Gas to Hit $7 a Gallon

[Bob Juch]

Both Qatar's oil minister and the head of OPEC can see oil hitting $200 a barrel before the end of the year and one analyst says gas could reach $7 a gallon within four years. That could mean cataclysm for the global economy.

http://blog.wired.com/cars/2008/04/4-a-gallon-gas.html

[silvercamaro]

Thank you for that thoughtful analysis, Chicken Little.

[BackInTex]

Both Qatar's oil minister and the head of OPEC can see oil hitting $200 a barrel before the end of the year and one analyst says gas could reach $7 a gallon within four years. That could mean cataclysm for the global economy.

http://blog.wired.com/cars/2008/04/4-a-gallon-gas.html

I'll go on record as saying that this time next year oil will be $57 barrel and the average gallon of unlead across the country will be a whopping $2.42 gallon.

Three things will cause this:

1. The collapse of the Chineese economy sparked by riots at the opening ceremony of the olympics followed by a complete withdrawal of all non communist countries from the games.

2. The collapse of the Chicago Mercantile futures market for oil. Long speculators will fill the street with dead bodies flung from the tops of the buildings.

3. The 'suicide' of Venezuelan dictator Hugo Chavez who will be found with his hands bound behind his back, tied to his ankles and his throat slit.

[PlacentiaSoccerMom]

Both Qatar's oil minister and the head of OPEC can see oil hitting $200 a barrel before the end of the year and one analyst says gas could reach $7 a gallon within four years. That could mean cataclysm for the global economy.

http://blog.wired.com/cars/2008/04/4-a-gallon-gas.html

I'll go on record as saying that this time next year oil will be $57 barrel and the average gallon of unlead across the country will be a whopping $2.42 gallon.

Three things will cause this:

1. The collapse of the Chineese economy sparked by riots at the opening ceremony of the olympics followed by a complete withdrawal of all non communist countries from the games.

2. The collapse of the Chicago Mercantile futures market for oil. Long speculators will fill the street with dead bodies flung from the tops of the buildings.

3. The 'suicide' of Venezuelan dictator Hugo Chavez who will be found with his hands bound behind his back, tied to his ankles and his throat slit.

I will agree with you.

You should add the word naked into #3 and it would be even better.

[ne1410s]

Britons pay the equivalent of $9.38 per gallon.

Why doesn't this make me feel better?

[BackInTex]

You should add the word naked into #3 and it would be even better.

Hey, I like that.

3. The 'suicide' of Venezuelan dictator Hugo Chavez who will be found naked with his hands bound behind his back, tied to his ankles and his throat slit.

[Rexer25]

Britons pay the equivalent of $9.38 per gallon.

Why doesn't this make me feel better?

Prolly because the most of the difference between what we pay and what they pay is taxes.

[melleon]

I filled up my mini van tank here in Germany yesterday for 98 euros, roughly $150. almost $9/gallon!

[PlacentiaSoccerMom]

You should add the word naked into #3 and it would be even better.

Hey, I like that.

3. The 'suicide' of Venezuelan dictator Hugo Chavez who will be found naked with his hands bound behind his back, tied to his ankles and his throat slit.

Thank you. That's much better.

[NellyLunatic1980]

Thank you, President Hoover!

[peacock2121]

Thank you for that thoughtful analysis, Chicken Little.

Teehee

Uday called him Chicken Little.

[peacock2121]

Britons pay the equivalent of $9.38 per gallon.

Why doesn't this make me feel better?

Why do I discount that comparison saying "They don't drive the distances we drive, so the impact is not the same?"

[peacock2121]

Both Qatar's oil minister and the head of OPEC can see oil hitting $200 a barrel before the end of the year and one analyst says gas could reach $7 a gallon within four years. That could mean cataclysm for the global economy.

http://blog.wired.com/cars/2008/04/4-a-gallon-gas.html

I'll go on record as saying that this time next year oil will be $57 barrel and the average gallon of unlead across the country will be a whopping $2.42 gallon.

Three things will cause this:

1. The collapse of the Chineese economy sparked by riots at the opening ceremony of the olympics followed by a complete withdrawal of all non communist countries from the games.

2. The collapse of the Chicago Mercantile futures market for oil. Long speculators will fill the street with dead bodies flung from the tops of the buildings.

3. The 'suicide' of Venezuelan dictator Hugo Chavez who will be found with his hands bound behind his back, tied to his ankles and his throat slit.

I will agree with you.

You should add the word naked into #3 and it would be even better.

BiT will be our Secretary of State and PSM will be the White House Press Secretary.

[andrewjackson]

I agree with the rejection of the comparison of gas prices here and in Europe.

They pay way more than we do because they choose to. European countries are representative democracies. Those governments, with the consent of the governed, put very high taxes on gasoline so consumers pay much higher prices on gasoline.

In the U.S. we do not tax gasoline nearly so much so we pay much less in terms of price per gallon. We have chosen to do that by electing the governments that we do.

It always drives me crazy when people talk about how "lucky" we are that gas prices are so low in the U.S. compared to Europe. Or that we should be happy that our prices are not as high as in Europe. Our prices are a consequence of decisions that we make, no luck to it. Why should we be happy that we get the prices, relatively speaking, that we aim for?

[themanintheseersuckersuit]

Update: From the same source, here are the gas prices in dollars per US gallon EXCLUDING taxes:

Date
4/14/2008 Belgium 3.32 France 3.28 Germany 3.18 Italy 3.61 Ntherlnds 3.85 UK 3.09 U S 3.21

So the price at the pump will depend largely on whether or not the new President appoints Al Gore as Sec. of Energy.

[Sir_Galahad]

And yet the libs continue to pander to the environmentalists blocking the drilling of oil in both ANWR and the newly-found blockbuster reserve in the Dakotas. And, before you tell me that it would be at least 8 - 10 years before that oil could be brought online, consider this. ANWR could have been brought on line by now had it not been blocked during the Clinton era. Yes, the Bush era did nothing to turn that around either and Madame Hillary has said that she would continue efforts to prevent such drilling (not that she is going anywhere in her campaign anyway). I'm not sure where McCain or Obama stand on this issue.

Whatever happened to the will of the people?

[ * sigh * ]

[marrymeflyfree]

Britons pay the equivalent of $9.38 per gallon.

Why doesn't this make me feel better?

Norwegians are paying $12-$13/gal - probably more, actually, with the weak dollar. Most of Europe pays quite dearly for gas. Most of it is tax.

On one hand, they can weather it better because they have much better public transportation and more towns that are built around walkable city centers. And they actually do walk. They aren't as dependent on cars as we are. But they're also more likely to drive small cars, diesel cars, manual transmissions, etc, when they do.

[themanintheseersuckersuit]

And yet the libs continue to pander to the environmentalists blocking the drilling of oil in both ANWR and the newly-found blockbuster reserve in the Dakotas. And, before you tell me that it would be at least 8 - 10 years before that oil could be brought online, consider this. ANWR could have been brought on line by now had it not been blocked during the Clinton era. Yes, the Bush era did nothing to turn that around either and Madame Hillary has said that she would continue efforts to prevent such drilling (not that she is going anywhere in her campaign anyway). I'm not sure where McCain or Obama stand on this issue.

Whatever happened to the will of the people?

[ * sigh * ]

[DadofTwins]

Somebody with some economics expertice help me out here.

The American economy of the last 15 years has been a sequence of inflating and popping bubbles. First it was dot-com stocks and the "new economy" in the 90's, Enron and its ilk in 2001-03, followed by real estate prices and sub-prime lending more recently. In every case, there were temproary gains, but shaky business models and poor fundamentals ultimately proved unsustainable.

So here's my question:

Are we now seeing an "oil bubble," where high prices are a temporary result of unsound speculation? Are these oil traders chasing the momentum the way others did with the dot-coms?

Or were low oil prices the true "bubble," such that what we're seeing now is the market reverting to its natural form?

Cue the economists.

[BackInTex]

Somebody with some economics expertice help me out here.

The American economy of the last 15 years has been a sequence of inflating and popping bubbles. First it was dot-com stocks and the "new economy" in the 90's, Enron and its ilk in 2001-03, followed by real estate prices and sub-prime lending more recently. In every case, there were temproary gains, but shaky business models and poor fundamentals ultimately proved unsustainable.

So here's my question:

Are we now seeing an "oil bubble," where high prices are a temporary result of unsound speculation? Are these oil traders chasing the momentum the way others did with the dot-coms?

Or were low oil prices the true "bubble," such that what we're seeing now is the market reverting to its natural form?

Cue the economists.

If you ask two economists this question you will get two different answers.

Personally I think that the price of oil is currently about $40 over valued due to speculation. Go back to just before Katrina and just before Rita. Prices went up because of the loss of production in the Gulf. When that production came back online the price did not go down because of the new crisis dejur, speculation that there will be a shortage. Once the money has invested in crisis, they can't unwind without risking heavy losses. Fortunately for them oil demand is fairly inelastic in that there is little correlation in demand and price. In other words, the demand reamains constant with changing prices (up or down). So as they drive the prices up, the supplies don't increase significantly causing downward pressure on the price. However, soon the inelastic demand may snap, or the high prices will encourage more production to take advantage of the high prices and the supplies will increase. At that point the price will start to drop and the speculators holding the high value paper oil will start selling and it will look like the final scene in Trading Places. Oil will drop to $40 before it stablizes around $55-60 (and only that because the USD is doing poorly).

This is only my gut feeling. But then again, I never thought oil would get to the $100 level. So what do I know?

[dodgersteve182]

I'll take the "Unders" on this prediction! With political talk of a possible "tax holiday" on the price of Gas and the fact that Consumers will reduce their use of Gasoline, I think we might be at the "top" of the market right now. Even in car addicted California, local governments are talking about moving to a "4 day work week" to reduce traffic and oil consumption. Motorists in my neighborhood and people I know (including moi) are carpooling and reducing the amount of discretionary driving they do. If everyone (other than workers who use their vehicle for their jobs) stop buying gas on one particular day each week (let's say on Tuesday's), gas prices would drop 10 cents a gallon very quickly. It would freak out the oil companies! This is not my advice, I heard this from a radio report from a representative of AAA Insurance. Sounds interesting to me.
As for myself, I drive to L.A. on average one day per week less than before, and when I drive to Santa Monica on a Saturday, I usually car pool with my wife who visits family and friends at the same time. We save 5 gallons per month, i.e. $20 each month by sharing our driving tasks. Not to mention, reduced maintenance and repairs on our cars, and we save time by using the car pool lanes too! A win-win Situation!

[PlacentiaSoccerMom]

I paid $3.89 a gallon for gas today . The trip to HB for Quiz Bowl, probably costs me about $15 round trip for gas. This week, I am only taking one trip, but usually I take three trips a week.

[marrymeflyfree]

Our gas bill for last month was $466. Yikes!

Now that included one medium-sized road trip, two trips to EWR and back in the big engine car (to pick up guests at the airport), and four birth center appointments (an hour's drive each way). All atypical events, but still.

Yikes.

[earendel]

I'll take the "Unders" on this prediction! With political talk of a possible "tax holiday" on the price of Gas and the fact that Consumers will reduce their use of Gasoline, I think we might be at the "top" of the market right now.

If there's a "gas tax holiday" I'm afraid that gasoline use will increase, rather than decrease, which is not what we should be doing. If anything we should increase the gas tax to discourage consumption, and use that money for more development of alternative fuels (not so much for cars as for power plants, etc.). This would have to be offset by a cut in taxes somewhere else for the benefit of the working poor, many of whom don't have access to good public transportation.

[Sir_Galahad]

We don't need alternative fuels and the cost to develop these "alternatives" would be greater than if we just started to drill and provide our own oil in ANWR, Montana, California, The Gulf and Montana. According to reports, we have enough oil in just these locations alone to provide America's needs for several hundred years. But, your friendly politician will continue to drag his heels and pander to the environmentalists and nothing will even get done.