Advocacy & Safety - Gas price in 10 years...

No, the Saudis have often stated that 80$ was their threshold and that they would increase production to keep the price below that. They have not shown an ability to increase production, for years now.

Domestic oil production has been declining every year since 1970.

We may see oil down in the 70s again. But 50 dollar oil is a thing of the past, and 200 dollar oil is a thing of the future.

Robert

The technical charts, historical fluctuations, crowd behavior and trends suggest that the price of oil will spike downward to the $60-$63 per barrel range by spring. Enjoy it while it lasts! I would expect it to remain there for a few days. This will probably be the last oil market correction this side of $120. Even a small disruption in supply will enable $150-$180 oil.

I am going to enjoy it by buying oil companies with large oil reserves and some of the small drillers and those who supply oilfield equipment the moment the price of crude hits $65. Word.;)

... I am going to enjoy it by buying oil companies with large oil reserves and some of the small drillers and those who supply oilfield equipment the moment the price of crude hits $65. Word.;)

The reason we do not currently see long 1970-style lines of cars at the gas pumps is that the government has not imposed price controls, but has instead permitted the market to function on supply and demand cues, as it does so capably. Cheap gasoline and government subsidies of private automobile usage have gotten us where we are now, and a steadily rising cost of fuel is probably the only way to break John Q. Public out of his addiction to underpriced energy.

I have been investing in oil and gas (e.g. APA and several "big oil" companies) and drilling equipment companies (e.g. BHI) for several years, much to the benefit of my stock portfolio and to the chagrin of my friends who are economics liberals. Do you have any particular favorite stocks in this sector?

My own view is that the world is far from running out of oil, but it is indeed running out of cheap oil. I also believe strongly that no single energy source can jump in and replace petroleum -- therefore, we need a multipronged approach which includes conservation, renewable sources, and nuclear power (fission now, fusion later).

When I was working on my doctorate in Environmental Science and Engineering between the 1973 and 1979 gasoline "crises," one of the oil companies used the advertising slogan, "A nation that runs on oil cannot afford to run short." We posted this prominently in our students' lounge, with the last word eliminated, which made much more sense to us, even back then. It is truly appalling to see how little America has learned since 1973.

But if you just hold it steady at that 13.6% per year, that means in 2017, a gallon of gas will cost more than $10.

*Source: Energy Information Administration - US Dept of Energy

A (us) gallon of gas in the UK already costs 8 US dollars.

A (us) gallon of gas in the UK already costs 8 US dollars.

While that may be true, it is due to excessive taxation, not the cost of oil. Hard to believe but 81.5% of the price of gasoline in the U.K. is tax. Source http://www.petrolprices.com/fuel-tax.html

While that may be true, it is due to excessive taxation, not the cost of oil. Hard to believe but 81.5% of the price of gasoline in the U.K. is tax. Source http://www.petrolprices.com/fuel-tax.html (http://www.petrolprices.com/fuel-tax.html)

But I believe the UK is actually paying for their roads, which the US is not. There's a strong call by the states to raise the federal gas tax in order to pay the upkeep on highways. The gas tax is a flat tax per gallon, so it hasn't been adjusted for inflation since 1993.

Personally, I'd like to see a high gas tax to discourage consumption, but I don't mind seeing the auto infrastructure shrink just a tad. We should take care of the roads we have, but not more capacity or miles would be a bad investment, IMO.

While that may be true, it is due to excessive taxation, not the cost of oil. Hard to believe but 81.5% of the price of gasoline in the U.K. is tax. Source http://www.petrolprices.com/fuel-tax.html

But the flip side is how much of the price of gas in the US is supplemented by the government through tax incentives and "exploration" incentives?

Further, how much is auto use supplemented by the government by using general tax revenue for highway improvement?

Sure the movement of goods on roads is great for the economy; but with individuals driving relatively empty autos for even minor errands, what has this cost the general population in general health, and the nation in pollution?

The reason we do not currently see long 1970-style lines of cars at the gas pumps is that the government has not imposed price controls, but has instead permitted the market to function on supply and demand cues, as it does so capably. Cheap gasoline and government subsidies of private automobile usage have gotten us where we are now, and a steadily rising cost of fuel is probably the only way to break John Q. Public out of his addiction to underpriced energy.

I have been investing in oil and gas (e.g. APA and several "big oil" companies) and drilling equipment companies (e.g. BHI) for several years, much to the benefit of my stock portfolio and to the chagrin of my friends who are economics liberals. Do you have any particular favorite stocks in this sector?

My own view is that the world is far from running out of oil, but it is indeed running out of cheap oil. I also believe strongly that no single energy source can jump in and replace petroleum -- therefore, we need a multipronged approach which includes conservation, renewable sources, and nuclear power (fission now, fusion later).

When I was working on my doctorate in Environmental Science and Engineering between the 1973 and 1979 gasoline "crises," one of the oil companies used the advertising slogan, "A nation that runs on oil cannot afford to run short." We posted this prominently in our students' lounge, with the last word eliminated, which made much more sense to us, even back then. It is truly appalling to see how little America has learned since 1973.
:beer:

As long as the market is kept free, there will be no shortages and no lines, because the price will keep going up to keep either from happening. Let's say some disaster suddenly cut off half the oil supply to this country. The gas prices would spike, to whatever price is required to get people to drive half as much as they are driving now, perhaps jumping to $5, $8, $15 or even $20 gallon, whatever the market would bear until demand drops to equal available supply. With a few minor local exceptions here or there, there will be no shortages or lines. I mean, if people are lining up to buy your product, that's a sure sign the price is too low.

And as the price goes up, alternative energy becomes more and more affordable. Sooner or later we're going to realize the only way to go is nuclear.

.. snip ..

Personally, I'd like to see a high gas tax to discourage consumption, but I don't mind seeing the auto infrastructure shrink just a tad. We should take care of the roads we have, but not more capacity or miles would be a bad investment, IMO.

This is the U.K. approach. The high cost of fuel there is intended to be a disincentive to traveling by car. When you consider the vast distances in our country to the U.K. what works there will not necessarily work here. Our economy is dependent on cheap fuel. The area of the England is roughly equivalent to that of Louisiana. Now, stuff all the people from California and New York State into Louisiana and you get a feeling for the population density of the England. Because of the much smaller size, mass transit works better there than here, as well as traveling by bicycle. Our country, right or wrong, is central population centers surrounded by suburban commuters traveling to and from those centers. The economy will dictate the direction our country goes.

The UK price has just breached the £1:litre level or $7.95:US gal.

Welcome to the future

One thing to keep in mind about Americans' tolerance of oil prices is that while prices might double or triple, many Americans drive vehicles whose gas mileage is less than a third of a vehicle they could be driving. If someone switches from a 15mpg truck @ $3/gallon gas to a 45mpg car @ $9/gallon fuel, they won't feel any financial pain. The streets won't be filled with cyclists any time soon, but there will probably be a lot less V8's out there.

For every gallon of gas that we burn we are adding several dollars to our national debt. We have troops in Nigeria now......anyone guess why??

If we factor in road construction and maintance AND using the military to protect oil reserves around the world the true cost of a gallon of gas is around $8.00 per gallon without any taxes according to the CATO institutute which is a CONSERVATIVE organization. Some liberal estimates are much higher.

Dont worry because if we do not change our ways our grandchildren will not have any oil or a United States to call home.

Let the good times roll......that seems to be our motto.

One thing to keep in mind about Americans' tolerance of oil prices is that while prices might double or triple, many Americans drive vehicles whose gas mileage is less than a third of a vehicle they could be driving. If someone switches from a 15mpg truck @ $3/gallon gas to a 45mpg car @ $9/gallon fuel, they won't feel any financial pain. The streets won't be filled with cyclists any time soon, but there will probably be a lot less V8's out there.

You're not seeing the whole picture.

If the prices double or triple then the transportation cost for "stuff" goes up. That means higher prices for "stuff" for everyone. They'll be financial pain alright, and IMO, a change in driving habits/transportation means, not to mention spending habits.

You're not seeing the whole picture.

If the prices double or triple then the transportation cost for "stuff" goes up. That means higher prices for "stuff" for everyone. They'll be financial pain alright, and IMO, a change in driving habits/transportation means, not to mention spending habits.

You're assuming that most people look at the big picture ;)

For the guy who lives 20 miles from his job, I can't see him switching to a bike or moving when he could just buy a new cars (something he'd probably be doing soon anyway) and not pay any more money for fuel than he used to. No matter what he did, the price of everything else would still be going up so that's not going to be influencing his transportation decision, unless of course, the cost of living gets to high that he can no longer afford a car at all.

. Do you have any particular favorite stocks in this sector?

EGY, UPL, NOV, DRC, DRQ. :)

:beer:

As long as the market is kept free, there will be no shortages and no lines, because the price will keep going up to keep either from happening. Let's say some disaster suddenly cut off half the oil supply to this country. The gas prices would spike, to whatever price is required to get people to drive half as much as they are driving now, perhaps jumping to $5, $8, $15 or even $20 gallon, whatever the market would bear until demand drops to equal available supply. With a few minor local exceptions here or there, there will be no shortages or lines. I mean, if people are lining up to buy your product, that's a sure sign the price is too low.

And as the price goes up, alternative energy becomes more and more affordable. Sooner or later we're going to realize the only way to go is nuclear.

It is doubtful that the siren call for politicians to do something about rising fuel prices will be resisted beyond $8-$10 gasoline. The moment they intervene (for the children, no doubt;)) scarcity will become common.

When I was in college in the early 80's, I was paying around $1.29 for gas. I remember in 1998, we moved to Dallas, and I spotted some $0.79 gasoline. So in that 15-year period, prices had actually come down a tad- which makes predicting future prices rather difficult.

I recently attended a presentation on energy forecasts. They were anticipating that most of the growth for energy would be in the developing world- China, Africa- rather than US.

:beer:

As long as the market is kept free, there will be no shortages and no lines, because the price will keep going up to keep either from happening. Let's say some disaster suddenly cut off half the oil supply to this country. The gas prices would spike, to whatever price is required to get people to drive half as much as they are driving now, perhaps jumping to $5, $8, $15 or even $20 gallon, whatever the market would bear until demand drops to equal available supply. With a few minor local exceptions here or there, there will be no shortages or lines. I mean, if people are lining up to buy your product, that's a sure sign the price is too low.

And as the price goes up, alternative energy becomes more and more affordable. Sooner or later we're going to realize the only way to go is nuclear.

You may not see shortages or lines, but you'll see a whole lot more theft and a host of other problems stemming from the fact that much in our culture depends on relatively cheap gas. Take a look at what people drive in economically depressed areas. Getting to a low paying job is going to be problematic. Poor people don't drive hybrids.

Nuclear will play a role, but it's not that cheap of a source of energy either when you consider all it takes to build and operate a plant plus the expense of storing and monitoring the waste.

Take a look at what people drive in economically depressed areas.

Oh I do...and I'm always surprised that the wheels and tires of some of those vehicles cost 2 times more than what I've paid for some of the beaters I used to own. :D