People are angry, but they aren't going to change their behavior, not for a long time or until prices top $5. In fact they are angry because they just have to suck it up as the cost of living or cost of doing business. They are angry because out in the suburbs they have no alternatives to getting to work, to dropping the kids off, to getting groceries, to visiting friends and relatives. If you live in the suburbs it's either pay the gasoline bill or become unemployed or a social hermit.

What these people should be for is more light rail, more buses, more mass transit connections, more park & rides, more real centers of towns where people can meet and do business.

The biggest effect I've seen so far is more talk about high prices around the dinner table and the water cooler. Reactions runt the gamut from dismay to anger to indifference.

Also, two of my brothers-in-law have bought used motorcycles. One motorcycle is already out of commission. The reason: It ran out of oil!

What parts of our society are going to seize when we start to run out of oil. (Yes, I know we aren't going to run out per se, but there will be shortages just as is happening in China)
Regards.

Mr. Fuller likes the "greater freedom provided by suburban living." But, as peakguy points out, he has no alternatives to driving. He is free only because gas is cheap.

I live in NYC and work 4 miles from my home. I can commute by subway or one of 3 bus lines for ~$2.50/day or I can bike. Now that's freedom.

What I find most interesting from the 'Pinched at Pump' postings by the self-journalists is how self-centered they are. They do not understand yet how higher fuel prices for truckers and shippers and electricity producers are going to slam them in the pocket for all items in their consumer's price basket. It is a fascinating observation of human behavior. It is how they have been programmed to behave.

(Yeh, I know, you believe they all have something called "free will" --well try exercising your free will at the gas pump these days. Try convincing your spouse to give up the guzzler and start riding a lowly scooter. Do you realize how the Jones next door are going to laugh at you? Still feel like you got free will? Ha.)

The question they ask is "How has the high price of gasoline changed your life?" They might have gotten a different sort of answer if they'd asked how it would affect the country, etc.

So anyway, people tell their own stories. I think the guys with SUVs who say they are prepared to pay higher prices at least show constancy. They knew this might happen, and are prepared (so far) to take it.

I think it is interesting though. Even though (as some mentioned) gas prices are actually low compared to the price of a large SUV or its insurance ... that doesn't mean filling it up is going to be pleasant.

One of the ways that we humans are not rational economic agents is that we don't really count all dollars as equal. The unpleasantness of a fill-up may exceed it's actual cost. People may trade cars sooner than they have to, just because they don't *like* $100 fill-ups.

From talking with friends and co-workers, I've heard some recurring themes:

"this can't last"

"somebody needs to do something"

"it's costing me X to drive to work now"

"hopefully after labor day prices will drop"

"what's going to happen next?"

I'm not hearing any talk of trading cars or relocating. The impression I get is that everyone feels there have been price spikes before, and this is just another one, to go back to "normal" after something happens (the 'something' depends on the person, iraq gets stable, isreal leaves gaza, hurricane season ends, driving season ends, moon is made of cheese, etc.)

Speaking for my family, our driving habits have changed drastically, and not just because of the spiking prices the last two weeks, but the constant price increase in the past several years.

It's difficult to discuss the national impact of higher prices, because I often assume that there is a fair bit of profit already built into prices. As I've stated before, oil companies are making out like bandits at this time, which implies to me that they are far from desperate to change anything at all about the current situation.

In the row house part of Frederick you'll see many Priuses and other small cars, but once out of town you see exactly the sort of suburbia that Kuntsler rails against. That's probably where you'll find Fuller. I bike the four miles into Frederick, and it is soooo easy. I cross over 270 and see the lines of cars creeping towards Gaithersburg, Rockville, Bethesda, DC, and even VA every morning. Driving takes me 10 or 15 minutes; biking takes 15 or 20 and traffic doesn't slow me down. But this isn't a change in behavior, I've biked to work a lot.

My wife's sister now only drives to work. My sister's husband has begun taking a bus from Frederick to Bethesda.

But, I've been told a large portion of the Frederick work force commutes in from PA every day, at least an hour away. My brother works with a guy who commutes from Altoona PA to Frederick every day. And I've been told there is a group of laborerers that commute from Altoona every day in a van (the driver sleeps between trips). That's two hours and fifteen minutes, if you drive at least ten miles over the speed limit. What option do they have? There's already very little work in central PA.

The reality is that $3/gallon is still cheap. In the UK at $6+/gallon people drive smaller cars, but the roads are still packed, and the milage isn't massively better than the Hondas and the Toyotas that are still the main stay of America despite the huge numbers of SUVs that have been sold.
I think it will have to be $6/gallon at least, and perhaps $10/gallon before people are truely forced to change, but I think change will happen at prices lower than these in poorer parts of the world so it may be a while before demand destruction hits the US.

"High" gas prices haven't yet affected me much materially. They've added to my anxiety level, though, as I'm not ready for the serious economic difficulties to begin (too much debt, a piece of real estate to sell in a few months).

But rising prices also give me hope. I live about an hour from Atlanta, where we're fighting off an enormous proposed development: 12,000 acres and 20,000 houses built out over 30 to 40 years. The people who would live there would mostly work in Atlanta (a bunch of "Rob Campbells"), so high gas prices will help us tremendously in this battle.

Given what all of us here know about peak oil, I'm confident that this project will never be completely finished even if approved. But if gas prices keep going up, maybe it will die on the drawing board, or at least be altered significantly.

*

ben,
it's eay to get crazed and blame "the oil companies". But "companies" are not scentient beings. They have no heart. They are machines. Inside of the machine are various knowledgeable individuals who are plotting and planning how to cash out, get their bonuses, make their "numbers" and run for the hills before the bovine matter hits the spin zone blades. I'm reading through one of the Enron tomes now. It is interesting reading how the higher ups plotted to get theirs and leave the bag in the hands of the low level sheeple. After the fact, nobody knows anything. Everybody was "just doing my job". Point is ... it is a mindless machine driving itself off the cliff and nobody is in the main wheel house steering the boat. Managers are all squirming in their personal quarters trying to figure how to scrape whats coming to them and how to jump ship before the iceberg strikes. You and I are in the passenger quarters. Listen. Is that "aulde lan sine" the band is striking up with? Can't quite make out the tune.

...

If someone drives 150 miles a day, 220 days a year, getting 20 mpg and paying $3 per gallon for gas, it is costing them just under $5000 per year. There is a good reason people are selling SUVs cheap.

I guess they make everything I buy more expensive. I sold my car after 9-11 in protest so as far as that goes, no worries on my end. I take mass trasnportation which is great here in San Francisco...

Here's some highlights from an AP poll conducted last week: (AUG 9-11)

http://www.pollingreport.com/energy.htm

Question: Over the next six months, do you expect that increases in the price of gasoline will cause financial hardship for you or your family, or not?"

64% said it will; 35% said it will not. Thatis up from 51% who said it will in April.

Question: Which ONE of the following would you say deserves the most blame for higher energy prices? . . ."

Oil Companies seeking too much profit: 30%
Foreign Countries that dominate oil reserves: 22%
Polititcians: 21%
Environmentalists who want to limit exploration: 9%
People who drive gas guzzling vehicles: 9%

Now, if I were a marketing department for a major news organization, I would want a lot of reports about #1, #2, and #3 and then not worry about other explanations in my reporting.

Also, note what wasn't even given as an option like supply problems or the resource running out. I wonder, if this was asked, how often would it have been chosen?

The fact that it wasn't even an option sure reveals a lot...

I agree, stepback, and I'm sorry if I came across as blaming the oil companies. They are doing what they are set up to do - maximizing profits for their shareholders - same as a wal mart or general motors or whatever. But when just about everyone is wringing hands about gas prices, yet they continue to post record profits, it is clear they aren't exactly trying to lower prices for the consumer. Does that make sense? This is a seperate issue on whether they are being 'good corporate citizens' or whatever and taking care of our natural resources, etc. In other words, quite simply they could lower the wholesale price of gasoline they sell to retailers and still make a decent profit (but that could trigger more demand, which will make it more scarce, which will raise prices, GAH!)

Also, $5,000 a year for gas really isn't that much for somebody who is already bought a $40,000 car. The last $20,000 car I bought cost me $500/month in payments (not counting insurance) so if you figure somebody can afford $800+ a month just to drive around then what's a couple hundred more for gas? (remember, this is an incremental change - many many people bought their cars when gas was at least $1.50 a gallon and knowing it hasn't been below $1.00 consistenly in years)

Even if they want to, many couldn't afford to trade in their autos for a more economical model, especially if they just bought an expedition or whatever this summer with the 'employee pricing', you can't just turn around and sell the car immediately without taking a huge hit in lost value.

I'm rambling again... sorry.

"If someone drives 150 miles a day, 220 days a year, getting 20 mpg and paying $3 per gallon for gas, it is costing them just under $5000 per year. There is a good reason people are selling SUVs cheap."

Run it again, with the 10 mpg that SUV really gets in heavy traffic ;-)

... but really I'm in "watch mode" on this. I'm not really going to predict the broad reaction (and economic outcome) of these prices. I do, nonetheless, watch with interest.

Exactly Tedman - it can't just be that mother nature can no longer provide us with the plentiful resources. I bet the neo-cons will want more focus on #4 - Environmentalists.

I also agree with SR that even $5 gallon gas will not really change behavior since people think of gas as a cost of doing business, like the cost of water or bread, or milk. So here we are looking at a coupld of hundred million people with vertical demand curves and a shrinking global supply. This has disaster written all over it.

What will affect us all is the impact on the economy. Unless people continue to increase their debt load, then they will have to cut back on other costs. And I bet they will cry out for tax relief and the gov't will give it to them!

I have no doubt the high prices are causing significant hardship in some places. But I do want to point out that in at least some parts of the world, namely Venezuela, these monies are being put to good use: here are some examples:

http://oilwars.blogspot.com/2005/06/by-way-of-contrast.html

http://oilwars.blogspot.com/2005/06/how-does-he-do-it.html

ben,
no you're not rambling.
but one of the tall tales told is that corps "maximize profits for shareholders".

what maximized profit did holders of Enron get?
World Com ?
dot.com bust ?

maximized profit is another one of those lies "they" tell you in order to maintain order in the ranks and files of the herd as we march towards the cliff.

"they" have golden parachutes. you (we) don't. gulp.

I remember distinctly reading an editorial by Steve Forbes in his Forbes magazine just a number of months ago about how the peak freaks are all wackos and oil will plummet to $35 real soon (when it was at $45) and that the peak freaks will be shown for the fools they are. Have not been able to find a copy on the net. Did anyone out there save theirs? Remember, it is this same captain of capatilism, Steve Forbes that tells you to relax because the machine will maximize your 401K plan, you don't need social security. Feeling "secure" yet?
...

peakguy starts us off on the right foot in this discussion by talking about "out in the suburbs they have no alternatives to getting to work...". And SuperG is right on the money too, gas is still cheap for Mr. Marietta Georgia although its getting a bit tight for the working class who also commute to work, for food, etc.

Just a reminder that on a previous thread here there was a discussion about these issues with regard to inelastic demand and a term Rick Starr used called latent demand in which people would use gasoline if they could use it but can't due to cost.

There are also two relevant articles in today's New York Times, Fuel Costs Drive Consumer Prices Slightly Higher in July and Fuel Rule Change for Big S.U.V.'s Seen as Unlikely.

Also market is tanking today on Wal-Mart concern over "The Pinch"

(sounds like something that comes out of a salt shaker --how delectable)

http://biz.yahoo.com/ap/050816/wall_street.html?.v=18

snippet: "Wall Street is facing increasing evidence that high energy prices, spurred by record crude oil futures, are starting to dampen consumer spending. Wal-Mart stock drooped after the company said its quarterly revenues fell as consumers struggled with higher gasoline prices."

Awhile back, I tried to look at the rising cost of gas through the lens of the economic concept known as utility thusly: How much would I be willing to pay to go where I need to go. My answer at the time was $20/gal for those must-make medical appointments, which roundtrip consume one gallon of gas. However, during my last dozen or so years in the workforce, I rode public transit constantly and didn't own a car, and prior to that I commuted on a motorcycle rain or shine. If I were still in the workforce, I would still use public transit because it provides utility for me beyond that of saving money by not operating a vehicle. I would even argue that public transit increased my rate of productivity; it certainly helped my peace-of-mind and pocketbook.

Being essentially retired, my situation is different from most here who are still in the workforce, yet I am very aware of just how dependent I am/we all are on that workforce. It is how the vastly complicated network of interdependence we have constructed reacts to ever increasing energy costs that concerns me most.

FWIW - Walmart also is suffering on the backend of their business as higher fuel costs make their business model (the "warehouse on wheels" - lots of trucks moving lots of goods lots of miles to lots of stores) more expensive.

The effects of higher gasoline prices in the US seem to me to vary across the socio-economic spectrum based on three primary variables:
1. Personal Income
2. Miles per week driven
3. Gas mileage of vehicle

The lower income folks are already feeling the pinch pretty hard, from what I'm told by my less affluent friends and a few fixed income seniors I know. Public transportation, less discretionary driving, increasing carried over credit card balances, selling their clunkers to buy higher mileage clunkers. People near or above median income gripe about the price and ruminate about getting a better mileage vehicle next time, but appear to be resigned to pay more to drive and cope with having less discretionary cash and reduced savings. The wealthy seem unaffected to date, but I did hear firsthand that some recreational boaters are cutting back on the distance that they cruise; people who are running 25+ foot boats on the Chesapeake Bay for fun on the weekends would be regarded as rich pretty much anywhere in the world except the US.

I drove a bunch in Canada back in June, price was $3.30/gallon US. This was the first time my own driving behavior was affected by higher fuel prices; I am above median income and was driving a relatively poor mpg work pickup truck. I usually run around on weekends when working in CN, but I stayed closer to base this time. So for my income, miles, and mileage it took $3.30 to change my driving behavior. I think the masses will really start to cut back on discretionary driving in the US at about $3 to $3.50 per gallon based on my own experience.

But what do I know about how the masses will behave? I do believe there will be a demand drop in US or decrease in rate of demand growth as prices continue to rise. This is crucial; a 10% drop in US consumption would save about 2mmbd which could ease the strain on supply... for a couple of years at best IMHO. Just my unfounded optimism coming out; longer term I think we are in very real trouble.

Nice site BTW, good content and contributors.

Let me offer one gentle reminder: Don't fall into the trap of saying that all people (even if you mean US consumers) will or won't do X.

If you read GreenCarCongress, you know that hybrid sales are booming, and SUV resale values are suffering. Why? Because some people are reacting to high prices and downsizing their vehicles. I suspect that almost all of them are doing so in the course of buying a new car on their normal schedule, and not suddenly trading in a one-year-old Excursion for a Prius.

Economists like to say that we study things at the margin because that's where change happens. Right now, more and more people are getting the message that the market is sending, and some of them are reacting exactly as one would expect.

Sure, there will always be the diehard SUV fans who will hold out as long as possible. They'll come around eventually when they realize how much more money they could have for other things like food, clothing, etc. For some, that light won't come on until we hit $5 or $6/gallon, but many more will have the epiphany much sooner.

heres a possible reference to forbes speech, stepback.
http://www.azcentral.com/arizonarepublic/local/articles/0426neforbes26.html

not much information in article, but I would bet that a large percentage of our
captains of industry believe that the "evil speculators" are to blame- arbitrarily picking oil as the commodity they want to distort prices for.

"Forbes' speech was a highlight of the corporate golf outing, held at the Camelback Golf Club."

rather funny name for a golf course in arizona, from a peak oil perspective. but anyway, Im sure the executives will have used their multimillion dollar powers of ingenuity to solve our future problems by the back 9.

Following up on Lou's point, I would say that there is no "magic price" for gas at which behavior will change massively. More accurately, for every 10 cents the price goes up, there will be a few more people who change some of their behaviors (though probably not all) to accomodate.

The MSNBC piece illustrates this nicely: at current prices, a few people have made major changes in behavior (getting rid of their car, for instance), a lot of other people are making minor changes (driving slower or combining trips for errands), and others are not changing any of their behaviors at all (except for saving less or becoming more indebted, which ultimately will have its own impact).

The point of all this is that while any single 50 cent or 1 dollar rise in the price of gasoline may not seem to cause a significant shift, we may wake up one day in the future when gas is $6/gallon and find that all the little shifts have actually added up to something significant and that we as a society are behaving differently towards fuel.

I had a recent reminder of the change in gas prices when I decided to update the budget amounts in Quicken.

Two years ago, I had $60 as the monthly gasoline budget. I recently had to up that amount to $90 to reflect what I had been spending fairly consistently (although that includes a few out-of-town trips during the summer months). In July I spent $120 in gas, although that included a trip from TN to FL and back.

In two years, gasoline expenditures have doubled.

We live in a smaller city, with our daily range limited to about four miles (no m or than two miles to work and school and groceries). We recently bought a Corolla (I wanted a Prius, but lost that argument) and have an Odyssey that we plan to replace with a smaller car in about 4 years (figuring a 10 year lifespan). We put about 4500 miles on each car in a year.

How we have adjusted: we drive the Corolla more, especially around town. We try to combine errands. We have more or less gone to vegetarian diet to keep grocery costs down (we rarely ate at restaurants anyway).

My chief worry is that, as higher oil prices ripple through the economy, we will end up with a situation similar to the 1970s: oil-inspired inflation leads the Fed to raise interest rates, therefore hampering the economy's ability to change (and hurting many people) with high interest rates on top of anemic growth.

On the debt issue (now that it's come up more than once):

Is anyone out there conversant in the effect that massive personal debt has on the economy? Given that high gas prices seem to be something that people will load up on their credit card debt for, I'd like to learn more about its ultimate consequences for the economy.

If you want to send us a guest post on this issue (or if PG or HO want to take it on), let us know.

Also, I would say that we've yet to see the cost-push inflation associated with the last 12 months' rise in oil prices due to the natural and unnatural time lags involved. And with a net saving rate now at Zero, I think Stephen Roach is right in his assessment of ever rising oil prices on the US and Global economies (article linked at EnergyBulletin). Time is now the main variable.

On debt:

I'm not an economist, but I think that massive debt creates two concerns: 1) It will (or at least should, according to economic theory) drive up interest rates, which reduces investment in new businesses, capital, and labor (i.e., jobs); and 2) creates the potential for a downtown in the economy becoming even worse as distressed borrowers end up defaulting on their debts.

Isn't credit card interest included in the GDP? So my fellow Americans with 29.58% interest rate credit cards are 'growing' the economy just by having debt?

(I'm ashamed, I was stupid, I'm fixing it, but still - I have some. And there are people with variable rate mortgages that are going to be in a world of hurt soon if they don't stop raising interest rates)

Since I have been on this kick lately, let's not forget about demographic pressure. The consuming population needs not only to reduce levels of consumption from current levels. But must also do so to offset ongoing increases in population size.

The per capita consumption of energy (all marketable sources combined) seems to have been pretty flat for some time (with some reduction in the 1980's) -- see the raw data link at: http://www.nationalatlas.gov/mld/ete000t.html

But, the U.S. population is growing at about 1.3% per year. So, there is a natural increase in consumption simply do to demographic pressure. So, if we just wanted to hold current consumption constant, we need to reduce aggregate consumption by 13% over the next decade! -- see http://www.nationalatlas.gov/articles/people/a_international.html#two

Alternatively we can close all borders to ALL immigration and put in place mandatory family planning policies to keep population growth at 0....

Wonder how many folks would be willing to go for the latter?

Debt and the Economy:

Doug Noland at David Tice and Assoc. (Prudent Bear) writes a weekly column called the Credit Bubble Bulletin. Their web site also has some interesting, eye popping charts. I'm not a macroeconomist, but his views are interesting:

http://www.prudentbear.com/

Roy--What you describe is called crowding out.

Ben--Bingo! That's what kept housing booming--still.

Since Volker, the Fed's main demon is inflation followed by "liquidity," also known as "easy money." Volker recently wrote an op-ed on the debt crisis and was quite gollomy. And occasionally, Greenspan crypticly acknowledges the fire he's playing with. Basicly, to keep going, the current economy needs ever greater liquidity to fuel the ever greater debt, while low rates of inflation are demanded by the commercial banks, and the bond markets, that own the Fed. While "flexibility" in labor cost through "globalization" resulted in wage delfation that offset the inflation caused by the ever increasing "liquidity and oil remained "cheap" (not to mention the CPI's "re-engineering"), US and global inflation rates remained at or close to historic lows, and interest rates stayed low. But there's a reason it's called the "business cycle"--each expansion creates the conditions for each contraction. Only this time there's a catch--the onset of serious fossil fuel depletion, feedstock for the entire global economy. Its inflationary spiral will be met with an ever increasing interest rate spiral until the debt bubble bursts. As I said above, time is now the main variable.

Lou, Roy, Ianqui, et. al.

Lou: "Don't fall into the trap of saying that all people (even if you mean US consumers) will or won't do X."

Roy: "...for every 10 cents the price goes up, there will be a few more people who change some of their behaviors (though probably not all) to accomodate."

Ianqui: "....high gas prices seem to be something that people will load up on their credit card debt for..."

Anyway, some questions:

OK, we can't generalize about who will change their behavour and who won't. Now, at what point does interest on that credit card payment exceed using cash at the pump? What people in the US are likely to be forced to modify their behavour first? Or will do so not out of immediate necessity but for other reasons? (In another context, these people are called "early adopters") What if the person who just served you that burger or just cut your hair or just checked you out of the supermarket is running up credit card debt at the pump to get to work? When is it the case that Mr Marietta Georgia can still get to work in his guzzling SUV but his secretary can not?

As somebody said in Moby Dick, "Thar She Blows!"

Sorry, I said "Mr Marietta Georgia can still get to work in his guzzling SUV but his secretary can not"

That would be his administrative assistant -- and trust me on this, he's got (at least) one.

Did I mention that I drive 74 miles each way to work. That's 150 a day. Can you think of a more comfortable way to spend those hours than in a big, comfortable vehicle? Me neither.
--Rob Campbell, Marietta, Ga.

I just can not get enough of that quote.

Also I expect that Wal-Mart would have trouble down the road with the costs of making products in China and shipping them over to the US, in addition to their trucking costs.

Not to mention that Walmart's goods may be having trouble even getting from the factories to China's ports if the Chinese fuel shortages continue. And that is regardless of any price Walmart is willing to pay for transport.

I hear ya, Dave.

What do you bet Mr. Marietta has a file drawer full of applications? If a worker bee can't afford to drive to work anymore, he can always find another...

What might this do to cost of living raises?

(sorry, turning this into an Open Thread, I'll stop)

Here's Jim Kunstler on WalMart:

Operations like WalMart have enjoyed economies of scale that were attained because of very special and anomalous historical circumstances: a half century of relative peace between great powers. And cheap oil - absolutely reliable supplies of it, since the OPEC disruptions of the 1970s.

WalMart and its imitators will not survive the oil market disruptions to come. Not even for a little while. WalMart will not survive when its merchandise supply chains to Asia are interrupted by military contests over oil or internal conflict in the nations that have been supplying us with ultra-cheap manufactured goods. WalMart's "warehouse on wheels" will not be able to operate in a non-cheap oil economy

It will only take mild-to-moderate disruptions in the supply and price of gas to put WalMart and all operations like it out of business. And it will happen. As that occurs, America will have to make other arrangements for the distribution and sale of ordinary products.

There it is.

On Walmart:

"The impact was painfully clear at Wal-Mart, which today reported the smallest quarterly gain in profits in four years. Sales of the nation's biggest retailer grew 10 percent in the second quarter, but profits increased only 5.8 percent.

Wal-Mart said its customers are cutting back on other purchases because they are spending so much to fill up their gas tanks. By one estimate, the spending power of the average Wal-Mart customer has been cut by more than $200 because of high fuel prices.

Wal-Mart warned that it expects the consumer spending cutbacks to get worse going into the back-to-school season when families with children usually spend heavily on clothes and school supplies."

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/16/AR200508...

Darwin was right: Adapt or um, wither away.

Anybody notice: Many of the people who responded to the initial question actually seemed to come to appreciate the adjustments they made. And a number of the adjustments are things intelligent and environmentally conscious people have done for years: Who doesn't try to maximize his use of the car for errands, walk or ride a bike when you can, etc. Hey, maybe Peak Oil wll solve the Health Care crisis! (diabetes, heart disease, cancer all reduced by more exercise)

Hopefully $2.50 gasoline is getting people thinking about what happens further down the line. If they're not, then they can't blame anybody but themselves. And if they make adjustments and nothing happens, hey, money in their pockets.

Unfortunately, if gas falls back down to $1.90 or lower, lots of people will say "I told you so - $@%#^# crooks." and go right back to wasting gasoline like there's no tomorrow.

And then get spanked again - probably much worse.

And if gas does fall back to below $2/gallon, people will be that much more convinced that the world has all the oil it will ever need, and that high price spikes are due to (greedy oil companies/greedy arabs/fear/environmentalists - pick favorite villain here) and not due to fundamental supply constraints. They will then be that much more resistant to changing down the line when the price goes up again.

You are still taking baby steps on the beach as you look over your shoulder at the tidal waves coming in.

I can not envision any scenario -- given country-by-country new projects coming online including so-called "non-conventional" sources, EOR with existing fields, realistic depletion rates and inelastic demand -- that gasoline prices will ever fall to $2.00/gallon ever again. It's cheap now at $2.50 and I believe that's nearly a "bottom-line" from now on. There may be some price fluctuations in the near future that take it a few cents lower, but that's it. Will everyone say "there's no problem, the crisis is over" if on October 1 it's at 2.30?

Peak oil is about supply inventories versus demand and there is no credible evidence whatsoever in any report that I've seen that would bring down prices to under $2.00/gallon in the near (or distant) future. Every financial analysis cited here at TOD (from Bloomberg, etc) has said don't expect prices to come down in the near future in the next few years.

These financial analyses always include the obligatory "oil prices are not at their all-time high compared with 1982 adjusted for inflation" paragraph. Look at all these stories. Standing by itself, that paragraph is always included in the text. The only things they leave out are (1) there is no historical event (OPEC embargo, Iranian revolution) precipitating the current high prices and (2) don't expect price alleviation ever because that would scare the people. It's always over a limited window of a few years. And then we'll see.

That's the whole power of the CERA/Daniel Yergin propaganda. It supports this bogus story.

I heard today on the TV, with a local news cast talking about the high price of gas, and they clearly stated that "experts" believe gas will never go below $2.00 again!! I couldn't believe they stated that on TV. I'm just curious as to how many sheeple actually picked up on that statement??

Mr. Fuller probably isn't telling you the half of it. Typically, people I know commute long distances so they can buy rather than rent. The moment they buy, they get $20k or more a year ($50k on the coasts), mostly free of income tax due to lifetime exemptions, from appreciation in equity, i.e. the real-estate bubble. And they get another $10k or so in income tax they don't have to pay, courtesy of the real-estate bubble. Now, really, who could resist taking $30k or more annually from poor schlemozels who will be born in later years?

I suppose we could abolish the mortgage deduction and prick the real-estate bubble, but that would be economic heresy, wouldn't it? Besides which, lots of end-of-the-worlders are happy to profit from those things as well, and they, too, would be out of a handsome extra income.

There has been a lot of talk about public transportation. I would love to see a list of cities with population over 1 million who have only bus service. And then, I would love to see the maximum capacity of their bus services. I think those numbers might shock those people who take mass transit for granted. As a nation, we are simply not setup for it.

Does anybody have any data on commercial railroad profits and plans? I would think as badly as those guys have been hammered, they would be itching to expand again...

Here's what's really funny. This is a recycled story! They posted this story over 4 months ago when Gas prices hit $50 a barrell. Now they are posting it again, pretenting that this is a new piece. They may have added a few coments, but the first piece on the prices in Alaska and the gentleman driving the SUV gas guzzler was in the original article posted over four months ago.

Talk about pathetic news.

OOPS! -- Edited for clarity

Here's what's really funny. This is a recycled story! MSNBC posted this story over 4 months ago when oil prices hit $50 a barrell. Now they are posting it again, presenting this article as a new piece!

They may have added a few coments, but the first piece on the prices in Alaska and the gentleman driving the SUV gas guzzler was in the original article posted over four months ago!!!

Talk about pathetic news.

Good catch, Eric. Still, at least it generated interesting discussion (although it also serves as a stark reminder of the fact that people's habits aren't really going to change as long as the prices inch up slowly and there are no shortages.)

I guess someone else decided to pick up on this thread:

http://news.yahoo.com/s/usatoday/20050818/bs_usatoday/commutersseekwayst...

Still, I think a lot of this is non-sense. If gas was expensive, which it isn't historically speaking, they would just start driving slower. That is the easiest thing to do. Anyone see any evidence of that? Or is 70-75 still the average highway speed?

When it comes to what people think of gasoline prices it is what their foot does on the gas peddle that counts, not what comes out of their mouth.