GWB will make oil cheap or your nation back
Chris did a good writeup of W’s recent strong words regarding oil.
The problem is one of economics. Hybrids improve the fuel efficiency of cars. In a lot of economic models, when you can use a product more efficiently, this actually increases consumption of the product because suddenly it makes economic sense to use it in ways that didn’t make sense before. For example, when I lived in Saudi Arabia, they used to spray oil on to sand dunes. Why? With the low cost of gas and the high cost of fresh produce, it was a cost effective way to reclaim land from the desert. Same thing happens with more fuel efficient cars: sure, that commute to work stops chewing through so much gas, but now it makes economic sense to drive more. If it cost me $200 a day to drive to work, I’d bike or find a job or home where I didn’t need to make that drive. It’d make economic sense even if it cost me $2000 more a month (either in lost income or increased mortgage payments) to do so. But if I can get a $2/month all-you-can-burn deal on gas, I’m going to start driving to visit a neighbor across the street.
I’m well aware of what happens when fuel gets expensive — heck, I took a different job so (amongst other reasons) I wouldn’t have to commute. The other side of the coin, however, I hadn’t considered. Frankly, I think the price of gas has a long way to go before people consider it cheap again, but it’s an interesting thing to think about either way.
Related: I wonder where the US’s cost for gas is relative to the rest of the world. An exceedingly hasty search shows that in Japan, gas was $3.79/gallon in 2004. I can’t imagine that it’s gone down. honestly, I’m not sure what we’re all complaining about.
April 26th, 2006 at 12:08 am
I’m not sure that the economic argument makes sense. First of all, I don’t think I buy the assumption that demand for gas is particularly elastic. Yes, there are things that one can do to reduce one’s gas consumption in the face of rising prices. But most of those things (moving, switching jobs, getting a different car) are relatively costly so most people are probably unlikely to make those changes unless they think that increases in gas prices are permanent.
I don’t see hybrids increasing the consumption of gas. Hybrids don’t lower the price of gas, they merely allow you to go further on the same amount of gas. So people might drive more with a hybrid than they would without one, but I don’t really see a mechanism that points to consuming more gas. The problem comes in defining what is being consumed. If we’re consuming driving, then hybrids do make driving cheaper and could be expected to increase consumption. But the same argument doesn’t apply to gas.
April 26th, 2006 at 8:20 am
Here’s a simple thought experiment to clarify the hybrid situation: if you were spending $200/week on gas, wouldn’t you be more likely to put up with all the annoyances that come with carpooling?
April 26th, 2006 at 10:13 am
A few thoughts, even though I don’t know that much about economics…
The price of gas is pretty low here compared to places like Canada and Europe. We subsidize gas here by giving tax breaks to oil companies, so the price is artificially low, even lower than bottled water at various times.
Places where gas is permanently expensive have forced people to plan accordingly. I don’t about Canada but I know in Europe cars are smaller, public transit is extensive and used by all social classes and development proceeds taking it into account.
In the US, in cities where they make it really hard for you to drive (high tolls, no parking, super expensive parking)–eg, NYC and San Fran, people end up not using cars as much or not owning them at all. I don’t know if this is a chicken and egg problem, because those places are naturally more condensed than LA so maybe it was easier to promote transit and taxis, and punish driving.
Hybrids might be a way we wouldn’t have to change our habits or city planning.I think if everyone used them at the current rate of regular cars the gas consumption would go down. I can’t imagine people using the hybrids so excessively that they would end up consuming as much as a regular car. I still would rather fly than take long car trips for example. Also if cars got drastically smaller and more fuel efficient that wouldn’t be so bad either. There’s still a time cost involved in public transit or biking that makes technological auto innovations more appealing.
April 27th, 2006 at 4:47 pm
Engines have become far more efficient in output per unit of gasoline in the past 20 years. However, we (and car manufacturers) have not responded to that improved efficiency by lowering the amount of gas used. Instead, we have cars which make a lot more power for the same gas input. Compare even the past 5 years. A Mazda 3 today gets comparable fuel efficiency (25/32 vs. 24/32) to a Mazda Protege (a car which it replaced) from 5 years ago, but gets more than 20% better power (160 HP vs. 130 HP). That Mazda 3 despite being a small car has an engine with the power of my father’s 92 near-luxury Bonneville SSE despite supposedly being an economy car. The Honda Accord hybrid is a key example of this - it doesn’t get any better fuel efficiency than the regular V6 powered Accord, but has a lot more power. In large part this is because, adjusting for inflation, gas is simply not that expensive. Ever-increasing gas prices will change this though - witness Europe and Japan, which have much more fuel-efficient cars.