Avgas price and the light plane ownership

On Fri, 01 Jul 2005 13:37:32 -0700, M wrote:


Anyone worries about what the rising avgas price to the light plane
ownership in the U.S? I have absolutely no doubt that the average
avgas price will surpass $5/gallon in about 5 years. We'll probably
see a significant drop of GA flying, along with a big drop of the value
of used airplanes. It's really depressing just to think about it.

I wouldn't worry about it too much. Most people don't realize some simple
facts about oil and fuel costs.

One, the price we pay per barrel has zero to do with its availability. The
price we pay is basically a speculative futures price based on
estimates of what the market will bare. Fact is, oil companies around the
world are making record profits.

Two, there is now more known oil in the world than there has ever been in
the history of mankind. The only thing that changes is where it's at, how
cost effective it is to obtain it, and what quality the oil is. With the
prices as high as they are now, VAST supplies of oil suddenly become
economically feasible.

Three, as the price per barrel sits above $50/barrel, especially above
$60/barrel, MANY, MANY, MANY alternative fuel options become economically
feasible. Heck, if they would lift the ban on hemp (which is not pot) in
the US, ethanol can actually become a viable fuel source without
government support; as is the case for corn-ethanol production, which at
best, is at a break even form an energy perspective. Meaning, it takes
about as much energy to produce ethanol from corn as we get back out of
it. As a rule of thumb, it actually takes more energy to make
corn-based ethanol than we get out of it. Hemp is known to provide up to
3x better yeild, per year, than corn and requires no pesticides (unlike
corn). Other alternatives include pure bio-fuels and even purely
synthetic options. Synthetics are expensive but becomes feasible around
$50+/barrel.

So why don't we see fuel more options? Simple ecomonics. The oil
companies don't want to invest the billions into processing more low cost
crude ($28/barrel) because they want to be assured a return on their
investment. If oil prices fall, it's harder to get that return on new
refineries. Alternate fuel supplies take time to bring to market and the
new entries require a stable market to justify the investment. In the
global picture, war = unstable oil markets; which is where speculation
comes in. If five years from now, prices have continued to rise, then I
think you'll start to see MANY alternatives can start to come into the
equation which will lower our fuel costs again. ...as theory goes anyways...

Cheers,

Greg

"Greg Copeland" wrote in message
news
On Fri, 01 Jul 2005 13:37:32 -0700, M wrote:


Anyone worries about what the rising avgas price to the light plane
ownership in the U.S? I have absolutely no doubt that the average
avgas price will surpass $5/gallon in about 5 years. We'll probably
see a significant drop of GA flying, along with a big drop of the value
of used airplanes. It's really depressing just to think about it.

I wouldn't worry about it too much. Most people don't realize some simple
facts about oil and fuel costs.

One, the price we pay per barrel has zero to do with its availability. The
price we pay is basically a speculative futures price based on
estimates of what the market will bare. Fact is, oil companies around the
world are making record profits.

Two, there is now more known oil in the world than there has ever been in
the history of mankind.

Quite...and right now, a surplus is being generated. Where the surplus is
going is into storage and reserves.

http://www.trendmacro.com/a/luskin/2...7luskinSMC.asp

"Matt Barrow" wrote in message
...

"Greg Copeland" wrote in message
news
On Fri, 01 Jul 2005 13:37:32 -0700, M wrote:


One, the price we pay per barrel has zero to do with its availability.
The
price we pay is basically a speculative futures price based on
estimates of what the market will bare. Fact is, oil companies around
the
world are making record profits.

Two, there is now more known oil in the world than there has ever been in
the history of mankind.

Quite...and right now, a surplus is being generated. Where the surplus is
going is into storage and reserves.


Funny you say that. Here in Oz the Arabs always seem to raise their oil
prices just in time for school holidays, holiday weekends, and so on. Some
would suggest profiteering by the oil companies but our Government watchdog
can never find proof, as the Govt creams a fortune in taxes on the fuel
sales.
Brian

"SR20GOER" wrote in message
...

Two, there is now more known oil in the world than there has ever been
in
the history of mankind.

Quite...and right now, a surplus is being generated. Where the surplus
is
going is into storage and reserves.


Funny you say that. Here in Oz the Arabs always seem to raise their oil
prices just in time for school holidays, holiday weekends, and so on.
Some
would suggest profiteering by the oil companies but our Government
watchdog
can never find proof, as the Govt creams a fortune in taxes on the fuel
sales.

You need to read up a bit on how oil trades on the world markets.

"Matt Barrow" wrote in message
...

"SR20GOER" wrote in message
...

Two, there is now more known oil in the world than there has ever been
in
the history of mankind.

Quite...and right now, a surplus is being generated. Where the surplus
is
going is into storage and reserves.


Funny you say that. Here in Oz the Arabs always seem to raise their oil
prices just in time for school holidays, holiday weekends, and so on.
Some
would suggest profiteering by the oil companies but our Government
watchdog
can never find proof, as the Govt creams a fortune in taxes on the fuel
sales.

You need to read up a bit on how oil trades on the world markets.


I have some idea of how oil trades but there comes a time when the constant
coincidence of the price rise occurring to coincide with large parts of the
population going travelling by vehicle streatches beyond the realms of
probability or 3 sigma if you prefer. The current diesel price, given it is
cracked out early in the process, is even more laughable.
Brian

"SR20GOER" wrote in message
...

"Matt Barrow" wrote in message
...

"SR20GOER" wrote in message
...

Two, there is now more known oil in the world than there has ever
been
in
the history of mankind.

Quite...and right now, a surplus is being generated. Where the
surplus
is
going is into storage and reserves.


Funny you say that. Here in Oz the Arabs always seem to raise their
oil
prices just in time for school holidays, holiday weekends, and so on.
Some
would suggest profiteering by the oil companies but our Government
watchdog
can never find proof, as the Govt creams a fortune in taxes on the fuel
sales.

You need to read up a bit on how oil trades on the world markets.


I have some idea of how oil trades but there comes a time when the
constant
coincidence of the price rise occurring to coincide with large parts of
the
population going travelling by vehicle streatches beyond the realms of
probability or 3 sigma if you prefer. The current diesel price, given it
is
cracked out early in the process, is even more laughable.

Right now (actually the past couple years), the biggest jump in fuel use is
industrial applications in China and India.

Also, at this time, more oil is being produced than is being consumed,
mainly going into strategic reserves.