Just North of $3/gallon
As I am sure everyone has noticed, gas prices have risen sharply. World demand for crude oil continues to increase while the supply remains maxed out. Many blame the oil companies, who are making record profits, for the high prices. I don’t fault then for making a profit but we need to end the tax subsidies they receive — they can invest their profits as most companies must do to stay ahead.
Back in December I suggested that Dubya might try to get gas prices reduced to keep a Republican in the White House. A few of the comments went like this:
“Can someone explain how the President has any effect on gas prices?â€
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He doesn´t. Only an idiot would suggest that he does. Oil prices, and by extension gas prices, are set on a world market. It´s that pesky supply and demand thing.
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The sad part is, these idiots are allowed to vote, which is why we get the “leaders†that we do.
The answer was the President controls the strategic oil reserve. Yesterday truckers staged protests of high fuel prices — diesel now costing far more than regular. From an AP article yesterday:
Using CB radios and trucking Web sites, some truckers called for a strike Tuesday to protest the high cost of diesel fuel, hoping the action might pressure President Bush to stabilize prices by using the nation’s oil reserves.
Just as with the Federal Reserve putting new cash onto the market, manipulating the nearly 700 million barrels kept for emergencies can have an impact on the supply/demand equation and thus the price we pay.
I personally like the higher prices as I think they are more likely to curb our drive everywhere mentality … I’d still raise the Missouri gas tax. Yes, poor individuals that drive and businesses are impacted by the rising costs. Items that are shipped will begin to have price increases where the market allows. It will be harder and harder for companies to offer “free shipping.” The trucking industry will shrink — not all will make it. Rail will take over more transport duties. Hopefully we will source more of our food and goods locally.
The question becomes at what price do people take transit or buy the more efficient vehicle? How expensive must gas be for someone to decide to buy a house in St. Louis Hills or Kirkwood rather than way out in St. Peters and drive to work in Clayton or downtown? Those with kids are going to claim the need for the 7-passenger minivan or suv and I can understand although many families were raised without such vehicles. Plus our demographics are heading to more single person households. Most of you reading this probably drive your own car to work by yourself each day. Do you need that much car to get yourself from A to B? Hopefully gas prices will have a long term impact on people’s buying choices from vehicles to homes to food and other goods,
I’m with ya Steve. 1 Car family of 3, live in south city and take the bus downtown to work! Economics… do your thang!
I love Metrolink. I barely remember filling my tank the last time. Take mass transit if you can.
Where are the protests for the price of milk? It is sad that since our past leaders, grandparents, parents etc. created this mess that we are some how expecting the present government to some how bail us all out. There isn’t a right to cheap anything. People some how think that the government controls all the prices. It just shows you how bad our economics education is. Just remember you can’t fix stupid.
JJ
The strategic oil reserves is for the US government to have a supply of fuel in the event of an international crisis; not a tool to leverage the price of consumer gasoline. Bush is the first president since the reservoir was established over 30 years ago to actually fill it full.
700,000,000 barrels is literally a drop in the bucket. It is less than two weeks of world oil production according to 2004 stats. Who knows how far we would have to drain the reserves to have a significant effect on the price, how long they could sustain it, and how in the world we would be able to bring those reserves back up in the event of a need.
The price of oil is simply based on supply and demand. Currently China and India are DRASTICALLY increasing their consumption. Until there is equal increase in production, the price goes up. Either pump more oil, or convince the Indians and Chinese to stop buying.
Using the reserves to regulate prices would be as responsible as sending out fire trucks to assist homeowners in filling their swimming pools.
If you care about the environment, clean air and the damaged caused to many by the escalating price of fuel, you should walk-cycle more and avoid using autos, trucks, SUVs, etc. when possible. Relative to self propulsion, Metro especially the busses are a poor substitute and no wonder Metro excecutives failed to incorporate paths along the lines as marketed.
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But this is St Lou and the vast majority of public funds are used to finance motorized dependencies and not infrastructure that support the use of alternatives. The fallout from this misapplication of precious funds will be felt in ways few appreciate. It will inevitably mean a weaker local economy and a lower standard of living. The key to fixing these self destructive trends is to change our daily habits and routines.
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At current oil prices, USA sends overseas $460 billion per year to finance the daily buying of 12 million barrels of imported oil. As a nation we are now sending $1.2 BILLION PER DAY out of our country to enrich other nations, and that is for oil only. The total amount is higher when defense expenditures are included.
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Concerned about your future? At $100 a barrel, OPEC’s oil assets exceed $90 trillion, equivalent to almost half of the world’s total financial assets and nearly twice the market capitalization of all the companies traded in the world’s top 25 stock markets.
The rising price of oil, as with the rising price of other commodities, is directly tied to the falling value of the dollar, compared to other currencies. The cost of oil, in euros, has remained fairly constant. It’s the cost in less-valuable dollars that has increased in direct proportion to the falling value of the dollar. That said, I agree, don’t reduce Missouri’s (or Illinois’ or the federal) gas tax.
I wouldn’t describe mass transit, in any form, as a poor substitute to automobile transit and further wouldn’t try to compare it to walking or cycling. To the contrary I would describe mass transit as and EXCELLENT substitute to automobile transit. Cycling and walking are beyond noble, and are far and away the most environmentally sustainable and human physiologically healthful means of self propulsion, however in a metropolitan context hardly the most practical for the gamut of inhabitants. If there is a least common denominator to which all means are reduced, I believe most would agree that mass transit is that denominator.
The cost of oil in Euros has also risen significantly in the last year unless you believe a 57% increase in price is a constant. The cost of oil per barrel has gone from $55 to $104, a doubling in price while the Euro gone from $1.32 to $1.58. One year ago the cost of a barrel was 42 Euros and now is 66 Euros/barrel. At the pump, the increase is about 18% for citizens and thus much less in percentage terms since the highest portion of the price paid per litre is for taxes. MO taxes haven’t been raised since the early 90s and we all know the the price of oil has gone up 10-fold since the 90s.
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Commodities prices like wheat, corn etc has more than doubled while the value of the dollar has fallen 20% and we don’t buy our commodities from Europe.
Choir preaching to the Choir?
Amen, brother . . . .
Let’s look at this supply and demand problem. Demand is, of course, is unprecedented — at least it has been in the last couple of years. But look at our supply. Over 60% of our oil is imported. Most of it comes from OPEC which has turned into a true cartel as explained by Robert Samuelson in the Washington Post. Where once OPEC members were okay with exceeding their production quotas, they are now in line with one another as a result of the insanely cheap oil of the late ’90s.
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Prices don’t have to be this way — at the very least, there is much we can do to curb OPEC’s pricing power. Conservation and new energy standards are certainly a huge step in decreasing demand. I’m all for a higher gas tax as well. On the production side, we need to start the expansion of drilling in the now partially forbidden wasteland of Alaska. The oil production of non-OPEC countries is expected to pick up. Also, a global economic downturn might curb demand.
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I remain quite astounded when people atribute the price of gas to the President. I don’t know if there is a single respected study that suggests such a correlation.
The Strategic Petroleum Reserve can only have a tiny impact on prices, for a very short period of time. But by raising the issue, liberals hope to put Bush in a lose-lose situation: If he does nothing, he’s “protecting outrageous prices for his buddies in the oil industry” and if he does release some oil, it won’t make any difference, which will prove what a lousy President he is. Those of us who didn’t sleep through freshman economics know the difference between market realities and political BS.
Interesting. So you don’t care that increased fuel prices have an impact on grocery prices? You don’t care that we’ve seen an increase of 25 – 30% in food prices due to the price of gasoline? No interest in what effects that has on middle income families?
It must be nice to sit on your high horse and watch the systematic demise of middle class American families while you wish for even HIGHER fuel prices.
Arrogant ass.
-JunkHead
Actually, the idea that local food production will decrease the energy component of food is a great, and potentially inaccurate, oversimplification. According to a University of Michigan study (link below) which, in fact, was in support of local food production, the transportation of food only consumes 13.9% of the total energy cost. Home refrigeration and cooking consumes nearly 32%. Which is to say, you can probably have a bigger impact on the energy cost of eating by replacing your old refrigerator with a newer, more efficient one, than by purchasing food locally – particularly if your local food purchases require driving to a different market than where you buy the rest of your groceries.
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Also, the agricultural production itself consumes 20.8%. So if large commercial farms are more energy efficient, as I expect they probably are, reduced energy consumption in transportation may be offset by increased energy consumption in production.
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I’m not saying we shouldn’t buy locally grown produce. In general, it seems to be fresher and more flavorful, though often more expensive. And it’s good to support our local economy when we can. But don’t assume that locally grown lettuce is more green.
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http://www.swivel.com/graphs/show/21368509
I hear a lot of anger and jealously in the comments above, particularly the comment about needing a riding lawn mower for the 5 acre lot.
How the heck is that wrong? Is it OK if I say YOU are wrong because you don’t wear your clothes til they can no longer be repaired? Is it the waste of gasoline that bothers you or is it your inability to escape the pitiful existance of living 2 inches from the next persons a$$ in a city with a history of gross mismanagement?
Intellectual discussion is a lot different than pretending to enjoy the underclass. Snobery is often a cover-up for underwhelming failure.
The entire population will suffer the consequences of the ‘oil crisis’, some more than others. To find joy in the coming hardships under the guise that it is for the good of man is the true mark of stupidity.
That’s just brilliant, justmyview.
In many cities that have an efficient and useful transportation system, there is a balance between the use of cars, mass transit, walking and cycling. The modes are designed to work together and not to create division which they do in St Lou. One of my favorite cities and just one example of many is Copenhagen where over 36% use bikes to travel everyday while less than 1% do so in StL region.
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Mass transit is a good substitute to Hummers but relative to other forms of personal transportation like walking and cycling, it requires fuel, large infrastructure investments, high maintnenance costs, etc. The Metro Extension investment was about $89 million per mile, an extraordinary amount. Of course that does not include the costs of maintenance, employment, security, etc., nor the environmental and energy costs required to move the vehicles. During rush hours numerous buses can be seen with less than five people on board. The amount of pollution and wasted energy far exceeds that of one individual per car and mass transit is only superior above certain load levels.
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Mass transit can be an integral part of an efficient transportation system that combines the benefits of motorized vehicles (whether personal or mass transit) with the advantages provided by cycling and walking. It’s really too bad and unfortunate for the region that Metro and MoDOT have both failed in supporting lower cost, healtheir and more efficient alternatives to travel than motorized vehicles. But even worse is the poor performance in providing synergistic potential. Most would agree that a Cadillac is better than a Hummer…big deal.
Metro is fortunate to come into existing rail corridors as they are, and to have achieved the level of success in St. Louis that they have is commendable. I find no such disappointment with metro, and further find no credible analog in Copenhagen, Amsterdam, Brussels or any other historic European cities, many centuries old with incredibly dense urban fabric to the city of St. Louis with regards to cycling. Expecting a jump from the current autocentric paradigm directly to mass cycling and walking, especially in a city so thinly spread by sprawl pattern development, is somewhat like wishing for less bumpy boat ride on a choppy sea, when its badly damaged hull is taking on water at a catastrophic rate. Let’s get the hull repaired first, and then we can focus on finer details.
In regards to the miles per gallon with mass transit, it doesn’t take many riders to make up the difference in person-miles traveled between a single-occupancy automobile and a bus. Let’s say the automobile gets 20 miles/gallon (20 person-miles per gallon) and the bus gets four. Anything more than five riders (20 person-miles per gallon) is more efficient from a fuel standpoint for that particular bus.
Of course, I don’t know how to control for all the externalities associated with each of the transportation options, but it seems to me that a public transportation system that serves an adequately dense population is a pretty darn efficient way of moving people around. “Busses to nowhere” don’t make much sense, but the suburban development model itself doesn’t make much sense either from a transportation efficiency standpoint.
Regarding miles/gallon vs. miles/passenger, this viral video makes some interesting points. We could [re]learn a few things from our neighbors to the south. Please watch:
http://blog.newtransportation.org/2008/01/bus-rapid-transit-video.html
US Politicians can’t do much short term. We could make a long term transition away from sprawl, but no politician would do this. As the cost of commuting rises, people will chose substitutes. Gas prices will continue to ride due to OPEC and most importantly China.
I’m probably getting a motorcycle because these prices are really through the roof. Driving a car is attractive when gasoline is cheap, but even for City driving this is an unnecessary expenditure.
“Where are the protests for the price of milk? It is sad that since our past leaders, grandparents, parents etc. created this mess that we are some how expecting the present government to some how bail us all out. There isn’t a right to cheap anything. People some how think that the government controls all the prices. It just shows you how bad our economics education is. Just remember you can’t fix stupid. ”
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Ladies and gentlemen, we have a winner! Take any gift from the top shelf.
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The president could release ever drop from the reserve and what would it do? Lower prices by 2 cents a gallon for 3 days? Big deal.
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Like others have said – only an idiot would think the president has any control over gas prices.
Peak Oil, people.
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Maybe not now, but sooner or later it is coming. The longer we wait to address it, the more severe, the faster, and the deeper the crash will be.
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We need to leverage oil into creating sustainability while we can. Using this precious resource to drive around in circles is a waste.
you must not be a patriot James.
The US has created a huge infrastructure of roads & Bridges and right of way based on the ability to move goods and people in an individualistic manner. It so happens that we took advantage of the cheap price of oil, a market economy and the efficient combustion engine. I would argue that it giveth some of our wealth and now it will taketh. But we definitely are not going to tear anything up anytime soon considering our options..
Mass transit works in corridors and density, but the reality is most of us are not going to get up and move on top of each other. We certainly need to invest into more Mass transit infrastructure but its not a cure all by any stretch of the imagination. Hydrogen sounds great, but it takes a huge amount of energy to generate and we have to install a huge amount of infrastructure in order to distribute it. Biofuels are not saving us at the gas pump. Instead we can’t grow enough, we subsidize the heck out of it, and its partly to blame for rising food prices. Price of oil even at $100 is still far more economical then these solutions.
Instead, I think the electrical outlet might be our best bet in the near future considering that the electric grid already exists and battery as well as material development is not that far away from creating an economically vehicle with comparable performance, safety and size to a gas driven vehicle. A vehicle that can easily be used on our existing infrastructure and right of ways.
Just give it a little time, let the markets dictate the value of oil, continue to invest in battery anbd material development, put the gas tax at where it should truly be at for maintaining our roads that we desire or least make use of more tolls, and make some more investments towards mass transit and inter city systems. I think it is very doable (especially if you can buy yourself a 5 dollar latte)
And where is all of this additional electricly going to come from?
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On another point, while we might not go out w/ the bulldozers and impact hammers, we’re tearing it all up through defered maintenance. And that holds for our roads, electrical grid, water and sewer service, etc. The pressure on the system is for gas taxes to go down, not up, to relive us troubled consumers. Look at the truckers strike last week.
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The longer it takes to realize that individual motorized transportation has now future, the worse that transition is going to feel.