Harry Veeder wrote:
Westerners have become so dependent on oil consumption that we will continue to buy more of it even as the price rises. It is too late to expect rising oil prices to reduce the demand for oil. People complain and complain about the price but still the demand rises.
Many people have said this in the newspapers, but I disagree. I know many people who waste gasoline, and who could easily and permanently reduce their consumption. For example, many of the families my Atlanta neighborhood own both an SUV and a regular car. They can leave the SUV at home and commute with a regular car, and cut their fuel consumption in half. We also have a glut in fiber optic capacity. My office landlord has begun offering free Internet and telephone connections to all tenants. This means a company could set up telecommuting and satellite offices cheaply, with high-speed video connections.
Beyond that, we could dramatically reduce traffic congestion by charging variable tolls, the way they do in London, England. This reduces fuel consumption because the cars run at more efficient speeds and because many people stay home or carpool. The medium age of automobiles has risen to 9 years (http://www.fhwa.dot.gov/ohim/onh00/onh2p3.htm) but that still means that if we get serious, we could replace most cars and nearly all SUVs with hybrids and plug-in hybrids a decade from now. At that point, U.S. consumption would be reduced by about half, and we would be exporting oil to Japan. We might as well export it, since the stuff will be worthless a few years after that.
The point is, people are not going to pay $5 or $10 per gallon for long. They will develop substitutes such as plug-in hybrids, that reduce consumption by a factor of 10 or more, or eliminate oil it completely. We have not replaced oil up until now because there has been no economic incentive, and because we are lazy. Not because we are stupid or incapable of doing it. We could have done it decades ago.
By the way, some news reports in the US say that the US gasoline prices are rising because of refinery capacity shortages. I doubt it. The Japanese television news reports that their gasoline prices are rising exactly as much, and they have no shortage of refineries. The effect is worldwide. I assume this means oil production has peaked.
- Jed
