Peak Oil & $225 Oil by 2012
Upsides
- “More carpooling, fewer people on the freeways, more telecommuting — in many ways, what would happen is what people have been trying to make happen for a long time,”
- California has seen a jump in drilling activity as oil companies try to extract more crude from the state’s fields. Regulators expect a record 4,000 wells to be drilled in the state this year.
- “Every rig and every crew that’s available is working right now,” said Hal Bopp, the state’s oil and gas supervisor.
- Alternative-fuel vehicles become more cost-effective as all-electric sports car, could become important leaders in an emerging industry.
- Upswing in local business as families look for less-expensive vacation alternatives close to home.
- In Southern California, with its many natural wonders, theme parks and other attractions, the prospect of a “staycation”
- And spending less time stuck in traffic on the 405? Priceless.
[Source: LA Times]
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In the workplace
- Dramatically higher transportation costs leading to virtual mobility, or zero mobility, for many workers.
- Companies go to four-day workweeks
- Videoconferencing, touted as “the next big thing” to cut corporate travel budgets.
- Telecommuting, or working from home, as “knowledge” workers take over.
- Lower-income workers tend to be in jobs that don’t favor telecommuting, such as retail and food service.
[Source: LA Times]
Consumers
- With every penny hike in the price of gas costing American consumers about $1 billion a year, sharply higher pump prices would lead to “significant bankruptcies and store closings,” said Scott Hoyt, director of consumer economics at Moody’s Economy.com.
- “The purchasing power of the American people would be kicked in the teeth so darned hard by $200-a-barrel oil that they won’t have the ability to buy much of anything,” said S. David Freeman, president of the L.A. Board of Harbor Commissioners and author of the 2007 book “Winning Our Energy Independence.”
- Almost 42% polled said they had reduced vacation travel and 40% said they were dining out less.
- If any retailers would benefit, it would be those on the Internet. In a recent survey by Harris Interactive, one-third of adults said high gas prices had made them more likely to shop online to avoid driving.
- Big box restaurants would suffer, while fast-food chains wouldn’t be immune, experts say, although they might fare better as families downscale their dining choices.
- Vehicle sales, too, would probably continue to tank. As many dealers are demanding premiums for gas-sipping hybrids, wiping out much of the financial advantage of buying one.
- Nationwide, $200 oil and $7 gasoline would force Americans to take 10 million vehicles off the roads over the next four years, Jeff Rubin, chief economist at CIBC World Markets, wrote in a recent report.
- As for the state’s beleaguered housing market, prices are falling faster in areas requiring long commutes — such as Lancaster and Palmdale — than in neighborhoods closer to job centers.
- Ads for locking gas caps are becoming more prevalent.
[Source: LA Times]
Trade
- “To put things in perspective, today’s extra shipping cost from East Asia is the equivalent of imposing a 9% tariff on East Asian goods entering North America,” said Rubin of CIBC World Markets. “At $200 per barrel, the tariff equivalent rate will rise to 15%.”
- If oil continues to rise from current levels, officials at the Port of Los Angeles believe West Coast ports would gain business because they are 10 to 12 days’ sailing time from Asia, versus the 18-to-20-day route from Asia to the East Coast through the Panama Canal.
- “Local sourcing is ideal. You won’t pay as much for freight, and when you use less fuel it’s better for the environment,” Gaddis said.
- Soaring diesel prices will make companies rethink whether they should have large, centralized plants or build smaller ones around the country.
- That is why Pizza Hut is now charging for delivery.
[Source: LA Times]
“Expensive oil is no longer enough. We are approaching the point where it will no longer guarantee relatively stable economic development.”
[Inforgraphic Source]
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