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InvisibleBlack -> RE: Will $5 a gallon gas soon be the reality? (1/24/2011 5:13:04 PM)
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quote:
ORIGINAL: Marini
I would like to hear what some of our resident "great thinkers" could be the answer to our ever increasing oil and gas prices.
Will $5 gas become the new normal?
[;)]
Not being an expert in the oil futures market, my opinion is relatively uniformed as to the future price of oil - but I would say that a big chunk in the rise of the price of gasoline is simply due to the fall of the U. S. dollar in foreign exchange. Currently the dollar is at parity with the Canadian and Australian dollars. It's pretty much taken a nose dive against most of the world currencies (with the exception of euro which has its own problems and the reminbi which has a fixed exchange rate (and boy has that caused tensions with China)). Obviously, as long as the value of the dollar against foreign currencies is falling, the price of any imported goods will rise and one of the major things we import is oil.
So, I believe a stabilized dollar will stop the currently rising price of gasoline and a stronger dollar would lower the price of gasoline.
That being said, if your goal is lower the price of gasoline without resorting to currency manipulation, I have a number of suggestions which have a somewhat realistic time horizon (as opposed to developing entirely new technologies).
First, build more oil refineries in the United States. A great deal of the value in the price of gasoline is not created at the well head but at the refinery. By refining oil overseas and shipping gasoline here, that value is captured in foreign countries. Ship the crude oil here and refine it here.
Second, encourage a shift to diesel. Diesel burns more efficiently than gasoline. Modest estimates indicate a 5% fuel conservation using diesel instead of gasoline.
Third, improvements in technology have resulted in mssive increases in the amount of natural gas available in the United States and resulted in a massive drop in the price of natural gas. Convert everything you can to burn natural gas.
Fourth, focus R&D efforts on improving electrical transmission. The further you can move power around the country, the more efficiently you can source it and the more options you can offer people in what exactly is creating their power (if your hybrid is being charged off a dirty coal-burning power plant, just how green are you being, really?).
Fifth, develop good foreign relations and establish favorable trade agreements with new oil-producing nations. I cannot claim the United States' foreign policy has worked wonders with either the classic oil production nations of the Middle East nor the newer oil producing nations such as Venezuala or Nigeria. Even where we seem to have good relations with these nations (such as the countries that span the Baku–Tbilisi–Ceyhan Pipeline) it seems to me that it's more built on a house of cards than any long term good will.
Lastly, to answer the OPs underlying question of Will $5 gas become the new normal? ... eventually, of course, yes. Even leaving aside the supply of oil in an ever expanding world, historically, inflation never goes away - so as the United States continues to inflate its currency, as it's done for almost a century, the prices of everything will increase. $5 gas will become the new normal no matter what. Remember, there was a day when people were speculating would $1 gas be the "new normal", then would $2 gas be the "new normal"...
[Edited: Typos]
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