It seems that everywhere I look these days there are doomsday stories of how we are going to see $5 or $6 prices for a gallon of gasoline by the end of the summer. Fox News runs stories on this topic about every 12-15 minutes and seems to be trying to speculate that higher gas prices will be the down fall of Obama's re-election bid in 2012. CNN has spent a fair amount of air time on the topic as well with a slightly more positive spin at times. I have seen print press articles too numerous to count and it seems to be soaking up a fair amount of bandwidth online as well. Obama even appointed a commission to look into price fixing or other such ways that we could be getting gouged at the pump. There certainly is no shortage of discussion on this topic. There are a multitude of reasons behind this increase in gas prices and to avoid a dissertation on supply and demand and economics I will not cover that here. The reality is that the price of a gallon of gas is already "high" and will get much "higher". I put those in quotations because we still pay relatively little compared to what other countries pay. An immediate example would be Bermuda (a lovely place I just visited) where gas prices are hovering at $8 to $9 per gallon. In most European countries the price of a gallon of gas is similar to Bermuda but usually a slight bit less. For instance, in England the prices are running around $7 - $8 per gallon (though they sell it by the liter or litre on that side of the pond).
As a driver of a gigantic truck that gets an EPA estimated 14 mpg city and 19 mpg highway, I'll be the first to say that I wouldn't necessarily welcome such a scenario. It would certainly cause a lot of inconveniences and there would be plenty of adjustments that would need to be made. And I will be the first to admit that the rising prices have already started to make a small but measurable amount of impact on my day to day driving decisions. I'm being a bit more mindful of that little area on the instrument cluster that gives the average and instant estimated mpg. But with the estimated price increased that may unfold through the next season or two there will be more significant changes to come. But what will those changes be both short term and long term and what will be the consequences?
The first and most obvious change people are likely to make will be something similar to what I have already started doing. People will start using the brake less and accelerating a little less vigorously. The next accommodation will be that trips will be bundled or avoided altogether if possible. A more drastic measure would be to trade in that gas guzzler for a smaller car with higher efficiency. We saw a slight bit of that the last time gas prices soared but it was really artificially boosted by the tremendously costly "Cash for Clunkers" government program. However, if we see sustained prices in the $5 - $6 range we may very well see more people that have no choice but to travel by automobile starting to trade in some of that extra size and luxury for some extra efficiency and affordability. If these changes are sustained over an even longer period of time then more drastic changes will come. Eventually those that live within shorter distances of their needed destinations may choose to use a bicycle or moped or even go biped (walk) when physically possible. Over a longer term, people may even choose to live closer to their needed destinations to avoid the need for travel by automobile. All these are viable options to minimize gasoline consumption in the near and long term in an effort to control household costs associated with its consumption.
But how on Earth could all those changes be considered a GOOD thing for all of us? I know the premise of paying more for a commodity and having to make unwanted changed in our lives to minimize the negative financial impact sounds utterly absurd but hear me out.
The first change that I mentioned above is likely already being instituted on a fairly large scale. Do you try not to stop for that red light but rather coast slowly up to it trying to avoid the dreaded full stop? Are you being a little more mindful of how you pull out at that 4-way stop trying to conserve just a little fuel? Have you checked your tire pressure shooting for that optimum 32 psi to maximize mileage? Then you are already taking part in the changes. Congratulations. Not only are you protecting your wallet in exchange for a few seconds added to your arrival time, you are also reducing your greenhouse gas emissions. In my gigantic truck, I can easily go from about 13.5-14mpg in city driving to about 15.5-16mpg simply by obeying the speed limit, minimizing brake usage, using "rolling stops" to avoid having to start from a standstill and accelerating judiciously. I haven't even seen a measurable change in my arrival times but my fuel mileage has increased by about 12%. If I'm spewing 12% less greenhouse gases/CO2 into our environment, that has to be good right? That's a very tangible improvement in my "carbon footprint" and it actually saves me money. How many "green" products can you go buy that actually save you money over alternative products? I can't think of any. But here is one setting right in front of our faces and we're acting like it's some sort of punishment. I guess a cooler, cleaner Earth could be thought of as a positive, right?
Now let's think more long term. The next change I mentioned was bundling trips or avoiding them altogether. Sounds like a bummer, huh? You can't just jump in your cars and ride out to the shopping center to browse around and buy things you don't really need? Have to make a list and check it twice before heading out to Wal-Mart or your favorite local grocery store? I guess it could be thought of as a minor inconvenience. Or you could appreciate the fact that when you do get out on the road there will be less traffic. You could appreciate the fact that the roads aren't as torn up with pot holes and worn down at the edges because the traffic load is lighter. In a perfect world, the state might even cut taxes because the upkeep of the roads wouldn't be as expensive with less traffic. You might even get fewer traffic tickets. I know it may seem outrageous but avoiding all those trips may even open up a little quality time to spend with family at home just enjoying their company. Heck, you may even save more than expected when you don't buy that spectacular new gadget at Super Mall 3000 because you weren't needlessly browsing the stores. I guess all those could potentially be seen as positives, right?
The next thing likely to happen would be trading in larger and less efficient vehicles for smaller and more efficient versions. As mentioned before, we saw a fair amount of this during the "Cash for Clunkers" program but that rise in gas prices was so short lived that it wasn't really a sustained change. When you couple that with the incentivized reason to buy, it was even less impressive. But on a positive note, the last surge in prices did coerce the American car companies into developing some fairly impressive new smaller and more efficient models. GM has started to roll out its ground breaking new Chevy Volt which has the potential to be an all electric model if driven less than about 60 or so miles per day. I say "the potential to be" due to the fact it has an on board gas engine if extended range driving becomes a necessity. Ford has rolled out some impressive compact models getting in the range of 40mpg. Chrysler is on the verge of starting to import Fiat models from Europe that have a proven track record and are small and very efficient. I personally can't wait to start seeing the Fiat 500 on roads here. It is a sharp little ride. If the masses start to trade in their larger vehicles for more efficient versions, the American car manufacturers are in a much better position to capitalize on that than they were before. This could serve to help stabilize the American auto industry if a significant percentage of auto traders choose these models. And even if they don't most companies like Toyota and Nissan have American factories and use American parts in percentages equivalent to and sometimes even more than their American counterparts. And we haven't even mentioned the decrease in "greenhouse gas" emissions with these changes. Even if people chose mopeds or public transportation we would see big decreases in greenhouse gases as well. I guess stabilizing the American auto market and cutting back on greenhouse gases to protect our Earth could be thought of as a good thing, right?
Let's get more drastic, shall we? Let's say we go 2-3 years with gas prices sustained in the $6 range. This would motivate many more people to use bicycles or walking as alternative transportation solutions. With the explosion of obesity in this country (no pun intended), many maladies have come along with it. The number of people suffering from diabetes, hypertension, high cholesterol and heart disease are increasing at an alarming rate. If we don't get a handle on the obesity epidemic we may very well become the first generation in history to have a shorter lifespan than the generation that preceded it. That would be an unspeakable tragedy. In my opinion, the availability of incredibly cheap transportation by automibile has played a part in contributing to the high obesity rates. It has become so cheap and easy to jump in a car and go wherever we want that no one even considers "manual" transportation any more. In fact, the existence of such cheap transportation has caused us to construct an environment where it has become almost impossible to use "manual" transportation. By building our cities out into the suburbs, we have limited the viability of this as an option for transportation. The distances are too great and the safety is a definite concern. But if we make the change to bicycles and walking for alternative means of transportation we can take a big step in fighting these diseases. There are mountains of research showing that increased activity levels delays the onset and curbs the progression of diabetes in obese individuals. There are also mountains of research showing that higher activity levels have a negative correlation with obesity (i.e. more activity decreases the likelihood of having diabetes). If people start to choose bikes and feet for their transportation we could potentially cut off the obesity epidemic and decrease the number of people with diabetes. I guess less obesity and less disease could be thought of as good things, right?
What if people started to live closer to their work? When I lived in Lexington, Kentucky there was a lot of discussion about urban sprawl. Lexington and the surrounding areas have a rich tradition of horse farms. A lot of effort was made to reduce "urban sprawl" to protect those farms. Unfortunately, the only thing that was really accomplished was the creation of cookie cutter neighborhoods with zero lot line. In many of the neighborhoods there, you could literally stand between two houses and be able to touch them both at the same time. And there were endless rows of houses like that. "Urban sprawl" is a concept that nearly every city has been unable to get much control over. The bottom line is that people want to have a yard and as long as they can afford it then that is what they will have. But with sustained high gas prices, it is a very real possibility that people will no longer be able to afford those little pink houses that have made up the American dream for so long. If transportation via auto starts eating up a significant portion of the American family budget, then people will have no choice but to live closer to their work which would effectively halt urban sprawl. Maybe we have finally stumbled on the panacea for urban sprawl. Maybe we finally have the reason to stop paving paradise and putting up parking lots. Maybe we can finally stop encroaching ever further on wildlife habitat. I guess those could be seen as good things, right?
But what about business? How is business going to be affected by surging energy prices? Well, you have me there. Businesses large and small will be affected and the majority in a negative way. Wal-Mart will no longer be able to truck your Heinz ketchup from Pittsburgh to Los Angeles without a hefty mark up because that transportation will be pretty costly. McDonald's will have to increase their dollar menu to a 2 dollar menu because the cost of transporting buns and burgers will be drastically higher. Your local convenience store will have to charge more for your Coke and Snickers because it too has to be trucked in at an increased cost. In fact, the cost of nearly every tangible good will likely increase in a substantial amount. All that seems bad, huh? So where is the positive? We'd likely see an increased demand for products made locally because of the competitive advantage conferred by not having to be transport their goods as far. That increased demand could possibly create the economic circumstances needed to spur local business development and small business growth which have historically been the engine of economic recovery. It's possible that could lead our economy out of its prolonged funk. We'd likely see more locally grown fruits and vegetables available. Who needs to buy blackberries from South America that have been transported halfway around the world at considerable cost when you can buy blackberries from the Chesterfield Berry Farm at a fraction of the cost? As an added benefit, there would be less need for spray pesticides and preservatives because of the decreased time from harvest to store shelf to kitchen table. Existing small business would likely see record growth. Instead of buying that more expensive Miller Lite trucked in from Milwaukee you just might buy that Legend Brown Ale made locally here in your hometown at a fraction of the cost. I guess at least some of those things could be seen as a positive, right?
So, there you have it. After what has seemed like a non-stop major news media onslaught of negativity and doomsday predictions if gas prices continue to go up and stay that way, I just wanted to point out that maybe not all of it would be doom and gloom. If we choose to look hard enough and in the right way, we can see the positive in anything out there. After all, that's what gets us through the day anyway. Life isn't about having everything that makes you happy. It's about learning to be happy with what you have. I choose to be happy no matter what.
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