The Oil Outrage

The nationwide outrage over gas prices is interesting on several levels. Reading the Journal-Sentinel’s coverage of the recent spike in gasoline prices I was floored by three themes: the utter ignorance that the people interviewed had towards the oil market in general, the shocking suggestion that the suburbs don’t hold The Answer to happy living, and the general hint that conservation holds the key to the future.

It’s strange in reporting on the effects rising gas prices have on the personal and business interests of Milwaukee, the newspaper makes no mention of the reasons why prices are so high. It’s certainly not a mystery of the universe; instead it’s based on the fundamental economic idea of supply and demand. To review how America got into this mess in the first place is certainly beyond the purpose of this post, but for a 10,000 foot overview I suggest reading this post by Kevin Drum on the now-cresting Peak Oil problem. To summarize his point:

Oil production will almost certainly surpass 84 million barrels per day as new fields come online in the future, but demand is going to increase right along with it. Thus, unless there’s a global economic shock of some kind, it’s likely that demand is now permanently equal to supply. There’s no spare capacity left, and there never will be again.

This mean that we’re now living in a different world. I’m not sure what all the ramifications of this are, but one thing is pretty certain: the next oil shock — and there will be one eventually — is going to be worse than any previous shock. Fasten your seat belts.

I should note that the oil shock he describes is not what we are experiencing right now. Oil today stands at around $65 per barrel, which around here roughly translates to $2.85 per gallon. Assuming a linear increase of gasoline prices compared with crude oil prices (which is a best case scenario,) imagine what it would be like if oil went to $100 per barrel or $300 per barrel in one day due to a terrorist attack on a refining facility or a hurricane wreaking havoc on the platforms of an offshore oil field.

Imagine what would happen, realistically, if gas were $5 per gallon or $10 per gallon TOMORROW. How would your life change?

The American media’s stubborn desire to interview “common folks” about how gas prices are affecting them without explaining the root cause in their coverage is leading us to an intellectual dead-end. I’m continually reminded of the White Guy Who Walks Right At The Trouble, portrayed in Cedric the Entertainer’s comedy act. “WHY DIDN’T ANYBODY TELL ME?” the white guy exclaims. I think that come $8 per gallon gasoline, the public will be asking the same question with the same level of indignation.

So now, to the suprises that I found in the article.

Americans love their suburbs and exurbs. They love not living anywhere near where they shop, where they play, and where they work. I used to think the American Dream was a two story house on a quarter acre out in the suburbs, with no sounds, no traffic, and no people around to bother me. Wirkuswhazz and Cal always took the opposite view, and I never understood what drew them to living in the urban environments. I believe I’m starting to understand now. I drive 20 miles each way to work every day; Wirksu rides his bike. I generally feel like we don’t live in the suburbs. We’re close enough to various commercial areas that we can walk to eat, grocery shop, go to the hardware store, go to Best Buy, Costco, etc. It’s not high-density living, but it’s certainly easier to walk to places than where my parents now live. Wisconsin has very few high-density urban areas. Madison and Milwaukee are probably the only two, and its tough to call Madison truly urban, though they make up for it by having a highly pedestrian-friendly layout. Milwaukee and its many, many suburbs scream its inhabitants disdain for urban living, which is why it blew my mind to read the following in the Journal-Sentinel article:

Hartling has scuttled a regular summer trip to Six Flags Great America because of the gas increase and is urging her 23-year-old daughter, Aliceson, to buy a hybrid car to get better mileage. She said she wishes there was a more economical way of getting around, but in the rural swath of Waukesha County where she lives she has no choice.

“If I lived in the city would I be riding a bike?” she asked. “You bet!”

Rural Wisconsinites questioning whether unneccesarily living miles from everything is a good idea? This absolutely floored me. Now, one person’s opinion in an interview (and not a strong one at that) does not a movement make, but I have never seen this kind of thinking in the general coverage of “gas prices are rising, what will YOU do?” coverage.

The ultimate question surrounding America’s love of cars as symbols of wealth and freedom has always been: at what specific gasoline price do cars go from being an asset to a liability? What cost per gallon would cause America to pause and look at the amount of money it pours into the Auto Industry in pursuit of status and freedom of movement and say, “Is it worth it?”

We’re certainly not there today, but as the “man on the street’s” answer strays from the “I guess I’ll just pay higher prices” phase through the “I’ll have to stop going places for fun” phase and towards the “if I lived closer to everything I needed, I wouldn’t have to drive as much” phase I think we’ll see a common wisdom shift towards more conservation. Not because it is being forced the populace by the government, but because people wake up to the idea that they can conserve all by themselves; that they have the ability to bring their own costs down by making certain lifestyle choices. You can certainly see inklings of it in today’s coverage:

Pam Hartling said she’s made adjustments in light of the ever-rising gas prices, but she still drives a Chrysler minivan from her Town of Waukesha home.

“I think about combining errands,” she said while pumping $36.91 of regular unleaded at $2.60 per gallon at the Speedway on Waukesha’s E. Sunset Drive. “But I don’t think there’s a lot that you have control of. I certainly wouldn’t buy a Durango.”

Hartling has scuttled a regular summer trip to Six Flags Great America because of the gas increase and is urging her 23-year-old daughter, Aliceson, to buy a hybrid car to get better mileage.

Price are “ridiculous, but what can you do?” Ray said as she filled up her Dodge Dynasty.

She said she puts $10 worth of gas in her car every three days. She said she now wishes she had purchased a smaller, more fuel-efficient car.

At the BP station on E. Wisconsin Ave. in Oconomowoc, Tom Johnson of Racine put 16.6 gallons into his Toyota Camry. The $45 it cost put a dent in his wallet, but not as much as if he drove the Lexus SUV he left parked at home.

“Since public transit isn’t an option and carpooling is hit or miss, I don’t have much choice” but to pay whatever gas costs, Johnson said. “At least I can drive something that gets decent mileage.”

Now for a little Bush-bashing, just because it’s so easy in the context of this article.

The article strays several times into rhetorical idiocy. Apparently, the common wisdom is that there is a gigantic pot of oil somewhere that we could get a greater share of if only the mythical Somone would do it. The media does little disabuse the populace of this common wisdom.

“I guess we’re going to have to get rid of the cars or park them and not use them,” he said. “Somebody should do something about the price, to get it down where people can afford it.”

To conserve money, Hernandez put in only half a tank. She said she has also started carpooling.

“I still need money to live off. It’s very frustrating,” she said, adding she’d like to know the reason behind the high prices.

The reason is simple: George W. Bush is an oilman. His biggest donors are oilmen. Coincidentally, oil companies are posting record-breaking profits every quarter. Have you heard George W. Bush’s solution to the problem? Drill in Alaska. I’ll ignore the environmental argument here and drive straight to the reality-based argument. If they started the process of drilling oil in Alaska TODAY (building the infrastructure, scouting drill points, etc.), we would not get any precious gasoline for years and years. Drilling in Alaska does not solve today’s problems, but funny thing, it would put more money into the oil companies’ coffers in the future. Imagine that.

So, to conclude, I hate the man-on-the-street interviews. “Why oh why are gas prices going up? It’s causing me so much hardship!” people exclaim for the cameras and reporters, but the well-coifed TV reporters never answer the question. They parade the financial problems that the system causes, yet never deign to explain to the common folk how the system works or, more importantly, what is causing it to freak out right now. On the other hand, so many of this style of interviews are done by so many different media companies that it does give one lots of anecdotal information in order to zero in on the current state of Public Opinion. As that Public Opinion starts lumbering away from its previously held addiction to the sweet, sweet juice of commuting 50 miles in from the suburbs daily, it could signal a greater change in store for the American City once Peak Oil has its way with global gasoline prices.


11 thoughts on “The Oil Outrage

  1. federal government should only do 3 things in my opinion… unified defense system, unified free public transportation system… costs are fixed for necessary capacity public transit… sort of like bandwidth on the internet. thus it should be taxed per person and everyone gets unlimited free use. then establishing and maintaining a national currency. after that, everything should be at the state level. that is the smart way to run things, and oil use could be almost completely removed from day to day life. the way i understand things, 70% of power generated is lost in transit… if that is such a big problem anyways, why can’t we put like 100 nuclear power plants in the middle of nevada and just run cables everywhere… lose a shit load of power in transit, but who cares… you have an unlimited supply.

  2. 1. Why is the RAW diva seach settled with an American Idol-style phone call poll and not a wrestling match?

    2. What if the gov jumped the gas price to say 12$ a gallon and used the extra tax money to develop better hybid and public transporation? That would never work, huh? Even if they calmly explained the plan to the public, would it?

  3. W-whazz, your idea is a little too socialist for my tastes. I think as gas prices rise the market itself will move toward better hybrid cars and public transport. Car companies already have a lot of technology to make better hybrid cars, but the development costs outweighed the number of people that would actually buy the same car for $10,000 more because it gets 10 more miles per gallon. The higher the cost of gas the closer the lines representing gas price vs. hybrid car price will be on the economic graph. One day they’ll make an SUV that will get 40 miles per gallon because the market will require it. 50″ Plasma TV’s were like $15,000 when they first came out and now they’re about $4,000. It was the initial development costs that made the first ones so expensive. Same shit with computer software and pretty much any cutting edge technology. While I think high gas prices are currently an econonic problem for the country, I don’t see it as a long-term acopalypse type problem, because there will be just as much money to made in saving people from high gas prices.

  4. In terms of automakers, it seems the problem is they are just too content with the status quo. A few years ago I read some stories that indicated that auto makers could produce cars/SUVs that got much better mileage (10+ more MPG) using current technology and for very little, if any more money. Not sure why that hasn’t happened more.

    I was a bit miffed when I did the math and found my Matrix has only been getting 28 MPG city/highway average.

    We’re on a bit of a hunt to move closer to downtown Madison…

  5. 1. I’d hesitate to say that it’s the government’s job to move America along towards more efficient autos, but it’s realy academic under his Administration; they simply won’t do it. I actually think that hybrid cars won’t do anything in the long run. If gas prices jump faster than inflation can keep up (let’s say $10/gal in two years) then you’d be choosing between $140 for a tank of gas for a hybrid and $220 for a tank in a Chevy Tahoe. Either way its damn expensive. In this way, I think the long view maintains that we fund more public transportation (Scientist’s view) and build more efficient city models (get rid of the far-flung suburbs). Face it, we ain’t finding any more huge oil reserves.
    2. The Niners/Raiders game last night was interesting. Anyone see it? Oakland’s third-string QB was actually really good.
    3. Even though they supposedly use American Idol-call ins, I’ve read a lot of rumors that suggest the whole thing is worked. There’s fine print in the Diva Search contracts that says the WWE can change the way the winner is decided at any time at their own discretion, and it has slipped out that sometimes people who did not get the highest vote total were the winners for that week. They basically play it so that there’s always a “heel” diva. Fucking retarded, but doing fake shit is the WWE’s bread-an-butter.
    4. I didn’t mention this in the post, but it really pisses me off when people go fanatically hunting for the best gas prices. They pass up 12 stations at $2.90/gal to go to the one that is $2.88/gal. The difference in my Tahoe is $0.44; it would be far less for a Camry or Accord. Not only did you use a chunk of that difference in gas you have by driving around looking for the best price, but if you bought a candy bar at the gas station, you just ate up all your profits. Dumb.
    5. I’m down for survival; does Scientist still have that half-assed website he set up? Can’t remember the web address.

  6. hybrid cars = dumb. textbook definition of a bandaid solution. hey look, i’m a crack addict, well, jimmy, how about you start smoking 2 less crack rocks a week. that will solve the problem, right? dumb. the entire idea of ROADS and SINGLETON self propelled vehicles is right out of 12th century history. it’s dumb. did you guys see that special on the history channel about this thing they are going to build in japan that is an entire city in a building with a very awesome transportation system built in? it was a super high rise, but every “level” had a huge park in the middle and open air. it would easily be the biggest building in the world i believe. that is where we should be working towards. i think i deleted all that football stuff. WHOOPS. anyways, if people aren’t willing to unify on my solution, renewable resource powered vehicles is the obvious step… hydrogen fuel cells. gas is just as high in MN… cost $40 to fill up the ack yesterday. R U JOKIN ME?

  7. government has already done similar extra taxation without representation on cigarettes… so i think coming out and saying, “look at our new public transporation system… it will cost 650 billion dollars to build and 10 billion dollars a year to maintain. surprisingly this is cheaper than our current roads, so it will work out for the people in the long run. to initially fund the project as well as begin the crossover process, there will be an additional $1/gal tax on all unleaded gasoline.” now you have a HUGE extra problem. what about gas used to move goods and services around. if you hamper that, you totally fuck up the economy… so i guess you would have to have an exemption on commercial vehicles, but then you just opened the can of worms. what i don’t understand is why do we still have a zillion semi trucks driving around? didn’t we invent trains like a million years ago that can haul 5000 times as much cross country with 1 engine car? people have just exploited this road system for way too long… we aren’t doing things the smartest way possible, and that, by definition, is the dumbest way to do things.

  8. staying in the shade of any amount of dumb is totally dumb if you can see the light of smart.

    -madd scientist 2005

  9. Another 4th place in a sit’n’go. I almost made the money when the extreme short stack went all in in the small blind. I called in the big blind with A2c and the button called. We checked it down and the all-in won to triple up with J9. He went on to knock me out when I had AQo in the BB and he had AT. Hit a ten on the turn and CYA. Fourth fucking place again.

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