Friday, October 31, 2014
Gas prices will go back up, forever up.
Which leads me to point out that much of the American public will always act to ensure future damage to their finances are just a matter of time.
Consumers: As soon as gas prices went down, low mileage SUV's, pickups, and the general mix of poor energy effiecent cars jump in sales.
Oil price history: Prices always go up. They come down for a few months, some dips last 16 months, but the trend is up, forever up.
Oil producer strategy: Saudi Arabia and other big producers want to put a halt to fracking and oil sands operations all over the world. Adding to the supply coming from those new sources combined with lower demand due to so many low mileage cars being sold the last 5 years, has brought on lower prices. In the past Saudi and others would cut production at this point to hold up prices. This time they want it to fall. Prices at $80 a barrel cools interest in those hard to recover resources such as oil shale, oil sands, fracking. The industry says $77 is the point some operations will shut down. If they can get it lower or hold it for months the drilling rigs will come out of the fields, some drillers will go out of business. When they cut production prices will go back up but it will take years for drillers to return in great numbers to the field.
Sage advice: Buy the highest mileage vehicle you can, prices will go back up at the first international crisis or when big oil thinks they need the money. I have an 08 Camry hybrid, get 39mpg, it paid for it's higher price (over the standard model) several years ago, and now that prices are low, wow, I really have low fuel bills.