Oil Speculators & Car Sharing

Demand is down… supply is up… so why are we paying more at the pump?

This is the Environment Report. I’m Rebecca Williams in for Lester Graham.

So the way we all learned it in school was that prices were supposed to be dictated by supply and demand. Right now there’s a huge glut of supply of oil... and at the same time, weak global demand for it.

But the price of a barrel of oil has jumped up from 45 to nearly 70 bucks in just three months. And gas prices have been creeping up too.

Basically - oil prices are out of sync with reality.

I thought we could use an oil market expert here - so I called Ruchir Kadakia (ru-SHEER kah-DAH-keyah). He’s with Cambridge Energy Research Associates. He says speculators are driving oil prices up.

“People believe that with positive economic growth in the future there will be greater demand for oil. So they start to buy up oil in anticipation of that demand recovery.”

So these speculators are making money while most of the economy is in a slump. But Kadakia thinks the realities of supply and demand will eventually catch up and drag oil prices back down.

And you remember last summer – how gas prices just kept going up and up? Kadakia says that won’t happen this year.

“The pain we’re feeling at the pump today is probably going to be the worst we feel all this summer.”

He thinks gas prices will drop and might get back below two dollars a gallon.


(((STING)))
This is the Environment Report.
Car sharing has long been considered a green alternative to owning a car. Companies like Zipcar have made this concept mainstream in a lot of urban areas. Now some cities are trying out car sharing with their municipal fleets. Tamara Keith has more.

Karyn LeBlanc (leblang) works in the Washington DC department of transportation, so maybe it's not surprising that she was one of the first to try out the city's FleetShare program.

ACT: It's this one over here, right here, says 6067 is the license plate on it.

A white Honda Civic powered by natural gas is waiting for her in a parking lot behind a city office. She went online to reserve the car and it's expecting her. At least the very smart computer transponder thingie in the front windshield is expecting her. LeBlanc presses something that looks like a credit card up to the device.

ACT: So, we place this right here and you hear that little click and the car opens.

For people who use Zipcar this process will sound very familiar. The company has simply brought its car-sharing technology to Washington DC's municipal fleet. So far DC has about 60 new cars outfitted with Zipcar gear. But here's the remarkable thing, those 60 cars are replacing 360. How? The new cars are getting a lot more use than the old ones, saving the city millions.

Scott Griffith is Zipcar's CEO and says the company is now in talks with 25 cities.

ACT: They all have the same challenges, not enough tax money, too many cars. They do need to move people around during the day and we're trying to make that happen in the most efficient way.

Griffith says CAR SHARING IS EFFICIENT. When they have to book in advance people tend to stack all their stops in one trip rather than take a bunch of individual trips.

Car sharing isn't new for cities like Chicago, San Francisco and Philadelphia. They've had programs in place for some time BUT CITY WORKERS IN THOSE TOWNS use the same CAR SHARING COMPANIES the public uses. Eli Masser helped form the relationship in Philadelphia between the city and the non-profit Philly Car Share which he co-founded.

ACT: One of the benefits of car sharing with municipalities or most businesses for that matter is residential demand is in the evenings and on weekends and most business demand and municipal demand is during the day.

Which means those cars are busy well beyond the 40 hour work week. Critics say this model is far more efficient than what Zipcar is doing in DC. But Masser says there's an even better model - a hybrid of DC and Philly.

That’s the Environment Report. I’m Rebecca Williams.