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You can register using your Google, Facebook, or Twitter account, just click here.Thanks for that educational journey. Must have been the dollar responsible for the dramatic change ('88-'98)?Having spent most of my working life trying to guesstimate petroleum futures to save my own hide, I think I can offer a bit of good news. In the oil industry your career depends on the boom-bust cycle that is endemic to the business. Your job or your company's survival is dependent on the price of crude. Spend too long underwater (about $70/bbl), and construction contracts for new equipment start to be cancelled. It's not so much the dollar price of oil, I'm told by those who know the market best, but the stability of the price that allows the industry to invest in new growth.
But there's been a change in the market model over the past few years, and that's definitely good news. The US has reached the point in domestic production that we are almost self-sufficient in crude oil. New shale oil plays in South Texas, the Dakotas, and offshore discoveries made possible by new technologies are about to turn this nation into a net exporter of oil. What does this mean for the price we pay at the pump?
Let's start by saying that oil, like agricultural products and metals, is a fungible commodity, meaning that it is traded worldwide at a price set by consumption. The market will go to the low-priced source. Barring political influence, this tends to stabilize the price of oil as when some desert kingdom decides to "punish" the US for its foreign policy, it turns off the oil tap. While it worked in the past, our newfound self-sufficiency helps insulate us against some prince deciding he's going to tweak the US economy just because he can. Oil is no longer the weapon it has been against the US for the past 40 years. That ship has sailed. So, by taking imported crude out of the lead position in our energy economy, we are no longer so directly dependent on foreign oil. We can produce sufficient quantities for our needs here at home. We're not out of the woods yet, but we won't be held hostage by our gas pumps.
Now, it isn't all geopolitics and global economics - we have plenty of profiteering going on here at home, and a good deal of it is in our legislatures. If you've read the stickers on gas pumps lately, you'll find that they are not just fuel dispensers, but tax collectors. 18¢ of each gallon goes to the federal government, and depending on your state, you may be paying another 8¢ (Alaska) to 50¢ (NY) per gallon to your local taxman*. As states scramble for more revenue, don't look for this to let up. Gas taxes are getting to be like "sin taxes" in the eyes of many legislators, cash cows that can produce millions for their pockets by attacking those things they believe we should moderate - like cigarettes and alcohol. Add it up, and you could be spending a LOT more money on taxes every time you fill up.
Then there's the motor gasoline market. One thing that probably hasn't escaped your notice is that your car is burning less of the stuff now than it did five, ten, or twenty years ago. Even a few tenths of a gallon reduction in your consumption, spread over the millions of automobiles in America's fleet, cuts into the overall demand for gas. That's a good thing - even for Big Oil. There isn't a whole lot of profit in gasoline - not compared to other products we can make from our recovered crude. It's sort of what happened to the telephone company - Big Oil discovered they could make more money with technology than product - just as your local telephone company quit stringing wires and renting you a telephone. The big profit now is in DATA, not phones. They don't even have to get their hands dirty with all that public utility stuff. Better to sell new products of oil and natural gas for greater profits. Synthetic lubricants, plastics, construction materials, even pharmaceuticals make more money - and many of these products are recyclable. Gasoline makes one trip through your engine . . . and it's gone . . . forever. It's just not a smart long-term investment to burn your product.
That's the long view - now for the short term; we're going to see regular fluctuations at the pump, some are seasonal, others respond to demand. As fall arrives, refineries began anticipating several new influences on the distillate market. People generally won't be taking long trips like they do in summer, which will depress the demand for motor gasoline. A larger supply results in lower prices. More crude feedstock is diverted to producing home heating oil at this time of year, which will cut into the availability of motor gasoline. At the same time, the blends of motor gasoline switch over to less oxygenated products that are slightly more volatile (for winter starting) and a bit less environmentally friendly - which can result in a production savings of 3¢ to 15¢/gallon depending on your state regulations. Let's face it, "green" fuels are expensive to produce - there's no free lunch here. In winter, as we drive less and cooler weather naturally mitigates the formation of typical summer smog (I promise not to get too technical here), we are running on cheaper fuel - and buying less of it.
Finally, we do have some short-term blips in fuel costs. In the spring and fall, refineries go through "turnaround", which is related to that conversion from summer to winter blends and back. Particularly in spring, during the turnaround to summer fuels, most refineries conduct their maintenance and process upgrades as the weather warms up - which will, for a few weeks, cut into the production of gasoline and the plants begin selling their reserves out of those big tank farms to cushion the shortfall. Many times that little blip gets buried among all the other economic factors, but it is particularly noticeable in the spring - when everyone complains about the sudden increase in gas prices when we go back to summer blends and start driving a lot more.
Of course there are the random catastrophes that will briefly impact your fuel costs. Plant fires, natural disasters like hurricanes on the Gulf Coast, earthquakes in California and Alaska, can cut into our refining capacity pretty dramatically, causing short-term increases in the wholesale price of gasoline that we can't anticipate - but these may last only a few weeks and will affect prices only briefly and in limited areas before the market returns to equilibrium. The same applies to military actions overseas, as the world takes a deep breath when another terror group starts throwing its weight around. Whether in Iraq or Russia - or anywhere else, political unrest anywhere has worldwide consequences - and we will probably see some reflection of this in gas prices - not so much as a reaction, but as to a sign of instability in the market. Remember, it's that stability we all want - the kind of stability that allows us to make future plans based on a ripple-free price for oil and gas. We may not be as dependent on foreign oil as we once were, but we are still a part of the market. We may see fluctuations in our price at the pump, but it shouldn't be as dramatic as it once was.
The bottom line is this: Our view of the gasoline market is a pretty narrow one - only ten years or so, in most recent memory. Over the past hundred years, the wholesale price for a gallon of gasoline hasn't changed more than a few cents in constant dollars. If you adjust the price of a gallon of gas for inflation, you see that the average 100-year cost per gallon is $2.86 - and it hasn't shifted dramatically over the years.
Year Price
1918 $3.87
1928 $2.87
1938 $3.31
1948 $2.52
1958 $2.42
1968 $2.28
1978 $2.33
1988 $1.89
1998 $1.46
2008 $3.49
2013 $3.51**
It's not so much that the cost of gasoline is rising, it's that the dollar's falling - it's part of that fungibility thing - we're in a worldwide market. It might well be that your Elio is the best hedge against inflation you can own right now. There's a new perspective on buying a new car you might not have seen coming!
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* http://taxfoundation.org/article/state-gasoline-tax-rates-2009-2013
** http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp
Notice anyone in S.Dakota buying one? I heard the rumor it wasn't a good idea to drive a Prius in those states right now. Hopefully just a rumor.
I think one thought is some people want a road trip. These are most ones with some spare time and maybe some girth and age. They want to take their partner. I agree it would be nice. Maybe for model 2 would be good.
Elio - 6.1 gallon tank
Gas - 2.909 (today in NC)
Fill up - $17.50 (if its bone dry)
Me -
oops!One correction, the Elio will have an 8 gallon tank.Z
) we owned a Vette .... great rig that I came to hate .... I've driven Jeeps/trucks all of my life, with them I step up into the truck and stepped down out of it .... with the Vette I had to sit down and then swing my legs into the vehicle, the reverse to get out .... I'm now pushing 68 and we have a 2000 Buick Park Avenue .... it must be a few inches higher than that Vette which makes a big difference .... still not my favorite ride (I prefer my Chevy pickup) but I can live with it .... my hope is the final version of the Elio will offer a comfortable entry/exit .... in a retirement community I believe that side by side seating with separate doors would prove to be more attractive than inline seating .... another advantage a golf cart has is they can be readily modified to offer a wide range in ground clearance
I filled up the wife's car last night at Sam's Club and the price for regular was $2.569 a gallon. Lowest I can remember in quite awhile.
