Are We In For Much Higher Gasoline Prices?

avatar

Have you ever noticed how much of our economy is dependent upon the oil industry?

Contrary for the calls about the end of oil, we are still dependent upon the fossil fuel and that is not changing anytime soon. With all the attention on electric vehicles, people think we are rapidly moving towards a non-oil world.

The reality is that this is nowhere near reality.

In spite of the hype, EVs are not making much of a dent in the global auto sales. With maybe 2 million sold last year, we see a total market of 75 million new vehicles sold annually. At the same time, there are somewhere around 2 billion vehicles on the road globally.

This means that the 2 million sold last year, is a rounding error.

Of course, many believe that EV sales will ramp up and overtake the ICE sales in a few years. The problem is that batteries are going to be a hindrance. There are studies that show to even convert a large percentage of the new car sales to electric, will require a doubling of the amount of copper produced in the next 20 years.

Forecasts are that we will be producing less copper.

This does not mean that battery research will not get around this problem. However, it will take a while.


Source

Hence, we are still dependent upon oil for not only cars, but plastics, tires, and the asphalt in roads. Look at all the plastic that around us. I find it ironic when people are on video talking about the end of oil while drinking bottled water.

This puts us back in a supply/demand equation. With oil, that is the biggest factor. A year ago, there was a glut of oil. However, as COVID hit, we saw the oil companies get rid of rig after rig, dropping the counts are great deal. This means they were plugging every hole they could.

Now, we are seeing a situation where, even though demand is down, the supply is down even more. This means that upward pricing pressures could result.

We also cannot overlook the politics of the situation. The Biden administration has already banned drilling on Federal land as well stopping pipelines. This will also feed into a lower supply of oil.

It is also likely that we see states trying to make up for lost tax revenues. One of the easiest ways to do this is to tax gasoline. A few cents per gallon will not be felt by each individual yet will raise millions.

The problem with this is that when gasoline prices go up, everything increases in price. After all, not only are most products made out of plastic, but it is also shipped. Naturally, ships, trucks, and planes are almost all powered by fossil fuels.

Ergo, when the price of oil heads north, everything else see a price increase.

Here we see another situation that will help to stifle the economy going forward. For investors, we are likely to see a commodity boom over the next few years due to the supply shortage. This is not only relegated to oil as we also see a shortage in food due to the lockdowns.

As commodities head higher due to supply chain issues, we see this filter throughout the entire economy. Even working from home, people cannot escape the breadth of what is taking place.

Of course, this is only going to be further enhanced (harmed) by the politics of the situation.

The states that most likely will be affected the most will be New York and California. The later might well see $6 a gallon gasoline.

As we saw in 2008, before the Great Recession, the economy can only withstand a certain level of oil prices. In fact, some believe that the financial collapse only masked what was going to be an economic collapse due to the price of oil.

Could we be seeing a repeat of what happened then?

While the price is much lower than at that time, the economy is more fragile today than it was heading into 2008. At that time, things were on fire.

Now, after a year of COVID, the global economy is hardly on fire. The United States is holding up fairly well (as compared to the EU which is tanking). However, there are aspects of the economy that are struggling.

Higher oil prices are devastating to our economy in spite of how much we want to pretend we are moving away from it. There is no doubt we are still tied to it completely. A pushing up in oil prices is like a tax on households.

In the end, higher prices will likely lead to a lot of pain for the pocketbook.

What are your thoughts? Are we in for higher gas prices over the next couple years?


If you found this article informative, please give an upvote and rehive.

gif by @doze

screen_vision2025_1.png

logo by @st8z

Posted Using LeoFinance Beta



0
0
0.000
20 comments
avatar

pixresteemer_incognito_angel_mini.png
Bang, I did it again... I just rehived your post!
Week 51 of my contest just started...you can now check the winners of the previous week!
6

0
0
0.000
avatar

We're still very dependent on fossil fuels. I do alot of driving and Australia is a big continent. On other continents I'd pass through multiple countries in the span it takes me to get to another Australian city and EVs can not handle this nor the heat.

Hybrids have been good and I'd recommend recommend Toyota hybrid but beyond that this tech is no where near the level it needs to be. With drawing electricity costs it would cause a massive price boom in utilities.

Always made me cringe, using fossil fuels to charge up a batter that doesn't last that long.... defeats the purpose doesn't it?

Posted Using LeoFinance Beta

0
0
0.000
avatar

the usage of fossil fuels to charge cars is myth disseminated by the fossil fuel industry. I don't think the electricity in Australia's grid in anywhere close to 100% from fossil fuels, you have a lot of sun down there so there are a lot of opportunities for solar. Also even in a worse case scenario where EV's are charged exclusively with electricity made by burning fossil fuels, that would still mean less pollution in the cities and less pollution overall because EVs are more efficient and it's more efficient to transport electricity in the grid than transporting gas with large trucks that also consume gas. Yes EVs are very expensive and in some cases very impractical but they are the only way to move forward

Posted Using LeoFinance Beta

0
0
0.000
avatar

20% Victorian Renewable Energy Target, I know this because I lobbied for it. We just increased it to 50% but not sure when the due date is. Our current Feds love fossil fuel.

I agree it is the future, just needs government investment to build what we need.

Posted Using LeoFinance Beta

0
0
0.000
avatar

The possibility of a Persian Gulf war is a wildcard.

Copper mining has been in the doldrums for a long time. Increased production would need a lot of industrial demand as a prerequisite and, even then, you don’t put a mothballed mine into production quickly.

Posted Using LeoFinance Beta

0
0
0.000
avatar

We are far from ceasing to depend on oil. Here in Venezuela the economy depends on oil in 75% I think, it is incredible, although the government has been in charge of destroying the entire oil sector, they have stolen all the money, beautiful socialism hehe. Venezuela being an oil country now has to import gasoline from Iran, crazy. By the way the gasoline from that country is very bad, it is oily and damages the vehicles.

Posted Using LeoFinance Beta

0
0
0.000
avatar

Totally in for higher gas prices for a number of reasons. Thing is though a lot less is being used so they are trying to make up for it now. I for one it doesn't bother me as I hardly use any. I say let them increase the prices because it drives demand and funds for alternate fuels. Been way to reliant on the oil industry for no good reason other than it was cheap.

As we found out last year most jobs can be done off site from home with no need to drive into work each day or only doing it once or twice a week instead. For sure some will feel it and there was a time when a lot of people where forking over 10%+ of their paycheck to gas just to drive into work. At some point you have to do a reality check and see if this jobs really worth it or you should look for another.

0
0
0.000
avatar

What about your food? You reducing the amount you eat?

How about all the things that have plastic in them? Do you want to pay more there?

People do not realize how much we are truly dependent upon oil and gasoline and how it filers through the economy.

Posted Using LeoFinance Beta

0
0
0.000
avatar

We are definitely going to get more higher gasoline prices because of the Biden administration. The keystone pipeline and other events only lower the supply of gasoline produced in our country. However gas prices rising will affect more than just the gas we normally use, it will also affect anything that uses it as an ingredient like plastic.

Also the entire discussions about the middle easts and the other nations will definitely lead to higher or equal prices to what it is now. I see no reason why they would lower the prices. Thus all of this points to higher prices.

Posted Using LeoFinance Beta

0
0
0.000
avatar

I think one of the goals of the "Great Reset" is making everything 3 or 4 more times expensive with out raising wages. Pricing that poor to fighting for survival and the middle class penny-less.

Wood 2x4's are 4 times more experience than pre-covid. Steel ain't far behind. Pretty soon you won't be able to drive anywhere, build anything. Most on a permanent lockdown.

Posted Using LeoFinance Beta

0
0
0.000
avatar

Prices around here have been terrifying our pockets for some time now. Interestingly, the last time I went to a gas station, the price of ethanol, which is the fuel I put in my car, dropped slightly compared to the last times I refueled.

But unfortunately I already knew that from May 1st, everything will increase again. From what I see the trend will be even worse because the governors are not concerned with the country's economic situation.

Posted Using LeoFinance Beta

0
0
0.000
avatar

German economy is tanking pretty badly at the moment and our gasoline prices are already a lot higher than in most other developed countries.
On the case of EV - the battery issue is just one aspect that's highly problematic here. Charging them is a completely different beast. Our current infrastructure simply doesn't allow for dozens of charges in one place. My company just recently built a new heardquarters and wanted to have as much EV chargers as possible. Well, a grand total of 8 chargers was all the infrastructure could handle. Not saying EVs won't take over eventually, but it's still a long long way to go.

Posted Using LeoFinance Beta

0
0
0.000
avatar

I got a little spoiled with the gas prices we were seeing last summer. It is going to be a harsh reality to go back to the higher prices this year. We are already creeping really close to $3 per gallon where I live. It sucks too because my truck eats gas like a fiend when we are pulling the travel trailer. We have a lot of trips planned this summer too!

Posted Using LeoFinance Beta

0
0
0.000
avatar

The price of gasoline and the price of gas used to heat your home ( we use it a lot in Europe ) is why I dream of buying a house and installing tons of solar panels and also buying an electric car. Energetic freedom is almost as important as financial freedom

Posted Using LeoFinance Beta

0
0
0.000
avatar

That is going to be a while before you can do that.

In Florida, where we have a lot of sun, homes are still dependent upon the grid. Electric bills are reduced but I have yet to meet someone who had no electric bills.

With conversion rates of about 20%, they simply do not provide enough power. We probably need carbon nanotubes in them to get it to the point where it can full power a home.

Posted Using LeoFinance Beta

0
0
0.000
avatar
(Edited)

With battery storage and enough solar panels you can get to almost 0 electricity bill. The problem is cost, yes they are inefficient but if you can get enough of them you can compensate for their inefficiency. Once they get cheap enough you can just slap a ton of them on your house and problem solved. Of course the angle of the roof and a southern orientation is kind of important

Posted Using LeoFinance Beta

0
0
0.000