Wednesday, May 7th, 2008
Over a lovely week-shifted Mother’s Day breakfast last weekend we had an interesting conversation about gasoline prices and the price of flour. My father told a story about a baker in Door County who was closing his doors due to the recent price jumps in flour. Two years ago a bag of flour was $6, a year ago that same bag was $12. The price of the same bag of flour currently sits at $67. Gas prices invariably figure into this primarily due to two factors: transportation costs across the board have increased, and a much larger percentage of arable land is now being used to grow corn for ethanol production purposes.
Talk turned to the specific pains caused by recent surges in the cost of gas, and I mentioned that I haven’t even noticed what with not having a car anymore. There wasn’t any detectable hostility at the table, but I suspected I was being somewhat of a boor in broaching the subject. Indeed I’m very lucky to be able to work from home, but my point was less about finding a job that doesn’t require a commute and more about modifying your lifestyle. It’s about not living 50+ miles from your work. It’s about living in a community where it doesn’t take a car and a 20 mile round trip to get your groceries and errands.
Both in private and in public I’ve often wondered just what it would take to fundamentally change the majority of Americans work/leisure habits with regard to driving, especially long distances. A few years back I naively assumed that $5/gal gas was sufficient to shock people into lifestyle change. As gas now tops $4/gal and I hear nothing but wails about the ‘evil oil companies’ (more on that below) I’ve revised my thinking that $10/gal would be the National Freak-Out Moment. This morning, however, I linked through one of my RSS feeds to this post by Charlie Blaine. He projects Freak-Out USA at $7.50/gal:
Gasoline at $7.50 a gallon is something nobody should go into denial over because there are going to be big problems from prices at levels I’ve suggested, including:
Will there be any U.S.-based auto manufacturers left? The answer depends entirely on how fast they can transform their product lines. Chrysler is in deep trouble already. That probably means more stress for the Midwest.
Will there be any domestic airlines left? The so-called legacy airlines (American, United, Northwest, Delta and Continental) would either try to combine into one big carrier or simply disappear. They’re having serious troubles surviving as it is. This means big troubles for cities where these airlines operate hubs that generate thousands of jobs like Atlanta, Cleveland, Newark, Houston, Chicago, Denver, Dallas, Memphis and Minneapolis-St. Paul.
How will big convention cities survive? Places like Las Vegas, New Orleans, Atlanta, Chicago, New York, San Francisco and Houston have thriving convention industries, all built around the capacity of airlines to transport conventioneers to and from the destinations relatively cheaply. Emphasis on the word “cheaply.”
How will tourist destinations like Florida or Hawaii cope? Add to that places like, say, Williamstown, Mass., whose Williamstown Theater Festival is a big draw, or Ashland, Ore., home of the Oregon Shakespeare Festival. They’re not close to major cities.
One thing I see over and over is the gnashing of teeth about the oil companies and their exorbitant profits while America crumbles. I don’t harbor any ill will towards them– they’re entire livelihood is screwed soon enough as oil supplies dwindle. I would imagine that in the next 10 years or so the oil and airline industries will be nationalized; what other choice will they have? With razor thin profit margins (once the average American can no longer afford their products) or even losses there will be no incentive to stay in business from a purely capitalistic point of view. Yeah, yeah I’m expounding on economics as if I knew anything about it; it’s simply my cynical take on things.
I’d rather turn all this flailing and anger about driving to the mall to buy salad-shooters into productive activity based on ratcheting down the globalism and outsourcing that have driven so much work out of the country, and forming productive communities again. It won’t happen overnight, but we need to focus on the problem at hand rather than storm around.
