RE: Ginger discussed on Today Show?

From: Lisa Dusseault (
Date: Mon Mar 19 2001 - 10:29:06 PST

GG writes:
> writes:
> << What's going to
> happen to communities that depend on the car when it costs $50 to get
> groceries because you have to drive to the strip mall? >>
> we hicks in the warmer climes will have it made, i suppose.

Has anybody really examined the premise that it's cities that would suffer
most if gas prices went up?

Today's country-side communities are usually single-purpose communities.
Where I lived in Ontario, it was mostly corn and hogs; the wheat and beef
were from Alberta, the fruit from BC, if not farther. So supplies already
have to travel a great distance to get to their markets. Assuming that the
produce continues to travel, then woudn't the city-dwellers be better off?
They're more likely to get shipments of stuff (big shipments are less
sensitive to oil prices because of rail etc), and they can walk or drive a
couple miles to get to the strip mall. Or bike, or whatever. But people in
the country are going to need their cars more.

To address the phrase "when it costs $50 to get groceries": it won't.
(adjusted for inflation, that is).
 - if it cost $50 to go a generous five miles (who in suburbia lives >5
miles from a grocery store?)
 - that implies that gas costs $300/gallon (assuming 30 mi/gallon)
 - that implies oil cost of $3000/barrel (at current taxation and profit

At $3000/barrel we could probably construct oil from raw atoms economically.
OK, I don't actually know if that's possible, but I do know that there are
all kinds of oil reserves, some extremely large, that don't count in the
numbers of "known oil reserves" because it would cost more than $25/barrel
to extract and purify the oil. E.g. the tar sands in Alberta could go into
production if oil stayed at or above $29/barrel. And we'd find other
sources of energy that are just too expensive today: at $100/barrel,
biomass-driven cars! Ever bought those gallon jugs of canola at Costco for
a few bucks? Even olive oil costs only $10/gallon. So fuck, we could grow
oil if we needed to. (Yeah yeah, it's a different kind of oil, but motors
can run on it nonetheless).

The price of oil isn't determined by real scarcity or production costs. You
know that, because we could buy oil at $17/barrel average in 1999 [1], and
real scarcity and hasn't changed much since then. Oil costs have gone up
not because of increased scarcity, but because of speculation and the OPEC

Notice that OPEC has an ideal desired *range* for oil prices, not an ideal
minimum. That is, they want oil to sell for US$24-$28 per barrel. Why
don't they want unlimited high prices and profits? because they know that
around $28 per barrel:
 - US consumers would moan and whine and make Big Daddy W kick those Arab
 - Various orgs would fund increased research into alternative energy
source, perhaps even making a breakthrough that would *depress* the price of
 - We'd conserve, using less oil
 - We'd invest in long-term conservation projects like mass transit, meaning
a long-term reduction in oil usage

So OPEC has a closely defined ideal price point for oil because it's in
their long-term interest to make oil just expensive enough to make them
gazillionaires, but always cheap enough to make it an attractive fuel
choice. That's what governs the price of oil now, and probably well past
the time when those huge Brent Sea, Venezuela and Middle-East reserves start
to gush a little less freely.



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