Tuesday, August 16, 2005

Oil and Gas Prices: Quit Bitching

The whining and bickering about price being up to $2.75 a gallon (higher and lower in different places, that's a non-scientific estimate) is ridiculous. Gas has been cheaper than water for far too long and is far to precious a resource for us to have squandered it so quickly for so long. Gas is cheap right now, wait till we start really running out.

http://www.energybulletin.net/4733.html This is a handy link and contains a lot of information that makes the direness of our situation clear. We're fucked.

"Surprisingly from the most pessimistic to the most optimistic, there was not much deviation in what the estimate is as to what the known reserves are out there. It is about 1,000 gigabarrels. That sounds like an awful lot of oil. But when you divide into that the amount of oil which we use, about 20 million barrels a day, and the amount of oil the rest of the world uses, about 60 million barrels a day, as a matter of fact, the total now is a bit over the 80 million that those two add up to. About 83 1/2 , I think. If you divide that into the 1,000 gigabarrels, you come out at about 40 years of oil remaining in the world."

There is about 40 years of oil left in the world according to simple arithmetic, not factoring in the increase in demand overtime by developing countries and population growth.

It's not just cars that will suffer either from this price jab. The whole economy will be impacted. Everything that depends on some product of fossil fuels to run, be produced, and be shipped will suffer some increase in price.

For example, let's use Megaloc Elgoblocs. Assume that one barrel of oil produces one crate of Megaloc Elgobloc. Elgoblocs are made in Sweden, so shipping is a long distance. Let's assume that it is 100 barrels of oil worth of travel, and there are 10 crates on a cargo vessel. Each crate of Megaloc Elgoblocs contains 50 packages of blocs.
b = price of 1 barrel of oil
P = price of a package of Elgoblocs

P = (101b)/(50*10)

If b = $40 then the price of a box of Elgoblocs = $8.08. The record high for the price of oil, $67 a barrel (a few days ago), would make the price of a box of Elgoblocs $13.53. That's a significant difference.

Also, remember that the Elgobloc plant has workers, as well as people who drive the ship and stock the shelves at the store that sells Elgoblocs. These people have to buy Elgoblocs as well as other products that have an increase in base price due to the change of price of oil. Therefore, if I had factored it into the equation, the price of Elgoblocs would go up. The equation has become recursive. All of these minor factors are what really add up to create a nasty ripple effect and bad inflation.

Eventually, people will barely have enough money for Elgoblocs, putting those workers out of jobs. Because they don't have jobs, there's less money in the market to buy other products, continuing the wave of debt.

Yay! Economic depression! That's worse than emo depression. Not only does your life suck, but you can't whine at Starbucks about it. You have to whine on a street corner or an unemployment office.

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