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TODAY Thursday 12 June 1997 Each weekday. Conn Nugent on what's new in the world, on the site. |
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TODAY Thursday 12 June 1997 Each weekday. Conn Nugent on what's new in the world, on the site. |
TODAY IN THE WORLD: Cheap Oil and Bargain Cars
If you're in the market for either 100 million barrels of crude oil or a nice two-year old convertible, now's the time to pounce. Recent articles in The Wall Street Journal and The Economist -- those indispensable publications for environmental materialists -- illuminate two interesting trends in the wide world of petroleum.
One of those trends is that investors in crude-oil futures have seen prices decline 27% this year; heating-oil and gasoline futures are both down by more than 20%. This dramatic slump follows a two-year-long rise, but experts see no quick resumption of that: there's an oil glut, they agree, with no signs of abatement.
The second interesting development is a drop in the price of used cars. The official industry data say that used car prices have declined 2% over the last year, but dealers tell stories of much bigger bargains than that. So acute has the problem become that Ford is prepared to help its dealers buy end-of-lease returns rather than have them put up at auction. Anybody who wants a Taurus that's been leased for a couple of years can get a great price. Ditto for the minivan: the apple of the soccer mom's eye has lost its market juiciness (which now belongs to the Sport/Utility Vehicle) and you can score big on some barely-used recent models.
The oil glut may not last too long, though the signs for increased production still shine brightly: a feeble OPEC; a slowly de-sanctioned Iraq; a new, moderate president in Iran; vigorous pumping by giants Saudi Arabia and Venezuela; fresh indications that even the hapless Russians are ready to join in the export game.
The car glut may just be beginning, says the Economist. The growth in demand for automobiles is still up, up, up but the supply is upper, upper, upper: the industry has a serious overcapacity problem that's only going to become more dramatic as manufacturers build new plants in Asia and Latin America. Many European automakers will be hard pressed to compete in the new world market, but will probably be subsidized to do so for reasons of national pride and domestic politics (Vive le Citroen!). The resulting car glut will be good news for consumers (you) but bad news for enviros (also you) who realize that the private automobile is the most important planetary menace to nature.
So we'll have cheap gasoline for a least a little while more and cheap cars for quite some time to come. Perhaps we can mark this occasion by reminding ourselves of the folly of using the general truth that fossil fuels are finite to reach the particular conclusion that humans are "running out of" oil and that its price will ineluctably rise as supplies dwindle. That's all true over the very long haul, but many of us in the 1970s grievously underestimated the capacity of market systems to find more oil and to pump it more cost-effectively. Oil is cheap and will stay cheap for who knows how much longer. And nothing -- absolutely nothing -- matters quite so much.
TODAY ON THE SITE
Steve Pedery and Dan Becker of the Sierra Club can steer you in the right direction for good Website information on these sticky subjects. Check out their High Fives feature on Automobiles & Fuel Economy.
6/11: More Taxes
6/10: Clean Air, Hot Air
6/09: Swimming
6/06: Enviros and Transpo
6/05: Fabulous Ethanol
6/04: Swine and Federalism
6/03: A New Measure
6/02: My Front Yard
5/30: Funders
5/29: Quantification
5/28: Over the Top
5/27: Solar Hippies
5/23: Spiffy Cars, Clunker Bikes
5/22: Petroleum Heresy
5/21: We Irish
5/20: Shallow Backpackers
5/19: Songbirds
5/16: Fat, Fat, Fat
5/15: Our Forthright Administration
5/14: Coral Reefs of the Sahara
5/13: (Life Before) Death and Taxes
5/12: Kids
5/09: Free Trade and Hormones
5/08: Sherry Boehlert, Republican
5/07: Fort Davis, West Texas
5/06: Europe (yawn)
5/05: Divorce, Mothers, Equality
5/02: Killer Grannies and the Highway Bill
5/01: China
4/30: Pity the Mangrove
4/29: Grizzlies off Battery Park
4/28: Mighty Monsanto
4/25: Growth
4/24: Refrigerator Wars
4/23: The Day the Earth Day Stood Still
4/22: Doorman Ecology
4/21: Toyota Steps Out
4/18: Victims of Extremism
4/17: Our White Guy Problem
4/16: Coca-Cola and the Merrit Parkway