Quote:
Originally posted by cmccuist
. . . I've never understood convervation of oil (higher milage autos, solar and wind power etc.) Let's use it up and move onto something better.
$55/bbl crude isn't getting anyone's attention yet . . .
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IMO, the weak link in that argument is that we don't have "something better" today and aren't likely to have it for some considerable time.
Oil at current prices is a fairly inexpensive and convenient source of energy. The extraction, processing, and distribution have all been figured out. Alternative energy sources are more expensive and will probably remain so for many years, until the technology is better developed. So reducing oil usage now saves money. not to mention reduces pollution and our dependence on politically unstable parts of the world.
Over the past 30 years, major increases in oil prices have usually coincided with the start of significant recessions. Greenspan testified that so far this year, the rise in oil prices has reduced US GDP growth by about 0.75%, which is not a trivial amount. He believes that the US economy is less sensitive to oil prices than in prior decades, not that it is
insensitive.
The other weak link, for me anyway, is that $2.70/gal premium is definitely getting
my attention. Paying >$50 to fill my tank is not so fun. $50 isn't spare change (in my world, anyway) and I would much rather spend the money on something else.
Edit: US GDP growth in 2004 so far has been about 3.5% and average US GDP growth for the last 10 years has been 3.3%. These are from a Wall Street Journal article today, I can go look up the exact numbers if anyone cares. Anyway, by Greenspan's estimates the rise in oil prices has reduced economic growth by about 1/5th in 2004. That's not insignificant.