Category Archives: Gas

Oil Subsidies

Something most people don’t focus on when it comes to our high gas prices, is the role of fuel subsidies. I’m not talking about in the US but in China and India. These countries, along with many oil producing countries, subsidies the price of oil. This creates an artificially higher demand than actual supply would naturally allow if they were to float these commodities naturally as is done in most modern countries.

The simple solution is to have these countries stop and allow the price to settle in at a natural supply and demand point. Oil I am sure would fall as most Chinese and Indian’s, and Russians or Venezuelans, cannot afford to pay $4 a gallon and would fall out of the oil market all together. This would mean the artificially high demand would go away.

The problem is, these countries will not do this without some substantial pressure from the outside and I do not think the will by Europe and the US is there to create such pressures. Beyond that, the other options do very little to curb this artificial demand. You can impose surcharges on imported goods or some other measure but they would do very little in the long run.

The only way to move away from this is to create more choice in fuel options. When you have competition, quality improves. If I were in charge of the government, I would be giving tax breaks and funding every alternative fuel source I can find. This will create more options and choices and as more people move away from oil to these other options, the demand on oil will go down and the need for it will as well. Those still dependent on it will find that prices will go down. Seems like a good solution, too bad no one in Washington can think up something so simple.


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Filed under Alternative Fuel, Business, Consumerism, Energy, Gas, Globalization, Renewable

New Hybrid Car

Volvo is working on a new hybrid called the ReCharge. Check out this link for the technical specs on it.

I think this is a great idea and it could get up to 160 mpg if they do this, the problem is, they won’t be ready for another 5 years. Most analysts on the sector give 18 months for automakers to switch to more fuel efficient cars. Volvo will be out of the loop in 5 years and late to the game. I would like to see them try to develop this car and launch it for the 2010 model year. The iron is hot, demand is high, I know I’d buy one; I think Volvo should reconsider their decision and launch this car as soon as possible.

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Filed under Alternative Fuel, Energy, Gas

What Happened to Global Warming?

I think Canada and the US are probably the only industrialized countries doing something for the environment these days. In case you haven’t hear, Brazil is doing off shore oil exploration, Russia is giving tax breaks to company’s that do more artic oil exploration there, The EU announced recently they are building 50 new coal burning plants in the next 5 years and China is building one a week. Aren’t all these people concerned about the environment?

This is one of those fun facts of life. Europe for years has bashed the US for all our pollution, yet Europe is doing its very best to out do the US and pollute more, 50 new coal plants will do the trick. What happened to alternative sources of energy Europe? Where is that Euro Metrosexualism showing off in how green you are? I guess they realized that it was not a good idea to be energy dependent on the Russians who have a nasty habit of turning the faucet off whenever they get a bug up their butt. So, the environment takes a back seat to energy independence.

Of course Russia and Brazil are energy exporters and like a good dealer, don’t want to run out of supply so they continue to find more sources to ensure the world keeps on polluting.

Then you have China, who is exempt from the Kyoto treaty. So China goes around telling everyone we should go along with the Kyoto treaty, of course, they don’t have to change a thing! At one point last year they were producing 2 plants a week.

So, what’s going on, I thought everyone was all into the environment, stopping global warming and so on? It seems for Europe, global warming has its limits; energy independence trumps global warming concerns. For China, I don’t think they care about global warming or the environment, ever see the smog there or the “yellow sand” that falls on Korea and Japan from China; it is so toxic they have close down entire areas.

From what I can tell, pretty much Canada is doing its part and that’s about it. We in the US have not made any new oil refineries or pumped more gas so I guess you can say we are doing our part too. It is just funny that the biggest complainers about global warming (that would be Europe) would rather create more coal burning plants than say, geo thermo heating, or how about develop solar or wind or some other alternative fuel source. I guess I should not feel so guilty about driving a big car, after all, what I pollute is nothing compared to those 50 new coal plants.

Don’t get me wrong, I’m not someone who says the environment is the only thing to worry about, we need to take care of people too. But I am just really surprised that Europe would go to coal, so much for innovation. If it were me, I would be going for geo thermo on all new construction sites, wind and solar, zero point energy systems etc… There are so many ideas out there, why not use them?

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Filed under Alternative Fuel, China, Energy, Europe, Gas, Government, Renewable

The Price of Goods is Up, Thanks to Globalization

Here’s one of those little facts the free traders and globalizationist forgot to mention. Last week, Wal Mart said that its cost for shipping goods to the US had doubled and if oil goes to $200, it will double again.

So last year, it cost about $3,000 to ship a container from China to the US. Today it is about $6,000 – $8,000 and if it oil goes to $200 a barrel it will be estimated to cost $15,000. Of course Wal Mart or anyone else is not going to eat that cost; they will pass it on to you the consumer.

So, lets say a container has 1,000 products that have a cost of $30 before shipping. So last year, the shipping cost was $3 per item. Today it is $6-8 per item, if oil goes to $200, it will be $15 per item. So something that might have cost $33 by the time it hit the shores of the US, now costs $37 and could cost $45, a $12 difference just in the shipping cost alone and that doesn’t include the cost to get it from the port in the US to your local store, that’s an additional cost as well! Now times that, by 80% of the products in Wal Mart or Target and you can just imagine how much bigger your bill is compared to two years ago. Add to it your cost to drive there and your ability to buy goods has gone down.

Then if you really want to have some fun, factor in the weaker dollar that makes everything more expensive that is not sourced from the US. So overall, you pay more for the very same thing, yet get no added value for that extra money you just paid. The globalization people never mentioned this when telling people how great globalization is, because they knew you wouldn’t support such a system if you knew.

There is a way to combat this, a four step buying guide that is very simple to follow. First, source locally as much as possible. Buy from farmer’s markets or local Community Supported Agriculture. Go for local as much as possible and demand those producers source locally as much as possible. This helps to minimize the swings in global commodity pricing as well as gas prices because the transportation factor is less.

Next, go national; again, demand the seller sources locally as much as possible. Where I live garlic doesn’t grow so well, but they do grow garlic in California, so that’s where I buy from. I will pay more but I will not have to pay the extra $3-15 for it to be shipped from China. If that doesn’t work, source from responsible companies that practice on the global scale. Good luck finding them, most do not open themselves up enough to really see how they get their goods to you. Last, buy from retailers that are more focused on supporting the local community than with some global agenda.

Yeah, I can hear it now; people will say that is protectionism. No, it is responsible shopping. When goods from afar cost more and use up our vital resource, that is not being responsible. It is better to buy local, save our gas, spend less on oil and have more money to go further. That’s sensible shopping.

If you don’t want to be impacted by the rise in global energy prices, you need to adjust and force businesses to adjust by spending your money in different ways, being conscious of how you get your resources and how they get theirs. Demand transparency, believe me, most will not want to be transparent because they know you will not do business with them if they are. They got us into this mess so they don’t want you knowing that. But if you prefer paying an extra $20 with no added value, do nothing, it will come. If you like to have your money go further, simple changes can make a huge difference.

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Filed under Business, Consumer Activism, Consumerism, Energy, Gas, Globalization, International Trade

The Price of Gas, Europe and the US

I hear a lot of people say we should not complain about the price of gas in the US because in Europe they pay twice as much for gas. I find this argument to be a bit misleading and used to create a false argument for why Americans should pay even more for gas.

Yes the price at the pump is higher in Europe, but the cost of gas itself is not. There are two issues involved, the price of gas and the tax on gas. In the US we have 11% federal, in Europe (France, Germany, Netherlands) you are looking at about 60% for gas taxes. So if the base rate on a gallon of gas is $3.35, the price at the pump in the US is going to be $3.72. In Europe you are looking at about $5.36 for the same gas. The difference is in the taxes.

There is not a price for Europe and price for the US, we all buy our oil on the same global market, so no, Europeans are not actually paying more for gas, they are paying more in taxes. Huge difference in how you look at the fundamentals. Of course there are other factors like local taxes, regulations on emissions, transportation costs, etc…

One thing people don’t realize is the fuel efficiency in Europe is much higher thanks to the lower emission standards on diesel. Yes, that’s right; the Europeans have less stringent standards than the US. Lets take the Honda Fit, which is a diesel version in Europe, it is far more fuel efficient than it’s gas driven American cousin. Same car, a just different engine. So yes, the European is paying more per gallon of gas, but is driving further on that same gallon. If it was not for the higher standards on emissions in the US, the American driver could probably also be driving just as far and being as fuel efficient.

So when people claim Europeans are paying more for gas, remember, they are paying the same, they are just paying more for the taxes on gas and that is what makes the difference in price, not the gas itself.

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Filed under Business, Consumerism, Economics, Energy, Europe, Gas, Life, The World, US