Quote:
Originally Posted by HungLikeJesus
Well said, TW. When gas gets to $5/gallon, people will react - there is some movement already, but not enough.
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Using perspective from the 1970s - no effort was made to innovate in American cars until gasoline prices rose to $7 per gallon in 2007 dollars. Shawnee123 - what will you do if that happens? That was late 1970s.
Oil industry analysts are asking why prices are spiking when nothing serious is ongoing. Review where the oil comes from. Even Nigeria may be on the verge of a country wide civil war. Iraq and Iran could be shutdown by military actions. Saudi Arabia could have more than half their export abilities impeded. Even Ethiopia may be drawn into regional wide war. Russia is slowly gripping their energy industry for one obvious reason. Russia must be prepared in case another cold war mentality starts. Did you notice how Europe - even Netherland and UK - are now dependent on Russian gas?
Last year, prices were high because so many providers had long term contracts. They had to hoard as much oil as possible with so many uncertainties and with long term contract requirements to fill. (And yes, many parts of the oil industry had to cover big losses as a result.)
Same situation applies this year except that more oil sources are now at risk. No, it does not look like $5 per gallon gasoline. But then it also did not look that way before it happened in the late 1970s. The fact that oil prices are rising early means prices will probably remain stable - not go to $7 per gallon of gas. Yes, an early rise of gas prices may actually be a good thing (for this year).