tomhudson's Journal: $7/gallon gas for US markets predicted by CIBC

Note that the article is about US prices ... we're already at almost $6/gallon in Canada.

Partial quote:

Gasoline could hit $7 a gallon in four years: CIBC
Crude predicted to top $200 by 2012 on tight supplies, pushing gas higher

SAN FRANCISCO (MarketWatch) -- Surging crude prices, which could surpass $200 a barrel in four years on tight supplies, could push gasoline prices to as high as $7 a gallon, CIBC World Markets analysts said Thursday. Crude supplies are actually lower than some official estimates indicate, while demand is unlikely to fall anytime soon, according to a statement by analysts led by Jeff Rubin at CIBC, an investment bank. They forecast that these tighter supplies and continued strong demand will drive oil and gasoline prices to roughly double their current levels by 2012.

"It is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity," said Rubin. "Despite the recent record jump in oil prices, oil prices will continue to rise steadily over the next five years."

The argument is that while total energy production is increasing, that increase is almost all natural gas, not something you can turn into a gallon or liter to stuff in your tank, so gasoline prices have nowhere to go but up, since demand is increasing faster than supply.

CIBC based its prediction on an analysis of crude-production estimates by the International Energy Agency, which the investment bank says has overstated supplies because the agency counts natural-gas liquids as part of the output. Stripping out natural-gas liquids, the global oil market is much tighter, and oil production will hardly grow, they added.

"While natural-gas liquids only account for 10% of total supply, they account for virtually all of the increase in petroleum-liquids production since 2005," said Rubin in a news release. "Stripping out natural-gas liquids, oil production has not grown for over two years, which certainly goes a long way to explaining why oil prices have doubled over that period," he added.

Makes sense ...

Latest data from the Energy Information Administration, the statistical arm of U.S. Energy Department, indicated domestic drilling of natural gas liquids was increasing, while domestic oil production was falling.

$7/gallon ... we'd all better start coming up with ideas on how to drive less.

Heh

[Captain Splendid]

Yeah, caught that article too. The funniest part was then they said crude was going to be $150/barrel by 2010. We're probably going to see those prices this year.

Re:

[tomhudson]

All it would take is one hurricane ...

I don't know why, instead of farting around with tweaking the start of daylight savings time, we don't just go to a 4-day work week. We'd save 20% of the energy on daily commuting, 20% on land use for parking (if we staggered the "day off") and roadway congestion, and with a 3-day weekend, people wouldn't be having to cram in all the stuff that they put off during the week into 2 days.

4 days, 10 hours a day, is easily doable for many jobs.

Then there's the whole "

Re:

[Captain Splendid]

I've got a feeling it's going to take some sort of a revolt to change things

Rising energy costs will do that by itself. Corps may on the slow and sluggish side, but they know how to read a bottom line. I'm expecting a slew of Sunday Journal articles soon about the hard push towards telecommuting. Since you do consulting, that might be something you'd want to pimp. There'll be a lot of money spent on 'transitioning'.

Re:

[tomhudson]

It's something I've been thinking about for the last 6 months or so, actually. That's why it keeps on coming up in conversations. One way or another, our energy consumption habits have to change.

Re:

[rthille]

I drive a lot more on days I don't work than days I do. Of course, I telecommute, so I'm an exception, but my brother is the same way. He works 5/4/9 for the Navy and that extra day off is used to drive around doing errands and etc.

Re:

[tomhudson]

But for most people, going from a 5-day workweek + 1 day driving around on errands to a 4-day workweek + 1 day driving around for errands still works out to a cost and resource usage reduction. It's not like you'll all of a sudden have an extra days' worth of errands to run.

Re:

[richie2000]

3+3 is the way to go. Three days work, three days off.

Re:

[tomhudson]

3+3 is the way to go. Three days work, three days off.

Bombardier was going to go one better at one plant - 3 days on, 4 days off. 3 days x 12 hours per shift, and they'd "top up" the employees pay with an extra 2 hours, bringing it to 38 hours (so they save 2 hours). Employees would have saved 2 days commute, and had 4 day weekends. The plant would then be able to run 4 shifts and still leave 1 day for downtime/retooling.

It would have been a win/win for everyone, as well as saving a lot on energy costs

In other news...

[curtisk]

In other news, sales of hoses, gas canisters and mouthwash have been predicted to skyrocket by 2012

Re:

[tomhudson]

We'l have to update our jokes ...

Q. How does a redneck quintuple the value of his pickup?
A. He fills the tank

And it won't be just the redneck Amish who have a horse up on cinder blocks on their front lawn ...