[GotWind]

That is just my opinion. When I say breaking point I mean severe demand destruction, depression era unemployment etc. People will be FORCED to change.Ever since investigating PO I have sort of looked at things differently. I really see a lot of slack in the system.
Examples:
Look around at the cars on the highway- 85% during rush hour have one occupant- Slug lines could work everywhere and pop up almost immediately
How many airplanes are there in the sky on a daily basis? How many are needed?
People driving hundreds of miles for weekend getaways?
Homeowners & businesses firing up the AC & Heat very early in the hot & cold seasons
Minimal recycling even though plastic is made w/oil and recycled goods save energy.

THere is a lot to be done. We can all be thankful that at this point there has been a gradual run-up in energy prices and not a superspike.

[Such]

I consider that price is probably largely irrelevant.... people will find ways to compensate. it's physical shortage that marks the problem. now, granted that a physical shortage should push the price up as well, but a high price doesn't necessarily mean physical shortage.

[fletch961]

$10 gas implies oil price of around $320 a barrel. I think you get quite a bit of demand destruction before hand. The housing bubble will pop before $4 gal. gas/$100 barrel oil.

[RonMN]

I can't even imagine what the price of food would be if gas was $10 a gal.

[GotWind]

You are probably right about $10 being on the high side. I guess I just did some quick calculations that 3/4 of the passenger cars/trucks on the road today do not even need to be on the road and 2.50/gal hasn't changed a lot of habits unfortunately. Of course, well before you hit $10/gal US you have a whole lot more people not going to work/traveling/making senseless trips anyhow.

[cube]

$this->bbcode_second_pass_quote('fletch961', '$')10 gas implies oil price of around $320 a barrel. I think you get quite a bit of demand destruction before hand.....

[turmoil]

for the fellow visual monkeys



pictures are great

Source

[matt21811]

At $420 a barrel. I can grow Palm oil at $4000US per acre.
Many farmers will already happily grow crops at $600US per acre.
If oil hits only $100 a barrel, Brazil will tear down the Amazon and plant Oil Palms. A few years later they will become one of the richest contries in the world using nothing but farm labour and lucky geography.

Insanely high estimates for oil price estimates ignore market realities.
$100 a barrel is a realistic long term target.

[I_Like_Plants]

Compared to the 70s, it's amazing, huge vehicles, all single-occupant. Some are fairly thrifty, some of those older Toyota vans get amazing mileage, I know, I had one, and my Saturn Vue gets very good mileage because it has the small engine in it. But it's amazing, our last real oil shock people changed over to driving much smaller cars than people drive now, they carpooled, cities/counties set up bus systems or rejuvenated the ones they had, etc.

We're not doing any of those things now, in fact while we stew and steam here on the net right now, the gas prices at the stations up the street here are 25 or 30 cents cheaper than they were a few months ago.

[fletch961]

cube
your forgetting the 50 cent or so in taxes plus all the production cost that go into making a barrel of oil into gas. You are are also making the assumption that a 42 gal. bar. of oil yield 42 gal of gas. It doesn't. If your formula was right $55 oil would equal $1.30 gas. It's closer to $2.20 here. The $320 was an appoximation. The rule of thumb I was using is that every $1 rise in oil equates to about a 3 cent rise in gas.

[Jdelagado]

$this->bbcode_second_pass_quote('GotWind', 'T')hat is just my opinion. When I say breaking point I mean severe demand destruction, depression era unemployment etc. People will be FORCED to change.Ever since investigating PO I have sort of looked at things differently. I really see a lot of slack in the system.
Examples:
Look around at the cars on the highway- 85% during rush hour have one occupant- Slug lines could work everywhere and pop up almost immediately
How many airplanes are there in the sky on a daily basis? How many are needed?
People driving hundreds of miles for weekend getaways?
Homeowners & businesses firing up the AC & Heat very early in the hot & cold seasons
Minimal recycling even though plastic is made w/oil and recycled goods save energy.

THere is a lot to be done. We can all be thankful that at this point there has been a gradual run-up in energy prices and not a superspike.

[jdmartin]

I think it will be bad much before 6 or 7 dollars a gallon, at least here in the US. Everyone says "well look, 2 dollar gas didn't change anyone's habits". Think about 3 or 4 dollar gas, though. People will be having heart attacks. At 4 dollar gas, a 20 gallon fillup costs 80 bucks. If that vehicle gets 20 miles to the gallon, you've got 400 miles of driving, which I think for most Americans these days equals about 1 1/2 weeks. That means you'll be spending 200 bucks a month just in gas. Now multiply that by 2 cars, since most people both man & woman work, and you're up to 350 bucks (assume car 2 doesn't drive quite as much).

Most of the lower middle class and all of the poorer class are already at the breaking point. There is no reasonable way they can absorb those energy costs. I see people in my field of work every day who can't even pay their water bills, which average 30 bucks a month. They're driving vehicles that look like they may self-implode any second. At that point they may not even be able to afford to go to work.

And the upper middle class will be hurting, too. Most of them are maxed out on credit cards and only appear to be doing well.

I think that if gas gets to 4 bucks a gallon you're going to see serious demand destruction in the US, because businesses will be folding up left and right. Only the basics will be affordable to most, meaning that more and more people will be walking the street with no jobs.

One thing I do know: regardless, it's gonna get ugly.

[Tyler_JC]

The question we have to ask ourselves is, "will the extra slack created by an American recession be eaten up by China/India?"

If the answer to that question is yes, we are in serious trouble...

Not to suggest that PO was going to be a picnic without an Oil-Hungry China.

[cube]

$this->bbcode_second_pass_quote('fletch961', 'c')ube
your forgetting the 50 cent or so in taxes plus all the production cost that go into making a barrel of oil into gas.....

[jimmydean]

$this->bbcode_second_pass_quote('cube', '
')here's my anaylsis of what will happen depending on how high gas gets.

$3/gallon gas == cut back on Starbucks and Odwalla juices
$5/gallon gas == the end of SUV's
$7/gallon gas == if you haven't invested in a good lock for your gas cap to deter thieves right now would be a good time.
$9/gallon gas == another middle eastern nation gets "liberated"
$13/gallon gas == the "American" way of life is history
$15/gallon gas == WW3

[Novus]

Ten dollars a gallon sounds about right to be the real breaking point before real demand destruction sets in and people can no longer cope.

We are currently at $2.20 a gallon and demand is still growing at 4%. That is a lot of growth. It would take gas over $3 a gallon just to get it to slow that growth down. I am talking about the point where we get a real contraction gets going. At $3 a gallon most people probably still wouldn't car pool, they wouldn't slow down *gasp* drive 55 on the interstate, or trade in their SUVs.

People arn't going to just quit their jobs because gas has reached $5 a gallon. This is America, people who don't have jobs become homeless in short order. Quiting is not option they will have to find a way to get to work or else. This will mean car pooling wheather they like to do it or not. Even an SUV that gets 15 miles per gallon but is packed with seven people gets 105 miles per person per gallon. Just car pooling with one extra person will effectively cut the price of gas in half. So $5 dollar gas is really equal to $2.50 gas when people car pool. As long as people can still get to their jobs and still get to the store demand will not be destroyed but in fact continue to grow.

At $7 a gallon there would likely be a massive ressession but people would still be fighting to get through this. People want to survive. We have a built in survival instinct to fight the dying of the light. People who have jobs we make every effort to get to them. People arn't just going to roll over and die because gas is $7 a gallon.

It is not until we see $10 a gallon that the fight for survival will become a losing battle. It is only at this high price will people start loosing their home, jobs, and start going hungry. This will be the true breaking point in the economy and likely signal the begining stages of die off.

[DantesPeak]

I estimate that the US is now paying about $200 billion more per year than one year ago for energy (through March). There is significant evidence that US shrugged off those costs by increased borrowing and drawing down savings.

Foreigners have provided the funds for the increased borrowing by US consumers. So demand destruction does not occur purely by higher prices.

An outright shortage may be necessary to curb energy use in the US. The price at which it occurs is not as important as it seems at first glance, as long as the US has ability to borrow from foreigners to finance its trade deficit - and energy use.

[Leanan]

$this->bbcode_second_pass_quote('', 'P')eople arn't going to just quit their jobs because gas has reached $5 a gallon.

[Barbara]

Come on, people. Gas here is already at $6 (euro 1.25 per liter) and everybody keep driving alone like always. People don't even TALK about it. They don't give a blink over price at $6.

[shakespear1]

If they don't give a flip at 6 then 10 might convinve them to car pool.

Reaching into the pocket is a great way to convince others to change their ways.