Oil Price affecting US economy?

[Jay Ashar]

Oil price have reached there new record highs in last few days. OPEC is saying there is nothing much they can do about it, is it affecting our (US) economy and the recovery? Job market had just started to look a bit better and now comes this. What impact do you'll think its gonna have on economy? Is our not-so-good relation with rest of the arab world causing this? I have started taking bus to work because of oil price, you think more and more people should do that so we are less dependent on foreign import of oil?

[Michael Ernest]

The last few newspaper articles I have read conclude that most Americans are not changing their usual demands for fuel.

[Ernest Friedman-Hill]

There's a front-page article in today's Washington Post where they talk to area car dealers about recent trends in automotive purchases. Sales of big trucks, minivans, Canyoneros, Subdivisions, etc, are down, while sales of Civics, Escorts, and other rollerskates, as well as Priuses (gas/electric hybrids) are up. All the dealers credit (or blame) gas prices for the shift.

[Paul McKenna]

My trusty little Acura Integra gives me 30mil/gallon. But with the way gas prices are headed north, I'm not sure I'll be doing that much driving this summer.

[Ashok Mash]

There was a report on 'falling SUV inquiries in the US� in the Motoring Supplement of yesterday�s Irish Independent. There was a SUV dealer�s experience where an SUV owner traded his SUV for a mini!

I think non-conventional energy sources must be promoted aggressively (just as aggressively as American administration keeps Oil-rich countries free of potential trouble-makers). Various kinds of hybrid engines are going to be the future, and I hope they comes with some groundbreaking fuel technology soon enough � Hydrogen may be?

[Warren Dew]

Ernest Friedman-Hill:

Sales of big trucks, minivans, Canyoneros, Subdivisions, etc, are down, while sales of Civics, Escorts, and other rollerskates, as well as Priuses (gas/electric hybrids) are up. All the dealers credit (or blame) gas prices for the shift.

Is the trend really that recent? I seem to remember reading some stuff a year or two ago about how people, particularly younger people, were eschewing SUVs.

Oil prices do have a strong effect on the economy, insofar as it's an input to almost everything - indirectly in the transportation of goods, as well as directly for heating and in the form of raw materials for plastics and, perhaps most importantly, food.

The economy might be doing a little better if oil prices were lower, but one thing we have to keep in mind is that oil is still cheap on a historical basis. The price of gasoline would have to rise to about $4 per gallon to be equivalent to the price in the late 1970s, adjusted for inflation. Prices like that would probably have a more noticeable effect on the economy.

As for why it's happening, I don't think it's an issue of producing countries tightening supplies. Rather, it's a combination of the fact that existing demand for oil is very price inelastic in the short term - triple the price of gasoline, and most people will still drive to work - combined with new demand, particularly, I think, in China. China used to use very little oil, and now they are overtaking Japan as the world's #2 consumer. They're still using less than a third as much as the U.S., but at present they only have about one automobile per hundred people, so there's a lot more room for rapid growth there.

Hybrids help a lot for urban city driving, but they aren't much better than conventional automobiles on the expressway, where most of the driving is done in the spread-out U.S. What would really help here would be smaller automobiles, but unfortunately government regulations limit how far the manufacturers can go there.

[Michael Yuan]

I signed up to buy a Toyota Prius at a local dealer. But the waiting period is 8 months! I called every single Toyota dealer in central Texas and it is the same. It is a shame that the US auto makers are so far behind in this hybrid car game. And Bush is still talking about Hydrogen cars and sending people to Mars.

[Jeroen Wenting]

hydrogen powered cars are just a fad that solves nothing.
The major problem is that massive amounts of energy are needed to produce the hydrogen and transport it to the filling stations.
Unless a major new campaign of building nuclear powerstations is launched (something the treehuggers don't want) and massive investment is made in nuclear fusion research (something the treehuggers don't want) the only means to generate enough energy to create that hydrogen is through fossil fuels.
Overall, the oil and gas expidenture to create the hydrogen needed for a hydrogen powered vehicle is HIGHER than the expidenture had that vehicle run directly on the gas produced from that oil.

[KR Campbell]

Originally posted by Jeroen Wenting:
[QB]hydrogen powered cars are just a fad that solves nothing.
[QB]

I saw Top Gear ( U.K. T.V. programme ) once and they did a test on running a car on used vegetable oil. They added a thimbleful of some other chemical and then just drained the fuel out of a Volvo estate and put this stuff in. The car apparently ran normally. Is this an example of a hydrogenated powered car?

[Jeroen Wenting]

no, hydrogen powered cars run on liquified hydrogen gas (there's various formulae being experimented with, ranging from real liquid hydrogen stored in pressurised cooled tanks to organic chemicals used to trap additional hydrogen in a form of gel).

What you're describing is using alternative fossil fuels. It is indeed known that vegetable oils can be used as a basis for fuel (in fact, the hydrogen gels are sometimes based on them).
They can be added in low percentages to regular gasoline, but have a lower caloric content and cause more polution (similar to old diessel engines).

One possibility that is being used in the US on a small scale is mixing a percentage of alcohol with gasoline.
This works well and burns cleanly, problem is again the lower caloric value so you cannot use a high percentage.

What was added to the vegetable oil in the Top Gear trial I can't tell, but it must have been pretty potent stuff if the oil used was not specially treated beforehand.
Don't try to fill your car with olive oil, add some snake oil, and expect it to drive

[SJ Adnams]

apparently economists are saying $60/barrel will tip the US into recession (again).

in todays money that is 1984 prices.

but of course it depends who you listen to http://www.petroleumworld.com/SuF080303.htm

[Don Stadler]

Originally posted by Michael Ernest:
The last few newspaper articles I have read conclude that most Americans are not changing their usual demands for fuel.

Michael, I'm proud to report that this American isn't changing his oil-guzzling ways one bit. I still ride the bus and tube to work and still use a minicab a couple times a week (ferrying groceries and to/from the occasional night out)!

Sometime in the nebulous future I'll get my UK driving license and buy a used Focus and still rise the bus and tube to work. The car will be used to make shopping more convenient and for the occasional weekend and holiday trip.

I read something yesterday which says that the gas mileage for the hybrid cars is very dissapointing, as much as 30-40% less than reported figures. The response is that people don't drive their hybrids correctly, but the fact is that is true for petrol cars as well. Hold your speed no higher than 35 MPH and your gas mileage will go up 20 or 30%.

[Joe King]

Half the problem is those parents who are incapable of walking their kid to school and end up driving it the single mile to school in a huge petrol guzzling 4x4.

[Sadanand Murthy]

My 650cc Yamaha motorcycle gives me a great 45 to 48 miles per gallon.

[Michael Ernest]

Which is great, until you have two kids and a bag of groceries to cart around.

[Warren Dew]

Jeroen Wenting:

One possibility that is being used in the US on a small scale is mixing a percentage of alcohol with gasoline. This works well and burns cleanly, problem is again the lower caloric value so you cannot use a high percentage.

Actually the biggest problem is that the alcohol comes from corn that is grown using fossil fuel intensive measures, including fossil fuel intensive irrigation and fertilizer. By the conservative estimates I tend to trust, the energy content of the oil used to grow the corn is 1.5x as much as the energy content of the resultant alcohol. Even by the most optimistic estimates, which ignore everything except the fertilizer, the energy content of the alcohol is only about 70% more than the oil used to grow it.

The U.S. ethanol gasoline program is probably most accurately seen as yet another form of agricultural subsidy, or at best, as a mild antipollution measure.

[Don Stadler]

Originally posted by Michael Ernest:
Which is great, until you have two kids and a bag of groceries to cart around.

That is what minicabs are for!

[vi kam]

SUV rentals are pretty cheap. I could get a 4 x 4 Explorer for a week for $300.

Thats pretty good price as it goes. Any way I have convinced myself that i need it for my Memorial day weekend vacation of 7 days into the smokies. Dont want to put close to 2500 miles on my car. Plus the view is great from the SUV anyway, i think

I am a bit concerned about the price of Gas, but hey its not everyday that i go to smokies. I still have the option of cancelling the rental and i might even take my car. i think

[Jeroen Wenting]

Originally posted by Warren Dew:

Actually the biggest problem is that the alcohol comes from corn that is grown using fossil fuel intensive measures, including fossil fuel intensive irrigation and fertilizer. By the conservative estimates I tend to trust, the energy content of the oil used to grow the corn is 1.5x as much as the energy content of the resultant alcohol. Even by the most optimistic estimates, which ignore everything except the fertilizer, the energy content of the alcohol is only about 70% more than the oil used to grow it.

That is another problem of such programs.
Of course it's not just gasohol that suffers from this, but all "green" energy sources.

When I worked in the energy research institute in the Netherlands they were wrapping up some impact studies calculating the timeframe for earning back the energy investment needed to construct and run various forms of plants.
Turned out that nuclear plants have the least impact of all if properly run (meaning the waste products are allowed to be reprocessed, breeder reactors are built that can run on the waste, etc) while solar powerplants never even earn the initial investment back before the end of their useful life.
All others fall somewhere in between, with a windturbine breaking even after a staggering 15 years out of a 20 year life expectancy.

The study took into account not just the cost of construction in toto (so including mining and transporting raw materials, creating special compounds, etc.) but also the mining and transport of fuel material and maintenance.
Most studies which claim that solar and wind are good sources don't take that into account and only look at the pollutants put out during the running of the plant and sometimes (in rare cases where the authors have a tinge of common sense) the impact of dismantling the plant.

They debunked a lot of the ideas ingrained into the population about what constitutes clean energy production there. Sadly they had no way of reaching the mass media as those are tightly controlled by the environmentalists whose agendas would be seriously hurt by our findings.

Gasohol can in fact work well, but only in agricultural societies where the production and consumption of the alcohol takes place very close to the source of the raw materials.
The far vehicles can then use that alcohol as fuel for producing more raw materials for more alcohol rather than it being shipped off to SoCal to make some people happy that they're environmentally friendly

[Jay Ashar]

But is our government doing enough to save fuel and encourage people to use more and more public transportation and creating more safer walkways so people can walk their kids to school ( if its near) instead of driving them in SUV. I have seen leaders talking about rising gas prices and how to bring them down, why not try to save fuel and come up with some ideas, like having more public buses, so we are less dependent on our cars

[Graham VMead]

Saw this petrol price comparison and it appears that Joe Public in the U.S. pays approximately a third of what we pay in the U.K. and on a greater average income!


So why worry?

I still think the Kyoto treaty is a good idea coz won't the effect of Global warming be a bit of a downer on all of our 'economies'

Reckon our grandchildren might judge us a bit better if we ALL signed up!

[Jeroen Wenting]

Originally posted by Graham VMead:
I still think the Kyoto treaty is a good idea coz won't the effect of Global warming be a bit of a downer on all of our 'economies'

Reckon our grandchildren might judge us a bit better if we ALL signed up!

Kyoto won't do a thing...
First it's going to destroy the European (and any other firstworld country that signs up) economies to the point where we can no longer afford to install environmentally friendly energy sources.
Second it is not going to tell the second and third world (where the dirtiest powerplants are located, as well as the dirtiest cars, aircraft, ships, etc.) to do the same and scrap all those.
Third it's designed to reduce CO2 output only which is both a marginal total effect AND the part of that effect by the energy sources we'll have to give up is a marginal part of that. (The entire effect of human output of CO2 in a single year is no more than that of a decent sized forest fire lit by an Indonesian or Brazilian farmer that runs out of control).
Fourth and not the least the entire "greenhouse effect" theory has long since been proven to be just fearmongering.

The ONLY effect implementing the Kyoto strangleholds on the Euro economies will have is to draw us ever deeper into economic collapse until we need economic aid from Zaire and Kenya...

[Graham VMead]

Just a couple of points concerning this:

1) Whilst I'm sure (as in most debatable issues) we can all wheel out URLs to 'prove' our points, like this one UCS (MIT) and I agree that the current fluctuations could just be anomolies as our window of measurement is pretty small, there does appear to be a large number of Scientists, Governments and other more informed people than myself who are convinced it is a 'real' effect.

Where have you seen a) 'Proof' that the GreenHouse effect is fictitious, b) Brazilian deforestation produces greater side effects that the U.S/U.K/Russian/Chinese or whatever country's industrial output?

I am quite happy to be convinced and would sleep a bit better too!

2) If it is true that deforestation is partly to blame isn't it going to be very difficult to persuade the offending third world countries to reduce this (as all they are doing is what we already have done), if we aren't willing to do anything in our own patch!?

Do you feel that Kyoto is attempting to address a non-problem or is addressing the wrong causes if so what do you think is the solution.

I just can't help thinking that the U.S./Russian decision is very short termest and is more to do with politics.

[Jason Menard]

The US will never get Kyoto passed in its current form. It's not even a Presidential issue, rather a Congressional one. The President could sign it, as Clinton originally did despite promises not to, however there is no possible way it can ever make its way through Congress. There are no votes in Congress for it, as the treaty as it stands is extremely damaging to the US (no doubt designed this way imho).

[Max Habibi]

Clinton originally did despite promises not to

President Clinton promise not to sign the Kyoto Protocals?

M

[Thomas Paul]

We plan to install offshore windmills off of Long Island as a clean power source.

http://www.lioffshorewindenergy.org

[Michael Ernest]

Why do we want to bring electricity to Long Island, of all places?

[Jeroen Wenting]

Another form of "clean" energy that isn't...
And it's also highly unreliable.

Last summer in Europe was extremely hot, and at the same time there was no wind to speak of for weeks in normally windy areas.
As a result our energy output (already hampered by overheated cooling water in conventional powerplants because the inlet water was 10 degrees warmer than usual) was struck down another 10% or so when the wind generators all fell silent.
This had the effect of causing brownouts in some areas, airconditioners and refridgerators failing while temperatures soared to 35+ Celcius in areas that normally don't get even 25 Celcius.

I've worked during graduation work in the Dutch energy research institute, who conduct applied research for the energy production industry.
There's BIG money in wind power, with massive subsidies on putting up the darn things (if you visit my area, some 200 went up on a 100 square km stretch of land in under 3 years).
We did some calculation of total environmental impact of different sources of electrical power and how long it takes for a powerstation using those sources has earned back itself.
Solar plants never earn themselves. Their production and installation (plus dismantling) cost more in energy than their total lifetime output!
Windgenerators cost about 10-15 years to earn back (depending on size and where you build them, far out to sea obviously is the worst place for transportation and construction cost).
Nuclear is cheapest at some 5 years, natural gas not too far behind.
Coal and oil are somewhere in between.

Mind this is energy cost, not monetary!
The calculations took the mining and transportation cost of the fuel (if any) into account, as well as resource expidenture for scheduled maintenance and impact of any leftovers (polution, nuclear waste disposal).

Nuclear fuel reuse (for example breeder plants) can make nuclear even more efficient, as can a removal of the ban to refine nuclear waste material to extract reusable elements (as it is nuclear waste cannot undergo any treatment, has to be stored in bulk. If it could be refined into risk categories the more dangerous shortlived elements could be stored separate and most of the rest reused as fuel or for other purposes like medical applications of radiology and in R&D).