Quote:
Originally Posted by Tron_fdc
Fuel costs are going to start dictating lifestyles.....people need to start getting used to it.
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I think this is the big take-away from this thread. For those who assume that this energy-crisis has been created by the ExxonMobils of the world. Think again, it's not like all these companies are sitting on millions of barrells of production, that they could unleash at a day's notice and bring your gas prices back down to 50 cents a litre. Less than 10 percent of the world's oil production even comes from publically traded large oil companies. The rest of the production and future opportunities are under control of National Oil companies such as Saudi Aramco, Pemex, Petrobras, CNOOC, et al that are under the control or are extentions of their local governments.
In fact the major oil companies would rather oil be half the cost it is now, because anything over $100 a barrell has the potential to do some serious long-term demand destruction over the next couple of decades. If Exxon could double it's production overnight it would be much more profitable as the cash flow brought in from doubling production would easily offset the downward impact the increased supply would cause, because they are barely even in the top 10 oil companies in the world vis-a-vis production. For the oil industry it's all hands on deck trying to crank out more production, but the geology and politics of oil prevent serious increases of supply.
The way this is going to play out over the next few years is that oil prices are now starting to affect both consumer's lifestyle decisions and the companies that offer products to these consumers. Those who can't afford to commute will do all or any combination of 1) Moving closer to where they work, 2) Downsizing the size of their living space 3) Buy more fuel efficient vehicles, 4)Find more alternative means of transportation, 5) Travel shorter distances for re-creation/vacation. 6) Buy less junk and useless things that don't contribute to their standard of living or quality of life (Any pack a day smokers on the thread? Heavy alcohol consumers? Anybody who owns closets full of shoes? pretty much eveyone of us who is middle class or higher has frivilous spending that far exceeds the cost of transportation fuel that we consume.
Those industries/companies that are impacted the most by these changes in consumer behavior will start: 1) offering more fuel-efficient/hybrid cars, 2) Grocery stores will respond to increasing fuel costs by buying food products that require less fuel to reach their stores 3) Oil companies will spend to the nines to increase production and refining capacity (We're already in the initial stages of the investment cycle in both Exploration/Production and Downstream refining.) 4) Airlines will cut service to respond to the lower demand (Already happening). 5) Many things that were considered marginal and hair-brained means of generating energy (Ie wind power, tidal power, alternative fuel) will be more economical and will also contribute to more demand destruction for oil.
The long-term effect of all these changes is going to be a more stable supply/demand scenario for oil. It's the market at work and any legislation or interferance to slow this down is going to result in more sudden/painful consequences at a medium term later date (Ie maybe in a year or two, supply shortages). Any legislation or market interference to speed these changes up, will cause more overall pain and suffering and will also hit people in the near term.