So it's been an interesting couple of months, energy-wise. If you've filled up in the past little bit, you've noticed a significant decrease in the amount you've had to pay. Short-term, this is probably a good thing - shucks, the extra cash helps around holiday time, anyway. Long-term, I'm not as convinced.
I put 6 gallons in my wife's car the other day. It was less than $18.00. I had to do a double take - surely something was wrong... Nope. For just over $15.00, I'd put in half a tank of gas. It was a little surreal. Or a lot surreal.
Of course, I remember in high school when gas was a dollar a gallon. I'd fill up at the Holiday on Center near the school and remember thinking how easy it was to fill up for a dollar a gallon. $20 would pretty much last me at least a week, if not more.
So, what determines how oil is valued, anyway?
In a word (or, in this case, an acronym) - OPEC. The Organization of Petroleum Exporting Countries. They don't control ALL of the oil in the world, but enough to swing the market, which is why they organized in the first place. An economic cartel that focuses on setting the market value of oil throughout the world, OPEC steers the cost to consumers for their own long-term goals. The biggest goal, of course, is to gain money (and power - more on that in a moment) for the organization's constituent members. This money has literally transformed some of the most barren desert into incredible oases of wealth, decadence, and opulence. You can even go skiing in the desert in the summer. All because of oil. And all because oil is king.
How did this come about?
In the early 1900s, people were starting to spread out a bit. The inner cities were starting to lose their charm, and people wanted a safe, clean, and almost bucolic place to live. They didn't move very far from the city, though, and transit lines were developed to move people in and around in relative comfort. I've written about this before - most communities had private transit lines. Even Salt Lake City had its electric trams and trolleys (that's where Trolley Square came from, after all). But about this same time, cars were making great strides into the people-moving arena, and these small private entities were muscled out by car manufacturers, tire/rubber companies, and land speculators who wanted people to utilize the car as their main way of getting around. Oil was cheap and plentiful, and no one foresaw the dependence that would result. Or maybe they did, but they benefited from this dependence, so it was promoted.
Then oil became more expensive, and the OPEC countries started to realize that the competition between themselves was creating an artificially low value on a relatively precious and rare commodity. So they organized and started to wag the dog. The economic repercussions of this are still being felt, from the decline of Detroit and US manufacturing, to the world becoming on the cheap and easy transport of finished goods/raw materials across the world. It's almost staggering to think of what power is concentrated in these relatively few countries, and the lasting impact they've had on the world - environmentally, culturally, politically...
All because of oil.
In this article (http://www.bbc.com/news/business-30577381) the author points out that cheap(er) oil has meant that expensive exploration has been curtailed (short-term) because it's not economically efficient to get oil from some places when it is cheap enough to get from where it's easier. The North Sea comes to mind, as well as some of the oil shale production that is taking place in Eastern Utah.
Add to the mix Russia's economic woes and you've got a very interesting outlook.
Long-term, I personally prefer gas prices that are high. While environmental friendliness is always a good and altruistic cause, people are more reliably motivated by their pocket books, and the magic number seems to be about $4.00/gallon at the pump. Once the price of gas hits that level, people start to make lifestyle changes - riding mass transit, shorter trips, combining trips, or even eliminating them altogether. Expensive gasoline means people also look for efficient transportation. All of which are good things.
I agree with the conclusion of the BBC article above - the one on oil prices - that the prices will be coming back up. But the OPEC tail wagging the dog can only really do so much, and demand appears to remain poised to stay low for a much longer term. So we'll have to see where that takes us.
I put 6 gallons in my wife's car the other day. It was less than $18.00. I had to do a double take - surely something was wrong... Nope. For just over $15.00, I'd put in half a tank of gas. It was a little surreal. Or a lot surreal.
Of course, I remember in high school when gas was a dollar a gallon. I'd fill up at the Holiday on Center near the school and remember thinking how easy it was to fill up for a dollar a gallon. $20 would pretty much last me at least a week, if not more.
So, what determines how oil is valued, anyway?
In a word (or, in this case, an acronym) - OPEC. The Organization of Petroleum Exporting Countries. They don't control ALL of the oil in the world, but enough to swing the market, which is why they organized in the first place. An economic cartel that focuses on setting the market value of oil throughout the world, OPEC steers the cost to consumers for their own long-term goals. The biggest goal, of course, is to gain money (and power - more on that in a moment) for the organization's constituent members. This money has literally transformed some of the most barren desert into incredible oases of wealth, decadence, and opulence. You can even go skiing in the desert in the summer. All because of oil. And all because oil is king.
How did this come about?
In the early 1900s, people were starting to spread out a bit. The inner cities were starting to lose their charm, and people wanted a safe, clean, and almost bucolic place to live. They didn't move very far from the city, though, and transit lines were developed to move people in and around in relative comfort. I've written about this before - most communities had private transit lines. Even Salt Lake City had its electric trams and trolleys (that's where Trolley Square came from, after all). But about this same time, cars were making great strides into the people-moving arena, and these small private entities were muscled out by car manufacturers, tire/rubber companies, and land speculators who wanted people to utilize the car as their main way of getting around. Oil was cheap and plentiful, and no one foresaw the dependence that would result. Or maybe they did, but they benefited from this dependence, so it was promoted.
Then oil became more expensive, and the OPEC countries started to realize that the competition between themselves was creating an artificially low value on a relatively precious and rare commodity. So they organized and started to wag the dog. The economic repercussions of this are still being felt, from the decline of Detroit and US manufacturing, to the world becoming on the cheap and easy transport of finished goods/raw materials across the world. It's almost staggering to think of what power is concentrated in these relatively few countries, and the lasting impact they've had on the world - environmentally, culturally, politically...
All because of oil.
In this article (http://www.bbc.com/news/business-30577381) the author points out that cheap(er) oil has meant that expensive exploration has been curtailed (short-term) because it's not economically efficient to get oil from some places when it is cheap enough to get from where it's easier. The North Sea comes to mind, as well as some of the oil shale production that is taking place in Eastern Utah.
Add to the mix Russia's economic woes and you've got a very interesting outlook.
Long-term, I personally prefer gas prices that are high. While environmental friendliness is always a good and altruistic cause, people are more reliably motivated by their pocket books, and the magic number seems to be about $4.00/gallon at the pump. Once the price of gas hits that level, people start to make lifestyle changes - riding mass transit, shorter trips, combining trips, or even eliminating them altogether. Expensive gasoline means people also look for efficient transportation. All of which are good things.
I agree with the conclusion of the BBC article above - the one on oil prices - that the prices will be coming back up. But the OPEC tail wagging the dog can only really do so much, and demand appears to remain poised to stay low for a much longer term. So we'll have to see where that takes us.
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