- Any price > $100 a barrel is a high price
- Price was $131.28 at press time. An updated price can be found here.
- High prices encourage people to conserve
- Drive less
- Less leisure driving
- Combine trips. Wal-Mart and Target may be winners from this consumer behavior
- Consumers may walk or bike more. It has been overheard that bicycle sales are up so far this year.
- More exercise leads to better fitness
- Resource productivity increases
- People have an incentive to maximize output when input costs are increasing
- This may create cost differentiation among producers. Those who effectively increase resource productivity make more profits per dollar of sales.
- Alternative strategies become relevant. When gas was $1.509 people kept buying trucks and SUV's because the cost per mile was so low as to not matter. Now that Gas is >$4.009 in some location people want alternatives.
- Toyota utilizes hybrid technology that provides excellent fuel economy
- Honda is well know for efficient and reliable engines.
- GM has a vehicle called the Chevy Volt. This vehicle will be capable of 40 mile round trips WITHOUT using a drop of fuel. When not in use this vehicle is plugged into the wall. This is the future. This vehicle is the most exciting vehicle from the General in decades [pick your favorite car introduction].
- As this technology proves itself, reliance on fuel will be lessened. Consumers driving patterns will change to take advantage of the strengths of plug in cars etc.
- Power firms and suppliers may be the big winners from high oil prices.
- Plus the firms that patent effective battery technologies
What are your thoughts and idea on oil prices as well as the costs and benefits?
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