10 posts tagged “oil”
I've been forwarded the following chain letter a few times recently (stripped of names & cleaned up the formatting for presentation, but otherwise intact as forwarded):
Normally I don't do this but at $4.00 a gallon maybe it will help ...
Subject: Tips on pumping gas
I don't know what you guys are paying for gasoline ... but here in California we are also paying higher, up to $5.00 per gallon. But my line of work is in petroleum for about 31 years now, so here are some tricks to get more of your money's worth for every gallon..
Here at the Kinder Morgan Pipeline where I work in San Jose, CA we deliver about 4 million gallons in a 24-hour period thru the pipeline. One day is diesel the next day is jet fuel, and gasoline, regular and premium grades. We have 34-storage tanks here with a total capacity of 16,800,000 gallons.
Only buy or fill up your car or truck in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening ... your gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some other liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY. The reason for this is the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every gallon is actually the exact amount.
Another reminder, if there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up. Most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom.
WHERE TO BUY USA GAS ...
Gas rationing in the 80's worked even though we grumbled about it. It might even be good for us!
The Saudis are boycotting American goods. We should return the favor. An interesting thought is to boycott their GAS.
Nothing is more frustrating than the feeling that every time I fill-up the tank, I am sending my money to people who are trying to kill me, my family, and my friends.
Every time you fill up the car, you can avoid putting more money into the coffers of Saudi Arabia. Just buy from gas companies that don't import their oil from the Saudis.
These companies import Middle Eastern oil:
Shell 205,742,000 barrels Chevron/Texaco 144,332,000 barrels Exxon/Mobil 130,082,000 barrels Marathon/Speedway 117,740,000 barrels Amoco 62,231,000 barrels
Citgo gas is from South America, from a Dictator who hates Americans. If you do the math at $30/barrel, these imports amount to over $18 BILLION! (oil is now over $120 a barrel)
Here are some large companies that do not import Middle Eastern oil:
Sunoco 0 barrels Conoco 0 barrels Sinclair 0 barrels BP/Phillips 0 barrels Hess 0 barrels ARC0 0 barrels
All of this information is available from the Department of Energy and each is required to state where they get their oil and how much they are importing.
But to have an impact, we need to reach literally millions of gas buyers. It's really simple to do. Now don't wimp out at this point ... keep reading and I'll explain how simple it is to reach millions of people!!
I'm sending this note to about thirty people. If each of you send it to at least ten more (30 x 10 = 300) ... and those 300 send it to at least ten more (300 x 10 = 3,000) ... and so on, by the time the message reaches the sixth generation of people, we will have reached over THREE MILLION consumers !!!!!!! If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted!
If it goes one level further, you guessed it ... THREE HUNDRED MILLION PEOPLE!!!
All you have to do is send this to 10 people.
It's interesting, but I can't decide if it's hokum. There's enough jargon, detail, and calls to authority here to make it convincing -- "specific gravity", "internal floating roof", "All of this information is available from the Department of Energy", etc -- but not quite enough to convince me.
The Conoco bit, for example -- didn't they have some kind of deal with Iran? I guess not -- back in 1995 they considered it, but were blocked by Clinton, though apparently the company and the country have a long, sordid history together.
The logic seems a little shaky to me though, and the woolly thinking (sloppy punctuation, incongruously jumping from a swipe at Citgo / Hugo Chavez / Venezuela to out-of-nowhere math about aggregate import costs) has me thinking that this person may have a point, but not the whole picture. Can individual gas pumping tactics help you get more per tank? Maybe. Can collective purchasing decision & boycotts make a difference, even on a large scale? I tend to doubt it, but maybe. Do boycotts ever work? Sometimes they do (South Africa & apartheid being the best example I can think of), but often they don't (the sanctions / boycott of Cuba, Iran, & North Korea being examples of them not getting results even after decades of trying at a national scale).
Anyone with more economics tuits have a handle on whether this could work?
Human societies have always depended on having ready access to cheap, efficient means of transportation.
The Egyptians built their kingdoms along the Nile. The Greeks built their civilization among their islands. The Mesopotamians had the Tigris & Euphrates, the Indians had the Ganges, the Chinese had the Yangtze. Later, the Romans and Incas built vast empires laced together by paved roadways.
In America, the continent was [re-]populated first by ships & horses, then Conestoga wagons, then the locomotive, then automobiles and airplanes.
The topography of ordinary life is a reflection of this need to have access to transportation, balanced against other needs for agriculture, trade, industry, and so on.
From what I've seen of Germany, most of the old cities & towns are organized along roughly similar lines, with a dense cluster of homes & other structures, clearly demarcated from the surrounding countryside -- often by a literal wall. Of course, this probably has old medieval origins where the people would live together in town but farm in the fields, and occasionally would have to hide behind the walls as the town was besieged by some invading army or mob. But it also means that for ordinary life, the things you need are all within walking distance of home -- your job, the people you trade with, and so on.
Older American cities on the east coast started out along similar lines, but with less fear of invasion (after all, Native Americans tended not to have cannons & muskets) plus good roads and horses to get around with (not to mention the allure of an entire vast continent to stretch out across), they never really had the tight, walkable density that old European cities had.
And then, of course, the train came, and not long behind it, the car. If you look at how American cities are laid out, especially as you move west, and as you look at cities that had most or all of their growth in the 20th century, it's obvious just how much these places grew up with the assumption that the car would always be there, would always be cheap, and was strong enough to be the almost physical foundation of how society is built, lives, and works.
It could be grim, according to an Atlantic article from March
It could be really grim, according to a LA Times article from this week.
American suburbs just aren't ready for this. Hell, even the cities are mostly unprepared for this. With a handful of exceptions -- New York City, San Francisco, and a few others -- even most city dwellers tend to need a car to get around. The transit systems aren't in place in most places, and where the are, they tend to be running near capacity (and over budget, accumulating debt), and are not equipped to service a big uptick in ridership in a short time frame, which is what we could see if oil prices continue their climb towards $200/bbl and beyond (they hit $140 this week)."You'd have massive changes going on throughout the economy," said Robert Wescott, president of Keybridge Research, a Washington economic analysis firm. "Some activities are just plain going to be shut down."
[...]
Push prices up fast enough, he said, and "it would be the urban-planning equivalent of an earthquake."
Assuming you can't pull up roots and move to New York, San Francisco, or heck London or Paris, then where would be a good place to live for the next 10, 25, 50 years? What criteria would a "nice", "smart" place to live be? Good access to public transit, preferably rail, but bus should work too (there's always biodiesel or electric trolleybus options). Being able to walk to things like jobs, schools, and supermarkets would be good. Access to a river would be nice -- just in case we get reduced back to Egyptian levels, though I'm not quite that pessimistic yet -- but I'm willing to assume that some kind of motorized means of transportation is going to be a permanent fixture of human society now, even if individual, personal motorized transportation may not always be taken for granted the way it has been for the past century. What else? For that matter, what kind of physical home makes sense? Should we all move in to Manhattan / Soviet style apartment complexes, or is a patch of lawn still an option? Is an oil heated home any better or worse than gas or electric? The time to plan seems to be now.
The effects of the rise in energy prices continues to unfold.
We're already in a period of supply & demand imbalance that is driving up prices on all kinds of fundamental resources. Oil prices are jumping, and supplies seem to be peaking. Likewise, there's concerns about peak food, just as there is peak oil. Demand for metal is driving up prices and creating a colorful black market. Even financial credit is more scarce today than it was a year ago. And as industrializing economies continue to increase demand, prices look set to continue rising indefinitely.
One aspect of this is that the global economy seems less able to withstand shocks to the system that it would have been in healthier times. Like pulling on a rubber band, if it's loose, it will stretch, but if it's taut, it will snap. So are we at a stretching point, or a snapping point?
- Today, a Nigerian oil pipeline was attacked, cutting off 10% of the country's oil flow, and driving up the price of a barrel to $136.88, $2.67 higher than the day before; almost inevitably, this seems likely to cause prices at the pump to continue to drive their rise above $4/gallon. It seems like only a month or two ago that policymakers were anguishing over the fact that prices had risen above $120 per barrel, but already that looks like an improvement over the current situation.
- A widening & as-yet unexplained salmonella outbreak with tomatoes is disrupting prices for produce, to the point that it has people considering the locavore movement as an alternative to national or international food markets. But is this really a solution? Stephen Dubner suggests that it's an appealing idea, but probably unlikely to have the intended benefits.
- Meanwhile, a quick Google News search for "shortage" turns up stories about limited supplies of deep-sea oil drilling ships, Indian fertilizer, bees, Canadian doctors, African blood, British teachers, Indian coal, Japanese doctors, and Midwestern sandbags. And every one of those, in its way, tells its own sad story.
When times are better, it seems like we are better prepared to weather these little storms. There have, for example, been several contaminated food outbreaks over the past few years -- most notably the 2006 E. coli outbreak with spinach & lettuce, but there are lots of other examples.
But usually when something like this has happened, it's a temporary glitch, people make do, and things go back to normal a few weeks later.
This time around, things seem different. People seem to be talking more openly about changing decades-old behaviors. People drive less & take public transit more, and are willing to pay more for organic food. Car companies are closing or repurposing SUV plants. Just in the building I live in, it seems like more people are recycling now than were even a year or two ago.
Clearly, things are changing. The big question is, is this a tipping point, or a breaking point?
Brass Monkey
That Funky Monkey
Brass Monkey, Junkie
That Funky Monkey-- The Beastie Boys, "Brass Monkey", License to Ill
There have been stories for a couple of years now about how the rise in prices of basic mineral commodities fueling the rapid economic growth in China and southeast Asia has in turn spawned a thriving global black market in stolen metals, as thieves steal all kinds of things for the raw materials, from automotive catalytic converters (platinum), to roofs (lead), plaques (bronze), and -- my favorite -- home electrical wiring (copper).
The items aren't taken for their own value -- there aren't underground art collectors out there building up catalogs of public statues -- but rather they get melted down and sold as slabs to dealers who export them to Asian factories. This seems to be safer & more profitable than more traditional crimes like mugging, drug dealing, home burglary, etc.
(Perhaps ironically, the rise of this kind of crime has coincided with a broader fall in crime rates, particularly violent crimes, that has itself been tentatively linked to banning lead from paint & gasoline -- so maybe somehow, in some way, our baser urges are driven by minerals trade. Or maybe I'm just taking this line of thought too far, nevermind.)
In any case, while this raw materials black market has been percolating for years, I was reminded of it recently by a local story about someone stealing a quarter-ton of cast iron metal from an active roadway construction site, and somehow no one saw it happen.
Someone stole 475 pounds of cast iron metal off the new pavement of Josephine Avenue Sunday night, according to police, and no one saw a thing.
The suspect traveled along Josephine Avenue, from Kidder to Broadway, and stole 20 manhole and 15 water gate covers, police said.
The manhole covers weigh at least 20 pounds and the water gate covers weigh five pounds, said Somerville Police Captain Paul Upton. They had been taken from the street and stacked on top of one another as work crews repaved the road and replaced sewer infrastructure, according to city spokeswoman Lesley Delaney Hawkins.
“They’re not light,” Upton said. “It took some time for it to happen.”
The police do not have a suspect. Upton said residents have not been able to provide police with information. None, he said, reported hearing or seeing 475 pounds of metal taken from their street between 5 and 10 p.m.
Last night police sent out an automated call to every home within four square blocks of Josephine Avenue asking for help.
“Not only is this a crime but it presented a serious safety concern for anyone walking or driving along this street,” Upton said in the message.
The weighty heist begs the question: how did it happen? Any scenario it seems would involve a vehicle with a lot of storage room. But Upton said there are other possibilities.
“It’s not inconceivable that someone living right on the street rolled them into their backyard,” he said.
“It’s unlikely but you can’t rule any possibility out.”
But this kind of thing isn't unique to Somerville, of course. Apparently it's also a problem in southern California, as roadway thieves have taken traffic signals, signage, and guardrails, as well as tools and wiring. And it's happening all over the place.
In the United States, a quick search turns up everything from California military bases and Oregon firefighting equipment, to Missouri scrap yards, Connecticut swimming pools, and Michigan electrical equipment.
Around the world, headstones are stolen from cemeteries in Australia, the lead roof is stolen three times in one month from a church in England, a robbery at a cable company is blocked in India, and fibre optic data cables are stolen by divers in Vietnam (oops! those are made out of cheap glass, not valuable copper).
And this isn't even getting into the many stories about how people driven by the subprime mortgage crisis are being evicted after foreclosure, and getting back at the banks by taking everything they can, from appliances to lighting fixtures to the wiring from the walls. One could almost take a charitable view here and argue that these aren't even really theft, as the house had recently belonged to them, it was arguably taken away by forces beyond their control, and besides, it isn't like the bank is going to get a quick sale on the place anyway, unless maybe the government wants to buy the house. But maybe that's a bit too charitable.
In any case, it's clear that this is an accelerating worldwide trend, being driven by metals prices that are rising just like the prices on gas & food are rising. Where will it all end? Back here in Somerville, the manhole cover theives are still at large, but the police did catch four men trying to steal "hundreds of railroad spikes and plates". Which would be great for the trains, if anyone actually took the trains, but hey, the police have to start somewhere.
So now that I'm aware of The Oil Drum (TOD), I'm feeling more than a little outmatched in the recent apocalyptic wailing here -- clearly they've thought about it more deeply, for longer, and some of them appear to have advanced degrees in the subject.
Reading a site like TOD is a little bit like reading some of the Y2K fears in the late 90s -- like today, back then there were a lot of reasonable, knowledgeable people making dire warnings that if we didn't take drastic action, all kinds of catastrophes would unfold: transportation would literally be derailed, the food supply would be disrupted, the finance system would collapse, and so would the economy.
Obviously, one might point out that with Y2K, the catastrophes never happened, and it was all a false alarm. The contrary point of view is that it wasn't a false alarm, but a heard alarm, and we had enough time to fix the critical issues before they had a chance to become actual problems. By the time January 2000 came along, we had updated the railroad switches, financial mainframes, etc, so the status quo was stabilized.
With Peak Oil, on the other hand, there are similarities and there are differences. There's a growing mainstream acceptance of the idea, and the financial futures markets seem to be predicting continually rising prices from here on, while in the near term we're debating whether rising gas pump prices are here to stay, and oil executives are testifying about the situation before Congress.
So the hype is there, as it was for Y2K.
But with Y2K, we had both the will and the time to correct the problem. It didn't take an act of Congress to fix Y2K, it took companies hiring armies of Cobol programmers to come in and fix the problem, or upgrade IT infrastructure to something more modern. With Peak Oil though, we as a society seem to be catching on the problem just as it's beginning to unfold, but the solutions available could take decades to become available on a wide enough scale to make a difference.
How long would it take to switch the entire American automotive fleet to hybrid Priuses, if Toyota was able to build them fast enough -- maybe a decade? And that's with existing technology, which isn't even necessarily enough to help.
How long would it take to bring expanded oil drilling in Alaska or the North American continental shelf online? And how much oil is available there to begin with? Look to Brazil, with the massive untapped oil fields suspected off their coast. Even if the new Brazilian fields are brought online, they will take years to become productive, will be very expensive to extract -- in other words, possibly a remedy for oil supply shortages, but probably no solution for rising prices. Exploration of the untapped North American oil fields would probably go the same way -- slow to access, expensive to produce, and unclear how much is available to begin with. (The Machiavellian in me thinks we might as well leave it in the ground until supplies elsewhere dry up and we need some kind of real reserve; going after it now is just a partial solution to a near-term problem, but would make the long term problems worse. Kind of like Chrysler's promotion, but I digress.)
* * * * *
Anyway, the point, which I seem to keep wandering aimlessly around, is that Peak Oil seems to be rapidly evolving from "wingnut conspiracy theory" to "a fact of the world". Maybe now then the debate can move on to how to restructure society to a post-petroleum world, with steps along the way to improve efficiency of cars with available technology, reduce the need to drive to begin with (mass transit, car pooling, walking, telecommuting, etc), and so on. At this point it looks like we really can't stop the wave from hitting, but if we're lucky we'll find ways to ride it out safely...
A lot of the things I've written about on here are simply facets of big trends driving the world today. You could punt and say that the big trends are just "global warming", or "peak oil", or "peak food", or "the credit crunch", but even those seem like facets of the broader globalization trends going on. If it were just the USA putting out greenhouse gases, consuming oil & other resources, and driving the credit markets, then the problems we're having now might (maybe) still be happening, but less acute. But the big national economies are all interdependent now, and depend crucially of the rapid growth of big new economies like China, India, Brazil, and others.
On one level, the growth of these emerging nations is unquestionably a good thing. It raises the standard of living in the growing countries, provides cheap goods & services to the developed nations, and opens up new markets on both sides. But it raises problems as well: as the standard of living in the emerging countries comes up, so does their level of consumption, increasing the strain on global resources and amplifying trends like climate change and habitat destruction, raising questions about whether this is all sustainable into the future, or whether it brings back a Malthusian crisis.
Thomas Malthus realized in 1798 (!!!) that human populations rise geometrically ("fast"), while natural resources rise linearly ("slow"), and eventually we're likely to hit a point where there aren't enough resources to feed everyone any more. The only problem is, Malthus ended up being wrong: the population has ballooned massively since 1798, and so has the global standard of living by almost any measure. The reason is often believed to be the Industrial Revolution., which brought about a wave of prosperity & growth that swept the world and is still improving lives today. While the pressures Malthus raised over 200 years ago are still present, many feel we can continue to stay ahead of them, while others point out that Malthus was right for all of human history up to his own time, and for all we know we won't be able to escape the trap he identified forever.
Enter Newsweek International editor Fareed Zakaria, who has coined the term "the rise of the rest" to describe where we stand now:
- Foreign Affairs, May/June 2008, "The Future of American Power: How America Can Survive the Rise of the Rest", by Fareed Zakaria"
- Newsweek, May 12 2008 issue, excerpt from Zakaria's "The Post-American World"
- NPR/PRI's Marketplace, May 12 2008 broadcast, interview with Zakaria, "Economic problem: 'The rise of the rest'"
- Bostonist blog, May 9 2008, article on a talk Zakaria gave about the book at Harvard
The main differences between what Zakaria is arguing and the themes I've been looking at include:
- Zakaria is the editor for Newsweek, and I'm just some guy, so people will actually listen to him.
- Zakaria has been watching these trends a lot longer, and thinking about them a lot more deeply, than I have, so people will actually pay attention to him.
- Zakaria seems to be a lot more optimistic about the long term outcomes than I currently feel, so maybe people will prefer his take on the situation to my bleaker one.
I'll finish with an excerpt from Zakaria's "Marketplace" piece:
Expensive oil is one facet of the signature trend of our age -- global growth. Last year 124 countries around the world grew at over 4 percent. This year, despite the American slowdown, growth in most of those countries remains robust. While we debate the current financial panic and impending recession, our future is not likely to be shaped by crisis and collapse. The real problems we will face will be the consequence of what I call the "rise of the rest" -- the rest of the world that is.
Look around, it's not just oil that is soaring. Almost every commodity is at a 200-year high. Wheat and rice prices have doubled and then kept on rising over the last two years. In some cases, demand is so high that we're actually running out of stuff. Helium, the gas used in balloons and MRI machines is in short supply globally. And it is the second-most abundant element in the universe.
The problems of growth are, of course, high quality problems. But on this scale they are problems we have never really experienced before. We know how to handle a recession. But how do we handle the rise of the rest? That will be the real challenge of the next decade, long after this recession has turned to recovery.
As Paul Mison notes, the gas price surge is finally driving Americans to use more public transit, but not exactly at a breathtaking rate:
But … as of 2005, only 4.7 percent of American workers took mass transit to work. So even a 10% surge in mass transit ridership would take only around half a percent of drivers off the road.
Sure, usage is higher in Europe, but people always attribute that to higher population density. But does that explain it away?
[...]
Anyway, Canada has lots of open space, too — and it doesn’t even have $8 a gallon gas. Yet it still has usable public transit in a lot more cities than we do.
Fortunately, we'll have Chrysler pulling up the rear on this one:Canadian gasoline is somewhat more expensive than in the US — but not European-level expensive. Otherwise, Canada looks a lot like America, and Toronto almost speaks the same language, eh? Yet a high-quality transit system and different land-use planning make a big difference.
What’s more, as far as I can make out from the data, a lot more Canadians than Americans (as a percentage of the population) have switched to public transit over the past year; because the system is there, they have more flexibility.
All in all, this comparison is a reason not to believe apocalyptic warnings about the long-run effects of energy scarcity: there’s a lot of substitution possible. America’s main problem is that we have a capital stock — cars, public infrastructure, and housing — designed for dirt-cheap oil. And the transition may be nasty.
But even the Wall Street Journal doesn't think it's a good deal. They go on to say:As an alternative to the standard incentives, the company is offering $2.99 gasoline for the next three years to those buying selected new models. And you can get the cheap gas at almost any station, as it is subsidized through your credit card.
Well, actually I do think prices are going to rocket, but nevermind, they anticipate my objections:The bottom line? In most cases consumers are probably going to be better off taking the standard rebate than going for the subsidized gas. The savings on Let's Refuel America really only start to stack up if you think gasoline prices are going to rocket a lot higher in the years ahead.
Exactly. But, err....And if you think that's going to happen, what are you doing blowing, say, $29,000 on a brand new SUV that gets 15 miles to the gallon? You'd be better off scaling back to a secondhand Civic and ploughing your savings into a good energy fund.
...it's $3.69 at the cheap places down the street from my house, and pushing $3.85 elsewhere. I recently had what I expect to be my last sub-$50 full tank fillup, and can remember not so long ago when I could fill up my first car for under $10.The gas price would have to average more than $4.10 a gallon over the next three years before it made sense to take the subsidized gasoline.
I fully expect gas prices to hover in the low $4 range by fall, and only go up from there. Apparently, or so the article says, the gasoline futures market disagrees with me, but we'll see, won't we?
(On the flip side, when I first read about this program, I was worried that it was just going to stimulate consumption and exacerbate the problem, but apparently they cap how much fuel you can buy based on the projected mileage of the model you purchases, so that's less bad than I thought. Not great, but less bad.)
Next up, thoughts on Fareed Zakaia's the rise of the rest, but I'll save that for tomorrow, as it's now time to go play Boom Blox on the Wii. Yay escapism...
This post is very annoying to me. You must not know any poor people. We use our car for our work, buying and selling antiques, and gas is a HUGE expense for us. I agree that it has to go up so that alternatives are more viable, but the transition is extremely painful for us. We don’t visit friends, much less health clubs! Cable TV? Forget about it! Eating out? More like a big pot of soup that lasts 3 or 4 days. Where we live people drive 30 to 50 miles a day one way to work if they want to make more than 8 bucks an hour.
You may have heard that milk prices worldwide are rising at the fastest rates ever.
Unfortunately prices for milk will be higher for the foreseeable future.
We will continue to monitor the market and adjust milk prices to offer you the best value possible.
We apologize for any inconvenience.
Declining egg production and an increased demand for dried egg whites used in manufacturing as product ingredients has resulted in a decreased supply of fresh eggs.
This decrease in supply has caused the cost of eggs to rise dramatically, which has resulted in increased egg prices.
We apologize for any inconvenience this may have caused.
[...] He said he bought the business in February 2008, just in time to see the price of wheat, flour and Romano cheese “skyrocket.”
“Everything I need has gone up about 30 percent” in the last three months, he said. In addition, vendors have begun charging for the gas they used when delivering to him.
“We're trying to hang in,” he said. Masci said family members have helped by coming into work without taking a paycheck and he has added wraps, chickens and turkeys for the young professionals of the neighborhood.
He also said the economic downturn has made potential customers a little tighter with a dollar. “I get the sense that people are saving their money to pay for gas right now,” he said.
Via Paul Krugman, an interesting article from October 2004:
Since its last major low in 1998 at $12 (when The Economist published a very bearish piece about oil), crude oil prices have climbed to around $50 at present. The question, therefore, arises whether oil prices are headed for a sharp fall, as most analysts seem to think, or whether far higher prices could become reality in the years to come.
[...]
Just consider that China's car population has more than doubled since 2002 and that it is up tenfold since 1994! Thus, as mentioned above, oil imports of China have risen by 40% so far in 2004. And while I certainly do not believe that Chinese oil imports will rise every year by 40%, it is equally unlikely that oil imports into China will ever decline again meaningfully.
In fact, if we look at what happened to per capita oil consumption during phases of industrialization in the US between 1900 and 1970, we see that per capita consumption rose from one barrel per year to around 28 barrels. In the case of Japan's industrialization between 1950 and 1970 and South-Korea's between 1965 and 1990, per capita oil consumption rose from one barrel to 17 barrels.
In the case of China, oil demand per capita is still only 1.7 barrels per year, and for India it has only reached 0.7 barrels. By comparison Mexico consumes annually about 7 barrels of oil per capita and the entire Latin American continent around 4.5 barrels.
Therefore, starting from such a low base, oil consumption in Asia will, in my opinion, double in the next ten to 15 years from currently 20 million barrels per day to around 40 million barrels per day.
Remember also, that if China's per capita oil consumption went to the level of Mexico's per capita consumption China would consume 24 million barrels of oil daily, which would be close to 30% of global production. And since it is most unlikely that current total global oil production of 80 million barrels per day can be increased much - in fact, it may begin to decline because no major oil field has been discovered since 1965 - I expect that prices will increase further in future - possibly far more than anyone is now expecting.
And, in the case that oil prices were to rise in real terms to their 1980s highs - well over US$ 100 - then the foundation for World War Three would be laid and most certainly begin to weigh heavily on equity prices for which I cannot share the prevailing widespread optimism anyway. Financial stocks have begun to weaken and this is an indication that something is not quite right!
As of mid-late April 2008, petroleum is hovering around $115 - $120 per barrel.
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