Gas Prices Changing the Landscape

[Fencergrl]

My husband read a report that was released recently that discussed how the ever increasing gas prices will alter North America and how we do business.

A great deal of our economy relies on cheap transportation to distribute goods and people to their places of employment across vast distances. If the increases in the price of gasoline continues, will this change everything? Will living in the suburbs and commuting to work will no longer be economically viable? Will this cause the price of houses in some areas will drop significantly, while other areas will become much more densely populated?

Essentially, I can see North America being more like Europe as in where we work vs where we live. What do you think? What do you think the domino effect will be? Is North America about to undergo a shift in how we do things?

[PeterGustafsson]

Hi!


Data point: I recently bought 95-Octane grade gas for my car. It costs 13.79 SEK/liter, which translates to 2.30 USD/liter, or 8.91 USD/gallon.


Have a nice time!

Peter Gustafsson

[fatfencer]

Originally Posted by Fencergrl

My husband read a report that was released recently that discussed how the ever increasing gas prices will alter North America and how we do business.

A great deal of our economy relies on cheap transportation to distribute goods and people to their places of employment across vast distances. If the increases in the price of gasoline continues, will this change everything? Will living in the suburbs and commuting to work will no longer be economically viable? Will this cause the price of houses in some areas will drop significantly, while other areas will become much more densely populated?

Essentially, I can see North America being more like Europe as in where we work vs where we live. What do you think? What do you think the domino effect will be? Is North America about to undergo a shift in how we do things?

IN a word yes, but no one can agree on how its going to happen. The absolute worst thing that can happen is an immediate superfast downturn. We haven't seen the brunt of THAT yet.

If it happens in fits and spurts it will make us more comfortable with that fact but the flipside is that those rural areas which would have been great deals might not be such good deals. The prices for land wont really go down much if at all and may be ameliorated by general inflation such that we dont really see any savings as buyers.

It's an oversimplification but you get the general idea...it's going to be like musical chairs for awhile except no one will know in advance how many chairs we have. Strap yourselves in for a bumpy ride. There's a general sense that consumers arent seeing value in their purchases and that they just can't afford them with gas prices octopussing its way into every industry and every price. Salaries NEED to rise to offset demand worries. Good luck with that.

WHat happens when a country that depends on retail and financial service to keep its economy going decides considerably curtail spending. The SPEED at which that occurs will d in a large part determine how bad this economy will get and how angry the middle class will become.....very angry.

All the best,

Fatfencer

[Fencergrl]

Originally Posted by PeterGustafsson

Data point: I recently bought 95-Octane grade gas for my car. It costs 13.79 SEK/liter, which translates to 2.30 USD/liter, or 8.91 USD/gallon.

Right now, gas is about 1.50/litre. The lowest I remember it within the last few years was 0.39/ litre due to a gas war. Once it got over a $1/ litre people started cringing. It has never been that high.

Peter, being familiar with both Europe and North America and the differences I'm interested in hearing your views on how you think this is going to change things for us.

[Inquartata]

There are too many differences between the US and Europe for the model to be adopted here. Distances, for one thing.

Are things in Germany or France arranged the same way they are in Russia and central Asia? IMO we're a lot more like the latter than the former...

Of course, that could just be my western bias. Maybe things WILL go that way on the eastern seabord. I don't think they will do in "flyover country", though. And that's most of the US.

[Lemonaide]

I think we should all retreat into the original thirteen states and leave the rest to the wilderness and farmland, leaving only small areas for skiing, hiking and watersports.

[Capt. Slo-mo]

Of course, if you visit Boston, and then anywhere in North Dakota, it seems like your idea has already happened...

[teacup]

Have you read "The Long Emergency" by James Howard Kunstler?

http://books.google.com/books?id=zC2...um=1&ct=result

[Capt. Slo-mo]

Wow. That is some happy go lucky reading. Now I'm depressed....

And in today's news...a good example of just what Mr. Kunstler is talking about

[OROD]

Well, I'm glad that gas prices are finally high enough that people are not buying SUVs anymore and are now thinking about conserving gas. Also, it makes alternative energy sources more competitive... as opposed to oil which gets trillions of dollars in subsidies in the form of military funding and damage to the planet.

Same for house prices. It was getting to the point where no one could afford a house. And that's the problem, lots of people that couldnt afford them were buying houses through bizarre mortgages. So, all of a sudden house prices went down, interest rates went up, and these people couldnt afford to pay for their house or even sell it... well, what can I say... welcome to the real world.

.

[Grimaldi]

Originally Posted by OROD

Well, I'm glad that gas prices are finally high enough that people are not buying SUVs anymore and are now thinking about conserving gas. Also, it makes alternative energy sources more competitive... as opposed to oil which gets trillions of dollars in subsidies in the form of military funding and damage to the planet.

Same for house prices. It was getting to the point where no one could afford a house. And that's the problem, lots of people that couldnt afford them were buying houses through bizarre mortgages. So, all of a sudden house prices went down, interest rates went up, and these people couldnt afford to pay for their house or even sell it... well, what can I say... welcome to the real world.

.

You have an interesting way of looking at things. You're glad gas prices are high so that people have less disposable income and the economy hurts (which negatively impacts everyone) so people "conserve gas", which basically means reducing their freedom and choice of lifestyle. All this to force a switch from "subsidized" oil to, in your mind (apparently) unsubsidized alternative energy. The idea that alternative energy sources are cost-efficient and/or unsubsidized is silly.

I'd like to see your reference to "trillions" in energy subsidies, as here (http://en.wikipedia.org/wiki/Energy_subsidies) states "In the US, the federal government has paid US$74 billion for energy subsidies to support R&D for nuclear power and fossil fuels from 1973 to 2003." while alternative energy sources received $26 billion during the same time frame. Considering today, renewable energy contributes less than 10% of US power (including things like hydroelectric from dams), I think it's clear who gets subsidized the most. Plus, gas taxes put a great deal of money back into the government...I don't think you'll find that's the case with most renewable energy.

I think I'd be glad if oil producing nations were peaceful and democratic, allowing for inexpensive access to a great energy source for the world, or perhaps the development of a new, successful cheap energy source (say, fusion) that allows people unlimited access to cheap, reliable and clean energy. Maybe I just don't fully appreciate the economic suffering of people across the country and world.

Your perspective on home ownership is equally unique. You claim homes were too expensive for people to purchase...and then turn around and show how people were, in fact, able to purchase homes during the time frame. In fact, housing costs were rising BECAUSE people were buying so many homes. There would be no problem, of course, except for the economic troubles caused by the rising fuel costs that you extol above.

Yeah, I see you're point...I'm glad things suck too

[OROD]

Originally Posted by Grimaldi

You have an interesting way of looking at things. You're glad gas prices are high so that people have less disposable income and the economy hurts (which negatively impacts everyone) so people "conserve gas", which basically means reducing their freedom and choice of lifestyle. All this to force a switch from "subsidized" oil to, in your mind (apparently) unsubsidized alternative energy. The idea that alternative energy sources are cost-efficient and/or unsubsidized is silly.

I'm not sure if you've heard, but oil is a limited resource that we're quickly running out of. Also, a lot of it happens to be in places that are unstable and not very friendly to us... not to mention the damage we're doing to our climate through burning of fossil fuels. What that means to me is that the sooner we get off of our dependency on oil the better. So, yes, I'm glad that high gas prices are forcing people to change. And this has nothing to do with "reducing their freedom", that's bs, unless you think that destroying the planet is some freedom you're entitled to. Also, I never said that alternative energy is unsubsidized... please dont put words in my mouth.

Originally Posted by Grimaldi

I'd like to see your reference to "trillions" in energy subsidies...

Some estimates put the Iraq war cost at 3 trillion dollars. Add in the first Gulf War, the cost of our military spending to maintain our interests in the region, the environmental cost of oil spills, the actual explicit amount of subsidies, etc...

Originally Posted by Grimaldi

Your perspective on home ownership is equally unique. You claim homes were too expensive for people to purchase...and then turn around and show how people were, in fact, able to purchase homes during the time frame. In fact, housing costs were rising BECAUSE people were buying so many homes. There would be no problem, of course, except for the economic troubles caused by the rising fuel costs that you extol above.

Again you're putting words in my mouth, or maybe it's just your reading comprehension that's the problem here. I said that people couldnt "afford" houses, not that they couldnt "buy" them. Getting a mortgage is not the same thing as affording one. And, yes, prices were rising because people were buying so many houses and in many cases only so they could turn around and sell them at a higher price soon afterwards. Just look at article that Capt. Slo-Mo linked to, perfect example. So what happend, a housing bubble. And, again yes, it's good that the bubble burst. Now prices can get back to reasonable levels that are not artificially high due to speculation.

Originally Posted by Grimaldi

Yeah, I see you're point...I'm glad things suck too

No, I dont think you see my point at all.

[Grimaldi]

Originally Posted by OROD

I'm not sure if you've heard, but oil is a limited resource that we're quickly running out of.

Define "quickly" for me. As far as I can see, oil production worldwide from conventional sources MAY be peaking right around now. That still means plenty of oil production from those sources in the future, as well as lots of oil from sources like shale and tar sands if we so choose. Not to mention additional oil we may recover from current sources if technology allows us to become more efficient.

Originally Posted by OROD

Also, a lot of it happens to be in places that are unstable and not very friendly to us...

So the answer is to withdraw from interaction with these places, destroy their national income and let them suffer economically like the US is? At least you're consistent in spreading misery across the globe.

Originally Posted by OROD

not to mention the damage we're doing to our climate through burning of fossil fuels.

Right. Funny how CO2 didn't affect global temperatures in the Earth's (recent) past, but now that humans are adding some to the atmosphere, it's the leading cause. Look at the past records: http://en.wikipedia.org/wiki/Image:F...ate_Change.pnghttp://en.wikipedia.org/wiki/Image:V...core-petit.png
The planet is supposed to be in a warming cycle, characterized by rapid temperature increases...just like the previous cycles of peaks and valleys. Heck, the previous peaks were all warmer than our current temperature, so why people think that this time it's because of human intervention (as opposed to whatever caused it all the other, warmer times) escapes me. Well, no, I understand it's a tool of people who want societal change and more government control over people's lives, I'm just sad so many people buy it.

Originally Posted by OROD

So, yes, I'm glad that high gas prices are forcing people to change. And this has nothing to do with "reducing their freedom", that's bs, unless you think that destroying the planet is some freedom you're entitled to.

I want to drive to see my family in Kansas. I can't because energy prices make such a trip too expensive. I want to live in the country and commute to work, but energy prices are too high to accomodate, so I live in the city instead. Those aren't impacting my freedom? I suppose poll taxes don't impact freedom, either, because if it's important enough, people could save/sacrifice to pay to vote? If it's a factor of the free market (gas prices), it's still a restriction on freedom, but it's not government imposed. If the government imposes ridiculous taxes/prices on things to discourage their use, it can absolutely infringe on freedoms improperly.

Originally Posted by OROD

Also, I never said that alternative energy is unsubsidized... please dont put words in my mouth.

I'm sorry...when a statement like this comes up:

Originally Posted by OROD

Also, it makes alternative energy sources more competitive... as opposed to oil which gets trillions of dollars in subsidies in the form of military funding and damage to the planet.

The "as opposed to" leads one to believe that the second party in the statement (oil, in this case) gets something the first party (alt energy) doesn't get. I'm not putting words in your mouth, just applying the English language as generally understood, instead of whatever system you use. I suppose you could say it's a difference of degrees, which I think I addressed by showing the difference in subsidies paid vs. amount of energy produced. Either way, alt energy is subsidized much more heavily than traditional energy, making your statement inaccurate.

Originally Posted by OROD

Some estimates put the Iraq war cost at 3 trillion dollars. Add in the first Gulf War, the cost of our military spending to maintain our interests in the region, the environmental cost of oil spills, the actual explicit amount of subsidies, etc...

You're not seriously arguing that the world would have sat by and let Iraq invade/keep Kuwait if the region didn't have oil? We're talking about a UN member nation invaded by a foreign power in an unprovoked war. More importantly, the invading power was not a superpower...that's the perfect excuse for a war, which (as happened) would lead to high approval ratings and a fairly quick and easy war. Everyone would jump on board that train (as they did).

As for the rest, the last two are peanuts (big picture), and the first is tough to tell. How seriously would we take the Middle East if oil wasn't there? Israel would still be an issue, as would development of WMDs and (possibly) international terrorism. Yes, I agree we'd view the region as much less important than we do now, but I think it would still get some attention...more than I think you think.

Originally Posted by OROD

Again you're putting words in my mouth, or maybe it's just your reading comprehension that's the problem here. I said that people couldnt "afford" houses, not that they couldnt "buy" them. Getting a mortgage is not the same thing as affording one.

Snide remark aside, I think we're arguing semantics at this point. How do YOU define "afford"? Able to purchase without credit at all? Very few people can buy a home (or car) completely with cash. Able to make payments on a loan? So what happens if you make payments easily for two years, and then the economy crashes and you can no longer afford the payments? Do you retroactively go back two years and say you really couldn't afford it? That seems absurd, although you certainly can't afford it at the present.

Originally Posted by OROD

And, yes, prices were rising because people were buying so many houses and in many cases only so they could turn around and sell them at a higher price soon afterwards.

You make it sound like investing in property, fixing it and reselling it is bad? It's business. Without it, we get a bunch of run-down homes no one wants. The people doing it make a living doing what they like, people looking for homes get a nice house...what's the problem? Prices for homes were rising? That's a good thing for many people! People were buying homes? Sounds good again? The economy took a hit from oil trippling in price and people were negatively affected? I think that was going to be a problem regardless, and people will adjust and survive as always.

Originally Posted by OROD

And, again yes, it's good that the bubble burst. Now prices can get back to reasonable levels that are not artificially high due to speculation.

Strange how you only happen to see good and bad from one perspective. Do you not see (or care) that current homeowners are then screwed, as the value of their home drops? I bought my home 2 years ago. I have a new child and 3 other children that are now 2 years older. I'd like a new home with a little more space. If I bought the home for X two years ago, and now home values have dropped dramatically, how do I move? Sell the home at current market value and just eat the loss, paying the remainder of the first mortgage and the new home's mortgage for several years? As discussed above, I'm "free" to do that, but it's not really a valid choice, so I'm screwed (along with other recent homeowners in the same boat).

The business cycle changes, so I understand how things rise and fall in prices and value. When the economy drops, some people benefit, certainly, but in the long run the majority of people flourish with a strong, growing economy, not the pain you're presently enjoying.

[mrbiggs]

Originally Posted by Grimaldi

why people think that this time it's because of human intervention (as opposed to whatever caused it all the other, warmer times) escapes me. Well, no, I understand it's a tool of people who want societal change and more government control over people's lives, I'm just sad so many people buy it.

I think you should replace "people" with "many reputable scientists."

It's really not too difficult:

Humans are producing huge amounts of greenhouse gases in addition to those naturally produced.
The more greenhouse gasses there are in the air, the warmer it gets.
It's been getting warmer recently.
Therefore, it's quite plausible that humans are causing the warming.

Granted, it's not easy to prove that humans are causing it, and I've never heard of any evidence that proves causation. However, there is a strong correlation, and shouldn't we be safe rather than sorry? I don't think that people should all sell their cars and start biking to work, but I think it's a good reason for things like emissions standards.

I don't see what it has to do with governmental control over people's lives. With the exception of some crazy people, no one is encouraging the government to pass laws forcing people to not drive. I don't think emissions standards qualify as "control over people's lives", but rather as "control over corporations' operating methods." It's still control, but it's control I'm willing to accept and control that has become expected in our society recently.

I generally favor less government control, and my personal opinion is that the government should approach this through education rather than regulations for the most part. But I don't see how flat-out denying human involvement in global warming helps anyone.

[PeterGustafsson]

Hi!

Originally Posted by Grimaldi

I want to drive to see my family in Kansas. I can't because energy prices make such a trip too expensive. I want to live in the country and commute to work, but energy prices are too high to accomodate, so I live in the city instead. Those aren't impacting my freedom?

High prices of necessary stuff leading to lower quality of life for the ordinary guy... The state should fix this!

Gee! You sound just like a common election stump done by either the Swedish labor party, or even more so like one would expect from our major communist party. Just thought that you might like to know what you remind me of.

Originally Posted by Grimaldi

You're not seriously arguing that the world would have sat by and let Iraq invade/keep Kuwait if the region didn't have oil?

This might come as news, but yes, many people think just that. Me - I guess that USA would have responded even if Kuwait did not have had oil, but slower and to a lesser degree. For comparison, see the much less muscular response by USA to the Indonesian invasion of Eastern Timor just after the latter had declared independence from Portugal. The countries are about the same size also.

Originally Posted by Grimaldi

You make it sound like investing in property, fixing it and reselling it is bad? It's business. Without it, we get a bunch of run-down homes no one wants.

So, if you were not expecting to sell your house but instead planning on living there to the end of your days - then you would not keep it from disrepair?

Originally Posted by Grimaldi

Strange how you only happen to see good and bad from one perspective. Do you not see (or care) that current homeowners are then screwed, as the value of their home drops? I bought my home 2 years ago. I have a new child and 3 other children that are now 2 years older. I'd like a new home with a little more space. If I bought the home for X two years ago, and now home values have dropped dramatically, how do I move? Sell the home at current market value and just eat the loss, paying the remainder of the first mortgage and the new home's mortgage for several years? As discussed above, I'm "free" to do that, but it's not really a valid choice, so I'm screwed (along with other recent homeowners in the same boat).

One perspective indeed. Why should the perspective of someone who bought a home when prices were near-tops be of more interest than that of a person who presently is not a houseowner, but wants to come into that market, preferably with a low prices as possible?

4-kid family, a parent that wants a roomy house, and to drive from Iowa to Kansas on a regular basis on top of that. There is your problem right there - unless you are earning serious bucks, your wishes are too big. If you thought that you could have a big family, a big house, a big driving bill without first getting a big wage - and things don´t turn out so rosy now, well, that is not a problem that the rest of us should deal with.

You did not state where you and your folks live, but a Google Maps search gives that the driving distance from Des Moines to Wichita is 400 miles, one way. That would put me back 106 bucks (one way). See, I live where gas costs 8.32 USD/gallon, so I do not feel your pain when you complain about higher gas prices.

Gnällspik.


Have a nice time!

Peter Gustafsson

[Fechter1]

I think OROD wins this exchange... Sorry, Grim.