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Thursday, August 25, 2005

High gasoline prices, SUVs, conservation, and so forth 

Glenn Reynolds has lots of links and discussion about high gasoline prices, the reasons for the SUV boom and the unpopularity of regulation. Glenn points to this post by Tom Maguire, also worth reading. Maguire weaves together the Bush administration's new proposed fleet mileage regulations and the political reaction from environmental and consumer groups.

If you are worried about gas prices, the first place to start is this chart, which reflects the actual and "real" (inflation-adjusted) prices that one man paid for his gasoline since 1979. If you are over 40 or so, you remember what it was like back then and you recognize that even today's prices are child's play by comparison.

The Instapundit post includes interesting discussion about the intersection between the SUV craze and the current generation's obsession with safety. Reynolds:
First, the SUV craze isn't solely the result of car-buyers being idiots. It's in no small part an artifact of government regulation. Andrew Sullivan, in a post that Tom links, notes that people used to just toss the kids in the back of the station wagon (at least I hope that's what he means by the "trunk.") Do that now, and you'd practically be charged with child abuse. (Accusing SUV owners of treason is a bit, er, excitable, too.)

Now you have to strap them into car seats until they're quite large. This produces demands for more room, DVD players, etc., to keep them amused, and the like.

A subsequent emailer:
I've been saying this about car seats and seat belts laws causing SUV's popularity for three years now to all the liberals I know in Jackson Mississippi and keep getting blank stares in the process. Maybe since they don't have kids they don't get it. Don't forget the passenger-side airbag effect as well, keeping older kids in the backseats with their siblings deep into the tween years. The bottom line is--if you have more than two children, you HAVE to drive an SUV or minivan.

This argument seems true, as far as it goes, but it is not an argument for SUVs compared to minivans, which get much better gas mileage. It also does not explain why the popularity of SUVs is a primarily American phenomenon. Surely our relatively cheap gas is also a factor. Europeans, who might not drive SUVs anyway because of their narrow streets, are currently paying the equivalent of US$6 per gallon or more. Even Americans would make do with smaller cars at those prices.

It seems to me that there are a number of true statements about the current high cost of gasoline and American public policy:

1. Gasoline prices are high by historical standards, but not as high as they were during the Carter years.

2. Someday, perhaps in the near future, gasoline prices will be higher than they are today.

3. Someday, perhaps in the near future, gasoline prices will be lower than they are today.

4. Higher fuel prices have an impact on the economy, but because we produce an additional dollar of GDP with a lot less energy today than in 1979, high fuel prices have much less impact than they once did.

5. By and large, people are not altering their behavior to contend with higher gasoline prices. For example, you don't see people turning off their engines at long lights or while waiting for a drawbridge. When I was a kid, people did that all the time, just as they do in Europe and Asia even now. Just today, I walked out of the Dunkin' Donuts in Tupper Lake, New York, a working-class town in the poorest county in New York State. Most every vehicle in the parking lot was a light truck or SUV, and several of them had their engines running while the people ran in for their donuts. Has the average speed on the interstate highways declined at all in the last few weeks? If so, it is imperceptible.

6. It would be wonderful if as a nation we could nudge the economy into consuming less petroleum. We ship a lot of money to a lot of disgusting countries to import the oil that we burn in our gas tanks. We subsidize the price of that oil with a significant geopolitical investment, including a significant amount of defense spending (the Iraq war need not be about "grabbing the oil" for this to be true). And, of course, there is always the chance that the greens are right and that incremental carbon is the cause of global climate change.

7. A huge part of our gasoline consumption really is frivolous. This is obviously true in my family -- which is, admittedly, affluent -- and in many other middle and upper-middle families. How many people carpool to work? I know that at our company, a huge proportion of our employees could carpool to work (in that they live close to at least one other employee), but do not want to suffer the inconvenience. Not even with gasoline prices at $2.50 or more per gallon. I imagine that the average American family could cut its gasoline consumption by 10% or more with no meaningful impact on its quality of life. I'm sure that we could.

8. A huge part of our gasoline consumption is structural. Housing developments are built miles from essential businesses like grocery stores, liquor stores and coffee shops. In many suburbs even in dense places like New Jersey you have to drive a couple of miles to get to the first retail business. To a great degree, we have built high gasoline consumption into the political decisions that we have made at the town zoning board.

I am writing all of this from the bench in front of the Tupper Lake, New York public library, which is the only WiFi hotspot for miles. I had to drive 5.4 miles to get here, and will now drive 5.4 miles back. Blogging takes gasoline, too.

11 Comments:

By Blogger Screwy Hoolie, at Thu Aug 25, 09:12:00 AM:

Fuel prices are not likely to go down anytime soon since there's not very much stockpile left to tap into, and China is gobbling up more energy every day.

Americans use a disproportionate amount of natural resources, and we could certainly cut into that if this weren't a nation of "me, me, me". Our American individualism is a wonderful thing, except when it's a bloated, harmful thing.

Oil was the fuel of the 20th century, and now it's high time to reach out to renewables. Nothing else makes sense. The recent energy bill signed by GWB lacked any sort of leadership on the issue of oil dependence.

I'm just rambling, I know. The tone of your post is that "things are kind of bad, but not very bad, better than it could be, better than it was, but still a little bad, and we could do a little better". Many of my clients can no longer afford to drive. The high prices at the pump are affecting the poorest people first, the ones who don't show up on the 'buying power' charts and graphs, the ones driving the car they bought for $200. The gas crisis is here, just not for you.

Uptown Ruler and I are wagering on the price of a barrel of crude at year's end. Uptown is calling it at $100, I'm going with $80.  

By Anonymous Anonymous, at Thu Aug 25, 12:01:00 PM:

The 2005 Honda Odyssey and Toyota Sienna both get 19MPG in the city, which is only 1 MPG better than a Toyota 4Runner (a large SUV with a V8, no less). The idea that minivans are much more efficient than SUVs is antiquated, yet minivans still sacrifice much of an SUV's utility. What's the point?  

By Blogger Charlottesvillain, at Thu Aug 25, 12:07:00 PM:

It isn't so surprising that there are a lot of SUVs in Tupper Lake. The place gets two feet of snow a year. What is less clear is why so many people in Charlottesville, VA drive SUVs. (They remain garaged if so much as a quarter inch of snow falls on the road).

The child seat thing is definitely a factor. You cannot buy a real station wagon anymore. I tried, but needing seating for two kids, three adults, and luggage, had to go with the minivan.

I think the real answer is one related to marketing. The industry has been very effective at selling the SUV. It will be interesting to see if their pitch changes in light of higher gas prices. I did see one interesting article some monnths back (which I am too lazy to google up and link to)that indicated that the market for used SUVs has collapsed, as many people are trying to get out from under. If true, I have to think that demand for new models is in jeopardy as well. Even so, it will take many years for the current population of SUVs to work their way through the system, even if no more are produced starting now.  

By Blogger viking kaj, at Thu Aug 25, 12:23:00 PM:

I read somewhere that if we all drove vehicles that obtained an average fleet milage of 26 mpg we wouldn't have to import any oil.

If you will recall during WW2 the civilian population was called on to make immense sacrifices for the war effort. Yet this time around we seem to want to be able to have our cake and eat it too.

Why not a national gas tax in the $ 5-6 a gallon range as they have in Europe, and invest the proceeds in developing alternate energy sources. If the middle east is going to cntinue to be a problem, we are more secure as a country if we are less dependent on them.

Also, at $ 5-6 per gallon this would give people who drive SUV's a real chance to show their patriotism.  

By Blogger Catchy Pseudonym, at Thu Aug 25, 12:43:00 PM:

SUV's are the anti-mini van's mini-van.

High gas prices are making people think and talk about alternative sources of power, and not just view alternative feuls as pipe-dream from bong toking hippies. That's a good thing. It's always baffled me that people thought gasoline was the only thing could move a car forward.

When it comes to promoting change, I think the people that are passionate about the environment will suffer through the development phase and push the enviromentally friendly technology that will one day be applied mainstream. I've given up on corporations or the govornment as a source of this change. I feel it really needs to start locally, grow nationally. We have a bio-diesel group out here in Asheville making the diesel, opening up bio-diesel stations, which I think is great. People are using the techonology in their daily lives, working through the kinks and showing that it can be done. Once a new green techonology is introduce, the kinks worked out and it doesn't alter people's lifestyles, we will see a real change.  

By Blogger TigerHawk, at Thu Aug 25, 08:44:00 PM:

Screwy, if you and Uptown are so certain you better know the direction of oil than the futures markets, why not buy some call options on January oil and take all those evil commodities traders for a ride? :)

All I can say is that nobody, and I mean nobody, buying gasoline in 1979 thought it would be $10 per barrel in 1986. I am (I believe) a lot older than you guys, and I've heard it all before.  

By Blogger Charlottesvillain, at Thu Aug 25, 08:46:00 PM:

Catchy Sue, I couldn't agree more. Twenty years ago I had the same thought. Imagine where we could be now with that kind of time. No one had the courage to wean American drivers off of cheap gas, a reckoning will come sooner or later. I wrote on a post on this blog, an oil expert I saw gave an outstanding analysis of the state of the oil market. He predicts intermediate term prices will stabilize around $45 a barrel in today's dollar, but perhaps not for 5 or 6 years. I heard that and I couldn't help thinking, that won't be enough time.  

By Anonymous Anonymous, at Thu Aug 25, 10:07:00 PM:

A lot of good points here, both in the post and in the comments. About SUV's and safety, though, I'm reminded of something from an episode of the Simpsons:

Marge: I can't see around all these SUV's!

Homer: Don't worry, there's a gentle curve just ahead!

(SUV's all roll off the road)

- Levi  

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