The current high pump costs are not driven by the price of crude but by the price of refining. The US has just about hit its current refining capacity, which appears insufficient to meet world demand. BP revealed just yesterday that its own refinining margins are rapidly contracting. Demand is certainly robust enough for refinining companies to further increase these costs.
I am sure that Bush would love to solve this problem by inducing oil companies to build more refineries, but somehow I doubt that this idea would gain much traction on the bongo circuit.
The main limit on how much gasoline can be produced is the number of refinerys, IIRC. Since it cost the oil companies the same amount to refine gasoline whether it cost $1.00 a gallon or $3.00, they will have high profits.
I just paid 1.32 this weekend. Euro. Per liter. I’d laugh if I’d pay US prices, which are less than half what we pay. Ah well.
The main cause is the rise of demand in China, and that doesn’t look to slow down for a while, so expect prices to become and remain high structurally, and more so as reserves run out. We’re soon approaching the time when we really don’t have enough of the stuff to go round mindlessly consuming it, and alternatives will become really important. All hail to California for experimenting early with alternatives. Go Prius, with your 1 liter = 23 km hybrid tech, and yay for those clever enough to install a gas tank, as Shell has twice as much Gas in its reserves as it has oil.
Alternatives will have to become mainstream soon, we better get on with it.
I don’t think that’s true. Over here one of the reasons we keep hearing for the rise in oil is the fall of the dollar. So for you the price of oil ought to be more or less stable, or at least relatively so.
FWIW, I refuelled Friday in Birch Bay, WA. $2.40/gallon. When I lived in L.A., gas was routinely $0.30/gallon more expensive than in WA. I wonder what it is now?
Regarding European prices. One big advantage Europeans have is their public transportation infrastructure. In many cases, people can travel bu underground/subway/metro, by train, or by bus. In the U.S., things tend to be spread out more. Some places have good public transportation, but not all. L.A. has buses, but they’re not very nice. The subway system was never useful to me because I lived on the West Side where it doesn’t go. Housing prices are so high in many areas that many people have long commutes – with no public transportation. In the U.S. we’re pretty much a ‘captive audience’. I’m still unemployed, so higher prices are hitting me harder than they do for a lot of people. When I do get a job, it’s likely to be in Bellingham 22 miles away.
California’s emmissions laws have been called ‘draconian’. Still, when I lived in L.A. it seemed as if half of the vehicles on the roads were SUVs. I do have an compact SUV (Jeep Cherokee) in which I’ve gotten as much as 25 mpg. But with the heavily congested roads, more typical mileage was 18 mpg. I rode a motorcycle half of the time. One gets 50 mpg, and the other gets about 40. Much quicker and more fun than a four-wheeler, too.
But bikes are a bit problematic up here in WA. No lane splitting, and much of the year the weather is not good for riding.
Over what period of time? Right now, a euro costs ~$1.284, which is right about where it traded five months ago. But US gasoline prices have gone up appreciably during that time, as has the dollar-denominated price of a barrel of crude.
Should we really ask soldiers to die to keep oil prices low? Shouldn’t we first try strategies to use less oil? And what’s the cost-benefit ratio here - at what number of lives lost per billions of dollars saved are we coming out ahead on the deal?
Not that it’s even guaranteed to work. To the extent that that was part of the motivation for the Iraq war, it’s kinda backfired.
But at least the folks on your side of the pond have a reasonable facsimile of a public transportation system. Here on the west coast of the U.S. our options are walk or drive.
Hmm, good point, RTF. Here’s an article from 12/11/04 which makes a claim similar to mine. They, however, have added a kind of regulating valve between the relationship of oil prices and the deflated dollar - the trade deficit. Might be interesting to plot the numbers of all three of these things on a timeline for the last couple years and see if we can find a relationship.
THe news media have been too busy slavering over the menace of SUVs to have much time left for Bush.
Interesting piece in the N.Y. Times the other day, with writer Oliver Sacks preening himself on owning a hybrid vehicle and saving on gas usage.
However he reports driving 20-30,000 miles a year.
Drive 10K miles a year in an SUV and you’re a villain. Do 3X that mileage in a hybrid car and you’re an environmentalist.
Go figure.
