Oil Under $60 and Gasoline Approaching $2/Gallon. Gas Guzzlers Set for a Comeback?

November 14th, 2008 7:44 AM

Commodities markets are on an even wilder roller-coaster ride than the stock market and crude oil is leading the retreat. The AP reports that Thursday’s hit of inter-day low of $54.67 / barrel and closed at $58.24. That there is almost 2/3rds down from the summer’s near $150 peak. TFC Commodity Charts publishes a dandy oil price graphic ,while the EIA puts detailed gasoline price histories online. Unfortunately for conspiracy theorists, gasoline prices have tracked crude oil prices very well in recent weeks. The national average for regular fuel for the week ending November 10th was $2.17; broadly consistent with January 2007 when crude oil was last in the $55-$60 range. Interestingly for whichever automakers stay in business is the little reported fact that steel, copper and other raw material costs have plunged even more rapidly than crude oil. Copper, for example, is falling through the floor.

So, does this mean it is time to ramp Hummer production back up? So far, signs are that most consumers remain gun shy about gas guzzlers. Democrats are beating the drum for massive infrastructure construction projects in the new year, so some relief may be in sight for the work truck market next year. The real story, however, may be the headwinds facing Ford’s European small car invasion, Honda’s new Insight and the believe-it-when-I-see-it Chevy Volt. Even if customers aren’t stampeding back to monster trucks, they might not be as keen on Lilliputian cars and expensive plug in hybrids as they were when $5/gallon seemed to be just over the next hill. We seem to be living in dog years where each calendar year counts for seven.

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FromBrazil on Nov 15, 2008

As to your question: I should hope not! The sooner the average American gets his fat ass into a SUV, the faster the prices rise for all of us again, and ultimately, to him , too. This makes it a no win situation. If American consumers remain enamored of smaller cars for a while, the Big Oil companies et. al. remain more confused about what price they can get away with, and this makes the price stay dowm for a longer while. As an aside, own here (oh you Americans whine so much) the price of gas has not fallen an iota. This means we are paying roughly twice what Americans pay, and about 60% of what Europeans pay. When you calculate that against average purchasing power we are being just fucked!! That's what you get when you socialize the market. Our beautiful Petrobras (just hammered by Moodys) has had a record profit. And why not? They have kept prices frozen at like 100 dollars a barrel for over 2 years. In that time imagine how liong the barrel has actually beem at that threshold? Yeahy like under 35% of the time. So, the Brazilian consumer is paying overprice 65% of the time, and now comes talk of a reduction in price. In 4 months time! Yeah, just enough time to guarantee (a morally undefensable) profit against our pocket book. Why 4 months? The summer driving season! Fuck consumers and after they get back to work in February, be benevolent and give them a break. But fuck the a little more. Heck anybody can pay an extra 200 dollars to the gov for revenue. After all they are rich and all driving to th beaches in their own private cars. Let the gov distribute the wealth (mainly amongst themselves). Oh yeah, and you gotta protect the super millionaires who produce ethanol in this country. No I'm soory the patriotic businessmen who invest their "talents" (cough--lobby and cough cough--gifts) in a market with no competition. Forgive the bile, but even without such virulence the truth is roughly really as I've written. LOng live capitalism

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Fallout11 on Nov 18, 2008
ra_pro : Let’s give credit where credit is due; pch101 was correct that in the short term the oil would go down. While Pch101 is a generally a very astute commentator, I would like to point out that gas prices fall EVERY year in the fall, assuming there is not a major hurricane smashing refineries. Predicting the norm is not especially prescient, e.g. I predict it will be drought like in the Sahara next year. The true test will come late next spring. However, thanks to a collapsing global economy and with it, lower demand, prices will rise but perhaps not as much as this year. On the flip side, global oil depletion is as real as the depletion of the gasoline in your tank as you drive down the road. New wells must be found to replace old ones as they wither and die. This is not conspiracy theory, but petrochemical industry fact (ask a geologist or oil patch worker). New discoveries have paled in comparison to usage and depletion rates for decades now, and no new Saudia Arabia's have been found. The IEA, whose job it is to monitor this, have pointed out that Mexico (our #3 supplier) will be an oil importer by 2014, just as the United States, Indonesia, the UK, and Norway before them have, and depletion rates for existing wells worldwide are now averaging 8-9%, while new discoveries are replacing 2-3% of total usage. Thus, peak oil is real, a simple compounding action. Oil prices, per barrel are still 5x what they were 10 years ago. We'll see $200/barrel before we see $20/barrel again, barring a complete economic collapse, and I'll bet a year's pay on it. So the real question becomes.....can a crappy global economy continue to drive down demand faster than depletion rates drive down supply? Film at 11.

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Islander800 That is the best 20-year-on update of the Honda Element that I've ever seen. Strip out the extraneous modern electronic crap that adds tens of thousands to the price and the completely unnecessary 400 pd/ft torque and horse power, and you have a 2022 Honda Element - right down to the neoprene interior "elements" of the Element - minus the very useful rear-hinged rear doors. The proportions and dimensions are identical.Call me biased, but I still drive my west coast 2004 Element, at 65K miles. Properly maintained, it will last another 20 years....Great job, Range Rover!
Dennis Howerton Nice article, Corey. Makes me wish I had bought Festivas when they were being produced. Kia made them until the line was discontinued, but Kia evidently used some of the technology to make the Rio. Pictures of the interior look a lot like my Rio's interior, and the 1.5 liter engine is from Mazda while Ford made the automatic transmission in the used 2002 Rio I've been driving since 2006. I might add the Rio is also an excellent subcompact people mover.
Sgeffe Bronco looks with JLR “reliability!”What’s not to like?!
FreedMike Back in the '70s, the one thing keeping consumers from buying more Datsuns was styling - these guys were bringing over some of the ugliest product imaginable. Remember the F10? As hard as I try to blot that rolling aberration from my memory, it comes back. So the name change to Nissan made sense, and happened right as they started bringing over good-looking product (like the Maxima that will be featured in this series). They made a pretty clean break.
Flowerplough Liability - Autonomous vehicles must be programmed to make life-ending decisions, and who wants to risk that? Hit the moose or dive into the steep grassy ditch? Ram the sudden pile up that is occurring mere feet in front of the bumper or scan the oncoming lane and swing left? Ram the rogue machine that suddenly swung into my lane, head on, or hop up onto the sidewalk and maybe bump a pedestrian? With no driver involved, Ford/Volkswagen or GM or whomever will bear full responsibility and, in America, be ambulance-chaser sued into bankruptcy and extinction in well under a decade. Or maybe the yuge corporations will get special, good-faith, immunity laws, nation-wide? Yeah, that's the ticket.