A few years ago, many were screaming ‘the day it reaches $1 a gallon is the day I start walking” but $1 a gallon is already just a fond memory, some story you will be able to tell your grandchildren about in a few years. The highly respected financial analysts’ CIBC World Markets believe that $200 a barrel is less than two years away, which equates to $7 a gallon. The Saudi oil minister said in a speech in May that he predicts $250 a barrel ‘in the near future’.
At that price, we will easily slip through the $10 a gallon psychological barrier, but psychological barriers have been falling like dominoes over the past couple of years. Will the $5 barrier stop people driving? two years ago millions would have said there is no way I will drive if it were that price, but as that price actually looms ($5.01 at a handful of California stations on July 19) will people again back down and learn to live with it?
Anyway, $7 and $10 is a long way off, no ones actually paying that now, it might never happen.
Well you can say that but for some it is already a reality, in the UK, New Zealand and Japan it is already over $8, Denmark Eritrea, and Finland are nearer to $10, but all that is small potatoes compared to Sierra Leone, which back in May posted the worlds highest gas price at $18.43.
If you are looking for the ideal location for your gas guzzling pickup you could try Iran, Egypt or Kuwait where gas will only set you back around 50 cents. There is one other option, we could all drive our Humvee’s down to Venezuela and enjoy 12 cents a gallon.
Those that believe that all this is outside of the oil company’s control and they are as much victims of world events as the rest of us, should consider that Exxon Mobil recorded their highest ever annual profit of $40.66 billion in 2007. And if that wasn’t enough they also now hold the record for the highest ever quarterly profit for any US company, at slightly below $11 billion that’s just under $1billion a week.
But will all this actually stop us driving?
There is some evidence that Americans are beginning to cut back on the overall mileage they run up each month. Government figures claim 10 million less journeys last month. There is a renewed trend towards staycations (stay at home vacations) for this summer, with an estimated 20% more American families choosing to stay at home and travel to nearby destinations and then return at the end of the day. Remember those European gas prices; the staycation is believed to have jumped up a massive 58% in Europe this year because of gas prices, perhaps an indication of things ahead for the US.
Nascar announced earlier this month that they were suffering a definite fall in attendance, which they believed was a direct result of the economy and gas prices. With race fans, not wanting to pay nearly double, what they paid last year to travel to the tracks. The New Hampshire Motor Speedway announced that all 100,000 tickets for the race in the first week of July had been sold but on the day, it was evident that they were no where near capacity, indicating that many fans had abandoned plans to travel since buying the tickets.
One area where drivers are showing a lot of resistance to saving on gas is by not car pooling. In 1980 20% of all workers car pooled a decade later despite advertising and a government push, the numbers had dropped to 13%, by 2006 it was less than 11%, this year is expected to see a rise for the first time in nearly 30 years, but by only around 6%.
Will increased MPG save our driving habits?
Over the past few years new innovations in vehicle propulsion combined with lightweight composite car panels and parts has increased the average MPG of many vehicles. However, massive sales of big SUV’s and pickups over the last decade have eroded the average MPG gains for all vehicles on US roads. In 1987, the absolute average for all cars and light trucks on US roads was 26.2 MPG twenty years later with all our technical innovations that has risen to only 26.7, a rise of only half a mile per gallon.
Will new fuels let us keep driving?
As little as 18 months ago bio was the magic word, biofuels were going to save our motoring lives by avoiding having to deal with all those annoying OPEC nations. That was before anyone had bothered to calculate just how much land would be needed to grow these fuels and if we did grow so much biofuel where would we grow the food. That has now been answered with massive worldwide price increases for all basic foods causing riots in many nations as people stopped worrying about gas prices and started to worry about starving.
It is clear that at the moment despite the promise of hybrid cars, solar powered buses, hydrogen powered vehicles, electric trucks, and a whole range of alternative fuels. We are simply too far away from a realistic short term solution. There is going to be a time gap between gas prices that we can afford and the perfection of a new propulsion system that will allow us to again have total driving freedom.
We are going to have to adapt, we are going to have to deal with tiny cars, car pooling, actually planning trips to the supermarket to fit in with other activities, increased use of public transport. At the moment we are in denial, we will quit driving when gas reaches $5 a gallon, or $10. We will have to come to terms with the realities that are staring us in the face; we will have to adapt our driving habits or learn to live without our beloved cars.