Investment firm Lehman brothers has indicated that they believe oil prices have peaked for the next few years, citing signs that tight supply and demand conditions are loosening.
Oil peaked at over $147 barrel on July 11, and now has retreated back to $115. Hopefully to continue to drop.
High prices have led to reduced global and US demand, and the end of China’s hoarding in preparation for the Olympics has occurred.
Further, speculative forces also appear to be declining.
Source (Reuters )
This entry was posted on Friday, August 8th, 2008 at 9:01 pm and is filed under Financial, Fuel. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Aug 8th, 2008 (9:06 pm)China hoarding for the Olympics. D@mn. Why didn’t we think of that?
Of course, anyone can make a prediction. And, if it pump prices stay at $3.50 for that whole time, you can still say they’ve “peaked.”
Good news for those who can’t afford high gas prices, or new fuel-efficient cars. I doubt it will put too much of a crimp in the Volt. It does make the new Camaro less of a white elephant, though.
The long lead-time for production from new drilling should just about work out perfectly!
FIRST?!!
Aug 8th, 2008 (9:20 pm)No doubt this is good for the near term, but we must not lose sight of our energy goals. I sure hope GM and the big three can recover from this jand sell enough cars of all types to stay the course, however I wouldn’t bet on this information. We’ve been played like a yo-yo so far and it’ll happen again.
Aug 8th, 2008 (9:24 pm)Probably not. Most people have resigned to stay at home this summer – cutting US demand by huge numbers, so yes, maybe for the summer it has peaked. With China and India ramping up their consumption, the world’s thirst for oil will continue to increase, deeming higher prices. Don’t forget winter is around the corner and most of the US Northeast uses oil to heat homes. The only way to drop oil prices is to stop consuming oil.
Thus, we need the Volt, solar, wind, hydro, geothermal, and don’t want it but reserved to it to get away from oil, nuclear.
Aug 8th, 2008 (9:29 pm)We didn’t learn our lesson of the 1970′s. That was a warning. So, here we are again – repeating history. This time we have to get it right. Who knows if we’ll get another chance – so might as well take the opportunity now while we still can.
Aug 8th, 2008 (9:37 pm)There us NO easy way out of this. There may be peaks and valleys but in the long run the price of oil will still climb. We each must decide how we are going to deal with it.
Take Care
Arch
Aug 8th, 2008 (9:42 pm)The problem with a free market economy is that it rolls in the direction of least resistance. This is why it wasn’t easy to gravitate away from oil in the 70′s and it certainly won’t be any easier today. What it’ll take is a national commitment spearheaded by leadership, which we unfortunately don’t have. Regardless it won’t happen overnight and it won’t be easy. This is why I commend the courage of Rick Wagoner and the BOD of GM to stick with the Volt. I certainly can’t solve the nation’s energy problems, but I can work toward solving my own, and I sure hope many more will see it the same way.
Aug 8th, 2008 (9:47 pm)Ha! What a bunch of idiots! One major storm or cut in supply and the price will break $147. Also, If they are predicting a recession for the next few years then I can’t really argue with that. We will just have to wait to see how long Americans stay out of their Hummers or resist the urge to go out and shop. I’m guessing it won’t take that long. Just a guess.
If the price continues to drop and even Lehman brothers are predicting low prices for the next few years well then won’t that bolster consumer confidence and thus push us closer to the supply limit? We can all be sure that the supply limit is not changing anytime soon.
Maybe that’s Lehman brothers position! They really went long but need consumers to go out and shop to get us closer to the supply limit and thus raise prices again. Brilliant!
Aug 8th, 2008 (9:51 pm)Let’s not forget that the OPEC likes the money they are currently getting. If they see a big enough drop in price, they can simply cut production.
I’m with LB #4. When are we going to get it through our heads that we have to get off of this stuff? We took a big hit in the 1970′s and we are taking another one now.
Grizzly is correct. We need a national commitment. Will we get one? Who knows?
Aug 8th, 2008 (9:56 pm)LB #3 says,
Don’t forget winter is around the corner and most of the US Northeast uses oil to heat homes.
—
Yup. Lucky me. I live in the North East and I use oil to heat my house.
Lucky me.
———————-
Off topic: What the heck is up with this site? This is the slowest I have ever seen it.
Aug 8th, 2008 (10:02 pm)Oil is dropping like a rock because the oil speculators are having everyone crawl up their arse, are we really to believe that world demand has plummeted in the last week and a half, and that everyone in the middle east is holding hands singing kumbaya?
Also, you’ll forgive me if I don’t feel comforted by the vast wisdom of the Lehman Brothers, it won’t stay down for long. Hopefully this does not de-motivate all the impressive work that has been going on with EV’s.
Aug 8th, 2008 (10:05 pm)And Russia, a major oil supplier, just got into a nasty little war with Georgia.
Aug 8th, 2008 (10:13 pm)It is interesting that the Russian bombers headed straight for the oil supply lines (and military bases)
Aug 8th, 2008 (10:16 pm)The Saudis massively increased production in the 1980s to bankrupt the Soviet Union. They could do it again. They also are very aware of the saying that stone age didn’t end from lack of stone. They could easily kill this technology (and hurt archenemies Russia and Iran).
As James Woolsey put it, let’s hope we someday transform oil as a strategic commodity to a mere commodity. There was a time when salt was the only means of preserving meat. People fought wars over salt mines. Electricity and refridgeration made it obsolete. Now nobody cares how much salt costs or where it comes from.
Aug 8th, 2008 (10:24 pm)Well, well well…
Looks like price will settle now to around 1.10 to 1.20 a litre.
Just like it has done year after year, the price has successfully been raised by about 10 cents a litre from before, and because it’s not the 20-30 raise we have been seeing, the masses will be pleased.
This is just marketing…
If we have learned anything, which history shows apparently we HAVEN’T – that this WILL happen again, and again…
As we get closer to acheiving electric vehicles, free of oil, the prices will come down..
The media may be saying that the “green movement” is pushing the movement to clean energy – as well as the cost of it –
but the only green that’s really forcing the market is money.
If you charge people too much – they are unhappy, and will move to other alternatives.
The environment will NEVER push the market like money does.
I hope fuel stays this expensive and forces the new fuel efficient technology to the market.
It’s the ONLY way it’ll happen.
Aug 8th, 2008 (10:30 pm)Indeed. I don’t think high oil prices are over. We are just seeing a temporary break. Come Monday, I’m sure prices will go back up again. There were a few reports that Russia just bombed an air base used for NATO training, but since I don’t see nukes flying over my house yet, I’m sure that was just an exaggeration.
The world let the US take parts of the Middle East for oil, and now I predict the world will let Russia take parts of Eastern Europe for oil too. Georgia will be no more. Any nation that has oil or oil pipelines that isn’t part of NATO or a world power is finished. I just surprised we haven’t seen China flex their muscles (though they have had some dealings in Africa lately).
It’s time to worry when all the oil has been taken by world powers. Oil will be the reason for WWIII if we don’t break our addiction soon.
Aug 8th, 2008 (10:33 pm)Let also not forget our good friends Israel and Iran. Iran recently announced they want to expand their nuclear program. Iran’s government firmly believes in peace, love, and the extermination of all Jewish lifeforms from the planet. They’re just a bunch of misunderstood guys. [sarcasm mine]
Israel will eventually have to do something (bomb) about Iran’s nuclear facilities. When they do, the price of oil will, of course, skyrocket from panic-stricken oil future traders. $500.00 a barrel oil, anyone?
We apparently have a window of lower oil prices, giving us a little relief. We need a new US policy – NO energy imports. Give DOE (the Department of Energy) something to do other than compute oil price trends and issue reports about how bad we’re doing – they need to actually produce energy. NOTHING should be off the table – ANWAR, California and Florida coasts, hell, drill in Nancy Pelosi’s backyard if it will help. Nuclear, geothermal, solar, and everything else. The next time, it could be a full-blown, world-wide economic depression, not just a recession.
How about a Manhattan Project type government program to hire the best and brightest to advance energy storage technology.
In the meantime, if you catch yourself starting to say the phrase “we can’t drill out way out of…”, hit yourself in the head with a tire iron before you complete the sentence. After a few times, you will learn to stop saying such silly things, and people will like you better. (It also works for smoking, too).
Aug 8th, 2008 (10:51 pm)I’d say that’s whistling past the graveyard. How many times have they said the same thing over the past 2 years? There are so many ways that the supply can be reduced that avoiding all the dangers
would seem extremely unlikely. Those who produce oil are countries among the most unstable in the world – I can’t believe anyone would venture so sanguine an outlook. It simply goes against all historical
evidence. Lehman must be shorting oil futures. That;’s the only reason I can imagine them making such a ridiculous prediction.
Aug 8th, 2008 (10:53 pm)Well well, Looks like the little speculative oil market price jump is over, prices overall will continue to rise forever though. Also this is horrible for GM and other automakers that have been cutting truck production, asuming people start buying trucks again.. Its like kicking them while they are down. Luckily, oil prices wont ever be as low as they once were just because of global supply and demand, and the fact that its non-renewable one day it will be completely gone. The automakers ALL need to stay ahead of the ball and not drop their EV programs, it will pay off in the future.
Aug 8th, 2008 (10:59 pm)Goldman Sachs has a better record than Lehman on oil. Their prediction is for oil prices to range between $50 – $105 through 2009 but then rise to the $150 – $200 range.
The exact quote is: “The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty.”
Then again, the author of the best selling book “The Black Swan,” Nassim Nicholas Taleb, an economist and former trader, has famously blasted economists for exploiting “our desire to be fooled by a simpler representation of the world.” His conclusion: “I cannot find a single convincing argument that tells me that astrologers won’t do better than economists.” [quotes courtesy of the NY Times]
That said, the long term trend for a hundred years has been up. With peak oil and increasing international demand that doesn’t seem likely to change.
Aug 8th, 2008 (11:02 pm)Let’s not get short-sighted. The current drop in oil prices is just a temporary glitch. We all need to focus on our conservation and alternative fuels.
Aug 8th, 2008 (11:03 pm)I hope it stays at today’s prices or cheaper long enough for GM and the others to develops EVs. If GM keeps losing billions, they won’t survive long enough to make the Volt and that isn’t good for anyone.
Aug 8th, 2008 (11:07 pm)If one more person talks about a Manhattan Project, I think I’ll start
reciting what the actual Manhattan Project was all about – it wasn’t about inventing anything – it was all about engineering. But significant storage devices are about invention, not engineering. We don’t know how to make them a lot better/cheaper and there in fact may not be any way of doing so. We’ve been trying for over 100 years already.
There is so much venture cpaital flowing into battery companies, plus IPO money, that no knowledgeable soul can possibly claim that there are “battery genius types” out there with good ideas and no money. EVERY plausible idea has been funded – over $200 million just last quarter alone. Why isn’t this information known by the public? Why is the media not covering this story?
The other point is that we only need to make batteries that have the capabilities of 3rd gen li ions cheaper in order to electrify the fleet. It would, of course, be better still they were fast rechargeable, long lasting, in order to make battery-onlies and thus cheaper cars, but that’s not required in order to meet our goals. Cheaper is good enough. They will get a lot cheaper and it ain’t going to require no “Manhattan Project” effort to do so. A123 Systems guys say so. And if EEStor works, which we’ll know in a few months, the game’s over. Too much money has already been thrown away on primitive technologies like wind and wave and PV by impatient and hysterical types, rather than waiting for far superior technologies to appear, e.g. solar thermal and PBMR nuclear.
Aug 8th, 2008 (11:09 pm)I still want a decent, affordable BEV or E-REV. I’ve wanted one for years. Fuel efficient vehicle demand correlates with oil prices. High demand brings premium prices. If oil prices go down, will that affect BEV and E-REV prices?
Aug 8th, 2008 (11:13 pm)Grizzly,
“What it’ll take is a national commitment spearheaded by leadership”
You are right. So, we have to become the leadership. The people must lead by example. If everyone does their small part, buy a Volt, put solar panels on our roofs, dig up our backyards and put in a geothermal system, put windmills in our front yards….. Of course all of this costs money. So do what you can. Every little bit helps. Lyle’s web site here is an excellent example. He’s doing his part by getting us to think about and talk these things. Next step is to do something about it. The politicians are in big oils’ pockets. Why? Money talks. Well, we have money. Individually, each of us has a little bit. Together, we make up the richest country on the planet. If we each do a small little thing – drive a Volt – or whatever – it will eventually add up. We can become the leaders of our country again as it was designed way back in 1776. The politicians will have no choice but to follow.
Made in USA. Buy American.
Aug 8th, 2008 (11:23 pm)Peaked for now,,,
Aug 8th, 2008 (11:41 pm)Interesting article – compressed air car
Is this a feasible technology?
http://www.cnn.com/2008/TECH/08/08/air.car/index.html
Aug 8th, 2008 (11:42 pm)I would be surprised if the Georgia/Russia conflict spiked oil prices. Russia DID just bomb the oil depots and the pipeline but that pipeline was already shut down by a terrorist attack on the line in Turkey.
The truly bad news is that NATO can’t and won’t let Russia control Georgia. That pipeline is the only line going to Europe not in the direct control of Russia. Given the fun Russia has with turning the spigot on and off during Winters I doubt the European powers, and by extension the US, can let that single pipeline fall into Russia’s direct control even busted as it is.
Aug 8th, 2008 (11:46 pm)I don’t get some of these posts. It seems that most people are angry that oil prices are dropping. High oil prices have hurt a lot of people. Folks have had to cut things so they can afford gas. I for one am glad they can have cheaper gas. Can’t we root for the Volt and still be happy that that things are getting easier for people?
Even with oil at $80 a barrel, a host of alternative energy’s will become viable. But it takes time for this to happen. The EREV’s are still 5 years away in meaningful numbers. In the meantime, lower prices are good. I don’t think people are ignorant. They know what’s coming. But this gives us more time to prepare.
Finally, folks need to decide what their theory on oil prices is and stay consistent. I personally consider oil to be a global commodity driven strictly by supply & demand and the future predictions on supply and demand. Sounds like some folks think their might be some deeper conspiracy going on. First the conspriacy is to drive oil prices, up, then its to drive them back down, and maybe Bush controls the whole global market. Does someone have a consistent theory?
Aug 9th, 2008 (12:06 am)# 19 DonC
I only pick on you donc because you put out actual information…which I respect.
The inflation adjusted price of oil has not increased historically. In the last half of the 20th century it remained relatively constant. The outliers on this were around the OPEC embargo in the late 70′s and the recent spike. If you adjust oil price for earning power of Americans, the price of oil has consistently fallen in the last 50 years. It’s impossible to tell if this trend will continue or not. The future is always full of suprises. Maybe EREV’s will destroy demand and the price will drop further? Make a wish….
Aug 9th, 2008 (12:09 am)#22 kent beuchert
I’m having some problem following what you’re saying. I agree that the issue isn’t a lack of good new ideas. In fact it seems to be the opposite. There are so many good new ideas it’s hard to know in which direction to go. Any one of several on the table will obsolete existing Li-ion tech.
Most people who have looked at the problem would agree that the technology is here. It will doubtless be better in the future but what we have now is certainly good enough. The issues are cost and volume, which boils down to production. As you know the Manhattan Project produced two bombs at a gazillion dollars a bomb. We don’t need two battery packs that cost five million dollars each. We need two hundred million batteries at $5000/pack. The production is what is taking the time, be it with EESTOR or GM.
BTW I’m not sure what you have against wind and PV solar. Wind is cost competitive with any other source now, and the new thin film PV solar panels should be an even lower cost solution — after the two years it will take to finalize how to print these things in volume.
Aug 9th, 2008 (12:45 am)Phew! These lower oil and gas prices are a sigh of relief for everyone–car makers and buyers.
Prices will eventually rise again over time, but should be at a rate that everyone can handle–manufacturers to ramp up production of small cars while owners of SUVs can afford to drive them until they wear out after which buy a new fuel efficient car when the supply is there.
The rate of rise over the past 6-12 months was sooooo artificial–there is no way that a combination of wars/hurricales/paranoia and increased world demand should make gas prices jump up so much.
Aug 9th, 2008 (1:07 am)#28 Cautious Fan
Hardly picked on. But this one is a YIKES! I’m going to have to watch the throw away lines.
Good catch. Yes you are correct that I did not think about using a deflator. I was just thinking in nominal terms. It’s a bad habit I picked up from the Arco (BP) economists, but here is why that wasn’t really so wrong:
First you would definitely not want to use earnings as the deflator. Until the last eight years, in every decade wages went up faster than the prices of goods and services, meaning both real and nominal wages rose. For looking at prices you want to look at the prices paid not the value of wages earned.
Now we get to the technical part. Most economists would agree that until the mid-1990s the CPI (the prices paid index) overestimated the rate of inflation because of (1) substitution bias; (2) new good bias; and (3) quality bias. In the mid 1990s the CPI was corrected to account for numbers (1) and (2) but not number (3). This changed the inflation rate by about 1%. Importantly for our purposes here, the CPI was not changed for the years prior to the adjustment. (If you wonder why not, just think what would have happened to all those on government programs if their payments were adjusted for past year errors — not a pretty thought).
This is relevant because if you decrease the deflator rate by .5% to account for the better view of the CPI then the price of oil no longer stays flat, it trends upwards. if you adjust it by 1% the effect is more pronounced. And if you adjust the deflator downwards by 1.5%, which takes into account the quality bias, which it should, then oil prices trend upwards even more strongly. (What’s surprising about using a more accurate deflator is that it even results in commodities like copper trending slightly upwards.)
Having said that I’m not sure if the trend line matters. If you believe in peak oil, then rising world demand will send the price up regardless of the prior trend.
Aug 9th, 2008 (1:55 am)I suppose good news in the short term if true, but hopefully we have learned our lesson and we don’t immediately go back to the large SUVs and abandon all our alternative energy plans. As others mentioned, I don’t think we have many other chances.
Aug 9th, 2008 (6:13 am)Hopefully the oil prices will come down and stay low long enough to accomplish two things.
1. Give us a repreave until these alternative can be developed.
2. Give a boost to the economy so that we can afford to convert over to many other forms of energy.
Aug 9th, 2008 (6:52 am)Is Lehman making a forecast, or are they simply stating in words what the graph shows as a line? There has been a peak. We are past that peak. Neither Lehman nor the rest of us know whether that line will go up or down in future months.
Aug 9th, 2008 (8:30 am)Remember $1 per gallon? It wasn’t that long ago. The attacks for using $2.50 for gas in cost analysis for Prius aren’t that hard to find still. Heck, there are fresh memories of speculation that oil could eventually reach $100 per barrel. Some insisted it was crazy to suggest prices could get that high… Now people are finding relief from $3.50 at the pump.
Talking about greenwashed.
That lack of perspective is scary. No wonder history has repeated itself. Makes you wonder what things will be like 2 years from now… when plug-in vehicles hit the market.
Aug 9th, 2008 (8:54 am)Lehman brothers is full of the smelly brown stuff.
Price rises are not a linear progression, they go up, demand dampens, they fall back down for a while, then go up again.
The problem is many countries subsidise oil for various reasons, Mexico being the closest to the USA. While USA has cut usage, China is still increasing, along with Russia, KSA, Iran, Mexico etc. Demand is still going up, supply is not.
If China is hoarding, why does South China have big fuel shortages?
I just hope it stays down long enough for EV’s to start becoming mainstream. I am still seeing no change in the underlying oil stats, to change my prediction of $150 to $180 by the year end.
LONDON, Aug 7 (Reuters) – OPEC oil exports, excluding Angola and Ecuador, will fall by 360,000 barrels per day (bpd) in the four weeks to Aug. 23, an analyst who tracks future flows said on Thursday.
Seaborne crude exports from 11 OPEC members, including Iraq, will fall to 24.46 million bpd from 24.82 million bpd in the four weeks to July 26, British consultancy Oil Movements said in its latest estimate.
Source: http://africa.reuters.com/energyandoil/news/usnWLA7793.html?rpc=401&
Aug 9th, 2008 (9:11 am)Even if gas gets down to 3 dollars a gallon we need to stop sending billions of dollars to countries that want to do us harm. Drill here now open up shale oil, solar and of course the purchase your Volt!
By the way, Lehman help bring us the Mortgage mess should we trust what they are saying? In 6 months oil will be back over 125 a barrel.
Aug 9th, 2008 (9:29 am)I do have a healthy fear of the USA’s very short memory. Prices go down and we behave as if they never went up.
Having said that, the folks at this site (and others) pose some hope that there are people around who look ahead, instead of in the rear view mirror.
Just to repeat myself, I think that we need to do EVERYTHING, and we need to do it yesterday.
NOW LET’S GET THE VOLT’S WHEELS ON THE ROAD!
Be well,
Tag
Aug 9th, 2008 (9:33 am)#10 Stew & #20 Kent
You guys hit the nail right on the head.
Lets see what happens to oil prices when the olympics are over.
http://www.oil-price.net/dashboard.php
Aug 9th, 2008 (9:40 am)“Lehman: Oil Prices Have Peaked”
Wow, stunning observation there.
Actually Lehman has been one of the few to express unbelief that the price of oil was/is over $90 at all.
They did come out well ahead of this ‘bursting,’ with call of $83/$90 in 2009 (depending if you are reading their April or June reposts).
Here is their press release from April 2009:
http://www.domain-b.com/industry/oil_gas/20080425_oil_boom.html
Aug 9th, 2008 (9:54 am)I agree TAG we have to direct our attention to getting off oil. I can see the 1970′s all over again when the oil suppliers increased supply and drove the price down so we would forget alternatives. AND we did forget alternatives. Let’s not do it this time. Let’s get onto Electric vehicles and off of petroleum vehicles. Only by keeping our fuel Dollars in American hands can we prosper. That being said, GM I NEED MY VOLT NOW.
Take Care,
TED
Aug 9th, 2008 (10:00 am)Repost of my post from the recent power steering thread:
I see mention about the price of oil that’s been dropping and whether that will reverse the vehicle downsizing trend that’s now going on…
Well part of the price drop is due to reduced demand… I can’t remember how much but I recall something like the equiv distance equal to several round trips to the sun less. Any reversal in the demand will equate back to a reversal in prices back to higher prices, and it could indeed keep fluctuating like this.
Part of the drop is also being attributed to the increase in strength of the US$. Since all oil prices are denominated in the US$, a stronger dollar reduces the price for us (I imagine a stronger dollar increases the price in places like Europe?). If the dollar continues to strengthen and stays stronger that could have a longer lasting effect on oil prices.
However while cheaper oil prices is definitely likely to increases the miles driven, I think car buying consumers won’t base their decision on what could be short term oil pricing trends. Also given the lack of a lease option now for those big SUV’s that’s going to keep them out of the hands of even some that still want them.
Longer term the world wide trend is still increasing demand, mainly from China and India, and decreasing worldwide supply (mature oil fields).
Aug 9th, 2008 (10:07 am)OhmExcited regarding the Saudies bankrupting the Soviet Union… interesting, hadn’t heard that before but I can see it partly being the case. However I also have a feeling another part is Regan’s defense spending at the tail end of the cold war forced the Soviets to also spend massively, and their economy couldn’t take it (of course ours also struggled afterwards as Regan used deficit spending but that’s another story).
As for salt… you must be from a State where it doesn’t snow… up here in the Northeast we definitely car how much salt costs… last Winter with so many days that had snow (or ice) we blew through our salt piles and went over budget. Hoping this winter we have bigger but few storms instead of lots of little ones.
Aug 9th, 2008 (10:12 am)#39 Statik (Me):
“Here is their press release from April 2009″
Hey, doofus it’s not 2009 yet, I think you meant 2008
Aug 9th, 2008 (10:18 am)#41 Jeff M
“Part of the drop is also being attributed to the increase in strength of the US$. Since all oil prices are denominated in the US$, a stronger dollar reduces the price for us (I imagine a stronger dollar increases the price in places like Europe?). If the dollar continues to strengthen and stays stronger that could have a longer lasting effect on oil prices.”
This is 100% on the money, nice post.
The US dollar this week has had a monster rally…which not only makes oil quite abit cheaper, (adjusted value of around $6), but even moreso, it takes away some of the large premium that has been built in over time by having a steadily depreciating currency as the base for oil.
Even forget the USD appreciating, if it is seen as just stabilizing, that alone should be good for $15-$20 off the peak price for a barrel of oil .
Aug 9th, 2008 (10:19 am)Reply to Cautious Fan…. I don’t think folks are angry that prices are dropping (except those invested in oil stocks)…. what folks are concerned about is that we will become complacent again and that nothing will really change and we’ll just be in the same position the next time oil prices shoot up again.
And while EV’s in mass numbers may very well indeed be 5+ years away… and are definitely the long term solution… that doesn’t mean they are the only short or medium term solution… simply making smaller much more fuel efficient vehicles (they don’t even need to be hybrids) will go a long way to mediate the demand for oil and save consumers billions at the pump.
And while McCain jokes and flip flops about it, if everyone made sure their tires were properly inflated, we’d reduce demand by 3% which is no small change.
Aug 9th, 2008 (10:30 am)DonC
If oil has increased higher than CPI, this mean that oil has gotten expensive relative to other commodities. But what I care about, is how it’s increased relative to my income. And over the past 50 years, average incomes have increased faster than oil. In addition, fuel efficiencies have gotten better as well. So in 1960, $1 of oil would’ve moved me 10 miles. Today it moves me 20 miles. Things have gotten better, not worse.
On peak oil, I’m agnostic. People have been crying wolf for a long time on many issues. It is interesting the peak oil date keeps moving out. Still 30 years out, just like in the 70′s. But if peak oil comes, the market will price it to reduce usage or encourage innovation, just like what we’ve seen lately. I don’t loose any sleep over it.
In a previous post you mentioned that economists can’t forecast well. On microeconomic issues, (future price of oil, future price of housing) I would agree with you. But on macro level issues they are successful. They can predict the effects of policies. For example, they can predict that Chavez’s policies will kill his economy. Or that higher taxes will discourage growth. Economists have too much faith in human innovation to be specific.
Aug 9th, 2008 (10:33 am)Jeff M@46 said
“…And while McCain jokes and flip flops about it, if everyone made sure their tires were properly inflated, we’d reduce demand by 3% which is no small change.”
Actually Obama said that by inflating our tires and getting tune-ups we could save all the oil we now import from other countries. I guess if we only import 3%, Obama is correct.
I’ve missed 3 votes my entire life and all of them were primaries (parents in the ER), and I’ve never seen such disappointing candidates for President. Not a good one available, but at least they both make some mouth noise about developing transportation alternatives.
We need to do everything now.
JMO,
Be well,
Tag
Aug 9th, 2008 (10:37 am)Cautious Fan@47 said
“…On peak oil, I’m agnostic. People have been crying wolf for a long time on many issues. It is interesting the peak oil date keeps moving out. Still 30 years out, just like in the 70’s….”
Try the 60′s! Back when the first “Earth Day” was held to highlight the impending Ice Age.
Be well,
Tag
Aug 9th, 2008 (10:46 am)Tag,
I remember that. Are we dating ourselves?
Take Care,
TED
Aug 9th, 2008 (10:52 am)Ted@50
Sorry, I’m not available for dating. I’m married 35 years (two if them happily). JK!
Be well,
Tag
Aug 9th, 2008 (10:55 am)I also remember the oil crisis of the early 70′s when I bought my first Honda Civic that got 30 MPG and traded in my 70 Pontiac Catalina which got 12 MPG. I swore then I would never own another car that did not get at least 30 MPG. Then in 1991 I bought an 89 mustang that got 18 MPG and followed it with a Jeep Cherokee which got 15MPG. Cheap oil prices will suck in even the most deterrmined of us. We all must be strong.
Take Care,
TED
Aug 9th, 2008 (10:57 am)I too have been married 35 years but to 4 different women.
Take Care,
TED
Aug 9th, 2008 (10:58 am)>> …simply making smaller much more fuel efficient vehicles (they don’t even need to be hybrids) will go a long way to mediate the demand for oil…
That’s not even enough to maintain status quo and does nothing to address the problem of smog-related emissions. Don’t forget about the needs of the entire world.
Half-Baked solutions are what got us into this mess in the first place. In fact, it’s the reason there is support for Volt now. Of course, E-Flex won’t be a high-volume technology (at least 25% production) for a very, very long time.
That’s why FULL hybrids are a must. They fill in that large & lengthy gap and make the option to plug easy for both automaker & consumer.
Aug 9th, 2008 (11:03 am)My current car is a Honda Insight wioth 60.6 Lifetime MPG. 40,000 miles worth. It is still not enough. My next car will be electric like my bumber sticker says.
Take Care,
TED
Aug 9th, 2008 (11:10 am)john1701a
“They fill in that large & lengthy gap and make the option to plug easy for both automaker & consumer.”
I don’t want to make it easy for the manufacturers. I want them to feel the pressure. The Volt is the first GM car I have been excited about since 1970. Bring the Volt—GM. Sooner if you can. No plug, No Sale.
Take Care,
TED
Aug 9th, 2008 (11:35 am)naaah. not true. the oil producing countries just want the carmakers to discontinue their electric car & hydrogen vehicle plans.luring ‘em back to complacency. but there is no turning back now , i hope. no repeat of the EV experience of the 90′s.
the Volt must be a real winner for GM . it’s different to have cnbc feature it in the cable channel’s docu a couple of nights ago but for network tv’s abc to trumpet the car in its morning show today is the real thing. especially that latter station mentioned the volt’s projected price somewhere in the vicinity of $35 k instead of cnbc’s $45 k !
Aug 9th, 2008 (11:39 am)#35,000.00 reallly would be too cool but I do not hold my breath. They will however sell millions more if they want at $35,000.
Take Care,
TED
Aug 9th, 2008 (11:58 am)Great comments guys. You have said it all.
I really liked LB’s comment at #24 about the people leading by example and each of us doing our small part. I would bet that everyone here is doing that, to the best of their abilitities.
Our family is doing its best to drive less, and to save electricity and natural gas. In drought plagued SoCal, we are also trying to save water. It is interesting that 20% of all electricity used in California is used to pump water. So saving water also saves a lot of energy.
The cumulative efforts of millions of people doing the same thing are clearly impacting the price. But the minute we back off, it will go right back up. As so may have said, they do it to us every time.
I also have to agree with john1701a at #53. Half baked solutions are not going to get it done. Our next car will be the greatest leap forward (backward?) in fuel consumption possible. If GM gets the Volt to us in time, at a price we can stand, we are ready to go. If not, we will be forced in another direction. My sense is that when the next batch of Honda hybrids arrive, they will blow the market away. Get ready GM.
Aug 9th, 2008 (3:01 pm)Repost of #43…something tripped the mod.
Bob Lutz (on his GM blog) comments on the CNBC special, he says:
“I was impressed with the balance, the fairness, and the journalistic integrity of the entire piece. Our story is there, warts and all, but so are the things we’re trying to do to help this company survive and thrive in the future. The missteps we’ve made in the past were clearly spelled out, as are the challenges we face today. It’s no puff piece, that’s for certain”
..and he continues in the blog to rag on ‘a good bit’ of the ‘press reports ‘irresponsible speculation or uninformed opinion and bias’
Personally, while entertaining I think the special was about as easy on GM as it could be. Bob’s stamp of approval on it would seem to back that up.
http://fastlane.gmblogs.com/archives/2008/08/gm_on_cnbc.html
Interesting how Lutz posts, then the first 3 comments are all well written, all giving a full endorsement of GM and all are written in the first hour of posting. Then it goes 3 of 4 comments bad (2 ragging on your salaries and one ‘make better cars’).
/just a curious observation…it’s all part of seeing the glass half-empty
Aug 9th, 2008 (3:37 pm)Hmmmm …. could it be that the run up in oil prices was because of Wall Street greed and NOT supply and demand? Those big hedge fund speculators perhaps? I remember Goldman Sachs said a barrel of oil would go to $200+. Could it be that Goldman Sachs had big money on the line HOPING that it would keep going up so they could get rich at us drivers’ expense? Hmmm …. I’m sure Exxon Mobil loved all the oil speculation this year. Record profits. Hopefully those hedge fund speculators lost their shirt when the run up came down a bit in the past week or so.
I think one of the main reasons that oil prices might be collapsing is because those Wall Street oil traders are learning more about the Volt and more electrification of the car in general in the next 10 years. No joke.
Volt technology IS coming Big Oil! Whether you like it or not. You cannot kill it or bury it. It sure sounds like the battery technology is going to work to specifications to me. It’s going to be here to stay once people see the Volt on the street in 2010+. I hear it will only cost about $1.50 to go the first 40 miles in the Volt. $1.50 per 40 miles will be “THE price” that OPEC and Big Oil will be competing against in the next 10-20 years. Big Oil better find 5 more Saudi Arabia sized oilfields in order to compete with that cost per 40 miles. For the range extender liquid fuel, I hope there are plenty of cellulosic ethanol pumps in my area. That way, Big Oil and OPEC would only be getting 15% of the money I put into each gallon of E85 since E85 only has 15% gasoline in it. Big Oil will be getting quite a revenue drop from me each time I fill up.
I can’t wait to get me a good bumper sticker to put on my Volt. Something like … “Big Oil and Bin Laden hate this car” or “Chevy Volt … OPEC’s worst nightmare”. I’m sure there will be lots of good bumper stickers for Volt owners to choose from.
Go GM !!! Getter done. Getter done right. You’ll have a huge new customer base in 2011 if you hit a home run with the Volt. Lots of us GM Volt fans. We’ll have to start a Chevy Volt Club like they have with classic Corvettes, Porsches, Ferraris, etc.
Aug 9th, 2008 (6:00 pm)Lehman brothers says oil has peaked?
In what contex do they mean that? the next 6 months, 3 years, forever.
Personally i think that is a ridiculos statement, unless the growth of the middle class in china drops off dramaticaly soon we have only seen the begininng of oil prices climb.
Our consumption trails of a few %, prices drop, and now were through the storm.
Retards
Aug 9th, 2008 (8:35 pm)Peak Oil is not the only problem for the Volt, in the US, check this out.
According to the EIA’s 2007 Uranium Marketing Annual Report:
8% of the 51 million pounds of U308e delivered in 2007 was of U.S. origin.
47 million pounds, or 92%, of U308e delivered in 2007 was of foreign origin.
Folks, it’s time to get serious about your energy options!
Aug 9th, 2008 (9:56 pm)Is anyone betting on the price of oil on Monday, after the US vs Russia game that is currently being played in Georgia.
I wonder what Lehman Brothers will say…
Aug 9th, 2008 (10:05 pm)bruce g @63
The conflict didn’t bother oil on Friday.
Once we have our Volt’s it won’t be such an issue (g).
Be well,
Tag
Aug 9th, 2008 (11:00 pm)Tag,
Yup,
Either Volts or bicycles will make oil games irrelevant, if not impossible.
Aug 9th, 2008 (11:21 pm)Tagamet… regarding the “impending” ice age in the 70′s… sounds like someone takes the word of Fox news or oil lobby misinformation campain seriously…. there was absolutely no scientific concensus and most of the story is based on one article in a scientific journel which was essentially discredited. To use that to try to debunk the overwhelming scientific concensous of man made global warming as just more “alarmists” is a pretty lame attempt.
As for your other piece of misinformation… ie. that Obama has said that if everyone had properly inflated tires and tuned engines that we would eliminate all imported oil… I don’t think even Fox news, which I do watch by the way, I’m a life long indepedent for a Dem or a Repub so need to fact check both and not take either at their word, has claimed Obama said that. What I did hear Obama said is that proper tire inflation and engine tuning would save more oil in one year than would be produced in 4 years worth of expanded offshore drilling off our coasts. And by the way, the 3% savings is backed up by both the AAA and by the US Government (the DOT I believe). Even McCain, after mocking Obama, said it was a good idea (I’ve seen the footage) before he started mocking again. It’s also funny how McCain was against expanded offshore drilling as recently as this past June… until he got some major campain contributions from the oil industry (and fwiw, Obama supposedly got some oil contributions as well, just not as much… Obama’s problem is his close ties to the corn based ethanol industry).
Aug 9th, 2008 (11:43 pm)Jeff M@66
Maybe it’s you that should check their facts. Back in the time of the original Earth Day, FOX NEWS DID NOT EXIST. I’d have to check, but I don’t think CNN was even started until around that time (and they WERE concerned about the impending ice age. So I can guarantee you that Fox News was not my “source”. The source was the same cutting edge environmental scientists who have since reversed their course about the ice age. At least they got smart enough to now worry about “Climate Change”, so it could go either way and they are covered “We TOLD you it would change!”
I WATCHED Obama’s speech about inflating tires. It’s primary source info to me – as opposed to your “Well, I hear that he said it this way. I agree that Obama has a problem with corn based ethanol, but it’s about #485 on his list of problems. Pelosi’s insistence on going on vacation without even allowing a vote on a bipartisan energy plan has got to be in the top ten.
Some facts, some opinions,
Tag
PS I too am an independent voter and I just don’t have a candidate I like this year.
Aug 10th, 2008 (12:00 am)john1701a calling making more smaller fuel efficient now a “half baked solution”….. WAKE UP!!!!
BEV’s (range extended or not) being produced in mass numbers are at least 7, most likely 10-15, years away… and that’s only if there isn’t a prolonged worldwide economic slowdown that keeps oil prices down to $80 or less…..
…. in addition not everyone is like us can afford the up front cost of a BEV as they will be priced initially and while they should hopefully drop in price, it’s going to be a while they are priced in the $15-20k range that is affordable to a good chunk of the working class.
I’m a big proponent of BEV’s and plug-in hybrids, even before the Volt was announced, even bought Sherry Boschert’s book “Plug-in Hybrids: The Cars That Will Recharge America”. Even researched and looked into doing my own EV conversion of a ICE (a Chevy S-10 is what I think would have been the easiest)….
…. however I’m also a realist. Waiting for affordable to the masses mass produced EV’s and maintaining status quo while we wait is not a solution (not even a half baked one). Americans for economic reasons are already not waiting, they are choosing smaller fuel efficient vehicles.
As for smog related emissions…. a (non-plugin) hybrid getting the same milage as a non-hybrid produce exactly the same amount of emissions… that’s because they are burning the same amount of gasoline to go the same distance. 20 years ago GM had 50+ mpg vehicles that would have given the Prius a run for the money, and probably cost less (sure the Prius would beat the Metro on performance but it depends what you want). Fuel economy has stagnated for 20 years… 2008 Nissan Sentra gets the same milage as my 1987 one did as the focus has been on performance after oil got cheap again.
Hybrid technology is only one tool that can be used to increase fuel economy, as long as it’s applied for that purpose. The last several years have seen plenty of hybrids where the technology was used mainly to increase performance and in some cases the hybrid model got as little as 1 mile/gallon better milage (that one was either a Toyota or a Honda and has since been discontinued).
Aug 10th, 2008 (3:29 am)“Biodiesel from algae changes the landscape of renewable fuels,” said Jonathan Wolfson, chief executive officer of Solazyme. “The concept of algal biofuel has been discussed for decades, and Solazyme’s technology finally provides a scalable solution based on proven industrial processes. This fuel is just the first example of how algal oil will help the environment through new products that offer attractive economics and performance, as well as environmental benefits.”
Soladiesel exceeds both the requirements of the American Society for Testing and Materials (ASTM) biodiesel standard D6751 and EN 14214, the European standard, which ensures that biodiesel can safely run any existing diesel engine. The car demonstrating Solazyme’s biofuel at Sundance is running on its original, factory-standard diesel engine with no modifications, and is powered by the highest blend of biodiesel that engine manufacturers currently certify. By operating in the typical sub-freezing temperatures for the area in January, it also illustrates how Soladiesel provides better temperature properties than any traditional biodiesel.
*** Why not use this technology to literally “grow” ourselves out of this mess. 5,000 algae fuel manufacturing centers creating 200,000 gallons of algae biodiesel (daily) would provide 1000 million gallons of carbon neutral fuel each day or 1 billion gallons (what we currently use)
Check out the video
http://www.solazyme.com/news080122.shtml
Aug 10th, 2008 (5:43 am)I will probably order my volt stripped. No radio, no a/c, no floor mats, only drivers side door rear view mirror, roll up windows, vinyl, not cloth seat covers, green monocolor LCD screen, squeeze bulb horn, and only one charging port.
Aug 10th, 2008 (7:05 am)The following graphic seems appropriate here. Enjoy team.
http://projects.flowingdata.com/gas-prices/
Go GM, Go VOLT !!!!
Aug 10th, 2008 (8:18 am)Best book to read on “Oil”.. published in 2006 …
“THE LONG EMERGENCY” …It predicts and describes exactly what we have gone through for the last 6 months … US oil production peaked about 1970 … and worldwide production in 2005 … Unless there is more exploration and drilling now with the declining limited supply oil … the only way the price of oil can go is UP…. We need a national energy policy … but as long as big oil owns all the politicians in Washington nothing will be done.
Aug 10th, 2008 (9:38 am)Here’s a graphic visualisation of long term trends in prices, enjoy.
The Volt is safe.
http://projects.flowingdata.com/gas-prices/
Aug 10th, 2008 (9:49 am)NZDavid
Neat chart, but made be a little ill (on so many levels). I wish it could be run “backwards” so I can see how long ago gas was .25 a gallon (early ’60′s?).
Thanks again,
Be well,
Tag
Aug 10th, 2008 (10:20 am)NZDavid,
Interesting way to view data.
Tag,
Can’t you close your eyes to “see” that?
Aug 10th, 2008 (10:26 am)Koz@74
They say the oldest memories are the last to go, so it is getting clearer…
Be well,
Tag
Aug 10th, 2008 (10:56 am)Ahhh…yes…youth and the young.
I have seen a few fewer cycles than some but have enough to recognize and whence the come.
Hopefully the silver lining in the downturn in oil prices (I do believe will coincide with worldwide soft economic conditions that will persist for at least 1 1/2 years) will be that it gives GM the opportunity of a “softer” transition. The just need to stay firm in their resolve for “gas friendly to gas free.”
Aug 10th, 2008 (12:06 pm)Me #79,
“I have seen a few fewer cycles than some but have enough to recognize and whence the come.”
I really need to stop using the tablet to comment, s/b:
I have seen a few fewer cycles than some but have seen enough to recognize from whence they come.
Aug 11th, 2008 (2:47 pm)Kubel makes a great point in #15: a large-scale war over dwindling oil supplies is a real possibility.
Hard to say when that could happen, but consumption by China & India continue to increase relentlessly. They, like us, can be expected to do ANYTHING it takes to get the oil they need.
Moreover, increases in oil demand by those two giants can easily offset decreases in American & European demand. Barring some dramatic improvement that isn’t readily apparent, prohibitive prices and even shortages might not be too far off. That’s an easy trigger for armed conflict.
In the short run, we can ameliorate prices and avoid shortages by drilling in Alaska and off-shore. And IMHO, we should. But that’s not a long-term solution. At best it can buy time to convert all our vehicles — and some of our homes and businesses — away from oil (towards electricity generated by nuclear, solar, and wind).
China in particular continues to play hardball to gain access to coveted oil-fields. And they’re succeeding. The Wall Street Journal had an article last week about China routinely outbidding Indian companies for ownership stakes in oil exploration & drilling ventures around the world.
China also bribes oil-producing nations — particularly in Africa — with billions in low-interest or no-interest loans or outright gifts of “development aid.”
With hundreds of billions of dollars flowing into China’s coffers every year from short-sighted American consumers of “cheap” goods, China has piles of cash for such endeavors.
Those same piles of cash also enable China to keep modernizing and enlarging its military. And, unlike the USA, China’s not funding its military build-up through unsustainable deficit spending.
China certainly intends to do more with its military than simply “re-unite” Taiwan. All of China’s forces — Army, Navy, Air Force, and possibly Space-based — will be more larger than ours within 20 years. Hopefully they won’t also be more advanced or efficient, but that’s a possibility too. What better purpose for those armed forces than to take scarce oil (and water) resources?
Access to oil and water will mean life or death. Let’s get the hell off oil ASAP. That way we can sit out the horrific oil wars that may be coming. It’s tragic enough for Chinese & Indian people to kill each other over oil someday — let’s not have a “need” for Americans to die in such a conflict too.
Aug 12th, 2008 (10:46 am)#71 Avatar,
Thanks for the algae link, but did you read this:
“Solazyme is currently producing thousands of gallons of algal oil and recently signed a biodiesel feedstock development and testing agreement with Chevron Technology Ventures, a division of Chevron U.S.A. Inc.”
That’s just great, I believe it’s Chevron that has the patent rights for the EV-95 battery. After being sold the rights to the battery from GM, Chevron (who bought out Texaco) turned around and sued Toyota and Panasonic to get them to stop making large format NiMH batteries. They were getting 120 mile range out of these batteries. Chevron holds the patent to these batteries until 2014.
Chevron will tie up this technology too. I sorry I have zero confidence in anything Chevron is tied to.
Aug 12th, 2008 (9:35 pm)Well hell!!! I’m going out an getting a Hummer RIGHT NOW!!!!