Hypothetically, if vehicle mpg doubled, wouldn't that be the death to oil companies?

things would remain the same as people would have more disposable income they'd travel more and use twice as much gas. So the whole thing for the oil companies is revenue neutral. And the people wouldn't b/c about having to pay so much. But would still pay the same. People tend to forget the important things like conserve. Humans are short term thinkers. Unfortunatly

 

No.

People would still buy gas.

Oil would still be needed for other things besides gasoline.

And they'd just raise the price to $6 a gallon.

 

<div class='quotetop'>QUOTE(burritos @ Jan 14 2007, 09:51 PM) [snapback]375669[/snapback]</div>

Need to review your math again. If half as much gas sold, corresponding expenses reduced as well. No way would they be in the hole.

 

If it happened overnight, Exxon-Mobil would have to trim expenses. Some expenses are dependent on the amount of gas sold ... they don't need to buy as much crude, use as much energy to refine it, etc., so those expenses get trimmed automatically.

Other expenses are fixed and would have to be reduced so the company could stay in business. Have an idea of what kind of expenses are "fixed" in this case? There might be facilities, like refineries, they could close down. But the most "liquid" of expenses when a company is faced with declining sales is people. If they need 10 accountants to keep track of 38 billion, well maybe they only need 5 for 19 billion. If they need 80 middle managers, perhaps that can be cut to 40. They have about 83,700 employees (2005 figures), so the people who want to simply close down "big oil" and their "obscene profit" are wishing for those 83,700 people to lose their jobs.

It wouldn't happen overnight though, even if all the existing new cars sold were double the mileage. That's because new cars represent only a fraction of the total cars in use. The US DOT Bureau of Transportation Statistics says that in 2005, half the cars were older than 8.9 years old. Cars on the road are getting older, on average, not newer, according to their table at http://www.bts.gov/publications/national_t...able_01_25.html

So you don't need to shed any tears for the oil companies if we immediately double the mileage of all new cars sold. It would take several years for the changeover to occur, and while growth in this country isn't all that significant, all the major oil companies are really world-market companies, and the growth in other areas will keep those 83,500 people working.

 

<div class='quotetop'>QUOTE(Godiva @ Jan 14 2007, 11:14 PM) [snapback]375703[/snapback]</div>

Who is they?

<div class='quotetop'>QUOTE(burritos @ Jan 14 2007, 09:51 PM) [snapback]375669[/snapback]</div>

Profits and the life expectancy of the oil companies are two different issues. Eventually they will either morph like AT&T has or they will follow the horse and buggy maker. I would bet they are heavily leveraged into ethanol production, that if fuel cells become big - who will have the best chance at developing a nation wide hydrogen distrubution network, same for flex fuel E85, etc.

How many Americans were involved in the computer industry in 1975? And now how many are earning a good living working for Microsoft, Dell, Cisco, etc.

There is a natural evolutionary change in the economy of this country - whatever happens to the oil giants will happen to them and our economy will adjust. Witness our current employment rate of over 95%. And notice how the Federal budget deficit continues to shrink at an amazing pace. We will survive.

 

I shed no tears for the oil companies. I am not aware of their sinking funds to clean up the toxic mess they have created around drilling sites and refineries. If they follow the usual corporate model YOU will be paying for their clean up after they take the money and run. The first steps they could take as far as profits go are to reduce upper management pay and stockholder return to lesser amounts. Secondly, like so many other corporations they will diversify into other related and non related income streams. They're here and they ain't goin' anywhere, unless they hire GM's management team then all bets are off.

 

The price needs to be $20 a barrell for oil companies to remain in business, although it seems unlikely that 80's scenerio is going to happen anytime soon.

 

<div class='quotetop'>QUOTE(Godiva @ Jan 14 2007, 11:14 PM) [snapback]375703[/snapback]</div>

If I remember right, I thought 40% of the U.S. oil consumption was used for cars etc. Not sure if the trucking industry is in that number, though. Anyway, the drop in consumption would be significant for the oil companies, but not a going out of business problem.

 

<div class='quotetop'>QUOTE(Frank Hudon @ Jan 14 2007, 10:10 PM) [snapback]375698[/snapback]</div>

Correct. There's an economic principle called Jevons Paradox, where increasing the efficiency of resource being used will increase the supply, thus lowering the price of that resource (he was looking at coal), so it can be used for more purposes. Two things to note about this: 1) more work is getting done from the same amount of resource (ie. people can travel more), so increasing efficiency is still a good thing, 2) it assumes stable supplies, but if the price is going up because of an increasingly reduced supply, then it counteracts the price going down from reduced demand.

So mandating better CAFE rates isn't as effective at reducing oil consumption as a gas tax. But you also have to consider that people don't have unlimited time for vacations (at least non-Europeans), how long would it take for airlines to buy more airplanes, etc. So the fuel efficiency increase really could lower oil consumption in practice, but not as much as a simple calculation would predict.

 

<div class='quotetop'>QUOTE(nerfer @ Jan 15 2007, 01:08 PM) [snapback]375909[/snapback]</div>

I say we do both.

There will be a point where the "more planes" the airlines fly will be half empty. Plus, you can only add so many more flights to already full schedules at airports. It's not like you can double the planes and double the flights. There wouldn't be time in the day or space on the runways. Our city for one isn't going to double the airfield so the airline can fly twice as many planes that are only half full.

 

Maybe a decrease in oil demand would spur oil companies to offer alternative energy sources, thus offsetting an economical ramifications such as job losses. At first, their profits would probably decline due to initial R&D costs but eventually they'd turn a profit. We will always need some form of energy. I do recognize, however, that this transition will probably be spurred more by demand of alternative energy instead of merely a decline to oil sales.

 

This all assumes the energy giants continue to be lavishly subsidized.

IMO the subsidies need to go somewhere else more useful and more taxes applied to non-critical fuel needs. Like gasoline...

 

with those profits they have had recently, you dont think they are already investing in wind, solar, and geothermal???

believe me, they are already lining up their eggs for the post-oil boom days. i can guarantee that

 

Don't worry, the Chinese will pick up any slack in demand for oil.

 

Fossile fuels (oil, coal) permeate our entire culture, world wide. The reason solar, wind, hydro and conservation have not yet been deamed "feasible," is because the energy giants have not yet figured out how to absolutely control renewable energy.

At the same time medicines, fertilizers, plastics, agriculture, housing, transportation, education and recreation are based almost exclusively on "cheap" oil. Those that recognize and apply "least cost, end use" (long-term) thinking will succeed and make continually successful transitions. Those that only recognize and apply "least cost, first use" (short term) thinking are doomed to failure and extinction.

Sacramento newspapers have been running articles on "Sacramento Without Oil." The outlook is bright, quality, more sustainable and more human-centered.

http://www.newsreview.com/sacramento/Content?oid=oid%3A46557

 

If mpg doubled, GM would sell larger / heaver Hummers to increase their profit. SUV's similarly, would be made the size of motor homes. Garages would be made larger ... bigger driveways ... freeway lanes ... we'd super size our toys. Oink Oink

 

<div class='quotetop'>QUOTE(PA @ Jan 18 2007, 11:56 AM) [snapback]377216[/snapback]</div>

Do not forget India which is close behind China in developing its economy. At least when Iran develops nukes it will use less fossil fuel :lol: I think this is one of the few things we should emulate the french in - they use nukes for 70% or so of thier energy needs vs. 20% for us - silly we dont build more nuke plants while we wait for renewable sources to mature.

 

well, ever wonder why the rollout of alternative fuels has been so sluggish despite the plethora of evidence that suggests it is not only inevitable but also the right thing to do???

well i dont. the oil companies are the ones slowly buying up alternative energy ideas and purposefully holding them back until they have milked their cash cow dry.

ok sure its a conspiracy... but i am betting i am right