Thursday, March 30, 2006

Like Soda for Petrol

On Saturday Brad's parents came over for lunch. We make it a habit to see them at least once a month that is when they aren't out of town on a cruise. Brad's dad, Jon, is a man that has a wealth of information when it comes to the free market as he used to be a grocery store manager for many years prior to his retirement.

On this particular occasion we got on the subject of soda and how the quantity and price of the product have gone up significantly over the past twenty years. Jon recounted the days when in stores that he managed a can of Dr. Pepper at a vending machine would cost a mere five cents. Eventually the management decided to bump the price up to eight cents in an effort to turn more profit. Jon explained that many people thought that it would be a disaster and that no one would pay for their instant gratification refreshment. To his surprise, and the pleasure of executives, sales continued to be good at the new price. Apparently people were willing to pay more for their soda and as long as people were willing to pay the price kept going up. In some places these days you are are hard pressed to find a vending machine that charges fifty cents for a can of soda.

Why am I discussing this you ask? Well I believe this anecdote is a bellwether for the gas prices in this country. Even after the devastation of Katrina and Rita the oil companies in this nation have had record years for profit and yet gas prices are on the rise again. On the local news here in Dallas tonight they interviewed several a commuter and asked if they thought the prices were high enough for them to cut down on driving or consider alternate modes of transportation. All of them stated that they didn't like the prices going up but that they wouldn't alter their driving behavior.

I have no grand conclusion to this, I just thought it was an interesting parallel. In fact I want the price of gas to get higher so that hopefully these things will happen:

  1. Increased demand for alternative fuels such as biodiesel.
  2. The demand and production of SUVs plummets.
  3. Suburban sprawl comes to a halt and urban revitalization gains more momentum and forces the market to produce more low to middle income high density living in urban cores in lieu of the current trend that is almost exclusively the high luxury market.

14 Comments:

Blogger Nathan said...

Our news showed a similar clip, where a guy didn't like the prices but wasn't willing to alter his driving habits.

WTF? People are ridiculously wasteful.

1. The prices are too high and I do my best to be conservative with fuel. By being wasteful, the demand for gas continues, sending a clear message that it's okay to charge high prices, because we're stupid enough to pay them.

2. The Earth is not an unlimited source. We should be more conservative anyway, regardless of the price of gas.

2:38 PM  
Blogger gayborhood gringo said...

This is why I chose to live where I do. Nearly everything that I need access to on a regular basis (aside from work) is within walking distance.

Because of this, I was able to last two weeks on one tank. Unfortunately, that car (Toyota Echo) was totaled in an accident. My new car (Ford Focus) is more of a gas guzzler, I can usually last about a week to a week and a half now.

I can't imagine spending $50 every three or four days as some of my friends and co-workers do. They just aren't willing to give up their SUVs.

3:59 PM  
Blogger Ed said...

So, Like...whatever happened to public transportation? Where are the nifty monorails and subways? I'm shocked to this day why our country hasn't developed better public transportation. Instead we give tax breaks for SUV's over 10,00lbs. Hybrids aren't the answer, but they are a start. To that point, Hybrids should be getting (and they can) 100mpg, not 40. I scratch my head when I see a hybrid Ford Escape and see that it ONLY gets 34 mpg. Why even bother? WTF?
There will come a day when the oil will run out, and god help us then. WE CAN make all electric cars and cars that run on hydrogen. It's just a matter of changing people's minds and most importantly changing the current government leadership.

4:37 PM  
Blogger Seeker Onos said...

Just try selling that to the Big Business(TM) that has its hooks on ALL the politicians and Big Oil... they practically encourage wasting fuel.

I honestly do not think that we will see any serious movement toward alternative fuels until its too late... not even $10/gal prices will dissuade the SUV owners, simply because they can float that kind of cash.

What SHOULD be done, is to levy taxes on gas to bring it up to $12-15/gal and USE that tax money to rigourously pursue R&D into biodiesel/biogas infrastructure development.

And encourage local food source development. The Third World Post Industrial crash IS coming... Peak Oil IS here already.

The question is, will greed dominate the plunge into the new Malthusian Dark Ages... or will we pull our collective heads out of our arses and soften the blow?

5:26 PM  
Blogger Hypoxic said...

Great post.

Think of the money that we've spent on the ill-fated Iraq War. If we had taken that money and put it into serious research on alternative energy sources - we probably could have significantly reduced our dependence on mideast oil - which in turn, would truly make us safer today.

Like El Gringo Loco where I've chosen to live makes me virtually free from the need of a car. I live less than a block from work. Pretty much everything I need is within walking distance. One tank of gas lasts a good month or more. Moving to my current location is the best thing I've ever done. I get more exercise and it saves a hell of a lot of time too.

5:46 PM  
Anonymous tp said...

ooh, good point Hypoxic... don't bother trying to secure middle east oil supply by 'liberating' Iraq, rather spend the money on work to reduce the addiction. If only B*S* had thought of that... You should run for President. No really!

For what it's worth, I chose not to have a car when I moved to Canada - I walk or cycle, and rent a car for those occasions I need (as opposed to want) one.

tp

8:53 PM  
Blogger tim said...

Maybe it will also force people to start using other modes of transportation like walking or biking to help improve their health and help lessen the burden of caring for the obese individuals that pepper our landscape. Just a thought.

9:52 PM  
Blogger VJnet said...

Remember when water used to be free to the public. Ohh, wait it still is. But, now people are willing to pay more than the price a can of soda for so called "cleaner" water. How clean does water have to be? Are we in a a shortage? The last I heard, most of the world is covered in it. Now what's up with that? Did we get brain-washed to think that just because things cost more then we must need it to survive?..

It's funny how we forget about the little things and wonder why we let other things get out of control.

5:48 AM  
Blogger tornwordo said...

I remember getting an ice cream cone for a nickel at Thrifty Drugstore.

I am so grateful to be able to live where a car is not a necessity.

6:21 AM  
Anonymous Aaron said...

To expand on what Ed said ...

The problem with "free markets" is that they work to the benefit of the few over the many. Actually, the whole idea of "free markets" is bogus.

Wealthy individuals, institutions and corporations like to shout about "free markets" to the middle class to discourage them from participating in regulation. Then, they send their lobbyist to Washington to make sure all the regulation is done in their favor ...

But the whole idea of a Democracy is that people have the right to regulate how society works. A "free market" is antithetical to the idea of a Democracy. A "free market" mandates that the dollar makes the decision, rather than the vote.

If you look at urban areas that have been able to successfully solve the growth/sprawl problem, implement good public transportation, discourage private cars and the like ... This was not done by waiting for gasoline to get expensive.

It was done where voters intervened and granted government the authority to curb sprawl, build the trains and prohibit wasteful driving patterns.

My hometown of Portland is thirty years into an urban planning experiment with a growth boundary, light trail and trolley systems, natural gas buses and all sorts of other related quality of life programs. All of these came relied on voters granting government the power to tax them, pay for the programs and limit excessive behaviors.

The problem with Portland now is that it has become such a desirable place to live that the voters who put these programs in place can no longer afford to be there.

8:14 AM  
Blogger Jeff said...

Gas went up here again last night. It's $1.00 a litre for regular unleaded. My car takes an average of 65 litres, of premium fuel (which is $1.30) That's $84.50 to fill up my car. Then with GST the total bill is $90.41!!! Good thing I only fuel up once a month. Some older gentleman was on the train this morning discussing which SUV he wants to buy. It took all my might not to explode on him.

8:33 AM  
Blogger John said...

Gas prices here are about $5 a gallon. (You've gotta do all that currency and metric conversion.)

I was reading something recently that said people won't use public mass transit if the stop is further away than their parking. Duh. So, lets stop building parking decks and design cities for mass transit and walking. The blob cities like Houston, LA, Atlanta...yuck!

Jerusalem is building an above ground msss transit light rail train system. Check out: http://www.rakevetkala-jerusalem.org.il/en_main.html

9:33 AM  
Blogger Jim said...

With the Hummmer density in this city I don't think $20/gallon would produce a nod toward conservation, they would just consider it a luxury and probably buy more in the name of conspicuous consumption :)

I intentionally design my school schedule around a 2x week drive to the burbs to minimize the gas bill.

12:15 PM  
Blogger Seeker Onos said...

Ya know, this kind of thing has me *almost* hoping that Iran decides to pull the plug on its oil to the US ... if only to give the us all a nice oil shock and force us to re-think our disgustingly wasteful use of oil.

8:01 AM  

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