Maybe I Should Line Up For A Prius After All
When we moved to our “new” house, which is located in car-based suburbia à la 1930 about a mile from the end of the nearest — now vanished — streetcar line, I figured proximity to the University of Wisconsin campus (1-1/2 miles) and my office (3 miles) wouldn’t hurt us, given that we had to pay a near-peak price for the house. Hedge or speculation? Both. (See also Stephen Karlson‘s rollicking read for the Pigou Club.)
I started commuting to work by bike in the fall of 2005, just in time to see the Katrina gas price spike; now my human-powered local travel project has reached the point where my bike is accumulating miles faster than my car. So I’ve figured that I just don’t drive enough to recover the hybrid price premium. (*)
Of course, that’s assuming $4-ish gas. One of the oil supply mysteries is what the Saudis really can do, and BW got hold of some documents that suggest it’s not that much more than they’re doing now:
[T]the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. BusinessWeek obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013.
H/T Balloon Juice and others.
This isn’t exactly a shock, but still, wheeeeee! The market’s late reaction to the Saudis seems to reflect this sort of assessment of their excess capacity, but if BW’s source is right, sign me on with the rest of the blogiverse in not expecting big longer-term price declines.
(*) If you drive a more typical American amount, which is to say a lot, hybrids will usually pay for themselves well within their batteries’ lifetimes, say 3-5 years depending on how you account for the hybrid premium. The exceptions from the current market are the GM mild hybrids (recently discussed a bit in the comments), which have most of the cost of more economical hybrids without much fuel economy improvement over the comparable four-cylinder models. I wonder if someone looked at cup holders in German cars and decided to do those hybrids in the worst possible way to learn those hippy tree-hugger suckers.