Hollywood_North GT

It will be interesting to see how long the muscle car wars last, or if Chrysler and GM cancel Challenger and Camaro production altogether, or at the very least, determine to make them limited production vehicles.

I seem to recall Bob Lutz in an interview early this year telling 60 Minutes that if oil hit $100 per barrel, it could have a catastrophic effect on GM and the whole auto industry.

It will also be interesting to see how dramatically this changes our entire way of life.

StangMahn

I'm so sick of this oil crap. It doesnt cost much more to make it today than it did in the 60's when gas was like 10 cent's a gallon. Even adjusted for inflaton and some profit, it shouldnt be anymore than 1.50. If they would set it and leave it at 2.00 they'd still make more profit than they know how to spend. Im glad to see Chevy stepping up with the E85 projects, Ford needs to do something similar, we've got to get away from the dependency.

Hollywood_North GT

Well, that's only partially true. While I agree that 'Big Oil' is screwing the people, there are forces we are contending with now that didn't exist in the '60s, most importantly >>

- the rise of China and 1.3 billion people who all want cars;

- the arrival of 'Peak Oil' (The point or timeframe at which the maximum global petroleum production rate is reached. After this timeframe, the rate of production will enter terminal decline. If global consumption is not mitigated before the peak, the availability of cheap conventional oil will drop and prices will rise, perhaps dramatically.)

I'm skeptical that the price of oil will ever drop substantially again, or if it does, it will only be a temporary circumstance before it begins to rise sharply - and permanently.

Greywolf

the biggest reason for the oil price increase is speculation in the commodities market. the oil companies dont set the price. oil is a freely traded product and traders are running up the price.

drakino

Sadly my attempt to invest in oil failed a few years ago. I had taken my stock money from tech stocks and converted it into a drilling operation that looked promising. What is amazing to think about is how quickly the price has jumped. Back then, $60 was on the top end of the charts in the information I had, and that wasn't expected to really ever happen for long.

The other part of the price though is the tanking US dollar value. $100 USD back when I was investing was €90. Thats now $100 to €68.18.

Hollywood_North GT

Right now €1.00 = $1.46 USD

There is already a lot of talk of converting "Petrodollars" to "Petroeuros", that is to say the commodity of oil will in short order be traded in Euros instead of Dollars.

poldrv

What's interesting is that the oil sold to Canadians is pumped out of the Alberta Tar Sands...you would think that the OPEC agreement could be altered so that gas could be sold to our own people at a lower price before it is shipped out of the country. Thank you Pierre Trudeau for your not so colourful insight.

Hollywood_North GT

Trudeau was a Liberal weenie. Am I right?

RCSignals

Uh, yes

poldrv

Trudeau was the weenie of weenie's.

elcaminoguy

That's absolutely right. Everyone wants a quick buck and they're doing it on the backs of the little guy. The real price of oil is around 60 a barrel only commodities trading is bumping it up.

Don't worry guys, It'll come down again. Everyone thought we'd be at $4.50/gal by now two years ago. The market can only support so much profit taking before it collapses. Make gas too expensive people stop going to places like Wal Mart, restaurants and finally work, then the whole economy takes a huge plunge. Sounds conspiracy theorist I know but it's simple economics.

Alternatives to oil demand and projects like the new GM V8's shutting off 4 cylinders (like the old cadillacs had) at highway speeds all work into this. In fact the new Camaro is getting that feature to get it up to 30MPG average.

They can have 100, 200, 1000 a barrel if they want but the average wage better be 1,000,000 a year to support it! Otherwise it's a downward slope on the bar graph...

Hollywood_North GT

You're failing to take into account exponentially increasing demand for oil (India and particularly China) and inside industry concerns about peak oil.

Commodities trading is just one factor that's driven up the price. And I don't think we'll see $60 a barrel oil again anytime soon.

elcaminoguy

That price factored in demand from China and India. Saw it on CNN and MSNBC. 60 a barrel is still outrageous though. 3 bucks a gallon is outrageous too but drive that price to 4 and suddenly it looks like a bargain.

What made me stop believing the PR feeds was when the oil companies posted profits last year in the 10's of billions with gas at near 4 bucks a gallon or more in some places while crying about expenses in the same breath. Simple economics says you don't have any profits to post if you're supposedly going broke.

I don't buy the whole Chinese demand claims either. There's always some populist excuse somebody in a PR firm dreams up somewhere. It's the war, It's Venezuela, There's a hurricane somewhere, Martians landed, whatever...

Supply is supply, it's gone and that'll be it no matter who's using it and how fast. If the supply were that low we'd have seen shortages and high prices long before now.

At least there's the appearance of alternatives now. Before such thinking was relegated to the ranks of conspiracy theorists and tree huggers.

Hollywood_North GT

So you believe that 1.3 billion Chinese people buying cars and wanting cars is a "populist excuse"?

elcaminoguy

When it comes to oil futures, yeah, and 1.3 billion people don't have cars there yet. China still has an "emerging" middle class. If the bulk of people were making a decent wage we wouldn't have so many companies outsourcing manufacturing there.

It's commodities market futures playing with the price and that has lots to do with completely speculative trades. I know quite a few people who've got into oil futures in the past year just because it was a way to make a quick buck. They thank me every time I go fill up.

The problem with oil futures is that investors believe that short term effects are going to have a long term consequence. So every time somebody farts in IRAQ or 3 more people buy a car in China the investors figure we're going to run out of oil tomorrow and try to cash in. That's what the market is doing to the price of oil. It's not costing any more to produce than it did yesterday.

Speculation like all market trades is based in guesswork and assumption. Actual business process that produce and distribute the product have nothing to do with it.

Like the fart in IRAQ example. Some idiot blows up an empty oil tanker truck and the market is going to assume the entire middle east oil supply is in jeopardy so the price skyrockets. Where I live I've watched gas prices swing 1.70 a gallon in two years. This time last year I was paying 3.59 a gallon, This year it's 3.00, Two months ago I was paying 2.09. All because of speculation. China's population, Flatulence in IRAQ, etc aren't going to change overnight but the market will react like it will and thus we pay ridiculous prices.

The point is that unless average wages increase significantly the price can't stay that high because this economy won't support it.

Hollywood_North GT

Except that your theory fails to take into consideration three factors:

1. The rise of the Chinese middle class is real, and it's happening right now. The ones we're outsourcing our manufacturing jobs to are not the middle class. Take a visit to Shanghai and you'll see how prosperous the middle class Chinese family is. Take a visit to Beijing and you'll understand why they're under scrutiny from the Olympic Committee for the poor air quality: cars everywhere.

2. Oil is a finite resource and a declining commodity. It is expected that by the middle of this century it will cost more $$ to extract a barrel of oil from the ground than that barrel can net on a global market.

3. Pressure is inexorably building around the world to slowly move away from a petroleum-based economy for immediate environmental and geopolitical reasons...that puts pressure on the industry that inevitably leads to price increases.

elcaminoguy

I've failed nothing. I just don't support speculative thinking. Especially when it only serves the few who can afford to take advantage of it.

I believe what I believe and you believe what you want to. I'd suggest you get in on the light sweet crude for April. Big bucks there!

What's the point of this thread anyway? We should all sell our Mustangs and SUV's and buy up all the Toyota Prius's we can find?

BTW, hope nobody with a hybrid ever gets in an accident. There's this little problem with a lot of fire departments who aren't trained to deal with all those batteries. It's a fact and it could be a real problem. Even service departments are having reservations about them as there's a very real safety risk when working on them. Found that out from an automotives class.

Another problem. The batteries last 5 to 10 years tops. What do we do with all those lead acid batteries when millions of people are driving hybrids or electric cars? Can't put them in the landfill, Recycling them is expensive. So we've traded one problem for another but just like the 60's we'll push that problem off for 30 years like we did with fuel economy and pollution. Let's just all hope that an viable alternative shows up that doesn't involve depending on anyone but ourselves.

As for the world moving away from Petroleum, well you said it yourself, China has this growing demand but they also have atrocious emissions, limited human rights, and they're still a communist government. They can still pull the rug out if they feel their power is threatened. You can't have true private property rights in a communist country. They tolerate it now because they got a great cash cow, namely the U.S.A.

Economics says if supply exceeds demand prices fall. If everyone dumps oil and starts running on grain alcohol or something where's the market for oil then. Billions of barrels of oil worth about as much as the stuff they pump out of your septic tank. Which might be another source of fuel come to think of it. Methane is explosive, maybe we can all just have dinner at Taco Bell and face our rear ends in the direction of our gas filler...

Hollywood_North GT

I wasn't trying to start an argument, I was merely pointing out some facts which you might not have taken into consideration.

As to the issues of human rights violations in China, and hybrid cars being a bit of scam, I agree wholeheartedly, though I think those are topics for another conversation, no?

How can I argue with someone who owns a Redfire GT, after all?

StangMahn

Yeah, NC State University did a study that shows that over the lifetime of the vehicle, a car like the fugly Prius is actually worse for the environment than a regular v8, because of the battery materials and such. I only hope that the principles of economics will factor in here, and gas prices will eventually reach an equilibrium point. In the meantime, car companies need to be working on hydrogen technology. If Im running Ford, Ill put about 80% of research funds onto that, and produce hydrogen cars in certain cities such as NYC, LA, Miami, etc. And also build Ford brand hydrogen stations. I believe that it would be a pretty big success, and would also start threatening crude oil prices, and maybe scare them back to a decent rate.

Hollywood_North GT

Just one problem >> Hydrogen does not occur free in nature in useful quantities. It has to be made, usually by splitting H2O to get the hydrogen. This requires all the energy you are going to get from burning the hydrogen and a bit more on account of inefficiencies.

One more efficient way to split the H2O would be to use nuclear power - but now you're opening up a whole different kettle of fish.