Tuesday, October 30, 2007

Rarity!

I'm gonna go and disagree with Matthew Yglesias on this one:
Hybrid cars are already available on the market, are much more fuel efficient than conventional autos, and with the "hybrid premium" standing at a few thousand dollars and falling, it seems obvious that if drastically higher fuel prices emerge, middle class suburbanites are going to respond with slightly altered consumption habits (more expensive cars, fewer plasma TVs and granite countertops) rather than radical lifestyle alterations
I don't want to over-state this, because I've argued against oil-catastrophism for some time. But, there's an obvious point to make that current hybrids are not, relatively speaking, "much more fuel efficient." The Prius, in normal driving, is about twice as efficient as a comparable non-hybrid. Meaning, in absolute terms, my fuel bill would only be advantaged until the price of fuel doubled. In the US, the price of regular gasoline has doubled, roughly, since 2004 (Excel link!). And, if you grant that we're at or near peak oil (as Matt seems to, albeit optimistically) then the rate of price increases can be expected to accelerate. Meaning, in the lifetime of your average car purchase (8-12 years) a hybrid bought today would still see it's owner's fuel costs be many multiples of what they would otherwise have paid.

So households could still face severe hardship, even if they make the "right" choices. A rapid quadrupling of gasoline prices would be roughly what the west saw in the mid 1970s, and would begin to eat up a significant chunk of a household budget (12% or more. Currently, the average is about 3%) And those who make the wrong choice -- often because they took bad advice from bad people (housing bubble, anyone?) -- are going to be punished severely, and this fraction of the population can be quite large indeed.

Now, like I said, I don't think this needs to be catastrophic. But somebody mentions the example of many European countries, where gasoline is more expensive now than it will be in North America for the forseeable future. This is true, but look what it's meant -- a large and efficient high-speed train network, people commuting largely on mass transit, and more people living closer to where they work. The built space of Europe is far more conducive to car-free or car-lite living, and it's taken decades. (And Europe was already more car-hostile when the oil shocks came around, meaning it was easier to turn around!)

What Matt says is true, in one sense: people will make different choices about how they live -- where possible. But in many places, it simply isn't possible to live close to where you work, or possible to drive less when gas prices increase. (Most driving really is "essential" for suburban families, in that they can't immediately choose to not drive to work, or not get groceries.)

The fundamental problem with peak oil, like climate change, is that the range of effective individual actions is really very small absent policy change. In fact, it's almost zero absent policy change. Which means, like climate change, the answer to peak oil is going to rest in large part on the people we elect and what they elect to do about it.

With intelligent policies and decent-to-bold leadership, I think that peak oil need not be a disaster. But like oil, intelligent policies and adequate leadership seem to be a resource in decline.

5 comments:

odograph said...

Good post, but I'm always wary of "comparable non-hybrid" thinking.

A Prius, with 50 real-world mpg (42 mpg with a 17' sea kayak on top) may be a much bigger (or smaller) improvement, depending on where you are coming from.

... it triples a For Explorer's real-world 17 mpg (no kayak)

NonyNony said...

odograph -

What I think John is saying is that that doesn't matter if the price of fuel QUADRUPLES.

The point here being that if the price of fuel quadruples and middle-class suburbanites switch to driving a Prius (or some other hybrid) to save on fuel costs they're still objectively worse off financially than they were before the price of fuel quadrupled. And that Matt's idea that this will result in "slightly altered consumption habits" rather than "radical lifestyle changes" doesn't take this into account.

I tend to agree with John - this would be a big hit to the Midwestern US lifestyle. And it'll be a domino effect. Our economy in the US is built on consumption - if middle class suburbanites stop buying granite countertops and plasma TVs and devote more of their budgets to higher priced fuel, food and clothing, that'll cost jobs in the retail electronics and construction sectors. And probably won't add much in the way of jobs in the fuel, food and retail clothing sectors (since people won't be buying MORE of these things, just that the cost of them will rise due to the scarcity of fuel).

odograph said...

I should have put in some words to say that I get the broad point, and agree in some fraction.

I certainly agree with the broad point that:

"With intelligent policies and decent-to-bold leadership, I think that peak oil need not be a disaster."

But I'm still a bit hesitant to discount hybrid efficiency. I mean, people are still buying 17 mpg autos this year. Those people can still get the 3x improvement.

;-) Have those of us who bought Priuses in 2005 burned our one-time hybrid improvement? Maybe, and that would be sad.

(Concerns about the broader economy can certainly be argued. Having lived through a few 'crises' though, I'm slow to think that any one crisis will necessarily snowball.)

odograph said...

Oh, I can still shift to a Bajaj Chetak (110 mpg) scooter if things really get bad.

Actually I'm a bike rider too.

There is a whole sliding scale of adaptation (and, I like to emphasize, creativity) yet to be explored.

Catelli said...

Bang on John! This is something (as a commuter) I've been saying for years.