[Shadizar]

The recent drop in oil prices and gasoline prices are very confusing. I for one don't understand themcompletely. Inventories are up, that is true(apparently). Supply and demand issues are the same as they have been for at least a year.

It is significant to note that the numbers for the U.S. (perhaps not for other countries) are not entirely reliable. I am only basing this on reports from http://www.financialsense.com/ and their interviews. Beyond that I have my own reasons to distrust the interview reports (such as the fact that they never significantly went down after Rita/Katrina).

But, beyond that is this really so surprising? The Hirsch resport's finding was that oil prices would first be volatile.

That is the idea. Volatility is not a good sign.

Prices would go down, and up far more than they would regularly be inclined to do. I think this recent move is only in support of that.

Most peak oil believers have accepted the fact (and I could be wrong here) that economics does play a part in it. However, it only makes an undulating curve. I personally think its what we're seeing now. Demand destruction lowers the demand (and kills growth in some economies) which lowers prices.

The next "growth faze" will be weaker than the last due to competition and lower oil supplies.

I for one am still in the Peak Oil camp. This does not really contradict peak oil theory....If anything it strengthens it.

-Shadizar

[rwwff]

The problem with people that are looking for a very quick disaster is that, in the US, there is an enormous amount of demand destruction that can occur without costing jobs.

If Joe Schmoe has an eight year old 4Runner, and goes into the dealership to buy a new Toyota, he could buy a Titan, or he could buy a Yaris/Prius. Toyota doesn't much care which, and they are selling the Yaris/Prius at sticker+. If Joe buys the Yaris/Prius, then his mpg for all his driving just went from 15mpg -> 45mpg, and over the life of the vehicle, thats over 5000 gallons of destroyed gasoline demand. Not from a loss of a job, not from less driving, but simply a consumer choice, buy A, or buy B. The service tech will still work on that Prius every 15k miles; the oil changes still happen, new tires from time to time... MP3s/CD's for the commute still get bought.

What this means, is we'll have this up&crash price cycle for a very long time. On the transport side, there are a couple squeezes, the first, which we've seen a small bit of, is when Joe buys the efficient car instead of the SUV, takes him from 15 to 45 mpg. The next squeeze, which I think may happen somewhere in the $10-$15/gallon price range is when that efficient car is not efficient enough, at which point, PHEV and scooters enter the competition. Joe's gonna hate riding the scooter at first as much as he hated riding in the efficient car at first; but millions upon millions of workers around the world do it today; Joe will survive the experience.

The point here is to not exect gas to pass that $5/gallon mark until just about every SUV used for transporting a single 200lb human is off the road. Once that slack is gone however, it could be a very steep climb up, and I have no idea what goes splat first.

[Shadizar]

Imo the real problem with this is that alternatives become less economical. The price will go up in the long run (imo). If alternatives do not become more competative we'll find ourselves in the same situation we did before.

-Shadizar

[Ludi]

Those kinds of changes have been quite hard on the auto industry and auto industry JOBS of late you may have noticed rwwff....

[rwwff]

$this->bbcode_second_pass_quote('Ludi', 'T')hose kinds of changes have been quite hard on the auto industry and auto industry JOBS of late you may have noticed rwwff....

[Shadizar]

I totally agree with you rwwf. Unfortunately (or fortunately) Toyota et. al. do not pay as high (if any) medical or retirement pay.

That is the free market economy. Unfurtunately that is not good for the U.S. economy in general (for labor). GM and Ford are doing their best to destroy pensions. That is more competative in the globalized economy, but it does nothing for the domestic economy.

Toyota et.al. pay less and is more competative. U.S. companies cannot compete. Period. There are few industries in the U.S. that can imo.

-Shadizar

[Ludi]

Yeah, you may be right. But it's hard for me to picture standard of living improving or remaining steady during a period of decreasing available energy when standard of living is already decreasing for the middle class.

[ClubOfRomeII]

$this->bbcode_second_pass_quote('TommyJefferson', '
')
I am seriously lusting for a gas guzzler. If gasoline prices will flatten until early 201X, now would be a great time to purchase one. SUV prices are way down. Local gas is $2.40/gal. A few more months of this, and SUV prices will rise again.

[rwwff]

$this->bbcode_second_pass_quote('emersonbiggins', '')$this->bbcode_second_pass_quote('rwwff', 'T')he problem with people that are looking for a very quick disaster is that, in the US, there is an enormous amount of demand destruction that can occur without costing jobs.

If Joe Schmoe has an eight year old 4Runner, and goes into the dealership to buy a new Toyota, he could buy a Titan, or he could buy a Yaris/Prius.

[emersonbiggins]

$this->bbcode_second_pass_quote('rwwff', 'A')nd that is the pure definition of demand destruction. Its not put off, its not transfered, it is demand that is foreever destroyed by a consumer choice in response to price pressure.

[rwwff]

$this->bbcode_second_pass_quote('emersonbiggins', '')$this->bbcode_second_pass_quote('rwwff', 'A')nd that is the pure definition of demand destruction. Its not put off, its not transfered, it is demand that is foreever destroyed by a consumer choice in response to price pressure.

[rockdoc123]

One thing I would like to bring to everyones attention is that everything you see in the press about possible demand destruction is talking solely about US demand. Yes US demand for gasoline is currently the highest in the world but China and India are growing extremely fast. The following I clipped out of a daily news report from IHS Energy:

$this->bbcode_second_pass_quote('', 'P')erhaps some oil ought to be diverted from US shores as China's oil demand rose 9.2% in August, even if four months of double-digit growth have been broken. Of note is that China's recent demand growth has been driven by motor fuel and fuel oil (1,000 new car
registrations/day in Beijing).

[rwwff]

$this->bbcode_second_pass_quote('rockdoc123', 'O')ne thing I would like to bring to everyones attention is that everything you see in the press about possible demand destruction is talking solely about US demand. Yes US demand for gasoline is currently the highest in the world but China and India are growing extremely fast. The following I clipped out of a daily news report from IHS Energy:

[TreebeardsUncle]

Ok. So, it looks like PO will not occur for at least another decade or so after the last oil glut due to these various projects coming online off of the West Coast of Africa, in the Gulf of Mexico, in Brazil, in the ME, in the Caspian area of Central Asia etc. After that prices should go up significant ($10 to $20/ gallon in today's dollars within a couple decades). Incidentally, how much demand destruction has there really been in the states? Yes, folks are still selling their suvs, but it looks like most of those that were being driven a couple years ago, even by solo commuters, are still being driven. I still bet we have another 10 to 15 years before PO really starts being a big visible factor in how things play out. To summarize, demand destruction in the states thus far appears to be expressed in some fat suburnite commuters driving cuvs instead of suvs. And, I don't see this price drop as being driven by demand destruction as much as it has been driven by the end of the summer driving season and a mild hurricane season in which no hurricane came ashore in the states.

g

[AgentR]

$this->bbcode_second_pass_quote('TreebeardsUncle', 'O')k. So, it looks like PO will not occur for at least another decade or so after the last oil glut due to these various