What Does $100 Oil Mean?

With oil hitting $100 a barrel and gas heading to $3.50 a gallon - don't you wish you were driving a Prius right now? Especially if you buy a tank of gas every week.

This isn't the first time we have seen $100 a barrel of oil. In 1980, the inflation adjusted price was equivalent. We also had an economic recession in the early 80's, which we are desperately trying to avoid now.

At $100 oil, you can expect your gas prices to go from around $3 a gallon to $3.50 a gallon this spring, not $4 - however I don't see that number to far off in the future. The prices of oil and gas will rise and fall based on demand, so if the economy slows down and people are using less, prices will drop. Pretty simple. If people start car-pooling (a quick solutions with some nice social benefits), they will save money on gas and overall buy less gas which will drive prices down.

Big Oil is profiting tremendously as a reuslt of high oil prices. Exxon Mobile made $10B last quarter - the largest quarterly profit EVER by any US company and almost double what they made 3 years ago. What are they doing with all that money? Stockpiling Euros as they watch the US market tank? Cruising around on the Super Yachts in the Caribbean and taking their Lear Jets to Italy for a Cappuccino for Breakfast, and then off from escargot and cavier in Paris for dinner?

Perhaps they should take those profits and like Oprah - start giving away cars? $10B should buy around 500,000 Priuses a quarter and 2 million a year. Come on - who doesn't want a nice cute little new blue Prius parked in their driveway? What would their shareholders think of that? We could even give them a few tax breaks for all their generosity. Ha!

Just for the reecord ... I don't own a Prius. If they made a convertible, I might consider it. I only drive a few miles a day so gas mileage isn't as important to me as someone who might commute 30 miles a more a day. I know people in the Bay Area that commute 120 miles a day. Yikes! I bet they aren't too happy about has prices doubling recently.

I don't think higher gas prices is enough to send the economy into a recession on its own. We spend about 6% on average of our paycheck on gas versus 8% a decade ago. Owning a car is expensive - period! From insurance, to registration, maintenance, parking tickets (which I always tell people to budget something for) and of course gas. If you are lower income, like I was in college and around my grad school years, I would suggest not owning a car (like I did) and instead ride-sharing when you need one, taking the bus, train, etc, or finding alternative local activities you can bike to. When I moved to San Francisco, I sold my car and rode my mountain bike all over and had the added benefit of staying in excellent shape as a result (after all I had all those hills to tackle). For me then, it was less about the gas prices, and more about not being able to afford the tickets and parking garages where I lived downtown.

When it comes to flying, if you fly Southwest, you might not see any increase at all. Why? Because a very smart CEO (and one of my favorite) Herb Kelleher bought hedges against higher oil prices (through 2009) when it was just $51 a barrel. What is that worth to Southwest? And to you the flyer? To Southwest over $2B. To you - a much cheaper ticket on Southwest than it will be on most other airlines.

We can all ease the energy burden by using a heck of a lot less energy than we do now. I just survived several days without power due to the big storms here and it wasn't all that bad. Granted, I don't like to hang out in 48 degree weather in my own home, however I do normally keep the temperature at 61 degrees since I have a
fairly large home and keep the unused areas even cooler. I am also hoping to have solar installed this year so I can raise my temperature to 64 degrees and not feel guilty about that giant oil sucking sound from Mother Earth.

I could go on and on about other ways to ease the energy burden on the planet, but why do that will Nobel Peach Prize winning Al Gore does it so well? Climatecrisis.net.