Friday, June 27, 2008

WSJ: $7 gallon gas

The Wall Street Journal
June 26, 2008, 11:12 am
Oil Shock: Analyst Predicts $7 Gas, “Mass Exodus” of U.S. Cars
Posted by Keith Johnson

Oil at $135? That was just the opening skirmish in the “peak oil” wars. The latest smart money? $200 oil in 2010, with gasoline at $7 a gallon. And that is going to turn Americans into car-shunning Europeans once and for all—poor Americans, at least...

Oil, of course, was actually in the $140s today. This chart accompanied the article:



...Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today—a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks.

And who will be parking their cars? The 57 million American households that have both cars and access to something resembling public transit. Gasoline at $7 begins to approach prices Europeans have paid for years, meaning that chunk of America “will start to act more and more like Europeans,” Mr. Rubin says. Not soccer moms in a minivan—soccer fans, searching for tokens:

Our analysis suggests that about half of the number of cars coming off the road in the next four years will be from low income households who have access to public transit. At their current driving habits, filling up the tank will have risen from about 7% of their income to 20%, an increase that will see many start taking the bus.

Gas prices already appear to be reshaping suburbia. But what Mr. Rubin is predicting is a far bigger shock to the American system. Europe has had decades to develop a society based on expensive energy. What will happen if Americans suddenly are forced to shoulder European-style energy prices — but without the European-style society to cope with them?


Exactly what I've been asking all along. Reshaping suburbia? More like abandoning suburbia. Wages are 20% less than what they were in the 70s, as previous posts have shown. We can't cope with gas/diesel eating up so much of our budget that we're spending more on gas than on groceries. Our grocery bill is already outrageous.

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