$5 per Gallon - Fond Memories?

What would you say if I were to ask you, “Would you ever wish for gas at $5 per gallon? Well, I’m asking. I heard a report today that described the fuel needs present in China and India. It stated that by next year, they very well could be demanding the importation of oil at a rate larger than what the world can provide to them.

From “Fueling the Dragon – China’s Race into the Oil Market”

With 1.3 billion people, the People’s Republic of China is the world’s most populous country and the second largest oil consumer, behind the U.S. In recent years, China has been undergoing a process of industrialization and is one of the fastest growing economies in the world. With real gross domestic product growing at a rate of 8-10% a year, China’s need for energy is projected to increase by 150 percent by 2020. to sustain its growth China requires increasing amounts of oil. Its oil consumption grows by 7.5% per year, seven times faster than the U.S.’

But despite its efforts to diversify its sources, China has become increasingly dependent on Middle East oil. Today, 58% of China’s oil imports come from the region. By 2015, the share of Middle East oil will stand on 70%.

From the Business Insider a year ago, but in support of the above…

While Chinese oil consumption growth is expected to slow from the blistering 13.1 percent growth the country experienced in 2010, China is still expected to see a 6.6 percent growth in consumption this year. By 2015, the International Energy Agency (IEA) estimates that the use of oil in China will increase some 70 percent from 2009 levels, accounting for 42 percent of global demand over that time period.

The economic growth within those two huge nations, and the massive movement of their populations into a middle class existence lays a heavy pressure on the oil spigot. There can be no turning back in this reality without an equally massive reduction of their demands. This is not likely to happen without a national public throttling, a world crash and /or a world war.

Our gas prices are averaging near $4 right now, with oil around $108 – $110. today, it went above $110 for a while. We ARE on our way to $5 diesel, and close to that for gasoline. Does it have to stop there? Yes and no. There are many reasons why it might come down.

  • Relaxation in Iranian tensions.
  • Slowed growth in China due to currency fluctuations brought on by the European problem.
  • Successful Chinese discovery and exploitation of petro reserves in the Western Hemisphere.
  • Canadian oil sales to Chine due to the US not wanting oil piped in.

Reason for it to go up, though?

  • Iranian trouble. (Likely, due to their insistence on pursuing nuclear power.)
  • Chinese and Indian growth as manufacturers and exporters of goods no longer produced in Europe.
  • Failure to discover new sources by energy producers.
  • Trouble anywhere in the middle east.

I think it best for preppers everywhere to find ways to move about more efficiently. There is no way you can store enough fuel to do more than extend your bug out range, or soften the blows of temporary price spikes. It isn’t safe or rational. You will need to start thinking differently about the fuel budget and usage. Use less and /or redirect funds from elsewhere in the household budget.

The other thing you can do is to get active. The US has large reserves in the lower 48 that we can’t get to without Federal permission. The largest exception to this in the field in North Dakota, which is private, and which is driving the largest growth of any economy in that half of the nation. We need to increase our pull from the ground, pure and simple. That means drilling, which is far safer to the environment on land than under the sea. Wherever you can promote exploration and retrieval, do it. Remember that all economies grow on energy, and the only reliable, available and predictable energy source that can be applied to great areas of the economy is OIL. We need it. We have it. We should be going for it.

In the mean time, take immediate steps to conservation (and cash savings) such as carpooling, auto maintenance and driving habits (stop and go and max speeds). Consider long term adjustments such as job or home relocation, telecommuting if possible, and using a more efficient car if available. buying a different car is not always the best bet for near term answers, because the depreciation, interest payments and tax & license costs will eat far more than the fuel, even at $5 per gallon. Balance the costs as best you can and do what makes sense. If a more efficient car can be bought for cash, and cheaply, you may have a good budget saver there.



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