There’s an emerging meme that recent high gas prices are a good thing. And I want to nip it in the bud. So… Bad Newsweek! Bad Wall Street Journal! Bad Freakonomics blog!
Gas prices are not something to crow about. To be sure, there are some benefits to higher prices—a rush to innovate, and a bit less climate pollution — but they’re a tarnished silver lining, at best, to an awfully dark storm cloud.
I can’t help it, I’m going to get a little preachy. Even though the drastic price increases are re-arranging conventional wisdom about our energy dependence, we need to remember that the suddenness of the spike is financially devastating to many families (and to many businesses too). It’s only for a minority that this is an opportunity to try out sleek new bike gear. For many more it’s an “opportunity” to stop saving for retirement, to pinch on necessities, and to run up credit card debt.
People will eventually adapt, of course, by switching vehicles, and perhaps even switching jobs or moving residences. (In fact, folks are already trying to adapt by switching to transit, driving slower, and cutting out far-flung vacations.) But in the near term, most people have few choices that can make a large difference for household expenses. Decades of sprawling land-use—abetted by short-sighted policy and, yes, consumer choice — means that many North Americans need oil.In many places it is truly impractical to get to work, or even to the grocery store, without a car. Until families have time to adjust by reducing gas consumption, high prices will take a big toll.
Right now, it’s pretty difficult to adjust. Consider the housing market. It’s not very feasible to sell an energy-intensive house and buy something else with lower energy costs. As the housing bubble deflates, houses may not even be worth what their owners paid for them. And the problem may be worst in the outer suburbs where energy price worries are making home values fall faster. So some families are locked into homes they can’t afford—leaving them with high gas prices, and few options.
Compounding the problem, it’s often more expensive to buy in the dense, walkable neighborhoods where buses or bikes are a realistic option. So even if you could off-load your exurban house, you might have a tough time getting into a traditional urban neighborhood where you could realistically choose to trade a car for a bus pass. And while I admit that I take some small pleasure in seeing SUVs diminish in value, even that’s preverse: for most families, an auto is the second biggest purchase they make. It’s yet another financial hit.
If that’s not misery enough, the high cost of fuel is quickly propagating throughout the economy, driving up the cost of luxuries and necessities alike. It’s not just airplane tickets that are up because of oil costs — grocery bills are too.
Sure, in some alternate universe, rocketing gas prices could be a good thing. It’s just that we don’t live in that universe.
If, for instance, gas prices were rising because we had thoughtful and well-timed policy—an incremental carbon tax or auctioned cap and trade—then that would be one thing. If the public were capturing revenue from the price increases, and then investing in renewables, efficiency, and equity… well, then that would be reason to cheer.
But that’s not happening. Instead, oil companies are reaping huge profits from consumers who don’t have enough choices. It’s a financial blow to many families, and a knock-out punch to some.
Plus, high prices may not even be good news for the planet. Higher prices make carbon-intensive, environmentally destructive extraction a sweet deal—as the Canadian tar sands are already showing. Next up will be shale oil extraction in the Rockies and coal gasification, either of which is far worse for the atmosphere than what we’re doing right now. And no doubt, higher prices will amp up the pressure for oil exploration in Arctic wetlands or in the Yellowstone Basin.
It’s clear that we need to get unhitched from oil. It’s anathema to our economy and our environment. It will mean change: land-use change, technological change, behavioral change, and political change. The recent price spikes will stimulate some of that change, but in the most painful and least strategic way possible. The current hyper-inflation of necessities isn’t cause for celebration. For most families, it’s simply a tragedy.
Matt the Engineer
I agree with everything said above. But it’s really hard to feel an appropriate level of pity for those that will be soon suffering. Despite pleading using logic, calculations, and warnings about peak oil and lost commute time, a family member of mine bought a house in the exurbs for the abundant space she could have compared to the city. Her husband then bought a huge truck (again, despite my pleading) because it is “more comfortable” than an economy car. They now each drive an hour to work inseperate cars. They don’t have much money, and I’m sure they’ll soon feel the effects of their decisions.The same is true for many in the exurbs. A city house or apartment isn’t unaffordable – it will cost exactly the same as a house in the exurbs, if you’re willing to live with less space. It’ll cost much less if you can convert your commute time to overtime, reduce or remove your car purchase, and reduce your spending on products to fill your large exurb house.The exception to this is those that are already living in small apartments or 15 to a house in the exurbs. Those are the people without good options and whom I honestly feel for. (psst… your gas sign is a bit out of date)
Barry
I agree 100% Eric. Excellent post.A rapidly rising flat-price on carbon will cause massive hardship without solving climate change. Carbon riots before carbon cuts. Already happening around the world.The poor don’t emit much carbon compared to the wealthy. This is obvious on the global scale with 3 billion people competing for oil on global market with $2/day or less. They are losing out already, big time, on food, water, transport, lighting and security. But even if this poorest 45% of humanity stopped using fossil fuels completely and suffered accordingly, the global ghg cuts would be a couple percent. The only way to make significant cuts in ghg emissions is to create a system that leads to big cuts in the fossil fuel usage of the wealthiest folks. With research showing that 50% of global ghg emissions are caused by the wealthiest 8% of humanity, it is obvious who needs to make the biggest cuts. Consider that jet fuel has more than quadrupled in price in recent years and yet consumption of it is rising unabated at 5% per year. The globally wealthy are not cutting consumption because of price, yet math shows they must to solve climate crisis. Fortunately this same group can afford alternatives. But there are no policies on the books or seriously proposed that will force them to.We can’t just let the marketplace decides who gets fossil fuel based only on who can pay the most for it.
Milan
Pain through high gas prices is probably necessary, given that politicians in democratic states lack the courage to enact sensible long-term policies. The harm to families now needs to be weighed against the value of a strong signal that change is needed.
Scott
My wife and I live in a small apartment near downtown, just a few miles from our jobs. We often walk or bike. When we drive, we use small, fuel-efficient cars.I have been trying for years to get my family to choose an energy efficient lifestyle, but they have continue to choose large SUVs and pickups, and to live in the exurbs.I have to agree with Matt the Engineer. It is very difficult not to feel at least a little schadenfreude in this situation.
Eric de Place
Believe me, I am no stranger to schadenfreude! But, in fairness to the examples mentioned above, we are barraged by information. A couple of years ago there was a TON of credible-sounding hype about housing prices, and oil reserves, and so on. I think there are plenty of people who weighed the evidence and simply came to the wrong conclusion (or at least the conclusion that seems wrong now). Anyway, I’m not mostly mostly worked up about double-income high-earning households who suddenly feel the pinch. I’m far more concerned about the single parents, the immigrant families, and the lower-wage workers generally. It is really expensive to live in Cascadia’s three big metro areas. Prior to the gas price run-up, far too many people were going without health insurance (or with too little insurance); or were living paycheck to paycheck, or falling deeper into debt; or were choosing between school clothes for their kids and saving for a rainy day. It’s worth remembering that 1 in 10 people—and about 1 in 8 children—in WA and OR lives below the federal poverty line. And that line that is almost laughably low. More realistic measures of poverty and well-being suggest that something more like 1 in 6 don’t have enough money for necessities like rent, food, transportation, and health. They’re the ones who get hit the hardest. Sorry for the rant. I intend to do some more writing on this soon…
bryan
Hmm – for some reason I knew this when I graduated from high school (1983) and have based all my life decisions on lowest energy use. V10 engines cost a fortune to run? Commuting 50 miles a day is a dumb idea? Bicycles are cheap and healthy? 50 acre parking lots make neighbourhoods unpleasant?Gosh, whoulda thunk it? Whether you slept through high school or chose to ignore the data you had your chance, soa) get over it orb) buy lottery tickets and wait for someone to invent Mr Fusion.
SC
Wow. Congratulations on being right. But frankly, this holier than thou crap sickens me.Let’s face it; in Seattle (and many urban areas) the poorer you are the more difficult it is to get on a good bus route, walk/bike to work, purchase food w/out driving, afford a home, etc… What astounds me is the idea of “choice” and “I told you so,” running through these posts. When it comes to energy, “choice” is limited, esp. when you get outside of eco-friendly places. For work reasons (and health care and family reasons) I am getting ready to move to a region known for its sprawl with almost zero walkability– if I find a place to live that allows me to walk to work, it won’t allow me to walk to the grocery store, etc. (And the way the roadways are built make biking unsafe.) I am trying really hard to make my life sustainable and it’s looking quite difficult right now. So, a little less “I told you so” and a few more suggestions as to how to manage in areas that aren’t hip to a green vibe would be WAY more useful.
Colin Wright
Nice piece! I think those pro-high-prices writers you linked to will one day look back to this as their “Bring it On” blunder.The common theme is that the markets will solve everything. This is equivalent to the neocons believing that Iraq would take care of itself as if by magic. American hubris!
KB
Matt the Engineer, could you please share where you are finding condo, multi-family or single-family dwellings in the city – specifically Seattle – that are as affordable as a dwelling in a ‘burb like Tukwila or Snohomish? Last time I went looking for any kind of dwelling in the city near decent public transportation and necessary amenities for less than $300k, I came up with 400 sf or less condos. In addition to the mortgage, all condos and townhouses that I’ve checked out have a hefty monthly dues payment as well. Though I am a professional and earning more than the local median income, I’m currently living in an apartment because I can’t come close to purchasing anything within the city. I’d love to find out where the affordable city housing is!
James Geluso
You mention coal gasification as a terrible idea, climate-wise. I heard on C-SPAN a couple weeks ago some guy from Brookings saying that if we converted passenger cars to electric, even if we got all the power from coal plants, that would contribute half the tons of CO2 per passenger-mile. That seems like a great solution to me. It’s way too slow, but if we can convert cars to electric, that’s a first step. We can reap national security benefits of sending our money to Wyoming instead of Saudi Arabia (yes, that is an improvement) until we get our electrical grid off coal. We can perfect the technology and sell it to the Chinese, who also have coal to burn, and get them to slow down their carbon emissions. And we can start converting our infrastructure to more freight rail, more mass transit and shorter distances. And we can have fewer oil tankers on the seas. Aside from the in-country environmental effects of expanded coal mining, it seems like a winner all around to me.
cesar
Gas prices are going down…. Why airplane tickets aren’t??????/