Five Dollar Gas?

Yes sir.

I wrote a post a long time ago about how gas would hit 4 dollars a gallon and some of the consequences I thought it would have on the driving habits of most Americans. Well courtesy of Adam’s blog here is a photo of 4 dollar gas as a reality in California.

Well here is my next prediction, 5 dollar a gallon gas! And maybe even 6 dollar a gallon. The Washington Times is reporting that 70 percent of Americans see 5 dollar gas as a foregone conclusion. What does all of this mean? Here are a few things.

1. Gas is only going to continue going up, maybe until the end of next year. If you believe the forecasts of some of the largest financial institutions then don’t be surprised to see 200$ a barrel oil by the end of 2009, and this is without any major eruption of violence in a oil producing nation. All of this reminds me of only about 14 years ago as a little kid visiting my grandparents in Kansas and going to fill up with my dad. Gas was 87 cents a gallon. Those days are long gone and the developing world now has an unquestionable hunger for America’s greatest addiction.

2. People will travel less. This is the reality of the situation. When it costs even 50 bucks to fill up a mid-size car people will begin to think twice about where they drive and how. This should be an interesting cultural development in suburbia and church activity participation. I am sure this will begin to factor in for many as decide how to spend their free time. I would not be so dramatic about this if food costs and health insurance are making the margins for the American family smaller and smaller. For many a few elective driving trips will become the financial tipping point.

3. The end of the gas-guzzler. News report after report is saying that SUV’s and trucks are lagging in sales and wasting away on the lots of car dealers. Ford has already reported that they are diverting away production activity from their truck SUV line to small compact cars. Anecdotally, I heard a guy next to me at the pump last week cursing the whole time he was filling up his Dodge Ram. His total came to 103 dollars! We made eye contact as I was filling up our Honda Civic, I could tell he was coveting my Civic and just laughed as I drove off after filling up for 36 dollars. This story is being repeated all across the country as people with massive trucks are having to chose between making the payment and driving them; they can not do both.

Why do I spend all this time writing about this? Because it is a great example of how American policy is much like most families; they wait until the problem is here before they worry about it. This gas problem has been a long time in the making and yet as a nation we have ignored it and kept consuming recklessly. We are doing the same thing with our nation’s oncoming Social Security problem. So now as a nation we will have to spend the next 10 to 15 years in this rut as we wait for new technologies or fuel supplies to have a national impact. So in the words of Mellencamp, “This is OUUUUUUUR Country!!!”

ryan

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9 Responses

  1. Right on! Politicians too busy arguing. They can’t get anything done. This check and balance systme we have only leaves room for argument.

  2. My windshield received it’s second crack from it’s second rock just this week. The serviceman for the job had to drive to meet me at a distance of about 50 miles. His comment to me had to with buying a horse to replace his brand new Chevy pickup. I never thought that I would associate the smell of new car with grief for having to drive it. With these thoughts in mind, I am appreciative for the comments made below from the post above:

    “Those days are long gone and the developing world now has an unquestionable hunger for America‚Äôs greatest addiction.”

    “Because it is a great example of how American policy is much like most families; they wait until the problem is here before they worry about it.”

  3. Chris good to hear from you. I will get you that info on the church in the next day or so. Keep in touch and let me know how the job hunt is going.

  4. We are a stupid country now. Within our own borders exists 1000-2500 year’s worth of oil. But we have hamstrung ourselves from using it, and will spend the next 20 years paying for the last 20 years of regulatory stupidity. Eventually we will wake up, but not before massive unemployment, actual, real economic depression (and not these slow-growth periods like we’ve had recently) and a whole host of other consequences.

    Oh well, it had to happen eventually. World powers nearly always fall from within.

  5. Confession…
    I drive a 2004 Honda Element (picture a silver toaster). I love our car it is great car for our family and is pretty practical even if it is a small body SUV. I was talking to a mechanic friend who told me that my toaster actually gets about the same gas mileage as an Accord. That being said, my toaster requires 87 octane gas. Not a big deal until I pulled up to the pump this afternoon in Highlands Ranch, CO not far from Ryan’s house and saw that 87 octane was $4.02. I hate my life…
    Brad

  6. “Stupid” is too harsh. Maybe “illogical” or “insane” would be better words for what we are.

  7. When congress passed the law back in the 90s (I’m not going to pretend to be smart enough to say which law it was or what it said, but for the sake of this point, go with me that there was a a law that said something) about increasing fuel economy in cars sold in the States, American and Japanese automakers had two different reactions.

    American automakers hired thousands of lawyers to dispute and eventually reverse the ruling.

    Japanese automakers hired thousands of engineers to work on the problem of high fuel consumption.

    Somehow in winning, we still lost.

  8. Excellent point Jake. Truth is that Ford and GM were highly resistant to fuel efficient cars because their profit margins were enormous on SUV’s and giant Trucks. They hated the idea of having to develop new technologies for smaller cars with a smaller profit margin. So they buried their head in the sand and hoped the gravy train of monster vehicles would last forever. Kind of like many people who saw all dire consequences awaiting stupid lending a few years back, but pushed ahead because the profits were so great.

    At least Ford caught on a little sooner than GM and began ramping up their R&D a few years ago on mid-size cars and is making some pretty competitive products now. The ford Focus for example, has been highly rated, up there with the Civic the last couple of years now. But the fact still remains American car makers (all though there is really no such thing) are a number of years behind their Asian counterparts.

  9. Detroits-DeTuned Dogs. and we Americans couldn;t get enough of them, despite being grossly over priced for the lesss than stellar quality and gas mileage.

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