreices when they still have a "free ride" compared to us, for example.

when it comes to gasprices, we -the Dutch- are fucked beyond redemption. buckweeded by our government and the oilcompanies.
our "premier" Balkenende is one of the most devout and loyal followers of King Smirk and also one of those nutcases wearing the bible on his sleeves. same same....

those bizarre gas prices over here also make the food, the public transport, the energy prices (the government paired our natural gas reserves to the oil reserves because of Shell pressure) going for the roof.

a neat little link to prove it; click it and weep
http://money.cnn.com/pf/features/lists/global_gasprices/

6,48US$ a gallon!!!!!!

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» Stop whining about $10/gal gas! Posted by: tommy_slothrop
Gas Prices
Posted by: mtnclimber on May 23, 2008 7:54 AM   
Current rating: 5    [1 = poor; 5 = excellent]
Let's understand that the gasoline price corrected for inflation has risen but tends to be reasonable taken in historical context. We got used to cheap gas in the 90's etc. and expect it to continue so we can drive our gas guzzling unregulated by CAFE standaards SUV's.

Now that the price has adjusted (albeit from speculators) we complain. It's not the Oil companies. In fact we had better hope they make profits so that they can explore, refine and deliver gasoline to us!!! Also, they make a nice profit which we like to see in our investments.

We are hypocrits. Blame somebody for paying more when all we want is cheap, cheap, cheap.

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Just the beginning...
Posted by: QuestionAuthority on May 23, 2008 8:09 AM   
Current rating: 5    [1 = poor; 5 = excellent]
The airline industry's troubles are just the "canary in the mine shaft" for the US. Any business that depends on lots of cheap oil/cheap energy will soon follow.

Consider the common thread here: aviation, long-distance trucking, pharmaceuticals, chemicals, plastics, producing metals like aluminum, electricity production, on and on. All these and many more industries are based on heavy, cheap energy use. When the price of energy spikes severely, they start losing money. When they lose money, they start to lay off workers. Can you see the shape of a worldwide Depression in the future? Global war over the remaining resources? I do.

Wars are always fought over resources, whether it be "liebensraum," oil, food, or other natural resources. The politics are merely a cover for what the actual cause. Witness the US in Iraq. "Bringing them democracy?" Bull.

Just wait until the Chinese finish building their military machine with our money and licensed knowledge. Intel is building a huge chip factory there. Boeing has already given them the knowledge via the 777/787 licensing programs to build their own jumbo jets...or heavy bombers.

Our government is run by people that have no concept of the Law of Unintended Consequences or that the "faith-based" politics they espouse may well arm our worst potential enemies.

Remember: Before World War I, the European politicians and business leaders said there would never be another war because of all the business ties between the countries there.

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Lemme tell ya what $4 - $8/gal means to working poor
Posted by: DaBear on May 23, 2008 10:15 AM   
Current rating: 4    [1 = poor; 5 = excellent]
Setting aside the disgusting economic affair of reducing school teachers to the poverty+10% bracket, this is what $4/gallon gas means for a family of four: driving a car is a luxury. Using public transit means spending 3-4 hours each way to do anything. Riding a bike is faster (and healthier) but is impractical with young children who are too big for trailers and not big enough to ride in vehicular traffic, and trying to find a bike rack in a Republikaaner car county in socal is like trying to blow shit up with your mind. So you still drive but that means a parent skips a couple of meals to cough up the petrol funds for every single drive. A $63/tank gas bill on a 22 mph vehicle (don't even talk hybrids, those are at least $12K beyond our maximum affordability) is 1/3rd the weekly food bill (spartan as prices keep going up: milk up 235% in 8 months!) . Eat or gas, that's the "choice."

At $8/gallon, the car is abandoned or sold. Period. There's no way to afford gas at all once it hits $4.93 on a teacher's salary (plus three other low paying but high-education/skilled jobs).

So while the middling serfs and their owning class masters bitch and whine about gas being "expensive" frankly, they don't know shit from shat. Working people are so fucked in this infrastructure fragged 'Merkuh, thanks in no small part to the owning class parasites who made all the choices with little or no thought of anyone else. Blowback's gonna be a bitch, rich boyz...

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$8 Gas? Bring It On
Posted by: shinseiji on May 23, 2008 10:24 AM   
Current rating: 5    [1 = poor; 5 = excellent]
The sooner Americans get knocked out of this suburban shopping mall drive everywhere in your Tonka Toy complex, the better.

Notice how nobody says petro was *underpriced* in the 1990's. But it turns out that it was, much to our detriment.

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traffic lights, speed limits, driving habits
Posted by: tbone on May 23, 2008 10:54 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
If traffic systems were prioritized to keep primary traffic flows moving, millions of gallons of fuel could be saved. The more time your car is sitting at idle, the more fuel it wastes. Contact your local DOT and ask them to re-time commuter traffic regions!

Drive slower. This one primarily applies to un-aerodynamic vehicles. Fuel consumption is dramatically higher for large vehicles once they break 50mph. My Honda Civic, however gets nearly the same mileage at 65mph as it does 55mph. But I don't drive like a dipshit.

Stop accelerating if you will have to slow down. Anytime you use your brakes it means you used the gas too much. Drive smart, and your car will thank you for it.

I have a 28 mile commute one way. I must go thru 9 traffic lights for the first 8 miles, 5 more lights for the next 18 miles, and 4 more for the last 5 miles. When I hit the timing correctly (ie I don't have to slow down for idiots who cause average speed to drop below timed speed) I can make the whole trip in 35-45 minutes. I average 40-45 mile per gallon during warmer months. My current fuel/maintenance bill is still $40.00 cheaper than getting a monthly bus pass at $175.00. There are no shoulders on the 2 lane highway that I travel...that means no biking. I have been on a ride share/carpool website for the last 2 years, I have had 2 people contact me...and they wanted me to drive their kid to school, not fellow commuters. If/when gas climbs over $5/gal the bus will be a better choice...maybe. Our public trans is underfunded, and is poorly managed = p*i*t*a schedules (i have 2 minutes to make one of my transfers), ever increasing fares, and now increasing ridership that means I might not be able to even get on! My point is that if this is the case in a major metropolitan area such as Denver/Boulder, it must be really bad for all those red-staters. But then I didn't vote for Bushie, I knew we would be fubar'd when he got in. Thanks dillholes.

Time to start growing your own food, pretty soon nothing else will matter.

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Opening More land to Oil Exploration is Not the Answer.
Posted by: peacekeepertwo on May 23, 2008 11:27 AM   
Current rating: 1    [1 = poor; 5 = excellent]
The positive side of high Oil prices,is that Windmills & Solar Panels are A good investment. and we will see more funding for Light Rail. and we will learn to live without the Automobile.

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CalKid
Posted by: CalKid on May 23, 2008 5:40 PM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
First intelligent comment on Alternet in 3 weeks

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themanwithadog
Posted by: the man with a dog on May 24, 2008 1:59 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
In Dubai at the present moment a small city is being built that will prove to be the most friendly enviroment known to man. No cars, solar powered energy free air co,free rail commuting the lot. All this is costing hundreds of millions of dollars which is funded by the exorbitant profits that the arabs are making from the price of their natural product. They are not only laughing at the rest of the world as they take their profits to the bank, THEY ARE THE BANK

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» I Have a Dream Posted by: wilty
And it will still...
Posted by: bobtr900 on May 25, 2008 4:16 PM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
...cost 8 dollars a gallon when McCain and the Theocons and Neocons get done with us.

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