Wednesday, April 23, 2008
Oil Is Still Cheap
Even with oil prices soaring, by some estimates, they're still short of historic highs.
By Kevin Bullis
High oil prices are supposed to get people to use less, yet oil consumption continues to rise in many places. That could be because oil really isn't as expensive as it's been in the past, according to some ways of looking at it. A recent article in the Economist says that because Western consumers' incomes have risen considerably over the past few decades, oil prices would need to top $134 a barrel to have the same impact as prices in 1981. The price of oil was a mere $119 a barrel yesterday.
Massachusetts Institute of Technology
Comments
zig158
04/24/2008
Posts:64
Now what?
deafwolf
06/06/2008
Posts:1
danimiller
04/24/2008
Posts:1
z0rr0
04/24/2008
Posts:53
However, we certainly haven't had cheap oil in a long time, if you include all the costs you and I are paying. Estimates vary, but it's safe to say that the US government subsidizes the cost of oil imported from the Persian Gulf to the tune of $1 - $2 per gallon.
ChuckInReno
04/28/2008
Posts:19
There's something much different today than back in the OPEC-induced crisis of yore. We import 75% of our crude oil consumption (30 Quads out of 40 Quads or so). Back in the 1970s, we imported about 30%. This means that high prices impact our trade deficit to a much greater extent than back in those perfectly acceptable days of gas rationing, locks on gas caps and lines for miles at filling stations.
It's funny that people say in effect, "Oil isn't quite as expensive as it was in the days of oil Hell." What's the take away from a statement like that? Kevin, you're awesome, but I think this is bad news, not glass-half-full news. Maybe you had to experience those days as I did to realize that they were anything but normal times.
MakeSense
04/24/2008
Posts:93
The blog is just pointing out one of the reasons people continue to pay for oil largely from other countries. There are other reasons, too, such as people living far from work and having no choice. Even if prices reach historic highs, many people will have to keep paying.
What's the solution? How will people come to use less gasoline? I don't know. One interesting proposal is to increase gas prices still further with taxes, and then take that money to help those who can't afford the gas, to invest in the development of gasoline alternatives, and to promote changes to American cities so that people can live closer to work.
Kevin Bullis
04/29/2008
Posts:92
If we want to import far less oil, then we have to anticipate that success will bring lower oil prices. If oil could not be bought or sold for less than say $55/bbl, then companies that could potentially impact oil imports would not have to fear their own success, a la lower oil prices. If the international oil price fell below the minimum price, the resulting tariff would go to the government.
MakeSense
05/09/2008
Posts:93
But as we deplete the most abundant cheap oil reserves in the world in 2030 or 2040, oil prices will steadily rise until final depletion of cheap reserves. Price floors are an excellent way for the U.S. to develop a stable and reliable alternative energy industry. But no politician has the cajones to do this.
energymv@gma...
05/15/2008
Posts:5
energymv
05/22/2008
Posts:19
Real income data based on http://www.census.gov/prod/2004pubs/p60-226.pdf
Income Distribution Graph...(shown in 2003 dollars)
http://upload.wikimedia.org/wikipedia/en/thumb/a/a7/United_States_Income_Distribution_1967-2003.svg/800px-United_States_Income_Distribution_1967-2003.svg.png
energymv
05/22/2008
Posts:19
Oil prices will drop. China will have less money to build it's military (yea, believe it. China will be a threat to us) and more jobs will be available in the United States.
gmm76127
05/23/2008
Posts:1