Positive Energy

Sunday, May 16, 2004

Gasoline - Still Too Cheap

The price of gasoline is high now, staying high, and may get higher. We can do something about it, but we don't want to.

Gasoline prices wobble up and down, causing all sorts of consternation that sells newspapers. People are filling up and driving off without paying as an act of defiance. There are better ways to do this.

Gasoline is a minor expense item for a conventional household - about $2000 per car. Restaurants and movies cost twice as much, while rent or home ownership costs five times as much. The car receiving the gas depreciates by this amount, $2000, every year. So if you really want to be concerned about your expenses you won't put gasoline at the top of your reform list.

Gasoline is too cheap to begin with, which causes waste. The cost is low because ships can deliver oil all over the world without any concerns about piracy. The US Navy keeps the sea lanes open, at a cost that is not fully reflected in gasoline's price. The cost is low because we do not account for pollution. We pay for gasoline with itching eyes during smog alerts, and with shorter lives. The cost is low because we do not tax gasoline enough. The European approach indicates that higher gasoline taxes will be tolerated, but we don't like to tax the rich people who own cars. And the cost is low because oil is sold too cheaply. Keeping the price of oil low makes a few people rich, and makes the consideration of alternatives appear too expensive, which preserves the current social structure. All these factors are subject to change, in fact very rapid change, which can lead to improvements in our way of life. So it is possible to view gasoline prices as too low now, and the coming increases as an indicator of progress.

The gasoline consumer can react to these higher prices in various ways - the most obvious being car-pooling for going to work. This will reduce your gasoline expenses by forty percent, saving more than the recent price increases have cost. So the price increase could be an event that increases your wealth. The difficulty here is the social adjustment involved - schedule coordination, music selection, rekindling the art of conversation, being affected by other people's issues. It would be a big change, though I would argue a positive one.

And with a slightly longer term view, knowing that gasoline prices are heading in one direction, you can switch over to an electric car. Much cleaner to run, simpler to maintain, and more interesting to own. You will have lots to talk about during that drive to work.


  • There are psychological factors, too. Many drivers believe or feel that have a right to drive, so even if they were convinced by arguments such as these, they would still be very resistant to change their use of automobiles.

    I think this is very much a North American thing. Our civilization and the automobile grew together. "De-carring" our society will be a difficult operation -- like the surgery to separate conjoined twins.

    Dave Edwards

    By Anonymous Anonymous, at 16 May, 2004 15:46  

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