Fighting Gas prices : will this work?

[prlundberg]

...whether biofuels are an answer depends on a couple things.

1)source. Like I mentioned above, corn isn't a good answer because of the impact it will have in other areas. Switchgrass may be a better answer because it will grow in about any soil and has no other real economic impact (we don't use it for food or feed generally). Other bio-oils (soybean oil, grapeseed oil, etc.) can be a better answer due to higher energy content and multiuse.

I guess the point I was trying to make is everytime you use farm land to grow fuel you are using land that is typically used for food, regardless of what you are growing on it.

I just don't believe we can grow all or most of the fuel we need without having a dramatic negative affect on food production and/or prices. To some extent, that's exactly what farmers need today. But it could cause problems down the road.

Like you said, it can help out in the short term, but we need to keep looking at other options.

Hopefully people don't view this as a political discussion.

[ragswl4]

I agree that this will not work for the reasons already given. I believe that this is nothing more than a free market economy at work. Supply and demand is driving the price and as I have said on this subject before, the price of gas will continue to rise until we are paying what the rest of the developed world is paying.

Gas in Japan has been over $5.00 a gallon for over 20 years and they do everything possible to discourage people from driving. People still drive and that's not all, every freeway is a toll road and you have to pay through the nose every time you go somewhere and once you get there, get ready to pay again to park, cause its so crowded there is no such thing as free parking. In comparison, we got it pretty good.

The government is wasting its time trying to persuade the oil companies to do anything. Instead we need alternative energy, not only for cars but for heating and electricity. Won't happen in my lifetime, too much money at stake, in the form of consumer spending and TAXES!!!!! As always it will take a crisis before we see action, by anyone.

[Russianwolf]

http://www.msnbc.msn.com/id/18700750/from/RS.3/

An interesting article from MSN.

[Russianwolf]

I guess the point I was trying to make is everytime you use farm land to grow fuel you are using land that is typically used for food, regardless of what you are growing on it.

I just don't believe we can grow all or most of the fuel we need without having a dramatic negative affect on food production and/or prices. To some extent, that's exactly what farmers need today. But it could cause problems down the road.

Like you said, it can help out in the short term, but we need to keep looking at other options.

Hopefully people don't view this as a political discussion.

I see your point, but land has to be cycled for food production. If you keep growing corn on the same land, all the nutrients leach out of the soil and you won't be ab;e to grow corn again for a long time. Some plants can grow on poor soil that can't be used for food production (either short term due to crop rotation, or long term just bad soil not suited for food production), that's when they should be growing things that can be used as alternatives such as the Switchgrass I mentioned.

[Ed62]

I'm a little surprised nobody has mentioned electric powered cars. It's true, they're not ready to serve the needs of many (most?) people, but it shouldn't take too long to get there.

Also worth taking a look at, are the solar powered cars. We've had the technololgy for many years, but it's always been put on the back burner, and nothing much has come of it. When will we wake up? It could be very cheap transportation.

Ed

[Kristofor]

And I am in the minority. I can't wait to see $5/gallon gas. Because that's what it's going to take before consumers start demanding better milage and alternatives.

Well... Gas was $3.39 on my way home from work today. Going up %50 to top $5 would have little impact on most folks driving just like the %50 increase from $2 to $3 didn't nor the 50% increase from $1.20 to $1.80. Look at miles driven per person for the last 20 years.

Mobility is highly valuable. Time is highly valuable. Utility is highly valuable. Comfort is highly valuable.

People appear to care (somewhat) more about mileage when fuel is more expensive but unless there's a real alternative that doesn't require sacrifices to mobility, time, utility, and comfort that adoption will be far slower than if there were natural incentives of a superior product...

[LCHIEN]

Well... Gas was $3.39 on my way home from work today. Going up %50 to top $5 would have little impact on most folks driving just like the %50 increase from $2 to $3 didn't nor the 50% increase from $1.20 to $1.80. Look at miles driven per person for the last 20 years.

Mobility is highly valuable. Time is highly valuable. Utility is highly valuable. Comfort is highly valuable.

People appear to care (somewhat) more about mileage when fuel is more expensive but unless there's a real alternative that doesn't require sacrifices to mobility, time, utility, and comfort that adoption will be far slower than if there were natural incentives of a superior product...

They do care somewhat about gas mileage but given that a $1 per gallon increase will cost them maybe $500-700 this year versus having to scrap or sell at a loss a car that still has five useful years of life left (maybe worth $10,000) and lay out $10,000 or a new loan for a new car they're going to keep driving that older car - simple economics.

[Kristofor]

They do care somewhat about gas mileage but given that a $1 per gallon increase will cost them maybe $500-700 this year versus having to scrap or sell at a loss a car that still has five useful years of life left (maybe worth $10,000) and lay out $10,000 or a new loan for a new car they're going to keep driving that older car - simple economics.

That explains why the changes would be slow... But in the last 25 years fuel economy has gone up ~7%, while car prices have increased over %200. That tells me that over time there has been little customer demand for fuel economy.

It would make sense that as prices keep going up that will probably change somewhat (see: Prius demand), but I'm not expecting our largish American families of 6'+, 250Lb.+ people driving around in fleets of LeCars any time soon.

[Russianwolf]

They do care somewhat about gas mileage but given that a $1 per gallon increase will cost them maybe $500-700 this year versus having to scrap or sell at a loss a car that still has five useful years of life left (maybe worth $10,000) and lay out $10,000 or a new loan for a new car they're going to keep driving that older car - simple economics.

I agree, but I think the higher prices will give the people buying new cars an incentive to ask for more for their money.

Case in point. Nissan just announced that they will be selling an Deisel version of the Maxima here soon. Jeep has the Deisel Grand Cherokee, and had the Liberty selling as fast as they could stock them.

Not everyone will buy a new car due to the gas prices. I for one will not be giving up my Jeep Gladiator. Yeah it sucks down about 9 mpg, but It would take me 5 years at 15k per year to match the cost of a used truck. Add to that that I use it to commute to the train station and run local erands, I might but 2k per year on it.

Did a quick bit of research. There are 300m people in America. There are about 17m car/trucks sold each year. If you estimate that 225m of those people are of driving age/car buying age then on average everyone buys a new car every 13 years. Now obviously some people hold on to cars alot longer than 13 years and others ONLY buy used cars. I would be curious to see how many people buy cars every 3 (warranty expires) or every 5 (loan is paid off).

[billwmeyer]

I never buy from Exxon, of course much of that is because there is no local Exxon station.

I agree that corn is not the answer, but it is part of the answer. It is going to take a lot of different solutions to get THE answer. Taking acres away from food is not a big deal at this time. We export millions of bushel of corn and milo each year. The stockman has taken a hit though, the increased price of corn has affected profits, especially for the dairyman.

As far as cutting gasoline consumption, I am among those that have almost no place to cut. I would guess that 95% of my fuel usage is to work and back. My wife and I ride together as we work near each other. The main waste of fuel, I suppose is the occasional pleasure trip that we take, and that doesn't happen often enough.

I disagree slightly as to the free market economy arguements. It is not totally a free market economy in the regards that the refinery situation is reaching monopoly standards. Big oil has just been getting bigger, and there is not enough refineries, or refinery competition. Also profit margins have been skyrocketing for big oil. If profit margins were static or were showing modest gains, then I would agree with the free market statements. You might notice that the price of crude oil has not risen in proportion to the price of gasoline, and that is because of the refinery situation. Yes it is supply and demand, but why should big oil build more refineries at this point. I understand the problems with pollution control and environmental problems that makes building refineries more difficult, but I don't believe that is the only reason that new refineries are not being built.

Would boycotting Exxon have an affect? Well if by some miracle, a significant boycot were to take affect, I think that it could have a minor impact. If Exxon were losing sales significantly, they might maybe as a last resort fight back by lowering their price to entice consumers. This would be reminescent of the gas wars that used to happen in the 60's and early 70's. Do we have a chance at doing this? Not a chance in this world.

Bill

[dlminehart]

Bill, the corn exports to places like Mexico ARE a big deal to them, given corn's role as a staple in their diet. With less corn available to them, and at a significantly higher price, and with few obvious substitutes, some consequences can be anticipated. Among other things, we can expect a continuing and possibly increasing uptick in the number of folks feeling pressured by hunger to slip across our southern border. I suspect that, once here, they'll be driving larger, older, less fuel efficient vehicles, and further increasing the pressure on prices at our pumps.

Re others' comments about switchgrass: all conjecture at this point, as the biotech necessary for converting cellulose to ethanol has yet to be moved to a commercially viable stage. Hence our sticking with converting corn sugar, and (especially in Brazil) cane sugar (much more efficient), to ethanol. Midwestern farm interests are keeping high subsidies on corn, and preventing our substitution of sugar cane as an ethanol source.

[billwmeyer]

David,

I agree with you that exports for food to other countries are a big deal to them. However, I was just stating the fact that in the U. S. it is not an issue at this time. Internally, we are not in a food or fuel situation and nowhere near it. I won't disagree that illegal aliens will probably be driving older and less fuel efficient vechicles, especially in areas like this where there is no mass transportation.

Most of our exports are for animal feed, and I believe that Japan is still our largest trading partner for corn and milo.

When corn is converted to ethanol, one of the by products is distillers grain. This is an animal feed ingredient, so even after the ethanol is produced, there is still a viable feed product and a marketable commodity.

Even with all of our production of grain in this country, we still import grain and grain products. This is quite evident with the problem we are having with recalled pet food, where Chinese imports of wheat and rice gluten were contaminated with melamine. This really is off topic, but interesting never the less. I wish that pet food users would protest the importation of pet food ingredients after this.
Bill

[ejs1097]

Back to the boycotting Exxon topic for a moment. After some thought, I came to realize I've been boycotting Exxon for close to 10 years now. Why? They are always 5 cents higher then their neighbors! I recall using an Exxon once in that time as I was pretty dry and traveling on vacation. Usually a lone Exxon means cheaper gas closer by and I will try to find it.

I guess my Supply/Demand/Cost 10 year boycott hasn't had any effect.

[vaking]

Try to think globally - the planet is becoming one small place.
There are 2 types of countries in the world - developed and developing (not yet developed). The main difference between the 2 types - energy consumption per capita in developed countries is about 5 times that of developing countries. So far the combined population of developed countries is relatively small. That is because largest countries (China, India) are still developing. China and India combined account for about 50% of world population and that is several times more than all developed countries today put together. China and India are developing fast and are expected to become developed in the next 10 years. That means that consumption of energy in the world in the next ten years will increase several times and this will happen regardless of what population in US or even all developed countries will do about it. Scientists estimate that oil supplies on the planet will run completely out in about 40 years, natural gas supply - in 65 years and coal - in 150 years. If you think gas is becoming expensive now - you have seen nothing yet. I believe that on that scale there is only one real source of alternative fuel. Scary as it is - it is nuclear energy. We can talk all we want about biofuel or wind power but the real options are simple - learn to use safely nuclear energy or go back to 18th century life style when human race was not dependent on fossil fuel.

[LCHIEN]

Back to the boycotting Exxon topic for a moment. After some thought, I came to realize I've been boycotting Exxon for close to 10 years now. Why? They are always 5 cents higher then their neighbors! I recall using an Exxon once in that time as I was pretty dry and traveling on vacation. Usually a lone Exxon means cheaper gas closer by and I will try to find it.

I guess my Supply/Demand/Cost 10 year boycott hasn't had any effect.

Gasloine station margins historically have been notoriously low - I think around 3-5 cents per gallon. Compared with typically (depending upon state, 50-60-or 70 cents per gallon rroad use taxes) and the rest paying for the wholesale gasoline price.

They have made profit on the convenience store.

So if they have no convenience store, a 5 cent higher price that cuts traffic in half is still profitable.