Fuel Prices

[Smokyroo]

Crocus,
They are here because the unions do not have a stranglehold on industry. BMW could build a plant anywhere in the US and any city or local government could toss them a bone on tax breaks in terms property tax or income tax breaks. It is clearly different offering tax breaks versus giving a company $39 billion dollars.

Why did they choose Greenville, SC? All things being equal, they did not have the head aches and hassles of the UAW. BMW's pays there employees quite well and their factory is state of the art. The South's manufacturing prowess is because of the right to work, low taxes in terms of property and income, great weather and fine universities. Funny how Saturn located in TN had to close its doors and it was not a unionized factory in the GM family. The most unionized and liberal run cities in America are also the worst cities in terms of crime, poverty, unemployment and poor performing schools. That is a fact. Detriot is like a third world country compared to most other places in America. I honestly do not understand how anybody thinks in today's global economy that the way we ran business in 1959 will still work today.

[Smokyroo]

I have another idea...those of us with IRAs and stock in the oil companies all have a say in how the company is ran, right as we are share holders. It is time we write the board of directors at these companies as shareholders and demand change as shareholders. We own the darn companies do we not? just saying.

[JimChow]

As if the price of fuel isn't high enough, here in Michigan the legislature is looking at adding more taxes to a gallon of gas and increasing the registration s fees to pay for improving our roads. Remember the old saying....fool me once.......

[Al Fresco]

The era of “cheap” oil is coming (has come) to an end. One comprehensive study that includes data on the known oil reserves from 47 of the major oil producing countries estimates that world peak oil production will occur in 2014. Other studies suggest peak oil production has already occurred, while others estimate it will occur around 2020. While the timing is somewhat uncertain, most petroleum geologists concur that the beginning of a permanent and continuous decline in worldwide oil production is likely to occur sometime within the next decade.

It is estimated that approximately one-half of the world’s known petroleum reserves still remain in the ground and below the sea. Therefore, some argue that there is no cause for concern because there are still plenty of potential sources of oil available to meet demand. The problem arises from the fact that the more easily extractable and more readily refined (i.e., cheaper) petroleum resources are inexorably declining. The energy return on energy invested (EROEI) measures the number of energy units obtained from each energy unit invested in the production process. In the early days of oil production, the EROEI was about 100. In other words, 100 units of energy were obtained per energy unit invested. That number has steadily declined over the past century to the point that the EROEI for oil produced in Saudi Arabia is now about 10. The EROEIs for oil production from tar sands and oil shale (often touted as the panacea for our energy problems) are approximately 5 and 3, respectively. The lower the EROEI, of course, the higher the cost for the finished product. Unfortunately, even if the Keystone XL pipeline were to be constructed and carry oil produced from Canadian tar sands, it would not transport us back to the days of anything close to $2 a gallon gasoline. Most of the low-hanging fruit has already been picked.

The price of gasoline is not increasing because a lack of drilling has dried up our supplies and U.S. has run out of oil. In fact, as has been mentioned, this country is now producing a surplus and the oil companies are actually selling U.S. produced and refined petroleum products (including gasoline) on the export market. For those calling for a free market solution, it should be kept in mind that the price of oil is set by the oil companies and is determined primarily by world market forces. Oil companies are now selling domestically produced petroleum products on the world market where they command higher prices. It would be nice if they would sell all those products in this country to help increase our supplies and reduce prices here, but being nice is, unfortunately, often not best for the bottom line. In addition, rampant speculation in petroleum futures is estimated to now account for $8 to $10 of the cost of a barrel of crude oil. This price manipulation is currently driven by fears about the impact a Middle East conflict might have on the availability of crude. The free market is working all right. Regrettably, it is often working to raise our gas prices.

Frankly, there is very little politicians of any stripe in this country can do to reverse the long-term trend of gas price increases. The fact that the world’s appetite for oil is rapidly increasing at a time when the “cheap” supplies are being exhausted renders an expedient political solution virtually impossible. . With increasing demand for petroleum products from emerging nations such as China and India, it is going to become increasingly more difficult for supply to meet demand. The average global oil consumption growth rate before the recession was around 2% annually (1995-2005). At this rate, the world would need 50% more oil by 2025. Obviously, such an increase (if it could possibly be sustained) would only come at a greatly elevated price.

Can we count on the discovery of new “cheap” oil sources to bail us out of this predicament? Not likely. The worldwide discovery of oil peaked around 1965 and has been on a downward trajectory since then. According to industry consultants IHS Energy, 90% of all known reserves are currently in production. The likelihood of the discovery of a significant number of major fields in the future is remote. To put things into perspective, even if all the known oil reserves in the Arctic National Wildlife Reserve in Alaska were developed (which would require a ten-year lead time) it would produce less than 1% of the oil the world currently consumes.

RVers should be aware of the near certainty of increasing fuel costs in the coming years and factor them into their future travel plans. However, in my opinion, it boils down to a matter of setting priorities. My wife and I prefer the camping experience to other diversions (foreign travels, cruises, etc.) that are often considerably more expensive. Undoubtedly fuel prices will continue to rise. But that is not going to prevent us from partaking in an activity we both thoroughly enjoy and which will continue to be less costly than many of the more highfalutin alternatives.

[Crusader]

Originally Posted by Smokyroo

I have another idea...those of us with IRAs and stock in the oil companies all have a say in how the company is ran, right as we are share holders. It is time we write the board of directors at these companies as shareholders and demand change as shareholders. We own the darn companies do we not? just saying.

The oil companies don't need your money invested in them. You need them. What they need is competition. May it be natural gas, solar, battery or hot air........

[Oakman]

Here's my idea for lower gas prices. Quit EXPORTING oil from the U.S.

[b1b1das]

There are still areas where known reservoirs still have a relatively high (given today's standards) EROEI. However, due to bureaucracy we are unable to exploit those areas...

Just my 2 pennies...

[Al Fresco]

b1b1das,

While bureaucratic hurdles to drilling may account for some of the increase in gasoline prices, they would appear to be a rather minor component. The number of oil drilling rigs working in this country has increased substantially (up 60%) during the last four years. The U.S. is producing more oil today than any time in the last eight years at a time when U.S. demand is at a 15-year low. Furthermore, the oil companies currently have leases on tens of millions of acres and are sitting on thousands of drilling permits they are not using. The problem is not so much a lack of drilling opportunities as it is an apparent reluctance on the part of the oil companies to explore what they have.

Another factor contributing to the current high gas prices is the closure of a number of U.S. refineries. Because of the rise in crude oil prices and decrease in demand for gasoline in this country, oil companies have not been able to pass enough of the higher raw product costs on to their customers to make some refinery operations profitable. Therefore, they have shut them down. (A fire at one of the larger west coast refineries has exacerbated the problem.) This, of course, decreases supplies of refined products and drives up the price.

Proven oil reserves in the U.S. are about 21 billion barrels. According to the Department of Interior, the total volume of undiscovered technically recoverable oil resources in all the U.S. (including the continental shelves but excluding oil shales) is estimated to be some 134 billion barrels. Some of these resources, while technically recoverable, would no doubt have rather unfavorable EROIEs. The daily consumption of petroleum products in this country is approximately 20 million barrels a day. If all of these resources could be developed, they would supply the U.S. needs for only about 20 years and then they would be completely depleted. What then?

[b1b1das]

Al,

Having been in the oil industry for the past 22 years, I could continue this conversation / debate with you for quite some time. I agree with many of your points. However, this is not what this thread (or forum) is for. I believe that the original jest of this thread was to see how fuel prices will affect individual travel / spending plans...

[Al Fresco]

b1b1das,

Fair enough. Since various reasons were being offered to explain the higher prices and various solutions were being offered, I though some participants in the forum might be interested in a more comprehensive analysis of the subject. I was initially unsure of what was responsible for the current price increases myself and thought I would share the results of some of my research on the topic.

At least it is reassuring to know that someone with your expertise in the workings of the oil industry agrees with many of my points. I apologize for any off-topic comments I may have made. Be that as it may, I think it is important for RVers to plan for the fact that “cheap” oil is a thing of the past and that gas prices will most likely trend higher (perhaps much higher) in the future.

[DDC]

Any one remember the last time scientists predictions were corrector have they ever been correct .I remember as a kid in the late 50s being told that nuclear energy would be so cheap it would cost to much to send out bills. Another thought the ozone whole we were all going to be cooked, oh acid rain geezzz I could go on............

[b1b1das]

Al,

IMHO you are spot on with most of your research. You definitely have a thorough understanding of current events relating to this issue. I am not, nor was I trying to deter your conversation. I was simply trying to refrain from steering my posts toward a debate over the causes. I found your posts to be a good read.

Maybe after defending the oil companies for the last 10+ years (at least the ones I have been involved with), I find it somewhat of a sore subject. For that, I apologize to you. I generally have to debate or explain the challenges that we face to other people who are not aware or are uninformed. The popular opinion is that the oil companies are evil corporations because they are profiting billions of dollars and the prices of oil are sky high, putting undue strain on the majority of the working class Americans. For the most part, from what I have seen, the majority of those profits go back into developing and producing more BOE (Barrel of Oil Equivalent) reserves. The cost for exploring and then exploiting new reservoirs is astounding! It is not as if the oil companies take the money and run, it is a continual investment into future development. Sure, you have some CEO's that are making huge salaries and bonuses. But, that happens in almost any sector of successful businesses.

The truth is, we (as a consumer) have it pretty good here. As has been stated in previous posts, try buying a gallon of diesel in Europe, Canada, etc... From the "inside", things are not always rosy for the producers either. There are many factors that run up our LOE's (Lease Operating Expenses), i.e. weather, vendor prices, permitting fees, lawsuits, materials (which, BTW we only use AMERICAN MADE), equipment rates, etc... For example, in shallow water, on the Outer Continental Shelf here in the GOM (Gulf Of Mexico), a drilling rig will be on location an average of 40-60 days to drill and complete a well. This rig is costing approximately $175K to $300K a day. Simple math, on the low end, it would cost $7 million dollars for the rig to drill the well. That is not taking into account the tremendous amount of work that it took to get ready to drill in a location, Geologists, Geophysicists, Engineers (Reservoir Engineers, Drilling Engineers, Production Engineers, Construction Engineers), I could go on and on. Not every well turns out as expected, a serious drilling mistake could render the well inoperable, putting the oil company back at square one with regards to drilling. This just gets us to having a drilled well. Then comes the cost of producing it, transporting it, then refining it. I will not go into any more of the realized costs to produce oil now, as I feel it would be futile.

As for companies "sitting" on permits to drill, I find that hard to believe. They may have done a feasibility study and determined the EROEI to be too low, or as is the case in one of our leases, the technology is not refined enough yet to efficiently produce those areas. Thus, causing more money to be spent on research and development of techniques and procedures to efficiently extract the "liquid gold".

Okay, I will get off of my soapbox now. I apologize in advance if I have offended anyone with my posts.

Happy camping!

[JFM-jr]

Originally Posted by Smokyroo

Crocus,
They are here because the unions do not have a stranglehold on industry. BMW could build a plant anywhere in the US and any city or local government could toss them a bone on tax breaks in terms property tax or income tax breaks. It is clearly different offering tax breaks versus giving a company $39 billion dollars.

Why did they choose Greenville, SC? All things being equal, they did not have the head aches and hassles of the UAW. BMW's pays there employees quite well and their factory is state of the art. The South's manufacturing prowess is because of the right to work, low taxes in terms of property and income, great weather and fine universities. Funny how Saturn located in TN had to close its doors and it was not a unionized factory in the GM family. The most unionized and liberal run cities in America are also the worst cities in terms of crime, poverty, unemployment and poor performing schools. That is a fact. Detriot is like a third world country compared to most other places in America. I honestly do not understand how anybody thinks in today's global economy that the way we ran business in 1959 will still work today.

As paychecks shrink for the average middle class worker so does disposable income levels and purchasing chocolates gets scratched off the list quickly. Blaming the worker seems to be a common theme among the right wing war chest. Make no mistake the UAW took a significant haircut in this process.

Gas prices . . . . not gonna have any changes in my plans this upcoming season i'm goin camping!

[Glockfanjohn]

I find it sad that everyone blames big oil for gas prices of $4 a gallon but the same people go to Starbucks and pay $5 for a cup of coffee. You talk about record profits!!! If your looking to blame someone for high gas prices and prices (for everything at that matter) go look in the mirror. We elected all these Goverment officials who just keep taking from us (higher taxs at the pump). Also blame the EPA , all the other Goverment agencies and Unions that put restrictions, regulations, and higher cost of producing consumer products on companies so the have to charge outrages prices to make money. I hate paying high prices also. This is not a right or a left thing....this is a common sense thing. All I ask is that you think who is really to blame...all of us.

I am not changing any of my plans except those in November! Thanks for letting me vent....now I will step off my soap box. :-)

[Smokyroo]

B1,
I am fascinated with oil production and the ins and outs being a science minded and degreed guy. This entire thread is listed in an off topic section of this forum where stuff like this debated. Oil is in everything we do, and nearly everything we own and in fact take oil out of the equation much of what our campers, cars and boats are made of would not exist. It is key to our technology, materials, energy, medicine and food. Oil is not evil nor are the companies extracting it. We have a media and political class who demonize it for personal power gains nothing more.

JFM-1, I am a businessman and as such I pay taxes, payroll, hire employees, write checks to the IRS every month. Nothing is handed to me sir. What I drive and what I do has little to do with the state of the rat hole economy we are in. I do not demonize the workers of America, the problem is with the leadership of unions who blindly look out for their own power, their butts and often do not give a rats hind end to the over health of the company their employees work for. The leadership sets up a adversarial relationship pitting the worker against the management and then plays on the fear of the system they set to make the worker either dispise or loath management and have management not trust the workers. it is the leadership and poor leadership at that is the problem with unions. If unions are soo darn good and beneficial, then I ask you in states where there are right to work laws, why then are they not flourishing? They only are surving in states where they are protected by law to force all employees to join them. I wish there was a law forcing people to buy my chocolate and I would rich too like the corrupt labor leaders.

what gets me here is you have no clue as to who I am or what sacrafices my wife and I make to make sure our employees still get a paycheck. I treat the people working for me like family and there are times I do not take pay check so they can have one. Until you are in somebody elses shoes dont judge a man until you know him and you do not know me, my values or what I truly stand for. I make no assumptions about anybody here in terms like this. Perhaps you should do the same.

I did not start any of this, I was slandered because I love Toyota and the person doing it forgets that Toyota employs nearly 1 million Americans here in the US. They have the nerve to blame folks like me for the economic mess in this country. Hey build a better car and I will buy it. GM and the American auto industry only have themselves to blame for their own mess. It is called a free market. I do not pick on folks for what they drive, who they vote for and so forth. But I will defend my views when put upon.

The simple truth is energy costs are effecting all of us. They effect me alot as I have stated before. Our energy policy need not be politicized as we all need it. I do lean right but I will tell you green energy development is important as i want oil around to be able make cool stuff like my carbon fiber bicycle. However, unlike many in the media and politics, green energy is not now. It does not power airplanes, or trains, or cars or ships. We need affordable energy now too. Oil, coal and natural gas are now, windmills and solar are now and in the future, biofuels are maybe the future. Who knows what technology holds for the future, but saying no no to oil and coal and it is bad bad does not solve the problems either.

I love my camper, I really do, but my passion is the water. I love fishing offshore in my 23 foot boat. It takes 125 gallons which my boat gets anywhere from 2.6 to 3.1 miles per gallon and average fishing trip we run 40 to 50 miles offshore and troll for 5 to 6 hours. Gas prices are making it hard for me to enjoy this on regular basis anymore. I have less revenue coming in and thus less to spend on fishing. So instead of me taking 5 or 6 trips in a spring time to fish, I take maybe 2. The trickle down effect to bait stores, tackle companies, over night lodging providers is huge. never mind the entire boat building industry here in America has been slammed hard by this. It is not 9% unemployment here causing this, it is high fuel costs and folks simply can not afford it.

So we are in a period where wages are stagnant, unemployment is high and fuel/energy is increasing. It does not take a genius to figure out where we need to start trying to figuring out what to do here and where to start with our economy.

[b1b1das]

Smokyroo,

X2

[RubenZ]

Originally Posted by Smokyroo

Teamgl : Thanks and you are dead on.

Crusader,
My Tundra was built in Texas and the last time I checked, Toyota was not importing Japanese nationals to build it. It is 75% American parts. Our Venza is built in Kentucky and its components is 70% American. My boat is built in North Carolina by American workers and the Yammaha outboard is built in Kennesaw,Ga by more American workers. So I think I have done my part to support American jobs. Since you call into question my take on the economy and who I support, do you shop at Walmart?Did you shop there and buy chocolate for your sweety for Valentines Day or did you find a business like mine and pay a little extra for hand made treats? A great deal of chocolate packaged for sale at Walmart is made in Mexico. Are you for American jobs or only union jobs? Everybody wants union wages for work and are only willing to pay Walmart prices for stuff they buy. You wonder why the American economy is in a pinch there it is for you. I find it difficult listening to people from Michigan who have strangled their auto industry with ridciolous union contracts questioning my desire to buy quality American made Toyota's only then demand to be bailed out by the US tax payer to save their beloved GM or Chrysler. If this is you then you really have no room to talk.

I was born and raised in the south and here in the south we are right to work states. Here in the south we build Hondas, BMWs, Mercedes Benz, Subaru, VW and hopefully soon Boeing Airplanes. Here in the south we love the American dream of both the workers and the employers who pay them good wages. Here in the south we do not rely on massive bailouts to support our companies. The free market does a fine job on its own for providing good labor and product sales.

So with all due respect, and I mean all due respect like Ricky Bobby would say, I will never buy a GM or Chrysler product as long as I walk this earth simply because they sucked $50 billion tax payer dollars out of the treasury versus doing what should have been done which would have been to file for bankruptcy and reorganize their failing business model like the rest of us would have to do. The auto bailouts costs us money as tax payers and they were wrong in this tax payer's opinion. Those expensive superbowl ads by GM you can thank the tax payer for flipping the bill on those.

Crusader, I do not know you, we have never met and you are likely a nice guy. I try to be decent guy on these kind of message boards. Please know you questioned me and I responded. We just see the world from a different point of view and that is ok. I am convinced gasoline prices are single biggest factor either killing or slowing any kind of real economic recovery. There is only so much money folks have and the more it costs for their daily around the town trips the less they have for leisure simple as that.

But until Toyota can build a truck that can reliable tow 10k + lbs I'll continue to buy GM. My duramax/Allison can tow circles around anything Toyota has out right now.

[crocus]

Smokey, I have to chuckle at people who whine about the economy, then brag about their "carbon fibre" bicycle and "only" being able to go deep-sea fishing twice this spring. Give me a friggin break!

[Al Fresco]

b1b1das,

Thanks for your favorable comments regarding my take on the subject. And thanks for providing insight based on your many years of experience working in the industry.

[JFM-jr]

Smoky So your issue is with the labor leaders not the Union represented workers themselves or what they recieve in the collective bargaining process? You sound like an employer who takes care of his workers because your workers take care of you in return. No disrespect intended in my prior post hence this short and to the point post. I'm sure if we met on a campground i'd walk away feeling like I just met another fine middle class family guy like myself regardless of political views wich we would never discuss in that situation anyway.