patrick.net

Vicente says

Result of “just in time” inventory is trucks rolling half-full inefficiently because we need another 50 pairs of shoes and stretch pants shipped from distribution center right now

This is a symptom of what I call the NASCAR Economy: Going around in circles at high speed, burning lots of oil in the process, but accomplishing very little.

Yes, let them eat iPads.

justme says

Let’s do the math: 368/4=92gals/month.

How on earth does the *average* household manage to consume 92 gals of gasoline/oil in 1 month, even with 2 cars? That’s insane. But we knew that already. Americans consumes 4x as much gasoline per capita as the rest of the western world.

I suppose by driving 92gal * 20 mpg (US avg) = 1820 miles per month or 910 miles per month per car (2)

So at ~22 work days per month, assuming no driving on the weekend, this would be a 40 mile round trip (20 miles each way).

I wonder what the difference in commuting distance is between the US and Germany...

It is more the MPG than it is the M(iles) that makes the difference. And the driving style.

Yeah, gas is costing me about $250.00 a week to $350.00 a week. We SHEEPLE just keep letting them do it to us day in and day out. I'm a contractor. My clients keep saying: Better Price (lower), Higher Quality, My materials, because they're petroleum based went up 30% again. It's crazy. Profit for yourself and your business is null and void.

justme says

How on earth does the *average* household manage to consume 92 gals of gasoline/oil in 1 month, even with 2 cars? That’s insane. But we knew that already. Americans consumes 4x as much gasoline per capita as the rest of the western world.

Very easily, actually - when you compare to Europe, remember that the US is twice the size of Europe (excluding Russia); people have to drive much farther than they do in Europe.
In many urban areas, commutes of 25 to 50 miles are common. Out of 20 coworkers in my office, only 1 has a commute less than 10 miles, 2 are under 20 and 3 are over 40 each way.
In addition, most of the US does not have a usable mass transit system - but thats a topic for another thread!

That's barely related to inflation. There's a lot of free cash floating around and people don't know what to do with it. People are generally avoiding stocks because of the crash and some are looking again at real estate; many, though, are looking at commodities.

The hype around gold, silver, cotton, oil, and rice have people with more money than they know what to do with buying futures contracts or ETFs that do so. These are people looking to turn a quick buck, and simultaneously complaining about the rising costs of things. In short, it's representative of the ignorance surrounding us (surrounding me, anyway).

While commodity costs certainly drive prices up, and oil drives up the prices of everything, this is a temporary state. These prices are representative of what they would look like in 7-15 years; that they're this high now is just speculation. Expect more wild swings between commodities and currencies as less sophisticated investors get more ready access to these financial products.

I've been wondering what would happen if you were not allowed to trade futures. That is, you could write them, and you could buy them, but trading was forbidden. That person buying a futures contract for 10,000 barrels of oil would be forced to take delivery of the oil and sell it on the open market. You'd see the prices of everything drop about 20% within days, I bet.

Gas prices are nothing to get upset about. If prices stay high then after a rough transition a new equilibrium will be found and the net impact will be a more sustainable situation for us all. Far more likely is that this is another profit taking blip that will pass and prices will go low again to achieve the oil companies goal of keeping all the fools in their big fat guzzlers. In truth I don't know if the oil companies are actively orchestrating this cycle or if it is just a happy accident for them.

The real travesty here is that the money is being siphoned off from the pockets of people who actually earned it into the pockets of people who do nothing to earn it. Although perhaps the even bigger tragedy is that fixing this is extremely easy but can never happen because the same fools who can't see the part they play in all this can't think deeply enough to recognize how the solution would work when the idea is put to them.

So, pretty much the only thing that will save us from self-annihilation is to actually run out of oil. BTW, the solution for those who haven't read my rants before, simply tax the oil and thus take the unearned profits and return them to the people.

well, I moved close to work and have been using a bike to do little errands (for exercise). I have had this car since may 2008, been a full 3 years. 12,500 miles on it.
I fill up maybe once a month, 12 gallons (sometimes less).

whew.

:)

In a few months when oil barons have decided they squeezed hard enough until you are almost dead, they will decide to let up so you can catch a breath. Coincidentally we'll see economists saying "inflation is flat or slightly negative".

How do higher gas prices lead to inflation? If households have less money to spend, then they'll consume less, which will drive down prices, no?

You'll pay what you must, because for most Americans the need for gasoline to continue living the burbclave lifestyle makes demand inelastic. Oh sure they'll drive a little slower, maybe check their tire pressure and knock a whopping 1% off their usage. What makes you think Americans will consume enough less to matter? When has drops in consumer usage EVER significantly driven down gas prices?

You sheeple are a bunch of whiners. If gas price is too high why dont you do something about it instead of blaming the man. The problem isn't energy use, high energy use is a sign of a growing economy, the issue is that you expect everything to always be the same. Damn entitlement mentality

Yea, I am writing this from my Ipad.

"justme" ... USA uses 4x as per capita as the rest of the western world, not only because of our less efficient vehicles but mostly because of suburban sprawl with our 1+ acre housing lots and endless strip malls.

Most people in western countries live in apartments or townhouses in walkable areas without much suburban sprawl. Its either city or farm and countryside, not much in between.

Many places in Europe also tax the car based on the size on the engine, or have higher gas taxes or both. I bet the tax on a 5.0 V8 is huge.

In 2010 I only drove 3831 miles and used 89 gallons. That is $19.58/month. It's hard to believe that's it but I keep good records. And my car has averaged 43mpg since I've owned it for the past 2 years. Since my gas usage is so small someone else is buying the rest of my average share.

Gas taxes more than pay for the roads, infrastructure and what not. In fact, the taxes are used to fund many projects.

If you pay $5/G in taxes and burn 1G you pay $5. If you pay 30 cents/G in taxes but burn up 20G, you pay more.

Tire pressure effects mileage by about 5%, driving slower or less eradict can be 10-30% or more. My EPA was 28mpg on my car, but on the highway I could get 39 due to a less aggressive driving style.

My new car gets about 17mpg average, and it's a small sedan. ah well, it's fun.

Rich says

In 2010 I only drove 3831 miles and used 89 gallons. That is $19.58/month. It’s hard to believe that’s it but I keep good records. And my car has averaged 43mpg since I’ve owned it for the past 2 years. Since my gas usage is so small someone else is buying the rest of my average share.

Rich, you got me beat. I drove 4289 miles and averaged ~30mpg. My next car will be better.

jetbay says

not only because of our less efficient vehicles but mostly because of suburban sprawl with our 1+ acre housing lots and endless strip malls.

MOSTLY because of sprawl? I don't think so. I think the efficiency (MPG) is the biggest factor. I know there is a stat on Vehicle Miles Driven, and with some work maybe we can find one for European countries. Then we'll know with more certainty.

pkennedy says

Gas taxes more than pay for the roads, infrastructure and what not. In fact, the taxes are used to fund many projects.

I couldn't find any reputable links that support your claim that gas taxes cover the costs of roads and so forth.
http://www.ospirg.org/news-releases/transportation/transportation-news/myth-busted-roads-not-paid-for-by-gas-taxes
Please share if you have something of interest.

Vicente says

You’ll pay what you must, because for most Americans the need for gasoline to continue living the burbclave lifestyle makes demand inelastic. Oh sure they’ll drive a little slower, maybe check their tire pressure and knock a whopping 1% off their usage. What makes you think Americans will consume enough less to matter? When has drops in consumer usage EVER significantly driven down gas prices?
“Eagles are dandified vultures” - Teddy Roosevelt

The last big oil price bubble saw large changes; bus ridership jumped dramatically (at least here in Phoenix), small car sales jumped, moron vehicles sat on sales lots and didn't move, the number of scooters, bicycles and skateboards was visibly higher. The so called inelastic demand for oil is a myth, or at most a transient effect. Given a little time people adapt quite well. We waste most of our oil, coal and gas here in the US because it is priced absurdly low.

Maybe this will be the resurrection of rail freight and the demise of just-in-time. Perhaps that's why Buffett bought Burlington Northern

terriDeaner says

justme says

Let’s do the math: 368/4=92gals/month.
How on earth does the *average* household manage to consume 92 gals of gasoline/oil in 1 month, even with 2 cars? That’s insane. But we knew that already. Americans consumes 4x as much gasoline per capita as the rest of the western world.

I suppose by driving 92gal * 20 mpg (US avg) = 1820 miles per month or 910 miles per month per car (2)
So at ~22 work days per month, assuming no driving on the weekend, this would be a 40 mile round trip (20 miles each way).
I wonder what the difference in commuting distance is between the US and Germany…

Europe has a robust public transportation network - no need to use a car most days. Also, little in the way of suburbs so people can walk to the rail station or to work.

cc0 says

I’ve been wondering what would happen if you were not allowed to trade futures. That is, you could write them, and you could buy them, but trading was forbidden. That person buying a futures contract for 10,000 barrels of oil would be forced to take delivery of the oil and sell it on the open market. You’d see the prices of everything drop about 20% within days, I bet.

I agree. Commodities plummeted this week mostly due to margin calls.

justme says

jetbay says

not only because of our less efficient vehicles but mostly because of suburban sprawl with our 1+ acre housing lots and endless strip malls.

MOSTLY because of sprawl? I don’t think so. I think the efficiency (MPG) is the biggest factor. I know there is a stat on Vehicle Miles Driven, and with some work maybe we can find one for European countries. Then we’ll know with more certainty.

Smaller cars in Europe too, even cute little 3 wheel cars. How much vehicle does one need anyway to pick up groceries? I drove all over the UK last year and found that even though gas cost twice as much there (after converting for litres and currency) my converted cost was the same as driving the same mileage in the US in my 1999 Toyota 4Runner. Which would make the car I rented there twice as efficient as my 4Runner...

I read somewhere that more than half of gasoline is wasted as heat. Only a relatively small portion is used to actually move the car.

So efficiency is a potential area for huge savings.

About 30% of the energy from gas gets to the tires, the rest is lost in heat, and friction elsewhere. That being said, the way engines are built, and our expectations of those engines, doesn't leave us a huge amount of room for efficiency improvements there.

There are enough people out there working on that problem, that it's clearly not that easy to solve. Ford would rather invest in a better gas engine and beat the prius, than build electric cars. If they could, they would.

Lighter cars, more aerodynamic, and computers that will fight bad drivers habits and "waste" would probably help the most. While I can get 39mpg on a car rated at 28mpg, many people can't even get epa. That's a pretty massive gap right there! Obviously the biggest savings would be to move slightly closer to work, play, entertainment and shopping to avoid many of the miles we drive.

I read somewhere that more than half of gasoline is wasted as heat. Only a relatively small portion is used to actually move the car.
So efficiency is a potential area for huge savings.

True to a point, roughly 30% of the fuel from a gasoline engine actually makes you move, maybe as much as 45% with a diesel engine. The laws of thermodynamics won't let you get a lot better than that using any known combustion technology. Fuel cells could theoretically get us to maybe 80% but not for cheap.

I think we are at or very near to the point of diminishing returns on improvements with automotive technology. Shoving X square meters of frontal area through the air at 120 kph takes lots of energy. Best you can do is move a lot of stuff at one time with the same frontal area - i.e. use a train!

kiatoa says

True to a point, roughly 30% of the fuel from a gasoline engine actually makes you move, maybe as much as 45% with a diesel engine. The laws of thermodynamics won’t let you get a lot better than that using any known combustion technology. Fuel cells could theoretically get us to maybe 80% but not for cheap.

Right on... pesky thermodynamics!

kiatoa says

So, pretty much the only thing that will save us from self-annihilation is to actually run out of oil. BTW, the solution for those who haven’t read my rants before, simply tax the oil and thus take the unearned profits and return them to the people.

you sir, have a solid grasp of economics, if I may say so. . .

http://en.wikipedia.org/wiki/Severance_tax

jetbay says

Many places in Europe also tax the car based on the size on the engine, or have higher gas taxes or both. I bet the tax on a 5.0 V8 is huge.

On CR I was going on how great Norway is, as is my wont, and some guy popped up that he had a Norwegian coworker who fled here because he was unhappy with the tax regime on cars.

So I went to Oslo Toyota to confirm this, and I was shocked!

A fully loaded Prius is $63,000 -- a V8 Landcruiser is $270,000!

kiatoa says

I think we are at or very near to the point of diminishing returns on improvements with automotive technology.

nah, there's still tons of stuff to do. We have yet to really economize on the stuff outside the car.

Once we fully electrify things we'll be carrying less mass in motion, which is good. There's a desperate need to increase range and less battery mass. Not sure the world has enough copper to actually electrify roadways, but we might figure out something to get energy to cars better.

I'm pretty sure that by the turn of the century we'll be entraining cars on every trip -- there won't be a driver in cars any more.

Troy says

nah, there’s still tons of stuff to do. We have yet to really economize on the stuff outside the car.

It surely looks like that now...

but we did know how to do that in the past, and it looked GOOD.

I read somewhere that more than half of gasoline is wasted as heat. Only a relatively small portion is used to actually move the car.
So efficiency is a potential area for huge savings.

It's worse than half. The common ICE about 62% is straight out loss but not all heat, some of it is simple friction loss etc, energy expended to move fresh air in and exhaust out (sustain the cycle) and so on.

I was really reminded of the waste heat the other day when after a long drive I parked my car in a cold garage. When I came out to the garage to get something from trunk a bit later it was quite warm in there as all the heat still shedding from the block & manifold made it hot and stuffy.

Diesel engines are better, but here in America we hate diesels in cars for some reason.

triple-take headshake:

half-empty trucks guzzling like drunks, while warehouses crumble...
(the ones where the jobbers used to supply retail from)
- the ones that used to employ a lotta folks stuck in McJobs now.
Wasteful is the new North American industry.
Send in the clowns.

Whoever is still making a living by selling fuel is still smilin', I'm sure.
But the final kick in the pants is convincing the public that this is still,
um, necessary?
The whole concept of contraction brings on a tantrum of heroic proportions.
That gas bill has doubled in two years (and they're still blowing smoke
about a recovery.)

Bubble Bobble says

They will make sure they can sell us every last drop of oil before we move to another tech.

I'd agree with this.

Vicente says

Diesel engines are better, but here in America we hate diesels in cars for some reason.

Diesel fuel in the US is taxed higher than gas. In europe diesel is taxed lower than gas, a lot lower on the order of a dollar a gallon in many countries. There are extra costs to manufacturing a diesel engine, which needs stronger crank, rods, pistons, head, starter, battery as well as a very high pressure fuel injection system. You will never make up the difference in the extra cost of the car with higher mileage in the US. They are louder, slower, and most gas stations don't have a diesel pump so why would anyone buy one if it's not going to be any cheaper? People don't hate them, it just doesn't make any sense to buy one.

Bubble Bobble says

2.The solution for the next 30 years will involve the decentralization of the main engine to the wheels. Rotary engines are much more efficient and lighter. They will make sure they can sell us every last drop of oil before we move to another tech.

http://www.msnbc.msn.com/id/42460541/ns/technology_and_science-innovation/

I certainly hope the wave disk engine works out, but it's an awful long road from a proof of concept to a working production engine that will last 300,000 miles, meet emissions standards, and be produced at a price that is marketable. Many have tried to supplant the basic four stroke engine for the last 100 years and all have failed with the exception of the rotary, which is a very very thirsty little devil that has so far been limited to high performance applications that disregard fuel economy.

The wave disk engine looks to me like it will have massive problems with seals and need very expensive alloys similar to turbines to be viable.

Mark my words:

When the price of diesel hits $5 a gallon this 2011 summer, the trucking industry will grind down to a halt. Truckers that move everything from organic veggies to toilet paper to dog food will stop driving as was almost the case in late 2008 when a barrel of oil was around $150.

Now, what are you doing to do?

As for me, I am going to make ethanol as a clean, renewable fuel in a small scale and make food in greenhouses (veggies grown in CO2 enriched greenhouses, fishes, mushrooms, earthworms, etc.).

Check this out: www.LiquidEnergyOasis.com and http://www.youtube.com/watch?v=9qZPwBPAqks&feature=related

Everything is completely affordable (you should definitely buy that second home you want honey). Everyone also needs to go on a drive for their vacation (as far as possible, yeah baby). Everything is just wonderful today....

no2foreclosures,

You were saying about diesel? Thimble fledge could applecart...... must be distracted by something....

Well, put it in a perspective.

$400/Month for a household with two relatively new cars. Is it really much?

Two mid-size cars cost on average 45-$50K. They are usually replaced by a middle class family more often than after 5 years. This is about $4500 a year. On top of this there are $2000-$3000 (much more than that in California) spent on insurance, maintenance, interest on car loans, licenses, fees, parking, tickets, etc. It all adds up to more than $7000/year or about $600 a month. So gas prices are still less than 40% of car expenses. To become the majority of the transportation cost they must jump to $6-$7/gallon.

IMO, gas is still dirt cheep.

jetbay says

“justme” … USA uses 4x as per capita as the rest of the western world, not only because of our less efficient vehicles but mostly because of suburban sprawl with our 1+ acre housing lots and endless strip malls.
Most people in western countries live in apartments or townhouses in walkable areas without much suburban sprawl. Its either city or farm and countryside, not much in between.
Many places in Europe also tax the car based on the size on the engine, or have higher gas taxes or both. I bet the tax on a 5.0 V8 is huge.

While the whole concept of "endless strip malls" and "burbs" is a probably a topic for another time... :) Lemme throw in a contrarian view.

Yes, we have our 1 acre lots vs close in apartment buildings and townhouses. Why shouldn't we? This IS America, lest we forget. Living in the world's foremost economic power has its pros and cons, but let's not forget that there IS a difference between America and a third world country. It's fairly evident. Now, between Europe and America? That gets a bit more fuzzy...but I'll leave with you a parting thought.

While the average person in Europe (or certain parts of it) may feel "happier" overall, their lifestyle is not the same as the average American, who may be "unhappier", but has a different (for better or worse) lifestyle.

I'll pick a cheesy example.

Who in Europe or America wouldn't wanna drive nice V8 powered sports car? How much does it cost on both sides of the Atlantic? :) You have your answer.

While there is a lot of "brainwashing" in America, Europe's not a whole lot better either.