A fully employed America at $5.00 a gallon gas?
Can gasoline prices go anywhere but up?Any major US economic recovery, as well as world economic recovery, will require massive increases in oil consumption, according to the energy experts, and that means much higher gasoline prices.
Yet, despite the relatively stagnant economy, gas prices are already increasing, and an upward pricing trend appears inevitable throughout the next decade. Even more disconcerting, there are numerous, highly likely events that could spark huge spikes in gasoline prices.
If $5.00 per gallon is the new $2.00, can America ever again achieve 'full' employment? While seemingly oxymoronic, might not accepting the reality of $5.00 gasoline be the key to full employment?
Labels: gas prices
posted by Dahcredyns at
9:11 AM
9 Comments:
I am going to take a shot at opening the discussion. I think that almost everyone will agree that when peak oil hits around 2014 gasoline and diesel fuel will probably skyrocket. I think the $5.00 figure is much too low for several reasons. As an older retired dude I watch the news to determine what is going on in our country. I watch all the feeds; ABC, CNN, FOX, CNN HLN and some times I even watch MSNBC.
Let's take a look at what is coming down the pike. We have passed health-care which depending on who and what you believe will either be our salvation or the straw that brakes the camels back. We are now talking about a Value Added Tax/Sales Tax of from 15-20%. We have started to resurrect the discussion of Climate Change [Cap and Trade]. Medicare, Social Security, the Postal Service, Medicaid are all broke or will soon be insolvent. Hiding under the blanket are hundreds of billions in commercial real-estate failures. Unemployment is at 9.7% but is probably much higher than that considering all of the individuals who have either stopped looking or who no longer are collecting benefits. In my own community we have started shutting down some schools and laying off teachers.
The phrase 'will require massive increases in oil consumption' to me is just plain wishful thinking. How do we have a massive increase in oil discovery, oil drilling, oil refining and oil sales when everyone will have fewer dollars to spend after everyone else takes their percentage. Let us not forget the 16,500 IRS agents we are going to hire. Someone has to pay their salaries.
Given the above; I see gasoline at $6.00 - $7.00/gallon by 2012 or 2013. I welcome opposing views and would love to be proven wrong.
Tom-
The phrase 'will require massive increases in oil consumption' might have better been stated, 'will require massive increases in energy consumption'.
The fact is, there is a very good chance, as you point out, that such an increase in consumption might be impossible because of the increase in costs.
So, what does that mean for a real economic recovery?
For instance, if gas hit $4.00 this year and $5.00 next year, might that not be the final straw towards a double dip recession?
My point is that we should be assuming $5.00 gas is the new $2.00.
How do we move our economy forward knowing this future is inevitable?
Earlier today I suggested embracing natural gas immediately as part of the first step towards an electric future.
On the other hand, if the US is relying on $3.00 gas for the next decade, then we're probably screwed.
Dahcredyns [said in part] On the other hand, if the US is relying on $3.00 gas for the next decade, then we're probably screwed.
I chuckled when I read the above sentence. While my post certainly painted a gloom and doom picture I also have big hopes for the future.
A new fuel injector is just around the corner to improve fuel economy of a standard Internal Combustion Engine (ICE) to over 60 mpg. Federal standards have been changed to what 35 mpg?
Assuming $6.00 gas becomes the new $3.00 then 60 mpg is going to equal 30 mpg or vice versa? Isn't technology wonderful.
Also everyday I read about advancements in battery technology. Solar PV is becoming more affordable.
So what concerns me? Almost every day I hear that the government is creating some new agency and hiring more people. Another one of my concerns is economic recovery or lack thereof? Will we ever return to a full employment number of 5% or will this be impossible with the government running the show?
Excellent discussion.
P.S. like this statement much better "will require massive increases in energy consumption."
I'm about to post a Financial Times story that covers some of these issues.
Essentially, any serious economic recover will almost certainly push oil prices well above $100 per barrel, possibly quite a good bit over $100, and that's just next year.
By 2015, it's possible that $4.00 gas could seem VERY cheap. Yet, can the economy recover at such prices?
Might not a true economic recovery require accepting that $5.00 gas is a minimum and that alternatives MUST be brought online immediately?
... "economic recovery require accepting that $5.00 gas is a minimum and that alternatives MUST be brought online immediately?"
I couldn't agree more. I can't see any set of conditions in the future which would cause gasoline to fall below $5.00/gallon.
I also have great hope for renewable energy - my only hope is that it arrives in time.
Tom, the line about 16,500 new IRS agents has been proven to be yet another right-wing lie. Currently, the IRS only has 16,000 agents. Do you really think they're going to double their workforce because of the health care bill? It's preposterous.
You sound like you've been listening to Rush Limbaugh and Glenn Beck way too much.
Hi Mark:
O.K so you caught me. Here are the actual numbers and I should have been more specific and stated IRS agents and support staff to be more technically correct.
"It shows that of the 93,337 employees the IRS had on board as of the end of the last fiscal year (September 31, 2009) only 14,264 were actually working as revenue agents."
O.K. so I guess I should have said 16,000 new employees or taken a guess at what percentage of the new employees would be needed to support some percentage of new agents.
So how about 14,000 employees and 2000 agents. Is that close to the existing ratio of agents to employees? Whole discussion is really meaningless isn't it since no one know AT THIS POINT IN TIME what the real numbers are going to be. They haven't even written the implementing policies and procedures yet.
So my question back to you is this. How many new IRS EMPLOYEES and AGENTS would be acceptable to you? I would sincerely like to know.
You can post the number here [not really good idea since this blog is focused on hybrid vehicles] or write to me offline. Please put HYBRID BLOG in the subject line so my junk mail filter does not delete your message. Sounds like a good topic for discussion.
On Beck:
While I do watch Beck on occasion, I certainly don't agree with everything he says. However, his latest efforts to teach us something about the founders of the country and our Constitution and our early Presidents I think is quite good. He has a way of making history interesting which is something I never received in college.
Well, the best case scenario is $5 - $10 billion over ten years.
However, let's be honest. The IRS isn't always the most efficient organization. Moreover, there will probably be fraud in this program that no one is predicting.
Likewise, the CBO has often claimed that it cannot really provide very good forecasts beyond 5 years, and that statement comes from the CBO itself and it came under Congressional testimony before the House's Committee on the Budget.
Thus CBO projections that have to go beyond 5 years are based on large amounts of educated guesses, nonetheless, they could be wildly inaccurate.
There are many right wing lies around the Health Care Reform, but Democrats are also being deceptive.
For instance, deficit reduction that Democrats are claiming is a very tenuous claim and is based on a best case a scenario over ten years+, but if its hard for the CBO to forecast beyond 5 years, how reliable of a prediction is the CBO forecast? Ultimately, it is quite possible that health care reform, as currently packaged, will not be deficit neutral and will in fact add to the deficit. Yet, much of what Democrats are claiming is based on forecasts that go beyond 10 years, which makes the forecasts very unreliable.
That doesn't justify scandalous claims from the right, but pretending that Democrats have nothing but high ground on this issue is disingenuous.
Moreover, just today, the infamous Robert Schiller, whom predicted the housing bubble was asked about the possibility of a double dip recession, and based on the housing market, such a dip wouldn't be surprising according to Shiller. He's not calling for one, and that's not really his specialty. Still his acceptance of the possibility was based on the housing market, which Mr. Schiller has seemed to understand far better than most, and based on that specialty, a double dip recession would not be surprising.
Thus, being worried about the financial implications of health care reform is important, especially today. Perhaps Republicans have played a dirtier game, but Democrats have plenty of skeletons in the closet on this issue as well.
Finally, the political machines are controlling the health care conversation. Really, it's the people that need to do some talking, as we are the problem. Even the President has acknowledged that without a change in the health habits of Americans - quitting our fast food nation ways - and a reduction in end of life spending, no health care system can save America.
That's not a partisan issues, yet it's the most important issue in the health care debate. Unfortunately, it's not even a topic in the health care conversation.
As usual you are right on target. I always value your words of wisdom.
Tom G.
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