Return to $1 gas?

news.yahoo.com...

COLUMBUS, Ohio – Oil prices hit four-year lows Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.

Some knowledgeable folks have been looking at the prospect of the US motorists paying $1 for gas in the next year. If someone suggested the same thing as early as July, the suggestion would be regarded as a desperate wish. But the circumstances had it that we are now at the national average at $2 per gallon nation. Could the price really hit the $1 mark and stay that way for some time?

Intuition tells me that it is unlikely.

What would happen if the price of gas stabilized around $2 and stayed that way for the entire year of 2009? The result would be very roughly $1000 saved on gas per vehicle in relation to what we would pay if the gas prices had stayed at $4 per gallon from July, 2008 on. Now remember that George Bush sent us an economic stimulus check with about $300 per person. It stands to reason that the $1000 gas savings would stimulate the economy more effectively. Since we know that stimulated economy requires fuel to stay stimulated, the energy prices would tend to go up baring the gas to slip and fall to $1 per gallon and stay that way for some time. But we paid a comparable figure for gas back in 2001, and that's not that long time ago, so there is a slight chance that the gas prices could possibly hit the $1 level for a very brief period due to the turmoil in the economy, before the oil-producing countries would declare an emergency to take care of things.

What?



I don't speak 17th century French. Actually I don't speak French at all. So the $1 gas question remains a $1 guess -- or a subject of a deep analysis to be conducted by Rockpuck&Tribute Economy Forecasting firm in Ohio.






[edit on 12/5/2008 by stander]

I dont see a problem with it. I think it will encourage people to travel more, and have more money to buy other things, which in turn will help boost the economy.



Cheers!!!!!

reply to post by stander

Some knowledgeable folks have been looking at the prospect of the US motorists paying $1 for gas in the next year. If someone suggested the same thing as early as July, the suggestion would be regarded as a desperate wish. But the circumstances had it that we are now at the national average at $2 per gallon nation. Could the price really hit the $1 mark and stay that way for some time?

Although that may sound good, in reality, the reason that gas is going down is not so great. It is because the economy is grinding to a near-complete halt. People are either losing jobs or fear losing their jobs, and as a result, they are not traveling, not shopping, and not going out to dinner, entertainment or other diversions. Gas could go to 50 cents a gallon, and unless the economy turns around, people won't drive just for the sake of driving. Fear is the driver of the current crisis, at this point, and telling people not to fear, is like telling a child to go into a room, and don't think of a black bear. That is all they will think about.

Its true that certian industries are going through a bad time, and others are prospering. I find it hard to believe however that the falling price of gas is going to reflect a failing economy.

Out here in Wy, the oil and mining industries are booming! Jobs galore! The saying out here now is if you cant find a job in Wy, its because your not looking for one! And that is so true. The paper is littered with job ads, from blue collar jobs to white collar jobs and everything in between.

I got friends down in Tx, west Tx, I keep in touch with them daily and they are telling me the same thing...jobs booming and oil industry down there is so good they cant find enough help!

All these places with good jobs and excellent costs of living only help boost the economies, and it will spread out in time. It just has not reached all areas yet.

The recovery of the economic machine has to start somewhere. What better area to begin in than the price of gas. For a number of years, the price has been so overbloated that it has caused the crunch in the entire economic system because more money was going to fuel than to other things, these other things suffering from it, thus closing of stores, layoffs and high prices. Now that the prices have begun to drop drastically, that will turn the tide on the situation.

What I would do is not focus on the doom and goom predictions. I would focus on taking advantage of the price fall and turn things around. And in some areas they are doing just that. Its going to take some time, but at least its allowing for a move in the right direction.

With the price so low, no one can say they dont have more money available to spend on other things than just keeping the tank full or half full or quarter full. It used to cost me 80 bucks to fill my 20 gal tank in my 72 roadrunner, now it costs under 20!!! Thats 60 bucks that can go towards more food for the table, or towards Christmas purchases, or catching up on bills.

I hope in those areas where it seems like its just going down and down and down, that the turn around will happen soon for those in these affected areas. It will happen, its just going to take a little time.

After all, Rome wasnt built in a day, and the downfall of the economy didnt happen overnight either. Thus the recovery will also not happen tomorrow.



Cheers!!!!

Originally posted by RFBurns

All these places with good jobs and excellent costs of living only help boost the economies, and it will spread out in time. It just has not reached all areas yet.

When do you think it will reach michigan? people here are losing their jobs left and right. Also I think gas being so cheap is great but its cheap because no one is buying cars and that means people are losing their jobs.

I dont know. I'm concerned that it's beeg kept low because oil companies dont want Americans demanding strict mileage and alternative fuel provisions pursestringed into existence as part of the auto bailout. It also could be that they're using low prices to lower expectations as a cover for other problems that might otherwise become big news at the end of the quarter. Last but not least, as the economy eventually recovers (hopefully it will) the demand is going to go up, and gouging will again be an option.

So I need to see another month of these prices before I get very optimistic.

How ironic, even though the price of gas is coming down, people are losing their jobs all over the country and the price of goods and services skyrocketed along with the price of gas and they are still high and getting higher. So sure its great that fuel prices are dropping, but who can afford to go anywhere now?

Originally posted by RFBurns
I got friends down in Tx, west Tx, I keep in touch with them daily and they are telling me the same thing...jobs booming and oil industry down there is so good they cant find enough help!

This seemingly doesn't make sense: If the demand for oil decreases, the oil pumps in Texas should turn slowly. But that's not so and the reason is that the US oil inventories got depleted during the time when climbing gas prices became worrisome for the economy. It usually happens that the US Government opens its oil reserves to pump more oil into the market to create a surplus that would help to prevent the oil price from climbing higher at an udesirable rate. The chart of the US oil stock clearly shows the missing barrels from the oil reserves. Then, when the situation somewhat normalizes, the missing oil must be pumped back to the required level and so the guys in Texas got busy with that apart from supplying the market. That's why they need a helping hand.

[edit on 12/6/2008 by stander]

reply to post by EpicJ19


I dont know but even tho the 3 major auto manufacturers are located in Michigan, its not the only industry in Michigan.

Which was my point earlier. Diversify.

Ever wonder how some companies manage to get through economic downfalls and others dont? It is because those companies that do get through an economic downturn diversify their resoruces and focus on what works and change what doesnt.

I am amazed that after the first major bailout of an auto maker, Chrystler back in the 80's that neither they nor the others made the necessary changes in order to prevent another cry for a bailout, even after all this time. True many people are going to hurt because of their lack of vision and lack of management, but putting a band aid on a severe cut wont fix the wound, and they should have properly dressed the wound back then so that they too could weather an economic downfall.

A bailout wont return all those lost jobs. 34 billion dollars wont even make a dent in saving the jobs and returning the industry back to being productive. If they continue to do the same thing over again, expect the same error all over again, sooner or later.

I hope in all areas getting hit hard recover soon. I would start speaking to your local elected officials, elected senators and reps up in washington about this. As someone pointed out, the 740 bil bailout just passed, and what are we seeing? Any huge recovery happening yet? Nope. It wont make any difference because that bailout isnt intended to rescue you or me, its intended to rescue investors and banks. The same will be with the 34 bil bailout of the auto industry. It only saves the CEO's and the investors of those auto makers. It doesnt save us.




Cheers!!!!

Doesn't anyone read Lindsey Williams??? $50 oil then the economy collapses entirely then a new currency and all the NWO stuff. yep.

Even with gas getting cheap, fewer people are traveling. Won't be long before the airlines are back at the trough. Don't want to forget Amtrak also.

reply to post by JaneFonda


Yea, and $50.00 oil was supposed to have the arab league boys back to riding camels also. As it has been said somewhere else it is an agenda not a conspiracy. The next few months will tell the tale.

Cheap petrol/gas until march next year...it will rise slowly...by june/july/august it will be the highest on record...$500 a barrel of oil will be the norm...by 2010 most people in the west will decide to buy food than petrol,and they wont have a choice...money will be so tight you will either have the choice of driving or staying alive...2013...things will stabilize...expect more boom in lifestyle and economy for 40 or 50 years...rinse and repeat.

I wonder at what rate it will start climbing next year toward the summer.

Wonder if it'll jump to $4/gal again?

OPEC = Evil

Remember peak oil?? they said that we are running out fast, if that were true the oil prices would still remain high, look around I still see millions of cars on the road, do you? What this boils down to folks is that the government is in control of EVERYTHING, the economy is in worse shape than the official figures, the government is manipulating the prices in hopes that low gasoline prices will kickstart the economy, this is logical but this also shows that they have been lying to us for a very long time. The greed of the vampiristic oil industry was killing the economy, Americans with thier poverty wages could not bear the $4.00 + dollar per gallon gas prices very long which helped start this roller coaster ride to hell we are on. Remember what George Bush senior said "If the people knew what we were doing they would chase us down and lynch us in the street"

Wake up America, the answers to your questions are right before your eyes.


Sailor

reply to post by Solomons


Proof? Sources? Links?

I remember the last time gas was at a buck. I could fill the tank for $10 bucks. Now it takes $20. Three months ago it took $40. I'd like to see it stay where it is, I think it's just low enough to boost tourism and travel a bit, but not low enough to encourage useless, wasteful driving.

reply to post by RFBurns

I find it hard to believe however that the falling price of gas is going to reflect a failing economy.

You are in the minority then. Most economic experts believe that the lower oil/gas prices ARE reflecting a failing economy. Here is just one of the problems with the falling prices:

seekingalpha.com...

As consumers rejoice over sub-$2-a gallon gasoline, Capgemini points out that the decline in oil prices is very bad news for future oil supplies. In its annual European Energy Markets Observatory, Capgemini ticks of a litany of worrying developments:

* Long term investments in exploration projects require stability in oil prices. Price volatility increases investment risks.
* A big drop in oil price will render expensive projects no longer financially viable. $90 per barrel is about the threshold below which production from the extra heavy oil sand in Canada would not give a satisfactory Return on Investment. At the same time, this heavy oil is needed for the future, and investment needs to start now.
* Even if economies of Western countries slow down or even go into recession, pushing down their oil consumption, it will not be enough to offset the steady consumption growth in the developing world.
* Technical difficulties to replace current oil production with new discoveries will remain.
* Unfortunately, there is little hope that geopolitical tensions between some oil and gas producing countries, notably Russia and Iran, and the western import countries, will ease soon.

In order to comply with the forecasted energy demand growth and replace aging infrastructure, huge investments are needed Capgemini notes:

At 2% global economic growth rate, the world would need about $22 trillion cumulative investments in energy (oil, gas and electricity) infrastructure between 2006 and 20304, half of them in developing countries.

“In the previous EEMO editions, we estimated that €1 trillion investment is needed in electricity and gas infrastructures in Europe. Our report cautioned that without a vigorous construction program, security of energy supply would be threatened. Since then, raw material cost growth and difficulties in finding qualified human resources have pushed investment amounts up and delayed commissioning dates of some much needed plants, electrical grids and pipelines.”

Another opinion:

American consumers are obviously in a bad way (see Rising Household Debts, Defaults Straining US Economy). My view is that we are currently in recession. During recessions, demand for a whole host of goods drops, oil included. But now that much of Europe is in, or near, recession (see Roubini’s excellent post on Global Recession Watch), European demand for oil (and other goods) is waning as well. Add the double-whammy of recessionary US and European economies, and it becomes obvious why the price of oil has dropped.

So the erroneous inference is that decreased oil prices will lead to increased economic activity. The correct inference is that decreased economic activity has caused a drop in the demand for oil, which causes oil prices to drop.

The drop in oil prices is therefore neither good news for the US economy nor Europe’s economy; but rather, bad news that indicates just how fragile those economies have become.

seekingalpha.com...

reply to post by Sailor1

Remember peak oil?? they said that we are running out fast, if that were true the oil prices would still remain high, look around I still see millions of cars on the road, do you?

Actually, your conclusion is not true. The fact is that oil prices are declining because demand is down significantly. It is a consequence of the Law of Supply and Demand.
Perhaps if you think of it as an analogy to the housing market, it will make more sense. There are MILLIONS of houses up for sale, but virtually no buyers. Prices continue to drop there, as with the oil. There is no "government conspiracy" involved. Our government is a net importer, and has to pay the same price as other importers to keep our oil reserves at acceptable levels.

One thing you might not be considering, is the fact that the oil producers have bills to pay. If no one is buying their own(compared to what demand had been), then they will continue to sell at a lower cost, in order to pay their bills. Virtually all economists agree on this. One silver lining here is that Hugo Chavez is really having problems now, with oil prices as low as they are. It couldn't happen to a nicer guy.

Ignorance everywhere ...... You do not want one dollar gas at all it would be the greatest curse ever. Why do You say that? Well its easy if the oil companies will not get a profit they will shut the wells down. They don't have to sell You anything and that is their right. So You might want it to stay right where it is because if it goes any lower the gulf of mexico will shut down and no electricity for Youuuuuuuuuuuuuuuuuuuu.

There are many valid points here. However just 2 months ago the price at the pump was 4+ a gallon, and more in some areas. The economic experts were crying wolf that this is ruining the economy.

Now they are saying the lower price is also ruining the economy?

BS!

You cant have it both ways! The reason why we see so many layoff's right now is because of the effect on the economy of high prices and low purchases that occured over the last several months, up to and including into this month.

Now the prices are dropping due to not only less demand, and not only because of the depressed economy, but because industry and the wheel of productivity has finally seen their error in price gouging the system and stressing it to the point of breaking.

So right now, I mean RIGHT NOW, is the time to SPEND!! Start traveling, start bying those gifts, start stocking up, start saving reserves of fuel. Help re-start the economy by taking advantage of the lower prices.

That will dump a whole lot of much needed money into the markets that got hit by the huge prices and "trinkle" spending that occured for months, and thus the reason why so many companies report terrible sales for the last two quarters.

We cant expect this thing to magically be fixed by a snap of a finger or some bogus promise by a young whipper snapper president elect who smiles and grins just like the ones that messed things up in the first place.

It will take US, the people to do the real recovery of the economic system. And its not going to be easy, and its not going to be something that will happen overnight. But if everyone just sits there and cries like babies about it and not do something about it, those prices are going to jack right back up and then we will be at square one all over again.

With the price of a barrel of oil hitting 50 bucks, that is incentive for oil companies, especially independant oil companies who do more investing in drilling domestically than the majors have done over the last 30 years, to break out more explorations and surveys to find more pockets of the oil in the ground, in turn breaking out more drilling rigs, and in turn, hireing more workers.

Its going to be very slow at first and in some areas there will be extremely high unemployment rates for awhile, but eventually when the wheel starts turning again, and it will, these areas will once again start returning to where they should be.

Another thing people can do is write to their reps and senators and tell them to start putting in inqueries as to why so much of the major companies are abandoning domestic investment and throwing it all overseas, and to put a stop to it. Its time for big companies to put people first and not profit. A good example is these big oil companies that rake in 40+ billion dollars profit per quarter, which means that is pure money after all expenses of wages, taxes, matenance, etc etc. They take their chunk and then do not re-invest in this country by building new refineries, replacing old outdated drilling rigs and distribution systems. Instad, they dump all that investment profit overseas because they want to make even more profit for the next quarter.

Its all so freaking simple yet it has become so complex that most do not see the obvious reasons why things are so messed up. So much of the backbone of this country that built the very foundations of our industrialization, have been sold off to foriegn investors. For pete's sake, there is a beer company that used to be an American icon that is now owned by a Germany owned corporation!!!!

Why did the major 3 auto makers fail? Simple. they used foriegn made components that comprised 99 precent of a typical vehicle and wrapped it all up with a label made in the USA. Its just like the American flag being made in China but you can readily find toothpicks and paperclips made in America!!!

When was the last time you had seen a television set that had a label in the back that had printed on it "Made In The USA"???? When was the last time you saw a microwave oven with the same label? How about your computers too?

The trade with other countries is so far out of kilt its also a contirbuting factor to our failed economic systems. We import far more than we export. That is a very serious problem and is the very reason why there are very little core products found with "Made In The USA" labels.

They all say "Made In China" or "Korea", or "Thailand", or some other foriegn country. But we sure can find plenty of toothpicks and paperclips made in the USA.

Were capable of far more than that!!!

Again we need to let government know that its time to start turning OUR economic engine so that the wheels of progress are once again turning for OUR benefit.



Cheers!!!!