* subject to various caveats below!
I’ve just been looking at some inflation data for the USA, and I was a little surprised to see that, in real (inflation-adjusted) terms, gasoline prices reached an all-time high last year. Higher than the oil shock days of the’70s – early ’80s, in fact.
I checked this against some other sources, and it seems to stack up – the Energy Information Administration and some other chap reached the same conclusion (although the other guy reckons they were higher in 1918 – my data doesn’t go back that far). Both of those sources suggest that 2012 prices were only a little higher than they were in 1980/1981, and that prices in 2008-2011 were lower than 1980/1981 – so their data might be a bit better than mine (which is CPI data for urban areas – maybe they have slightly higher taxes on gasoline than the national average). Interesting nonetheless!
Of course, “real” incomes in the US have risen since the early ’80s, so gasoline is arguably a bit more affordable today than it was then. But it’s still easy to see why vehicle travel in the US has dropped off in the last few years, and while they’re finally investing in public transport.
The situation’s a little different in NZ; “real” petrol prices aren’t quite as high as they were back in the day, thanks to our strong dollar. That could all change, though, if the dollar drops – or if oil demand keeps rising.
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Interestingly the increase if fuel costs seems to correlate rather well with the reductions in distance traveled.
I’ve noticed this myself, and it does seem to be more than a coincidence, doesn’t it? As I’ve pointed out in previous posts, further price rises are likely in the medium term, which means it’s rather silly to be planning for distance travelled to keep going up as it did in the 90s and early 2000s.
“That could all change, though, if the dollar drops – or if oil demand keeps rising.”
And if both happen at once there will be ‘shock’ and ‘surprise’ and ‘why didn’t anyone tell us’ and demands that the government do something…
Do you propose the government makes a huge stockpile so we can ride out any fluctuations? Or maybe or maybe buy back some of those think big projects that let us make our own fuel but previous governments thought best to give away in a fire sale.
Or reduce our dependenceon oil so we can function with less of it.
I propose that we stop investing in oil dependency and invest instead in resilience where possible. In order to easily continue to import oil for the productive parts of the economy we should not be wasting capital on reinforcing auto-dependency especially in our cities, and especially in our one city of scale.
The problem, illustrated:
“Of course, “real” incomes in the US have risen since the early ’80s, so gasoline is arguably a bit more affordable today than it was then. ”
Also, cars are more economical so we don’t use as much of the stuff as we used to.
The previous oil spikes generated hysteria like carless days. Also Think Big was predicated on the idea that we’d essentially reached “peak oil”, although it wasn’t called that at the time. Petrol prices eventually plummeted, we fixed a lot of the hysteria by electing a Labour government in 1984, and Think Big was an expensive failure but it didn’t break the bank. This time around the oil price isn’t really a problem for most people, there isn’t hysteria, and the only real issue is that we need to avoid basing an infrastructure program around the idea that oil is running out.
With the 2% fuel saving I bet they were getting a whole bunch more HP.
“Hardly an efficiency saving worthy of the average motorist.”
Airlines frequently spend billions of dollars buying new aircraft. There are a bunch of reasons such as lower maintenance, higher dispatch rate, and a more attractive experience for customers. But fuel efficiency always features and the savings can be really big.
Things are very different now than in the early 80s. The three big fields that came on stream just in time to plug the gap caused by the peak and decline in US conventional production [1970] are all in decline themselves now [Cantarell in Mexico, Alaska, and the North Sea] and now there are the new sources of demand; especially China and India, plus the fact that the net exporting nations themselves are all burning more which reduces the amount they are exporting even if they are maintaining production. So I’m sorry Obi we can’t just look back and say just because the wolf went away last time that he’s not there again now and hungrier. The only new sources are all difficult and expensive unconventional ones and of insufficient rate of production… we are scraping the bottom of the barrel and as such we most certainly should expect that to be reflected in the price us net importers will have to pay …
The best barrel of oil for countries like our are the ones we don’t need to import to run our economy, and with the RoNS we are doubling down on the wrong pony. Joyce also only looks backwards, but he’s in for a surprise; the future is of course unwritten but it certainly won’t be a repeat of the recent past- it already isn’t.
Hi obi, cars haven’t really gotten more economical since the early 80s – have a look at my very first guest post on this blog…
http://greaterakl.wpengine.com/2012/12/11/trends-in-car-fuel-efficiency/
Yep, even the venerable old Model-T Ford got about 25 MPG back in the day and its been mostly downhill on the MPG front every since for US vehicles.
As we all know a sizeable chunk of our petrol per litre is tax and this government has increased excise tax I believe 4 times in 5 years with another 2 rises to come. Then they added an extra 2.5% in the way of GST so the last thing they want is less consumption. Of course little if any has gone to alternative means of transport and ironically when our electric trains were going to be funded by a regional fuel tax National were so terribly outraged at another tax being forced upon motorists. I guess when this government flogs off revenue generating assets it has to get its money from some other place and perhaps this partially explains their outmoded obsession with roads, its tax rich but economically idiotic.