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> If massive amounts of people move to electric vehicles gas prices will fall. This isn't entirely true. The cost of gas has a hard floor due to the cost of ex

> If massive amounts of people move to electric vehicles gas prices will fall. This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. On top of that, as the number of cars going to gas stations starts to drop, gas stations will get less profitable. As profits drop, stations start closing down. Eventually, enough stations close down and it becomes inconvenient to own and operate an ICE vehicle regardless of the cost of fuel.

99_00 6y ago
>This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. Not all producers have the same cost. Saudi Arabia is the cheapest I know of at $2.80 per barrel. Others can be 10 times higher or more. Is $2.80 the floor? Maybe not, since SA is a monopoly and can manipulate the price. I think the point is that we can both agree on is that it's a complex dynamic system, with lots of variables and interconnections, and it reacts to changes. >Saudi Aramco, the monopoly oil producer in Saudi Arabia, boasts an extraction cost of about $2.80 a barrel >A geographical comparison from the annual reports of four major international oil companies shows that production costs in Russia were about $22 a barrel https://www.washingtonpost.com/business/energy/by-pumping-at-will-saudi-arabia-hurts-oil-investment/2020/03/15/189505da-6693-11ea-8a8e-5c5336b32760_story.html https://www.washingtonpost.com/business/energy/by-pumping-at...
- ogre_codes 6y ago
  Yeah, what I was trying to say is individual suppliers will drop out of the market as the price of oil drops. That in turn reduces the supply. For Oil Sands, that's roughly $43. Shale oil is similar. Every time the price drops, the number of suppliers drop. OPEC will fight to keep oil prices up by limiting supply when they can, since most of the governments in the Middle East are run on oil profits, they need to!

99_00 6y ago

>This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. Not all producers have the same cost. Saudi Arabia is the cheapest I know of at $2.80 per barrel. Others can be 10 times higher or more. Is $2.80 the floor? Maybe not, since SA is a monopoly and can manipulate the price. I think the point is that we can both agree on is that it's a complex dynamic system, with lots of variables and interconnections, and it reacts to changes. >Saudi Aramco, the monopoly oil producer in Saudi Arabia, boasts an extraction cost of about $2.80 a barrel >A geographical comparison from the annual reports of four major international oil companies shows that production costs in Russia were about $22 a barrel https://www.washingtonpost.com/business/energy/by-pumping-at-will-saudi-arabia-hurts-oil-investment/2020/03/15/189505da-6693-11ea-8a8e-5c5336b32760_story.html https://www.washingtonpost.com/business/energy/by-pumping-at...

ogre_codes 6y ago
Yeah, what I was trying to say is individual suppliers will drop out of the market as the price of oil drops. That in turn reduces the supply. For Oil Sands, that's roughly $43. Shale oil is similar. Every time the price drops, the number of suppliers drop. OPEC will fight to keep oil prices up by limiting supply when they can, since most of the governments in the Middle East are run on oil profits, they need to!