Axil

This is the black scenario we are heading at if our polticiam keep denying or ignoring peak oil then we will be trapped in a spiraling depression that slip out of control, if we accept the problem and engage actions right now, things will turn different, energy will be much more expensive but gain in efficiency as well as development of alternatives can turn to a soft landing. if we invest massively in the green stuff we will not only counter depression but also avoid the shock of peak oil, the problem is that we are already so much in debt with a weak currency and we are giving away our last money in a stupid and useless war. to day they voted 162 billions$ for this f*king war when this money could be spent on wind mill installing heat pump . Shame on our politics

Why don't you guys look at actual figures? It tells the story fair and plane. Production has been essentially flat but exports are dropping. There is decreasing oil on the market for increasing demand. Market fundamentals pure and simple.

http://europe.theoildrum.com/node/4179#more

So much talk I think I have carbon monoxide poisoning...I'm really dizzy. Why did everyone laugh for 35 years at my 35, 50, 53, & 75 MPG vehicles.

Only needed 14MPG trucks 3 times during those 35 years & my neighbor helped me.

@Treehugger

You are now a kindred soul; your words may have come out of my own brain.

John Jay Chapman: “Politics is organized hatred…”

I agree with some posters here that the price of oil is really just "correcting," in that it was always too cheap. Everyone's just waking up to this a little faster than we thought they would, but at least they are waking up. I think if we can make it through without a total collapse, the "Long Emergency" will mark the emergence of a better world, cleaner, sounder and more stable. Everyone on this site knows that electric cars would not be happening without $4 gas and the threat of $7-10 gas on the horizon. Yet I've wanted an electric car for years, because I'm convinced they will be better cars. Along those lines, we've just got to make it through the next 10-15 years until the efficient solutions start to kick in, and then we'll all be better off for having gone through it. So as I pull up to the pump I try to keep smiling even as I bite my lip...

Axil:

It takes 7-10 years from initial investment into oil field until oil will hit the market in quantities. No amount of money or multiplication of oil price can change this. Well, drilling ANWR could yield additional 0.5 Mbbl/d in 3-4 years, because most of the infrastructure is already in place, but that’s about it. How long ago oil price began to rise and capital began to flow into new projects? 3 years? Hence the flat production, despite high price. Same, BTW, is true to almost any mining project, hence 3-5 times higher prices for metals and other mined commodities. It is not peak oil, it is not enough time to ramp-up production, by large.

Most credible economists (credible IMO, of course) place “fair” price of oil at 70-80 dollars (current dollars, not 5-years old dollars). “Fair” price means enough anticipated profit to investors to begin massive investment in oil industry and alternatives, and enough price pressure to curb additional demand until new projects will come on line. Additional 60 dollars per barrel we see today is speculation, oh sorry, price discovery.

As any massive speculation, it could burst violently, and consequent disruption of financial system could throw us into REAL recession.

The worst possible thing that could happen right now is sharp drop in oil prices. Let’s hope that correction will be gradual.

“…to an average price of $200 per barrel by 2010. “Under prevailing refinery margins” he writes, “that should translate into a near-$7 per gallon pump price within two years….”

Rubin assumes prevailing refinery margins. Margins are percentage markups of prices. This assumption is wrong because competition will eventually decrease these margins when the price of crude oil increase. A better proxy for the relation between crude oil price and the US retail price of a gallon of gasoline is to divide the price of crude oil by 42 to obtain the per gallon crude oil price and then add $1 for refinery and distribution costs. That gives:

Crude oil at $140 per barrel: (140/42+1) = $4.33 gallon of gasoline.

Crude oil at $200 per barrel: (200/42+1) = $5.76 gallon of gasoline.

Crude oil at $300 per barrel: (300/42+1) = $8.14 gallon of gasoline.

I find Rubin’s projection of crude oil prices likely in a business as usual scenario where global economic growth continues to drive crude prices up because the supply appears to be fixed at the current 85 mbd. The biggest uncertainty is what happens if Israel destroy Iran’s nuclear program. Or what happens if Israel does not destroy Iran’s nuclear program and Iran subsequently obtain atomic bombs and launch an attack on Israel to destroy it completely as they have repeatedly said they would? Alternatively, Iran may give in to economic sanctions and abandon their program in a verifiable manner. Is that likely? Or is Iran just making jokes about the destruction of Israel?

My bet is that Israel will destroy Iran’s nuclear ambitions and that it would be wise for any company to make contingency plans for oil at $300 per barrel because it may happen for a limited time or as long as that war rages. On the other hand, war is like love in that it newer really turns out the way it was planned. Therefore, what we can do is to hope for the best and prepare for the worst. To prepare for the worst is to eliminate oil and natural gas use wherever it is possible as quickly as possible. One measure would be for all OECD countries, China and India to build a quick charge network for EVs. This is more important than any other measure and it can be done in a very short time (3 years) if we have the will to do so.

I love the "expert credible" economists that say that the fair price of oil is $70-80. I suppose they thought that when oil was $20. I suppose they know more than the collective market made up of millions of investors. They probably would say that the Dow should be 12,500 - that is the "fair value".

I don't see how any person could look at all the supply issues (and potential problems) and look at the demand of 7 billion people. Think for a second and come up with a figure. That is truly knowledge of a deity. Do they have "fair value" for a bushel of corn?

People who are experts love to get in front of a camera and say the price of oil should/will be $X. Makes them feel important and knowledgable. Just like the media stock pickers. The world is too complicated for that.

Nationalizing oil companies is actually a bit of the problem. Like in Russia because it limits outside investment and expertise leading to less production than possible. Nationalizing companies in the US is a ridiculous joke and the idea really speaks to ignorance. It is as if the oil companies in the US control production of a global commodity - and somehow if we nationalize them we can lower the price of a GLOBAL commodity.

Speculation = price discovery. Yes - in a way. If $140 barrel oil = gas at $4.50 and that keeps demand equal to supply then yes - we have discovered a price. But - the US usage is only minimally down so I am not sure that we have discovered a price. If what we need to do is decrease 5% per year in the US to make up for the rest of the worlds growth and we aren't there yet --- then maybe it is $5 a gallon or $6. Everytime the price goes up and we don't decrease usage - the price goes up more.

Axil - Tech Bubble = neo cons fault. Wow - that idea is fixed by looking at a calender.

Conservative here - yes the markets are working. Just fine. Funny how the most powerful force to improve the environment is market driven. Give us $5 gas and I'll continue to breathe easier, the sky will be cleaner and we might yet kick the SUV/truck habit.

1) Most people agree that using conventional crops to produce biofuel is NOT the way to go, since that takes too much energy to do so. The way to go is to using oil-laden algae, which won't interfere with food growing demands and oil-laden algae can use even seawater as a medium to grown in, which avoids the issue of fighting for fresh water resources. There are multiple companies around the world working on using oil-laden algae as a biomass fuel base.

2) EEStor is not the only company working on advanced supercapacitor technology. There are other American companies and European companies exploring this technology, mostly because of the huge promises of longer range, smaller battery pack size and very fast charge times, all very necessary for a true, practical BEV.

3) Cities may drop in physical size horizontally, but only up to a certain point, mostly because humans can't tolerate living in high density conditions (you do notice how stressed-out humans are in the world's biggest cities).

In short, it's like the 1850's all over again, when the rapid decline in the whale population made a lot of people worry about how to light lamps (at the time lamps was fuelled by whale oil). The discovery of using kerosene to fuel lamps eliminated that problem by the late 1850's, which laid the foundation of the petroleum industry (the Standard Oil Company started first as a kerosene production and distribution company). With cheap crude oil production dropping, there is now economic incentive to produce motor fuels from oil-laden algae on a huge scale and finally develop the supercapacitor battery technology that not only makes BEV's truely practical, but also make solar and wind turbine generation on a large scale practical (since there is now a way to store all the power generated for use at night and lower wind conditions).

We are actually fortunate that trucks, railroad locomotives and many oceangoing cargo ships are powered by diesel engines. With large-scale diesel fuel production from oil-laden algae, that means we will eventually substitute petroleum-based diesel fuel for algae-based diesel fuel, which means in the long run the transportation sector will recover since there will now be a true, renewable source of diesel fuel. And it has one big environmental advantage: diesel fuel from algae burns quite cleanly, which means less need for expensive NOx and diesel particulate traps.

OK I have a question about refinery capacity. I have read reports that our refineries (here in the US) are making diesel to export to Europe, where individual diesel demand is higher, while at the same time importing gasoline from Europe, here. If this is true, and throwing the current weak dollar, how would this affect pump prices here in the US?? Does this explain the oil company's obscene profit margins? I am no economic expert, but I would think the export/import scenario would be adversely affect pump prices! If this is true, it seems wastefull for a tanker to be going east with diesel, while another goes west with gasoline. Do they pass each other in the middle of the Atlantic and honk their horns at each other?? Back on topic, if all of our US refinery capacity were used for in-country fuel supplies, what would our prices be?? Would we be seeing any cheaper gasoline prices?

At the same time, I feel "price per barrel" numbers are somehow being manipulated to stay high to increase both public and private calls for more domestic oil production, namely in the deep waters off our coasts, anwar, and in the shale oil in Colorado. Cheaper "per barrel" prices do not make going after these reserves profitable. That is my gut feeling, and I have no examples of manipulation to back it up. Just many hours of reading differing articles and energy ideas across many mediums. Price speculating, to me would seem way to risky. But I am sure it also has an effect.

Our country, and the world, will be fine after this mess. There is going to be a major hangover, for which we are starting to feel the pain of. (We are at the point of looking at the runny eggs.) But like all hangovers, things will get better. Thats where BEV, and battery technology, will shine. A priority should be made, in this country, in diesel production for both freight trains and long haul truckers to help deliver cheaper food and goods. Or convert to DME. Future personal transport will be BEV, supported by mass public transport, scooters, bikes, both motorized and humanized. Efficiency gains across the board in batteries, and in freight train technology will return our country back to prosperity. We just need to be able to keep our brightest engineers who want to stay here, instead of letting their visa's run out. But thats an argument for another day and another thread somewhere.

300TTto545: People who are experts love to get in front of a camera and say the price of oil should/will be $X. Makes them feel important and knowledgable. Just like the media stock pickers. The world is too complicated for that.

Funny, I say exactly the same thing every time I see an oil speculator furiously apologizing for their price-pumping in the media. "Doom is at hand! My manager says $500/bbl by next Tuesday, or I lose my job!"

Funny how the most powerful force to improve the environment is market driven.

Yes, indeed, we can fix all of the environmental problems more or less tomorrow: just drive the price of oil to $1000/bbl. Civilization as we know it will disappear more or less overnight.

Problem solved!

What a breathtaking innovation! Thinking about this technique, I suddenly realize I can solve my heating bill problem by burning my house to the ground! I think I could do this with extreme efficiency too: a 1 cent match is all it would take. And the gasoline problem I have by pushing my car over a cliff! I suspect this could be done with the energy cost of a single glazed donut. Depends on how far I have to push the car. Can I make a trial run with your car?

So, now that price bubbles are now officially good, are there any other economic concepts we need to learn from the speculators?

Raymond, I agree with you 100% in regards to battery developemnet for wind/solar energy storage, and in the algae diesel production for freight trains, truckers, and cargo ships. Couple that with biodiesel from soybeans, and we are there. Freight trains have made major efficiency gains, recently, cleaner. Its obscene to know how far a locomotive engine can pull a full load of rail cars on a comparable single gallon of diesel. And more efficency gains forthcoming.

I am excited and about the future. Localized production and refinery of all our fuels is the only way to go. Then let the middle east fight amongst themselves with no intervention needed on our part. Could be a rosy future if we allow aspirations and ideas to flourish.

@300TTto545

Axil - Tech Bubble = neo cons fault. Wow - that idea is fixed by looking at a calendar

Let’s pin down the date.

Reference:

http://www.villagevoice.com/news/0203,ridgeway,31534,6.html

Excerpt:

In June 2000, Senator Gramm co-sponsored the Commodity Futures Modernization Act, a measure aimed at deregulating certain kinds of futures trading, but not energy futures. That bill never made it to the floor, and thus quietly died. Six months later, on December 15, Gramm curiously turned up as co-sponsor of a bill with the same name, the Commodity Futures Modernization Act, which did deregulate energy futures and which, without undergoing the usual committee hearings and preliminary votes, was immediately attached as a rider to an 11,000-page appropriations bill. It passed and was signed into law by President Bill Clinton six days later. Few lawmakers had likely perused the rider carefully, if they even knew it was there. And at any rate, Enron had given to the campaigns of over 200 legislators.

It all started on December 15 2000.

Reference:

http://www.washingtonspectator.com/articles/20080415fyi.cfm

Excerpt:

The "Enron exception" that Senator Gramm included in the act protected all on-line derivatives from federal regulation, even when they were designed to defraud investors. It did seem like a conflict of interest that Senator Gramm was passing a law that would benefit his spouse, who was being paid by a corporation that would reap enormous benefits from its passage. And although the glaringly evident conflict was reported in some news outlets, the Gramms emerged unscathed from the situation.

What is interesting about this impending explosion of old-school energy source costs on the world's economies -is- how its wealth (at least partially when you remove the immense profits going into oil-industry coffers) is APPARENTLY(media hype?) pushing technological innovation. It appears that a lot of systems are getting to almost-retail readiness a lot sooner than many had forecast. What we may have is a huge variety of products from all industries that are dramatically more energy efficient and/or are based on new energy systems. It is a remarkable thing.
The crucial lynch pin will be whether people/companies can actually afford the substantial capital investment in these upgrades and changes after depressed economic numbers. Showrooms full of hybrids, PHEVs, Fuel-cells, windmills, solar panels, etc., all going unpurchased? Will consumers and businesses retreat into a shell of non-consumer/non-fulfilling mediocrity -or- embrace the new technologies and push forward with the lifestyles they want rather than the lifestyles being forced upon them? Can they access any credit - do they have any savings?

On the price of oil: one of the simple, main tenets of pure market pricing is: that you charge the highest price the market will bear. If sellers believe that consumers are willing to change their lifestyle to continue to pony up cash for something as ubiquitous such as gas - what other 'essential' commodities will suppliers decide is simply priced too low. Geez, why not double the price of fresh vegetables and cereals in G8 countries - those placid citizens won't riot, rebels or significantly complain.. they will simply quietly suffer...Is this a better world?.. Is that the market mechanism that we want? A business community trying to pry every penny out of consumers because hey, why not - the highest price people will suffer to pay is a bit higher. There is no balancing mechanism. If I produce 5 oranges and there is a demand for 6 at cost + reasonable profit... what sort of person/supplier would decide to double that just because people are willing to pay it? Are we really that shallow and soulless? We are not talking about struggling suppliers... We are not talking about a ruthless competition among producers.. we are talking the whole industry getting wealthy without any pretension of 'competition' - no competition means 'silent collusion'.
Also, though no one is planning the steep price increases per se... it is obvious that 'silent collusion' is going on... suppliers are looking at the traditional profit margins before and saying.. why should we settle for that? -- this is the evil that is going on.. as i see it...

@ et al:

There is nothing as misleading and unfair as 'fair price' or 'fair value'. It means about nothing nowadays.

When so called intelligent persons pay $1000+ for a pair of decorated Jeans, made in China HK for less than $10, who would call that a fair price? The WalMart's $9.95 jeans would last just as long.

When speculators manage to boost oil price ten folds to $140/barrel and predict that it will soon reach $200+/barrel, it is very far from the fair price notion.

Worst yet is when we pay even more (per liter) for a bottle of plain (free) water.

When grain price doubles and triples within the last 15 months, did production cost go up at the same rate? Definately NOT.

When Google's value went up from a few thousand $$ to over $45 billions was this done in the search of fair price. If MS is cracy enough to pay that much, I'll stop using their products.

Buyers are being taken for a ride in most cases and we seem to like it.

Who believes that the made in India $2.5K Tata nano will be allowed into USA? Not unless somebody finds a way to multiply the price 10 folds.

Who believes That the made in China $5K BEV will be allowed in USA? Oh no, we must find a way to multiply the price or block imports to protect our inefficient Big three.

Free market is a fine principle but it is, most of the time, manipulated at will. That's why speculators exist and get rich at it. The official stock market is their main tool. They ride the bubble until it burst and then create a new one.

To burst the oil price bubble we need:

1) massive vehicle electrification, or/

2) lasting economic downturn, or/

3) A progressive but heavy carbon tax on all fossil fuels.

1) + 3) above would be an acceptable processus, if applied over 10 to 20 years, and if we could keep the speculators out.

Just saw an interview with Jeff Rubin on CBC newsworld. He was being interviewed with 3 other economists that tried to put the price in perspective. One, a british guy who was knighted and in the house of lords, took the position that it was pure speculation driving the price. That the fundamentals didn't reflect the price. The middle guy's position was that the price would cause some feedback and create conditions that would eventually cause the price per barrel to drop. The last guy was Mr. Rubin, whose position was that of peak oil. That no matter what, high prices cannot generate more oil and whatever excess there is, is being absorbed by world demand.

As for more oil. From what sources and at what costs. It's becoming fairly obvious that the finds are becoming less accessible and far more costly to get. It isn't feasible or realistic to expect to keep up this amount of consumption or the idiotic uses that we have created for it when it was cheap. Not only that, but many technologies that could cut oil consumption rely on oil itself to be easily produceable in a cost effective manner.

@HarveyD

Some of your economic strategies for busting the oil price bubble are inconsistent with the basic tenet of this thread: The average wealth and prosperity of Americans is declining with accelerating speed.

For example:

Massive vehicle electrification – this will not happen because most Americans consumers can’t afford to invest in this technology going forward.

A progressive but heavy carbon tax on all fossil fuels – This will accelerate the destitution of Americans further limiting their ability to respond.

Lasting economic downturn – This is a realistic economic prediction.

Your basic tenet that people will pay anything for a product is only true if there is unlimited money around: perhaps true in the past.

If the average person is destitute, they will not buy the product at any price: perhaps true in the future.

aym: Just saw an interview with Jeff Rubin on CBC newsworld.

What Rubin says may be true, but must be weighted in accordance with the fact that he is an employee of CIBC, a bank that has taken a massive hit in the credit markets in the USA.

It is likely they are very long in oil and other commodities at this time.

Which is to say, he is simply a mouthpiece for a group of speculators.

What we have here is similar to 7 people sharing a 6 pack.
Someone needs to go short.

World oil demand is now greater than world oil supply, and the supply cannot be increased any time soon.
Solution, increase the price till some demand is shed. The fact that Oil companies and various speculators gain a bundle is 'just business' albeit quite profitable for oil companies.

When shorted for his beer, our 7th friend goes looking for another party. Those who cannot afford (or who don't wish to pay) the new high oil prices will go look for an alternative to oil.

As it turns out, there is just such an alternative available. Battery Electric Cars and wind generation make a whole new "Energy-party" that will soon become hot new toys for the "in-crowd" and leave fossil fuels unsold at any price.

The stone age did not end because of a shortage of stone.

It has been scientifically proven to 99% certainty that speculation has caused the oil bubble.

Econophysicists Didier Sornette of ETH Zurich, Switzerland, and Wei-Xing Zhou of the East China University of Science and Technology, together with Ryan Woodard of ETH Zurich, claim that speculation must have driven some of the escalation in oil prices. They have found evidence for a “bubble” — an indicator of speculation — in prices since 2003, when the cost of an oil barrel was four times lower than it is today.

‘99% certain’

Could it be that there is no financial speculation, but that the demand for oil from China and India is growing super-exponentially, like a bubble? Sornette’s group cites figures on world oil supply and demand from the International Energy Agency that suggest this cannot be the case. Sornette told physicsworld.com that he is “99% certain” speculation is influencing current oil prices.

Sornette group first came up with his theory of super-exponential growth as a symptom of economic bubbles in 1996. In 2005, they used it to predict the burst of the US housing bubble.

http://physicsworld.com/cws/article/news/34718;jsessionid=45407E8216E6C46B5B5F1650B740ADEC

This isn't that complicated, conservative ideology be damned:

1. There is some data that indicates that speculation has an impact. It's cheap and reasonable to eliminate this possiblitiy. Limit speculation via responsible regulation or transaction taxation for a three year period.

2. Supply and demand are imbalanced in the short term and the long term.

SHORT TERM fixes (you can only drive conservation in short term):
1. Lower maximum speed limits to 65MPH, target 5MPH reduction in average speed nationwide. Not too painful, but will save billions of gallons.
2. fund retrofit mild hybrid drives everywhere feasible - school and city buses, short haul vehicles of all kinds - garbage trucks, delivery trucks, taxis, workplace and construction vehicles. This will save ~500-1000 gal/vehicle/year across 3-5M vehicles nationwide. Subsidies can enable use of simple mild hybrid drives using deep cycle lead/acid batteries, since the subsidy enables 3-4 year life to be acceptable.
3. Continue current biofuels initiatives 2 years, then review.
4. Fund route frequency expansion in all transit systems.
5. Subsidize private transport systems for suburban employers, a la google buses.
6. pay bounties for retirement of V8s. Gotta do it.
7. Oh yeah, $2 tax on incandescent light bulbs. No problem if you love them too much, just pay for them.

LONG TERM (3-10 years) you can attack the grid and transportation, and affect supply bottlenecks/fuel choices
Transportation:
1. make all tax incentive programs long term to ensure effectiveness
2. Use taxes to establish 10 year price of petroleum at 80$/BBL to ensure investment
3. mandate mild hybrid on every v6 and v8 via tax penalties
4. Invest in urban, high speed mass transit
5. Tax family vehicles above 3500lbs, aggressively.
Supply Bottlenecks/fuel choices
6. subsidize oil and natural gas production increases in mexico and Venezuela - big bang for 3-7 year time frame
7. Do everything possible to increase natural gas production and LNG transport around the world to US - so much is flared away or ignored right now.
7. Expand refinery and LNG terminal capacity in US
8. Encourage natural gas as a substitute auto/truck fuel for next 20 years.
9. Buyback all oil burning furnaces in US and replace with natural gas/propane
Electrical generation:
1. Drive transport electrification everywhere
2. Solar Thermal, wind, waves for increased total generation
3. clean coal, natural gas for base load increases - never mind nuclear, takes too long to impact, and natural gas is flared around the world.
4. strengthen the grid for when microsolar, cogeneration and BEV can impact supply.

See? This isn't that hard. Funding? $20B/year should do it easily in US. Is that so hard? Just mothball Star Wars and JSF, and you're done. Or withdraw from Iraq - let the Republicans decide which one to do.

In 10 years China will surpass the US in cars on the road. The future of energy is in the hands of China now.

Trehugger : “Stop thinking that US is still controlling the whole world economy…”

We’re just along for the ride.

Axil: In 10 years China will surpass the US in cars on the road.

You doomers are a riot and a half.

On the one hand, we have Peak Oil swooping in for the kill. Run for your lives!

On the other hand, we have China supposedly on the road to out-car Car Heaven. "We’re just along for the ride."

Anyone else looking at this is going to ask: where is all that oil to power them going to come from? Is this peak oil or is it not?

Don't worry -- I know, I ask the impossible of a doomer! -- here is your answer: given your claim comes true, we can confidently predict they'll be using less than half the gasoline the USA is using today. Probably the USA will be well on the backslope of the demand curve too.

The developing world's single advantage right now is that they have not decades of investment in patently inefficient cars and other infrastructure. They aren't going to build SUV's for a generation, they'll just start pooping out super-efficient cars, PHEV's or better.

I wonder if there is "Peak Doomerism". I hope it comes soon...

It's convenient that while reading this article, two useful graphs appear beside it in the right column. One shows vehicle miles travelled for the past 25 years. It goes up and up and up until suddenly - oops! - it turns around and heads back down. That goes to show how high prices are suppressing demand.

For those who insist that today's prices are "unfair" and that $70 is the right price, you are aware, right, that lowering the price will increase demand? That means, more oil would be consumed and we wouldn't have seen miles travelled come down like it did? And so, where do you think this additional oil would come from? If not enough is being produced at $140, how can you possibly think more will be produced at $70? The math doesn't add up.

The other handy graph is below it, and shows truck/SUV sales versus car sales. The SUVs grow and grow and grow in market share, until again - oops! - suddenly things turn around and now the cars are growing instead. And here, if you click on that and look at it closely, you'll see the "daring" prediction in the article of 30% market share for SUVs is totally conservative. When you look at that graph, the part to the left of the vertical line is in YEARS, while the part to the right is in MONTHS. That means that the decline rate on SUV market share is actually 10 times steeper than it looks on the graph! We're already almost down to 40% market share, and at this rate we'll be down to the predicted 30% before the end of this year! Yet our daring analyst went out on a limb and predicted 2012 for this milestone.

My daring prediction is that a year from now you won't be able to give those dinosaurs away. For years in fact I've predicted that the ultimate outcome is that today's SUVs will become ghetto hotels. All those hyper-expensive, massive vehicles are going to end up parked and undriveable, lived in by poor families as a cheap alternative to rental apartments. Poor people, by choice or necessity, tend to pay less up front in exchange for higher costs later. That's a perfect description of the considerations facing someone who's offered a hundred dollar Hummer.