5 dollar gas...are we ready?

[unh_hockey]

Re: 5 dollar gas...are we ready?

You know what is funny, I had been clamping down and on a serious budget for about a year now. I moved out of my apartment that I was living by myself in, to a house with a roomate. Granted I travel alot for my job, so right now it didnt seem like the best use of my money. I did increase my work commute from 2 miles to 7, I know stop my whining. But because I clamped down my budget so much (trying to pay off a sizable student loan in 3 years), I have the room to absorb the increase fuel costs. Plus my new place is right near my gym, so i think overall my weekly mileage hasnt changed much, and now that it is getting nice out, i sometime ride my bike to the gym.

Very interesting thread...thanks for starting it!

I have not started cutting coupons yet, since my budgeting has been pretty solid for a while now. After 2008, I took a huge initiative to track every dollar I spent on virtually everything. I wanted to get a grasp of what was important ,and what was not. People in general are penny wise, but dollar dumb. They worry about things that do not matter, but gloss over what does. As a student of science, I like to let data tell the picture. So I embarked on a yearlong obsession of tracking everything from buying groceries, to paying for my girlfriend to rock climb at the gym. What I found out was illuminating:

Of a percentage of my salary: 2% was used on vacation, 5% on travel, 5% on food, 60% on rent/heating/electricity/cell phone , (0.72 % on electricity). Had I been more liberal with eating out as many are, and on a commute, both of those numbers could have easily been 10% respectively. So than, why do people need to cut back on electricity, or on vacations when clearly the silent killers are food and gasoline? My friend is guilty as sin on this regard. He has a gas guzzling machine he pays absurd interest on, and goes out to eat all the time. He is obsessed with turning out lights though. So lets see, he stresses over a 0.7 % expenditure, while he completely ignores up to 20% of his yearly income?

A fringe benefit of this project is that it allows me to figure out what gas prices can before I start ‘breaking even’. I found I can still save and live a good life at 5 or even 10 dollars per gallon. I’d rather invest, so downsizing my commute to walking ( like wingah), which will add potentially 4-6% more to yearly investments. That’s significant.

 

[FlagDUDE08]

Re: 5 dollar gas...are we ready?

I have not started cutting coupons yet, since my budgeting has been pretty solid for a while now. After 2008, I took a huge initiative to track every dollar I spent on virtually everything. I wanted to get a grasp of what was important ,and what was not. People in general are penny wise, but dollar dumb. They worry about things that do not matter, but gloss over what does. As a student of science, I like to let data tell the picture. So I embarked on a yearlong obsession of tracking everything from buying groceries, to paying for my girlfriend to rock climb at the gym. What I found out was illuminating:

Of a percentage of my salary: 2% was used on vacation, 5% on travel, 5% on food, 60% on rent/heating/electricity/cell phone , (0.72 % on electricity). Had I been more liberal with eating out as many are, and on a commute, both of those numbers could have easily been 10% respectively. So than, why do people need to cut back on electricity, or on vacations when clearly the silent killers are food and gasoline? My friend is guilty as sin on this regard. He has a gas guzzling machine he pays absurd interest on, and goes out to eat all the time. He is obsessed with turning out lights though. So lets see, he stresses over a 0.7 % expenditure, while he completely ignores up to 20% of his yearly income?

A fringe benefit of this project is that it allows me to figure out what gas prices can before I start ‘breaking even’. I found I can still save and live a good life at 5 or even 10 dollars per gallon. I’d rather invest, so downsizing my commute to walking ( like wingah), which will add potentially 4-6% more to yearly investments. That’s significant.

You're definitely right. Also, here's one to consider: How often are you going to the ATM for "petty cash"? I realize that some expenditures are easy to track because so often people are using credit cards or check cards sponsored by credit card companies, but the fact of the matter is that people still use cash and that can be tougher to track. I typically use cash mostly because around Central NY there are several gas stations (especially the ones of decent price if you can call it that) that have a different cash and credit price, and I feel more comfortable with cash because you never know when your credit/debit card will fail.

Actually, while we're on the topic of gas stations with credit/cash price differences, here's a thought: If it meant a reduction in gas prices by the amount of the fee established by credit card companies, would you support seeing gas stations that only take cash payments?

 

[The Rube]

Re: 5 dollar gas...are we ready?

I paid $4.15/gal for 32 gallons of diesel yesterday, I didn't die, or even go broke. I think I'm doing ok.

Also, I want to know why my Wrangler is only worth $2000 when Brent's is $10k! My Wrangler would pound the **** out of Brent's!

Because yours is from 1973.

 

[bigblue_dl]

Re: 5 dollar gas...are we ready?

Because yours is from 1973.

Hey now, its an '89. It would actually be worth more if it were a few years older, so it was a CJ, instead of a YJ. To keep it somewhat on track, I get between 16 and 18 mpg with my '89 Jeep with a 258ci carbureted I6. I think you're newer Jeeps suck balls, mine gets better mileage! Also, my 3/4 ton Ram 4x4 gets 22mpg on the highway and between 16 and 17 in the city. Probably better if I didn't drive like Richard Petty.

 

[walrus]

Re: 5 dollar gas...are we ready?

No speculation involved

http://www.bnet.com/blog/financial-...speculation-drives-oil-prices-listen-up/12722




when Goldman Sachs Warns That Speculation Drives Oil Prices, Listen Up

By Alain Sherter | April 13, 2011

·

· Goldman Sachs (GS) fears that speculation is causing a dangerous spike in the price of oil. In fact, the head of commodities trading at the investment bank is so worried that he advised clients this week to cash in their profits before the bubble pops, noting in a report that the sector shows “record levels of speculative longs [trading] in crude.”

This is, to put it mildly, an unusual admission from Wall Street’s preeminent casino. The official position of securities traders, hedge funds and other market players has been that speculation doesn’t affect oil prices, including prices at the pump. That’s the line the industry has taken in enlisting key lawmakers on Capitol Hill to quash rules proposed under the Dodd-Frank financial reform law aimed at curbing wild swings in the price of oil.

As Goldman makes clear, this view is implausible. Mounting evidence — and recent history — suggest that crude oil prices are increasingly determined by investors betting on which way prices are moving, rather than on economic fundamentals.

Shortly before the financial crisis in 2008, for instance, the cost of oil soared more than 125 percent, pushing gas prices to more than $4 a gallon and badly denting the global economy. The run-up couldn’t be explained in conventional economic terms, since global oil supplies at the time exceeded demand. Prices, too, whipsawed,shooting from $65 a barrel in June 2007 to $147 a year later, before diving to $30 in late 2008 and back up to $72 the following summer. Meanwhile, the supply of crude in the U.S. was hitting a 20-year high, while the deep economic recession cratered demand.

What oil speculation costs

In wake of this surge, the House of Representatives passed legislation that would’ve curbed speculation in crude oil derivatives. But it later died in the Senate under pressure from Wall Street and other derivatives users.

It’s not only U.S. lawmakers who perceive the threat of oil speculation — so do the countries that benefit most from high oil prices. Said the Saudi Arabian oil minister at a 2008 meeting of oil-producing countries:

I believe that there has been a parting of the ways when it comes to oil supply-demand balances and other industry fundamentals on the one hand, and the price behavior and market volatility on the other. Industry fundamentals cannot account for today’s high prices, nor for the enormous degree of market volatility that we have experienced of late.

How much does speculation drive up oil prices? By roughly 20 percent, or between $21.40 and $26.75 a barrel, Goldman suggested. Every million barrels of oil held by speculators results in a price rise of 8-10 percent. Not surprisingly, such increases coincide with record levels of speculation in oil futures, Commodity Futures Trading Commission officials note. Since June 2008, the number of energy contracts held by such investors has risen 64 percent.



Financialization: The tipping point

Speculation is, of course, a normal and useful feature of markets. The danger is when a market that is ordinarily governed by supply and demand becomes increasingly hostage to speculators. Why? Because they have no financial stake in whether a barrel of oil, bushel of wheat or mortgage-backed security is correctly priced. Their only interest is whether the price of that asset goes up or down. And when speculators begin to crowd out other types of investors — including companies wanting to hedge their risks and even the kind of professional risk-takers served by investment banks — it can fundamentally disrupt that market.

Compounding that threat is the growth in recent years of new investment products and strategies that has resulted in what former CFTC staffer and now University of Maryland law professorMichael Greenberger calls the “financialization of the oil industry.” And other industries, too. For instance, the Goldman Sachs Commodity Index, which the company launched in 1991, includes some two dozen commodities, including oil, coal, metals, corn and wheat.

Such markets can be useful to, say, airlines interested in hedging against sudden hikes in the price of jet fuel. But they have also attracted a wave of speculators eager to bet on a range of commodities. And sure enough, prices in these “financialized” sectors have become alarmingly volatile over the years.

In the case of oil, the effects of such volatility range from slower GDP growth and higher unemployment in wealthier economies to starvation in poor countries hurt by the rising cost of grain. And political turmoil here in the U.S., it’s worth adding. Statistician Nate Silver has shown that high gas prices can severely damage the incumbent party’s electoral chances.

Gaming the game

The most obvious solution is to establish “position limits,” which cap the number of futures contracts a trader can hold. Dodd-Frank gives the CFTC the power to establish these limits as a way to diminish excessive speculation and ensure that markets function well. For now, however, exactly how those rules will be implemented or enforced is unclear. Why? Because companies like Goldman are lobbying against them.

If that sounds like the same recipe that helped trigger the financial crisis — economic and political interests aligning to fight regulation — that’s because it is. Or to put it another way, Wall Street and its clients create markets where speculation can flourish. They reap enormous profits from that trade, calling their chits in Washington to fend off efforts to restrain it. Perhaps, in openly warning that a market is getting too hot, bankers may even lay claim to acting as a cautionary force in global investment.

And when the stakes get too high, they take their winnings and go home.

 

[unofan]

Re: 5 dollar gas...are we ready?

Actually, while we're on the topic of gas stations with credit/cash price differences, here's a thought: If it meant a reduction in gas prices by the amount of the fee established by credit card companies, would you support seeing gas stations that only take cash payments?

That's assuming cash operations don't have their own costs - from the potential of theft to having to count the drawer and deposit it every day, and getting a safe or armored car depending on how much cash you're dealing with.

Those are probably not as high as most credit transactions cost, but I have a feeling a lot of businesses that advertise lower prices for cash transactions are skimming it somewhere along the way, probably by keeping a few of them off the books and avoiding the taxes thereon.

 

[walrus]

Re: 5 dollar gas...are we ready?

There isn't a gas station anywhere(maybe in the inner city ? ) that wouldn't prefer to be cash only. At 4 bucks a gallon, 2.something% credit card fee, 8 to 14 cent margin, guess what happens to your profit when someone pays with a credit card? Why do you think most gas station are now fast food vendors

That's assuming cash operations don't have their own costs - from the potential of theft to having to count the drawer and deposit it every day, and getting a safe or armored car depending on how much cash you're dealing with.

Those are probably not as high as most credit transactions cost, but I have a feeling a lot of businesses that advertise lower prices for cash transactions are skimming it somewhere along the way, probably by keeping a few of them off the books and avoiding the taxes thereon.

 

[ScoobyDoo]

Re: 5 dollar gas...are we ready?

With the Bush Tax Cuts passing again in December the economy is going to be so hot that this gas thing will be meaningless in the long run. Jobs, jobs, jobs and wages will be through the roof.

 

[joecct]

Re: 5 dollar gas...are we ready?

Ok engineers!

Instead of batteries, what else could be used as energy storage (outside of the flux capacitor) in a car? I recall about 10+ year ago the Rosens put a large flywheel in the trunk to store energy. What is environmentally and engineering feasible?

 

[FlagDUDE08]

Re: 5 dollar gas...are we ready?

There isn't a gas station anywhere(maybe in the inner city ? ) that wouldn't prefer to be cash only. At 4 bucks a gallon, 2.something% credit card fee, 8 to 14 cent margin, guess what happens to your profit when someone pays with a credit card? Why do you think most gas station are now fast food vendors

Exactly where I was going with this. However, I wonder if there are either state or federal laws that control the cost difference. I remember at the Oneida Nation gas stations, during the $4 crunch back in 2008, it was 7 cents per gallon discount if you used cash. Once the price started dropping, it became 5 cents. Granted, the prices were still a little bit higher during the bottom out, I assumed to make up for the lower price they offered during the crunch (I never paid above $4.06 per gallon because of it). However, they haven't gone back to that, and I wonder if there are other cards in play here.

 

[LynahFan]

Re: 5 dollar gas...are we ready?

Ok engineers!

Instead of batteries, what else could be used as energy storage (outside of the flux capacitor) in a car? I recall about 10+ year ago the Rosens put a large flywheel in the trunk to store energy. What is environmentally and engineering feasible?

Liquid hydrocarbons!!!

There's nothing that remotely compares, or we'd have been using it long ago.

Flywheels can have pretty good energy density, but only at such high RPMs that they are incredibly dangerous in a crash.

 

[walrus]

Re: 5 dollar gas...are we ready?

Ok engineers!

Instead of batteries, what else could be used as energy storage (outside of the flux capacitor) in a car? I recall about 10+ year ago the Rosens put a large flywheel in the trunk to store energy. What is environmentally and engineering feasible?

Think about the number of BTUs used everyday by cars, the number is staggering. No battery, No flywheel is ever going to come close. petroleum is a great fuel because for its size it packs a huge punch.

Nukes and Hydrogen are the only thing that come close, build nukes, crack hydrogen, make fuel cells.

 

[FlagDUDE08]

Re: 5 dollar gas...are we ready?

Think about the number of BTUs used everyday by cars, the number is staggering. No battery, No flywheel is ever going to come close. petroleum is a great fuel because for its size it packs a huge punch.

Nukes and Hydrogen are the only thing that come close, build nukes, crack hydrogen, make fuel cells.

Doesn't Chevrolet already have a fuel cell vehicle in development? Or did that stop when the government took them over?

 

[LynahFan]

Re: 5 dollar gas...are we ready?

Doesn't Chevrolet already have a fuel cell vehicle in development? Or did that stop when the government took them over?

Pretty much every car company has one "in development." How much they choose to advertise the effort is purely a marketing decision. However, none are remotely close to being economically competitive, so none of them will be players in the market any time soon. Gas will probably need to be up in the $10+ range before the high initial cost of such machines would be palatable.

 

[LynahFan]

Re: 5 dollar gas...are we ready?

Think about the number of BTUs used everyday by cars, the number is staggering. No battery, No flywheel is ever going to come close. petroleum is a great fuel because for its size it packs a huge punch.

Nukes and Hydrogen are the only thing that come close, build nukes, crack hydrogen, make fuel cells.

Spot on. The bond energies of the most common atoms in the molecules that make up gasoline are:

Bond Energy (KJ/mole)
C-C 346
C-H 411
C-O 358
O-H 459

And if some of those are double or triple bonds, then you're really talking. There are somewhere around 30 moles of molecules in a gallon of gasoline, so that's, well... a whole lot of bonds. The heat energy of a gallon of gasoline is ~120 KJ, and the cost of producing a gallon of gas is darn near zero - we're just picking the stuff up off the ground (well, out of the ground) for free. There's just nothing that's ever going to be so easy!

 

[Bakunin]

Re: 5 dollar gas...are we ready?

I want a trunk-mounted nuclear reactor to power my car and produce weapons-grade plutonium as a side benefit.

Then I can live out the American dream of tactically nuking a**holes that cut me off in their Audis.

 

[unh_hockey]

Re: 5 dollar gas...are we ready?

Spot on. The bond energies of the most common atoms in the molecules that make up gasoline are:

Bond Energy (KJ/mole)
C-C 346
C-H 411
C-O 358
O-H 459

And if some of those are double or triple bonds, then you're really talking. There are somewhere around 30 moles of molecules in a gallon of gasoline, so that's, well... a whole lot of bonds. The heat energy of a gallon of gasoline is ~120 KJ, and the cost of producing a gallon of gas is darn near zero - we're just picking the stuff up off the ground (well, out of the ground) for free. There's just nothing that's ever going to be so easy!

Right, the best bang for the buck are petrol products. They pack a high energy density, are abundant, and easy to store/ transport. While manmade biofuels might be viable someday, the big question is the cost to produce it . Back when oil was first being produced ,we could get 100 barrels for every 1 barrel to get it ( from an energy balance standpoint). The Canadian tar sand reserves, for example, requires 1 barrel to oil to make approximately 2. Basically we used in 100 years what took the earth millions of years to make. I am not so sure we will be able to outsmart nature.

 

[FlagDUDE08]

Re: 5 dollar gas...are we ready?

Pretty much every car company has one "in development." How much they choose to advertise the effort is purely a marketing decision. However, none are remotely close to being economically competitive, so none of them will be players in the market any time soon. Gas will probably need to be up in the $10+ range before the high initial cost of such machines would be palatable.

You're probably right. I only picked out Chevrolet because they had one on display during the State Fair in either 2008 or 2009 (I can't remember which). They did mention it'd cost at least 6 figures at this point if it were on the market.

 

[Kepler]

Re: 5 dollar gas...are we ready?

Right, the best bang for the buck are petrol products. They pack a high energy density, are abundant, and easy to store/ transport. While manmade biofuels might be viable someday, the big question is the cost to produce it . Back when oil was first being produced ,we could get 100 barrels for every 1 barrel to get it ( from an energy balance standpoint). The Canadian tar sand reserves, for example, requires 1 barrel to oil to make approximately 2. Basically we used in 100 years what took the earth millions of years to make. I am not so sure we will be able to outsmart nature.

By the same token, if you think of those carbon bonds as the gradual accretion of millions of years of radiation beating down on us from the sun, we should have billions of years of stored energy from other sources (not to mention the possibility of converting realtime radiation into energy). There is virtually limitless energy. What is limited is human ingenuity, particularly in a market environment in which the vast majority of ingenuity is wasted saving existing corporate investments rather than developing the competitors that will eventually bankrupt those.

 

[LynahFan]

Re: 5 dollar gas...are we ready?

By the same token, if you think of those carbon bonds as the gradual accretion of millions of years of radiation beating down on us from the sun, we should have billions of years of stored energy from other sources

If sun beats down on a rock, the rock will store some of that energy as heat and reflect the rest away. Unfortunately, heat does not like to stay put - it will leave the rock overnight. In nature, the ability to store the incoming energy in a form that will NOT leak away is more-or-less unique to photosynthesizing organisms (most, but not all, of which are plants). Even then, when plants die, much of the stored energy is lost as the molecules decay over time through natural oxidation. The only way the energy is stored long term is to keep the plants in a relatively oxygen-free environment (e.g. deep underwater) long enough to convert their cellulose molecules to more stable substances (e.g. coal). The same basic idea applies to the animals who consume energy stored in the plants - when they die, if their bodies are not consumed by other organisms right away, they will naturally oxidize and the energy will be "lost" (i.e. turned into low-grade heat that then fades into the background temperature of the planet).

(not to mention the possibility of converting realtime radiation into energy). There is virtually limitless energy. What is limited is human ingenuity, particularly in a market environment in which the vast majority of ingenuity is wasted saving existing corporate investments rather than developing the competitors that will eventually bankrupt those.

This is purely wishful thinking. There have been plenty of smart people trying desperately to discover new energy sources and ways to gather energy from the sun. Hydro, solar, wind, biofuels, photovoltaics - these are all solar energy, they just use different collection methods. Converting a "low-grade" (diffuse) energy source like solar radiation into an energy source with sufficient energy density to power a moving vehicle (i.e. a charged battery or fuel) takes a LOT of work, so the process is inherently inefficient. This will remain true, no matter what fraction of human ingenuity is devoted to the problem.

The same is true of the natural processes. All the trillions and quadrillions of BTUs that are stored in fossil fuels represent a teeny-tiny fraction of all the solar radiation that has arrived on earth since plants evolved. It's fundamentally an inefficient process - 99.999999% of the energy from the sun will be re-radiated back into space, regardless.

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