The New York Times has a bonanza of energy related stories today. First, there’s this feature story on “peak oil”—the notion that the world’s oil producers are very close to the point at which they no longer can increase production, after which worldwide crude oil output will inexorably sink. This idea has gained currency and adherents over the past several years as oil prices have risen—though there are plenty of detractors who say that we’re nowhere close to a global production peak. There’s nothing new in the article, but it’s a good summary of the debate for those who haven’t been following it.
Next stop, this news that the recent gasoline price spikes have suppressed gasoline sales for the second consecutive week:
All told, Americans used an estimated 8.63 million barrels of gasoline a day in the week that ended Sept. 9, down 4.3 percent from the week before and 6.5 percent less than the comparable week in 2004, according to the Energy Information Administration.
It’s not clear if this decline is because consumers are buying less gas, or if it’s because retailers are drawing down their existing stocks, waiting for prices to fall a bit before replenishing them. But at least one oil economics firm has reported steep drops in retail gasoline sales over the past week—a sign that higher prices may actually be changing consumer behavior, at least somewhat.
(As a side note—the general consensus seems to be that over the short term, a 10 percent increase in gas prices leads to a 1-2 percent decrease in per-capita consumption. So if average gas prices rise from $3 to $3.30 over the next year, we’d still see a negligible decline in total consumption— perhaps not even enough to offset population growth. If high prices are maintained over the long term, though, people will reduce their consumption quite a bit more. But I digress.)
Third, there’s this story about declines in overall retail sales—led by a drop-off in new car sales in August, after a torrid July. But the interesting thing to me is that higher spending on gas helped bump up spending a bit—which means that, for those who think of high levels of consumer spending as a harbinger of a strong economy, high energy prices may actually be giving the nation a boost. Yet another example of how standard economic indicators should be taken with an appropriately-sized grain of salt.
And finally, there’s this story: “Toyota Says It Plans Eventually to Offer an All-Hybrid Fleet.” Apparently, the automaker thinks that by ramping up production it can cut the cost premium for hybrids—making them that much more competitive with conventional cars and trucks.
Interesting times, indeed.
