After a long summer of high gasoline prices and constant news about the SUV world ending the stations are selling almost 30% lower than the weeks leading up to Labor Day. News programs are attributing it to the end of the summer driving season (possible if we are at capacity supply/demand-wise). But I think there is more going on.We have a lot of elections up this fall. With less of an energy pressure then incumbents will find it easier to stay. This certainly will be an important driver, but not the most important.Ethanol (E85) from corn and cellulose discussions are important. General Motors has the most forceful marketing push here, aided by the other local automotive manufacturers. The rough targets I have seen put E85 economic switch-over attractive if gasoline stays above the $3/gallon price point.

The announced new Gulf of Mexico oil field reserve find is probably the greatest contributor to the oil problem. A major reserve, though very deep and difficult (expensive) to obtain for $2-$3 per gallon gas. It’s very attainable above $3 per gallon though – and what the existing oil suppliers are worried about.

Existing oil producers learned a lesson in the 1970’s. They found that the US market (the largest oil consumers on the globe) started finding alternatives to big cars, uninsulated homes, and power hungry appliances. Not wanting to drive the US market to figure out further conservation and extraction methods, the existing world oil suppliers have found ways to increase supply and cut prices. They will continue to drive price spikes that scare the general consumer but follow those spikes with relatively inexpensive pricing periods that scare any oil company executive against putting up money for the next oil field supply expansion.

Here are a few recent comments I found (#2 chosen for its passion and humor). #1,
#2.

The consumer has another weapon to fight high energy costs – continue to think like the end of oil is near and pursue conservation and alternative energy methods. We won’t be the first to go this route Sweden (Oil) has already decided to eliminate oil imports by 2020. European countries in general have added high fuel taxes to artificially inflate fuel prices (politically difficult here) and naturally encourage their respective populations to avoid excessive consumption. Worried about energy costs and fueling terrorism? Keep your sights on the horizon and figure out how to save energy at home and in business. This may get you started..something I came across and may pick up for my house soon (Meter)

Cheers!