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How long before automakers and oil companies break their bond?

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How long before automakers and oil companies break their bond?

Old 06-03-08, 12:03 PM
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How long before automakers and oil companies break their bond?

At the rate of high gas prices and as consumers began to hold onto there current cars instead of purchasing new while SUV's and trucks just sit in lots how long before the auto makers began to really start looking for alternate fuel sources.
The car companies and the oil industry feed off each other, when an idea comes up for an alternate to gas how quickly is it sucked up and put to rest.

So when auto sales began to really slow down because of high gas prices I would think the auto industry would put the pressure on the oil companies to back off on prices or else they will seriously start to look into their hidden technolgy for solutions.
If say they return to research solar, electric, battery power or other ways I would think the oil industry would have to release their grip over them and us or else how will they sell product if there is no longer a great demand for it.
Old 06-03-08, 12:07 PM
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3 days, maybe 4. Of course, I'm talking biblical days.
Old 06-03-08, 12:14 PM
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Old 06-03-08, 12:15 PM
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Interesting question, especially in light of the news from GM. They are closing 4 plants.
Old 06-03-08, 12:22 PM
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Old 06-03-08, 12:26 PM
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Originally Posted by Numanoid
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^ I just came into the thread to do this.
Old 06-03-08, 12:32 PM
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Oh noes! The car companies are breaking out their secret alien fuel technology. Suck it oil companies!
Old 06-03-08, 12:35 PM
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They will just switch. This happens.
Old 06-03-08, 12:48 PM
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I would just settle for some cars being taken off the road. Not so in my area, traffic is just as bad as ever. I wonder if the same people who whine about gas pricves are whining about being stuck on I95 on a Saturday afternoon.
Old 06-03-08, 01:16 PM
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Does anyone actually believe gas prices will ever go down more than a few cents here and there? Why would they?
Old 06-03-08, 01:26 PM
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What bond?

Car companies make whatever sells. If people wanted economy cars, they would make them. Between 1988 and 2008, no one wanted them. Factories were retooled to sell giant SUVs that people did want. If people ever want to buy $50,000 solar cars that go 30 mph, they'll sell those.

The gas companies have a good business. There are lean years and fat years, but people always come back to buy more gas.
Old 06-03-08, 01:38 PM
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Originally Posted by Numanoid
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Exactly. Thank you.

I also wonder if the OP knows the difference between began and begin.
Old 06-03-08, 01:39 PM
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Originally Posted by Draven
Does anyone actually believe gas prices will ever go down more than a few cents here and there? Why would they?
Yes, I believe they will. Why? Because I don't look at economic events as a nebulous clouds of irrational occurences outside of the realm of control or logic.

Last edited by The Bus; 06-03-08 at 01:43 PM.
Old 06-03-08, 01:41 PM
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Originally Posted by Nick Danger
What bond?

Car companies make whatever sells. If people wanted economy cars, they would make them. Between 1988 and 2008, no one wanted them. Factories were retooled to sell giant SUVs that people did want. If people ever want to buy $50,000 solar cars that go 30 mph, they'll sell those.

The gas companies have a good business. There are lean years and fat years, but people always come back to buy more gas.
+1

Personally though, I hate GM. Having family from Detroit/Flint (and spending a good chunk of my childhood there), I can tell you first hand that corporate greed is what keeps these guys going. They don't give a shit about anything. Bigger, better, cheaper, faster...that is the motto. Followed closely by, fuck'em and how.
Old 06-03-08, 01:47 PM
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Originally Posted by The Bus
Yes, I believe they will. Why? Because I don't look at economic events as a nebulous clouds of irrational occurences outside of the realm of control or logic.
Isn't the precedent for gas prices to simply continue to rise? Sure they might fluctuate along the way, but aren't we, for example, always paying more than we were the year before?
Old 06-03-08, 01:57 PM
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Originally Posted by Draven
Isn't the precedent for gas prices to simply continue to rise? Sure they might fluctuate along the way, but aren't we, for example, always paying more than we were the year before?

No

Compare 1981 to 1988, adjust for inflation, gas did not continue to rise.

http://www.eia.doe.gov/emeu/25opec/sld004.htm

I also think from 1988 to 1998, gas dropped in price again.

Can you use that information to predict future prices? No

It simply shows that your line of thought on gas prices is not always the case. It may go up, it may go down, it depends on a lot of things (or {classicman} it depends on what random price exxon mobil picks this week to increase profits {/classicman} )
Old 06-03-08, 01:57 PM
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Originally Posted by Draven
Isn't the precedent for gas prices to simply continue to rise? Sure they might fluctuate along the way, but aren't we, for example, always paying more than we were the year before?
Yes, that's called inflation, and it's true with most goods and services.
Old 06-03-08, 02:03 PM
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I would think the oil industry would have to release their grip over them and us or else how will they sell product if there is no longer a great demand for it.
I am sorry but this statement makes no sense.

Cars use internal combustion engines because fuel is cheap (and still is). How much demand do you thing has to go away for your theory to make any sense. The last time I looked at the figures, the US uses something like 226,000 gallons of gas every second of every day.

In addition, oil is used for far more things than allowing Sally drive Susie to the shopping mall.
Old 06-03-08, 02:06 PM
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Originally Posted by Draven
Isn't the precedent for gas prices to simply continue to rise? Sure they might fluctuate along the way, but aren't we, for example, always paying more than we were the year before?
Yes, but they fluctuate more than "a few cents here and there" which, to me, implies $0.05 to $0.10.

August 7, 2006: A gallon of regular gas was $3.00
January 10, 2007: A gallon of gas was $2.10

We're now in the traditionally expensive part of the year for gasoline. While I doubt we will see gas at $2.10 in the next month, it is entirely probable that it will go below $3.00 sometime in the next twelve. At the very least, it may drop more than $0.05.
Old 06-03-08, 02:08 PM
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Originally Posted by Brian Shannon
I am sorry but this statement makes no sense.
None of the OP's statement makes sense. You're better off talking to people that are slightly off in their statements as opposed to giving statements that are deluded.

I assume the OP also forwards "Boycott Exxon: I'll show you how!" emails.
Old 06-03-08, 02:10 PM
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Originally Posted by Nick Danger
Car companies make whatever sells.
Similarly, "oil companies" only provide energy for which there is a demand.

Take, for instance, hydrogen fuel cell technology. Your local gas station doesn't provide a hydrogen pump because it's expensive to run the pipeline and instally the dispenser, not to mention the R&D and production costs. However, if there was high enough demand and a high enough willingness to pay, BP and Shell would have hydrogen pumps at local gas stations and would invest the R&D to develop lower cost (and less polluting) methods of hydrogen production.

So, why isn't there more demand? Well, because the technology is not well developed by the automanufacturers, leading to expensive vehicles that no one can afford.

no one owns a hydrogen consuming car --> no one buys hydrogen --> gas stations don't provide hydrogen

Does this mean that automanufacturers are to blame for the lack of alternative fuels? Not really. Automanufacturers similarly respond to consumer opinion. So, if enough consumers said they would buy hydrogen fuel cell vehicles, the automanufacturers would invest in R&D to lower the cost of the technology.

no consumer demand --> expensive hydrogen consuming cars --> no one owns a hydrogen consuming car

Does this mean that the consumers are to blame? Not really. Consumers base decisions on convenience and cost. The lack of hydrogen refueling stations and the expense of hydrogen when you find one means that consumers do not demand hydrogen fuel cell cars.

gas stations don't provide hydrogen --> no consumer demand


This leads to an obvious cycle where there are several principal players (consumers, automanufacturers, and energy providers) that are at an equilibrium that is pareto efficient, but not necessarily a Nash equilibrium.

No one benefits from changing the current state unilaterally. If automanufacturers make hydrogen fuel cell cars, they risk consumers not buying them. If consumers demand hydrogen cars, they risk the inconvenience of having no filling stations, and if energy companies switch to hydrogen technology, they run the risk of no use for that hydrogen. However, if they all switched together, there's a great benefit.
Old 06-03-08, 02:15 PM
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Originally Posted by The Bus
We're now in the traditionally expensive part of the year for gasoline. While I doubt we will see gas at $2.10 in the next month, it is entirely probable that it will go below $3.00 sometime in the next twelve. At the very least, it may drop more than $0.05.
I will be pleasantly surprised if gas ever goes below $3.00. I understand how things have changed, and I understand what inflation is but I'm pretty sure that gas prices have significantly outpaced inflation.
Old 06-03-08, 02:38 PM
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Originally Posted by Draven
I will be pleasantly surprised if gas ever goes below $3.00. I understand how things have changed, and I understand what inflation is but I'm pretty sure that gas prices have significantly outpaced inflation.
The US will see gas prices below $2 in the not-too-distant future. The price was highly inflated by speculators who had unrealistic expectations about the future growth of developing economies and that inflation continues thanks to investors with a need to hedge against inflation due to the slowly economy and credit woes.

There is no long-term supply and demand inbalance. The previous supply tightening was due to rapid growth and insufficient time to ramp up auxillary capacity.
Old 06-03-08, 02:47 PM
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The US will see gas prices below $2 in the not-too-distant future.
I respectfully disagree.

I do not believe we will ever see below $3.00 a gallon again. Demand continues to increase worldwide, capacities are near the top and while there are inventories on hand, anything from a hurricane to a coup will cause the price to rise again.
Old 06-03-08, 03:03 PM
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Originally Posted by Brian Shannon
Demand continues to increase worldwide, capacities are near the top and while there are inventories on hand, anything from a hurricane to a coup will cause the price to rise again.
Capacity is no where near "the top". The pre-established production capacity of OPEC is stretched pretty thin, but there is more than enough ancillary capacity that is already on stream to make up for any restriction. Not to mention that there are plenty of untapped reserves to cover any additional increases.

Refining capacity is thin right now, but oil recovery capacity is not.

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