Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Sun Jun 26, 2005 2:19 pm Post subject: The breaking point
Ten dollars a gallon sounds about right to be the real breaking point before real demand destruction sets in and people can no longer cope.
We are currently at $2.20 a gallon and demand is still growing at 4%. That is a lot of growth. It would take gas over $3 a gallon just to get it to slow that growth down. I am talking about the point where we get a real contraction gets going. At $3 a gallon most people probably still wouldn't car pool, they wouldn't slow down *gasp* drive 55 on the interstate, or trade in their SUVs.
People arn't going to just quit their jobs because gas has reached $5 a gallon. This is America, people who don't have jobs become homeless in short order. Quiting is not option they will have to find a way to get to work or else. This will mean car pooling wheather they like to do it or not. Even an SUV that gets 15 miles per gallon but is packed with seven people gets 105 miles per person per gallon. Just car pooling with one extra person will effectively cut the price of gas in half. So $5 dollar gas is really equal to $2.50 gas when people car pool. As long as people can still get to their jobs and still get to the store demand will not be destroyed but in fact continue to grow.
At $7 a gallon there would likely be a massive ressession but people would still be fighting to get through this. People want to survive. We have a built in survival instinct to fight the dying of the light. People who have jobs we make every effort to get to them. People arn't just going to roll over and die because gas is $7 a gallon.
It is not until we see $10 a gallon that the fight for survival will become a losing battle. It is only at this high price will people start loosing their home, jobs, and start going hungry. This will be the true breaking point in the economy and likely signal the begining stages of die off.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sun Jun 26, 2005 2:44 pm Post subject:
I estimate that the US is now paying about $200 billion more per year than one year ago for energy (through March). There is significant evidence that US shrugged off those costs by increased borrowing and drawing down savings.
Foreigners have provided the funds for the increased borrowing by US consumers. So demand destruction does not occur purely by higher prices.
An outright shortage may be necessary to curb energy use in the US. The price at which it occurs is not as important as it seems at first glance, as long as the US has ability to borrow from foreigners to finance its trade deficit - and energy use.
People arn't going to just quit their jobs because gas has reached $5 a gallon.
Of course not. But they can and will move, to be closer to work, or get a different job, so they don't have to drive as far.
This is already happening at my office. People drive as far as an hour each way to the office, and those who live farther away are really being killed by the high prices. They are taking different jobs - that are either closer to their homes, or that come with a "company car" and free gas. Some are actually considering quitting or going part-time. If they have a working spouse and kids, the savings on gas and daycare makes up for a lot of the money they'd lose in salary.
So far, no one is moving to be closer to the office, but that may be because we're in transition now, and the office itself may be moving within the next few years.
Joined: May 26, 2004 Posts: 1195 Location: Zoorope
Posted: Mon Jun 27, 2005 2:15 am Post subject:
Come on, people. Gas here is already at $6 (euro 1.25 per liter) and everybody keep driving alone like always. People don't even TALK about it. They don't give a blink over price at $6. _________________ **no english mothertongue**
--------
Objects in the rear view mirror
are closer than they appear.
Come on, people. Gas here is already at $6 (euro 1.25 per liter) and everybody keep driving alone like always. People don't even TALK about it. They don't give a blink over price at $6.
The US drives 10,000 miles per capita (40,000 miles for a family of four) using cars that average 20 mpg. That's 2,000 gallons a year for a family of four. A dollar rise in gas prices costs an average family in US $2,000. At $6 a gallon, that family would be seriously affected to the tune of $12,000 a year.
The UK drives a little over 4,000 miles per capita (16,300 miles for a family of four) using cars that average around 31 mpg. A dollar rise in gas prices only affects them a quarter as much. Gas would have to go to $22.80 a gallon to cost the average family in UK the same $12,000 a year.
American diving habits and family budgets have evolved around a premise of $1 - $2 gas. While because of the gas taxes in Europe their driving habits and budgets already reflect $5+ gas.
Joined: May 26, 2004 Posts: 1195 Location: Zoorope
Posted: Mon Jun 27, 2005 5:18 am Post subject:
My city (Rome, Italy) has the most amazing car rate in the world (990 cars per 1000 inhabitants!!!) So I am really surprised to see a lot of people going by bycicle these days. Most of them are immigrants or students or German tourists , but anyway it's not usual... maybe something is changing. _________________ **no english mothertongue**
--------
Objects in the rear view mirror
are closer than they appear.
Come on, people. Gas here is already at $6 (euro 1.25 per liter) and everybody keep driving alone like always. People don't even TALK about it. They don't give a blink over price at $6.
The US drives 10,000 miles per capita (40,000 miles for a family of four) using cars that average 20 mpg. That's 2,000 gallons a year for a family of four. A dollar rise in gas prices costs an average family in US $2,000. At $6 a gallon, that family would be seriously affected to the tune of $12,000 a year.
The UK drives a little over 4,000 miles per capita (16,300 miles for a family of four) using cars that average around 31 mpg. A dollar rise in gas prices only affects them a quarter as much. Gas would have to go to $22.80 a gallon to cost the average family in UK the same $12,000 a year.
American diving habits and family budgets have evolved around a premise of $1 - $2 gas. While because of the gas taxes in Europe their driving habits and budgets already reflect $5+ gas.
In those calculations you only look at the miles you drive yourself. What does it come down to when you also look at the miles driven to transport all the goods, that the family consumes, to the local stores (so basically all the oil used in the entire production & delivery process)? Doen anyone know where I would be able to find those numbers?
Carver
One way would be to find the number of barrel a country cunsumes on a per capita basis annually(about 25.4 in US, about 11.2 in UK). Every dollar rise in only would cost an american about $25.40. Multiply that by the number of people in a family. (The increase in oil prices used by business gets passed on in the form of higher consumer prices, the government eventually passes its additional costs on in the form of higher taxes.)
Every $10 increase in oil takes about $1000 out of an American family's pocket annually.
Joined: Aug 13, 2004 Posts: 1185 Location: Richmond, VA, Pale Blue Dot
Posted: Mon Jun 27, 2005 4:17 pm Post subject:
lets say that for 1 average US car, it requires a refill 2 or 3 times a month and has an avg tank size of 21 gallons (just a semi-educated guess).
at $1.00/gal
$1 x 2 x 21 = $42
$1 x 3 x 21 = $63
at $3.00/gal
$3 x 2 x 21 = $126
$3 x 3 x 21 = $189
at $5.00/gal
$5 x 2 x 21 = $210
$5 x 3 x 21 = $315
at $10.00/gal
$10 x 2 x 21 = $420
$10 x 3 x 21 = $630
If you check different monthly incomes we begin to see the percentage of monthly income just going to gas for 1 car. At varying percentages, priorities shift.
anyway, thats how i look at it. _________________ "If you are a real seeker after truth, it's necessary that at least once in your life you doubt all things as far as possible"-Rene Descartes
"When you have excluded the impossible, whatever remains however improbable must be the truth"-Sherlock Holmes
Last edited by turmoil on Mon Jun 27, 2005 11:38 pm; edited 1 time in total
i realize that people don't use up a whole tank before refilling, but if you figure the avg US car uses about 32-42 gallons (the better part of a barrel or more) a month, then you can estimate cost. (not that i think this is a perfect way to figure out how much gas people use and what they will spend on it).
But my goal was to show how it adds up (er, multiplies) for cars with ~21 gallon tanks at different prices, not to solve the world's problems (which would be fairly easy if the human species was slightly different) and get people to drive more efficient cars. i have no doubt that people will drive fuel efficient cars when squeezed hard enough. But it seems to me (getting back to the thread at hand) that $10/gal would definitely cause growing costs of food, utilities, etc to compete with high gas costs for everyone. _________________ "If you are a real seeker after truth, it's necessary that at least once in your life you doubt all things as far as possible"-Rene Descartes
"When you have excluded the impossible, whatever remains however improbable must be the truth"-Sherlock Holmes
Based on this, the suburban household with the $70000 income only saves $560 per year at the current time. Any additional expenses beyond that means they have to either cut back on something else, or further max out their credit cards. so, based on the above calculations, anywhere over $.30 per gallon is getting into painful, and at .66 per gallon, the increase is starting to show up in the $100 per month range, which is detectable in the budget of the average suburban family.
Quote:
People arn't going to just quit their jobs because gas has reached $5 a gallon.
Quote:
This will mean car pooling wheather they like to do it or not. Even an SUV that gets 15 miles per gallon but is packed with seven people gets 105 miles per person per gallon.
No, people will get laid off of their jobs just because gas has reached $5 per gallon. Reducing the number of vehicles on the road to 1/7 of the current level, as suggested above means a 6/7 reduction in disposable stuff, like tire usage, repairs, oil changes, etc. but in the long run, a 6/7 reduction in vehicle purchases. This trickles up stream: Fewer cars, fewer car salesmen, fewer people at the DMV, fewer loan officers at the bank, fewer people at the insurance company, less road construction and maintenance, less concrete and asphalt, less steel and rubber and chemicals. Before you know it, it goes through the whole economy, banking, financial, communications, right up to the government themselves.
pup55 do you have any data on the amount of Oil and Fuel the US military consumes? Has there been increased consumption since we have been spreading democracy?
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, but anyway it's not usual... maybe something is changing.
