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77 comments on Demand destruction isn't working out so well

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louGrinzo on September 28, 2005 - 9:17pm Permalink | Subthread | Comments top
Of course there are no reasonable short-term substitutes for the overwhelming majority of gasoline consumption--that's why the demand for gasoline is price inelastic.  We sure as heck don't keep buying it because we like the lovely smell of petroleum.

The bottom line is that absent national leadership or any major effort at educating people about the realities of our energy situation in the post-Carter period, the only thing that will make people use less gasoline is higher prices.  We're at that sorry point now--we ran full-speed into the wall, and it hurts.

In the very short run people will conserve a little on gasoline by batching errands, driving a little slower, avoiding some trips, etc.  Those who were planning to (or had to) buy a new vehicle now are very likely shopping for something more efficient.  Expect to see some amazing results in the first week in Oct. when the Sept. car sales figures are released.

In the longer run people will begin to adapt and minimize the impact of high gasoline costs.  Collectively they'll continue to downsize vehicles, lean more towards diesel models, get smarter about how and when they drive, etc.  It will lessen the pain, but it certainly won't eliminate it.

What concerns me is the triple impact of increased gasoline, winter heating costs (heating oil and NG), and electricity (NG).  We've only seen the impact of the first one so far.

By the way: In the spring, the US car market will have three interesting new options: the Toyota Yaris (replacement for the Echo), the Honda Fit, and a Nissan that's sold as the Tiida [sp?] in other markets.  All are small 3- or 5-door, $12K to $14K, non-hybrid gasoline engine vehicles that should get above 40MPG highway.  Expect this to become a very hot market segment.

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Yankee on September 28, 2005 - 9:22pm Permalink | Subthread | Parent | Comments top
In the longer run people will begin to adapt and minimize the impact of high gasoline costs.  Collectively they'll continue to downsize vehicles, lean more towards diesel models, get smarter about how and when they drive, etc.

I'm desperately hoping that as part of this process, people start demanding (and moving to) mixed-use communities where you don't need cars to buy groceries, go to the post office, or run other errands. If we demand them, undoubtedly developers will start to build them.

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shep on September 29, 2005 - 4:29pm Permalink | Subthread | Parent | Comments top

T E L E C O M M U T I N G

Only our psychology prevents us from taking better advantage of this practically free, immediately available, productivity enhancing method of demand destruction.

People who use and like telecommuting will ask, more and more, to be able to use it as fuel prices increase.  We need to make sure that public policy encourages their managers to allow them to use it liberally, at least until managers understand the benefits and learn to get over their personal antipathy.

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Rick on September 29, 2005 - 12:16am Permalink | Subthread | Parent | Comments top
"Of course there are no reasonable short-term substitutes for the overwhelming majority of gasoline consumption."

  1. For the short-term post-hurricane crunch, we only need to work on the margins, to reduce the last few percentage points of consumption.

  2. It depends on expectations, what the gas user perceives as reasonable. This is a problem of value trade-offs: is the utility (did I actually use that word?) I gain from saving gas worth the investment, time, stress, hassle it requires? What Americans may see as unreasonable (less heat and air conditioning, smaller cars, more diesels, more public transport) is standard everyday practice in Europe.

There are some non-draconian options to shave a few percentage points of consumption immediately. The IEA signatories have a treaty obligation to produce an immediate 7% decrease in oil consumption if a large supply disruption occurs. Their IEA worldwide draft plan is available as a PDF:

http://www.stcwa.org.au/journal/210405/files/background_IEA.pdf

Some of these are almost embarrassingly simple. A public information campaign to encourage adequate tire pressure would save over 100,000 barrels per day worldwide. That's 36 million barrels a year of pure, unmitigated waste. I know that's not a lot now, but I'll bet we'll wish we had those 36 million barrels at some point in the future.

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odograph on September 29, 2005 - 11:46am Permalink | Subthread | Parent | Comments top
There is a story making the blog rounds about people turning in $40,000 SUVs and picking up $15,000 Corollas.  I commented on my blog that this could be a gas thing, or part of a wider economic tipping point.  I know people who I (conservatively) think shouldn't be driving big SUVs.  It may be that the combination of higher gas prices and lower consumer confidence  encourages them to get their house in order.  Or at least the smart ones.

It would be cool if driving smaller cars became a little more acceptable, and if the middle aged guy showing up in a Yaris, Fit, or Tiida, was seen as partiotic/sensible rather than poor/cheap.  We'll see.

And small diesels are still essentially illegal in California.

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Yankee on September 29, 2005 - 11:59am Permalink | Subthread | Parent | Comments top
Here's your article, odograph:

Smaller Cars Enjoy New Chic

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GliderGuider on September 29, 2005 - 12:15pm Permalink | Subthread | Parent | Comments top
Here's my data point on that subject.  Earlier this summer I traded in a BMW 540i/6 (big V8, 6-speed stick) for a 2001 VW Jetta TDI.

The reasons were purely fuel type and efficiency.  I get twice the mileage I did on my Bimmer, and the day I took delivery of the VW the first biodiesel pump opened up in my city.  I've been running it on B20 ever since, and I'm about to brew my first batch of home-made biodiesel.

My decision came about a month after I "got" the concept of Peak Oil.  It took me a month to get over my initial doomsday heebie-jeebies and ask myself what I, personally, could do about it.  The first thing that came to mind was, "Dump that damn ego-mobile."

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TRE on September 29, 2005 - 12:39pm Permalink | Subthread | Parent | Comments top
Interesting story.  I dumped my "EgoMobile" as well, a BMW 740iL.  What a waste.  And anyone who tells you that a BMW is a good machine is either (a) luckier than me or (b) lying.  That machine had more problems.  Funny, when I traded it in, with about 60,000 miles or so, the guy said "Good to trade in now, these engines have a tendency to blow at mileage above this."  Friend with a 540 had his blow just around this time.

I bought a Prius and then, after my wife decided she wanted to drive it, bought myself a Honda Insight.

An aside:  When people consider the whole issue of demand destruction, I think their thinking is so tightly constrained by the "mind manacles" of the existing socioeconomic structure, they're unable to even consider how we might work our way out of this conundrum in a way minimizes the pain and suffering.  Hence my diatribes against the constant hand wrining and whining.

What is an automobile?  What is transportation?  What sorts of convenience has it brought us?  And what kinds of inconveniences?  The automobile itself is an result of government interference, isn't it?  Would a pay-as-you-go highway system have produced the excesses that we see everday?  I live in San Diego.  Right now they are spending millions and probably billions to widen the 805/5 merge.  At the meeting point: a megahighway.  Good timing folks!!!!!

I suspect a good part of the energy used in the US is in fact used to purchase convenience.  And little more.  The convenience of not having to turn out the lights.  The convenience of not having to consider energy when purchasing a car.  The conveninence of untold random trips in that automobile to transport 100-200 pounds of flesh in a container of thousands of pounds of metal and plastic, from 0-60 in a handful of seconds.

What nonsense.

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Yankee on September 29, 2005 - 12:50pm Permalink | Subthread | Parent | Comments top
Alright, TRE, I'm starting to think that our approach to this topic is not so different after all. We disagree on economics, fine. Let's not dwell on that.

Regarding demand destruction, I don't really understand what peeves you about it, but in any case, I don't think I said anything that should have bothered you too much. Are you talking about the topic in general, or something I said specifically?

I'm sure I've said this a billion times already, but I live in New York City! I do happen to own a car, but I drive it maybe 10 times a year, and only to get out of NYC. We'll probably get rid of it soon. I also suspect that a lot of energy use is about convenience, but that also has to do with the type of environments we prefer in the US. Suburbs, exurbs, residential-only zoning. It doesn't have to be that way. In fact, it could be that the urban landscape is designed to make walking and biking maximally convenient. And they wouldn't have to be megacities like New York--they could be more like Kunstler's Saratoga Springs.

Obviously this is a massive problem, since changing the urban landscape would involve repurposing or destroying a lot of current structures. But there weren't always suburbs in America, and they don't always have to be here. Those who follow this type of thinking just have to come up with a PR campaign designed to encourage people to think that mixed use development is desirable rather than something to be avoided at all costs.

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dani on September 29, 2005 - 1:06pm Permalink | Subthread | Parent | Comments top
Ianqui, do you know about car sharing? Zipcar serves NYC and could prove cheaper than owning a car for occasional trips out of town.
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Yankee on September 29, 2005 - 1:10pm Permalink | Subthread | Parent | Comments top
Yes, I know, which is one of the reasons we'll probably get rid of it soon. It's mostly been about inertia up until now, but we're making plans for transitioning to car-free.
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TRE on September 29, 2005 - 1:32pm Permalink | Subthread | Parent | Comments top
Our opinions probably aren't that different.  Sometimes, no doubt, I'm acting too much the gadfly (jerk might be a better word :-))  All of the editors and most of the posters here at OilDrum are great. Personally, I'm just not that interested in diving into the details of depletion modeling like Stuart (I should, but don't have the focus right now).  But given the great amount of work going on, both here, and at other sites (econbrowser, Peak Energy, etc) I tend to focus more on negative contributions--what I find wrong or adding a voice of caveat emptor--rather than actually contributing something.  I realize that is somewhat self-serving and a bit cynical--or negative.  JD, if I might be so bold, is also coming at this issue from a similar perspective to mine, though I think he's a bit more enamored or convinced that humans can technologize their way out of this conundrum.  (He's also contributing more in-depth analysis in many cases).

I'm not so convinced that we can technologize our way out.  And that's coming from some with physics and engineering degrees, twenty years in high technology companies (some of the best if I don't say so myself--BBN and QUALCOMM), and an appreciation for the limits to limits, e.g. the thinking at the turn of the twentieth century that the future of physics was the fifth digit (all was known).  Then the world changed (quantum, relativity, etc).  Nanotechnology to improve solar, for example, a fusion miracle might happen (I doubt it).  I think John Horgan's book "The End of Science" should be on the required reading list for all peak oilers with a scientific bent.  Peak oil is about people accepting and learning to live within limits.  For a society indoctrinated to think that there are no limits (in particular those who came of age in the Reagan years and beyond), this will be hard to accept.

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MikeTor on September 30, 2005 - 1:44am Permalink | Subthread | Parent | Comments top
I completely agree with you. And that comes from a physicist, too :-)
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odograph on September 29, 2005 - 12:49pm Permalink | Subthread | Parent | Comments top
I met another Prius owner (I have one) at a party.  He mentioned that his BMW (IIRC a 745) had been sitting in the garage, and he is happy with his little Prius.

My Honda S2000 is sitting in my garage and doesn't move much ...

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Leanan on September 29, 2005 - 12:38pm Permalink | Subthread | Parent | Comments top
I just bought a Corolla myself, in March.  I was driving a Ford Taurus.

I was actually considering going car-free.  I live only 2 miles from work - walking distance.  Maybe getting an electric bike for grocery shopping.  

But I finally decided that it's just not safe to walk or bike around here in winter.  I chose a Corolla because it's cheap, fuel-efficient, and reliable.  I figure it's the last car I will ever buy.  If the gas stations go dry in two years, at least I won't have wasted a lot of money on it.  If the cornucopians are right, and we're all still driving in 20 years, I figure I will still be driving this Corolla.

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Donal on September 29, 2005 - 1:12pm Permalink | Subthread | Parent | Comments top
I've been walking instead of bicycling lately.  We already own the last two gasoline-powered cars we will ever buy, a Regal 27 mpg and Elantra 34 mpg, both ten years old.  I'd love to buy an enclosed electric vehicle for the winter, but there are almost no choices.  
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Leanan on September 29, 2005 - 1:29pm Permalink | Subthread | Parent | Comments top
I like walking.  There's even sidewalk some of the way.  And it's good exercise.

But in winter, it's often not possible.  The sidewalks and shoulders are under 5' plow drifts.  Huge SUVs are skidding all over the road.  And forget about trying to walk or bike anywhere at night. You're asking to be hit by a car, or mugged.  

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77 comments on Demand destruction isn't working out so well

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