Gas Prices
Am I the only one who thinks that gas prices are insanely low? I’ve seen the news about the falling price of oil but I never thought I would see gas for under three dollars a gallon in San Francisco.
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Yeah that and the 5% growth last quarter are all part of Comrade Obama’s dastardly plan to lull us into socialism.Report
Well in fairness most credit for the low gas prices should fall at the feed of the House of Saud.
But yeah, economic growth and stuff, if a republican was in office they’d be measuring him for a place on Rushmoor by now.Report
Is that my version of the monument?Report
@nevermoor
It is a toy boat in a bathtub.Report
Oh yeah the Saudi’s ( those religious fundi, autocrats with a taste for public beheadings but are on our side) should get the credit for oil prices. Imagine what a liberal MSM would do with all this good news. O would be on the cover of every magazine with a halo on his head.Report
A little bit of credit for our friends to the west & north, my good @north .
It is OPEC that is forcing prices down to get the shale guys to ease up, but it’s the shale guys that are forcing them into that tactic. The Saudis are taking a bath in this that they’d certainly prefer not to have had to take.Report
Michael,
I think they might be happy if they manage to take down a few prime competitors. By which i don’t mean America. Iran can’t take these gas prices, you know?Report
You’re entirely correct @Michael Drew though I suspect the targets may be more Iran and ISIS than our buddies in Dakota. I can’t see how the Saudi’s would think that undercutting shale oil would whipe it out long term. It’d revive the moment prices rose again.Report
@north is correct but incomplete; there is also the desire to destabilize our frenemies in Moscow. We can certainly enjoy the low prices while they last but it’s happening because Riyadh is pissed off at Tehran, Moscow, and whereverthehell ammo dump the bunch of thugs calling themselves the Islamic State have chosen to call their capital. When Riyadh decides they’ve flexed their muscles enough to get one of their princes a place at the table again, we’ll go back to the way things were. The claim that it’s to drive down shale oil production is BS because this level of production and price depression cannot be sustained and shale fracking will become economically viable again. You notice the frackers haven’t stopped operations just because they are momentarily unprofitable: this sort of thing is built in to their business model.Report
I left off Russia, Burt, only because I am not 100% certain that the Saudi’s and the Russians are at odds. You do, however, correctly point out that Tehran and Moscow are buddies so yes, Russia should most assuredly be included in the targets I listed. As you aptly note the American oil industry cannot be a Saudi target. America can amply afford to furlough the industry as long as energy prices remain low then reactivate it when prices rise. Iran and Russia, however, have no such capacity and they’re feeling the pinch mightily.
My earnest hope is that this will nudge both towards greater cooperation at the bargaining table. If the US and Iran could sort something out vis a vis nukes it’d be enormously beneficial to the region and to us.Report
I was curious about all this as well, especially when my wife asked me “why is gas so cheap?” and my answer included a bunch of “I don’t claim to really understand this” type responses, especially regarding Saudi Arabia’s actions. So later, I went to Google!
Here’s what The Economist has to say:
Four things are now affecting the picture. Demand is low because of weak economic activity, increased efficiency, and a growing switch away from oil to other fuels. Second, turmoil in Iraq and Libya—two big oil producers with nearly 4m barrels a day combined—has not affected their output. The market is more sanguine about geopolitical risk. Thirdly, America has become the world’s largest oil producer. Though it does not export crude oil, it now imports much less, creating a lot of spare supply. Finally, the Saudis and their Gulf allies have decided not to sacrifice their own market share to restore the price. They could curb production sharply, but the main benefits would go to countries they detest such as Iran and Russia. Saudi Arabia can tolerate lower oil prices quite easily. It has $900 billion in reserves. Its own oil costs very little (around $5-6 per barrel) to get out of the ground.
The way I read that answer is this: a bunch of non-OPEC related factors drove down the price (and continue to do so) and the Saudi’s haven’t acted to counter those effects by tightening supply. The Economist writer is just guessing as to a reason why.Report
I also wonder what role, if any, ISIS plays in all this, selling oil on the black market for 20 bucks a barrel.Report
Burt,
Time was you could buy Anything in a Houston pawnshop. Keep the prices low enough, long enough and folks Will lose their shirts.
That won’t end shale production forever, of course, but it may provide significant disincentive for folks to throw their hat in. You’ve heard of “regulatory uncertainty” — this is quasi-monopolistic “pricing uncertainty” ** yes, it’s my term, don’t tell me I’m using it wrong [Sauds are the only ones with spare supply.]Report
I also wonder what role, if any, ISIS plays in all this
How much oil can they be moving?Report
I dunno. How much do they need to sell to move the price?
Also, from the Saudi Oil Minister:
“As a policy for OPEC, and I convinced OPEC of this, even Mr al-Badri (the OPEC secretary general) is now convinced, it is not in the interest of OPEC producers to cut their production, whatever the price is,” Naimi was quoted by MEES as saying.
“Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he said.
Read more: http://www.businessinsider.com/r-saudis-naimi-says-opec-will-not-cut-output-however-far-oil-falls-mees-2014-12#ixzz3MqcdPO22
The putative rationale is to drive down US production.Report
North
Sure, the oil boom in this country didnt play any part. Is this more “they didn’t build it.”Report
“How much do they need to sell to move the price?”
Now that’s a question, right there. Someone a lot more versed in economics than I will have a better answer but my first thought is that it would be a lot more likely to stabilize the price and keep it from going up more than drive the price down *UNLESS* the price was massively inflated in the first place.
Edit: that’s assuming that they aren’t more than, oh, 7-8% of the market.Report
Notme that is a staggering misreading of the situation, a new low even for you. Of course American oil production is a factor but not the primary one nor even likely a secondary one. If the Saudi’s wished to they could cut production to counteract the impact of American oil on market prices. This would result in less money going to the Saudi’s and more money going to Russia, Iran, ISIS and American oil producers. Of those four the Saudi’a despise the first two, are wary and cagey about the third and most likely clinically (impotently) disapproving of the fourth. So they have elected not to sacrifice their own short term income to benefit their enemies. American oil production is mostly incidental. If you want to put your finger on why prices are so low it is primarily because the cheapest oil producers on the planet are willing to sell their oil at normal volumes much closer to at cost.
Slack jawed pro or anti american jingoism has absolutely nothing to do with it.Report
ISIS is an inconsequential drop in the oil production bucket. When prices are high they can make some good dough driving barrels of crude to the black market in pickup trucks but the volume they move is piddling. Their primary influence is in that when prices are high they can turn a larger profit with what the sell. That incents people who don’t like them (the Saudi’s and other OPEC nations) to be less motivated to prop up prices than they otherwise would be.
That said I am quite confident that the primary source of this inaction on the part of OPEC is to turn the screws on Iran and Russia.Report
I’m skeptical North. While it’s certainly in Saudi Arabia’s interest to hurt Russia and Iran, it’s not in Iran’s interest to hurt themselves. So, why would they go along for the ride?
Other OPEc countries would require a different rationale for keeping the spigots open than furthering SA’s political interests, seems to me. Choking US production seems as good an explanation as any.Report
@Stillwater, Iran is kindof moot in the market manipulation department. They can’t sell all the oil that they have right now. The crude is quite literally sitting in barrels and tankers in Iranian cities. The sanctions have really shut down their ability to move it (especially the ships, they can’t insure them). Iran can’t try and cut back production to raise prices, they need every buck they can scrape together by sneaking the oil out by every avenue they have (and are being badly hurt by the fact that what they can smuggle out is now worth less). So they’re functionally not in control with regards to manipulating the price.Report
Note, please, that the concept of “choking the American market” is somewhat illusory. If the frakking and shale companies went out of business the knowledge that they have would not dissolve into the ether; the oil in the ground would not turn into kitten fur. Both would simply lie dormant until oil prices rose again and then those industries would arise, phoenix like, from the ashes. Trying to cut oil prices to kill the American oil industry would be like mowing the lawn; the grass would simply grow back as soon as the conditions were right.
Keep in mind that a lot of the OPEC states are Sunni Arabs. That’s a whole lot of animus against Iran right there.Report
North,
What you’re saying here is that SA has unilateral control over OPEC decision-making. I find that hard to believe, but not unbelievable. Do you have any evidence that what you’re saying is actually the case? I linked to an article saying that what I’m saying you’re saying isn’t the case, or is this one-a those “best explanations given the evidence” sorta things?Report
Oh no Stillwater, I think the article you linked and I are in agreement. SA is a big player in OPEC- arguably THE big player (noone can pump as much oil as cheaply as they can) and the article confirms that SA convinced OPEC not to cut production. All we’re really discussing is why which is ultimately pure speculation. You think that the target is US oil producers. I think the target is Iran. We could both be wrong and maybe there isn’t a target. Maybe SA simply doesn’t feel like cutting their revenue to prop up prices for other people.
My assertion merely is that price manipulating cannot permanently kill the US oil industry; it will regrow the moment prices rebound. Thus I am of the opinion that that fact makes the odds that the US oil industry is the target dubious. I don’t think SA really think they can permanently kill the Shale/Frakking industry. Iran/Russia, on the other hand, do not have the simple staying power that the US oil industry does. They need high prices right now. They’re dependent on oil revenue. Cutting back selling their oil doesn’t help them, it hurts them. As targets go that makes them a very appealing target and SA has no love for Shiite Iran (and Russia has been helping Iran out a lot).
But again this is entirely speculation. Maybe the House of Saud just wants some more money and doesn’t feel like cutting back and aren’t targeting anyone. This decision was made by OPEC but the Saudi’s and their Sunni arab pals are a big block in that organization.Report
@stillwater
SA is in fact the major player in OPEC, but they don’t need to be able to “control” it. No other OPEC country can by itself reduce the total supply enough to have a major effect on prices. All that would happen to a country that tried is that they’d earn less. Collectively they could do so, but they’ve learned from experience what a collective action problem that is–as prices go up, states start cheating on their quotas. And SA by itself could mitigate their efforts while being the big winner from price gains. There’s not that much room for the other states to really operate independently of the Sauds.Report
I agree with you komrad Saul; these prices are insanely low and klearly are the result of manipulations by klever western kapitalist pigdogs.Report
Middleeastern pigdogs! Who invested in Plastics and dare call themselves King!Report
http://time.com/3643558/saudi-arabia-gas-prices-opec/Report
At least someone listened to Mr. McGuire.Report
$2.21 in Jersey!Report
Yeah, CA is always more expensive because we require additional processing.Report
So does Jersey, but they just keep the taxes really low. (14.5 cents vs 41.8 cents for PA & 50.25 cents for NY)Report
1.99 here at the local Costco.Report
I just paid $2.229 at my local Wawa.
This would be a good time for NJ to raise its gas tax, but Christie doesn’t have the guts to do so, and the Republican sheep in the NJ senate would never go against him.Report
Yes. It’s frightening.
And, if you ever needed proof that consumers aren’t rational, this short-term dip in prices seems to be undoing gains in fleet efficiency.
This core irrationality about gas prices is the reason we should have an automatically adjusting gas tax (essentially setting a floor price by increasing the tax 1-1 as barrel prices decline, and increasing back to a fixed maximum tax rate as barrel prices increase).Report
You really think incentivizing the government to create oil booms is a good idea?Report
Explain how that would be the effect.
To the extent the government can control oil prices (which borders on zero), its incentive would be to keep them low. The policy itself would contribute by providing consumers certainty that gas prices would never dip below a fixed level and their investment in fuel efficiency would therefore pay dividends (which you would expect to reduce demand over time).Report
nevermoor,
The government can incentivize oil exploitation/extraction. To keep prices low, you keep supply high. Basic economics for simpletons, I’m leaving the refinements out of it.
So, you have incentivized an oil boom, because it gives the government more money.
As the government benefits more from low fuel efficiency vehicles, one has also incentivized the government meddling to reduce fuel efficiency. (You must have an aux gas engine! What if you get stranded more than 60 miles from home?)Report
If per-barrel oil prices fall, edge-case extraction becomes economically unfeasible. It’s happening right now.
So is your contention that my proposed tax scheme would (a) reduce international barrel prices; (b) raise revenues that are directly gifted to oil companies; and (c) raise sufficient gifted revenues to “unlock” extraction methods that would otherwise be cost-prohibitive.
Also, you’re completely ignoring the demand-reducing effect of predictably-high gas prices. Not to nitpick, but there are two variables in your “Basic economics for simpletons” chart.Report
Kimmi
Clearly Obama and the EPA need to kill the oil industry just like they’ve done to american coal.Report
I like how the condescension towards SUV & truck owners gets a pass but the same towards hybrid owners gets a rebuke.Report
Breeders and tradesmen should have known better.Report
K,
Spendthrifts deserve to be called out for being idiots. I’ll do the same for the guys who pay oodles to drink at starbucks, when they can make the perfectly same drinks at home.Report
Who am I rebuking?
I think fuel efficiency is important because gas guzzlers are a(n admittedly small) step away from US energy independence, which is an important environmental and geopolitical goal. I think government should encourage that. I think cheap gas discourages that.
The closest I came to condescension is to say that people are responding to short-term incentives (gas is cheap now) to make long-term decisions (car purchases). People do this all the time with varying degrees of rationality (which is why I presented the point as a criticism of the concept that consumers behave rationally, and not of the consumers themselves)Report
“Who am I rebuking?”
Not you, your link.Report
@nevermoor
You’re definitely rebuking people who don’t make consumption choices that line up with your views and values.Report
@james-hanley
If people want to buy 10 MPG land cruisers despite knowing gas would be minimum $X/gallon forever, that’s their business. If people are buying them now because gas is momentarily low, that’s a separate issue.
Obviously I think either choice is bad (unless you actually regularly rely on the performance capabilities of that kind of vehicle) but if we could price in the external harm caused by burning gas I wouldn’t care where people fell.Report
If people are buying them now because gas is momentarily low, that’s a separate issue.
I think what I like most about this blog is the the impressive wisdom of its participants, who always seem to have superior judgement about the consumption decisions of others. Let’s all give ourselves a big pat on the back and offer a Christmas prayer of thanks that we’re not as stupid as those people are.Report
James,
of course my consumption is better than THEIRS. Mine doesn’t come with the cheery odor of burnt orphan flesh.
… not that They have access to the information that I do, so I suppose I really can’t blame them.
[um, yeah. not joking about this one…]Report
Kim,
Oh, I know you’re not kidding. Insane people aren’t joking around.Report
James,
http://www.uniteforsight.org/gender-power/module4
sources cited on industrial accidents with child labor.Report
Yes, Kimmie, you psychotic nutjob, because SUVs are built by blind prostituted orphans. How much will it cost to get you to go away for good? I’ll start fundraising today, I swear to god.Report
If preferences for SUVs were changing in a vacuum, that would be one thing. But the claim here seems to be that SUV purchases are increasing in response to lower gas prices. Assuming preferences for SUVs didn’t also just happen to change as prices started to drop, that’s less a statement about personal preferences than it is about the buyers’ belief in the likely price of gas during the lifetime of a typical car.
I’m all for treating a person’s taste in cars as holy if that’s what everybody wants, but I don’t think that makes a discussion about what gas prices are going to do an exercise in boorish condescension.Report
It’s totally different from stretching to buy a house because you think prices are going to continue to rise, because that’s reckless and irresponsible speculation (unless it works, in which case it was a smart investment.)Report
I’m pretty sure that we’re all in the “buy a house and live in it” camp. I don’t think that anybody here would tell anyone else to speculate on Real Estate.
We might have someone offer the “buy land: they’re not making any more of it” aphorism, but do we have anybody who is anything but small-c conservative about home ownership?Report
@jaybird
While they aren’t making any more of real estate, they made plenty the first time around.
Also, in NJ property taxes are so high that home ownership isn’t all it is cracked up to be.Report
Doesn’t the claim here assume facts not in evidence? At least, if one doesn’t presuppose stupidity on the part of SUV buyers? SUV sales are great right now, but thanks in large part to the booming crossover market, which has been growing for quote some time now. The person on Nevermoor’s link points out that SUVs actually get better mileage than they use to, and that’s particularly the case with crossovers.
If the drop gas prices have played a role, it seems to me as likely as not as the bottom falling out of the argument that $5/gal gas is right around the corner. That doesn’t strike me as a particularly stupid bet, and does not hinge on gas prices staying down to current and near-term projected lows.Report
I’m all for treating a person’s taste in cars as holy if that’s what everybody wants, but I don’t think that makes a discussion about what gas prices are going to do an exercise in boorish condescension.
But an actual discussion of gas prices isn’t what we’re being offered. We’re being offered the assertion that obviously they’re going to rise, soon, to a price point that makes a current purchase of an SUV self-evidently irrational.
What’s missing in that assertion?
1. As Will suggests, there’s no consideration of what types of SUVs people are buying and the actual gas mileage of those SUVs.
2. As Will also suggests, there’s no serious consideration of what gas prices will actually be over the next X years.
3. There’s no consideration of what fuel mileage/price function these consumers find subjectively acceptable.
4. There’s no consideration of how long these SUV buyers plan on keeping their cars. Although consumers have been keeping their cars longer lately, that may have much to do with a weak economy, and as the economy and consumer confidence increase (in October, although down again in November) consumers may plan not to keep their cars as long. And of course many people lease, rather than buy.Report
@mike-schilling
Did you scare any crows with that straw man?Report
Actually, I started with a concrete proposal in response to a post about very low gas prices. Apparently that’s an attack on… well… something.
That said, I can’t resist responding to numbered lists.
1. Are we really disputing that vehicles classed as SUVs are less fuel-efficient than vehicles classed as cars? That category A is getting more fuel efficient doesn’t say anything about how A compares to B (which is also getting more fuel efficient).
2. Are we really disputing these lows are unsustainable? I haven’t seen that suggested anywhere, but would be interested in an argument against what I perceive to be the common wisdom.
3. Every consumer has their own. My argument is (1) people are more likely to buy more efficient cars the more expensive gas is; (2) people over-respond to the immediate price of gas, even though a car is a long-term investment. 1 should be noncontroversial. My evidence for two is reports that sales are up right now as gas is dropping right now. Maybe 2 is wrong, but I haven’t seen anything other than assertions demonstrating as much.
4. “Short term” ownership is still generally multiple years. Not sure why this is relevant.Report
Actually, Nevermoor, you started with a claim that SUV purchases as a consequence of diminishing has prices prove consumers are irrational.
1. 1. Are we really disputing that vehicles classed as SUVs are less fuel-efficient than vehicles classed as cars? That category A is getting more fuel efficient doesn’t say anything about how A compares to B (which is also getting more fuel efficient).
No, nobody’s disputing that. That’s a strawman. But the comparison between SUVs and cars is your preferred comparison, not necessarily the preferred comparison of SUV purchasers. If some likes the size, ride height, cargo capacity, looks, signaling, etc. of SUVs, passenger car mileage is not the key to their decision, whereas SUV mileage that is “good enough” (in their subjective evaluation) might be.
What you are doing is substituting your evaluations for theirs and treating it as an objective valuation. It is indeed based on some objective facts, but so is theirs, but neither the value you assign to those facts nor the values they assign to those facts has any objectivity; they are all equally subjective.
Are we really disputing these lows are unsustainable?
The issue is the time frame. If I’m taking a 24 month lease, can you prove to me that gas prices are going to go up past the price at which I’m willing to drive an SUV in the next two years? It’s not that Joe Consumer necessarily expects gas to remain close to $2, but that he might expect for it to not, let’s say, approach $4 in that time frame.
3. people over-respond to the immediate price of gas, even though a car is a long-term investment…My evidence for two is reports that sales are up right now as gas is dropping right now. Maybe 2 is wrong, but I haven’t seen anything other than assertions demonstrating as much.
You’ve given nothing but assertions for it. And you ignore, although I’ve already pointed it out, that cars aren’t a very long-term purchase for everyone. You have, in fact, presented absolutely no evidence, that people are “over”-responding to the current price of gas. You only note that some of them are responding differently than you (or I) do.
4. “Short term” ownership is still generally multiple years. Not sure why this is relevant.
Because just as the key price factor is not what the price is now, neither is the key price factor what the price will eventually be. The key price factor is what the price is guesstimated to be over the ownership period.
Let’s say, for purpose of an example that a consumer is comfortable with prices below ’08 levels, something not far north of $100 bbl. (in ’08 dollars, as adjusted for infkation), and leases an SUV for 48 months.
Can you demonstrate that the price of oil will be going up more than this consumer is willing to bear over his expected ownership horizon? More specifically, can you demonstrate that the chances of that are so certain that no rational person (with some tolerance for risk) could bet otherwise?
Because if you can’t demonstrate that, you can’t demonstrate that they’re actually irrational.Report
Your definition of “no evidence” is different than mine. Short term prices are down (the point of the post), SUV sales are up. Want more evidence of the latter? Here you go… (car sales flat, light truck sales up). And here’s a quote from someone at TrueCar: “Were continuing to see a lot of strength in trucks and SUVs which is no surprise with where gas prices have gone,” Eric Lyman, specialist in auto resale valuation and information provider at TrueCar Inc. “Also we’re seeing a positive trend of higher transaction prices and lower spending on cash incentives.”
I have no idea what most of the rest of your response is about. I never said (or even suggested) buying an SUV is irrational. Hell, I have a Forester.
If you want to convince me that people are carefully balancing their projected two-year fuel costs instead of just reacting to the big numbers on the side of the highway on their way to the dealership, you’re going to have to do more than assert it. I find it highly implausible when there’s a simpler (and expert-endorsed) explanation.Report
The first link doesn’t work. Notably, the second link lists multiple reasons for the uptick.
Some of this depends on what we mean in terms of time horizons on the gas prices. Whether we’re talking about the current free fall or the fact that it’s been trending downward for a longer period.
The latter has a stronger argument, I think, both in terms of explaining consumer behavior and actually justifying it.
I personally feel more comfortable with getting a bigger vehicle not because of prices right this minute, but because (a) the trend has provided further justification for my skepticism that $5 gas is on the horizon and (b) the mileage on such vehicles has been improving. (oh, and first and foremost because we could use something larger than what we have.)
Am I being an idiot? If so, why?Report
I never said (or even suggested) buying an SUV is irrational.
Well, there was this.
And, if you ever needed proof that consumers aren’t rational, this short-term dip in prices seems to be undoing gains in fleet efficiency.
The problem is, you’ve never demonstrated that this demonstrates consumer irrationality. If relatively cheap gas can be expected to last for as long as someone expects to own their SUV, then there’s nothing irrational about buying one now because of the low cost of gas.
And according to the U.S. Energy Information Agency, U.S. “domestic crude oil production is expected to level off and then slowly decline after 2020.” In the big picture, that’s not far in the future. But in the picture of someone who changes vehicles every 4 or 5 years, that’s outside the range of time they expect to own whatever it is they’re buying now. Even if they intend to hold their vehicle for the U.S. average of 10-11 years, with only a “slow” decline in production after 2020, it’s not implausible to assume that gas prices will remain reasonable for the time they hold a vehicle purchased this year.
Hell, I have a Forester
So do I. 15 years and 170k miles. But the Forester isn’t really an SUV; it’s a passenger vehicle. The classification of it as an SUV is a combination marketing gimmick and way to fit it better under the CAFE standards. I don’t know how much you know about those, so if I’m giving you info you already know, I apologize. But CAFE doesn’t recognize SUV as a category, just passenger cars and light trucks (well, just those two for our purposes here). As you probably know, classifying something as a light truck allows it to meet looser standards for fuel standards and CO2 emissions. So there’s an incentive for automakers to do so. The PT Cruiser actually had this classification, which everyone seems to agree was pretty bogus.
(Sources: see thecarconnection.com/tips-article/1005582_subaru-outback-counts-as-a-truck on the commercial appeal of an SUV classification, and jalopnik.com/5948172/how-the-government-killed-fuel-efficient-cars-and-trucks on how CAFE rules create incentives to classify vehicles as light trucks.)Report
At these prices, you can’t afford not to stock up. I already filled my bathtub and spa with Super Plus Unleaded.Report
Where is your holiday spirit….Gasnog!Report
Gasoline fight at greginak’s!Report
And if there’s anyone here that’s good at turning left…
😉Report
A friend of mine went through a phase where he made sure to do “Blue Steel” in every photo he was in. For like a year or so. It was pretty great.Report
I think Bloom County had this joke. I just seem to remember the image of an elderly man yelling, “Dump the milk, Ethel! The cat’s getting unleaded!”Report
I only steal from the best.Report
Under $2 here.Report
The subtext may be eluding me. I read this and assume you are all talking about how frickin’ awesome low energy prices are. Right?
Or am I missing something?Report
I’m not sure there is any subtext.
Saul appears to be reporting month-old news on oil prices…
A bit boring, but it gives the rest of us an open thread to joke about the Sauds,
which is always a trip — until you hit the Empty Quarter, which will give you an empty tank.Report
The Saudis are manipulating the price of oil for their own purposes, and people are making bad long-term decisions based onthat, just as Adam Smith predicted.Report
I don’t think there’s much to any subtext Roger.Report
‘cept for the Cypress Hill allusion.Report
Unless one is an unrepentant Freudian. Freudian’s are all about the subtext.Report
Or a post-modernist.Report
“Am I the only one who thinks that gas prices are insanely low?”
No, so does Jerry CarrollReport
Before we star fretting about those ignorant masses that don’t know what’s best for them, it’s important to note that vehicle sales of all kinds have been depressed from the historic trend line since just before the 2008 recession (and total VMT has been similarly flat). While the dip in gas prices has no doubt stimulated some demand this year, an economy returning to a more normal footing and people finally having jobs and discretionary income is also causing people to buy vehicles (and buying higher-end larger vehicles) after a long deferment.Report
Also, free money in the form of lower gas prices. Billions into the American economic gas tank.Report
It is certainly stimulative to non-oil producing states (which is ~42 of them). And stimulus is good as we remain at the zero lower bound.
Still (and part of me recoils from saying this) I’d prefer that our macroeconomic policy work for Texans/North Dakotans as well as us non-producing coastal elites. Which is to say that there are better ways to do this.Report
http://www.calculatedriskblog.com/2014/12/vehicle-sales-forecasts-strongest.htmlReport
Also, who’s most at risk for deferring a new/used car? That’s right, the folks with the greatest chunk of their income going towards the damn car.Report
In the Northeast, where most homes are heated with oil, this is a real blessing.Report
One advantage of living on the seventh floor of my building is that I rarely have to use gas unless it gets really cold.Report
We had that even on the third floor in a 3-flat walk up with separate heating systems.
But here in Maine, there are lots of very old houses with poor insulation and oil heat. Our house is big, and our heating bill can run to $6,000/winter if there are extended periods below 20F; the last two winters were particularly brutal that way; Jan. and Feb. were really cold.
In the new year, we have a solar company coming to do an eval. on our house; we’d like to put both electric and water on the roof that faces south. It wasn’t possible a few years ago, there were two big trees shading it, growing in the towns right-of-way for the street. The town removed them two years ago to put in a sidewalk, so it’s feasible now. The electric would be hooked into the grid, and the power company would pay us for any we don’t use; the hot water would lower the heating costs for our forced hot-water furnace or heat water for household use; sadly, the same system cannot do both because the furnace’s water is a closed system.
Perhaps peak cheap oil will help encourage competitive bids on installations.Report
zic,
I got in on peak cheap natural gas a few years ago, in energy efficiency upgrades.
My house heating bill is a third of what it was prior to our upgrades. And all that for taking down an unused chimney and air sealing the house (plus stuffing the walls with newspaper).
Solar’s fine and all that (still more expensive than electric, but not by that much — and a good hedge against gasoline). But don’t forget the cheap-and-easy, if you haven’t had it done in the past 5 years or so. Our tech is really, really cool.Report
@kimmi natural gas is not available here; it’s mostly an urban thing.
Solar is good because we’ve got a good exposure, once the initial investment is made, maintenance is minor, and the hot water really will help with our heating costs. We’ve got a very large expanse of south-facing roof which is now unobstructed. So not only will it help by generating some electric, probably more than we’ll need in the summer, but it will also help cool that roof in summer; something we’ve noticed with the trees gone.Report
(plus stuffing the walls with newspaper).
You mean fire retardant shredded newspaper, yes? I hope?Report
zic,
yeah, but you can still get energy efficiency upgrades.
Stillwater,
yes, of course. Stuff enough newspaper in the walls, and you starve the fire of oxygen, mostly.Report
I’m very thankful to be on NG, which has been super cheap for a while now (among many other benefits).Report
look to that changing, with oil going offline (potentially) in ND.Report