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364 comments on The Auto Efficiency Wedge

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memmel on December 19, 2006 - 10:24pm Permalink | Subthread | Parent | Comments top

From my reading the data on gasoline usage, recessions don't even show up on fuel consumption so for now I don't think anything outside a world wide depression will cause a significant drop in fuel usage.

Hmm I figured a spike late next summer based on to many negative factors causing a run on the market I did not consider any actual shortages for quite a bit longer 2009 at the earliest.

My opinion is still only a price spike in 2007 since I think KSA is filling storage and we still have the SPR that can be drawn down. Plus I think they have idled some production it may be heavy oil but I still think its happened.

So if you consider these factors we won't see shortages in 2007 and probably not 2008. 2009 is looking like a really bad year maybe 2008 but I think we will squeeze through 2007 with just one price spike and limp into 2008 with oil under 100.

Of course this depends on the decline rates of the big fields but I'd have to guess we have one more year at least  where excess capacity and stockpiles will prevent outright shortages and all we see are price swings with on big spike.

We just have to wait and see what KSA does when oil passes 70. If their production does not come back up for 6 months or more we know the party is over. So I guess we will know exactly where the world is at in 2007.

One thing about them claiming cuts and proclaiming a floor at 60 is it will soon be obvious where KSA is at as prices move well above this floor price.

If KSA says they are now comfortable with 70 next year ....

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mencial on December 20, 2006 - 3:00am Permalink | Subthread | Parent | Comments top
I don't think anything outside a world wide depression will cause a significant drop in fuel usage

¿Maybe a reduction on available fuel?

I do not care what some vice president says about something being non negotiable. If something gets too expensive, people will cut down. Witness medical insurance.

I did not say it would be pretty.

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memmel on December 20, 2006 - 4:39am Permalink | Subthread | Parent | Comments top

I dunno I thought the same the facts seem to indicate that economic recession at least on the scale we are used to does not have a major impact on fuel usage. If you think about it for modern countries your talking about a real change of maybe 3-4% in the economy from slightly positive to slightly negative. Fuel usage would be a % of this so say at worst 1% ?

So you would have to reach depression level economic slow downs to have a significant impact on oil. Put it this way to reduce overall oil demand by say 5% your probably talking a 20% reduction in economic activity. Note a lot of the economy is powered by electricity coal/NG so oil prices does not have a direct impact on the core economy. If you can find evidence that this is wrong please show me.

Now with that said shortages on the other hand especially chronic ones are a different ball game altogether and simple conservation probably won't solve those types of problems.

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BrianT on December 20, 2006 - 9:54am Permalink | Subthread | Parent | Comments top
Memmel: IMO, in the short term you are correct.Gasoline use in the USA is an addiction, and addicts will always cut back on other expenses before cutting back on their drug of choice. Dramatically higher gas prices will be difficult for the other sectors reliant on consumer spending(i.e. WalMart).
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InfinitePossibilities on December 20, 2006 - 2:36pm Permalink | Subthread | Parent | Comments top
You overestimate the importance of Walmart for the US economy. Walmart does not produce ANYTHING. They simply buy in China and sell in the US. You could replace them with an online  Chinese import/export company and get the same effect... cheaper.
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BrianT on December 21, 2006 - 8:59am Permalink | Subthread | Parent | Comments top
Infinite: I should have mentioned Ford and GM.
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InfinitePossibilities on December 21, 2006 - 2:47pm Permalink | Subthread | Parent | Comments top
Ford and GM are both great examples of companies you don't want to work for... other's would be United and Enron. The problem with either of these is that management only cares about short term success to satisfy stock owners and has absolutely no long term strategy. The US does not need any more of these companies. Let them die... and make room for new players with better management. I do not care if they are called Toyota and Honda as long as they employ people, pay taxes and don't need to be bailed out every other decade.  
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364 comments on The Auto Efficiency Wedge

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