Bob Brinker Free Discussion Site 59,820+

» Moe_Berg - Re: Oil Price

In response to Oil Price posted by Happy_2:

Your observation is spot on target, Happy.

I thought Bob did an excellent job explaining the difficult situation we face today - ie. demand driven rising oil price in an environment where existing producing and refining capacity is almost fully utilized with no expectation of slowing demand growth. Looks like he did his homework knowing he had oil industry analyst Charlie Maxwell as his guest expert on the program thiis weekend.

I thought Bob's observation that today's politicians are not fully facing the seriousness of the above situation was also spot on target. But Liberal Bob, true to his McGovernesque leanings, failed to mention that President Bush's proposed Comprehensive Energy Bill has been deliberately blocked in a partisan Congress for 5 years until it finally was passed during this past month and signed into law. It took a caller to point out that the cheap oil prices of the 1980's and 90's (with the exception to the quick spike around Gulf War I) drove the lack of interest in energy conservation and solutions during that period. Instead Showman Bob railed about the spilt milk (lost opportunities) of the past 30 years - something nobody can go back and do something about. Granted Reagen, Bush1, and Clinton could have exercised leadership on this issue and failed to do so. And Carter proposed 3 Energy Programs that a partisan congress shot down. But we can't do anything about that now - it's past and it's history.

And then Comedian Bob jokingly added that he does his part to save energy by driving his golf cart every time his schedule permits - HA HA HA. I doubt if Bob will be invited to headline any stage shows in Vagas any time soon based on that failed pun.

Frankly, if I were the President, I'd call in the heads of all American Car Companies and crack their heads together until they agreed to announce a crash program (ie. WW2 Manhattan Program) to mass produce Hydrogen Fuel Cell propelled cars and Hybrid Cars by a specific deadline no matter what the cost to the public. Whatever the extra cost of the changed paradigm, it would be worth it to cut off the funds we pay for gas that go to fund terrorism that Al Qaeda gets from the Saudi's as bribes not to topple the 'Royal' Family!

-- posted by Moe_Berg

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» bbaddict - Re: Re: Oil Price

In response to Re: Oil Price posted by Kirk:

Kirk, is there an easy way to get that chart adjusted for inflation? Can you set it in constant 1991 dollars, or just today's dollars?

Bob keeps telling us that oil is still cheaper than it was in 1991, adjusted for inflation. That is true, but somewhat of a distortion. That was a spike caused by fears of the first Iraqi war. He should also compare it to 1992, 1993, etc.

True...oil, adjusted for inflation, is not so high compared to 1991, 1992, etc. But to compare the short-lived spike of 1991 with the tremendously strong trending curve of today is a bit misleading.

I have been shopping for a small sports coupe this last year. I looked at Lexus, Infiniti, Mercedes, etc. They are very nice cars, but they only get about 20MPG! 20MPG from a 2 seat sports car is obscene! People give me grief over my SUV, which gets 15MPG, but they drive these tiny sports cars that are not much better.

I have decided to get a Honda Civic, which gets 35-40MPG. Maybe I will be a trendsetter. Who needs electric pedals adjustment anyway?

There are only a few ways out of this:

1) Conservation (duh)
2) Alternative energy (lots of companies working on this, but the technologuy is not cost-effective yet)
3) Build more refineries and drill more oil (not in my backyard, or off my beautiful beach)

-- posted by bbaddict

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» bbaddict - Re: Re: Oil Price

In response to Re: Oil Price posted by Kirk:

I just bought a bottle of water for $1. That works out to $7.57 per gallon. Street vendors sell water for $3 per bottle. That's over $20 per gallon.

That's just WATER pumped out of the ground, run thru filters, and bottled. Some of it just comes out of the municipal supply and filtered.

Compare that to oil...exploration, drilling dead wells, getting permits, buying land, paying high-cost labor, pumping, transporting via truck, pipeline, ship, train to a refinery, refining (very complex, dangerous, and regulated), additives added, storing in tanks, transporting to depot, put on tanker truck, driven to your gas station, pumped into tanks, pumped via expensive gas pumps, profit paid to gas station owner, 30% tax paid to government.

$3 per gallon for gas that will take me and my family 100 miles is cheap! (It's really $2 per gallon plus tax)

This is why conservation doesn't work. Oil is too cheap to worry about. That's also why alternative energy doesn't yet work. The cost of oil undercuts the alternatives.

They used to say that oil would need to be above $35 per barrel to make tar sands viable. Well, even adjusted for inflation I'd guess we are above that threshold, as tar sands are now being processed. But solar, wind, bio, etc. are still far more expensive than petroleum.

I would like to say that oil needs to rise in price even further, but that just sends more of our dollars overseas.

So while rising oil prices take a bite out of our spending, they should be expected and planned for. The rise in prices will drive conservation, alternative energy, and more exploration. And a less-gluttonous return of the more fuel-efficient car.

-- posted by bbaddict

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» bbaddict - Re: Re: Re: Re: Oil Price

In response to Re: Re: Re: Oil Price posted by Kirk:

I guess my rant wasn't logical. Comparing the value of a gallon of gasoline to other items in the marketplace, it is a bargain. It is just strange that people will complain about $3 per gallon gasoline, while holding in their hands a bottle of $8 per gallon water.

People will pay $10 or $15 or $20 to get transported 50 miles. They won't like it, but they'll pay it. They may curtail spending in other areas, but they'll pay it.

At $3 per gallon, and 25 MPG, it currently costs $6 for the fuel to get transported 50 miles. Not terribly expensive in the scheme of things. Until oil gets closer to the $100 per barrel mark, not many people will change their habits. When it costs $100 to fill up their tanks, they may start to conserve or switch to alternative fuels.

-- posted by bbaddict

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» EdO3 - Re: Re: Re: Oil Price

In response to Re: Re: Oil Price posted by bbaddict:

I know this will not be a popular suggestion, but one simple way to save gas and money is simply to drive slower. I've experimented with two different vehicles driving the freeway at an average of 70 mph on one tank full and then at 55 mph on another. The result was a 20% to 25% improvement on mph at the slower speed. (Remember they mandated the speed limit to 55 mph during that gas shortage in the 70's?)(I would imagine the savings might be considerable for SUV drivers.)

One has to use common sense about this, so as not to be impeding the general flow of traffic, but there are many situations when you can just stay in that right lane, let the traffic fly by you, find something good to listen to, and arrive stress-free and a few bucks ahead of the game. In most cases, the extra time it takes is unconseqential. Try it if you want to save a buck or two.

-- posted by EdO3

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» Moe_Berg - Re: Save gas and money is simply to drive slower

In response to Re: Re: Re: Oil Price posted by EdO3:

Excellent idea! But instead of driving too slow on the Interstate, one could intentionally take slower back roads that take take one to where one is going whenever possible.

-- posted by Moe_Berg

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» bbaddict - Re: Re: Inflation Adjusted Oil Price

In response to Re: Inflation Adjusted Oil Price posted by Kirk:

What is striking to me in the above graph is oil’s big fall from high prices matches the decline in interest rates AND the great bull market in equities that ran from 1982 to 2000.

Wow. Further study certainly warranted here... How about the above graph overlaid with a graph of CPI, and CPI-Ex-Energy?

If Bob Brinker is saying gasoline is cheaper than it was in 1991, adjusted for inflation, then he is very wrong as this graph shows.

Actually, he says that OIL is less than the $90 inflation-adjusted price of 1991, not GAS. Maybe there are some refinery pricing pressures that make gas/oil much more expensive now.

Good work, Kirk!

-- posted by bbaddict

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» bbaddict - Re: Re: Re: Re: Inflation Adjusted Oil Price

In response to Re: Re: Re: Inflation Adjusted Oil Price posted by Kirk:

Wow. I hope that Bronker's staff reads this board, and asks him to clarify this. What I can verify from pricing stats is this:

Oil spiked in October 1990 to $34.69/bbl

A 2005 dollar was worth $.676 in 1990, making $34.69 equal to $51.31 today. This is far from the inflation-adjusted $90 that Bob keeps mentioning. So, in real dollars, oil IS more expensive today than in 1990. Now I must make corrections to much of my analysis.

Here is a good site with many detailed graphs of oil price history:

http://www.wtrg.com/prices.htm

Any clarification or corrections, Bob?

-- posted by bbaddict

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» bbaddict - Re: Re: Re: Re: Inflation Adjusted Oil Price

In response to Re: Re: Re: Inflation Adjusted Oil Price posted by Kirk:

BTW, the $51 from my above calculation matches what the graph shows.

Maybe Bob just got the dates mixed up. Oil spiked at $90+ (inflation-adjusted) in 1980-81, not 1990-91.

That makes more sense. It never really was fair to compare today's STRONG price rise to the temporary spike of 1990-91. But the high prices in 1980 took a couple of years to dissipate.

But the most important aspect of these charts is that the price spikes were recessionary!. Big time.

-- posted by bbaddict

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» bbaddict - Re: Re: Inflation Adjusted Oil Price

In response to Re: Inflation Adjusted Oil Price posted by Kirk:

What caused that drastic price drop in around 1986?

-- posted by bbaddict

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