Fantasia on Gas Prices
June 6, 2008
Today the price of crude oil jumped to $138 per barrel. As it is here in Wisconsin we have been hovering right below the $4 mark for a gallon of gas.. and I am sure that before long the price will creep higher. Tonight I am going to let a speculative mental bubble run wild. What if the price of gas rose to over $10 per gallon? I don't expect this to happen any time soon.. but how would this influence our way of life?
I imagine the ease of long distance travel would change dramatically. It will not be the case that prices for air travel rise simply in proportion to gas prices, so that for every dollar higher of gas prices the airlines charge customers an extra $25 for a flight. No, prices will get higher and then as fewer people travel the prices will no longer reflect the scale discounts that are built into the system. If gas prices really shot through the roof the price of long distance travel would increase exponentially. One result of $10 gas would be a world in which our assumptions about travel are re-arranged. The era of casual 36-hour junkets to exotic locales.. even for the wealthy.. would fade into the past.
We would see the advent of a new localism. The reign of Wal Mart and other box stores is a direct result of the ability of corporations to manufacture things abroad for very little and then get them to local outlets with almost nothing in the way of transportation costs. A steep rise in gas prices will put that basic globalizing business model at risk. Local food and local goods will begin to look more and more attractive. At what point would a local woodworker be able to make a bookshelf or desk that is cost competitive with the cheapies on sale at Wal Mart? Higher gas prices would signal good news for all the people who make things.
Our retail landscape here in America would be slowly re-arranged if gas prices were to hit something like $10 a gallon. The trend over the past decades has been geographical expansion and profligate use of space. Downtowns have become home to specialty shops while the real heavyweight stores lie on the outskirts of cities.. but before long those downtown stores will start to look quite attractive to shoppers. People will have to begin thinking about how much they drive each week.. and as soon as people have to consider whether they can drive as far as the local Wal Mart, local downtowns will see a boom.
The internet economy I see continuing unchanged.. or even growing in importance. Businessmen will use the internet for virtual meetings in order to avoid costly flights. Books and movies will be available in electronic formats. Crucially, in a world that will is experiencing a severe trend toward localization, the internet will be a force for keeping people in contact with each other and allowing the continuation of something like a global culture even as our ability to travel easily back and forth between countries gets more restricted.
All in all, these results are hardly negative.. although the strain and stress involved with getting to this new localism will be high. Some people may even start to wonder why our political leadership in times of plenty (say, 1994-2007) did not adopt policies that would ease the inevitable run up in gas prices. Why were developers allowed to line their pockets with profits from housing developments that would cripple our economy in coming decades? Why was public transportation not a bigger recipient of tax aid so that people could someday have the option of leaving their cars behind? Why were the wealthy allowed to box us into a landscape that is only workable with low gas prices?
None of this was impossible to foresee. This could almost be an argument for a strong and specific tax aimed at those who profited most from this sell out of America. And that is another prediction: people will be angry.. very angry.. at those who got us into this fix. The challenge for the liberal in the coming decade is not to let the real culprits squirm away from their guilt by the usual moral equivocations and fuzzy numbers.
