Tuesday, December 21, 2010

The U.S. gasoline prices at the mercy of developing countries, not supply and demand here.

While we continue to see high gas prices largely caused by speculation, the public has dramatically reduced their consumption of gas. I know personally how much my family has cut back, so I guess I'm not so surprised, even while I've learned supply and demand don't mean a damn thing. What a scam.
In an interesting twist on conventional wisdom, Associated Press energy writer Jonathan Fahey reports today that America's demand for gasoline has declined four years in a row and will not reach the 2006 level again, even when the economy fully recovers.
Further, Fahey quotes one energy expert as predicting that by 2030, America will use just 5.4 million barrels a day, the same as in 1969.

The reason:
·         Higher fuel economy standards for U.S. cars, beginning with the 2012 model.
·         A steady dropoff in commuting distances plus less driving from aging baby boomers.
·         The shift toward more cars running partially or entirely on electricity.
·         Higher gasoline prices as developing countries in Asia and the Middle East begin to use more oil.
·         The increased use of biofuels in gasoline.
·         A shift from SUVs beginning in 2004 that has saved America $15 billion on gasoline this year.
Drivers typically cut back during recessions, then hit the road again when the economy picks up. Indeed, the Great Recession was the chief reason demand fell sharply in 2008.

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