<DrumBeat: January 17, 2008 The Oil Drum Goodbye Helium, Goodbye Brainscans>

125 comments on President Bush Questions Saudi Ability to Raise Oil Supply

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SailDog on January 17, 2008 - 1:48am Permalink | Subthread | Parent | Comments top

A switch to smaller cars in America will be inevitable if costs are to be contained.

In his February 2005 report Hirsch reported that the median age for the US fleet was 16 years. It is hard to see in a recession how the fleet is going to be replaced any quicker. Much of it may be scrapped, but that is a different issue. Car pooling, minibus point to point services (like in Africa and the Caribbean), reduced and shorter trips; and more use of public transport will most likely take up some of the slack. The recession and or increasing cost of oil products will also result in fewer journeys.

Anyway gasoline is more of a discretionary fuel.

The big issue is going to be diesel and Aeroplane A-1 (Jet fuel). These are very similar blends. Diesel is a vital fuel while jetting around is more discretionary. When shortages become apparent my guess is that the military, agriculture and haulage will get first crack at the available supplies while air travel will get very expensive.

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expat on January 17, 2008 - 7:56am Permalink | Subthread | Parent | Comments top

Though currently, it is outlying areas in the U.S. that seem to be suffering sporadic diesel problems.

Interestingly, gasoline appears ever less 'discretionary' in the eyes of those using it. At least if you see how declining expenditures in other discretionary areas continue, while money continues to be poured into the gas tank.

Even more interestingly, Europe has apparently turned its back on 'regular' gasoline (talking about details concerning octane, the ways to measure it, etc. is not important here) - in part, according to the radio news a couple of days ago, because the price for it at Rotterdam has been steadily increasing. As have European exports to America.

If you will, Europe is offsetting some of the increase in fuel prices through a strengthening euro combined with a bit of trading of 'unwanted' gasoline at a nice mark-up - however, since Europe is very much a diesel market compared to the U.S., I don't have any idea how much of for how long Americans can afford to pay euro prices for diesel when competition grows fiercer. I do know that the dollar doesn't go as far as it used to, though.

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125 comments on President Bush Questions Saudi Ability to Raise Oil Supply

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