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Another cracked crystal ball vision
When I was a kid back in the early '60s, gas cost about 12 cents per gallon (sometimes getting as low as 8 cents per gallon). Accounting for inflation (see http://www.bls.gov/data/inflation_calculator.htm ), that's 90 cents today. If you told people back then that they would one day have to pay 27 cents per gallon (or $2 per gallon in today's dollars), they would have said they simply couldn't survive. To us today, $2 per gallon is a bargain. Nobody today would have any problems with gas at that price.
My point is that Mr. Neider telling people what they can or cannot deal with does not make it so. When left to their own devices, people come up with their own ways to deal with pinched budgets. They can combine trips, buy more efficient cars (yes, even hybrids or electrics) and take public transit. Or they can bite the bullet and cut back on their daily Starbucks.
What's interesting is that even at current gas prices, only the Prius and Lincoln MKZ hybrids pay for themselves in any reasonable time (see http://www.globalautomakers.org/media/industry-news/2012/04/payoff-for-efficient-cars-takes-years ). So anybody who believes that hybrids and electric are the wave of the future had better hope for much higher gas prices.
What's forgotten in the current debate is that the US has tens of billions of barrels of "conventional" oil offshore, in Alaska, and other places that were simply taken off the table (hence the deception that the US currently has only 2% of the world's oil reserves). No other country in the world has artificially denied itself such resources. The irony is that even if Mr. Neider is right about "tight" oil, this oil will act as a buffer.
Government mandates in the US contribute in other ways to the high price here. We all know about the Keystone XL pipeline. However, the EPA requirement of "boutique" gas mixtures in the summer for each region is a big factor in price spikes. There is only one refinery that can supply Chicago's unique blend, so it's no surprise Chicago has one of the highest gas prices in the nation. A lack of pipeline capacity to where gas is needed is another problem. The northeast can't take advantage of the glut of oil in the lower midwest because there's no cheap way to get the oil there. Even if there was, refineries in the northeast couldn't use it because of stringent EPA regulations. As a result, these refineries have to import Nigerian and North Sea oil which is $18 per barrel more expensive and they can't make money even at today's prices at the pump. We can't even ship gasoline from the refineries in the Gulf to the northeast because the Jones Act says it must be done with very expensive US tankers manned with US crews. As a result, the northeast is expected to import more gasoline from abroad, even as its refineries shut down because they can't get cheap oil to refine.
Finally, while world demand for oil is growing, it's fragile. We complain about $4 per gallon gas in the US, but that same price is an appreciable fraction of a day's wage in India and China. Back in 2008 at the last price peak, both India and China subsidized gas at the pump, allowing their citizens to use as much gas as before. But that broke both countries. Now India no longer subsidizes gas, and China has greatly cut back on its subsidies. When gas goes up today, who will better be able to afford the price increase? Someone in India or someone in the US? It may not be "fair", but when the price goes up it will just free up more supplies for us.
Make no mistake, gas prices will continue to go up in the future. But to say that we in the US can't deal with prices above $4 or $5 is a joke, especially since Europe deals with prices of $7 to $8 today because of their taxes. However, it's exactly rising gas prices, not government mandates, that will drive the success of alternatives such as electrics.
My point is that Mr. Neider telling people what they can or cannot deal with does not make it so. When left to their own devices, people come up with their own ways to deal with pinched budgets. They can combine trips, buy more efficient cars (yes, even hybrids or electrics) and take public transit. Or they can bite the bullet and cut back on their daily Starbucks.
What's interesting is that even at current gas prices, only the Prius and Lincoln MKZ hybrids pay for themselves in any reasonable time (see http://www.globalautomakers.org/media/industry-news/2012/04/payoff-for-efficient-cars-takes-years ). So anybody who believes that hybrids and electric are the wave of the future had better hope for much higher gas prices.
What's forgotten in the current debate is that the US has tens of billions of barrels of "conventional" oil offshore, in Alaska, and other places that were simply taken off the table (hence the deception that the US currently has only 2% of the world's oil reserves). No other country in the world has artificially denied itself such resources. The irony is that even if Mr. Neider is right about "tight" oil, this oil will act as a buffer.
Government mandates in the US contribute in other ways to the high price here. We all know about the Keystone XL pipeline. However, the EPA requirement of "boutique" gas mixtures in the summer for each region is a big factor in price spikes. There is only one refinery that can supply Chicago's unique blend, so it's no surprise Chicago has one of the highest gas prices in the nation. A lack of pipeline capacity to where gas is needed is another problem. The northeast can't take advantage of the glut of oil in the lower midwest because there's no cheap way to get the oil there. Even if there was, refineries in the northeast couldn't use it because of stringent EPA regulations. As a result, these refineries have to import Nigerian and North Sea oil which is $18 per barrel more expensive and they can't make money even at today's prices at the pump. We can't even ship gasoline from the refineries in the Gulf to the northeast because the Jones Act says it must be done with very expensive US tankers manned with US crews. As a result, the northeast is expected to import more gasoline from abroad, even as its refineries shut down because they can't get cheap oil to refine.
Finally, while world demand for oil is growing, it's fragile. We complain about $4 per gallon gas in the US, but that same price is an appreciable fraction of a day's wage in India and China. Back in 2008 at the last price peak, both India and China subsidized gas at the pump, allowing their citizens to use as much gas as before. But that broke both countries. Now India no longer subsidizes gas, and China has greatly cut back on its subsidies. When gas goes up today, who will better be able to afford the price increase? Someone in India or someone in the US? It may not be "fair", but when the price goes up it will just free up more supplies for us.
Make no mistake, gas prices will continue to go up in the future. But to say that we in the US can't deal with prices above $4 or $5 is a joke, especially since Europe deals with prices of $7 to $8 today because of their taxes. However, it's exactly rising gas prices, not government mandates, that will drive the success of alternatives such as electrics.
Edited by zackers
Updated - 18th Apr 2012