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19 comments on Go ahead and drive less

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ChrisPhoenix on September 26, 2005 - 4:46am Permalink | Subthread | Parent | Comments top
I'm a bit confused by this... you seem to assume that if prices go up without actual shortages, we'll inevitably be making things worse.

But... suppose prices go up to $90 per barrel and stay there for two years, then ratchet up to $100 for a while, $110...

Sooner or later, in that scenario, alternative energy will start coming online. And it won't all be carbon-heavy fuels. If we can hold out for ten or fifteen years without shortage, while prices stay high enough to make other forms of power profitable, then we may have enough technologies (worthwhile solar cells, better batteries for plug-in hybrids, etc.) to actually reduce our oil demand.

As long as I'm being optimistic, I'll suggest that we might even be able to increase our energy supply without increasing our carbon consumption. Tar sand and coal liquefaction will never be all that cheap, and there may be some exciting stuff happening in solar (reel-to-reel solar cells) and even batteries.

But, back to pessimistic... I really don't like what I'm reading about Ghawar, and the "if we can hold out for ten or fifteen years" doesn't sound all that likely to me.

Chris

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mw on September 26, 2005 - 5:41am Permalink | Subthread | Parent | Comments top
you seem to assume that if prices go up without actual shortages, we'll inevitably be making things worse.

Yes, that is a distinct possibility, but whether consumers make big personal changes in their energy consumption habits  (and therefore business will have to adapt) depends on the RATE of change, not the absolute change,

I remember when price moved to 34 cents a litre (I'm in Canada) and at the time we felt it was robbery. Then 50, 60, 70... and a nice break back to "cheap" gas at 45 one summer. What a treat. Now we consider anything under a buck a litre "cheap".

Its all relative. After all, SUV's have been huge sellers for the past decade while energy costs have trended ever higher. The recent rate of change has picked up - that is what is causing all the handwringing and angst, not the price levels themselves.

I won't be surprised if we consider 1,20 a litre or 3.50 a gallon "reasonable" 12 months from now. When consumers get used to a price, they keep on buying, and all historical trends show consumers keep on buying.

The one fly in the ointment is that prices are back to inflation-adjusted OPEC embargo levels, but the pundits are doing their job, reminding us all that oil is a much smaller component going into GDP then it was back then.

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mw on September 26, 2005 - 5:45am Permalink | Subthread | Parent | Comments top
By the way European markets are ramping up early this morning - huge, almost unheard of moves - all on "Rita", it sure would be a cool day for a bit of "surprise" bad news once Europe closes.

US market index futures are not up as strongly ahead of the open but at the current levels there will be a gap up open and then.. who knows.

I'm sure markets will hold up until more detail is known and if the conclusion is "what me worry", well, its up in broader markets, down in energy, until something else clouds the horizon.

Seems a bit otherworldly out there today LOL.

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19 comments on Go ahead and drive less

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