Jimmy

I just read a feature on CNN Money called “Why electric cars have stalled” that seemed to argue that the main reason is the economy. That makes sense to me, if the Big Three are crawling (or driving, as the case my be) to Washington asking for money then little electric car start-ups must really be hurting.

But my main point here is one of the last lines in the CNN story. They print a quote from “Doug Scott, a senior vice president at research firm GfK Automotive.” He says: “However, if we get back to $140 barrels of oil and the politics of this situation get to the point where the American government says we need to switch to the power grid, an electric vehicle car becomes much more of a reality.”

Note the IF we get back to $140/barrel oil. This is something I’ve noticed other people saying as well. This idea that that was just a weird side track in our age of cheap oil and that now that we’re back to gas in the $1 range nobody has to care about all that “green” crap anymore. Well, what I have to say is: don’t be silly. We are running out of oil. Nobody denies that fact. Peak oil is either here or will occur within a few years (that seems to be the consensus of most peak models, anyway). I don’t know exactly why gas prices in the US have dropped from record highs a mere 5 months ago to the lowest level in almost 5 years (when adjusted for inflation, if you don’t adjust it we’re at the lowest in nearly 4 years) but I can guess it’s probably because A) the recession is driving everything down, and oil/gas is no different, and B) this summer people stopped driving as much due to the high gas prices, which increased supply which drove prices down, but people haven’t started driving more just because the gas is cheaper again, and the reason people are probably not driving as much is because of the recession and people wanting to save as much money as possible, also because a lot of people are now just in the habit of taking mass transit or carpooling or whatever. I’m guessing the two of these facts together is what mostly caused the extreme drop in gas prices the last 5 months. What I do know is that there’s no way in hell gas prices are going to stay this low forever, or even more than a few months. OPEC is going to get wise and cut production to make up for the lessened demand, and the recession will end (a Google search for “when will recession end” brings up a bunch of results that all seem to agree on next spring or summer as the end date) and prices of everything will begin rising again. In addition to all that, when peak oil hits soon it will send gas prices skyrocketing and make the July 2008 prices look really attractive. If peak oil has already arrived, which I’m inclined to think it hasn’t, than the recent gas price rises are the aforementioned peak oil induced skyrocketing prices and that makes me think even more that prices are going to rebound soon: if oil production is declining supply is obviously going to drop and that will drive up prices as well.

Any way you look at it it’s just plain freaking silly to think that lower gas and oil prices are here to stay. The current drop in prices is simply the result of a “perfect storm” of factors, but storms have a habit of passing rather quickly. The aftermath of this storm is going to be tragic as prices rebound to more record highs, but don’t think for a second that that isn’t right around the corner. Because it is.

Cheers!

-j

Posted in: Politics by jimmy2 / Tags: economy