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Economics and oil

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Old 12-30-2006, 09:30 PM
DanielC DanielC is offline
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Economics and oil

These are tough times. These are exciting times. There are people who say we are running out of oil, but I do not think so. I do believe we have run out, or about to run out of oil that can be gotten at $20.00 per barrel. I do believe there is a lot of oil to be found, but it is going to be closer to $100.00 per barrel. With oil companies consolidating, and the fact that more of them are selling petrolium gobally, we are going to see pump prices rise. There has been a strong push for ethanol fuels lately, but make no mistake, that is because as petrolium prices rise, it is economically feasable to make alternative fuels available. The higher the prices at the pump, the sooner we see E85, Hydrogen, LNG, electric, and who knows what else will come down the pike.
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Old 12-31-2006, 01:55 PM
Tom-O Tom-O is offline
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The Answer is: "Demand"

You make some good points, but in my opinion, the main cause of the dramatic increase in oil is the recent increase in demand. True, the supply of easily recoverable oil has shrunk, but not as fast as demand has increased.

Think about this: the population of the US has nearly doubled since 1950. On top of that, drivable cars have gotten really really cheap relative to income since 1950. In 1950 a good, dependable car would cost roughly $2,000, which was also the average yearly salary. Plus, there really weren't a lot of good used cars around.

Today, you can buy a brand new car for around $10,000, and the average salary is way over that -- probably close to $30,000 or more. Or if you want to buy a used car you could probably find a good used pickup or car for $3,000 -- about a month's salary.

That means there are a lot more cars on the road today per capita than there were in 1950. Think about it -- back in 1950 it was highly unusual for a family to have more than one car. Police rode two to a car. Most over the road trucks were either team or slip seat. Even college students rarely had cars.

By contrast, nowadays EVERYBODY has some sort of motor vehicle. In fact, it's unusual nowadays NOT to have MORE vehilcles than licensed drivers in an average family.

More vehicles travelling more miles = higher and higher demand for fuel.

All of the above PALES, however, to what is going on overseas. Countries like China, India, the entire continent of Africa, Russia, and in fact the whole third world has seen a great big change in the last couple of decades. That change is that where there were once little to no private motor vehicles, there are not HUGE NUMBERS of private motor vehicles.

Of course, this causes a HUGE INCREASE in the demand for fuel.

When you have a HUGE INCREASE in demand, and an increase in supply that cannot keep up with that huge increase in demand. You have increases in fuel costs.

Another thing to remember is that in the US, there has not been a new fuel refinery build since about 1970 or so. That means, we're trying to refine probably twice as much fuel today in the same number of refineries that we had 35 years ago. The reason for no new refineries is government environmental regulations.
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Old 01-25-2007, 11:11 PM
cwgu3 cwgu3 is offline
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Average price of a new car is @$18,000 to $ 22,000 average cost used decent car $10,000 to $15,000 unless you are looking for a lawn ornament you wont get a good used Vehicle for anywhere near 3,000 . Average salary $18,000 to $20,000. Average MPG in 1950s @12 now @19
Why are oil prices so high? Greedy Government.We arent even using 1 tenth of the oil available right here in the U.S. why? The Government has it under controll for themselves Not for us.
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