The 2012 Oil Crunch vs. Cash for Clunkers
Posted by Engineer-Poet on June 17, 2009 - 8:35am
World oil production is beset by declining fields and stagnant investment, and Saudi Arabia is predicting a new price spike even higher than the one in 2008. In the midst of this looming crisis, HR2751 is set to saddle the USA with a brand-new crop of gas-guzzling vehicles.
Via the UAE comes a warning from Saudi Arabia: crude oil prices are likely to spike above last year's record high. "If others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to, or worse than, what we witnessed in 2008."
This is no surprise to anyone who's been following the peak oil news, and it seems very unlikely that anything can be done on the supply side. If oil production is to keep pace with the historically rising consumption curve, we'll need 20-30 million barrels per day of new production by 2030 just to keep pace with depletion elsewhere. That's several new Saudi Arabias.
Where would this capacity come from? Not Mexico; its fields are sliding fast (Cantarell at 30%/year) and Pemex has neither the capability to develop difficult new resources nor the legal ability to partner with private oil companies. Not Venezuela; Chavez steals anything that comes into his country. Not Canada; the tar sands are terribly expensive to develop and are unlikely to hit 3 million bbl/day. Not Russia, which is past peak and following the same route as the USA's lower 48. Not Brazil; even if the 8 billion barrels in Tupi can be pumped at an initial 10%/year, that is only about 2 million bbl/day. And certainly not ANWR or the Bakken shale, which are good for perhaps 2 mmbbl/day total.
Non-solutions = we're screwed
There is NO solution to this problem on the supply side. The supply needed to continue BAU does not exist; oil prices high enough to expand supply will instead collapse the economy before that supply can be brought to market. The only way this challenge will be met is on the demand side, by shifting to other energy sources where it is feasible and aggressive economizing where it is not.
What's depressing is the utter inadequacy of our government response. Let's take this "Cash for Clunkers" bill (HR2751). It would give a $3500 rebate for the purchase of a vehicle achieving as little as two miles per gallon more than the one traded in. A five MPG increase nets $4500.
This will help clear dealer lots, but it won't do squat for our real problems:
- It will not significantly reduce our fuel consumption; we will still be burning far too much to accomplish too little.
- It will not fix the bad production mix of the auto companies; it adds demand for guzzlers only slightly less thirsty than the ones they'd replace. But worst of all,
- It will leave us with a brand-new fleet of guzzlers which will not be paid off for years at the exact time when we are facing radical increases in the cost of oil.
A back-of-the-envelope calculation
Let's try an example here. Suppose that Joe Sixpack has a 10-year-old pickup that's EPA rated at 17 MPG combined, which he drives 20 miles one-way to work 250 days a year plus 50 miles each weekend. His fuel consumption is 741 gallons per year. He has a choice of trading it for a Model X achieving 19 MPG plus $3500, a Model Y achieving 22 MPG plus $4500, or a Prius netting 50 MPG plus $4500.
At historical gasoline prices of perhaps $1.50/gallon, his fuel expenses were around $1100/year or under $100/month; this is quite bearable. But at today's local price of about $2.80/gallon, this jumps to $2075/year or $173/month; the extra $80/month has to come from somewhere, which is either his non-existent savings or the consumer economy. This is a substantial hit; if Joe makes $40,000/year, the increase is roughly 2% of his income. Things aren't much better with the trade-ins. The Model X's thirst costs $1857 ($155/month) to slake today, and the Model Y costs $1604/year ($134/month). Only the Prius gets costs down into the realm of reason, at a mere $59/month. Joe could pay off some debt and take his lady out for a night on the town now and then.
It will get worse. Much, much worse.
But we're not done yet. If crude prices head toward $200/bbl in 2012, gasoline will be above $5/gallon. At $5/gallon, feeding the 17 MPG monster costs $3706/year ($309/mo), which is over 9% of Joe's gross income. The Model X takes $3316/$276 (over 8%) and the Model Y $2864/$239 (over 7%). Only the cost of the Prius remains in sane territory, at $1260/year or $105/month—roughly 3% of Joe's income, or about what the old pickup cost at $1.50/gallon. The Prius, or something like it, is the only vehicle that Joe can afford to keep driving at that point.
You may have noticed that I ignored the rebates in the cost calculations. They barely matter. If Joe banks $3500 on the Model X and gas goes to $5, his fuel costs will eat those savings in about 16 months; if he buys the Model Y, the $4500 in the bank will pay his increased fuel bills for about two and a half years. Joe will be out of savings while he's still upside-down on his new car loan. Again, only a Prius-class car can save his budget.
Of course, this is in addition to the credit crunch. The USA needs to be paying its debts off, not adding to them. Are we going to be able to finance a whole new fleet of guzzlers, and then the crude to run them? Or will we face a surge of business failures, credit-card defaults and mortgage foreclosures which make the last two years look like a corner lemonade stand on a rainy weekend? My money (what's left of it) is on the latter, and building another fleet 3 years from now when this year's becomes unaffordable to run is out of the question.
The yawning gap between the crisis and the response
If our government was attuned to the looming problem, we would be seeing some real action on these problems. Nothing like HR2751 would receive a committee hearing, let alone House passage. We would be closing truck production lines and converting them to non-automotive products, while pushing to get Fiat's and other manufacturers' high-economy products into the remaining plants as rapidly as possible. US auto suppliers would be paid to re-tool for the new models, and Toyota's US Prius production line would be opened ahead of schedule. We'd be settting a high and steadily increasing floor on fuel prices, to keep that money inside the country instead of flowing out to oil producers.
Congress won't even think about anything like that.
Can we stop the Guzzler Subsidy Bill of 2009? Perhaps not. But if I was going to try, I'd call my congresscritters and Senators and tell them something like this:
- By 2012 at the latest, we will be facing fuel prices even higher than 2008.
- Paying people to buy inefficient vehicles is insane, no matter what they drive now.
- If we are going to survive the next oil-price surge, we need a fleet which gets closer to 50 MPG than 20. Anything less puts the economy at great risk.
- Achieving that fleet means Detroit has to build it, and the public has to buy it... and that means Congress cannot waste our money promoting anything less.
At this point it's up to you. Can you stop this runaway train before it runs off the collapsed bridge? I'm not sanguine, but I can hope.
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
Compressed Natural Gas.
Most cars can be retrofitted to run dual-fuel petrol and CNG for modest cost ( a few thousand $) and a loss of some luggage space for the gas cylinders. Power output is similar, range is reduced on CNG only, or extended if petrol is carried as well. Price of CNG in UK is less than that of petrol. Carbon emissions are modestly lower.
The US currently has a glut of natural gas. The price is very low compared with oil. The recent developments in unconventional NG supplies suggest substantial increase in production could be possible for prices no higher than oil is today.
A national infrastructure would be needed to supply the CNG. This could be rolled out over time, since the cars will be duel fuel and run on petrol when/where CNG is unavailable. The infrastructure costs will be no higher than building the existing petrol distribution plant were. The is no fancy high tech. The technology is available worldwide today.
The national gas pipeline network would need to be upgraded. This would take time.
A massive nationwide investment to convert as much of the existing fleet over the next ten years would cut most US oil imports, generate millions of jobs, and would provide real benefits from day one. It could probably offset the oil supply crunch worldwide for five years just by reduced US demand alone.
A Manhattan scale project would be the saving of the US from economic collapse and would be completed just about in time for the global peak on NG supplies, which would be followed by an even steeper energy depletion curve.
Buy a bicycle :)
Ralph
I agree with the natural gas approach. I am surprised it has not got wider attention.
I'd say hybrid NG electric is better than NG gasoline, but either will do
- ample supply
- low price
- domestic supply reduces trade imbalance and foreign debt
- less pollution
- national distribution network is in place via the Phil spigot in your house
- relatively low cost to convert existing fleet
- known technology, so no new technology required
- fleet conversion program would create jobs
... whats not to like?
so my prediction is, when high oil prices start to bite in 2010, and the oil/NG ratio goes to an even wider extreme, this will suddenly be discovered by the MSM. so what are the companies that stand to benefit when the herd stampedes in this direction? who makes the conversion kits?
A couple of points:
I'm not sure about 'ample' supply. Unconventional gas is more expensive to drill than conventional, and it is not clear how much supply could be ramped up before the price goes exponential. As documented on TOD, the current glut has led to half the NG drilling rigs being idled. That alone could cause a sudden shortage in a year or two if we have a cold winter or hot summer. Large scale investment would be needed.
I would run a mile from anyone trying to fill their CNG tanks from a domestic spigot. The supply needs to be compressed, the compressor is not on the vehicle. Domestic gas line pressure would very quickly fall to dangerously low levels if every house in a street pulled that trick.
You need to spend money on the infrastructure.
I think it is actively suppressed by the car/oil companies. It is given a 'third world' and 'unsafe and unreliable' image.
It will not be a cheap option, but a lot cheaper than all the others.
Electric cars, natural gas burned in an electrical generator can be captured.
d
Has anyone paid any attention to the hydrogen car developed in Britain that is about to hit the streets soon? BBC World has a story released today at:
http://news.bbc.co.uk/2/hi/science/nature/8103106.stm
That appears to be the Pickens plan, pretty much. I'm not sure what's left of it, after the maker of the Phill went bankrupt.
I still think it is a huge mistake to subsidize vehicles with lousy fuel economy, whether they're topers or huffers. Natural gas is only cheap at the moment, due in part to the collapse in US industrial demand and the sunk costs of a large amount of LNG infrastructure in places like Qatar. Producing new shale gas in the USA needs prices around $8 per million BTU. This is cheap compared to gasoline, but expensive compared to the historical prices of home-heating and industrial fuel. Shifting enough demand to NG will push prices up to that level and keep them there. Instead of trading food for road miles, it's the economy being traded for road miles. Then there's the question of what happens when there are NG shortages and vehicle usage is cut off to keep houses warm and the lights on. All the dual-fuel vehicles switch back to petroleum, running up prices there and perhaps creating secondary shortages (though less severe than without fuel-switching).
If we were talking about vehicles like the Honda Civic GX, this wouldn't be such a big issue. However, the incentives to replace these "clunkers" go to monsters only a bit less thirsty than my neighbor's 14-MPG Durango. More flexibility may help, but failing to promote economy is just piling new problems upon the old ones.
Hence the final line in my original comment :)
There are any number of solutions to our energy problems that would work if we expend a huge amount of capital on them.
One of the problems we have is that oil price spikes will cause recurring recessions (or worse) that will destroy capital. This past recession has been rough on renewable energy because a good deal of the capital they had drawn on dried up.
How will we afford these solutions that are so enormously expensive?
Something I've been wondering is what the net effect on the grid would be of millions of compressors running simultaneously.
Just like another hot humid summer day in South Florida when all the AC units kick in at full load.
[url=http://anz.theoildrum.com/node/3388]The Oil Drum: Australia/New Zealand | The Air Car - A Breath Of Fresh Air Or A Waste Of Breath ?[/url] has more than a few answers of course. Coal powered compressors would be no better than petrol according to one source; would compressing NG which has been diverted from electricity generation be any improvement aside from having an ostensibly large supply?
I can't see NG being any sort of long-term solution. My estiamte puts US resources of N gas at about 1,000 bcf (includes tight, not hydrates). At 23 bcf / yr present consumption, that's only about 40 years so we shouldn't be doing ANYTHING to increase N Gas consumption, especially not using it to support purchases of new guzzler autos.
Small PHEV and EV's is the way to go, with maximum support for generating electricity renewably. Better yet is the new light personal urban transport systems on rails. Since the vehicles and tracks are so light we could easily afford to cover cities with track grids at 1/2 mile intervals, meaning everyone and every place would be within 400 yards of a station.
I am kind of wondering if this entire program has enough conditions on it to make it more of a PR stunt than anything else. To take advantage of it, you need something defined as a "clunker". Who would own such vehicles? Mostly people who can't afford to replace them. And offering people 4500$ isn't going to be enough for them to be able to afford a new vehicle - if they were to replace the clunker, they would likely replace it with a somewhat newer clunker.
The one exception is that some people might keep an old pickup for those occasions where you need to haul some stuff. But for these cases, I don't see that there is a huge incentive to trade the thing in. You have an old vehicle that is paid for, and you want to have to start making payments so you have a shiny pickup to start hauling crap once a month? That doesn't add up either..
Exception #2: Someone who's kid is driving an old clunker, and they take this opportunity to trade in the clunker, buy a new car, and hand down the parents current car to the kid.
In other words, it's aimed at me. In the long run though, it's not likely to be cost effective for me to trade in a 1987 Mercury Grand Marquis to buy even an efficient car like a Honda Civic, and pass down my 2001 Chevy Prizm (Corolla clone) to my son. While he's still in college, my son only puts 3000-4000 miles a year on his car, so the cost of fuel isn't that big a factor. The cost of repairs on the clunker is a factor, but it would never be a big enough factor to be worth spending $14,000 on a new car to eliminate.
Don't forget the annual registration fee on the vehicle. In my state, Arizona, it is based on the list price of the automobile and the number of years since the vehicle was first registered. In short, the annual registration for an old clunker is about $15 / year and for a new car, it is several hundred dollars per year.
What about a 50% rebate on any new bicycle (no trade-in required), upper limit $350 credit (price $700) per bike, no more than one bike/member of household.
There are PLENTY of "on-the-shelf" Urban Rail projects (which will typically last 100+ years) ready to be built with tyhe money wasted on this.
Alan
Here's a better bike program: No government credit or rebate. We all just save up our our money from working, and each fund the purchase of our own bikes 100% with our own money. Amazing, but actually possible.
That way the money will be used for buying gas for the SUV and other consumption, none of which will help our society and economy prepare.
The concept of such tax incentives (and higher taxes to pay for them) is to reduce consumption and redirect that aborted consumption towards useful investments.
I also dislike the sop that Obama/Ds gave to the Rs, the $8,000 first time home buyer credit (the Rs wanted $16K).
Alan
That way the money will be used for buying gas for the SUV and other consumption, none of which will help our society and economy prepare.
I bought my bike 7 years ago for $100 and it's been my primary mode of transportation ever since. Purchasing my own bike without govt assistance didn't cause me to "buy gas for the SUV". I don't even have an SUV; I have a bike. I haven't the slightest inkling of what point you're trying to make.
Buy a bike, The last three bikes I picked up for free at the local transfer station, I am always amazed by what people on this continent throw away. There is obviously not enough of a problem yet to affect the consumer lifestyle.
mike
Well, since the premise of the legislation is that it's going to help the U.S. car companies out of trouble, while also boosting the economy to help us out of the current recession, from their point of view they aren't likely to think a 50% bike credit will accomplish either of those goals.
Plus, how much lobbying power do the bike manufacturers have compared to the auto manufacturers? Almost zero compared to a lot.
This article ignores numerous easy, cheap workarounds. 20 miles is not that far, and can be bicycled in an hour or so by a person in reasonably good shape. E-bikes don't use any oil at all, and can take you 50 miles in a day. (21 million e-bikes were sold in China last year alone). Mopeds getting 100+ MPG are available for $1500. Model X with 19MPG will get the equivalent of 80 MPG if you fill it with 4 people.
It's just plain dumb to calculate under the assumption that all driving is necessary and must be done in single-occupant ICE cars.
We don't need any big government programs or emergency auto fleet build-outs. The tools are really simple, and available right now. The only thing missing is Joe Sixpack's brain.
And the Prius will get 200 passenger-miles per gallon with 4 occupants, and will still burn only 38% of the Model X's fuel when it's commuting to work with only the driver's seat full.
...LOL!
Nick.
CAFE only increased passenger car efficiency 2 MPG per year in the early 80s, and many believed peak oil would hit in the early or mid 90s then. FWIW. I don't think automakers can move that quickly, or the political will to really crack the whip isn't there.
2011 jumps up to 30.2 from current 27.5, where it's held since 1990.
I think you have to look generally... Sure, you can bike -- but not 90% of Americans would do so. We need a path that would work for the great number of people o/w we are doomed.
You are trying to sell to Americans: "Let be like the Chinese in the 80s with bicycles, etc..." but we know where Chinese are currently.
This will be a step by step process. First, move to more efficient cars, then move to mopeds/scooters, then move to bicycles. hahaha --- something like that.
I have friends that drive their kids 300 meters to school. You think I succeed in convince them to walk? Good luck.
Well, I think they have only temporarily lost their way and as they are not immune to peak oil, climate change, ecological devastation and economic crash due to unsustainable growth, I have little doubt that many Chinese and Americans will return to riding bicycles on a regular basis in the not too distant future.
This is why I collect all the bicycles and wheels that are thrown away every time i visit the transfer station. The most efficient transport that man has created is too valuable to be tossed on a whim. or next years walmart special.
Mike
I think the Chinese don't use cars the same way as we. For them, just owning one is a status symbol. They don't need to drive it everywhere, just occasionally. Per car Ithink their fuel consumption will be a lot lower than ours.
This has to be the funniest (or most racist ) post I have seen in days.
Try google maps. I can't tell Beijing from Los Angeles.
Every city on earth is in gridlock (except Pyongyang). The Chinese buy cars because because they have bought in to the consumer culture,
not because they want to marvel at the heights of imperialist technology.
I just went to google maps and looked at P'yongyang. Wow. Big Wow. Not close to even Port au Prince.
Agreed.
Americans always seem to me to be UNWILLING to shift to bicycles. I watch them everyday and see them dressed up, in their cars, drinking their Latte's , listening to their MP3 players on the way to work. NONE of them seem WILLING to get up earlier to ride a bike into the office. They would not be dressed appropriately and their are no shower facilities in most work places, not to mention what do you do if you need to visit a customer's location to take care of something? Plus, I see so many people that are just "Psychologically Allergic" to exercise that it makes me very skeptical. People seem to be just plain lazy these days.
One point about cars - The state of California makes BUUUKOO BUCKS off people in the form of license and registration fees (TAXES). They are not about to jeopardize that by encouraging people to ride bikes. Maybe bike licenses will make a come back?
I bought a trike last year that I ride to the store and I'm seriously disabled. I can make it one mile to the store and back, then I need to rest until the next day. But, I am doing what is necessary for myself to get to the grocery store, since my vehicle became sick a few months ago. What do I do when I cannot ride any longer? I do not have a plan for that. I'm doing what I can when I can.
I like to ride but it may come to an end sooner than I would like due to my degenerative condition. I'm only 49 but wish very much to see what happens over the next 20 years or so.
Riding a bike in a major urban area is scary as hell. Until my early 20's, I rode a bike everywhere. Then I saw a cyclist crushed and killed by a city bus. A few months later, I saw another cyclist killed by a car doing an illegal left turn in an intersection a couple of blocks from my apartment.
Of course I had been hit by cars before myself, but not seriously injured. Seeing other cyclists die is what changed my mind. I decided I wanted to live, so I stopped riding for transportation.
We have to address safety in a serious way if Americans are going to cycle more.
I hope the car industry will just go away....when there aren't any more cars for sale then noone will think about them anymore.
I've been happily carfree for 13 years---ever since leaving the USA. My bicycle is my most treasured material possession. And riding it is a joy.
Sad to think that my lifestyle would be impossible in my native land.
I would agree that most people act like they are allergic to exercise. I fear that higher gas prices will ultimately force the issue, but most of these people would ride a moped before they would ride a bicycle..
People are unwilling to switch to bicycles, but not unable. If they are forced to, because they have no other options, then they'll do it. But at the moment they do have other options.
On the bright side, when they are forced too, presumably almost everyone else will be forced to as well, so getting killed by a car will be less likely since there won't be many cars on the road.
Nope-the cars aren't going anywhere-this is an often repeated myth. The problem of car congestion in urban centres will not be solved until very deep into the crap (if ever). The goal of walkable cities and neighbourhoods has absolutely nothing to do with oil depletion and won't be accomplished by oil depletion. Your fuel costs if you live in a congested urban centre are negligible, far from an important part of overall car costs. High gasoline prices will hit outer suburbs-exactly the commute you cannot do on a bicycle.
Why do cities have to be "congested urban centres" ?
Quite frankly, almost all of New Orleans is not. Hard to park, yes, so more incentive to take other modes :-) But the roads are not particularly congested.
BTW, I disagree with you in part.
Alan
J.D wrote "We don't need any big government programs or emergency auto fleet build-outs. The tools are really simple, and available right now. The only thing missing is Joe Sixpack's brain."
The only thing missing in our culture is teaching people to think for themselves and make informed decisions.
As long aa the IEA, EIA, CERA et al continue to produce rosy forecasts, we are all basically wasting our breath here. Look at the paltry number of 274 signatures at the Request Study of Global Oil Supply Decline & Impacts web page. The world is drinking the optimist's kool-ade. I am concerned about how totally clueless people in general are about the impending crisis. Essentially everybody, except a few doomers thinks that everything is fine and business can continue as usual with Peak Oil somewhere off after the next couple of decades or so.
I have discussed this once before in this post and I will repeat it here. The "official agencies" forecasting oil supplies and prices need to be challenged as to wild optimism of their forecasts. The problem is, who can put up a credible challenge? After all these are quasi government organizations, in the case of the IEA and EIA, whose job it is to know these things, so in the eyes of the public they must be right. The fact that they have been so far off target in the past few years does not seem to deter people from taking their forecasts seriously.
On the other hand, which person or organization has enough visibility and credibility to engage "decision makers" and the public at large. Certainly not www.theoildrum.com, ASPO, M King Hubbert, Matt Simmons, T. Boone Pickens, Roscoe Bartlett, Michael Meecher (UK), James Howard Kunstler, Richard Heinberg, Jared Diamond, Jeff Rubin et al, as all these people have been banging their heads against the wall for years. Any suggestions for someone who can make the challenge that would actually make the headlines?
On the weekend of June 5th, I attended a "green expo" in my neck of the woods. As was to be expected there was a high concentration of people and organizations with interests in the environment, energy conservation and alternative energy. At one booth for a government agency involved in encouraging trade and investment in the local economy, I encountered a young lady who was surprisingly well aware of resource depletion issues. However, when I told her about this web site and just how serious and imminent the problem is, her eyes sort of glazed over and she seemed to go into a trance, kind of like when a child has done something wrong and then realizes they are in serious trouble. I guess I put the poor lady into a state of shock for a little bit there! The population at large needs to be put in this "state of shock" and be reminded of the situation every time they go into denial. Only then will people see the folly of investing in long term assets that only make a marginal improvement in energy efficiency.
Alan from the islands
when I told her about this web site and just how serious and imminent the problem is, her eyes sort of glazed over
Alan, you may be a little too gung-ho. Peak oil has a tendency to push some people over the edge, and the woman may have tuned you out because you were ranting. I'm not saying you've gone over the edge, but you may be coming off as if you have.
Peak oil is a marathon. It's been going on at fever pitch for the last 5 years, and people just can't stay panicked that long. Now matter how you feel about the issues, you have to pace yourself.
Maybe but, I have recently tried to dial back on my doomscope when talking to real people. The person who is most receptive to the idea of PO is my dad. He was a geography teacher so, he appreciates the geology of PO and has a keen respect for the environment. Nevertheless I don't see him giving up his own personal mobility (car) without a fight, so thereya go!
Homo Sapiens, unlike the rest of the inhabitants of the planet can draw on history, gather facts about the present and use it all all as the basis for making plans for the future. Based on the information I see on this website, I realize that civilization is facing an unprecedented discontinuity. My problem is that, no matter how much I do as an individual, it won't matter much unless similar effort is put out by most if not all of the other 6.5 billion plus human inhabitants of this planet. It seems to me that, as we begin to slip down the downslope that humans are no smarter than yeast.
Alan from the islands
Edit: JD, just visited your blog and had a look at post #400. Thought for a minute that you had read my guest post then realized that your's pre-dates mine. Had I been aware of it I would certainly have linked to it since it references some material that I did not. We even used a couple of the same pictures!
Hi islandboy,
I think you are dead right -personally I have given up trying to convince people of my belief that PO is imminent...
Instead I have decided to profit from my belief and I am doing that in two ways:
-my general thoughts on PO are made public here (written end 2007):
http://www.megatrends2020.com/Peak_Oil__Joining_The_Dots.doc
Regards, Nick.
Thats a good one.
There are 250 million registered vehicles in the US today. This year, perhaps 10 million new vehicles will be sold. And you want a 50 MPG fleet by 2012?
I think we'll just have to accept that in general, Americans won't buy more sensible cars until oil prices forces them to. If you could make them in some other way, it wouldn't matter short-term because it takes time to replace the fleet.
If oil prices go sky-high, we'll just have to see how Americans adapt to European gas prices. It will be interesting, enjoyable even.
As you noted, the fleet as a whole can't do that... but the new vehicle mix could be heading there.
This begs the question of how long the existing vehicles will run. If purchase levels remain that low, it appears likely that the fleet will shrink considerably. A smaller fleet will consume less fuel.
Which is why I've been saying for a while that what the USA needs is $5/gallon gasoline.
I don't know if the fleet will shrink if sales drop. You know, Cuban cars have been running for quite some time.
I don't really think you need $5/gallon gasoline as much as you need steady price raises, since one gets used to prices quite rapidly. Being from Sweden, I found myself being happy about $5.5 gasoline earlier this year, for instance. (But now the price is back to around $6.25/gallon.)
In 2009, more cars were scrapped than were built. The financial types site this as why the car industry will recover.
Also, the early version of cash-for-clunkers required the cars be crushed, not torn apart for spare parts. This should reduce the supply of used car parts, and make used cars marginally more expensive to repair.
Also, parts suppliers going bankrupt should have some marginal impact.
Can you provide a reference for that data? I'm very interested in the trends relating to the overall number of cars in operation
Saw it on CNBC. Probably good info on their web site.
Interesting post in that "Joe Six-Pack's" dilemma so closely mirrors my own situation (I'm not much of a beer drinker, though). And my solution, three years ago, was to buy a new Toyota Prius ('06) and keep my old, 1978 Ford F-150 pick-up which I still use on weekends.
It's totally true that +2mpg improvements simply won't get the job done. I figured that out years ago. Equally true that there is probably no time left to change over the entire vehicle fleet with ANY combination of alternative vehicle power trains. I doubt that there is any solution which will rescue everybody. There will be some people who will figure out a path for survival, and many, many more who just plain won't.
By the way, I've got the Prius up to a yearly average of 56.5mpg using careful driving techniques.
Great! Hopefully, since I assume you are aware of Jevons Paradox, you have also cut your annual driving to well under 5K miles, right?
Absolutely.
Although I drive a lot more than 5k (which is why I bought the car), I drive NO more than I used to. In fact, this is one of the reasons I can get up to 62mpg on the Prius during warm weather months. I use it only for commuting to work, NO short trips. Short trips kill your mileage with these hybrids (also very cold temperatures). The truck is used for all short errands. It's mileage sucks anyway, so no harm done.
Some very weird logic in this post. All vehicles have lousy milage on short trips. Using the SUV instead of the Prius on them probably wastes more gas than you save by using the Prius on the longer trips. I hate to drive for any journey under five miles. I walk or cycle if at all possible.
No. No weird logic at all. About 16,700 miles per year on the Prius. Less than 1,500 on the truck. And I have a truck because I need a truck. I just don't need it all the time. And I sure as Hell don't need to drive it to work everyday.
I have a 1994 dodge caravan AWD that is now a 2 wheel drive,[I am told it is a 7 hour job to change the transfer case for the rear wheels] it will carry a 4'x8' sheet and has a trailer hitch for when I need to get dirt or anything else that might be a problem in the back. It is paid for and it does not owe me a dime. Oh and I purchased it in 2002 for $6000CDN. I live in the country in a passive solar house that only uses 250 gallons of water every 2 weeks and my heat has been off since the end of april. We are currently in a drought but the 700 gallons of rainwater that I collected during the last rainfall are helping my potatoes big time. The destruction of "clunkers" is in my opinion an ill gotten policy, that will eventually bite the hand that feeds it.
Mike
I'm where you were 3 years ago. I currently drive an '01 Toyota Tacoma -- ~22,500 miles/year (36,200 km/year) at about 27 mi/gal (8.7 L/100 km -- if I did the arithmetic right) and preparing to buy a commuter car. The personal economics don't work out at all -- it takes > 10 years or so to make back the cost, even at $7/gal. (Although, if I use your 56 mpg and $10/gal, the Prius is paid for in 5 years)
RE: HR 2751 -- when I saw the details, I was genuinely shocked at how anemic and pointless this response is - even if you don't believe in peak oil, from the simple aspect of restricting greenhouse gasses, this response is ridiculous. (People who odon't believe in either, I guess, see progress). $4500 to trade in a truck that gets 17 mpg for one that gets 22 mpg. !!
Rather than $5/gal, we need (he says, shooting from the hip) a $2/gal tax each year, adding every year for 4 years. Then we're in the range of about $10/gal (Germany last summer - when Germany's economy didn't implode). People's behavior changes and in the meantime, the money goes to Alan's electrified rail and expanding the national rail infrastructure (and we stop the insanity of loading things on a truck in Southern California and trucking it to New Jersey).
[/rant]
Yes!
A big increase in the Federal gas tax isn't likely to pass. Remember the tax revolt in California in 1978, Prop 13. The voters were responding to a perceived tax increase after inflation pushed up the price of houses and this was then reflected in the assessed cost of property. Remember also the calls last summer for a REDUCTION in the gas tax when prices at the pump went to $4 a gallon. So far, I've heard no public call for an increase in gas taxes, even though many states can not meet their budgets as income and sales taxes have fallen during the "recession".
After Peak Oil, the price of oil is likely to trend upwards over time. It will be impossible to increase the gas tax as any politician who votes for it would be out of office after the next election. The only solution to my mind seems to be gas rationing. That would work if there were a "white market" to trade excess allocations. Those who did not use their allocations would be paid for their frugality. those who wanted or needed more fuel would pay extra for their consumption.
E. Swanson
Poet is a master communicator.
His reasoning is flawless.
His facts are dead on.
His projected figures visavis the economy are very reasonable imo.
Now as to the intended purpose of the cash for clunker deal as written,OD junkies may remember a certain thread a few weeks back concerning the auto bailout I which I was involved.I will be so immodest as to quote myself.
Regarding the dispensing of subsidies ,"you got the connections ,you get the cash" (close enough,considering there will be no complaints)
There is essentially a zero chance that the bill will be amended so as to actually accomplish any real savings,because real purpose of the bill is to clear the decks for Detroit to inflict more friendly fire casualties on the rest of us.Any reqiurement of perhaps a MINIMUM qualifying increase in mileage of six miles or seven miles per gallon would might actually help every body but
the intended beneficiaries.
The democrats are straying far indeed from thier core values on this issue.
This bill,if it passes, will result mostly in the moderately well to to and the well to do trading up a little sooner than they would otherwise have traded anyway.
In political terms,it is a regressive income tax on anybody who doesn't want to trade,or can't afford to.If the dems are serious about fuel economy,they can make the credit refundable so that lower income people can take advantage of it. The immortal words of my long gone Old Pa,an illiterate but very intelligent country philosopher of some local repute come to mind :"I'll kiss your ass and give you an hour to draw a crowd when THAT happens."
As it stands this bill is kind of like a really skimpy two piece bikini composed of the fig leaves of environmentalism and economic stimulus.It just barely manages to cover up the really interesting parts-the things it's all about- but that amount of cover is all that seems to be necessary these days.
If the republicans were in charge they would figure out away to do something even worse.
"because real purpose of the bill is to clear the decks for Detroit to inflict more friendly fire casualties on the rest of us" spot on again, it's just so obvious - same for the bankster bills. This is just an unnecessary subsidy to an industry that has consistently opposed tough legislation to cut carbon emissions. IMHO it will merely pull demand forward so more pain for the manufacturers later.
The same sort of thing is happening in Europe where the scheme is often called "scrappage", some countries limit the incentive to lower emission (more economical) cars.
http://en.wikipedia.org/wiki/Scrappage_program
In the UK consumers will be offered GBP 2,000 towards a new car or van if they trade in a 10 year old plus vehicle which they have owned for 12 months or more. There are no conditions about fuel economy:-( From the launch date of mid-May about 60,000 people have taken advantage of the scheme.
In France it starts with 1000 EUR for a car with less than 160 g/km CO2 emissions so a bit better.
Yep.
Really what all this amounts to is paid for obsolesence, Build a better product in the first place!
Mike
You Yanks! Haha,$5 Gas! Oooooooo, that's some scary stuff! ;o)
[UK Gas price: £1 / litre = $6.25 Gallon (much of this stays in the UK) . Last summer it was $7.80/Gallon and I was doing $90 fill-ups...]
Here's what's going to happen:
Those countries who's populations and way-of-life have become so used to cheap energy (e.g. the US) will be giving money to the ME to build more of these in the hope that someone will still have enough disposable to come stay:
At $200>$5/G the choice is clearer for Joe: either he drives something more economic or he doesn't drive as much. Its just a pity that at $200 a host of other stuff dies: air travel will be bleeding to death worldwide and Millions more will be starving... So short sighted...
Nick.
Well maybe so, then again, here's an idea for an alternative form of air travel.
Nick,
I get the blimp,but just WHAT is the other thing?It looks sort of like a rolloe skate or a cruise ship if you try hard enough.
It's a hotel in Dubai.
Its the Burj el Arab hotel in Dubai, the worlds only 7 star hotel.
Always amazed me how Dubai has built all this tourist infrastructure and a major international airline while accepting that their oil will ultimately be depleted. Where do they expect to get the oil from to power all this?
Perhaps time to build super Dhows to transport all those tourists (if they remember how) or alternatively invest in airships!
Perhaps covert to natural gas or maybe nuclear power plants. Both would work. Also dubai is in an excellent region for solar farms.
Speaking of Dubai and power, Dubai power shortage continues to deepen, say reports
Every time I see pictures of the Burj Dubai, I am in awe of it's majesty, the greatness of mankind to be able to design such a structure and our stupidity in actually going ahead and building it. Why? Just to prove we can and how are we going to supply 150 MW to one supertall residential/hotel/office building when the world is facing an energy crisis?
We also can evaluate what the consequences of our actions are likely to be but, obviously we haven't been doing a very good job of that.
Alan from the islands
You are absolutly spot on!
Mike
Those skyscrapers are the new "Stone Heads". I used to wonder why they were building all that stuff too. But then I realized that their thinking is just as short term as ours. They're only worried about how much money they can make now. Who cares what happens in 100 years.
The first image is of the planned Hydropolis , the world's first underwater hotel shaped in the form of a phallic boot. $5k/night! 10 stars!
I'm building an 11 star hotel in my garage.
I recognized the thing next to the blimp as a modern architecture marvel of some sort.I intended to ask about the posted picture in the comment directly above the one with the blimp.Sorry!
Hi oldfarmermac,
believe it or not this is part of an underwater hotel complex they are building in Dubai -a snip at $5000 per night when complete sometime this year...
http://www.designbuild-network.com/projects/Hydropolis/
http://en.wikipedia.org/wiki/Hydropolis
Nick.
The Burj al-Arab is supposed to call to mind a merchant sailing ship IIRC. On Hydropolis, I keep scrolling away from that picture and scrolling back, but each time I see the same thing.
Mega Phallus
Your first link has this quote from the architect:
Wha? "Loss of algae"?
I should stop there, but I can't:
It's risky, yeah, but we convinced people it was actually safe and profitable.
I feel we may be doomed.
For the typical commuter, it seems to me a fleet of Volkswagen 1L cars makes more sense that a fleet of Prius. When it comes to very small cars the first question is always safety, and VW has taken that seriously. No one asks about safety if you consider a motorcycle instead. Even though the 1L will provide more comfort and much higher mileage than any motorcycle.
http://gas2.org/2008/05/07/vw-confirms-1l-concept-will-become-reality-in...
Paying for a 2 MPG benefit is just bald faced sabotage.
In theory, I suppose it could help. But lots of folks are financially strapped right now, so going out and buying new vehicles isn't going to help all that much, but I suppose it all depends on the price point.
My guess is that for a lot of people a moped will probably be the adaptation they will make. It serves the purpose of increased MPG, it would be far more affordable than any other type of vehicle, and it won't be as fun to drive so it will also serve to reduce VMT.
I would guess the vast majority of people are too lazy to consider a bicycle. And if you haven't ridden in 30 years, it will take some number of months to improve physical condition where it becomes easy. Which isn't to say that it is impossible.
It's not so much the "fun to drive" part. For a two-wheeler, it's more the lack of weather protection and high maintenance that limits VMT. My motorcycle has easily needed 5x the maintenance of my car in the same amount of miles. A moped or scooter may be less expensive to maintain, but it'll be just as frequent as a motorcycle. With a moped, not being freeway-legal also limits VMT because long trips are slow on surface streets.
Dwcal,
I used to ride years ago,and had lots of friends who owned motorcycles.Gas was a lot cheaper then,reducing the the relative fuel economy advantage of motorcycles so things may be somewhat different now,but I never met anybody who could look me in the eye and say that riding a motorcycle cost less than driving an old car that was not hard on gas.
My experience with maintainence and repairs was not much better than yours.
I understand that newer motorcycles are far more reliable and durable than the ones I rode in the sixties and seventies,and the fuel economy advantage is more important now that gas is so much more expensive,so the balance may have swung the other way.
I rode a bicycle on campus as a student because you could park a bike almost anywhere legally but there was NO parking available for students-except the "satellite" lots.Now NONEXISTENT car parking and free bike parking might work wonders in certain places.....
Living in Minnesota, we have 5 For Sure motorcycle months, 4 Absolutely Not months and 3 If You're Brave Enough months. I need something that has 3 or 4 wheels, enclosed and stable on ice.
And I know people who ride bicycles in the wintertime in Minneapolis. Yes, there is such a thing as snow tires for a bicycle. It may not be ideal, but I would never say never.
Concerning mopeds/scooters:
My quiet 4-stroke Honda Metropolitan was $2000+ out the door in 2002. It has served well the last 7 years, except on its birthday (May) while on the way to work the rear tire blew out. Took it to the shop, bought 2 new tires, had them slimed, and had super tune-up. Total expenses $420.00. In 7 years I've spent less than $600 total in maintanence, and it does get a reported 100 mpg if you don't punch it (like I do).
While it is admittedly mostly an in-town vehicle, it goes off road and into the boonies from time to time.
It is sometimes scary to drive in traffic, but IMO somewhat safer than a bicycle. It'll get up to about 34mph, and I ride in the traffic lanes. One MUST always pay attention on the road, and people do get killed driving them.
Here in Nevada, no plates required, no insurance required, parking is a snap, and I never have to get into a hot car.
I drive it 12 months a year, but certainly less when it snows.
For fat old farts like me, it is less work than a bicycle, tho I do bike from time to time.
And, when needed I can always borrow a car or truck for hauling big stuff.
It saves so much money that I can (almost) afford to work only 4 days a week over the expenses of a new car.
While my past posts on this make me sound like a broken record, I have to keep at it because it is so practical, and available, and inexpensive.
Sorry about being so repetitive, but it works.
Craig
I would hope no one is under the illusion anymore that the new Administration has either a green policy, or a new energy policy. We have just witnessed a massive new investment in the automobile industry via road, highway and bridge investment; purchases of auto companies; and now subsidies to buy more automobiles. These billions make the proposed investment in public transport look like spare pocket change. I am renaming Obama the Automobile President.
G
Well they have both. But they are all part of an incoherent smorgasbourg, one program undoing what the other does. Thats basically the way politics seems to run.
Nice piece, except for your slander of Chavez. How shameful! To spend petro revenues on the poor majority, rather than the private-jet-set.
Your understanding of who's stealing what is as inverted as our overclass' refusal to allow real transportation reform onto the public agenda.
You might do a bit of sociology study. Veblen might be a good place to start.
This is not an engineer's world. It's an investor's world.
For those curious, I didn't know much about Chavez and his government besides some nasty comments and hearsay. Then PBS put out a Frontline special on him, and it really gave me a lot to think about. It's free to watch online:
http://www.pbs.org/wgbh/pages/frontline/hugochavez/view/
I really enjoyed it, and while there's always the possibility of bias, it didn't seem very strong to me.
Chavez policy on not investing in new production is actually wise, since they are moving production to years with much higher petroleum prices. From a pure finacial perspective, OPEC should stop all new oil projects until prices top $100 or $200 again.
...makes you wonder at the sheer stupidity of continuing to pump UK North Sea Oil when prices where down at $10 doesn't it...
...and who was the Chancellor who could have taxed oil so high back then that more of it would have been 'saved for later' -Oh, it was Golden Gordon again our very own 'saviour of the Universe'...
Nick.
That's a little harsh on GG when you map oil prices against UK production. Oil prices collapsed on the mid 80' and were under $20 for most of the 1990's - the most productive years of the UK north sea. GG became chancellor in 1997 (and I can't remember who the Tory chancellors were from late 80's onwards).
Venezuela is a perfect example of how great natural resources in less mature countries is a curse - not a blessing. Great natural resources leads to fighting and socialism, because people perceive wealth as something that just exists and needs to be distributed. In general, though, the greatest asset of any country is its working population, which skills and productivity improves the most in an open, free market economy where ownership rights are respected and contracts are enforced.
Due to Chavez socialist policies and the corruption they bring, Venezuelan oil output has shrunk 30% to only 2.4 mbpd. If that output were sold at $100, the revenue would be $3,000/capita and year. US GDP is around $45,000 per capita. Venezuela has chosen a path that guarantees continued poverty in absolute terms, although relative poverty may be decreasing.
I don't know about that. Just because their output was down, doesn't mean that THE PEOPLE are poorer. All of this Per Capita sound good with increasing oil flow, but the truth is when a lot of oil was flowing in Venezuela, not much of the wealth was really flowing into the pockets of poor Venezuelans. Those rich oil oligarchs stole much of the wealth and funneled them into Miami or into beach resort paradise, somewhere.
You would think with all the oil wealth -- Venezuelans should be well off BEFORE Hugo was able to come to power. Why is it that under the leadership of many previous leaders before Chavez, not much was done for the people?
To say that corruption is the product of Chavez is dis-ingenious. W/out corruptions, you think the previous oil oligarchs managed to do that well?
Not to say that Chavez is great and all -- but things need to be balanced. May be he saw that oil is running out; the last thing he wants is his oil tap running at maximum thus robbing the wealth from the future generations.
It's okie for US government to interfere with "free and open market" but not for Venezuela. Market is rigged -- no such thing as "free and open".
I'm saying that they are destroying their prospects of wealth by socialising the economy, introducing price controls and so on.
If you read what I wrote, you'll see that the oil wealth isn't that large, per capita. At $20, the revenue is below $1000 per capita. It can be some icing on the cake, a good means to keep taxes low, but the oil definitely cannot replace a modern, free, productive market economy.
Those leaders didn't have the sense to create economic freedom either.
I didn't say that - corruption was rampant before too. However, the more you socialise the economy, of course, the more corruption is possible.
Nonsense. And again, the problem isn't oil, the problem is what he is doing with the overall economy.
There are no absolutes, but in typical rankings of economic freedom, the US are among the top ten countries and Venezuela is in the bottom ten. This means Venezuela will stay poor. US is far more open access, far more socially mobile, far more wealth producing.
I'm certaily relieved to hear that we won't experience any corruption here in the U.S.of A. because we hate socialism so much.
You guys seem to think if things aren't absolute, one system isn't better than the other. But does it not matter that the US is number 20 in Transparency International's Corruption Perceptions Index, while Venezuela is number 162 (out of 179 countries)? I think it does.
I don't think TI's CPI means a hell of a lot. Venuzeula might be right at the bottom, but look at some of the countries above the US: New Zealand, Norway, Germany Luxembourg, Australia, Canada, Netherlands, Iceland, Sweden, Finland, Denmank. All 'socialist' countries. Yet all more trustworthy than the US.
Looking at the blatant corruption and theft on Wall Street, and the agreeableness of the US Congress and various Government agencies to facilitate it, I don't see how anyone can say it's Socialism that breeds corruption.
I think what we've got IS socialism, as in the losses of the powerful and well-connected have been socialized. It's hard to distinguish this from crony capitalism.
The question then becomes - in what way are those countries "socialist"? New Zealand and Australia ranks HIGHER than the US in Heritage's economic freedom index. The others are not very far behind. Whereas Venezuela is close to last. But ok, if you like socialism, then let's not argue about it, and instead go into some more details. How can we explain corruption in relation to governments?
In countries such as Venezuela, division of power between branches of government does not exist - the executive branch (Chavez) controls everything, so among other things, enforcement of property rights is weak and expropriation arbitrary. Red tape is excessive - starting a business takes 141 days, compared to the world average of 38 days. The country has lots of barriers for foreign trade compared to open countries such as Sweden and the US. Inflation is high and there is extensive price controls and subsidies.
The plethora of red tape, trade barriers, price controls, subsidies and so on drives corruption - there are lots and lots of opportunities for corrupt officials to demand kick-backs. Modern big-government states such as Sweden's intervention in the market economy is much more streamlined, transparent and predictable. (And starting a business in Sweden takes 15 days.) Such modern "socialist" states RELIES on the markets, in open international competition, to create wealth, some of which the government then taps and tries to redistribute with as little distortion as possible.
The problem with Venezuela's brand of socialism is not extreme taxes or big government, neither of which they really have. It is that Chavez is despotic and hates market forces and so lets unpredictable bureaucracy and regulations run amok. This feeds corruption and ensures continued poverty.
The problem is that Joe six-pack, like most of us, has trouble thinking towards the long-term future. He is more interested in immediate concerns:
What is really needed by a large part of the U.S. population (and I suspect by many people in other countries such as Australia) is a vehicle which is really economical, but has a decent load capacity and can tow a medium weight trailer. If you can tow a trailer, for bulky loads, you can do a lot of the work of a pickup. The current offerings in the U.S. give the choice between such vehicles as the Ford Escape, with towing capacity up to 3500 pounds and 17 miles per gallon in the city, and the Ford Escape Hybrid with 34 miles per gallon in the city but no towing, thank you.
Surely it would be possible to build a vehicle with fuel consumption around 30 miles per gallon and a reasonable towing capacity of around 2000 pounds. There are rumors floating about of a diesel hybrid version of the Mahindra truck to be released next year. This could be such a vehicle, with a load capacity of perhaps 1500 pounds, a towing capacity of 2500 pounds and fuel economy (both city and highway) around 35 miles per gallon.
Forty years ago I owned a car -- a Citroen Safari -- with seating for eight and a payload of over 2200 pounds, with which I towed trailers of 1200 to 1800 pounds for thousands of miles. It had a top speed of about 100 miles per hour, and my overall average fuel consumption (in the six years I owned it) was about 24 miles per US gallon. Manufacturers today do not sell anything with comparable performance. Economical cars have zero towing capability and puny load capacity. Vehicles with reasonable load capacity and even minimal towing capability have average fuel economy at best.
Ird,
My recently acquired 84 Toyota pickup gets close to thirty mpg on the road if driven very gently and averages 23.It will easily haul two adults, fifteen hundred pounds in the back and another 1500 pounds gross in a trailer IF you are extremely careful,the brakes are a little inadequate with the loaded trailer added on.
It will go fast enough in third gear to get a reckless driving ticket in Va,and it's a five speed.
Precisely my point: a 25-year-old vehicle does better than anything on sale today with the same load capacity. And my 1962 Citroen did even better: it had larger load capacity and better brakes, but used about the same amount of fuel as your Toyota. I'm sure the latest vehicles are a little more comfortable, have better acceleration, are perhaps safer, and pollute less than these ancient vehicles, but in efficiency measured in ton-miles of load per gallon they are far behind.
I have a friend who has old vehicles given to him, first thing he does is put a hitch on them. He drove the 86 celica that I gave him for a couple of years towed a trailer until the floor started to breath. then parked it. the engine was still great. No doubt he will use it for something else.
Mike
What is really needed by a large part of the U.S. population (and I suspect by many people in other countries such as Australia) is an epiphany, that we won't have as much energy as we're used to for moving stuff around (including us) in the not to distant future.
Alan from the islands
Amen!
I have been driving for 23 years I have never once even thought it would be a good idea if I was able to 'shift mass goods from one place to the other' with this vehicle...
I suspect 99% of the time most of these off-road SUVs that can tow 2000 pounds simply sit in traffic. The dark irony of the 'school run' never ceases to amaze me...
Nick.
1) Rent a boat at the lake.
2) Make own manure. Buy it from somewhere closer. Rent a truck for a day.
3) Rent a truck for the day.
I see the moped/bike/very small car becoming popular. Rental of bigger vehicles by the hour.
The best, fastest way to accomplish this would be to ration fuel. (IMO, no more fuel should be rationed out than can be produced within our national borders, at the most).
Of course, this won't happen. Instead most will be forced to buy a bike, maybe a moped, when they lose their job, or make too little to afford gas. Then they might be able to afford truck rental. Then society might reset at lower consumption.
People won't change until they have to, but sooner or later, they'll have to. I think this will be well before we are all eating each other and burning corpses for heat. It probably won't be before mnay are unemployed. It probably will be gradual.
While it's nice to think about natural gas as a replacement, I would rather see it put off. I don't want our fleet of guzzlers converted to gas. I want our smaller, hopefully more efficient, fleet converted to it.
Buy a small car with 50 MPG. Then rent or borrow a big car if you need to tow stuff.
Andrew,Jeppen,
Renting for a day is a good idea,if your need is truly only once in a long while.In principle it should be a good policy even if you need the vehicle rather often,say once a month.Renting once a month is certainly cheaper than buyimg new.
But here in the states at least,rental rates day to day are kind of high in relation to ownership if you own a clunker.The same applies to tools.
The last time I needed a to rent a large truck the rate was 125 bucks, bring it back the same day.The collision damage waiver (they WILL find and charge for a scratch or parking lot ding sometimes) added another forty.Add in the inconvenience,and the possibility you're late,and that comes to quite a bit if you need that truck very often.Power tool rentals are so high that lots of them rent for 20 to 25 percent of the new purchase cost per day.The rule of thumb among small tradesmen is that if you will use it three times in three or four years,buy it.
I can buy a sound older truck like the one I rented for less than 5,ooo bucks and pay the fixed costs for about 800 per year.Considering that the life of such a truck is indefinite but easily 500,000 to 1,000,000 miles ,and it's THERE when needed for jobs that won't justify the rent,most folks just buy the truck.It's a lot cheaper and quicker to haul three or four tons on a big truck than it is to make three or four trips with a pickup truck,but that's the still cheaper-and may not take any longer- than renting if you are self employed and own the pickup.
Now I expect that all this is old news to most folks but it sets the stage for a discussion of car sharing clubs which I understand are taking off as businesses these days.I don't see why the concept can't be expanded at the right place and time to include a couple of big trucks,or a farm tractor with implements,etc.
Does any body here have any actual experience with along these lines as a club member or customer owned operator?
I suspect that at least part of the answer is performance. Just about any car sold in the U.S. will go zero to 60mph in 7 seconds. My 1969 Porsche 911S would barely do that and I thought it was a rocketship! A VW that I had at about the same time would go zero to 60 in something like 25 seconds. I don't think most people will tolerate that kind of performance today. I've suspected for a couple of years that the car companies have understood that very well and traded off mileage for performance even in cars advertised as economy cars such as the small VW models that actually have 5 cylinders instead of 4. Their mileage is nothing to brag about (25mpg combined)but they look like economy cars.
It sounds like the 2004 Passat TDI. I'm averaging over 35 MPG in mine (when not towing) and it has a rated towing capacity of 650 kg (1430 pounds). I have actually pulled far more than that, like a 5x8 trailer which weighs 1080 pounds empty, filled with firewood. It takes a 900 lb 4x8 U-Haul trailer and 0.9 tons of cargo up mountains in 5th gear at 65 MPH.
If anything, it is over-powered. The engine could be replaced with the 1.4 liter 3-cylinder TDI and still maintain the 65 MPH uphill at 3 tons GVW, albeit in 3rd gear rather than 5th. But that would boost cruising economy quite a bit with the reduced weight and friction.
There is a heaping s**tload of stuff we could do easily, we just have to do it.
It seems fairly obvious that the intend is not to increase fleet fuel usage but to stimulate demand for new cars, thereby giving the car industry a shot in the arm and make the gvt look like a good manager.
WeekendPeak
Engineer-Poet,
While I agree with your conclusion that this is not going to help much with the probable fuel crisis, a few things worth considering about averages.
If the average is 25mpg for the entire fleet of 220 Million vehicles, for every 17mpg vehicle we need to have two vehicles getting 33mpg to give an average of 500 gallons for the 12,500 miles, as Joe uses 241 more gallons and each 33mpg vehicle uses 380 gallons( ie only 120 gallons less than 500 gallons). Similarly for average VMT a few will travel 25,000 miles requiring 2 times as many vehicles only traveling 6,750 miles /year.
This means there are a few vehicles using a very large amount of fuel, and a lot of vehicles using a more modest amount. Getting those gasoline hogs off the road( or converting to CNG or EV) is a fastest way of reducing fuel use, it can be via rationing, or high prices.
Getting PHEV or 50mpg vehicles into the hands of high VMT drivers and keeping the low mpg vehicles in the hands of low VMT users will do the most. Unfortunately we probably have a lot of Prius owners who don't drive that much.
Joe has another option, he can buy a used low mpg vehicle for just a few thousand dollars, save on fuel and on repayments.
Those opposed to cash for clunkers might also mention the waste of materials including plastics, steel, aluminum, copper, lead, zinc, silver and platinum. Though there is considerable recycling from automotive scrap, recycling requires energy and is never complete.
Robert,
You have brought up a very important point.
As others have pointed out, the amount of energy used to manufactue a car is a multiple of the energy used to drive it for a year,even though the car contains a lot of recycled materials.Just what that multiple might be I cannot say as there are figures out there that are all over the map depending on the way you draw the lines.I would like to add a little more to your comments.
One thing that I have noticed is that even the younger single guys were parking thier hot rods during the week and only driving them on Saturday nights when gas was 4 bucks. Most of the folks I know these days are either retired or if working aren't making much-typically no more than 20,000 around here unless highly skilled or professional.
These people drove anything they could get financed for decades,but over the last ten to twenty years especially virtually all of them have switched to more fuel efficient cars.Not very many of the older cars and trucks they traded in have been scrapped except as the result of a major breakdown or accident.
These older cars and trucks are still in use,but now they belong to the folks who need really cheap cars/trucks and can afford to drive them because they drive very few miles.My Dad used to drive a big 72 Ford truck purchased new that got 12 mpg.He traded it on a new small 92 Ford that gets almost twice the mileage.His old truck is still on the road,but it is used only to haul firewood,hay,fertilizer,and so forth maybe a day or so a month.It might be driven in a pinch another day a couple of times a year if the current owners compact car is in the shop for maintainence.
The 92 is driven only as necessary as the family car gets considerably better mileage.The 92 will find its way eventually to someone who probably will drive it even less if gasoline is 6 or 8 bucks a gallon.The new owner will probably commute in a 50 mpg car by then,or ride a bike or small motorcycle.
These older vehicles may look bad at first glance from a conservation pov,but we may-probably are- actually saving energy by keeping them running in the short term,given the energy costs of building new vehicles.
When these older vehicles are scrapped a few years down the road ,thier ultimate replacements will be built to tougher standards than the ones currently in effect.The bottom line is hard to predict but it is certainly possible that keeping our little used old clunkers on the road will ultimately conserve fuel by delaying the sale of new vehicles until fuel economy goes up.
It's not at all about energy to them. Sure, energy efficiency to the cover story for it, but it's really about auto industry stimulus and overall economic stimulus. So to them, any talk about the energy needed to produce the new vehicles or to scrap the old is entirely beside the point.
The biggest road block to getting more fuel efficient vehicles in the USA is - Ta Da - The US Government!
The Smart for Two car gets 60 mpg in Europe and after changes required by US Government to import them here they only get about 40 mpg. (and that is on expensive Premium fuel!)
The Ford Fiesta is one of the most popular cars in England and gets almost 60 mpg. The Fiesta is due to be sold in the USA in 2011, but after making the changes to meet Government requirements it only gets about 40 mpg in the USA version. And the Fiesta for USA distribution is to be manufactured in - Ta Da - Mexico! Having had ample experience of buying supposedly identical parts for my VW Beetles with some parts made in Germany that cost twice or more the price of the made in Mexico parts, I found that the German made parts are worth 4 to 8 times the Mexican parts considering the labor to install, uninstall and replace the mostly substandard/faulty Mexican parts. I can't imagine what Ford is thinking?
There are a LOT MORE cars (and small trucks) available in Europe and elsewhere, but none of them can be imported into the USA because of - Ta Da - US Government regulations.
The more one listens to the messages coming out of Washington DC these days the more one understands what was meant by "double speak" in the book 1984.
The only way to get a small fuel efficient pickup in the USA today is to buy a used one from the 1980's (remember the VW Rabbit pickup that got 45 to 50 mpg back then?)
It's not great but going from 17 mpg to 19 mpg saves 10% and going from 17mpg to 22mpg saves 23% in gas use.
If you drive your car 12000 miles a year that's 75 gallons.
Also the old mpg rates are badly inflated, so comparing them to new 'corrected' ratings will save more than you might expect.
Besides, old cars get lower mpg in part because people run them into the ground.
Obama wants the new fleet average to rise to 35 mpg in 2012 so if this turns into a multi-year program we will see over 25% savings (a lot more $4500 deals).
As far as the money goes,
they probably had some economist figure that a certain number of cars would be sold if a rebate was that high.
This is 'economic stimulus', not maximizing energy saving.
I would guess that this won't amount to a large number of cars.
It would be better to get them into 35 mpg cars but an actual 10% is a good effort.
From 2000 up until all hell broke loose, the US was going into debt 500 billion (half a trillion) more every year. Then suddenly the long term debt went from 9.5 to 11.5 trillion in a few short months to try and pull us out of an economic crisis. We went from owing an equivalent of 17,500 per person in the US (figured at 300 million people) to 37,500. each and that was during 8 years of reasonably priced fuel, which obviously got higher just towards the end of 08.
Now we face a huge long term debt, yet we need to spend huge amounts more on a CNG infrastructure or on replacing gas guzzlers with hybrids or electric that get great mileage. But the problem is there isn't anymore money to borrow. If we try to borrow huge amounts of more money, whose going to lend it to us? What would happen to interest rates if the US credit rating drops? What if countries stop lending us more money?
When we should have been making the transition to plan B, we didn't do it. Instead, we gave away tax cuts and fought an unnecessary war in Iraq.
You can see where we are going. The money pot is empty - supply is dwindling - time is very short for a plan B...
Cslater8,
It's never too late for plan B, CNG conversions can't be too difficult if Iran and Pakistan are doing them by the 100,000's.
We can live with gasoline rationing, it will be easy after the first few weeks of confusion. People will change driving habits, put their names on orders for PHEV's EV's and really efficient vehicles and tough it out for a few years until Ford and GM realize the SUV is dead( amazingly they don't seem to get the message yet) and start producing a few million EV's per year.
The only disaster is trying to stay with plan A1 and A2( drill for more oil, or invade another middle east oil producer).
I like your optimism but where's the action? There only seems to be lip service so far. Why must the proverbial sh!t hit the fan to get govt., business and people to act?
The latest tally is about $720000 per taxpayer owed in federal government debt and promised future government obligations (Medicare and Social Security). It is actually pretty amazing that not one reporter even has the nerve to question Obama about the fiscal reality of the USA.
I think 720K is not correct. I think the number is more like $150K per person in the US (about 50Trillion debt and obligation all together - might be 60T now).
Still, $150K is a lot of dough. How can you tell your baby who barely can walk that he owes $150K via the generosity of Uncle Sam. The only hope for this baby is the system collapsed before he starts working.
The last estimate was 72 trillion and 104 million USA income tax payers.
Those numbers are highly contingent on future health care costs. Social Security is in decent shape, but at the currently exponentially growing medicine costs the burden is extreme. I have finally heard Obama say what I have been saying for years, either we fix healthcare -or it bankrupts the country. A major key to any continuation of the USA as a viable economy is to get healthcare costs under control, fail that and nothing else will matter.
That $150K/capita is the amount your socialist programs are underfunded until 2082. Since current GDP is on the order of $50K/capita, I don't see $150K over a 75 year period as a big problem - a 4% of GDP tax hike would suffice to cover this. You'd still have taxes well below 40% of GDP, and much of the industrialized world is already above this, partly due to them being ahead of you with regard to the demographic changes you are facing.
One of the problems is that the $50K/capita will not be maintained under current policies. Among other things, the refusal to enforce borders is importing an enormous underclass from countries where even the 4th generation has a college graduation rate of 9% (compared to 25% or more for other groups). Every $20K producer requires a $80K producer to meet the average... and even if we wanted to import those, there aren't enough of them. To fix this, we need radical changes.
Overpopulation is a big factor in the world's problems, and the USA is far from immune. California's water problems are greatly exacerbated by overpopulation, which is driven entirely by immigration (there is a net loss of natives from California). Time to close the borders and deport the illegals.
I agree, and would like to add that rationing would be stupid. The price will make supply and demand match.
On CNG conversions I suggest restricting them to pickups/utes built after 2000. If the owners really need to tow a heavy trailer or carry construction tools then they might accept a speed limiter set at 100kph/60mph. The idea is heavy haulage not boy racing. If these vehicles were also able to run on a liquid like petrol or diesel that may initially compensate for the lack of filling stations.
A huge amount of NG could be freed up by not using it in baseload or intermediate electrical generation. That is a job for nuclear power. Remember NG can be supplemented with biomethane, coal seam gas and methanated syngas. That might keep some high priority classes of vehicle on the road for decades.
I totaled my car a couple of weeks ago. I was was dreading buying a replacement, but I was able to buy a new VW Jetta TDI diesel for only $22K. I'm happy now because I've been getting about 47 mpg, which is about double what the old car got. This will save me over $1200 this year, and a lot more later as the price of gas goes up.
My point here is that replacing a car unless you really have to is not a good idea, but if you do have to replace it, think for the long term. The cash for clunkers program does not help with that.
That was what I paid for my first house in 1973 I have no idea what that property would be worth these days,[guess $350,000] But I bet after a similar lapse of time your car wont be worth more than you paid for it.
Mike
Assuming that one insists on owning a sedan for work or pleasure, the Jetta diesel would be an interesting choice. It has garnered good reviews. It should last many years with proper care. It would have a long range, with a potential for extra fuel storage, ideal for a period of low fuel availability. But a jetta with a convention engine would be significantly cheaper. In a post peak oil world do TOD experts expect continued availability of diesel fuel in the US at a price competitive with regular?
"Chavez steals anything that comes into his country."
I stopped reading this article on meeting that ridiculous and ignorant remark.
Jim Kunstler is much more percipient on the happy-motoring society: it's finished, with or without 50-mpg cars. Get used to it. Relocalise and learn to walk/bike/bus/pool your journeys. If enough of the US's power-wielders can wake from their delusions in time you might even be able to add a modestly refurbished railway system to that list, though that isn't looking too likely at the moment. But universal happy motoring is living now on borrowed time, which will run out pretty soon. 2012 is a good guesstimate.
You obviously aren't paying attention. After reneging on contracts with oil companies, Chavez is now confiscating oil service firms. After this, there will be no further outside investment in Venezuelan oil (or anything); whatever they need will be on a cash basis, and Chavez would rather cannibalize his productive capacity than invest in maintenance, let alone expansion. This means Venezuelan production will continue to collapse. I expect Chavez to be deposed after the next price spike and retreat, but that's years away and Venezuela will never expand production enough to compensate for depletion elsewhere in the world.
Reneging on bloodsucker-contracts with foreign and domestic-comprador land-sharks, and taking over their holdings in your country? Yes, it's called nationalisation. One of the standard moves in the repertoire of democratic socialism (the real article, that is, rather than the comic USAmerican propaganda-cartoon version, so naively believed-in by so many USAmericans, it seems).
And you imagine, do you EP, that if the gangster-capitalists of the US corporate 'elite' disinvest from Venezuelan oil, then the whole of the rest of the world will just follow suit automatically? Well, maybe the dwindling band of the US's obedient poodles, like England. But what about China (as just one example) whose leaders currently think that they need all the overseas petro-energy that they can contract, and are showing very willing.
China is keen to stop taking on any more US$s too, and to offload what it's got. Not that the Chavez government would want them anyway. The just-concluded Yekaterinberg conference of the SCO countries, from which the US was specifically excluded despite requesting observer status, continues the SCO-states' decisive moves towards creating currency arrangements for international trade in essential commodities which will release them from their recent enslavement to the US$. Another nail in the dollar's coffin, I imagine, in this new multi-polar world.
And as those arrangements proceed, do you really imagine that no-one will want Venezuela's petro-products, and no-one will be willing to make bilateral, or US-excluding multilateral trade and investment agreements with that country? Because of Hugo? He's actually quite well-thought-of you know, outside the USukisnato exploitation axis (pronounced 'You suck 'is nato').
In any case, as Jeffrey Brown has been exploring so cogently recently, exporter states are thinking more and more these days of no longer straining every nerve to blow away their vital assets to over-thirsty importer countries. Conservation for home use, and restrained, highly-profitable foreign trade with carefully-selected partners is now in fashion. As is CO2-pollution-reduction, belatedly.
The US has been importing about 15% of it's daily oil-demand from the world from Venezuela specifically, according to recent figures. So do we imagine that the US can just lose that flow -- in its present desperate condition -- and not plunge even further down the tubes, instantly?
I suspect that Venezuela's oil industry, whilst rocking on its heels somewhat under the universal impacts of the current economic chaos, just like everything else all round the world, will remain as much in demand, and as able to find finance as any, whilst its repeatedly-democratically-elected Chavez government continues with the proper socialisation of it's country's assets, for the benefit of all its citizens, rather than just a rapacious, self-serving US-comprador minority. The bulk of the Venezuelan people seem to continue to like that idea, as do many other South American peoples.
As for the prediction that Chavez will be gone soon, doubtless with the constant intrusive criminal help of the CIA, of course; well possibly. But he's survived pretty well so far, and has been re-elected (genuinely, unlike the Bush-mascotted junta ever managed) repeatedly. But anyway, the currents running in South America are not about individual personalities, but about the steady liberation of an entire part-continent from it's recent overlord in the north. The removal of individual elected leaders by criminal realpolitik thuggery isn't going to stop those currents, as the US fades.
And in any case, the South American peoples can read the very plain writing on the wall: The US is hopelessly overstretched in its inevitably-failing war to try to grab control of the Caspian-Hormuz Sweetoil Corridor and the vital surrounding Pipelineistan [hat-tip to Pepe Escobar] states. That may be the key to global domination, but the US isn't going to be able to snatch it. (Which one of the world's thug-imperialists has ever been able to subdue Afghanistan securely and keep it under control? Name one! Anyone familiar with the repeated fiasco-attempts by English imperialism in its heyday? Or the USSR's more recent fiasco?) Eat your psychopathic-criminal heart out McChrystal!
The US is no longer able to intervene with the standard elected-government-overthrowing scams in South America, the way it used to. The idea of an actual invasion of Venezuela, at the same time as getting steadily defeated in South West and Central Asia, is seen increasingly, around the world, as a joke. And as all this is happening, the steady, unstoppable slide of the US towards the same crash which annihilated the Soviet Union -- only worse -- continues. Every day that passes bleeds more strength from the 'world-hegemon', never to return. Meanwhile, the successor, multi-polar arrangements unfold steadily.
And in that global context, this post talks about continuing to run motor vehicles in the US that get all of an 'enhanced' 30-40 mpg! Even (whisper it) 50, just like my last-ever old clunker VW did without even trying very hard. I spy a certain small disconnection from the more horrifying facts of current reality here.
I say again: go back to Jim Kunstler's Kassandraisms. Despite all his blind spots, Jim sees it clearly. Dmitry Orlov sees it even more clearly. See his latest at Club Orlov, 16 June 09: his address to the FEASTA conference in Eire. Anything by John Michael Greer is always pretty sobering too. Try it! In the global circumstances which those trueseers foreshadow, I think the whole technowhizz discussion on this post about how to keep the cars running is -- well, a little detached from oncoming reality, shall we say. Get well-prepared for de-financialisation, de-globalisation and enforced, modest, local self-sufficiency, because that's what the survivors are going to be doing, like it or not, everywhere, including in the US. And get used to the idea that y'all in the States will be using cars'n'trux a WHOLE lot less, on what's left of the highway system in the near future. And as for SUVs: well you know what you can do with those. The vehicles which you do keep will -- perforce -- be a lot more modest in their demands.
Best regards to all, including you EP, old soak! No animosity intended in my forthright style. It's just that I was always hopeless at tact and diplomacy, and I get worse as I grow old disgracefully. RhG
And if you destroy essential competencies needed to keep your economy going, it's called "suicidal idiocy". Such subjugation of competence to ideology is exactly what Trofim Lysenko did to Soviet agricultural production. The results will be the same.
I don't think they'll be willing to let Chavez steal from them either.
"I don't think they'll be willing to let Chavez steal from them either."
No, E, I'm sure they won't. But unlike the gangsters who've usurped the US pretty much since its inception, subverted its truly wonderful Constitution, and steered it towards being the worst smash-and-grab nightmare empire of world history, the Chinese have a long -- I mean really long -- history of treating their smaller peripheral trading partners with rather more diplomacy and leniency. Sort of not killing the goose that lays the golden eggs.
Imperialists too, without a doubt, with all the criminal schweinereis which that always implies. But just with that different style.
My points in disputing your descriptions and prognoses are two:
First, expropriating the loot of a gangster comprador class, who serve foreign imperialist looters more than they serve their own country, and who take a cut of the spoils to live in disgraceful, selfish luxury whilst the bulk of their own compatriots starve for the bare essentials of life, isn't stealing at all, but the recovery of the proceeds of theft into the hands of the proper owners.
Second, no-one in their right minds wants mad doctrine to overwhelm sound engineering and financing practise. But I see no sign of the Chavez-led Venezuelan government being so crazily doctrinaire, in the style of Lysenko and his supporters. They simply want sound, reasonably-restrained socialist practises -- already use-tested extensively in various parts of Europe, to look no further -- to replace in their country the disasters and crimes of unrestrained 'free'-market gangster capitalism, Washington-consensus-style, which has been so conspicuously successful at taking studious care of the planet's life-supporting natural systems, and at making sure that every human in the world achieves prosperity and the good life -- now hasn't it.......?
I'd say that there is, therefore, a very good chance that as the US's global-hegemon strength bleeds away in its lost wars in Central Asia, successor powers -- the Chinese likely being amongst them -- will make reasonable arrangements with the Venezuelans to buy their petro-products, help them maintain a competent infrastructure to keep the products flowing, and give them a fair -- as opposed to a ruthless-gouger -- return for their exported assets.
There are, after all, enough importer-countries in the world getting increasingly desperate about their energy problems for Venezuela to be able to choose who it will deal with, and what contracts it will accept. The Chinese gics [see fifth para. below for definition of this acronym] in Beijing seem to understand this.
And successive Venezuelan governments, with or without Hugo, will do what they can to continue the democritisation and socialisation of their country, at least if the popular will can continue to hang on to its improved and still improving share of power there, since the Chavez revolution began -- on the shoulders of massive popular pressure, of course, and empowered by the freedom opening which the decline of the US empire has given to South America.
It goes pretty well without saying that any USuk citizen who wants to know what's going on in Venezuela, and indeed in South America more broadly, will need to treat anything that they get from the corporate media in our countries with a bucket of salt.
In fact, to get a seriously-reliable picture, it's probably safer just to junk their output altogether and ignore it. Instead, it's necessary to go ferretting about for more basically-reliable information-sources, before even beginning to firm up an opinion about what's going on their.
That's why I said at the beginning of this conversation that calling Chavez a thief is a ridiculous and ignorant remark. It just doesn't tally with soundly-researched reality. It sounds, on the contrary, exactly like a regurgitation of the sort of puerile propaganda dreck which spews constantly from the ignorant and naive hacks of the USuk corporate media whenever they speak about Venezuela, or Cuba, or any of the 'official enemies' of USukisnato.
After all, actual sound knowledge of a subject, to a minimal professional level of competence, isn't required in a Western media hack when dealing with such targets. The hacks just have to have their usual little bag of tricks: know what must always be said; know what must never be said; know what are the 'right' attitudes to take, and so on. Corporate-media hacks aren't chosen and elevated to prominence on the basis of their competence as professional-level investigative journalists, after all, but for having the 'right' attitudes and beliefs naturally; that's to say: for their serviceability to Western realpolitikal power-holders: the gics; the super-wealthy gangsters-in-charge who run both the economic commanding-heights of our countries (including the corporate media, natch), and the wholly-owned sorry crew of Congress and Parliament pocket-politicians -- such as Obama and Brown, for example -- who front for them.
Posters to TOD, though, need a much better standard of connection with actual reality to be taken seriously on this rather higher-quality information and analysis forum. It's because of the quality of TOD that I'm such a devotee. TOD has been a bastion of sound connection to actual reality all through the now-ending wilderness-time when the approved corporate-media hacks, sensing as they do the current gic-preferred in-attitude to take, were all scoffing at the idea of Peak Oil -- without, of course, having the least understanding or knowledge of the subject. To maintain TOD's usual standards of objective excellence, petro-exporters like Venezuela need to be discussed without intrusions of the facile political alleged-truisms that pass muster in the corporate media.
This is the kind of rhetoric I expect from hard-core Marxist ideologues. You haven't seen a country you couldn't reduce to grinding poverty, and tout your progress against the capitalist oppressors all the while. Here's the kind of doubletalk characteristic of your camp (Xinhua):
The replacement of a free market in oil services by a state monopoly is called "eliminating a monopoly". It's all about political control and getting rid of people who don't toe the Chavez party line.
You've paid no attention whatsoever to what Chavez has been doing (or the facts can't get past your ideological blinders). From The LA Times, back in 2005:
And from the Dow Jones Newswire, last month:
In plain language, Chavez can't find anyone to sell him services at the price he wants, so he's just going to steal the companies doing the work. He will find that they can't do the work any cheaper, and the work will certainly be done less efficiently and competently after he's purged them of all his opponents. But that's irrelevant to people whose most prized possession is their copy of Mao's Little Red Book.
Sorry EP, I can't keep a straight face any more: Citing the Los Angeles Times and the Dow Newswire as if they were to be taken seriously as reliable sources of sound information? Oh come on, matey! Chomsky and Herman weaned all of us who were prepared to see from such naivety years ago. You seem to be suffering from a truly USAmerican level of disconnection from reality. Too much credence given to your domestic propaganda apparat, I fear. A common problem for sheltered metropolitan citizens in tottering empires at the end of their lives, it seems. It afflicts our BBC Washington correspondents too. Their respectful, cloud-cuckoo-land reports from the imperial capital are just hilarious. Justin Webb in particular is a hoot! They do it unconsciously though, of course, in ways that they seem not to intend, nor even to notice. Seeing them take the whole circus so seriously just makes them all the funnier.
Incidentally, I was never a Marxist, just a common-sense realist with no One True Faith to defend, and with enough savvy not to trust the media or the politicians, anywhere. I even keep a cold eye on more convincing operators such as Hugo and colleagues in Latin America, despite their apparently more honest and egalitarian intentions and their constant re-application to their electorates for approval of their policies, through repeated referenda and elections, and through the distribution of power as widely as possible amongst the grassroots organisations of the common citizens, especially in Venezuela. (Doncha just wish our ruling crews would be more like that.....!)
And I think the Red Book is just a dull joke.
I think, EP old soak, that I must drop off this discussion and leave you to your 'free'-market illusions -- for whatever short time they have left. We'll see whether they keep y'all warm and keep your cars running. I doubt it though. Byeee!
A major problem I foresee with higher energy costs is that it will actually make it more pleasurable to drive ( if you can afford it and a lot of people can) by removing congestion from the roads.
Gasoline at $10/gallon might get the young, the poor, the middle income folks out of their
cars and onto bicycles, mopeds or public transit but it will affect the affluent hardly at all except to make their drives more pleasant.
$10/gallon gas is not that big a deal to a person who can spend $75,000 for a car. Even
if it was they could simply buy a $25,000 car and use the rest of their car 'budget' to buy 5000 gallons of $10 fuel and enjoy the less congested roads and find parking much easier.
Clearly that outcome would be outrageous but it is probably the most likely one if we simply let fuel prices be the determining
factor on who must economize and who need not.
I would argue that higher energy costs will make it less pleasurable to drive. The reason being that local governments will be strapped for cash, and will scrimp on road maintenance.
Not to mention the feral children who will entertain themselves by throwing rocks at nice cars!
We never did learn to tug the forelock vey well.
"...it will affect the affluent hardly at all except to make their drives more pleasant."
Pleasant? What, you mean being surrounded by angry crowds who will burn them alive in their cars? That's pleasant?
$10/gallon fuel will collapse the US economy so thoroughly into social chaos that only a lunatic would go out in a big car and take the chance, unless just now and then for absolute necessity, with an armoured escort. If they can find the fuel.
And -- er, affluent? You mean having lots of those green paper things which no-one wants anymore, and which no-one will take for anything you may want? Expect to see a lot of 'affluent' people realising, with desperate cognitive dissonance, that despite their pallet-loads of greenbacks (and maybe even their stashes of gold) they are suddenly destitute, because these pretty useless symbols of notional wealth have stopped getting them the real necessities of life. You can't eat them, or put them in a fuel tank, or fertilise soil with them, so no-one wants them.
Really: to grasp in more detail just what I'm talking about here, read the transcript of Dmitry Orlov's address to the FEASTA conference in Eire. It's at his website, Club Orlov, under the 16 June date. Dmitry has been there, at first hand, in Russia during the collapse of the USSR. And he sees the same signs in the US, as plain as day. I see them too, here in Britain. It's happening. And now the global conditions are a lot worse than they were even in 1989 If you want to survive, and see your children survive, prepare: learn to grow food; learn to make GENUINELY useful things with simple tools and no reliance on a hitech infrastructure; and build local community and your honoured, useful place in it as fast as you can.
Waffling about delusional technofixes and economic manoeuvres which aren't going to happen is no longer appropriate. The Limits To Growth have us in their teeth, just as Meadows at al. foresaw, and BAU, even in some moderately tweaked and greened form, won't be back. The really big Interesting Times are here, folks. You can dismiss me as a crazy old loon with a doomer sign if you like. But all you need to do is to stay alive and watch. You won't have long to wait.
Regards, RhG
$10/gallon fuel will collapse the US economy so thoroughly into social chaos that only a lunatic would go out in a big car and take the chance
I guess you have never been to Europe where prices are about $10 a gallon; not exactly social chaos.
Only in the US can people not imagine a world functioning with high gasoline prices; it's not rocket science just drive in 50mpg vehicles rather than 15mpg vehicles, and drive less.
Hi Neil.
I live in Europe. I suppose the short answer to your suggestion is: That was then, this is now. In fact fuel at our prices IS collapsing our societies here now.
Rather than go on at length about it, let me again recommend a look at Dmitry Orlov's 16 June post on his website, Club Orlov, where he goes into more detail about the reiterating process of price-spike, recession, recovery, price-spike..... and how each iteration bleeds us all that bit more than the previous one.
I say again: $10/gallon vehicle fuel would - no, will - create such chaos in the US that you can expect social collapse. Matt Simmons and Cliff Wirth see it clearly too, from positions of considerable professional expertise. But you know how it is with Kassandras: no-one wants to hear their unwelcome truths.
I think that neither in your country -- if the US is your country -- nor in mine, Britain, do we realise widely just how vulnerable and essentially fragile our states are: An imperial metropolitan state, and its abject little satellite, both teetering on the brink of a Tainter/Diamond-style collapse, yet as blindly unaware of what's happening as such moribund, over-reaching formations usually seem to be.
To resolve this argument, all we have to do is stay alive and watch. It can't take much longer. 50 mpg cars aren't going to save us. Best regards, RhG
Welcome to the far side. I miss the "Climate Change is the real problem" posts. Could anyone help me out here?
Try this:http://climateprogress.org/2009/06/17/schwarzenegger-praises-waxman-markey-bill-and-rep-mary-bono-mack/
I've been waiting for a 70 mpg hybrid for some time. It looks as if there will be a market for poor milage klunkers to use as trade in to make the $4500 discount. However the moderate milage sedan I am replacing will have resale value impacted.
Both sides of coin my resale value of present sedan may be impacted in resale value by 2-3000 $, --- so I am forced to purchase a junk car in order to buy a new one that is offset by falling used economy car value.
Good post I'm glad to see someone else working through the how much a month issue.
However and obvious answer is Joe6pack is not going to buy a 300k house he is not going to buy a 200k house and its doubtful he would buy a 100k house. He's probably won't buy a new car. And no boat etc.
He is also going to cut back on spending for consumer items.
What he will do if he still has room on his credit cards is start charging them up.
Certainly a few will buy new fuel efficient cars if they think prices will remain high but remember we just had a price spike and crash so the majority are far more likely to just tighten their budget. Also of course many more people have bad credit now so the absolute number willing and able to purchase a new car is much smaller now. And the used car market is already flooded making trade-ins less that the loan value. Most people are fairly deeply underwater on their cars now many are no longer credit worthy enough to qualify for a loan.
Regardless I'd argue that the purchase of new more fuel efficient cars will be minor.
So back to the general case you have the consumer pulling back on major purchases and running up his remaining credit on gasoline. Well this means house prices will continue to fall making most people well underwater on their mtg. Eventually they will max out their credit cards and the overall slow down ensure fear of job loss will be high and real unemployment will continue to rise.
Joe6pack is stuck and insolvent. If he does not get smart and buy a more fuel efficient car if he has credit then he soon won't be able to. Some I agree will many will not and gamble this is just another spike. Once his credit cards are maxed out then he will be forced to default on them once that happens his credit is ruined.
Soon after given he is deeply underwater on his house loans and rents are of course falling he will say to hell with it and move closer to work if he still has a job if he loses his job then again he will move.
This may or may not end up being closer to work and it could well be he get a job loses it then get another farther away from his new rented house or apt or he moves closer but his wifes job is further etc.
The point is the net migration is probably a wash. What he does do from now on as as needed lower his cost of renting and or try to do his best to minimize travel. The travel part is hit or miss.
What he is not going to do is buy a house and house prices continue to fall and rents continue to fall and unemployment remains strong.
Through it all overall fuel usage actually remains surprisingly flat.
Last but not least if the guy that bought the Pruis did not pay cash for it and he loses his job you can bet it will be repossessed the moment he starts missing payments. So he could easily end up worse of then the guy who keeps the payed of clunker. More likely he will if he finally lands a new job go ahead and buy a now very cheap used car with poor gas mileage. People still able to buy more efficient cars will readily buy a repossessed one at a discount or under good loan terms competing with new models like foreclosures do.
The economic impact of sliding home values dwarfs the economic impact of the driver which is rising oil prices.
This also happens to be exactly whats happening now.
memmel,
I am not sure how the Prius owner can be worse off than one with an older low mpg vehicle, say a 3-4 year old 17mpg SUV.
1) The Prius owner has been saving money on fuel 2) the Prius hasn't depreciated as much as the SUV so the Prius owner is probably above water on the cars value.
In the middle of every recession, it feels like a depression, even when the recession is over because home prices and unemployment are trailing indicators. Focus on new home construction, new car sales, and total employment not unemployment( because of the increase in participation rates).
Your comments about oil usage indicates oil is very inelastic to SHORT TERM price, but remember the lag in 1975-80 price rises that resulted in big reductions in oil use/$GDP (or oil as % economy).
Cash for clunkers...PASSES.
Hardly a disaster. At a minimum a 10% savings in gasoline.
Cantwell(D-WA) complained that it wasn't enough but Stabenow(D-MI) said it was needed to help sell cars.
Not passing it would save no gasoline.