10 dollar gas? What happens to the country?

[stephendare]

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/WhatIfGasCost10DollarsAGallon.aspx?page=1

In four years, U.S. gas prices have doubled to more than $3.70 a gallon, and crude oil has tripled to around $125 a barrel. Allowing for inflation, that's higher than prices were during the 1978â€"83 oil shock that triggered a recession and sky-high interest rates. But . . .

What if gas cost $10 a gallon?

Thousands of truckers would go bankrupt. Airplanes would sit idle in hangars. Restaurants and stores would shut down. Car-pooling, hybrid vehicles, scooters and inline skates would swing into vogue. And telecommuting, rooftop vegetable gardens, home cooking and recycling would proliferate.

Yes, it would be painful. At $10 a gallon, filling a Ford Explorer could cost $225. Even gassing up a Honda Civic could set you back $132.

And suddenly the bus wouldn't look so bad.

According to Todd Hale, a senior vice president for consumer researcher Nielsen, at $10 a gallon, the average family's gas bill would leap from 16% of its retail spending to about 40%. People would drive less, yes. But many have to drive to work or the supermarket, and they'd cough up the cash -- screaming all the way -- and cut back elsewhere.

Businesses and farmers, meantime, would be squeezed as the costs of transport, petrochemical fertilizers and plastics rose. If an oil shock came quickly, sending gas to $10 a gallon and oil to roughly $350 a barrel, the chain reaction of spiraling prices and sliced consumer demand would hit us hard.

"It would be a large recession, not a depression," says Michael Englund, the chief economist for Action Economics in Boulder, Colo. That would mean tight budgets and unemployment until the economy adapted and growth returned.

Here are some likely effects:

    * Consumer spending on eating out, clothing, electronics, vacations and other little luxuries would fall sharply. A Nielsen study found that even at recent gas prices, 41% of consumers were eating out less. In total, 18% of those surveyed were cutting spending to a "great degree." That would bruise companies such as Applebee's, Macy's, Gap, Best Buy and others. But discount retailers, particularly those selling food and gas, could do relatively well. Think Costco, Wal-Mart and McDonald's.

    * We'd see "a lot of parked planes," says Bill Swelbar, an air transport engineer for the Massachusetts Institute of Technology. The U.S. airline industry pays out $465 million in fuel costs for every $1 rise in oil. At $350-a-barrel oil, the industry would pay more than $100 billion extra, almost as much as last year's total airfare sales. Even if airlines ratcheted up fares 50%, half of their airplanes would be grounded because they'd be too expensive to fly, Swelbar reckons.

    * Many independent truckers, who pay for their own fuel, would go bankrupt as their costs soared and shippers switched to barges and trains. Taxis and FedEx would be strictly for the well-heeled. And home pizza deliveries would cease. Pizza delivery drivers also pay for their own gas. "It'd be brutal," says Joseph Miller, an assistant manager at a Domino's Pizza in Seattle. "I would think we wouldn't have any drivers."

    * Food prices could jump by a third or more, experts estimate. About 80 cents of the $4.50 retail cost of a box of cornflakes goes to transport it, says Dan Basse, the president of AgResource, a Chicago research company. On top of that, there's the cost of fertilizers to grow the corn and diesel for farm equipment. In 2005, transportation and energy made up 8.5% of all retail food costs, but energy was far cheaper then. As $10 gas pushed up food prices, pinched consumers would give up pricey fresh meat and vegetables for cheap pastas and oils. Ranchers and dairies with energy-hungry milking barns would struggle. And cities might sprout to life as people planted vegetable gardens on their roofs and balconies and in vacant lots.

    * Plastics for appliances, packaging, pacemakers and myriad other products would jump in price as the natural gas that plastic is made with rose in value alongside oil. Bill Wood, the president of Mountaintop Economics and Research in Massachusetts, says shoppers would have a choice: "Paper or paper?" Small plastic bottles of water would disappear. Glass and metal containers would make a comeback. And recycling would explode. Families might even have nine bins in the hall to separate their trash, as they do in Japan, where consumer recycling tops 90%.

    * As drivers began to switch to 100-mile-per-gallon plug-in hybrid cars (already expected to launch by 2010), the electricity grid could come under strain. Theoretically, if everyone had one and plugged it in at night, the grid could handle 84% of the nation's car fleet. But to avoid the risk of city brownouts, the grid capacity would have to rise. Solar, wave and wind power would ramp up. Giant solar thermal power plants, which use mirrors to concentrate the sun's energy, would be built. But in the rush to get power, we'd probably also step up the use of cheap, dirty coal (50% of our electricity generation now). Even nuclear power (21%) could be considered anew.

    * Resistance to drilling for oil in Alaska's Arctic National Wildlife Refuge and off California would shrink. Environmentalists might stand their ground. But as James Williams, an energy economist for WTRG Economics in Arkansas, says, "Let's put it this way: Y'all wanna drive?" Oil reserves in both areas are thought to be more than 10 billion barrels, double the proven reserves in Texas. That would help feed America's 21-million-barrel-a-day appetite.

After the hurt, some benefits
There'd be other ramifications, too. The federal government's deficit would balloon as it paid for energy incentives and social welfare. We could even see civil unrest as the poor scrambled to survive.

Suburbanites would crowd into urban town houses to avoid costly commutes, and working from home would become common. Eventually, public transportation might even improve.

Some of these things, such as small cars and excellent public transportation, are already entrenched in Europe and Japan. Gas prices there are the equivalent of $8 to $10 a gallon, largely because of high taxes. They live with it. We could, too.

In the longer term, we might even be better off.

As the economy adjusted to functioning with new energy sources and more-efficient energy use, jobs in engineering, science, alternative energy and conservation would boom.

Matthew Simmons, the founder of investment bank Simmons & Company International in Houston, says he thinks a good slice of the hundreds of billions of dollars that would flow to oil-producing nations would filter back to the U.S. He believes the oil industry infrastructure is aging and America would be called on to help.

"We'd have a more engineer, blue-collar, scientific world, versus the Starbucks, high-tech business that we've been in," he says. Not to mention that America's Achilles' heel -- its dependency on foreign oil for 60% of its needs -- would finally have a remedy. A painful one, but effective.

But most oil specialists believe that in the near term, $10 gas couldn't happen -- or that if oil hit $350 a barrel through some Middle East disaster, it would be short-lived. They say demand would fall sharply, bringing oil prices back down. Adam Sieminski, the chief energy economist with Deutsche Bank in Washington, D.C., puts the probability at less than 3%.

Richard Heinberg, a senior fellow at the nonprofit Post Carbon Institute in Sebastopol, Calif., disagrees. He believes it could happen within five years (of course, $10 likely would be worth less then).

More than half of the world's oil producers, including the U.S., Britain, Mexico, Venezuela and Russia, are seeing production decline, Heinberg says. Meanwhile, demand is growing at 1.5% to 2% a year. Heinberg says the OPEC countries need their reserves to meet booming demand at home and that at some point, oil will become scarce.

The result: Prices will shoot up.

[JeffreyS]

If you live in a city with good mass transit you will be so far ahead of the game.

[thelakelander]

I wish I did right now.  I'm burning tons of money on daily 50 mile roundtrips between my condo, my office at the beach and downtown.  Unfortunately, mass transit is simply not an option for me.

[Driven1]

"Oh for the days when we were only paying $4 a gallon for gas!"

$14 or $15 gas is on its way here according to this guy and the authors he cites...he was on CNBC yesterday...

http://climateprogress.org/2008/05/22/12-15-gas-not-so-fast-but-well-soon-be-mad-for-6-7/

[Driven1]

I wish I did right now.  I'm burning tons of money on daily 50 mile roundtrips between my condo, my office at the beach and downtown.  Unfortunately, mass transit is simply not an option for me.

here is your answer lake...

[gatorback]

What if gas cost $10 a gallon?

Well, what if a 747 engine lands on your head?  LOL

I welcome $10.00 /gal. gas.  Let ya'll pay for it.  Since I live in TOD with commuter rail server on either side and 1/4 mile ea. way to work. Other cities, Jacksonville included, really should really start planning for it.

Here's a better form of transportation.  Wonder how much they cost?

[hillary supporter]

in europe the price is higher than here, right? i think most places charge by the liter (just over a quart) people adjust for it. a lot of american panic is generated by our media. but everyones right, we have to begin action.
i really love the skyway, for its huge faults. i wish the city could take some action on its expansion, both east and south.

[Driven1]

$6.50 - $8.50 / gallon in Europe right now. 

[scaleybark]

A common refrain I hear a lot, in the Times Union letters page and elsewhere, goes something like this: "Drilling for domestic oil will fix everything, but those environmentalists/politicians/liberals/strawmen won't let us." 

Many times you see some big numbers thrown about, but they are not hard, fast numbers, and are presented to mislead, or are presented without caveats.  One caveat, many reserves reside in very small pockets, as opposed to big reservoirs.  Another caveat, other reserves are locked away in sand or rock, and can't be extracted cheaply or efficiently.  Try sucking water from a sponge using a straw to get an idea of how hard it is to extract oil embedded in sand or rock.

Even when the numbers are hard and fast, as with the ANWR reserves, they are often simply presented by themselves.  Saying that between 4 to 16 billion barrels of oil exist in ANWR sounds great, until you take into account that we use 21 million barrels of oil each day.  If the ANWR reserves were our sole source of oil, it would run out within 7 to 24 months.  If we combined the ANWR reserves with existing imports, and only extracted a little at a time, then the ANWR reserves will not have much impact on prices.

I have not been able to find hard, reliable numbers on offshore or mainland deposits.  Many sources of information are demagogues and I don't trust them.

I really wish the newspapers would try to nail this down once and for all.  How many barrels of proven oil reserves in this country really exist?  What are the major categories of reserves?  (IE, Alaska, offshore, oil-in-rock etc).  How costly is it to extract each major category of reserve?  How long will these reserves last if they were our sole source of oil?

Perhaps someone at the TU would like to tackle a big project? 

[David]

A common refrain I hear a lot, in the Times Union letters page and elsewhere, goes something like this: "Drilling for domestic oil will fix everything, but those environmentalists/politicians/liberals/strawmen won't let us." 

Many times you see some big numbers thrown about, but they are not hard, fast numbers, and are presented to mislead, or are presented without caveats.  One caveat, many reserves reside in very small pockets, as opposed to big reservoirs.  Another caveat, other reserves are locked away in sand or rock, and can't be extracted cheaply or efficiently.  Try sucking water from a sponge using a straw to get an idea of how hard it is to extract oil embedded in sand or rock.

Even when the numbers are hard and fast, as with the ANWR reserves, they are often simply presented by themselves.  Saying that between 4 to 16 billion barrels of oil exist in ANWR sounds great, until you take into account that we use 21 million barrels of oil each day.  If the ANWR reserves were our sole source of oil, it would run out within 7 to 24 months.  If we combined the ANWR reserves with existing imports, and only extracted a little at a time, then the ANWR reserves will not have much impact on prices.

I have not been able to find hard, reliable numbers on offshore or mainland deposits.  Many sources of information are demagogues and I don't trust them.

I really wish the newspapers would try to nail this down once and for all.  How many barrels of proven oil reserves in this country really exist?  What are the major categories of reserves?  (IE, Alaska, offshore, oil-in-rock etc).  How costly is it to extract are each major category of reserve?  How long will these reserves last if they were our sole source of oil?

Perhaps someone at the TU would like to tackle a big project? 

Thank you! I just got this petetion sent to me entitled "drill here, drill now" and I'm just dumbfounded by how short sighted it is:

http://www.humanevents.com/article.php?id=26744

It's just a very short term solution with less than desriable results.

[gatorback]

since i live 1/2 from work and often either carpool, walk, or bike, i never put more then $10 in gass which lasts me about a week.  My friend came up and i put $30 in and it gave us 1/2 take.  Honestly, this is the first time I've notice the true cost of gas.  I'm so glad I live where I do being so close to work, the bus routes and soon the Red Line.

[Midway ®]

As to how much oil there is and how long it will last, the answers to your questions already exist, just look up "Matthew R. Simmons".


Here's an electric scooter:
http://www.youtube.com/v/fmPosPXsbXc&hl=en

[Ocklawaha]

We simply will kiss our sweet lifestyle goodbye. Historically there are two directions to go, we'll take the easy path as it's human nature.

1. War, in order to save the economy by using it as an excuse for nationalization on a mass scale of failing farms and industrys. Then pray like "heaven" that we win.

2. Get smart, and re-tool, re-think, and re-build our entire fabric, our country, our transportation, business and industry. Our cities, states and lives, go farm a beet, or pluck an orange...but you better do it within an easy walk or trolley ride from home.

In either of the above choices, Jacksonvilles dedication to the "old ways", BRT, JTA, JAA, City Hall, foot dragging and new age fobia may doom us to chaos. The end is near folks, don't get caught dead without your program, "Attend a Church Tomorrow".

My son is a supervisor of Sunbelt Oil Supply in 3 states (TX-OK-KS) and he tells me there is all the oil we could use... "It's Still down there Dad, it's just harder to get at then ever and we won't have it until we're willing to pay the price. We don't see many gushers anymore. Instead of going through 9,500 feet, of rock we now need 20,-25,000 feet to get at it..." MONEY! Elk City, Ok is coming in now at 30,000 feet +. Economics are changing this scene, more jobs on the rigs, more active rigs, but less money because the very oil they pump is shutting down the farms and ranches they work on. Something is going to give... and soon.

BTW Stephen and Gator... I'm at his house now, got a question for him?

Ocklawaha

[gatorback]

Yes, what's the weather like up there?  It's partly cloudy, 83 degrees with a nice breaze in Hill Country.  What do they call the area you are in?  Big Rig Country?

[Ocklawaha]

HA! HA! Gatorback

Dallas, TX
84°F
Cloudy
Wind: SW at 14 mph
Humidity: 65%

We call it DOWNTOWN DALLAS...JR's backyard! Deep man. Wish I had time to pop down and meet your sorry butt, but since I've got a LRV to catch, fat chance.

My car has 1/2 inches of dust all over it. Red Cedar allergy's are spiked and I'm sneezing my brains out...or was that something else that went up my nose? Anyway a pseudo-treeless rolling landscape with gentle Florida like hills, dotted with little creeks and rock streams. The water is multi-colored from OIL and the pump-jacks are running all night. We hear the popper engines from here. Yeah, nothing new in Dallas but RAIL and a BABY GIRL.

Ocklawaha