I recall having some conversations years ago with friends back at the BigCo in the Bay Area about gas prices. We were wondering what the price per gallon would need to rise to for people to actually change their driving habits. I recall my estimate was $4-5/gallon.
With gas prices exceeding $3/gallon in some areas, I wonder if we may be starting to reach this point.
I think it will be interesting to see if people start changing their driving habits or if we see more fuel effecient cars on the road. It’s a good time for companies to be coming out with hybrid SUVs.
Driving habits won’t change until people realize that the rising gas prices affect everything. From how much it costs to ship a package to a rise in local taxes for school bus gas.
Hopefully the coming of fall will allow prices to drop significantly though predictions here (big oil) are that the drop will not be big enough.
Most of the problems we have today are directly related to demand and the fact that the U.S. does not have enough refineries. Some of the refineries are currently having to produce multiple types of gasoline due to different states having different standards. More strain means more uncertainty. China is the other problem. If they continue to expand the way they are now or if they stop growing but match Mexico in their standard of living then we will watch gas prices rise well above $4.00 a gallon.
We have just passed $6/gallon here in Sweden.
i couldn’t believe it when i saw that. over 3 dollars a gallon – man. it’s even impossible here in CO to fill my tank (taurus) now without it costing less than 30 bucks. still, i think 4-5 dollars is about right.
in the meantime, however, SUV sales are being hit. a friend of mine’s buying cars, and the GM guys said that Hummer’s getting killed. which, frankly, i’m glad about.
Tomas: Your gallons quite likely aren’t equivalent to US gallons, unless you’re doing the conversion from liters first. If you are, thanks. 😉
Alex: I ran the numbers once—I’ve loved the concept of hybrids since I took Thermo I—and I think that modern-day hybrids become economically viable around $4.75/USgal.
The biggest problem is the higher maintenance cost of hybrids, as new technology means that the knowledgebase on how to maintain and repair these vehicles isn’t significantly widespread yet. One simply can’t make a gallons-to-gallons approach and go on.
I wish that Congress and the President had put more tax breaks for hybrid buyers [to lower the economic barriers to entry] and more of a push towards biodiesel in the recent energy bill, but they didn’t.
This weekend, I finally broke $30 for a fillup in my truck. It took me aback. Living in a coastal state, my transportation costs of getting the gasoline to me are lower, which keeps my costs down. [Plus, Alabama’s gasoline taxes are lower, like every other tax in this state.]
Geof: Yes, I converted liters to your US gallons. For your convenience.
I normally fill up twice a month and each time it’ll set me back around $65-70. That’s a pain and I’m actually thinking of starting to use public transportation. But that would mean that instead of a nice 15 minutes ride to work, I’ll have to spend around one hour in a bus. With one change.
The rising cost of petrol is just part of the problem.
Here in Australia, government has been happy to extend cities based on private transport (mainly cars) at the expense of public transport.
Sydney’s public transport infrastructure has gotten old and undependable because of this neglect.
It also requires a major rethink in terms of urban planning and a commitment to higher density living.
To be fair, peoples mindset on a big block of land with a house needs adjustment as well.
Well, $3/gallon sounds good to me…over here in germany the gallon price for “super” (95 octane) would be:
1l = 1.32 € = 1,63$
1 gallon = 3,7854l = 3,7854 * 1,63 = 6,17$ 😉
Over here this huge price increase over the last few years has definetly led to changed driving behaviour (although some people don’t have much of a choice)…or at least to a bigger demand of efficient cars…over here you rarely see a V8, 6cylinder motors are common, but 4cylinder motors are most common…apart from the fact that diesel cars are the strongest growing part of the industry…
On another note: what is needed to change driving habits? New technologies and broad availability of those technologies. We’ve got natural gas and and liquefied natural gas cars over here, but they don’t sell all that good. Why? Because petrol stations carrying (liquefied) natural gas are really rare. Why? Because the oil industry isn’t interesting in pushing a market where they can’t blame increasing prices on the politicians (natural gas is state-aided)! Another alternative will be highly-efficient electrical cars (I think that the oil industry is holding down major improvement in this field) or, my favourite, the hydrogen cars, but those won’t be affordable for another 5-10years?!
I haven’t noticed a difference in driving habits here in Bakersfield. People just roll their eyes at the prices and fill’r up. Alternative fuel vehicles exist, but you don’t honestly expect BIG OIL to allow them to be mass produced in favor of gas guzzling v-8s and v-6s do you?
Jason: Mark my words: if the market bears a switch from SUVs to alternative fuel vehicles, it’ll happen regardless of whether the major oil producers want it or not. Detroit is running at ultra-low margins, and the SUV market is one of the very few demand-driven market niches it has left. If they think they can turn hybrids/biodiesel/fuel cell vehicles into another demand-driven [read: not-so-razor-thin margins] market niche, they’ll do it in two product years or be out of business when Toyota does it faster.
I currently drive a 2001 Subaru Outback. I don’t plan on buying another car any time soon, but when I do, I’d definitely like to get a hybrid. If I had to choose right now, I’d probably go with a Highlander, but really I’d like Subaru to come out with a hybrid Outback. 🙂
It is NATIONAL DON’T BUY GAS DAY ! Starts on Tuesday Aug.23
and every Tuesday thereafter.
We knew this was coming over 30 years ago in the 70s we should be driving on something besides gas by now! But theres too much greed in our government with the good old boys getting payoffs by big oil. And were at war over it right now! No matter what they say!
On August 8th, President Bush signed the Energy Policy Act of 2005 into law. America needed a new direction on energy policy that reduces our dependence on foreign oil, invests in cleaner energy technology and addresses global warming. Sadly, Bush’s energy policy fails to achieve these goals. Instead of taking the country forward, this bill further tightens Big Oil’s grip on the American consumer while handing his ’Big Oil’ friends a 2.9 billion dollar tax break.
Why would Bush sign such a policy? Checkout his financial contributors from the energy industry. Go to http://www.motherjon[...]0/index.html. It appears the President and the Republic Party has put the interest of ‘Big Oil’ ahead of those of hard-working Americans. I only hope we remember this in 2008.
I really wish people would get away from the car-dominated lifestyle, sprawl, etc. When I bought a house I decided to live in town. I don’t have a car, I ride my bike everywhere.
I hope at least people start to favor living near where they work, the commuter traffic is a blight – noise, danger from cars. I’m glad (in some ways) that gas prices are going up. I’m not sure if ultimately, the rising gas prices are because we’re running out of oil. But it seems likely. I hope there will be less waste.
Maybe more people will even get out on their bicycles.
Has anyone proposed a complete gas boycott. Do u think americans would support this? i’m not saying it will be easy but i think we could pull it off. What would oil compamies do? Think of what would happen if americans made the decision to not go to work for a couple days. think of how monumental this idea could become.
Conspiracy? Geez—just look at the price of a barrell of oil—pretty close match to the gas price.
And, if you take inflation into effect, gas is still cheaper than it was in 1982!!
Frankly, I don’t care what gas prices are in Europe, and always HATE it when the news people think that is impressive as to what they are paying, they have always paid a lot more than us because they have huge taxes per gallon on their gas, so, has nothing to do with us. What I don’t like is we have two (former) oil men in the White house, most of us against these fake cowboys believed we would be at this point in gas prices, we just did not predict a war..we figured this administration would sock it to the average american in gas prices to reward their rich oil friends, but we did nto figure that shrub would start a war and have that entire area decide that they will bring us to our knees via gas prices! Anyone predict over $75 a barrel before Xmas??? They are going to hurt us bad with this gas price stuff just to pay us back for invading a ‘soverign’ muslim country! And, shrub won’t help us in the least, because he doesn’t want to add fuel to the rumor his family has always been in bed with the Saudis. So, there will soon be rampant inflation just due to oil prices, maybe another mini recession all over the world, start saving your money folks, more huge lay offs ahead! And, as for living near where you work, get real, most of us can’t afford housing where we work, so have to commute 30 or more miles into town to work!!
Government will do nothing to lower gas prices. They would lose money if they forced companies to lower their gas prices, since many of them are deeply invested in the oil companies. Who could blame them? What we need to do is boycott one major oil company a week or a month and stop buying gas from them. i think it’s a crime to boost gas prices because of what you think might happen in the future. We need to tap into Anwar and let the oil flow.
I would like people to know that the gas prices affect everything we do and that the way to show your voice is to boycott. It worked in then 70’s it’ll work today.People are forming a boycott for Sept 11.A day thats easy to remember.Think about it and show your Patriotism
I’m sick of hearing “adjusted for inflationâ€? gas prices. Pro-Oil corporation people appear on news programs “reminding usâ€? that we haven’t hit an all time high, if you adjust for inflation, and compair prices to the early 1980’s. In 1981 Reagan removed the price control’s on gasoline. The US national average for a gallon of gasoline shot up to $1.42 ($3.05 adjusted for inflation). These people never mention the long gas lines. The rationing and the shortages. The fact that some waited in line to fill up and were turned away whey the pump went dry. Do we really want to return to that?.
These same people ignore the impact of gas prices on the working poor. On September 1st 1997, thanks to President Clinton, the Federal minimum wage was raised to $5.15 an hour. On Sept. 1st 1997 the US average for a gallon for regular unleaded(from now on refered to as a gallon of gas) was $122.9. As of Aug. 22nd 2005 a gallon of gas was $2.619. Thanks to “W� Bush, and the republican majority congress, minimum wage is still $5.15 an hour.
What does this mean to the working poor of America? Lets say a person uses 20 gallons a week to get back and forth from work, shopping, maybe day care etc. .
Sept 1st 1997 20 gallons of gas @ $1.229 = $24.58 or 4.77 hours of work.
Feb 2nd 1999 20 gallons of gas @ $0.885= $17.70 or 3.44 hours of work
Aug 22nd 2005 20 gallons of gas @ $2.619= $52.38 or 10.17 hours of work
To get to work, a person making minimum wage, needed to work less then 3.5 hours a week for his or her gasoline in1999. Now a person making minimum wage spends more then 1 day at work just to pay for their gas to get their. Added with the rising cost of heating, the cost of living, etc., you can begin to see how it is not possible to survive on minimum or a low wage in this country.
The price of a gallon of gas is nearly 3 times what it was 6 years ago. The time has come for US citizens to ask, “Why, after defeating 2 oil producing countries, are we paying more for oil then ever before?�
*Gasoline price referenced from the Energy Information Administation(www.eia.doe.gov)
With cnn recently reporting that (sorry do not have the link) suv resale prices are going to drop by at least 8% US wide, it is no doubt that producing these style trucks will be certainly indicated. However, pardon me if I should ramble, but shouldn’t we have a national movement to start the infrastructure of fueling stations to switch gears into creating hydrogen stations displacing the current gas ones? I don’t know, call me stupid but the last time I checked, water was a little cheaper than gas:)
No matter what spin the oil companies put on currently increasing gasoline prices I am absolutely positive that when the quarterly reports are turned in we will see ALL TIME HIGHEST quarterly earnings posted.
Mark: Thanks to our current administration! I have long believed that oil companies should be regulated the same as any other utility. After all they are just providing another form of energy.
Laura: In major suburban areas such as SF, NY etc it is possibly to live a perfectly normal life WITHOUT owning a car. BUT in rural parts of the country it is a neccessity. No car means no job. Not to mention all those construction workers that HAVE to drive large trucks plus pull trailers.
Stephen: I agree $4 or $5 a gallon will make a lot of people think twice about their next automobile purchase. I suspect the oil companies will push us to the brink then back off when sales of larger less economocal vehicles start to slow.
Shawn: This further solidified my disgust with Mr. Bush. It appears that most major decisions he has made in his presidency have benefitted big business ie. his buddies.
Lets see… it all started with energy policy …decided in secret… involving energy companies… then stonewalled by the executive branch… a little meddling in the Mideast.. de facto control of Iraqi oil … but it couldn’t have anything to do with the fact that we have a couple of oil men in the Whitehouse… Nah… that would be too cynical… hmmmm
People are quick to blame the government or the president for high gas prices, but they forget to consider the factors that actually have the greatest impact: the recovery of the world economy, the explosive growth of China’s economy, and speculation. It’s simply amazing that people blame the oil companies; what in the world can they do to when oil runs over $70. Sell at a loss maybe?!
And oil boycotts, what is that all about? What a joke. If you really want to make a difference, reduce demand. I’m tired of hearing people complain about high gas prices when I don’t see them lift a finger to reduce their consumption of gasoline.
They move out of the cities to afford single-family homes with large lots, and then waste their money (and time) commuting farther to work. Hopefully higher gas prices will reverse that silly trend.
I still see a lot of large, inefficient vehicles (SUVs) on U.S. roads. If your vehicle doesn’t get at least 30 mpg you automatically forfeit your right to complain about high prices. Again, hopefully high prices will remove most of these vehicles from our roads and at the same time make the roads safer for smaller vehicles.
If you need a larger vehicle for work, just pass on the cost to your consumers. If you can’t raise your prices, then the service or product is not worth the price. That’s plain economics at work.
Hmmmm..interesting that Katrina hadn’t even come close to anywhere and the “oil analysts” started predicting rising per barrel prices and spikes at the pump…I don’t care what you say about fuel efficient vehicles, shorter commutes, conservation, etc…the public is not being told the truth from the oil companies or the government about petroleum and costs…or forgive the word..”profits”…
As the old saying goes..”the masses are the asses”..and any consumer that uses anything that is petroleum based (which is all of us)..not counting the gas used in the automobile…is being hosed…sorry for the pun…and there isn’t a lot we can do about it…
Crude supply isn’t our biggest problem, and the “Don’t buy Mobil” or “Don’t buy Exxon” idea that is being passed around the net is never going to amount to any reductions at the pump. Here’s my take on why …
Fifteen years ago or so, the EPA started putting pressure on the oil companies and small refineries to clean up or shut down. Many shut down, dismantled their equipment and sold it to overseas buyers. Production capabilities were drastically reduced. Independents were out of the refining business and what was left was all owned by the Big Boys.
They were smart … they keyed in on the Law of Supply and Demand and looked to the future. Don’t build any new refineries … the laws are too stringent and make any new operations too expensive to build … just sit back and wait for demand to increase … even if crude oil is available, the we can only produce so much per day. When we reach capacity, or close to it, demand will drive the price up. We can get away with it … our customers have no place else to go, and we have almost everyone in the federal government in our back pockets. We are also smarter than them. When they yell and scream, we can point our fingers back at them and say, “The EPA forced us to shut down old refineries”; “They made it too expensive to build new ones”; “We wanted to build a couple on the West Coast but the Californians wouldn’t let us”; “We wanted to build a couple on the East Coast, but New Englanders wouldn’t let us”. If the vast majority of refineries weren’t located along the Gulf Coast, do you think the Big Boys could holler, “That will be another ten cents per gallon for the next six months. We had to shut down the Louisiana plant for a couple of weeks”.
We really are stupid. The Big Boys have us by the “you know what’s” and we really don’t have any way out. We can start pumping new stuff out of the ground in Alaska; we can start drilling off the California coast; we can become best of friends again with all the Middle Eastern producers … the price still isn’t coming down because enough is never going to get refined to satisfy our demands.
So here’s what I’m saying … the key to any type of “recovery” is to build new refineries … get some competition going. Maybe the U.S. government should build, own and operate a couple of them. Right now, the Big Boys are all in cahoots with each other. You think that they don’t strategize together? Develop gameplans together? Fix pricing together? Fund PAC’s together? Lobby Congress together? They have to be confronted with competition before they will change. Where in the hell is it going to come from?
I can remeber when gas was only $.97 a gallon and now it is $2.65 here in Texas and oil companys are not that desperate for oil they have plenty to last for hundreds of years so why do they keep rising gas? Wages are not that great and we wonder why so many in United States are with out jobs well look at it. We can afford life here and we are helping other countrys rebuild and we cant help our own country.
Why blame American drivers for wanting to drive their own cars? This makes no sense. It’s a free country, we should be able to drive where, when and however much we want without criticism. Why not look at the real culprit which is the oil companies and countries exporting oil? If the entire country took one entire MONTH and bought NO OIL OR GAS, it would break their backs and they’d have to come down to reason with pricing.
Johan read this. I think it says who is at fault.
http://news.bbc.co.u[...]/2992775.stm
You CAN (and I assume you do) drive whatever car you own. No one is telling you that you can’t drive your car, you’ll just pay for it at the pump. If you think the oil companies have you by the “you know what” as JJ claims, you’re probably right… but it’s by your own free choice. As for me, I have simply changed my driving habits and now use only 2-4 gal per week, so they don’t have me by anything. I really don’t care how expensive gasoline gets, it could surpass $5 for all I care, I’ll just use less gasoline.
And people, please don’t regurgitate a bunch of inaccuracies without checking your facts. Yes current U.S. refining capacity is tight in relation to demand (oh look, there’s demand again!), so whenever an event such as a hurricane or fire reduces refining output you’ll see a temporary spike in prices at the pump. BUT, during the period 1994-2004 U.S. refining capacity actually increased by 13%. And you blame the price increase we’ve seen over the last few years on a lack of refining capacity? It’s almost comical. All you need to do is compare the price of crude oil futures to gasoline futures over the last 2 years and it becomes evident that it’s the price of crude oil that’s behind the price increase at the pump. Check it out for yourself at http://futures.fxstreet.com
Oil and gasoline resources are traded just like any other commodity. Fact is, some of the recent price increase is due to market speculation and many Americans are thus causing, as well as benefiting from the gain in prices, by pumping more money into their portfolios that in turn invest in oil and gas futures (at least their 401k’s are benefiting from it).
And you suggest that the U.S. gov’t own and operate some refineries? Since when did the U.S. give up on free market capitalism? Don’t you think Donald Trump and Warren Buffett daily analyze the economics of refining, and if the economics look good, they would pump (no pun intended) millions of dollars into new refining operations? Yes it is a free country, anyone can own and operate a refinery, including yourself.
Americans should reall look at our leaders, Bush Cheney. They are making money off this. When they leave office the prices will come down. Remember the secret energy meetings?
Bill, um this is not Bush’s fault.
Have you heard of the law of supply and demand?
I don’t like Bush but people cannot blame him for every thing.
OPEC is the biggest name in oil.. they control how much they sell barrels for. We have to buy they barrels at their prices… meaning if the country has to pay more to buy it, then pay for refining costs/shipping.. its going to cost us more.
Electricity when it’s produced cannot be stored, it is generrated, transmitted and distributed immediately. Gas is a different animal. Pump the oil, you can store it. Refine it you can store it. There is no logical reason that prices can jump within a day and or within hours, unless someone is manipulating the market. What is at ythe pumps was purchased at (sic) yesterdays price. What is at the refinery ‘ditto’. Who did Cheney meet with? What did they talk about? What agreements wetre made? Why would I want a job paying at $120.00 an hour when I make $1000.00 an hour from my investments? I can do what Matha Stewart did and pass laws that make it impossible to prosecute me? But let the average person do what I do and I’ll see that they go to jai,l acoording to the law.
Ok, this is getting pretty far afield from my original post (at what price do people change their driving habits?) so I’m closing the comments.