Thursday, October 05, 2006

Gas prices down!

I'm sure everyone has noticed (thankfully) the falling price of gasoline around the country. There are even places selling gas for less than $2 a gallon, something we haven't seen in I don't know how long. Sometime before Katrina, at least. Unlike others, I was fortunate that I never paid more than $3 a gallon (at least not in Texas), but most places were sitting right under it for a long time. Finally the summer season is almost over, which always means reduced prices for gas, as well as the relative stability of the supply right now. Oh, and I don't subscribe to the idea that this has anything to do with elections right now. I know Bush and Cheney and a bunch of others are oil guys, but I don't think that means they can manipulate the entire market like that.

Before we get too excited, though, the prices we're seeing now may already be the bottom of the slump. Energy prices tend to increase again in winter, and OPEC has decided to cut back on production. Despite that caveat however, people might be wondering why, if gas is always going to come back to acceptable prices (if $2.50 is an acceptable price), they should worry about things like hybrid cars or ethanol. Well, keep in mind two big factors: India and China. Demand in those countries is already starting to outstrip supply. You might say there's enough oil if we just found it. Is there? Most scientists don't believe that. And to that you might say that's not our problem. Except that it really is. You see, in case you hadn't heard we get our oil from a bunch of people who aren't friendly to us. The only reason they work with us is because for one, we're powerful enough to make them afraid of crossing us and for two, we're rich enough to make it worth their while. If either of those things change, expect to see more oil being earmarked for China and Indian (read my post about Venezuela's relations with China). And then watch as prices rise sky high.

Point being, don't get distracted and think the problem has gone away. It's a temporary remission. Besides which, we're still better off with fuels that don't pollute as much and don't make us dependent on third-world countries that don't like us. Ethanol, bio-diesel, methane powered plants, etc, etc. Keep demanding change.


Xanthippas said...

Good points. The only thing I don't like about the low gas prices is that it will tempt some people into forgetting that we are still facing a very serious supply-demand issue with oil, and that our present state of energy dependance on it is not good for our country. I don't like the idea of gas prices shooting up because it's actually hardest on people not driving Hummers around, but the sad fact is that unless people are uncomfortable, they don't usually seek change. And we're bound to get considerably more uncomfortable.

Fan Boy said...

Wow your editorial could not be more off base than this.

First,By all assurances OPEC will not cut production, while some states are calling for a production cut, most of the producing countries are not. You can go to NPR and read their column this morning and recorded airings yesterday from in the field jounalist.

Secondly, it well known that the US has an untapped oil field that spans Colorado, Wyoming, and Montana. This oil was discovered in the 80's and a large shale production was built in the early 90's only to be sealed by the U.S. department of the Navy by 93.

I lived in Colorado which still has huge lots of goverment owned land and saw the caps my self. They hired then Exxon and Chevron to develop the technology to exctrat the oil from shale rock, when the technique was perfected the sites were capped and put in strategic reserve.

They were placed in reserve because 10 - 20 years ago the goverment did a study that showed the years of supply that took into account a robust developing world and the resource drain on liquid oil.

The oil fields of shale have an estimated 2 - 3 trillion barrels of oil, enough with population and demand models to supply the US with oil for 500 years.

Other nations that have this resource are in Africa and Desert climates.Ironic that Africa could be the next Middle East.

It will take 5 years to build the processing plants needed, but shale is more valuable than gold. The reason is the ore it comes from is a positive energy source. It actually produces more energy per lb than it takes to extract the oil as compared to coal or gold which take more energy to extract than they provide resourse material.

This is all corrabative.

Nat-Wu said...

Fan Boy...everything you just said is wrong. First of all, the fact that OPEC has said it intends to cut oil prices has sent oil prices higher already. But this is not speculatory.You can check it for yourself, but let me give you a quote:

"On Thursday, a senior OPEC delegate said the cartel was planning to
reduce crude production by 1 million b/d "as soon as possible" in order to
bring high global crude inventories down to more "normal" levels. OPEC
produced an average of 29.91 million b/d in August, according to a Platts
survey of OPEC and industry officials.
All OPEC members except for Indonesia and Iraq are expected to take part
in the output cut, the delegate said."

So what do you say now?

Second, even if they decided not to in the end, that has no bearing on the truth of what I said, which is that gas prices will rise again. According to the founder of, they're bottoming out already. Gas prices always rise in the winter and summer. We may see seasonal fluctuations, but that means our yearly average, were it to stay the same from year to year, is still somewhere over $2 a gallon. Probably in the area of $2.30. That's just a guess though.

Now as for the oil shale, you've been reading and believing too many right-wing rants. There might be nearly 2 trillion barrels of oil (the highest reliable number is 1 though) in that oil shale. But there's oil everywhere that we can't extract at prices to make it worth it. Read this:

"Last fall a couple of exploration geologists told me that a sustained $55 to $60 a barrel for oil made Alberta’s oil sands (tar sands) economically feasible. $70 made oil shale pay. Some of the new resovery technologies may make the price point somewhere in the $35 a barrel range– but that is speculative. Still, Saudi Arabia remains the swing distributor. It can whipsaw the price, though increasing Indian and Chinese demand means over the long haul oil won’t be cheap."

In short, it requires too much money to make money. It's true that some technology might come along in the future to make it more profitable. We don't know.

It was not "placed in reserve" 20 years ago. It was simply abandoned because it wasn't worth it even at the time of the oil crisis in the 70's. Given that oil was more expensive then than now (adjusted for inflation), that ought to tell you something.

Also, as for your claim that it would last 500 years, the US uses over 20 million barrels of oil a day. With 1 trillion barrels of oil, that means a supply for a max of 133 years.

Hey, that's really looking out for the future. Instead of doing the right thing and switching over to ethanol, let's just dump the problem off a couple of generations down the road, just like our ancestors did with us. The problem with that is the payoff gets higher the longer you push it off.

And besides that, let's assume you're right and we're in for a rosy future of burning cheap oil. Why does that release us from our responsibility of not destroying the environment? Sure, energy dependency is something I want as badly as a Republican, but not at the expense of ruining our land, air and water further. Let's just ruin that beautiful land in Colorado and Utah, huh? Do we really want that? Not me.