Oil price hedging...
10-12-2008, 04:04 PM
#21
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Joined APC: Nov 2006
Position: 767 FO
Posts: 8,047
Toyota is THE world leader in automobile production PERIOD!
Toyota build cars to order. If large trucks are ordered, they will be built. Traditionally, US consumers didn't value fuel efficiency in their vehicles.
If US oil consumption was merely a function of its productivity. there surely must be other issues that limit the nation's production possibilities frontier when compared to other nations.
The US goverment has charged auto makers with the task of producing fuel efficient vehicles in the coming years. Given the millions of vehicles registered in the US, clearly this will have a huge impact on demand for oil. Sadly, this could have been done long ago
If you reduce demand for oil in the US, you will see a very significant reduction in world demand.
Evidently you don't see the point in this.
AL
Toyota build cars to order. If large trucks are ordered, they will be built. Traditionally, US consumers didn't value fuel efficiency in their vehicles.
If US oil consumption was merely a function of its productivity. there surely must be other issues that limit the nation's production possibilities frontier when compared to other nations.
The US goverment has charged auto makers with the task of producing fuel efficient vehicles in the coming years. Given the millions of vehicles registered in the US, clearly this will have a huge impact on demand for oil. Sadly, this could have been done long ago
If you reduce demand for oil in the US, you will see a very significant reduction in world demand.
Evidently you don't see the point in this.
AL
You make vague generalities like:
If you reduce demand for oil in the US, you will see a very significant reduction in world demand.
If America stops driving fuel inefficient cars, the problem of high oil prices will go away.
What does that mean. If we get 10% better mileage the world will reduce their demand for oil by 10%?
Everything you said has some truth to it. You intentionaly blow off the supply side of the supply and demand equation; but my only real objection is everyone here switching to mini coopers will not solve the problem of high oil prices.
10-12-2008, 05:19 PM
#22
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Joined APC: Jun 2007
Posts: 1,045
I see the point perfectly clear. Toyota builds the vehicles people want. What you don't see is someone who has to drive 50 miles in a Montana winter may want a different vehicle than someone who wants to drive to the subway station.
You make vague generalities like:
If you reduce demand for oil in the US, you will see a very significant reduction in world demand.
If America stops driving fuel inefficient cars, the problem of high oil prices will go away.
What does that mean. If we get 10% better mileage the world will reduce their demand for oil by 10%?
Everything you said has some truth to it. You intentionaly blow off the supply side of the supply and demand equation; but my only real objection is everyone here switching to mini coopers will not solve the problem of high oil prices.
You make vague generalities like:
If you reduce demand for oil in the US, you will see a very significant reduction in world demand.
If America stops driving fuel inefficient cars, the problem of high oil prices will go away.
What does that mean. If we get 10% better mileage the world will reduce their demand for oil by 10%?
Everything you said has some truth to it. You intentionaly blow off the supply side of the supply and demand equation; but my only real objection is everyone here switching to mini coopers will not solve the problem of high oil prices.
So..................If a single consumer demands 1/4 of the total supply, you can't see how a change in their behavior would have a significant affect on total supply?
According to AAA, US demand has already fallen and Americans are driving less. Do you believe that, while other factors exist, this has nothing to do with the current price of oil?
There's just a few options here. Either reduce demand, increase supply, or both.
Or, do nothing and hope for the best.
AL
Last edited by alvrb211; 10-12-2008 at 05:40 PM.
10-12-2008, 05:42 PM
#23
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Joined APC: Nov 2006
Position: 767 FO
Posts: 8,047
No I don't agree our cars are gas guzzlers. Generally speaking; we have larger families, we live further from public transportation, our population density is less than anyone else (making public transportation less feasable), and since we travel farther we like to go faster. All of these things lead to an increased demand for larger vehicles.
Yes if we all increase our fuel milage tomorrow we will use less of the worlds resources on a per capita basis. That does not mean world wide demand will go down significantly. It just means that some power plant in East Bumfudgestan using coal or biofuel will now be able to shift back to oil. Oil is a valuable and efficient commodity, as long as there is a supply demand will rise to use it all up.
Again my only comment was based on your question "who said sole cause". I pointed out you did when you said: If America stops driving fuel inefficient cars, the problem of high oil prices will go away. Doesn't that sound to you like you are saying the cause of high oil prices is US gas mileage? Our 25% use of world supply is only partially explained by gasoline.
Yes if we all increase our fuel milage tomorrow we will use less of the worlds resources on a per capita basis. That does not mean world wide demand will go down significantly. It just means that some power plant in East Bumfudgestan using coal or biofuel will now be able to shift back to oil. Oil is a valuable and efficient commodity, as long as there is a supply demand will rise to use it all up.
Again my only comment was based on your question "who said sole cause". I pointed out you did when you said: If America stops driving fuel inefficient cars, the problem of high oil prices will go away. Doesn't that sound to you like you are saying the cause of high oil prices is US gas mileage? Our 25% use of world supply is only partially explained by gasoline.
Last edited by FDXLAG; 10-12-2008 at 05:49 PM.
10-12-2008, 06:43 PM
#24
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Joined APC: Sep 2006
Position: Retired
Posts: 3,717
FDXLAG,
As John McEnroe would say "You can't be serious!" Of course he'd say that about your statement that "we don't produce cars that are gas guzzlers." Not only are we the worlds leader in producing gas guzzling cars, but we've taken it a step further by following them with low milage SUV's and to add insult to injury, we are the proud producers of the Hummer (and I'm not talking airstarts here.) And if it weren't for the Japanese and the Koreans, our cars would still be giving us milage in the mid-teens.
I also don't agree with you on why we've migrated to these ever larger vehicles or why we don't avail ourselves of public transportation. Face it, the United States has had a love affair with the automobile since Al Gore invented them (and Ford mass produced them), way back in the early 1900's. Since then, we've produced larger, heavier, and ever-decreasing MPG's, until the government stepped in and forced Detroit to meet fuel economy standards. Then the cars got smaller, because Detroit really didn't want to invest in technology or development, so instead they just lightened up their vehicles, and got better milage that way. Then after a time, they made more efficient motors, and so again the vehicles themselves got larger, thereby reducing the efficiencies gained by the more efficient motors.
We have to face the reality that there will come a time when the earths' remaining oil supplies will be too expensive to use to propel our cars. Hopefully by then, we'll have mastered grid-plugins, to take advantage of cheap coal produced electricity and lithium-ion battery technology. I don't know what I'll do with my antique Porsche, but it will be a concern, if not for me, than for my son. So increasing our fuel milage will help to delay the inevitable. I agree with you that doing so will not decrease the worlds demand for oil, but it certainly can't hurt.
The price of oil has dropped, significantly, over the past few weeks. There are multiple reasons for that. The primary reason, if you can believe it, was the housing market bust. That was followed by the banking industry going bust, and that was followed by the bust on Wall Street, which was followed by the collapse of the rest of the worlds' financial markets. That of course was followed by the discourse that has flowed like volcanic magma, throughout the industrialized world, thereby leading to a devaluation of all major world financial institutions, thereby producing high anxiety throughout the financial world. And as we all know (Finance 101), when the world is uneasy, the smart money is put into U.S. Dollars, thereby strengthening the US Dollar. And we all know that oil is primarily bought and sold in US Dollars. Therefore, the price of oil has gone down, because the dollar has gone up.
A final thought about your statement "Oil is a valuable and efficient commodity". I have a 2 year old oil fired hot air furnace. We have it cleaned and tuned each September, in anticipation of the upcoming heating season. The best this furnace will do is to be about 83% efficient, while a LNG or propane furnace of the same BTU output is about 93-95% efficient.
JJ (WD)
As John McEnroe would say "You can't be serious!" Of course he'd say that about your statement that "we don't produce cars that are gas guzzlers." Not only are we the worlds leader in producing gas guzzling cars, but we've taken it a step further by following them with low milage SUV's and to add insult to injury, we are the proud producers of the Hummer (and I'm not talking airstarts here.) And if it weren't for the Japanese and the Koreans, our cars would still be giving us milage in the mid-teens.
I also don't agree with you on why we've migrated to these ever larger vehicles or why we don't avail ourselves of public transportation. Face it, the United States has had a love affair with the automobile since Al Gore invented them (and Ford mass produced them), way back in the early 1900's. Since then, we've produced larger, heavier, and ever-decreasing MPG's, until the government stepped in and forced Detroit to meet fuel economy standards. Then the cars got smaller, because Detroit really didn't want to invest in technology or development, so instead they just lightened up their vehicles, and got better milage that way. Then after a time, they made more efficient motors, and so again the vehicles themselves got larger, thereby reducing the efficiencies gained by the more efficient motors.
We have to face the reality that there will come a time when the earths' remaining oil supplies will be too expensive to use to propel our cars. Hopefully by then, we'll have mastered grid-plugins, to take advantage of cheap coal produced electricity and lithium-ion battery technology. I don't know what I'll do with my antique Porsche, but it will be a concern, if not for me, than for my son. So increasing our fuel milage will help to delay the inevitable. I agree with you that doing so will not decrease the worlds demand for oil, but it certainly can't hurt.
The price of oil has dropped, significantly, over the past few weeks. There are multiple reasons for that. The primary reason, if you can believe it, was the housing market bust. That was followed by the banking industry going bust, and that was followed by the bust on Wall Street, which was followed by the collapse of the rest of the worlds' financial markets. That of course was followed by the discourse that has flowed like volcanic magma, throughout the industrialized world, thereby leading to a devaluation of all major world financial institutions, thereby producing high anxiety throughout the financial world. And as we all know (Finance 101), when the world is uneasy, the smart money is put into U.S. Dollars, thereby strengthening the US Dollar. And we all know that oil is primarily bought and sold in US Dollars. Therefore, the price of oil has gone down, because the dollar has gone up.
A final thought about your statement "Oil is a valuable and efficient commodity". I have a 2 year old oil fired hot air furnace. We have it cleaned and tuned each September, in anticipation of the upcoming heating season. The best this furnace will do is to be about 83% efficient, while a LNG or propane furnace of the same BTU output is about 93-95% efficient.
JJ (WD)
10-12-2008, 07:13 PM
#25
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Joined APC: Nov 2006
Position: 767 FO
Posts: 8,047
Gas guzzler is in the eye of the beholder. You New Englanders just don't understand why the people in Tx or Mt wont take the subway to work. Why don't they take the bus to the Farmers Market like the rest of us. What do you need to do 70 for when the most you can do is 55 on the west side hwy.
If your oil burner is so inefficient why don't you replace it? Maybe delivering the LPG is just a little inconvenient. Should that be factored into efficiency, nah why include idiotic factors like ease of use.
I am not against better MPGs or alternative fuels, just don't mandate them. All of the above is a great solution. Because what works for the know it alls in the North East doesn't work elsewhere.
Again I didn't disagree with AB, just said his demand side solutions alone will not work. Remeber it is government that brings you ethanol, where it takes 1.4 gallons of oil to produce 1 gallon of ethanol so you can go 10% fewer miles.
What a weird coincidence, we fell in love with the automobile at just about the same time we become the greatest economic force in the history mankind. Go figure.
If your oil burner is so inefficient why don't you replace it? Maybe delivering the LPG is just a little inconvenient. Should that be factored into efficiency, nah why include idiotic factors like ease of use.
I am not against better MPGs or alternative fuels, just don't mandate them. All of the above is a great solution. Because what works for the know it alls in the North East doesn't work elsewhere.
Again I didn't disagree with AB, just said his demand side solutions alone will not work. Remeber it is government that brings you ethanol, where it takes 1.4 gallons of oil to produce 1 gallon of ethanol so you can go 10% fewer miles.
What a weird coincidence, we fell in love with the automobile at just about the same time we become the greatest economic force in the history mankind. Go figure.
Last edited by FDXLAG; 10-12-2008 at 07:20 PM.
10-13-2008, 05:10 AM
#27
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Joined APC: Nov 2006
Position: 767 FO
Posts: 8,047
You got me there
Actually a Nissan Maxima that gets about 28 Mpg and a ford ranger for utility work (22 MPG). Please don't send the eco police after my ranger, my dog woould never get to go anywhere. A hummer would be nice but can't see paying for the insurance. Anything else you want to know?
10-13-2008, 05:22 AM
#28
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Joined APC: Sep 2006
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Posts: 3,717
FDXLAG,
Perhaps $10 a gallon for regular gas (and $15 or $20 for premium) might be the way to persuade you that driving a more fuel efficient vehicle is in your best interest, as well as the interests of the rest of the world. Perhaps not. But fuel efficiency is certainly important, because we've got to make what petroleum there is left in this world, last as long as we can, so that in the meantime we can develop the alternative means of powering our vehicles, machines, ships, etc, etc. During the same time, we've got to update the infrastructure so that these alternative fuels can be delivered to homes and businesses in a more efficient and transparent manner. We've got a gas line running under the middle of the street where I live, but I choose to keep the oil system. Probably stupid, but when you consider the payback of the cost of the new gas system, over time, it's just too many years and I don't expect to be able to recoup my investment. Again, probably stupid, but no one ever said us pilots are smart.
I do understand why the good folks in Texas and Montana (as well as the rest of the country) don't take the subway to work. It's because the subway doesn't stop there. As well, I understand why folks in places like that drive at the speed they do. Hell, you've not gone fast until you're doing 85 in a 60, with 50,000 of your closest friends within 2 bumper lengths of your car, like we have here in the North East on a daily basis. New York City is, of course, an animal of a different color, and believe you me, when you're doing 55 on the West Side Highway, you do feel like you're doing 70.
I agree with you that if tomorrow, all vehicles driven here in the US, were to magically get 75 miles per gallon, the worldwide oil situation would not improve very much. But you gotta get rid of that Hummer. I mean Damn, Dude!
JJ (WD)
Perhaps $10 a gallon for regular gas (and $15 or $20 for premium) might be the way to persuade you that driving a more fuel efficient vehicle is in your best interest, as well as the interests of the rest of the world. Perhaps not. But fuel efficiency is certainly important, because we've got to make what petroleum there is left in this world, last as long as we can, so that in the meantime we can develop the alternative means of powering our vehicles, machines, ships, etc, etc. During the same time, we've got to update the infrastructure so that these alternative fuels can be delivered to homes and businesses in a more efficient and transparent manner. We've got a gas line running under the middle of the street where I live, but I choose to keep the oil system. Probably stupid, but when you consider the payback of the cost of the new gas system, over time, it's just too many years and I don't expect to be able to recoup my investment. Again, probably stupid, but no one ever said us pilots are smart.
I do understand why the good folks in Texas and Montana (as well as the rest of the country) don't take the subway to work. It's because the subway doesn't stop there. As well, I understand why folks in places like that drive at the speed they do. Hell, you've not gone fast until you're doing 85 in a 60, with 50,000 of your closest friends within 2 bumper lengths of your car, like we have here in the North East on a daily basis. New York City is, of course, an animal of a different color, and believe you me, when you're doing 55 on the West Side Highway, you do feel like you're doing 70.
I agree with you that if tomorrow, all vehicles driven here in the US, were to magically get 75 miles per gallon, the worldwide oil situation would not improve very much. But you gotta get rid of that Hummer. I mean Damn, Dude!
JJ (WD)
Last edited by Jetjok; 10-13-2008 at 05:30 AM.
10-13-2008, 06:23 AM
#29
done, gone skiing
Joined APC: May 2005
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Posts: 1,602
JetJok I think you hit it right on. We need to be more efficient but (historically) we (in the US) have had a good deal on energy. Recent events have shown that if the pain gets bad enough we will make adjustments to our driving habits and it will have a (marginal) effect on energy consumption and fuel prices.
The problem is volatility in pricing energy and the lack of volatility in structural consumption. By example, we can drive less if the price of gas gets out of hand (say $4 a gallon) and even less at higher prices, but we can't make that Hummer we bought 3 years ago turn into a Prius just because we wish (we could). While individually we can put our gas guzzlers behind us, by selling them on the cheap, we just pass off a "problem child" to the next guy. In a macro sense, until that Hummer meets the crusher, its problem to us all.
As we live in a free market society, with minimal government intervention in pricing, and no affective national energy policy, we have surrendered our ability to control our energy destiny to the free market and OPEC. Of yes OPEC, the non free market answer a sizable portion of the oil producing nations use to effect oil pricing. While we have no energy policy, Saudi Arabia, Iran, and Venezuela use coordinated efforts to control supply and set (downward) price caps.
With the history of not one, but two deliberate oil embargoes in the 1970's, we still lack any national effort to control our own energy destiny. Yes, both presidential candidates proclaim they will promote an energy policy, but it takes Congress to write the laws and I see lots of political reasons that some members will not support a comprehensive energy policy. Our (possibly) future VP comes from a state where oil production (and the taxes it raises for local distribution) is paramount to the well being of the local population. Same mind set in other energy producing states. Will we have an energy plan that will doing anything to promote conservation and alternatives, though the free market system, if if has the affect of reducing oil consumption??
Check back a year from now. We are guaranteed a new administration (that proclaimed during the election) that they would move America in a different (energy) direction. We'll see how effective they're leadership is or how sincere they were about addressing the problem of 30+ years of no energy policy.
The problem is volatility in pricing energy and the lack of volatility in structural consumption. By example, we can drive less if the price of gas gets out of hand (say $4 a gallon) and even less at higher prices, but we can't make that Hummer we bought 3 years ago turn into a Prius just because we wish (we could). While individually we can put our gas guzzlers behind us, by selling them on the cheap, we just pass off a "problem child" to the next guy. In a macro sense, until that Hummer meets the crusher, its problem to us all.
As we live in a free market society, with minimal government intervention in pricing, and no affective national energy policy, we have surrendered our ability to control our energy destiny to the free market and OPEC. Of yes OPEC, the non free market answer a sizable portion of the oil producing nations use to effect oil pricing. While we have no energy policy, Saudi Arabia, Iran, and Venezuela use coordinated efforts to control supply and set (downward) price caps.
With the history of not one, but two deliberate oil embargoes in the 1970's, we still lack any national effort to control our own energy destiny. Yes, both presidential candidates proclaim they will promote an energy policy, but it takes Congress to write the laws and I see lots of political reasons that some members will not support a comprehensive energy policy. Our (possibly) future VP comes from a state where oil production (and the taxes it raises for local distribution) is paramount to the well being of the local population. Same mind set in other energy producing states. Will we have an energy plan that will doing anything to promote conservation and alternatives, though the free market system, if if has the affect of reducing oil consumption??
Check back a year from now. We are guaranteed a new administration (that proclaimed during the election) that they would move America in a different (energy) direction. We'll see how effective they're leadership is or how sincere they were about addressing the problem of 30+ years of no energy policy.
10-13-2008, 06:34 AM
#30
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Joined APC: Jun 2007
Posts: 1,045
Based on average mileage,
A Honda Civic will use 8.2 barrels/year (42 combined mpg)
A Dodge Avenger will use 18 barrels/year (22 combined mpg)
The Avenger isn't a truck, SUV, or even a quality car!
But, it will keep the folks in the Middle East RICH!
AL
A Honda Civic will use 8.2 barrels/year (42 combined mpg)
A Dodge Avenger will use 18 barrels/year (22 combined mpg)
The Avenger isn't a truck, SUV, or even a quality car!
But, it will keep the folks in the Middle East RICH!
AL
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