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jayeff · 08-24-2005, 09:51 PM

The more reasonable media outlets will qualify statements about "record prices". Unfortunately, such disclaimers are usually missed and often missing.

But the reality is that until average pump prices reach $3.12 and a barrel of oil costs almost $87.00, neither pump nor barrel prices are setting new inflation-adjusted records, only nominal ones. The actual inflation-adjusted records were set between January and March 1981.

Another reality is that consumer spending on energy has declined from 9% of the total to only 6% in the past 24 years, although the US does have the dubious distinction of being the only industrialized nation whose motorists have become less energy efficient during this period. The reason is SUV's, 5% of the national fleet in 1990, but over 50% today. If we would switch to more efficient vehicles (a trend Detroit expects to accelerate sharply when pump prices go over $3 a gallon), we could reduce our consumption by 1+ million barrels a day, which should translate into a drop of more than 15% in the barrel price since the US is still by far the world's largest oil buyer.

Refining capacity is an issue and basically, without government handouts to pay for new refineries, the companies concerned are better off as things are. No-one really sees long-term pricing going anywhere but up and if Detroit is right, as prices rise, demand will fall. Comsumption doesn't need to be far below its present level for existing refining capacity (except sometimes during the spring when plants are taken offline for maintenance) to be adequate.

08-24-2005, 09:51 PM
jayeff Confirmed User Join Date: May 2001 Posts: 2,944	The more reasonable media outlets will qualify statements about "record prices". Unfortunately, such disclaimers are usually missed and often missing. But the reality is that until average pump prices reach $3.12 and a barrel of oil costs almost $87.00, neither pump nor barrel prices are setting new inflation-adjusted records, only nominal ones. The actual inflation-adjusted records were set between January and March 1981. Another reality is that consumer spending on energy has declined from 9% of the total to only 6% in the past 24 years, although the US does have the dubious distinction of being the only industrialized nation whose motorists have become less energy efficient during this period. The reason is SUV's, 5% of the national fleet in 1990, but over 50% today. If we would switch to more efficient vehicles (a trend Detroit expects to accelerate sharply when pump prices go over $3 a gallon), we could reduce our consumption by 1+ million barrels a day, which should translate into a drop of more than 15% in the barrel price since the US is still by far the world's largest oil buyer. Refining capacity is an issue and basically, without government handouts to pay for new refineries, the companies concerned are better off as things are. No-one really sees long-term pricing going anywhere but up and if Detroit is right, as prices rise, demand will fall. Comsumption doesn't need to be far below its present level for existing refining capacity (except sometimes during the spring when plants are taken offline for maintenance) to be adequate.