Chart Of The Day: As Oil Goes Up… Edition
Keeping a nervous eye on oil prices? Curious how each increase in the price per barrel translates into price at the pump, and what impact that actually has on consumers? Zerohedge comes through with this handy primer on the real-world consequences of each increase in the price of oil. And what, pray tell, does the “Nomura” note scrawled over the $220/barrel price refer to? Why, t he prediction by Nomura Investment Bank analyst Michael Lo, that if Libya and Algeria stop oil production due to unrest, the price of crude will hit $220/barrel. Are you ready to start spending an extra ten percent of your household income on gas?
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Yeah, I should buy a motorcycle to drive to work, even in winter, and the government is fighting "global warming" by actively preventing energy production in the US: http://thehill.com/blogs/e2-wire/677-e2-wire/146205-interior-officials-wont-offer-timeline-for-issuing-offshore-drilling-permits Well, yesterday it was -16 degrees F. when I got to work 15 miles away, not counting the wind. It has been this cold off and on since November. Any politician who is not keenly interested in increasing energy production in this country will never get a vote from me.
Auto gas mileage, and the price at the pump, are the least of this. It's the cost of ENERGY. Not gasoline per se, but ENERGY. Oil, specifically, although coal and natural gas are being put through the same regulatory cut-off procedures. You can OUTLAW personal automobiles, and energy use in this country will drop less than ten percent. You can tax gasoline, and mandate stupid SMART cars, and the savings is less than four percent. Everything you need or buy, has oil factored in as a large part of its price. It's manufactured or processed; warehoused, shipped by oil-burning devices, then stocked in heated/cooled stores for you to pick up. Whether you go there and back by car, taxi or (five-mile-a-gallon) bus. This is going to be a MAJOR cost of living increase, even for pedestrians. The cost of gas is just going to be the up-close-and-personal part of it.
...and why the price hikes? What keeps prices in check, in general? COMPETITION. Long ago, IBM was making a killing on a new device which didn't cost much to make and was very useful. Other people saw that and wanted in; and in no time at all, there were a thousand companies, big and small, making PCs. And the price of a PC went from over $3000 to under $250, even as performance increased a hundredfold. Right now virtually all oil comes from politically-unstable regions of the world; and much of that world is on fire with revolution. So the world price of oil, already dictated, is blowing off the scales. There is only one way to answer that. FIND OTHER SUPPLIES. You know, the kind that our government has placed off-limits. More supply -> reduced price. It's ECON 101.
Bingo, JustPassinThru. Our new legislature up in Helena is trying to open up resources that had been made off limits by the previous Democrat bunch. I would love to see Montana start producing oil and gas like neighboring North Dakota is. I know a few working class folks from here that are over in North Dakota making good money right now, and it is stupid to have prevented the same thing here. Elections matter.