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Monday
May192008

What if gas were $10 a gallon?


An article on MSN Money Central began as follows:

...."In four years, U.S. gas prices have doubled to more than $3.70 a gallon, and crude oil has tripled to around $125 a barrel.

Allowing for inflation, that's higher than prices were during the 1978–83 oil shock that triggered a recession and sky-high interest rates.

But . . . What if gas cost $10 a gallon?

Thousands of truckers would go bankrupt. Airplanes would sit idle in hangars. Restaurants and stores would shut down. Car-pooling, hybrid vehicles, scooters and inline skates would swing into vogue."


I find it strange that the writer would mention inline skates and miss the obvious choice in human power vehicles, namely the bicycle. As for truckers going bankrupt, some will, but goods will still need to be shipped whatever the cost.

There will be rising prices and inflation, which will affect everyone; however, those who can run a tight budget and spend less on gas, will fair better. Some low-income families will not be able to run a car.

...."According to Todd Hale, a senior vice president for consumer researcher Nielsen, at $10 a gallon, the average family's gas bill would leap from 16% of its retail spending to about 40%.

People would drive less, yes. But many have to drive to work or the supermarket, and they'd cough up the cash -- screaming all the way -- and cut back elsewhere."


Yes, many will still drive and even some will still drive SUVs; they will become even more of a status symbol. There will be more compact cars or the road, and a lot more motorcycles, scooters, and mopeds.

Not everyone will ride a bicycle, but for those of us who do, share the road will be a lot easier.

Public Transport will make a comeback, which will ease congestion further. Even long before gas reaches $10, we will see less joy riding in cars on the weekends, leaving roads less congested and more pleasant for bike riding.

...."Taxis and FedEx would be strictly for the well-heeled. And home pizza deliveries would cease. Pizza delivery drivers also pay for their own gas. "It'd be brutal," says Joseph Miller, an assistant manager at a Domino's Pizza in Seattle. "I would think we wouldn't have any drivers."

Pizza can be delivered by bicycle. All kinds of restaurant food is already delivered by bicycle in New York City, and in other large cities; it is the most efficient way in many cases. In fact, as less people drive to eat out, restaurants will be forced to consider other alternatives.

In many parts of the world, Europe and Japan for example, gas is already close to $10 a gallon. People still survive, and adjust to their economies. By the time gas reaches $10 in the US, $10 will be worth a lot less in terms of what it will buy.

American consumers have been spoiled for so many years by cheap gas, welcome to the real world.


Read the complete article

Reader Comments (25)

When gas costs $10 (plus inflation) our society will recreate the village. When people can no longer drive 20 miles to a restaurant the restaurant will be built where the people live.

It's not like this is the first time we have changed the way we live. I see this as a step back towards better times.
May 19, 2008 | Unregistered Commenter Anonymous
$10 a gallon? That's ALREADY close to the price in the UK. Right now, I'm paying £1.22 per litre - $9.04 for a US gallon.

And no, it hasn't recreated the village - we're just as much suckers to big box out-of-town shopping as people are in the USA.

The scary thing is that it doesn't seem to have had any effect on people's driving habits. I've noticed more cyclists recently, but only in the 'leisure' category - there really don't seem to be more people cycling to work / the shops / wherever.

Makes me wonder HOW high the price'll have to go before people realise that there are just better things to spend their money on!
May 19, 2008 | Unregistered Commenter Karl McCracken
Meanwhile, over here in the Netherlands it's also about $10 per US gallon.

However, here people are cycling. They were doing so a few years ago when petrol was much cheaper too.

The difference is infrastructure which just begs you to cycle. It's much more convenient to cycle than to drive, the scenery is often better (cycle routes are shorter and go through nicer places), you don't have to stop for endless traffic lights etc.

Make conditions for cyclists better than those for drivers and everyone wants to cycle instead of drive.
May 19, 2008 | Unregistered Commenter Anonymous
Just look at your neighbours to the north. The lifestyle is pretty much the same as it is in the U.S. People complain about gas price increases when they happen, but life goes on without much difference for most of the middle and upper classes. It's the less affluent who are severely affected. For them, there is nowhere to turn, because unlike Japan and Europe, there is no way to get around in North America if you don't have a car. It's an entirely a car and highway-based society, and things people need are laid out geographically on that basis. No matter where you live, you need to get to places that are hard to get to without a car. And that's not even talking about the costs of other staples of daily life which also increase as the cost of transporting food products increases.

People are short term thinkers usually. The price of gas goes up, they talk about commuting by bicycle (assuming the weather is nice that day, because not too many people talk about that except during the summer months when they forget that winter is just a few months away). Or they start thinking about a new "hybrid car", or a little Smart car. But a week later, the price of gas goes down a few cents and everything is back to normal.

What we all need is a more comprehensive strategy that includes the bicycle for those who wish to use it as a mode of transportation (keeping in mind that we don't all live in Copenhagen style geography or weather), and both inter and intracity transportation. Probably won't happen though in a society where politicians are unelectable if they don't promise tax cuts.
May 19, 2008 | Unregistered Commenter starling
Just what I was talking about to an AT thru-hiker in the store a few days ago. He was from Germany and figured that gas was over $9.00 per US gallon over there. He couldn't understand why the US gets in the car to run an errand around the corner.
Truckers will go bust but it'll also revive the rail industry since they can move more material cheaper than trucks, the main drawback being that the track networks aren't as extensive as roadways.
May 19, 2008 | Unregistered Commenter Marrock
I biked to work 4 out of 5 days last week for Bike to Work Week. I really don't do the commute to save gas so much as I do to put in base miles for my brevets. But I did save quite a bit of gas as a result--for when I really need it.

At a stop light, a 2008, Porsche 911 GT pulled up next to me. It was awesome! When I got to the office I looked on the Porsche website--the car lists for $191,000. I don't think the person that owns it is too concerned about the price of gas--nor will they be concerned about the price of food or anything else.
I don't have a problem with the guy having the money to have that kind of car. Some people will have to drive, at least for now, because they don't have any alternative--because I'm able to take the alternative, I only ask that car drivers be patient and show a little respect and let me ride in peace.

Cheers! Bruce
May 19, 2008 | Unregistered Commenter Bruce's Bike Blog
Right now our society is based on petroleum fuel. Name an item in a store that HASN'T been transported via petroleum (usually diesel) fuels. We don't just pay the price increase at the pump, we pay it for everything we buy. And air travel could soon become something for the wealthy also...making it a much larger world once again. Diesel prices are already pretty high here (I filled up my diesel Jetta a week ago at $4.82 a gallon here in CA...which by the REST of the worlds standards is still QUITE CHEAP!) Americans like to bitch and moan about the ever increasing cost of gas, and somehow feel ENTITLED to cheap gas, all the while driving solo in the latest gas-guzzling road-beast. Do a bit of travelling around though, and see that the REST of the world is driving mostly smaller cars that get MUCH better mileage than almost all cars offered for sale here in America. I was up in Norway back in 1999/2000 and gas cost OVER $8 (US) a gallon at that time...can't imagine what it is up to now. Here in the US we will see a gradual shift of the type of vehicles on the road over the next few years I imagine. The less affluent will be forced to switch from the ultra-cheap cars (older model American cars...chevys/olds/pontiacs/etc) getting really bad mileage, to not quite so cheap Japanese cars (the resale market price of those smaller cars will stay remain pretty high due to their smaller size/weight and substantially higher mileage, while you won't be able to give away your SUV's). And another funny thing I have noticed overseas: you see AMERICAN made car models that we can't get in the states! In my England trip last year my rental was a tiny little Ford! But the manufacturers and marketing here in the US emphasizes power/size over mileage (until recently anyway). Gotta have that Hemi engine! Gosh...if you have a child, then you and your wife absolutely NEED that Excursion! There's just NO possible way to put 3 people in a small car! Heaven forbid! It will take a generation or 2 to shift the thinking here that smaller is better (and SAFER for us cyclists on the side of the road!) Bring it on! Less traffic, more bikes, I like it!
Matt
May 19, 2008 | Unregistered Commenter Anonymous
At $10/gallon, gas is cheap and a bargain for most. How else can you move four people in luxury and a 3500 lb vehicle full of luggage over 30 miles for only $2.50 each? Of course this excludes upfront acquisition costs and insurance but those are more fixed than variable. Friends and family in Europe get along fine at $8/gallon..but can Americans?

How far can a large cup of $4 java (equivalent to oil at $44/gallon) take a family of four? The sky's the limit for this valuable resource. Auto dependency, oil addiction, and poor leadership guarantees more of the same.
Jack
May 19, 2008 | Unregistered Commenter Anonymous
Here's the thing : The U.S has 60 years worth of gas (estimated probably at current consumption rates) stacked up in the strategic petroleum reserve. They will not release it. Why? Read about it.

I also think up to a point, most people will be able to 'afford' gas, even though the worry will exist. The majority who will be affected is the lower income class people, farmers etc.

While its terrible that the situation is such, I also think its a good thing - giving a much needed wakeup call in need of change to people and their habits. If people don't change, companies will keep producing the huge,heavy,luxury filled boxes of steel and alloy that guzzle far too much gas than actually needed to get from point A to point B.

The situation is also spurring many developments in alternative fuels and means of transport. You can't simply tell everyone to start riding a bike. Its not the answer but certainly one in many.
May 19, 2008 | Unregistered Commenter Ron
Oh, and expensive gas is not just going to worry motorists. As crude oil prices rise, every single product out there whose raw materials somehow involve oil will increase in costs. I can think of chemicals, cosmetics, tires, even carbon fiber bicycles, duct tape... think about that. And add to this the rise in supply and distribution costs.
May 19, 2008 | Unregistered Commenter Ron
The Strategic Petro Reserve contains 703 million barrels (http://www.spr.doe.gov/dir/dir.html) and at current consumption of imported oil at about 10 million barrels per day means that the SPR could support only 70 days of consumption without imports.

Read about it:
http://tonto.eia.doe.gov/dnav/pet/pet_sum_crdsnd_adc_mbbl_m.htm

At current prices of $126/barrel for refined oil, we are spending over $1 billion/day for this addiction. Our dependency is growing as a vast array of products are now produced with oil derivatives and the majority of vehicles sold in the USA continue to be fuel inefficient.
Jack
May 19, 2008 | Unregistered Commenter Anonymous
Maybe I got my fact wrong on that number, but remember that the reserve is being filled - crude oil is still being transported to be stocked there. Even if its not going to last that long, I presume releasing that quantity will help in some relief.
May 19, 2008 | Unregistered Commenter Ron
Ron,

No future contract for oil are being signed for the SPR.

WASHINGTON (AP) — The Energy Department says it has canceled oil shipments into the Strategic Petroleum Reserve beginning in July when the current purchase contract expires.

The move came days after Congress passed legislation requiring the president to suspend the shipment into the reserve in hopes of lowering gasoline prices.

The Energy Department said it will not sign contracts for new shipments of 76,000 barrels of oil a day for the six-month period beginning July 1. President Bush had opposed halting the shipments, arguing that such a relatively small amount of oil would not influence prices. Current shipments will continue. The reserve is 97 percent full, holding 701 million barrels of crude.
May 19, 2008 | Unregistered Commenter veloben
Roads aren't meant for bike riding. Bikes create more problems than should be allowed. Or at the very least, let's have bike registration so bikers will pay for using the roads just like cars do. Already pay for a car? Well, if you have two cars you pay for two cars. If you have a car and a bike, and if you take that bike on the road, you should pay a tax for the bike, too. Just like multiple car owners do. Or just try not to slow traffic to 10mph. That would be nice.
May 19, 2008 | Unregistered Commenter Anonymous
hey anonymous...getting stuck behind a cyclist going 10mph helps you save gas. Slow down, enjoy the car ride...while you can!!! HaHaHaHA!! Because you better get used to sweating real soon!! HaHaHaHa!!!
Yeah...we love you too...your taxes keep the roads nice and smooth and clean! Thanks! Oh, and when we are all on bikes and paying taxes to maintain those same roads, we will be saving money b/c what kind of damage could a lowly bike rider do to a road? Road repairs will be almost nil!!
Future looks bright from the saddle folks!!

BTW...whoever submitted that post is a clever biker wanker who just wanted to jerk our chains!! Good post...made me laugh! Thanks!
May 20, 2008 | Unregistered Commenter zoovegroover
Dear Anon:

Roads were paved because of the bicycle lobby groups in the late 19th Century.

http://www.bikeleague.org/about/index.php

You're welcome by the way.
May 20, 2008 | Unregistered Commenter Chole
Dear Anon 8:09,

It must hurt to miss the good old days of Reganomics, but even Ronnie didn't meant to make every tax into a user fee.

Vehicle taxes are not a license to use the roads, they are income for hte state.

Tolls are levied on a per use basis either to reduce burden on the taxpayer for construction or maintenance or to generate income for the state.

Some roads restrict access to types of vehicles for safety or design reasons.

The public roads are a public good. Regardless of how they are funded, and it's never solely from motor vehicle taxes, they are available for all to use.
May 20, 2008 | Unregistered Commenter veloben
Whatever happens, it will be slow. The rich will ignore it, the poor will suffer more, and there will be a slow shift in thinking. More than likely the government will find someway to ease the burden and put off the inevitable. The fact is not everyone can ride a bicycle. We have a totally wrong infrastructure. We have no alternative transportation systems in place.
May 20, 2008 | Unregistered Commenter Forest Bikes
When you consider the amazing amount of energy contained in one gallon of gasoline, $10 is still a bargain. Someone more scientifically inclined could tell us how far I'd have to pedal to burn the btu's or calories or whatever unit applies - somewhere there has to be an equivalent. But I'll bet it's a lot of miles. I prefer to see high prices as cause for readjustment of priorities, and not the doom and gloom our leaders claim.
May 20, 2008 | Unregistered Commenter MtMann
I made a rare trip over the weekend, going the freeway speed limit. Did $4 gas slow anyone down? Hell no! 'mericans still drive like freaking lunatics!
May 21, 2008 | Unregistered Commenter yankee_dollar
My wife and I carpool, and our commute together costs 5 dollars a day round trip if you count my cup of caribou coffee.

Which is cheaper than taking mass transit in the twin cities (2 rush hour tickets each way would cost 8 dollars a day). Our minivan drove 298 miles on 14 gallons of gas last time we topped off.

For the last two weeks I have biked from her employer to mine, shaving 10 minutes driving off the commute (different route driving--same milage fewer lights). We'll see what driving 13 miles with less stop and go does for fuel economy.

If driving to work is such a burden, I think moving closer to work or buying a more efficient vehicle are reasonable solutions. Maybe both would be a good move.
May 22, 2008 | Unregistered Commenter Bujiatang
Well, I worked it out and we are already paying over $7 a gallon here in Australia and it keeps going up.

I ride to work 5 days a week and use my bike for shopping as well, even if it takes a couple of trips. I only use the 4 cylinder, car when I have to take the family out. And I try and encourage others to do the same.

Governments need to start taxing the large car/4WD/SUV owners more as they use more petrol and leave a larger carbon footprint as well.
May 26, 2008 | Unregistered Commenter Anonymous
For folks living in urban America, biking can and should be a logical choice for alternative daily transportation. However, unlike many smaller European countries, the Americans living in more isolated rural areas (read: far from work, shopping, entertainment, etc.) would find cycling a hard choice; the distances traveled would simply be impractical. I love cycling and own, tinker with, and ride six bikes regularly. I would prefer to commute by bike, however, my current proximity to the workplace (33 miles one way) makes it impossible. So, I'm selling my house and moving closer to work where I can practically utilize my recreational bikes as transportation. Basically, my wife and I are tired of the driving commute and wish to be closer work and all the services the city provides.

For folks who live in the rural American 'wide open spaces', in most situations cycling would be an impractical choice as a daily transportation device. Yeah, we all read about the cycling friendly countries in Europe, but realize geography is a great advantage in these countries...they are much smaller and more densely populated than America. Cycling is universally more practical so more people bike, hence these countries provide cycling infrastructure.

I think the best transportation solutions here in the States would include a multitude of solutions: for the urban areas more bike lanes and infrastructure, improved access to public transportation (e.g. buses and bike racks on buses), park and ride areas for longer distances, where you could ride a bike to a secure bike parking area, then hop on a bus to ride the remainder of the trip. I'm sure there are many other alternatives as well. For urban areas, carpooling could greatly decrease the number of vehicles on the roads. We certainly should follow Brazil's example and utilize alternative fuels (e.g. ethanol, soy diesel) to become less dependent on foreign oil.
May 31, 2008 | Unregistered Commenter djdau
the economy would shut down and be back up under the amero. the new dolalr by the north american trade union(us/canada/mexico). owner-operators will cease which they are now but not at a rapid rate. chaos in inner cities and low income areas. no food, clothes, appliances for days due to trucks not moving. it will effect everybody. electric and fuel cell cars will be in big demand. hybrids will replace conventional gasoline cars as the norm. only those making at least $250k or more will be able to have bumps in the raod. those under $250k will catch straight hell but all will be effected no doubt. i believe our economy will hit the 1929 depression and passed it. more homeless and madness in america. not sounding pessmistic but realist. americans have this mindset that all will turn around if obama becomes presdient, it does not mattter whether he or mccain becomes presdient, this will still take place. also brace yourselves for a war with iran, conflicts in sudan,venzuela, & somalia in the next 2-4 years.
June 2, 2008 | Unregistered Commenter mrsam2008
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