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Will Gasoline (petrol) Be The Trigger?

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itulip.com has an interesting "Report from the Front" story of a U.S. homeowner who has seen the value of her rural property plummet in recent months. Could it happen as fast in the U.K.?

Here's an excerpt:

"...Then Katrina hit. Gasoline prices skyrocketed. Most of the people in the area commute to the city for work. The cost of gasoline made that commute much more expensive. When I moved here gasoline was running about $1.20 a gallon. Recently I filled up for $2.69. When I moved here, $400 a month was my budget for gasoline. The same amount of fuel would cost me close to $900 a month. Just to commute. Because of the added commuting cost, people are not buying property out this far. People are holding back and real estate sales slowed to near nothing.

Soon after, the house of cards really started to fall. One local builder went bankrupt, unable to sell over 20 homes he built in a development. Those houses in foreclosure fed the buyer's market, driving prices of other homes for sale down farther. Then another builder went bankrupt, then another. In the past three months, six builders have filed in the area. The number of houses in foreclosure is staggering. They can be had for next to nothing. Banks are jumping through hoops trying to find people to buy them. The local newspapers all have classified ads reading "Builder's inventory Reduction Sale."

Land prices started to fall. What had sold a few months ago for $10,000 an acre was now sitting dead on the market at $2,500 an acre...."

Here's the link:

http://itulip.com

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This is very much the "End of Subrubia" as painted in the film of that name. But that is only one area somewhere in the US. If houses are not being bought there, then where are they being bought? Or have people stopped moving? The basic vulnerability in the US is the absence of public transport, the habit of long commutes, and the habit of driving stupidly large vehicles. In short, the consequences of not taxing gas heavily are coming home to roost. Oil shortages will hit the USA very hard, but they will hit Europe hard too, because here our industries rely heavily on road freight. Fuel shortages will impact the viability of distributing goods and we'll get the inflation through prices in the shops and supermarkets.

I think there is developing opinion that oil shortages will burst the property bubble. Unfortunately this will cause the price of oil to drop and everybody will think the crisis is past, when in fact it is just beginning! As we recover from recession we'll bang up against the oil ceiling again, unless steps are taken to reduce oil consumption.

Look out for a "Roosevelt" who directs state projects into renewable energies to stimulate the economy.

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I'm not convinced that consumer cars will be the biggest casulty of the oil squeeze. Modern diesel cars with simple engines can quite easily be modified to run on vegetable oil, which is a renewable resource. I don't know what proportion of current diesel prices is due to the raw material and distribution itself (and how much is tax), but the raw oil is relatively cheap. If more vegetable oil was used as it was being burnt as fuel then I would expect economies of scale and the possibility that fuel grade vegetable oil may be cheaper than food grade to reduce the price still further. There are other alternative fuels that can be used in current cars as well, such as ethanol, again with some modification to the engine but nothing too radical. And you don't get the problem that you get with hydrogen that huge amounts of energy is used to produce the fuel in the first place.

Billy Shears

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I'm not convinced that consumer cars will be the biggest casulty of the oil squeeze. Modern diesel cars with simple engines can quite easily be modified to run on vegetable oil, which is a renewable resource. I don't know what proportion of current diesel prices is due to the raw material and distribution itself (and how much is tax), but the raw oil is relatively cheap. If more vegetable oil was used as it was being burnt as fuel then I would expect economies of scale and the possibility that fuel grade vegetable oil may be cheaper than food grade to reduce the price still further. There are other alternative fuels that can be used in current cars as well, such as ethanol, again with some modification to the engine but nothing too radical. And you don't get the problem that you get with hydrogen that huge amounts of energy is used to produce the fuel in the first place.

Billy Shears

We will be very reluctant to give up our cars. Declining oil reserves will IMO be met with coal liquefaction and the bio-fuels you mention. But for this to be a better use of the primary energy, efficiency of vehicles will have to be improved and unnecessary large vehicles penalized. It can be done, it's ultimately a consumer choice.

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I just checked and pre-tax diesel prices in the UK in August last year were 28.6p a litre. I presume that they are higher than that now. Vegetable oil changes in price too, but you used to be able to buy 'economy' vegetable oil in ASDA for 19p some time ago. I was buying sunflower oil in Lidl for 33p a litre. Since the tax will be the same, it looks like the conversion to vegetable oil rather than diesel wouldn't, at current prices, make a massive difference.

Billy Shears

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I just checked and pre-tax diesel prices in the UK in August last year were 28.6p a litre. I presume that they are higher than that now. Vegetable oil changes in price too, but you used to be able to buy 'economy' vegetable oil in ASDA for 19p some time ago. I was buying sunflower oil in Lidl for 33p a litre. Since the tax will be the same, it looks like the conversion to vegetable oil rather than diesel wouldn't, at current prices, make a massive difference.

Billy Shears

We cannot have an exclusively vegetable powered transport system. There is simply not enough land to meet demand. Bio-fuels could be integrated into a sustainable transport programme.

Don't forget, 20% of biodiesel volume is methanol derived from natural gas, substituted for the glycerin content of the oil.

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Vegetable oil is very cheap at the moment right. What do you think will happen to the price of it once we start to run cars on it. At first it will cost the same but as supplies run out all the time it will not be had for love nor money. Supply and demand remember, and it will never be possible to produce vegetable oil in the quantities we produce gasoline at the moment.

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If you put vegetable oil in your car, it is subject to Road Fuel Tax. If your car could run on tap water, it too would be subject to this tax (about 50p per litre or so). Fuel prices aren't on fossil fuels - they are for any fuel which drives a road vehicle.

Edited by aris

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Vegetable oil is very cheap at the moment right. What do you think will happen to the price of it once we start to run cars on it. At first it will cost the same but as supplies run out all the time it will not be had for love nor money. Supply and demand remember, and it will never be possible to produce vegetable oil in the quantities we produce gasoline at the moment.

This is happening already. Last year I spent a day phoning round the local chip shops for their used oil, none would let me have it. The suppliers are collecting it to run their fleets on. The only stuff I could get was solid at room temperature, which means the final fuel turns your tank into a block of margarine!

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It won't be one simple thing we plug in instead of oil that'll save us, quite simply because there IS nothing that will provide the same amount of energy for the same amount of effort to get it.

Tar shales and coal liquefaction etc - doable but will cost more

Hydrogen - only an energy carrier, got to be produced (from wind or nuclear or burning coal)

Biomass - not enough available land to replace oil and also requires significant energy inputs to grow, harvest, and process, so not cheap

It'll be a mixture of conservation, efficiency, and a number of different sources - biomass, coal, wind, tide if they ever get that working well. We could end up mining our rubbish tips and converting the plastics therein back into fuel.

The upshot is we'll have some energy, BUT it won't be cheap like it is now and some readjustment of living standards will be needed. Dwellings will hopefully change to be better insulated. People will turn off their appliances when not in use and wear jumpers when it's cold. We won't be using throwaway plastic packaging, it'll be back to glass milk bottles and waxed paper. Many fewer people will drive cars. Air travel will be prohibitively expensive. These things will hurt economically and translate into lower living standards.

All going well everyone will have food to eat, but we won't be importing cherries from Turkey in the winter.

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Vegetable oil is very cheap at the moment right. What do you think will happen to the price of it once we start to run cars on it. At first it will cost the same but as supplies run out all the time it will not be had for love nor money. Supply and demand remember, and it will never be possible to produce vegetable oil in the quantities we produce gasoline at the moment.

Answering two posts here, first biodiesel is different from raw vegetable oil. Biodiesel has methanol as mentioned by dom, but cars can also run on the raw vegetable oil. There are some inconveniences. E.g. on cold mornings the vegetable oil may have solidified in pipes and tubes. But these can be worked around.

At present farming in the UK is often said to be in trouble. A need for mass amounts of vegetable oil would produce a massive new market for it. Rape grows quite well here. It may not be possible to produce vegetable oil in the quantities that we now use fossil oil, but a combination of increased production with considerably decreased consumption could possibly solve the problem.

Billy Shears

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Answering two posts here, first biodiesel is different from raw vegetable oil. Biodiesel has methanol as mentioned by dom, but cars can also run on the raw vegetable oil. There are some inconveniences. E.g. on cold mornings the vegetable oil may have solidified in pipes and tubes. But these can be worked around.

At present farming in the UK is often said to be in trouble. A need for mass amounts of vegetable oil would produce a massive new market for it. Rape grows quite well here. It may not be possible to produce vegetable oil in the quantities that we now use fossil oil, but a combination of increased production with considerably decreased consumption could possibly solve the problem.

Billy Shears

There are big problems with running diesel engines on pure vegetable oil for long periods. The main one being that all new diesel engines are HDI and run extremely high fuel pressures, which is why we get the high efficiency and power output from these systems. Modern HDI injectors, designed to provide better fuel atomisation, will become clogged with glycerin contained in the oil.

Piston rings will also become clogged with glycerin leading to engine destruction.

And as you mentioned, solidification of the fuel can cause serious damage to older cam belt driven injector pumps, causing them to stall and stripping the cam belt resulting in engine damage.

The glycerin will have to be removed, or the engines modified which will make them inefficient.

If you have ever driven a biodiesel or veg oil powered vehicle you will know what a stink the make, much more than fossil diesel. There will IMO be strong objections to the use of these biofuels in populated areas which is a problem that many are overlooking at present.

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"...Then Katrina hit. Gasoline prices skyrocketed. Most of the people in the area commute to the city for work. The cost of gasoline made that commute much more expensive. When I moved here gasoline was running about $1.20 a gallon. Recently I filled up for $2.69. When I moved here, $400 a month was my budget for gasoline. The same amount of fuel would cost me close to $900 a month. Just to commute. Because of the added commuting cost, people are not buying property out this far. People are holding back and real estate sales slowed to near nothing.

Personally I don't have a huge amount of sympathy here.

1 US Gallon approx = 3.75 litres, so $2.69/gallon approx = 72 cents/litre.

$900/month therefore = 1250 litres/month = 40 litres a day. "Just to commute." :o:o

How far is the commute FFS? (Or more to the point, what are they driving?)

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Personally I don't have a huge amount of sympathy here.

1 US Gallon approx = 3.75 litres, so $2.69/gallon approx = 72 cents/litre.

$900/month therefore = 1250 litres/month = 40 litres a day. "Just to commute." :o:o

How far is the commute FFS? (Or more to the point, what are they driving?)

Jesus H Christ. I use 60 litres a month usually.

334 gallons of petrol. 20 commuting days a month = 16.7 gallons per day.

I gather a Hummer will do about 10mpg in traffic. So a 167 mile round trip in a Hummer.

Surely nobody has more than a 167 mile commute daily? It'd take 3 hours even in no traffic. It's 40K miles a year.

OTOH a Prius will do about 48mpg on average. So switching to a Prius could save a Hummer driver about 80% of fuel costs, and in this example possibly take fuel bills from 900 to 180. 8.6K savings per annum.

A new Prius will set you back about 30K dollars, so would pay for itself in savings within 4 years in this example. And obviously they could trade in their used SUV for all or most of that.

BUT! who in their right mind would live nearly 90 miles from work... I do know a couple of people who live about 65 and 80 respectively but they use the train at least for most of the journey. And I still think they're mad.

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Jesus H Christ. I use 60 litres a month usually.

334 gallons of petrol. 20 commuting days a month = 16.7 gallons per day.

I gather a Hummer will do about 10mpg in traffic. So a 167 mile round trip in a Hummer.

Surely nobody has more than a 167 mile commute daily? It'd take 3 hours even in no traffic. It's 40K miles a year.

Hmmmmm, hadn't looked at the numbers that way. I get over 500 kilometres from 40 litres in my car (which is small, I admit, even though it's a 1.6).

There are parts of California where I understand 167 miles a day is by no means unusual. Not rural areas either.

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If you put vegetable oil in your car, it is subject to Road Fuel Tax. If your car could run on tap water, it too would be subject to this tax (about 50p per litre or so). Fuel prices aren't on fossil fuels - they are for any fuel which drives a road vehicle.

except electricity

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At the moment commuting in london I am doing about 420 miles for £50. 2.5 TDI.

I could do better, but squeezing out polos sometimes needs a heavy foot... :P

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except electricity

Not yet - you can bet your **** that if electric vehicles were more popular (and more available - that's another conspiracy), they would find a way to tax your road miles. Why do you think they are looking at taxing you by the mile instead of taxing the fuel?

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Not yet - you can bet your **** that if electric vehicles were more popular (and more available - that's another conspiracy), they would find a way to tax your road miles. Why do you think they are looking at taxing you by the mile instead of taxing the fuel?

I wonder if I am guilty of tax evasion for not paying fuel tax on at least some of my tucker - I cycle around 250 miles per month commuting in Edinburgh and do another 150 miles or so in other errands or for fun. Say 5,000 miles per year. At 600 calories per hour energy consumption in cycling, that's 250,000 calories per year (equal to about 50lbs of fat). So what might that energy content cost as food? Let us say the food is decent bread. Assuming £1 per 1,000 calories of bread, that's £250 per year. Now if I was to pay fuel tax on top of that at the rate that Diesel or petrol are taxed I'd be having to shell out about £500 a year!

I wish I'd never started this post!

This calculation reveals how cheap fossil fuels are in terms of calorific value, relative to food. I suppose that is not surprising, in that it takes something like 10 calories or fossil fuel to produce 1 calorie of food. This could be an interesting counter to the assumption that cycling is "green". I mean, it is quite green, but the inefficiency of food production should be taken to account.

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Not yet - you can bet your **** that if electric vehicles were more popular (and more available - that's another conspiracy), they would find a way to tax your road miles. Why do you think they are looking at taxing you by the mile instead of taxing the fuel?

Are they? How on earth would they enforce that? Is the revenue going to physically check your milometer every year? You can fiddle those anyway, people already do when selling cars.

And isn't that inherently regressive as you're charging someone to do the same mileage in a gas guzzling SUV as in a super efficient hybrid car? It reduces the incentive to drive in an efficient manner too.

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Norwich union already do a car insurance thing where they monitor where you go.

Oh, via GPS?

I personally would be highly reluctant to allow one of those on my car. It's riddled with potential privacy issues.

Besides, Norwich probably only have a few thousand drivers - the technical issues with rolling such a system out to everyone would be interesting, to say the least.

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Right.

So here we have a lovely simple system where you pay the tax integrated with the cost of your petrol. You drive more, you pay more. You drive a greener vehicle, you pay less. Simple and it works.

And they want to replace that with a much more complex system where they have to keep track of where everyone's driven? Presumably they have to keep records of this at least until everyone's been billed. So they have to keep records of where everyone's been for the last full billing period.

That will cost a FORTUNE!!! It'll be in the hundreds of millions range to implement that. For zero benefit on the current system. And it probably won't work and 2 years later they'll go back to charging duty on petrol.

INSANE.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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