Low Gasoline Prices… Now and in the Future

Fascinating article by Gail the Actuary at The Oil Drum concerning where gasoline prices are now, and where they are going in the future.  The comments for this article are especially good.

One point that jumped out at me is that a lot of economic pundits are writing articles and theorizing timelines based on when they feel the markets will truly ‘correct’ and be able to move forward again.  This article posits the idea that the markets  are so debt-ridden that they may never truly be able to correct.

The US government has thrown a lot of cash at the banks, the GSE’s, insurers, and practically everyone else except homeowners who played by the rules and only bought what they truly could afford.   The incoming Obama administration is promising to throw even more cash at things to try and get things moving again.  This ‘cash’ is really just more debt we are throwing on top of a massive mountain of debt we already are burdened with.  While this additional debt may provide a short-term jump-start to the economy, in the long run it’s just adding to the bill current and future generations will have to try to pay off… or not.

The current unwinding of debt that is starting now will probably not end for a while… when will we reach the point where the low energy prices will start killing off energy companies, and what will that mean for the country?    How many homes in the Northeast will be uninhabitable if there are no companies to deliver heating oil?  If natural gas prices crash to the point wellheads and pipelines shut down, what would that mean to millions of homes across Canada and the northern USA?  These are interesting questions that few people have thought about while we’re enjoying much lower gas prices.


5 Responses to Low Gasoline Prices… Now and in the Future

  1. onestraw says:

    Wow. The Oil Drum is apparently the largest conglomeration of freakishly intelligent fatalists ever amassed. Skimming the 130+ comments was a whirlwind trip that expanded my understandably and vocabulary while repeatedly killing and resurrecting my hope for humanity. What a trip!

  2. d.a. says:

    @onestraw: I agree, TOD has some amazing comment writers. A much better signal-to-noise ratio than most sites.

  3. Bart says:

    Yup… TOD is the best place out there for rational discussion of many facets of the peak oil issue. Lots of professionals in the energy industry, and a wide selections of academics, economics types and others who have lots of interesting things to bring to a discussion beyond the normal frothing found at other site.

    The one takeaway I got from the article is just reinforcement that the same ways of thinking and acting that got us into this problem will not get us out. Gail the Actuary was channelling Kunstler a bit when she mentioned the US possibly splitting up into smaller regional regions at some point. I could see it happening, since governments have the same ‘expand or die’ mentality that fiat currency has. Seeing how closely they are intertwined, this makes sense to me.

    I have some thinking & reading to do this winter… my mindset is definitely moving on to the ‘what do we do next’ phase and away from the ‘how do we fix things and get back to some semblance of normal?’ one.

  4. What are are you reading Bart that would help you with the “what to do next” phase?

  5. Bart says:

    That’s a good question, Matt, and one that probably deserves it’s own post at some point. For now, here’s a short listing of things I’m planning on reading:

    – Holmgren’s book on Permaculture Design – Deals with systems design at both the macro and micro levels.

    – Some classic writings by Thomas Jefferson. To gloss over US history a bit, Hamilton & the Federalists wanted industrialization, with the mass underclass that relies on, whereas Jefferson was more into the rural agrarian yeoman thing. We are living Hamilton’s dream right now, and I would prefer to understand better what Jefferson desired.

    – Hayek’s “The Road to Serfdom”

    – Combing Jeff Vail’s archives online. He has some interesting stuff on systems design & peak oil.

    – Some books on philosphy & psychology. We are entering very turbulent times, and I am interested in doing what I can to keep my outlook as positive (think: Happy Warrior) and flexible as possible. No one knows what the next few years may bring, and I don’t want to anchor myself to anything (a house, a job, a mindset, etc.) that could bring more harm to my family than is absolutely necessary.

    That’s what I’ve been thinking of for now. I’m sure this list will mutate over time… it usually does.

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