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Gas ws $4 before, and it had no real effect on the economy overall.
The real reason is because too much of our wealth is in the hands of people who do not spend it on consumer goods/services, nor do they invest it in economically expansive ways. Let consumers have a share of the wealth, and they will spend it, no matter what the price.
Nobody will spend his wealth establishing a widget factory to employ widget makers, because nobody has enough money to buy widgets. Too much of the wealth is in the hands of a few people who already have a widget, and too little in the hands of those would would like a widget. That is really the bottom line. No discretionary money in the hands of consumers, so no consumption, so no investment in production.
Current economic thinking is that if the money is held back from consumers and diverted to investors, the investors will produce what consumers can't afford to buy, and create an economic dynamic by piling unsellable product on the shelves. Childish thinking.
Such a simple view of the economy. Have you ever run a business, son? Doesn't sound like it. What you need to realize is that all businesses are profit driven and they are driven to maximize profits.
First, you need to understand that we live in the global economy. If people don't have money to spend in the USA, then there is always china, india and mexico who has money to spend. Needs and wants are unlimited and there is ALWAYS someone out there with cash willing to spend to satisfy those needs and wants. The business owner and investors are looking for those needs to satisfy. When they find a need to satisfy then they build a factory or invest the appropriate capital to satisfy the need and hopefully turn a profit.
When the capital is spent jobs are created building the factory and those factory builders ultimately buy the goods and services of the factory itself.
The whole idea of consumers not having money because people are hoarding it is complete non sense. Its socialist talk.
You see, the flow of money goes in a circle. Hoarding cash is probably one of the worst business moves you can make. As a business owner you should either take the excess cash as a dividend (and invest it in other ventures) or spend the money expanding the business. The businesses that do hold lots of cash are simply trying to figure out what to spend the money on. They'll spend it sooner or later and if they don't, its their loss since there is no profits with idle cash. It gets lost to inflation. Production of goods and services with maximum profit is the ultimate goal.
Also as far a gas prices goes, there is no need to worry. If oil goes above 150$/bbl for long enough people will simply switch over to cheaper fuels such as natural gas. Thats why opec always increases production when oil gets above 140$/bbl. High oil prices kills long term demand for oil.
Hah I just now realized that you two are different posters... JazzyTallGuy, jazzlover. I guess I just gloss over names a lot.
along with differing style and content . . .
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I also have issues with about three posters with some derivation of "Texas" in their name.
Yeah, Mrs. Philip T (btw, what did you think the T stood for anyway? ) says that you can always figure out very easy if someone is from Texas . . . they will tell you so . . . even if you did not ask.
Once this happens, any hopes for recovery will be dashed. Families will have to end any discretionary spending just to fill the gas tank.
Businesses that deliver goods and really just businesses in general will be affected.
It will come. If not now or soon, but it will be a reality in the future since the supply of oil will peak sometime in the next 30 to 40 years. What takes more than a million of years to create crude oil, we are rapidly using up the supply at a high rate.
If you have 45 minutes to read an article, you might find this worth your time.
It will come. If not now or soon, but it will be a reality in the future since the supply of oil will peak sometime in the next 30 to 40 years. What takes more than a million of years to create crude oil, we are rapidly using up the supply at a high rate.
If you have 45 minutes to read an article, you might find this worth your time.
THAT was a very good, sane, and well presented and documented essay -- and even was totally absent the Doomer Drama Queen routines and was also sans EROEI nonsense.
I guess you know from where you started, it looks like Peak Oil Production was around 2007? We may already be "past Peak" in the here and now -- not 30 to 40 years from now. Hopefully, 30 to 40 years from now we will be "past Oil," else we will likely be dead?
1. When a refinery cracks crude oil in to it's parts, ie distillates one of the products is gas and an other is diesel fuel. Lighter and heaver fuels and greases are also produced from every gallon of crude if they make gas they also make diesel fuel.
2. we have a glut of fuel at the present but the price has not droped. Why?
deregulation, oil futures, oil speculators are driving up the prices, not demand at this time.
3. Yes, diesel is becoming more popular but we don't export diesiel fuel.
4. If they are distilling crude for gas then they also get a % of jet-A also.
Not only truckers depend on diesel but so do power generation plants, industry and home heating.
The days of cheep fuel are gone like in Europe the cost is passed on to the consumer.
End deregulation and take the power to artificially inflate fuel prices.
Trucks 18whellers are becoming more fuel efficent as fuel costs go up.
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Originally Posted by jazzlover
$4.00/gal. gasoline might not throw the country into a depression (like we're not near one already), but $4.00-$5.00/gal. diesel fuel absolutely will, and we are getting very near that point in many places right now. As an oil company guy I know says, "The US drives on gasoline, but the economy runs on diesel fuel."
We will very likely see severe increases in diesel fuel prices in the next year or so--my prediction is $5-6+ per gallon diesel prices--and very possibly moderate to severe diesel fuel shortages. If the economy does manage to actually grow for any period of time longer than a few months (and I think we're currently in nothing more than a "dead cat bounce" in the economy), then such price increases and shortages are inevitable.
Why the problem with diesel? Because:
1. Worldwide diesel fuel demand is exploding, especially in the developing countries.
2. The US refinery infrastructure is geared toward producing more gasoline rather than diesel fuel.
3. The US freight transportation system is so horribly dependent on trucks (which are only 1/3 as fuel efficient as rail transportation).
None of those problems can be solved quickly or cheaply, and there is almost no effort being made currently in this country to address any of them. If the crisis becomes severe enough, it could lead to food shortages in this country, as our food supply system is completely reliant on diesel fuel, from cultivating and planting clear through the production and transportation system for food. Get ready.
One other thing, when I say "diesel fuel," one can make the same statements about another "medium distillate" fuel--jet fuel. The coming crisis in middle distillate supplies will also pretty much destroy the airline industry, as well.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,772,368 times
Reputation: 3587
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Originally Posted by zoomzoom3
$4.00+/gal. gas is coming again, believe it.
Once this happens, any hopes for recovery will be dashed. Families will have to end any discretionary spending just to fill the gas tank.
Businesses that deliver goods and really just businesses in general will be affected.
Gasoline will not go to $4 a gallon. It MAY go to $3 but I doubt it will even stay at the level long. There is less demand for it and more countries like Saudi and Venzuela are pumping it out of the ground as fast as they can. The world is up to its knees in crude.
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