- 19.5 Gallons of Gasoline
- 9.2 Gallons of Distillate Fuel (Home Heating & Diesel Fuel)
- 4.1 Gallons of Kerosene & Jet Fuel
- 2.3 Gallons of Bunker Fuel
- 12.9 Gallons of Production Materials (Asphalt/ Road oil, Lubricants, other products)
In The Last 10 Year a Barrel of Crude Oil went from $14.86 in January of 1998 To $92.93 in January of 2008 (A 525% increase).
Oil now sells for $126 a Barrel.
The price of oil has impacts on where people choose to build as well as how energy will continue to be consumed. This has implications for commercial real estate as well.
Retail: Increases in oil dampens demand for goods and services. Consumer staples such as grocery stores, drug stores and discount retailers should weather the storm with relative ease. Declines in durable goods (appliances, furniture, and electronics) should be expected as well as projected declines in men’s clothing. Women’s clothing should see modest gains. Lifestyle centers and transit-oriented-development (TOD) are new trends we are seeing in retail.
Office: Increases in energy prices will alter the bottom line of landlords. Sudden spikes in heating, ventilation and air conditioning (HVAC) costs will hurt landlords with full-service gross (FSG) tenants since these higher rents include utilities and cannot be immediately passed-through to tenants. Also a greater number of tenants are seeking energy efficient, environment friendly buildings.
Industrial: Transportation costs are seriously hurting the bottom line for the transportation industry and everyone, from ocean carriers to railroads to trucking companies, are looking for ways to cope. To conserve fuel carriers are reducing travel speeds and seeking to minimize travel distances. Green distribution centers and green supply chains are gaining momentum as users realize the financial benefits of reducing energy consumption.
In February the House passed the “Renewable Energy and Energy Conservation Tax Act of 2008,” or H.R. 5351, which would restore taxes on oil companies in order to invest in renewable energy. The Act extends the “income and excise tax credits for biodiesel” through 2010. The bill is now before the Senate. President Bush vowed to veto the legislation if passed in the Senate.
This nation is built on cheap oil.
Railroads were the tools to wealth in the 1800's, and the automobile was the tool to wealth in the 1900's.
At the turn of the century, we have yet to find a suitable alternative to the automobile and our goods are delivered to us by truck.
Diesel engines move 94 percent of all freight in the United States, 95 percent of all transit buses and 95 percent of all heavy construction machinery.
Diesel fuel is pushing $5 a gallon, the highest it has ever been, even when adjusted for inflation.
It seems to me that the huge recent push in ethanol production, is a last ditch effort as we enter what most professionals predict is "peak oil", the point in which demand forever crushes supply, removing any ceiling that may have existed for prices.
Now, I don't want to alarm you. Economists have predicted the end of all humanity for quite some time now (*cough* Thomas Malthus) and we are all still here. Something usually happens that disproves all of our collective pessimism, only we just don't know what that thing will be.
If I happen to find it, I will patent it and then I will be sure to sell it to you in little chunks, at monopolistic prices. I am just not sure if ethanol will be it. My limited experience has been things like this usually come out of left field, there are too many vested interests and backdoor political maneuvering in the ethanol field to make it commercially viable.
Usually a government mandate is a poor way to innovate yourself out of a crisis, although it did seem to work wonders for the space program.
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