Comments on: $4/Gallon Gas!

By: Robert

Robert — Wed, 30 Jul 2008 19:06:01 +0000

I thought this was an interesting analysis and in a format everyone can enjoy. YouTube!

By: brad

brad — Wed, 30 Jul 2008 00:19:30 +0000

I see your point but would argue that supply side economics is a political policy/belief rather than an economic reality. For proof that consumer demand still causes change, we can look back in time as well as at our current situation. In the 1970’s, auto manufacturers responded to the oil crunch by making smaller, more fuel efficient vehicles. Today, cars are out selling trucks and SUVs, which hasn’t happened in a decade. The motivating factor behind these changes in consumer spending, which accounts for 2/3 of the U.S. economy, is price. The cost of gasoline is such that it’s increasing demand for more efficient/alternative fuel vehicles. Therefore, it is no surprise the Toyota is now the world’s top selling auto manufacturer.

That same pressure is being felt in other areas of transportation, where companies are looking at alternative fuels/strategies for airplanes and cargo ships. The increase in fuel costs affects all levels of transportation, as well as the price of other goods.

I was merely citing “gas” because it’s relevant to regular people. You are correct in that oil is the key, and the true determiner of price, as it is found in a multitude of products. I’m not sure there’s a way to completely stop using oil, but reducing demand from the transportation sector, which accounts for 2/3 of our oil consumption, is a pretty good place to start.

Now, as much of our utility power is still generated by coal, we’re trading one pollutant for another…but that’s another post.

Reference:
Cars outselling trucks
http://www.latimes.com/business/printedition/la-fi-gm4-2008jun04,0,7437925.story
Virgin Airlines Completes Flight Using Bio-fuel
http://news.cnet.com/8301-11128_3-9877583-54.html
Railroad Expansion Due to Fuel Costs
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/20/AR2008042002407_pf.html
Cargo Ship with Kites
http://news.bbc.co.uk/2/hi/europe/7205217.stm

By: Robert

Robert — Tue, 29 Jul 2008 23:26:01 +0000

So I have a response to this post, I have read it over a few times and there is something that has bugged me about the logic in one of the arguments and it just hit me what it was, so here it goes.

In the third paragraph you mention we have to “break our addiction to oil” and i would argue that since the 80’s (when we switched to a supply side economic model from a traditional model. BTW don’t even get me started on the Laffer Curve) we have slowly lost the power as consumers to make large scale change in our economy. We have to drive, and despite desire for higher fuel efficiency/electric or hybrids we are beholden to what the auto manufacturers make.

And above and beyond that we have to consider that oil goes into more than making gas for our cars. Plastic is a petrolium product, so say buh-bye to anything plastic (last time i checked we couldn’t make plastic out of solar or wind power) And in addition to other more common sense things like airplanes, and cargo ships running on gasoline/diesel/jet fuel, here is a list of other things that are derived/made from oil.

We will have to apply pressure to all those industries (which are most likely producing their goods in other countries) to change.