Gas Seems Downright Cheap at $3.689/gallon
What a bargain, only $3.689/gallon. As I’ve made clear before I think the gas prices we’ve seen are a good thing in the long-term although painful in the short term. The $4+ prices have managed to push consumers away from gas guzzling SUVs and toward more fuel thrifty choices. Total miles driven has also dropped markedly.
I don’t think we’ll see sub-$3 prices again but we will see fluctuations in the $3-$4 range. We are all adaptive and I wonder if once people adjust to $4/gal if something less than that will seem like a bargain and return to old wasteful habits? I hope not.
The drop in gas use is having an impact on the federal highway fund. From MSNBC:
But the drop was not unforeseen. In February, the Bush administration forecast a $3.2 billion shortfall in the trust fund for fiscal year 2009.
On Monday, transportation officials revised that number to $3.1 billion, despite logging a $1.5 billion decline in receipts.
“We’ve been spending more slowly than we contemplated when we put the budget together,” explained Secretary of Transportation Mary Peters.
Peters said in a statement Monday that the drop in driving miles demonstrates that the federal gas tax is no longer sufficient to finance the nation’s transportation infrastructure.
She plans on Tuesday to propose policies that will include a “more focused federal role” and a movement away from the gas tax.
“We must embrace more sustainable funding sources for highways and bridges through more sustainable and effective ways such as congestion pricing and private activity bonds,” Peters said.
Since the inception of the federal gas tax and the highway trust fund we’ve almost consistently increased our total gas usage. We must decide what infrastructure is important to us and how we are going to pay for it. I personally like tolls. Perhaps highway 40 should have been rebuilt as a toll road?
I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.
Answer to your last question – No!
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Oregon is experimenting with vehicle license fees tied to annual miles driven. Given advances in technology, this MAY be the best solution – everyone gets to pay for what they actually use.
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Building and maintaining highways is driven by two separate issues, congestion and wear and tear. Those 80,000 pound trucks, individually, do a lot more damage to the highways than a 4,000 pound automobile does, individually. Heavy trucks should pay more, and they do. Whether it’s enough or fair is the subject of unending debates. Locally, a lot of highway spending is directed at addressing the issue of congestion, of simply too many people being in the same place at the same time. Congestion is much more a factor of the number of vehicles and not their weights, so an argument can be made for congestion pricing.
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In a truly “enlightened” world (and a very big-brother one), every vehicle would be assigned a formula that charges X cents per mile (based on vehicle weight) + a variable Y cents per mile tied to highway congestion at the time the trip is made, tracked remotely, and charged for the relative value of resources consumed. Drive your Corolla down Clayton Road at 3 am and you pay little or nothing. Drive your Hummer down the same road at 5 pm and you pay a significant premium.
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The thesis that oil prices were behaving bubblishly (and correspondingly, that their eventual downfall
would be swift, drastic, and fueled by a sudden and cascading shift in expectations) is still very much intact,
notwithstanding today’s big leap in oil prices, which came on the heels of a report of unexpectedly declining gasoline stores.
Now that we’re a couple weeks into oil’s swift and drastic backslide, the bubble faithful were likely
expecting a sizable rebound right about now, assuming they were using prior bubbles’ lifecycles as a template.
Consider the bursting of the tech bubble. The Nasdaq peaked on March 10, 2000, after
which it tanked some 17% over 18 trading days. From there, it regained six of those percentage points in just
3 days. And next, it went on to double its previous decline over the following 5 sessions.
At a very similar point in the plummet cycle, oil prices having fallen 16% from their peak of $145 per barrel
over 17 trading days, just enjoyed a rebound of their own recovering 3.5 percentage points of their decline in a
single day to settle near $127 per barrel.
oil prices were to precisely track the Nasdaq burst going forward, they’d still have another $3 to climb over the next couple days before resuming their decline, but once the bottom were to fall out again (some time mid-to-late next week), we’d see oil quite suddenly plunging back into double digits.
Of course the one thing we know with near certainty about oil prices is that they will not perfectly
track the Nasdaq burst (or any other bubble’s burst). But this cursory survey of bubble anatomy does seem to refute any contention that today’s rebound changes the bubble thesis in any meaningful way (except, perhaps, to lend it additional
stylistic authenticity).
If your into the theory check out:
http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html?_i_referralObject=806231404&fromSearch=n
Gas prices are cheap by comparison to just a few weeks ago. I think this weekend I will rush out and buy a new SUV!
In all seriousness, with all the upgrades Missouri needs to its roads and public transportaiton, how much longer can we have such a low gas tax?
so who wants to welcome josh maxwell by calling him an idiot? how can you make such a claim. unbelievable!@%# jerk, blah blah blah………………….it’s a joke, josh.
oil will be well below $80 sooner then you know. eric and kevin have renewed my faith in the sanity of your readers. china, india, and a handful of other developing economies have been subsidizing the price of fuel to their populations and that’s coming to an end.
since we last discussed this about 2-3 weeks ago my investments shorting the price of oil have just about paid for the kids’ upcoming tuition bill. i’m up 33% on that time. the price of oil peaked the day W called for domestic off shore drilling. demonstrating once again he’s a man of the people and for the people.
Despite a small reprieve in gas prices falling below $4, I think we are in the midst of a paradigm shift towards more fuel efficient vehicles and the end of energy ignorance. With new vehicles such as the new Pontiac G8, seemingly a good idea a year or so ago, is late to the party bringing something almost nobody is looking for in V8 performance, and the economy of a Bayliner Boat. A complete GM brand, Hummer, will likely go the way of the Brand it replaced, Oldsmobile, although for very different fundamental reason, but the same basic reason, sales.
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Honda Civic became the number one seller in the USA in May ’08, putting the Ford F-150 at number five. The battle wagon Ford, spent 17 years as the number one vehicle sold in the U.S. That fact was remarkable to me, I hadn’t followed trucks, as I like cars. I am not a redneck nor do I work construction or many neccessary truck customer fields; I wasn’t the core demographic. So, I am left wondering where one places a gun rack in a Honda Civic and won’t the dog suffocate in the trunk?
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The trends in the last few months sales figures paint an unsettling trend for country music. With the top four sellers being civic, corolla, camry and accord, one has to wonder if the songs will have the same ring without the pickup and the requisite pride of driving American? I for one am glad, as I watched one contemporary after another, once married, become imbued for a round of the latest country flavor of the day. I am not talking Johnny Cash. I wish that was country music, but music with the soul of a horny fruitfly, just empty I say.
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Following this logic, I might see the end of another personally despised music flavor, rap. I have never seen a honda civic with 22’s, but I imagine it might look as ridiculous as a cockroach with Air jordans. So how will people express themselves without all of that fuel to burn? As fat people everywhere know, it is just plain hard, to look cool in a GEO Metro.
Southsider, it is often said now, that people are free to their opinions, just not their own facts. I didn’t go to mr. maxwells site, so I don’t know what you are calling ridiculous in what was stated over there. I do know for myself, I don’t agree with Mr. Bush and many of his policies, nor do many people. But he is not the devil as portrayed either. He is in a long line of people, both Democrat and Republican that have as much ability to lead a country as your high school gym teacher. It isn’t their fault, we choose them and reward fear based politicking.
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I have family and friends that believe Global Warming is a hoax, and whole other set of friends that believe 9/11 was engineered by the government, specifically this administration. In my opinion, based on the evidence, both camps are inaccurate. This time should be a good time, never has there been a more appropriate time to look at the future of energy. If $4 gasoline does that for people, so be it.
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Where is it written that we are entitled to every drop of oil until the resource is gone? People love to espouse their love of children but where is that evidence? Sending your kids to college to inherit what? A failing unsustainable U.S. economic model built on petrol dollars? A polluted planet with dwindling resources to support human life? Extinction rates surpassing 100 to 1000 times the rate at which has ever been seen in this planets history? What exactly are you giving them and their children?
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Denial will not make the problem go away. True, you may never know the impact you make or I a for that matter. This must be taken on some degree of faith that we must act responsibly. Find your own voice on it, not some rhetoric of those claiming to be fiscal conservatives. Leaving office with a war debt that your grandchildren will be paying off. But hey, we are just protecting their access to oil, so they should be saddled with the expenses, right?
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Relax, GW, Congress, the lobbyists and Wall Street are your friends. They are looking out for you and me and keeping those pesky little terrorists from detonating a dirty bomb on the near north side. Live in fear of the boogeyman, as the friend of the people, robs our house and torches it on the way out the door. Unsustainable debt is weakening our national security. The new faith-based policy, which assumes that global economies will always be strong and, therefore, foreign capital will indefinitely bankroll America’s war machine at a low cost, shortened form is “deficits don’t matter.” Americans must have a plan to repay our debts if we want a strong credit rating that insures our national security for future generations.
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Depsite my thoughts on things, I remain positive for a good future. However, this country and this world in which we are only stewards, not masters, must be protected from the plundering that has only the immediate generation in mind. It is not just you, but your children and theirs and so on.
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Greed is unsustainable in the grand scheme.
John it’s not corrollas and civics that ruined county music. It was female vocalists. Sha-ni-a Twain or however the hicks spells it, the dixie gals. Why they make the man in black and the statler brothers turn in their graves.
Regards para dime shifts, why that’s just a fancy 25 cent consultant’s word for increased energy efficiency. Who would have thought 4 years ago that our economy would weather +$3 gas as well as it has?
Greed, that’s the lazy man castigating the striver’s ambitions. (NB, personally I tend toward the lazy side).
RE: Mr Maxwell, it was a joke fella. He doesn t have a site as far as I know.
RAP is not music. It reminds me of what folks said of Sinatra at the end of his career. He was just talking as the band played behind him.
About the kids, you re way ahead of me about the college thing. Heck I’m just trying to get them through elementary school (note, I can’t use the gov’t schools, see today’s PD about SLPS and charters where illiteracy reigns). College is a scam anyway luring millions of unsuspecting lower and middle classes into unsustainable debt before they even have a job.
Our economic system is the most successful model for lifting people out of poverty. Witness the great triumph over socialism circa 1989. The eastern block left behind more environmental contamination then capitalism ever did. Now the Chicoms India and hopefully Africa will follow the same path to human advances.
“those pesky little terrorists from detonating a dirty bomb on the near north side”…………….I’d say the north side has already been bombed out.
O well I gotta go. Look’s like my short on oil is going to be up another 5% this morning based on the overseas trading. Fella was calling for $100-110 oil in 6 months in the WSJ. He’s far too cautious.
At least we agree on Johnny Cash. May I suggest a little Tom T Hall. Outstanding.
Thanks for the Tom T. Hall suggestion.
Global warming:
Like 9/11, someone is making a lot of money from a lot of fear mongering.
I favor a fair transportation user fee. Doing it based on mileage seems fair, but again, people will drive less and government revenues will decline. Then what, more taxes? The cycle continues.
Similar thoughts on other forums:
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http://13thfloor.governing.com/2008/08/will-4-gas-kill.html#more
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http://freakonomics.blogs.nytimes.com/2008/08/12/what-is-the-future-of-suburbia-a-freakonomics-quorum/