As Joe says, Americans are driving less: "Americans drove 53.2 billion fewer miles November through June than they did over the same eight-month period a year ago..." Consequently, demand for oil is down to a five-year low, according to the American Petroleum Institute.
Not hard to figure out what's going on here -- as Matt says, prices change behavior.
Let's ponder a few things:
First, most of the changes people are making are short-term hacks like carpooling more, consolidating trips, skipping weekend outings, and so forth. Gas prices haven't been high enough, long enough, for people to have time to do the big things like buy a more efficient car or move to a more location-efficient home.
Second, the drop in demand has caused a drop in price, both of oil and gasoline. While I think Joe's right that this drop is only temporary, it does send a signal to consumers that prices fluctuate all the time and there's no reason to think they'll stay high.
Third, people won't make the long-term investments unless they know prices will be high for an extended period of time.
To me, this all adds up to a pretty good case for putting a floor on oil and gasoline prices. This is Tom Friedman's big idea, and though it's faintly gimmicky, I can't find the flaw in it. Just proclaim that gas will never go under $4/gallon and oil will never go under $130/barrel in the U.S. -- if they do, the difference will go into the U.S. treasury to be spent accelerating the transition away from fossil fuels.
Then everybody knows it's time to make those long-term investments. Other than its utter political impossibility, what's wrong with this idea?
Oil: enough energy to melt glaciers!
Comments
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Bob Wallace Posted 4:24 am
15 Aug 2008
Many voters are badly informed. And many want simple, easy to understand answers to often complex problems. People don't want to make changes.
IMHO, our best hope to get out of this mess is for Chevy to get their Volt to market, Toyota to bring out a PHEV "super Prius", etc.
A car that can be "filled up" for a couple of bucks for 80%+ of driving and has the ability to run cross country on liquid fuel is going to be a seller.
Once people experience doing most of their driving using electricity they are going to be open to a totally electric car for their next purchase. And by then we should have 'quick charge' batteries and plenty of places to plug in.
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sindark Posted 5:01 am
15 Aug 2008
That would allow for advance planning and it would also raise the price of the right thing: not driving, per se, but emitting greenhouse gasses.
a sibilant intake of breath
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Matt G Posted 5:29 am
15 Aug 2008
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justlou Posted 5:30 am
15 Aug 2008
Washington just can't seem to play out the latter scenario.
So, it seems that price shocks accompanying oil depletion will continue to rule and, poorer, we will run the gauntlet of keeping the wheels on the costly, inefficient machine while squeezing capital and resources for the frugal future.
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Bob Wallace Posted 5:45 am
15 Aug 2008
If we were to significantly increase the build out of renewable energy harvesting we would decrease the amount of carbon released over time by burning fossil fuels.
That would greatly boost the US economy via the creation of thousands of new jobs and the decrease in money spent for foreign fuels.
A push for PHEVs and BEVs would also help the carbon problem and the US job situation. Given the increase in shipping costs it's more likely that cars purchased in the US would be made in the US, even if the manufacturing companies are foreign owned. More jobs. More money staying in-country.
The Republicans have created such a wide-spread emotional reaction against taxes and regulation that it might be best to just avoid those approaches and go for a more positive method to solve both the price of oil and climate change problems.
Just think what a difference it would make to be spending 'a million dollars a minute' inside the US on salaries and products rather than shipping all that money off shore.
This country really needs a positive turn-around. We've been divided by hate and pessimism for far too long.
A large scale program to get things growing in a "can do" direction might be a much easier sell and might be a quicker route to where we need to go.
We've made serious inroads already when we have a major corporation such as GM touting their upcoming PHEV and an uber-right such as Pickens funding wind farms.
Build off that base rather than spending a few years fighting over carbon taxes in Congress.
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Russ Posted 5:51 am
15 Aug 2008
The catch-22 here is that when gasoline is cheaper, the masses assume it will stay that way and therefore deny any transition is necessary, so they're not willing to endure the interventions and expenditures.
Then when price inevitably surges, everyone feels economically pressed and clamors for immediate relief, so they're not willing to endure the interventions and expenditures toward a long-term solution.
This is part of the reason no large-scale transition is ever going to happen.
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ac5p Posted 6:41 am
15 Aug 2008
The sad fact is that we're going to have to convince a lot of people to get behind the idea of paying a lot more to pollute with carbon.
For our carbon-levels to drop to where they need to be, the demand for oil is going to have to drop through the floor and the price will go crashing along with it without some popularly supported legislation of some sort affecting the vast majority of the civilized world.
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sindark Posted 6:54 am
15 Aug 2008
This is one reason for which a tax and dividend system is attractive. It doesn't eliminate ordinary tax revenue, so it isn't problematic that the total revenues will fall over time as per capita greenhouse gas emissions do.
a sibilant intake of breath
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GRLCowan Posted 8:15 am
15 Aug 2008
Say it the other way. You may think the order can't matter, but the thing you say first is the thing a lot of people will infer matters more to you.
It occurs to me a lot of people may not even know what a dividend is. "Are you in favour of tax-and-hrnm-hmm-hmm?"
--- G.R.L. Cowan, H2 energy fan 'til ~1996
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Biodiversivist Posted 8:32 am
15 Aug 2008
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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justlou Posted 10:13 pm
15 Aug 2008
http://www.pbs.org/moyers/journal/08152008/transcript1.ht ...
BILL MOYERS: Here is one of those neon sentences. Quote, "The pursuit of freedom, as defined in an age of consumerism, has induced a condition of dependence on imported goods, on imported oil, and on credit. The chief desire of the American people," you write, "is that nothing should disrupt their access to these goods, that oil, and that credit. The chief aim of the U.S. government is to satisfy that desire, which it does in part of through the distribution of largesse here at home, and in part through the pursuit of imperial ambitions abroad." In other words, you're saying that our foreign policy is the result of a dependence on consumer goods and credit.
ANDREW BACEVICH: Our foreign policy is not something simply concocted by people in Washington D.C. and imposed on us. Our foreign policy is something that is concocted in Washington D.C., but it reflects the perceptions of our political elite about what we want, we the people want. And what we want, by and large - I mean, one could point to many individual exceptions - but, what we want, by and large is, we want this continuing flow of very cheap consumer goods.
We want to be able to pump gas into our cars regardless of how big they may happen to be, in order to be able to drive wherever we want to be able to drive. And we want to be able to do these things without having to think about whether or not the book's balanced at the end of the month, or the end of the fiscal year. And therefore, we want this unending line of credit.
BILL MOYERS: You intrigued me when you wrote that "The fundamental problem facing the country will remain stubbornly in place no matter who is elected in November." What's the fundamental problem you say is not going away no matter whether it's McCain or Obama?
ANDREW BACEVICH: What neither of these candidates will be able to, I think, accomplish is to persuade us to look ourselves in the mirror, to see the direction in which we are headed. And from my point of view, it's a direction towards ever greater debt and dependency.
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Tasermons Partner Posted 3:59 am
16 Aug 2008
An last year, like most years, prices went down around this time before they went back up again.
So if we see it go back up again (and we will), I'm pretty sure the long-term trend of prices risin' a dollar a year should be enough to transition the general population to more efficiency, regardless of short-term decline hic-ups.
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