How are Gas Prices affecting you?

[Butch Edwards]

The increase in gasoline prices have had only a modest impact on me thus far, okay, that's not exactly true. Still, the heat (oh no, global warming , that or it could just be summertime in the Mojave desert ) has had far more impact on my willingness to go tooling about than gas prices.

I'm sick and tired of all the doom and gloom and whining about gas prices in the media. That's been the impact. I'm getting 35-45 mpg, run premium. I've been looking to get a new motorcycle for my daughter to use and also as a backup for my current ride. Unfortunately, "entry-level" motorcycles are very popular right now, so the bike I want can't even be found within 500 miles of me. Now, there's likely a downstream upside to this, but it'll be a year or more before many of the folks who are jumping onto motorcycles right now discover that they are not riders at heart, and the market becomes flooded with late model used motorcycles.

For those of you who are saddled with long solo commutes and large vehicles, you have my sympathy. Enjoy your A/C and tunes, and take heart in the fact that gasoline is still less expensive than Evian, Perrier, Deft, Minwax, and Budweiser and Jack!

I'm bettin' the cost of ALL motorcycles/scooters will rise dramatically in the coming months.... I already see more 2 wheelers on the road, and just like high MPG mini-cars,they'll be caught in the Supply/demand chain....

[Art Mulder]

My foot has gotten lighter.

This.

I noticed this a year or so back. When driving 120kph(74.5mph) on the Highway, my gas gauge would go down a LOT faster than when I cut back to 110/115kph (68/71mph).

The price of everything is rising based on fuel costs, major lifestyle adjustments are inevitable for working class people.

True. Very true. I wonder if people are going to notice that imported stuff (ie: fruit from South America) is rising more than local stuff. That actually could be a good thing.

I get pretty good gas mileage on this, ... I can't ride every day, but it does make a difference in how often I have to fill up.

Yay, Rob!

10 years ago when we moved here we purposefully chose a house within biking distance of my work. It has saved my wife and I a ton of money -- we've stayed a one car family for all that time. I tell folks that this has been like giving myself a $10,000 a year raise.

This year I'm cycling even more, since I'm training for a 2 week charity bike ride this summer (see my signature). And it's really opened my eyes to how many places in town are really not that far on a bike. Especially since it seems to me that in the car I get stopped more by stop-and-go traffic than when biking. My friends and I have noticed far more people cycling (out in the countryside, on long distance rides, that is) as well, but I can't tell yet if that is also translating into more people cycling inside the city.

I have no idea about bus ridership. I really don't care for the bus system around here.

[John Keeton]

Butch, I agree with you in the short run on the price of 2 wheelers. Actually, I think prices generally will continue to increase because the petroleum issue permeates all facets of our economy.

I think Detroit has finally (the hard way) gotten the message on this issue and will shortly be revamping their designs to address the demand. Hopefully, in a couple of years, if we can last that long and GM doesn't fold up, there will be new and much more efficient vehicles available, and the current demand for 2 wheelers may ease some.

And, as the poll reflects, I think we are changing our thinking. What has surprised me though, is that we apparently have not yet reached the "pain" point. I still see a lot of cars left running while the driver goes inside a store for a moment, and notice a lot of vehicles occupied by only the driver. And, while it seems a lot more people are in the right lane on the Interstate going 65, I still get passed by people in tanks going 80+ mph.

Things will never return to "the good 'ol days." High fuel prices are going to be a part of our future simply because the US is no longer a major force in world markets. If we don't produce our own energy, we will be bidding against China. Their demand is increasing exponentially, and they will ultimately suck up all available resources on the global market. In 2007 we imported 59% of our petroleum needs. For some scary insight into this issue check out http://www.eia.doe.gov/basics/quickoil.html

According to some media reports, we currently are importing 70%. We either find new energy sources, and/or get serious about drilling and refining our own HUGE resources, or get used to paying higher prices for everything! It is really that simple.

[Joe Mioux]

I have switched to E85 in my Ply Voyager. Gas mileage drops about 4 miles per gallon in the city.

However, the other day, I drove into STL and got just shy of 22 mpg with E85. granted the day was 80 degrees and low humidity and no wind, but that is still really good.

Fuel is costing me about $1000 per month. That hurts.

joe

[wyman autry]

i understand the demand for more fuel, through out the world. i understand that the u.s.of a. doesn't call the shots in the world any longer. also that oil will some day play out. i under stand these things, but i do not understand the obscene profits that these oil companies are racking up. i know they are entitled to make money. i know that they have drilling cost, exploration cost, etc. but they have always had these cost, without bankrupting the economy. these profits are way out line. what these companies could use is a lesson on morals and ethics. thats just my opinion, and i'm stickin to it.

[Greg Peterson]

"...get serious about drilling and refining our own HUGE resources, or get used to paying higher prices for everything! It is really that simple."

It's even simpler than that.

Lets pretend that we are now pumping oil out of ANWAR. A barrel of ANWAR oil on today's market (7/8/2008) would sell for, get ready........$136.24.

When the US only has approximately 3% of the known oil reserves in the world, drilling isn't a realistic option. Our own government recently released a report on the impact of ANWAR oil on the US market. Two to three cents per gallon of gas is what we would see. Meanwhile, Alaska would enjoy crazy money, the oil companies would enjoy crazy money, and the rest of us would continue suffering.

The only ones that stand to gain from domestic drilling are the oil companies. Period. And will anyone speak as to the quality of the oil? Is it as 'sweet' as Arab oil? I've heard that it is not.

The oil companies are getting back into Iraq after having been evicted by Hussein when he nationalized the oil industry in Iraq. Some Iraqi's will get a percentage of the sale of each barrel of oil. Meanwhile, oil companies will be plenty busy drilling oil over there.

[Clifford Mescher]

More drilling equals more supply for the world. More supply will bring down prices. Clifford

[Dennis Peacock]

More drilling equals more supply for the world. More supply will bring down prices. Clifford

Only if congress will put a stop to the "speculators".

[Dennis Peacock]

What I'm really surprised about?

The Poll status reflects that we as the public in general are still "not feeling the pain" of the higher fuel costs.

What about common food market prices that are higher than ever before?
What about the many of us that struggle every month just to afford a way to/from work?

Could it be that we make so much money that we don't really feel the pain of the increased expense of just "living" or "surviving".??? What about those that have had to reduce 3 meals a day down to 2 so they can still survive?

I could go on and on, but I won't. It only upsets me even more.

[Greg Peterson]

More drilling equals more supply for the world. More supply will bring down prices. Clifford

There isn't a shortage Clifford. Where is there a gas station that doesn't have gasoline? Where is there one, single, solitary news report about a fuel shortage?

Supply/Demand are pretty much neck and neck. Granted there isn't much wiggle room, but currently the global supply is slightly greater than demand.

Pumping oil from our measly 3% reserves doesn't add up to a hill of beans on the international market.

Like I said, a barrel of ANWAR oil will sell at whatever the prevailing international market will bear. And there is no way we can drill enough and pump enough oil to seriously impact the international oil market.

The oil companies want to drill off shore because oil is selling for $136 barrel today. There's money to be made. Big money. But you and I will not see a lower price at the pump because they're drilling off the coast of Florida, or ANWAR. Not going to happen.

Sorry to burst your bubble. But the drilling argument is a red herring, pure and simple.

[Clifford Mescher]

There isn't a shortage Clifford. Where is there a gas station that doesn't have gasoline? Where is there one, single, solitary news report about a fuel shortage?

Supply/Demand are pretty much neck and neck. Granted there isn't much wiggle room, but currently the global supply is slightly greater than demand.

Pumping oil from our measly 3% reserves doesn't add up to a hill of beans on the international market.

Like I said, a barrel of ANWAR oil will sell at whatever the prevailing international market will bear. And there is no way we can drill enough and pump enough oil to seriously impact the international oil market.

The oil companies want to drill off shore because oil is selling for $136 barrel today. There's money to be made. Big money. But you and I will not see a lower price at the pump because they're drilling off the coast of Florida, or ANWAR. Not going to happen.

Sorry to burst your bubble. But the drilling argument is a red herring, pure and simple.

Beg to differ. Growing economies like China demand more oil. Still supply and demand. Nuclear power in USA would help solve energy problem. Clifford.

[John Keeton]

Clifford, you and I are in agreement on nuclear power. But, the petroleum issue is not just about burning it for fuel/heat. Everything you use, pretty much, has a petroleum factor. So many things derive from petroleum, asphalt, lubricants, industrial compounds, fabrics, etc. Unfortunately, it seems we will always need oil. If we change our tariff structure, encourage domestic production, find other transportation and heating sources, and use our oil for non-fuel purposes, we could gain some independence from foreign oil. Sounds a little to simple and utopian, I guess. For an interesting video check this out http://www.youtube.com/watch?v=ZPch2k63uj4

[Mitchell Andrus]

i understand the demand for more fuel, through out the world. i understand that the u.s.of a. doesn't call the shots in the world any longer. also that oil will some day play out. i under stand these things, but i do not understand the obscene profits that these oil companies are racking up. i know they are entitled to make money. i know that they have drilling cost, exploration cost, etc. but they have always had these cost, without bankrupting the economy. these profits are way out line. what these companies could use is a lesson on morals and ethics. thats just my opinion, and i'm stickin to it.

You and me are the oil companies. Anyone with a well diversified 401K owns oil company stock. The oil companies are us... and my mom, grandmother and the teacher's union's pension fund.

You can give some back if you'd like, I'm keeping mine.

Dollar for dollar, when I go to work, I make a better margin than the big oils do...

[Lee DeRaud]

What I'm really surprised about?

The Poll status reflects that we as the public in general are still "not feeling the pain" of the higher fuel costs.

What about common food market prices that are higher than ever before?
What about the many of us that struggle every month just to afford a way to/from work?

Could it be that we make so much money that we don't really feel the pain of the increased expense of just "living" or "surviving".??? What about those that have had to reduce 3 meals a day down to 2 so they can still survive?

I could go on and on, but I won't. It only upsets me even more.

I hear what you're saying, but there's no reason to be surprised at the poll results.

It's a self-selecting poll: by definition, everyone "voting" has enough discretionary income to buy a computer and pay for internet access, and enough spare time to screw around on a woodworking forum. Dunno about you, but personally, gasoline is far enough down the budget list that by the time it really becomes painful, my cable/internet connection and this laptop will be long gone.

[Montgomery Scott]

The author of this article from the Wall Street Journal would disagree with your opinion.

Although most experts agree that financial speculation was not responsible for the surge in the global prices of food and energy, many people remain puzzled about the source of these remarkable price rises. Economics offers a simple supply-and-demand explanation and reason for optimism about the future of commodity prices. In the case of oil, economics also suggests how policy changes today that affect the future could quickly lower the current price of oil.
We all know that rising incomes in China, India and the Gulf states have increased the demand for oil and many other commodities. But how could the modest, one-year rise of these demands lead to 100% increases in the prices of oil and other commodities? Let's take a look first at perishable agricultural commodities.

In the short run, there is little scope for increasing the supply of corn in response to a global increase in demand. For demand and supply to balance – for the market to clear – the price of corn must rise.
If the demand for corn were very price-sensitive, a relatively small increase in price would reduce global demand by enough to offset the initial rise in demand. However, since demand is actually quite insensitive to price in the short run, it takes a very large price rise to bring global demand into line with supply.


Here is a simplified picture of what happened in the past year. The quantity of corn demanded by high-growth countries rose gradually, increasing eventually by an amount equal to, say, 10% of the previous total global level of corn consumption. Since the supply of corn did not increase, the price had to increase enough to reduce corn consumption in other countries by 10%. If it takes a 10% increase in the price to reduce the quantity of corn demanded in the first year by just 1%, it would take a 100% increase in the price of corn to offset the initial 10% rise in the quantity of corn demanded.


In reality, the picture is complicated by the substitution in both supply and demand among different agricultural commodities, and by the role of the corn ethanol program. But the basic explanation holds: With a very low short-run price sensitivity of demand and little scope to raise supply in the short run, even a relatively small increase in corn demand by the high-growth economies can lead to a very large short-run rise in the price of corn.


Fortunately, the price sensitivity of both demand and supply will increase with time. This implies that the rising demand from China and other countries may eventually be accommodated with a price lower than today's level.


The situation for oil is more complex, but the outcome for prices is potentially more favorable.


Unlike perishable agricultural products, oil can be stored in the ground. So when will an owner of oil reduce production or increase inventories instead of selling his oil and converting the proceeds into investible cash? A simplified answer is that he will keep the oil in the ground if its price is expected to rise faster than the interest rate that could be earned on the money obtained from selling the oil. The actual price of oil may rise faster or slower than is expected, but the decision to sell (or hold) the oil depends on the expected price rise.


There are of course considerations of risk, and of the impact of price changes on long-term consumer behavior, that complicate the oil owner's decision – and therefore the behavior of prices. The Organization of Petroleum Exporting Countries (the OPEC cartel), with its strong pricing power, still plays a role. But the fundamental insight is that owners of oil will adjust their production and inventories until the price of oil is expected to rise at the rate of interest, appropriately adjusted for risk. If the price of oil is expected to rise faster, they'll keep the oil in the ground. In contrast, if the price of oil is not expected to rise as fast as the rate of interest, the owners will extract more and invest the proceeds.


The relationship between future and current oil prices implies that an expected change in the future price of oil will have an immediate impact on the current price of oil.


Thus, when oil producers concluded that the demand for oil in China and some other countries will grow more rapidly in future years than they had previously expected, they inferred that the future price of oil would be higher than they had previously believed. They responded by reducing supply and raising the spot price enough to bring the expected price rise back to its initial rate.


Hence, with no change in the current demand for oil, the expectation of a greater future demand and a higher future price caused the current price to rise. Similarly, credible reports about the future decline of oil production in Russia and in Mexico implied a higher future global price of oil – and that also required an increase in the current oil price to maintain the initial expected rate of increase in the price of oil.
Once this relation is understood, it is easy to see how news stories, rumors and industry reports can cause substantial fluctuations in current prices – all without anything happening to current demand or supply.


Of course, a rise in the spot price of oil triggered by a change in expectations about future prices will cause a decline in the current quantity of oil that consumers demand. If current supply and demand were initially in balance, the OPEC countries and other oil producers would respond by reducing sales to bring supply into line with the temporary reduction in demand. A rise in the expected future demand for oil thus causes a current decline in the amount of oil being supplied. This is what happened as the Saudis and others cut supply in 2007.


Now here is the good news. Any policy that causes the expected future oil price to fall can cause the current price to fall, or to rise less than it would otherwise do. In other words, it is possible to bring down today's price of oil with policies that will have their physical impact on oil demand or supply only in the future.


For example, increases in government subsidies to develop technology that will make future cars more efficient, or tighter standards that gradually improve the gas mileage of the stock of cars, would lower the future demand for oil and therefore the price of oil today.


Similarly, increasing the expected future supply of oil would also reduce today's price. That fall in the current price would induce an immediate rise in oil consumption that would be matched by an increase in supply from the OPEC producers and others with some current excess capacity or available inventories.


Any steps that can be taken now to increase the future supply of oil, or reduce the future demand for oil in the U.S. or elsewhere, can therefore lead both to lower prices and increased consumption today.