Saturday, August 13, 2005

Over a Barrel
For much of the summer, The Mrs. and I had been planning to spend this weekend with the family at the lake in southeastern Michigan. It's about a two-tank trip each way. The last time we made the trip, over Memorial Day, the price of gasoline was around $2.10 a gallon. But the going price on the west side of Madison went up to $2.59.9 yesterday, an increase of 20 cents in less than a week--and that means it would be even higher in Michigan. So we decided to stay home--because it just would cost too much to go.

All the while gas prices have been rising in the last year or so, I've been wondering how high they'd have to go to make me drastically alter my driving habits. Yeah, we canceled our planned trip this weekend, but what would it take to get me to alter my more mundane driving routines--the quick trips to the convenience store for caffeine or the mid-afternoon clusters of errands that get me out of the house. The answer seems to be "more than $2.59.9." The Mrs. and I make a decent living, and we can still afford to drive. I work out of our home, and she could take the bus to work, but using a monthly pass would still cost something like $2 per round-trip. That's still more expensive, at the moment, than driving her fuel-efficient '95 Ford Contour, and that doesn't include the cost of her time. It's nearly an hour each way on the bus from out here in suburbia to her office downtown versus a 20-minute drive. But if gas should get up around $3 a gallon, the bus would become a more attractive option to her.

I recall reading somewhere that some analysts think the price of oil could reach $100 a barrel. This week's gas price spike came when it set a new record price above $66. That price is about double what it was last August. If oil added another $33 a barrel and gas prices went correspondingly higher, the price would be pushing $4 per gallon. That price still wouldn't be as high as it is in Europe, but it might be enough to curb my routine driving, too. And if I had to bet, I'd say that I'll probably get the chance to find out.

(It's hard to believe, but even the current prices, when adjusted for inflation, still aren't as high as they were early in 1981, when I was horrified to pay $1.30 a gallon. We'll pay $1.30 a gallon for milk before we'll pay that little for gas again.)

Newspapers around the country have picked up the story of the poll of consumers that suggests many are beginning to worry about the impact of high gasoline prices. (Wisconsin State Journal version here; Milwaukee Journal Sentinel version here, both with appropriate local color.) The people I feel great sympathy for are those on fixed incomes--the high prices fall on them first, and hardest. The people I feel no sympathy for are those with monster SUVs. How do you like your nine-mile-per-gallon status symbol now, Mr. and Mrs. Hummer? It would have been cheaper to have your net worth tattooed on your foreheads.

The skyrocketing price of oil does more than make driving more expensive. As manufacturers and other businesses absorb fuel-price increases, those increases will be passed onto consumers in higher prices for damn near everything. And the cost of heating a home this winter is going to be monstrous. I'm no economist, but I know that the pivotal role of oil in the American economy makes it one of the pillars on which the economy rests. If the price goes uncontrollably sideways, we will be uncontrollably screwed. And we might find out how screwed a lot sooner than we'd like.

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