2007-2008 Crude Oil Cost

[jgriff]

This could be the final price increase, but we won't know that for sure until we see no more price increases.

This kills me.

Do you really think that this could be the final price increase? And if so, should it be? Do the people who work hard to get this stuff to market deserve to get the same price forever regardless of inflation in other areas of the economy?

[RedScare]

I guess there is a little more oil to be found out there.

http://www.bloomberg.com/apps/news?pid=206...id=aBUoYKhu7PWk

Yippee! We found enough oil in Brazil to satisfy world consumption for another 7 DAYS! The oil crisis is over! Everyone can celebrate.

[memebag]

This kills me.

Do you really think that this could be the final price increase?

Do I think it could be? Sure. Do I think it is? Probably not.

And if so, should it be? Do the people who work hard to get this stuff to market deserve to get the same price forever regardless of inflation in other areas of the economy?

Huh?

[TheNiche]

Yippee! We found enough oil in Brazil to satisfy world consumption for another 7 DAYS! The oil crisis is over! Everyone can celebrate.

Unless you desire to build an econometric model, I'd suggest that you cut out the propaganda. You have no idea what you're talking about.

[jgriff]

Do I think it could be? Sure. Do I think it is? Probably not.

Huh?

And if so, should it be? Do the people who work hard to get this stuff to market deserve to get the same price forever regardless of inflation in other areas of the economy?

I don't know how I can make it any clearer. Why don't you give it another read while I try to think of a way?

[RedScare]

Unless you desire to build an econometric model, I'd suggest that you cut out the propaganda. You have no idea what you're talking about.

Speaking of propaganda.....

Perhaps you could point out where world oil consumption has dropped below 84 million barrels per day.

Perhaps you could point to where these stupendous discoveries are actually increasing the amount of proven reserves over that which is being consumed, even with all of this advanced technology CDeb keeps talking about.

Perhaps you could explain why the estimates of proven reserves from OPEC countries should be trusted at all.

Perhaps you could explain why the pro-oil US government even accepts "peak oil" as valid.

Perhaps you could explain why your overly verbose and often incorrect application of economic theory to real world situations makes you worthy of belief.

And, finally, why should I take any suggestions whatsoever from someone half my age, with half my education, and perhaps 10% of my experience?

Taking a couple of econ classes at UH does not make one an expert. You are an ideological blowhard, apparently one with no idea how much of an ideological blowhard you really are. Unfortunately for you I do know, and am more than happy to point it out to the rest of the forum.

Have a nice day.

[memebag]

And if so, should it be? Do the people who work hard to get this stuff to market deserve to get the same price forever regardless of inflation in other areas of the economy?

This "should" only be the last price increase if the next price decrease is caused by the end of our dependence on oil (either through replacement with some other energy transfer mechanism(s) or catastrophic societal failure). I don't see what it has to do with what hard working people deserve.

[houstonmacbro]

People, just try to consume less. I have a feeling it is going to get worse before it gets better.

Price of gas is not going to come down any appreciable amount so we either learn to change our ways, learn to adapt, or not.

[RedScare]

I took a new job several weeks back that has me driving to Conroe every evening....41 miles each way. Even though the employer is reimbursing my gas usage, the numbers are staggering. Yesterday, I pumped $76, and I do that about every 6 days. Even though I am not paying for the gas, I decided to see what I could do to use less of it (a 45 minute commute each way allows one's mind to wander). Currently, my mpg is only .4 below the EPA estimate for my truck. My goal is to get at least 10% OVER the EPA estimate.

I started by rummaging through the truck and taking out anything that I don't need, to reduce weight. Probably only saved 20 lbs, but it's a start (maybe I should diet also). Next, I got an oil change, new air filter and aired up the tires. I am thinking of over-inflating the tires a bit, as this will leave a little less tread on the road for less rolling resistance, but it will also cause the middle of the tire to wear faster, so I haven't done this yet. Keeping the car clean will help aerodynamics, so don't keep it dirty. All of this cost a total of $51 for the oil change and filter.

Now, onto the driving. The first step was to reduce my speed from 70 mph to about 62. This adds about 4 minutes to my commute, so I leave 5 minutes earlier for work. Once my mileage starts increasing, I am sure I will get geeked about it and probably drop to 55, but for now, 60-62 is fine. The next thing I do is look for a big truck to draft behind. Last night I drafted one from Spring Cypress all the way to my exit in Conroe. The rest of this involves trying not to use my brakes as this slows my momentum that I burned gasoline to achieve. This takes some practice to time stoplights so that you do not have to stop, or allowing extra room in stop-and-go traffic so that your speed stays constant, but I am working on it.

I'll probably fill up again in a day or so to measure my progress. I'll report back later.

OK, just filled up the tank. Time to do the math and see what good this all did.

Previous fill up:

22.36 gallons

380.8 miles

17.03 mpg

Current fill up:

15.23 gallons

299.1 miles

19.63 mpg

Difference: 2.6 mpg (15.3% increase)

That's pretty damned impressive! Like I said earlier, all I have done to get this increase was to change my oil, replace my air filter, air up my tires, and attempt to limit my freeway speed to 62 mph. Obviously, I tried to eliminate jackrabbit starts and stops as well, but not as drastically as you might think. The only other noticeable change is that I turn off the AC when the cab is cool, and only run the fan until it starts to get uncomfortable, then run the AC again. I haven't had the guts to run up and down I-45 at 55mph yet (this is Houston after all), but since 45 is 60 mph in Harris County (65 mph in Montgomery), I may try it in the Harris part.

A little refinement in my technique should get me over 20 mpg with little effort. Mind you, I am driving a 2003 Toyota Tundra 4WD with the 8 cylinder engine. EPA estimates on this truck are 14 mpg city and 17 mpg highway, so I would say 19.63 mpg in this rig aint too shabby.

[TheNiche]

Speaking of propaganda.....

Perhaps you could point out where world oil consumption has dropped below 84 million barrels per day.

And perhaps you would care to describe the curve that describes oil price elasticity of demand (which shows price on one axis and quantity demanded on a second axis) in three dimensions (accounting for the fact that the curve shifts with time). Then you'll have to make a price projection which is not only an input to but a function of the denominator which would go into your "days of oil" estimate.

Oilfields are not tapped and depleted incrementally, one at a time. The quantity of oil demanded globally is constantly shifting, just as is the productivity of the field. The production from a major oilfield is best related to market conditions by assessing its market share over that field's lifetime. Again, it is best described graphically, and with a time series component...but of course, since production is a function of ongoing capital investment into that field, it also comes back to price, as well as the oil price elasticity of supply, for which we'll need the same kind of analysis as was made on the demand side.

The only solution to this kind of problem is tremendously-sophisticated econometric modeling. You cited a geologist earlier as the expert opinion. If only in the sense that I realize the analytical limitations of forecasting price and production quality, I count myself as the better expert. I count you as smart enough to know better than to resort to propagandistic one-liners, but as too partisan and at the same time intellectually lazy to help yourself from looking foolish.

Perhaps you could point to where these stupendous discoveries are actually increasing the amount of proven reserves over that which is being consumed, even with all of this advanced technology CDeb keeps talking about.

Much of the new technology allows us to more effectively exploit old fields that had previously been treated as though they were depleted. Take a look at Apache. That's what they're all about. Or it allows us to tap fields that had previously not been physically or financially viable (this is what Mark is talking about). Or it allows us to optimally site rigs to drill to just the right spot. Or it increases production efficiency/safety, thereby lowering the cost to produce. That technology is improving by leaps and bounds is indisputable. For decades it was the dominant factor in the price backwardation trend. There are more factors than just technology at play, though, and even if prices are rising due to other factors, that doesn't mean that the rate of increase isn't being offset by technological advances and investment.

Perhaps you could explain why the estimates of proven reserves from OPEC countries should be trusted at all.

The question doesn't necessarily pertain to OPEC or non-OPEC. Different countries have different resources available to them. The Saudis shouldn't be trusted, for instance, because they've got so much oil that their motive is to keep prices collared in a moderate range so as to prevent significant energy substitution in the long term. Libya has far fewer reserves; they want a cartel, but their optimal collar is much higher because their production will decline sooner. Saudis will tend to overestimate reserves, while Libyans will tend to underestimate them, each hoping to influence prices in such a way as is beneficial to them.

Another matter complicating this issue is that reserves vary by the degree to which they are economically viable. Some are easier to tap than others. Non-conventional fields become viable at a certain price, but are not accounted for consistently.

In any event, the analysis needs to be more sophisticated and there is insufficient useful information. No doubt about that.

Perhaps you could explain why the pro-oil US government even accepts "peak oil" as valid.

My contention is that that part of the US government which sets policy is stupid or politically manipulative (neither aspect being exclusive to the other). And the media, which acts as a liason between government and the people...well they're run by incredibly bright people that have absolutely no interest in truth; only ad revenue. The human preoccupation with apocalyptic times takes care of the rest.

There are aspects of peak oil theory that are very well founded in reality. However, there are very consequential realities not reflected in the theory. The theory itself is also far less harmful than its proponents (yourself among them) that only bother to understand the headline implications without a firm grasp of the nitty gritty details, and then go around prosthletizing the innocent from a base of ignorance. It's as annoying as any of the Christian Woodlanders that you've gone off on in past threads.

Perhaps you could explain why your overly verbose and often incorrect application of economic theory to real world situations makes you worthy of belief.

And, finally, why should I take any suggestions whatsoever from someone half my age, with half my education, and perhaps 10% of my experience?

Taking a couple of econ classes at UH does not make one an expert. You are an ideological blowhard, apparently one with no idea how much of an ideological blowhard you really are. Unfortunately for you I do know, and am more than happy to point it out to the rest of the forum.

You should take me seriously because I can explain and debate my position on the basis of reason rather than quoting people and posting links. And because I don't go around wasting HAIFers' time by blathering propagandistic one-liners. By engaging in reasoned discourse, I treat my audience with respect. There are people that may not agree with me (and I cite Jax and Woolie as terrific examples), but young though we all may be in comparison with you, we deal in reality. We deal in data. We deal in logic and reason. You deal in the distortion of logic and in the molding of popular sentiment with empty rhetoric and ad hominems.

[BryanS]

Unless you desire to build an econometric model, I'd suggest that you cut out the propaganda. You have no idea what you're talking about.

Why does it always have to come down to "an econometric [econo-centric] model?" Just asking... nicely...

[N Judah]

Anyway, can domestic production meet domestic demand? If so, nationalize the oil industry (if you are truly serious about cheap oil and not about assisting big oil's corporate demands).

[TheNiche]

Why does it always have to come down to "an econometric [econo-centric] model?" Just asking... nicely...

Because econometrics can handle this kind of an analysis. Traditional statistical techniques are ill-equipped for the task, as this scenario must account for multiple dependent variables in a time series with shifting equilibrea.

And an econo-centric approach is vital because it is an economic issue...obviously.

Anyway, can domestic production meet domestic demand? If so, nationalize the oil industry (if you are truly serious about cheap oil and not about assisting big oil's corporate demands).

Domestic production is presently incapable of meeting domestic demand, and by a significant margin. If the government were to nationalize the oil industry and go after domestic plays that aren't already economically viable, we'd only end up with far more expensive oil. Consumers wouldn't have to take it at the pump, but they would have to pay for it every April.

[memebag]

No.

[7000]

That's numberwang!

[crunchtastic]

OK, just filled up the tank. Time to do the math and see what good this all did.

Previous fill up:

22.36 gallons

380.8 miles

17.03 mpg

Current fill up:

15.23 gallons

299.1 miles

19.63 mpg

Difference: 2.6 mpg (15.3% increase)

OK, so which set of numbers are you turning into work for mileage? Nice job.

[crunchtastic]

Speaking of oil, I just watched There Will Be Blood.

Wow! Outstanding. I love good actors playing crazy people, especially in roles with a businessman/sociopath context.

[RedScare]

Niche, thanks for proving my point.

crunch,

unfortunately, I am merely turning in receipts, so the beneficiary of my geekiness is the county. I'm still enjoying proving that the net cause of our overwhelming gas consumption appears to not be poorly engineered automobiles, but lead-footed rednecks.

[crunchtastic]

I'm still enjoying proving that the net cause of our overwhelming gas consumption appears to not be poorly engineered automobiles, but lead-footed rednecks.

well put, for a carolina man.

[RedScare]

well put, for a carolina man.

I'm serious. When you drive 70, you don't notice it. You only notice the old people driving 50. But, slow down to 60, and it's as if the rednecks and assorted others come out of the woodwork. I noticed that a surprisingly large percentage of drivers are in the 60-65 mph range. But, every crazy-assed speeder is in an American built pickup or large SUV. They are also the ones that tailgate you in an attempt to get you to speed up (in rush hour traffic this morning, no less!) and when they pass you up they try to crowd you as they go by. Quite amusing!

The speeders in foreign cars appear to just enjoy hauling ass. They give you room, and even appear to enjoy using you as a driving obstacle. It appears that the heavy weight of a vehicle convinces some that they must "encourage" you to go faster, as if driving 60 mph is unpatriotic. Given the amount of increase in mileage I achieved just by driving 60 mph, I can just imagine what these road warriors must be spending on gas....and laughing while I imagine it.

[crunchtastic]

I'm serious. When you drive 70, you don't notice it. You only notice the old people driving 50. But, slow down to 60, and it's as if the rednecks and assorted others come out of the woodwork. I noticed that a surprisingly large percentage of drivers are in the 60-65 mph range. But, every crazy-assed speeder is in an American built pickup or large SUV. They are also the ones that tailgate you in an attempt to get you to speed up (in rush hour traffic this morning, no less!) and when they pass you up they try to crowd you as they go by. Quite amusing!

The speeders in foreign cars appear to just enjoy hauling ass. They give you room, and even appear to enjoy using you as a driving obstacle. It appears that the heavy weight of a vehicle convinces some that they must "encourage" you to go faster, as if driving 60 mph is unpatriotic. Given the amount of increase in mileage I achieved just by driving 60 mph, I can just imagine what these road warriors must be spending on gas....and laughing while I imagine it.

So true. My daily commute consists of about 2 minutes of highway time. Damn if it's not someone in a large truck-ish vehicle trying to nose me out of my lane, or ride my ass until I exit Allen Parkway. Just wait. Another $.20 jump in gas will start to be.....palpable.

[BryanS]

I'm serious. When you drive 70, you don't notice it. You only notice the old people driving 50. But, slow down to 60, and it's as if the rednecks and assorted others come out of the woodwork. I noticed that a surprisingly large percentage of drivers are in the 60-65 mph range. But, every crazy-assed speeder is in an American built pickup or large SUV. They are also the ones that tailgate you in an attempt to get you to speed up (in rush hour traffic this morning, no less!) and when they pass you up they try to crowd you as they go by. Quite amusing!

The speeders in foreign cars appear to just enjoy hauling ass. They give you room, and even appear to enjoy using you as a driving obstacle. It appears that the heavy weight of a vehicle convinces some that they must "encourage" you to go faster, as if driving 60 mph is unpatriotic. Given the amount of increase in mileage I achieved just by driving 60 mph, I can just imagine what these road warriors must be spending on gas....and laughing while I imagine it.

Absolutely. Get a Japanese economy car and haul ass, I say. I drive a 20+ year old Toyota MR2 - 80+ mph... and still get ~30 mpg. Even better... I bought it for $1500, out of state, off ebay (I know these cars inside and out, so why the hell not...)

A couple of years ago, someone backed into me in a parking lot... knocked out my front left headlight... the cost of the repair, that their insurance company had to pay - $1600 (long story there, they wanted to total the car, I said no - I had performed "value-added maintenance and repairs" that increased the car's value beyond what I paid, threatened small claims, then they caved). I was actually glad I got into an "accident." Jumping for joy! I am driving a free car now! Plus, I only had a spare silver painted headlight (again, bought off ebay)... that clashes with the gold color paint of the whole car... Now... when people see me barreling down the freeway - they get out of my way. Just like that guy who has the broken, dangling side view mirror on his vehicle (just get out of the way.)

In fact, at this point, as long as the car keeps running - it can't depreciate much further. I mean, any car that runs is worth at least $1000. Only 10K more miles, and it makes it to the moon (~242K to the moon - averaging distance at apogee/perigee). Once that objective is achieved, I will consider other options... Until then, the 20+ year old cheap ebay Toyota is blowing the doors off the total cost of ownership of any hybrid, or any newer car, when you consider the depreciation, and the true total cost of ownership (including full coverage insurance, what you waste on interest payments on car loans, etc, etc.)

Anyone remember these? Providing decades of low fuel costs, relative to what everybody else is paying.

...just an example picture. My car is significantly worn, like a good pair of old blue jeans... Not as pretty as this one.

[TheNiche]

Niche, thanks for proving my point.

Ow. That really hurt. What a biting comback.

[N Judah]

Why does it always have to come down to "an econometric [econo-centric] model?" Just asking... nicely...

I think it's because there's this extra political layer in between the amount of oil produced around the world and the amount of $ people are willing to pay for it. Because of this unpredictability, all we can do is look backwards and hope that the past is an accurate representation of what will happen in the future.

However, a lot of speculators are doing exactly that and as a result are all trying to out-guess each other...and since there is a ton of money going into oil speculation right now (the same money that used to go into the dot com thing, and into the housing boom - pension funds and the like) everything is being bid up like crazy.

That is my understanding, anyway.

[jm1fd]

Until then, the 20+ year old cheap ebay Toyota is blowing the doors off the total cost of ownership of any hybrid, or any newer car, when you consider the depreciation, and the true total cost of ownership (including full coverage insurance, what you waste on interest payments on car loans, etc, etc.)

No doubt about it, you're blowing the doors off newer cars in terms of costs. Problem is, you get in even a moderately severe wreck in that thing, and your head is liable to get blown off, and you can't take all that money you saved with ya.

[millennica]

Absolutely. Get a Japanese economy car and haul ass, I say. I drive a 20+ year old Toyota MR2 - 80+ mph... and still get ~30 mpg. Even better... I bought it for $1500, out of state, off ebay (I know these cars inside and out, so why the hell not...)

I agree completely. My spouse and I had 2 vehicles that we purchased new with cash 20 years ago, a VW Fox and a small Isuzu pickup truck. Although the truck finally gave up the ghost early this year, the VW Fox is still running well. In November, I purchased a new Honda Fit with cash that I hope, but don't expect, will last for 20 years. It was wonderful not to have had any car payments or other consumer debt for 20 years.

[RedScare]

No doubt about it, you're blowing the doors off newer cars in terms of costs. Problem is, you get in even a moderately severe wreck in that thing, and your head is liable to get blown off, and you can't take all that money you saved with ya.

I always love these responses. This is a possibility on virtually every road, in virtually every car. Sometimes, you just gotta roll the dice...or pay the costs.

It's gotta be a suck re-sale market for trucks now, right? Maybe not.

I am getting a kick out of all the desperation advertising on the radio for trucks, trucks, trucks!

Apparently, maybe yes.

SUV resale values plummet

[ricco67]

No doubt about it, you're blowing the doors off newer cars in terms of costs. Problem is, you get in even a moderately severe wreck in that thing, and your head is liable to get blown off, and you can't take all that money you saved with ya.

Interesting that you make that statement. Quite a few car accidents that I've seen on the news that have had fatalities were people in SUV's and the smaller cars that have also been reported to have fatalities (or serious injuries) were the ones that were obviously speeding.

Link

Link

Link

That's just a couple. I pulled these up at random, but if you want to dispute it, go ahead and get actual records.

[jm1fd]

I always love these responses. This is a possibility on virtually every road, in virtually every car. Sometimes, you just gotta roll the dice...or pay the costs.

So you're saying things such as high strength steel, numerous airbags, ABS, traction control, and stability control don't make cars safer?

[BryanS]

No doubt about it, you're blowing the doors off newer cars in terms of costs. Problem is, you get in even a moderately severe wreck in that thing, and your head is liable to get blown off, and you can't take all that money you saved with ya.

...Oh yes... It's (and small cars like it) the coffin-on-wheels. I've never heard this before... You'll see a lot more of smaller cars on the road as gas prices keep going up, up, and up... The way I figure it, I'm ahead of the game here! - and have been, for years...

I've elected to drive the old beater because I like it. You can still do basically the same thing (low TCO) with a slightly newer, older economy car; that has ABS, airbags, etc... and reduce your risk, some... I also enjoy flying light aircraft, which I have not done in a while, and that activity is significantly more risky. I guess I enjoy living on the edge. Everyone is different.

[millennica]

One of jm1fd's missions is to warn others about how unsafe older cars are. He preached the same message to me several months ago when HAIF was having a discussion about cars and I mentioned that I was still driving a 1988 VW Fox. Guess s/he feels the need to warn all of us uninformed folks of the danger we are courting when driving our small, older model cars. Based on the responses so far, several unrepentant HAIFers simply aren't heeding her/his warning.