The Oil Drum | DrumBeat: May 16, 2006

252 comments on DrumBeat: May 16, 2006

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Leanan on May 16, 2006 - 9:02am

The cover story of the McPaper today:

Most Americans aren't likely to make big cuts in gasoline use

"In many ways, this is an insurmountable problem. There is no simple solution to get people to change their driving," says Nick Epley, psychologist and assistant professor of behavioral science at the University of Chicago Graduate School of Business.
"People adapt to all states of affairs, positive and negative, and more quickly than they think," he says. "If gas were to go up from $2 a gallon to $3 overnight, we'd be up in arms. But it goes up a couple of cents each time you go to the pumps, and pretty soon it's $3 and, 'Yeah, that's what gas costs.'
"And conservation of any kind is tough for people to take. It requires losing something, cutting out part of their lifestyles," he says.

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westexas on May 16, 2006 - 9:18am

The Dallas Morning News profiled some drivers in this morning's paper.

One driver, a suburban mother of two, said that you could have the keys to her SUV when you pried them out of her cold dead fingers.

On a somewhat more positive note, another driver, who had been making a 50 mile roundtrip per day to and from EDS in Plano (a suburb of Dallas), moved to the Shops at Legacy, a New Urbanism project, right across the street from EDS. He now walks to work.

I'm not implying a gender difference (the genders could have easily been switched), but these two case histories represent the dumb response and the smart response to Peak Oil.

Unfortunately, I suspect that the ratio of dumb to smart may be about ten to one--partly because of the concerted "Iron Triangle" effort to persuade Americans to keep buying and financing large homes and SUV's. In the NYT story on driving patterns a couple of weeks ago, I was struck by the fact that just about the only people who had curtailed their driving were the ones that were financially incapable of buying more gasoline.

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Glenn on May 16, 2006 - 9:51am

Which isn't necessarily a bad thing. I see 3 points in time where you can respond.

Proactive Response - Taking steps to curb driving/fuel consumption, start carpooling, taking mass transit/ biking more often, moving closer to work, etc long before it hits your budget significantly.

Reactive Response - Waiting to do all of the above until it becomes "very expensive" to not do it (expensive is a relative term of course).

No Choice - Waiting to do all of the above until you absolutely have no choice - repossessing the car/truck, bankruptcy, unemployment, etc

I suspect most people will respond somewhere between Reactive and No Choice. That means demand destruction instead of efficiency.

THe #1 factor IMHO is having a positive alternative nearby - trains, buses, ferries, bike facilities, etc.

Furthermore, every suburban subdivision should be fighting for a nearby plot of land or vacant brownfield site to be converted to a grocery/drug store and/or farmer's market connected to sidewalks and mass transit - maybe even (god forbid) no parking lot.

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SaturnV on May 16, 2006 - 10:29am

westexas quote "One driver, a suburban mother of two, said that you could have the keys to her SUV when you pried them out of her cold dead fingers."

Jim Minter's eerily prescient assessment of the ramifications of peak oil back in 1996 in the classic piece Joyride to Global Collapse said; Here's a prediction for you. In the next two decades millions of Americans will begin a serious search for an alternative to the gasoline-powered automobile. It is not going to be a happy search. If you think trying to wean gun owners from their passion for firearms is a hornet's nest, try talking to the great majority of us about reining in our passion for the automobile. Lordy! And yet, most of us agree there is a problem, vaguely phrased as, "There are too many other people out there clogging up the highways and slowing me down." Otherwise our attitude is similar to the rabid firearms bumper sticker:

"You'll get my car when you pry my cold, dead fingers from around the steering wheel."

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BrianT on May 16, 2006 - 11:03am

Fantastic article for 1996 (it could have been written in 2006). Having said that, certain parts of the oil depletion theory are not playing out as scripted. The theory that as oil goes up in price everything else goes up in price is simply wrong. In fact, as oil has gone from $10 in 1998 to $70 currently many expenditures have gone down in price. In Toronto currently for 1 barrel of oil you can buy: 1. a fine meal for two 2.a cheap TV 3.a DVD player. My point is that oil can go to $350 without everything going up in price. If everything went up in price as oil or gasoline went up, drivers would be faced with a different situation. As it is, the expense of driving a car is competing for the consumer's dollar with other expenses which are not increasing at the same rate. If this trend continues, it will affect driving habits. Everything (including driving) has a price. I know everyone loves to compare drivers to crack addicts but there is a difference between the two groups (hard as it is to accept).

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ET on May 16, 2006 - 12:48pm

A couple of points:

There is a time lag for lots of goods/services for prices to rise because of underlying costs. I've seen many articles citing retailers who were straining to 'hold the line' on prices. The dam will break at some point and everything will go up.
Goods/services that stay relatively cheap will be those that have a high labor component. Labor is the essential ingredient that is getting cheaper. Look at the declining real median income in the US, not to mention all the outsourcing to foreign sweatshops.
The real crunch will IMO not be high gasoline price but unavailability of gasoline with increasing numbers of spot shortages. (ok, so it was more than a couple...)

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BrianT on May 16, 2006 - 1:43pm

The relativity is the important thing. Even though people love to drive, they only have one dollar to spend and at a certain price level they will decide that driving just isn't worth it (I am simplifying to make a point). Good point about wages- they are definitely not going to keep up with energy costs.

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ET on May 16, 2006 - 2:57pm

Yeah, relative income/purchasing power is sometimes forgotten in our focus on prices. If the unemployment rate goes up and/or wages creep downward, the effect is higher price for gasoline, etc. even if nominal price stays the same. If unemployment goes up drastically, even $1.50/gal could be expensive gasoline.

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tate423 on May 16, 2006 - 3:07pm

It's called the Purchasing Power Parity and it is available @ http://en.wikipedia.org/wiki/Purchasing_power_parity.

If things continued in terms of economic growth, by 2030 or so many countries will have passed us in PPP.

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crazypat on May 16, 2006 - 1:18pm

SaturnV -
Thanks for sharing this article. Fantastic! He states all the key elements of the oil depletion problem. I love reading articles from a decade ago that clearly see the problem.

I am stunned at this amazingly accurate prediction:

[As we reach the Peak] Vast windfall profits will be made by some, which will complicate the ability of leaders to explain the reality. And the supply-side religion will tune-up its highly paid chorus.
...
The economy will slow down but the prices of everything will keep on rising. We will then rediscover the age-old truth: money is not a real thing; it is only an accounting device. Congress can't print oil and they can't repeal the Second Law of Thermodynamics.

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CarCulture on May 16, 2006 - 11:30am

These kinds of posts ignore the fact that in many parts of the country, long commutes are a result of people starting out in life, who can't afford to live near work and can't find a job that pays the bills near where they live.

I have been railroaded into a long-term, 100 mile a day commute. I originally agreed to do it for a limited time, but now face the fact that I stay at my current location, or lose my job completely.

Finding a new job in another part of the country and relocating is easier said than done.

It's sad that the incredibly intelligent people on this board still choose to blame the people for their energy-wasting commuting habits, when the fact of the matter is, even in densely populated parts of the nation, there is no meaningful public transportation. I would gladly choose public transportation if:

It was available.
It didn't take 3-4 times longer to get where I am going where it is available.

Sometimes it's not about dumb and smart, its about $$ and time. We need realistic alternatives and criticism doesn't get it done.

We need an organized effort to improve the public transportation systems in the US.

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Glenn on May 16, 2006 - 11:38am

That's because many people are actively against mass transit spending, preferring their personal cars and low taxes. I know it's a tough sell in many areas even with gas prices over $3 a gallon. Take this example from a friend in Phoenix a couple of years ago.

It takes a significant investment from the public that many are going to fight, but without real alternatives to the personal automobile, the inelastic demand for gasoline will continue until it reaches a break point and real demand destruction occurs through bankruptcy, repossession of cars/houses, unemployment, etc.

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Torion on May 16, 2006 - 3:48pm

FYI, The light rail won. It's being built here now in PHoenix.

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Glenn on May 16, 2006 - 4:49pm

I know and that's great. I just thought it was funny to point out how people just love their freeways...

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Substrate on May 16, 2006 - 11:22pm

But hey, what better way to support the highway than to get all of the slow-poke light-rail-lovers off of it? Right? ;)

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westexas on May 16, 2006 - 12:13pm

"I have been railroaded into a long-term, 100 mile a day commute. I originally agreed to do it for a limited time, but now face the fact that I stay at my current location, or lose my job completely."

My guess is that a fairly old sedan probably costs you about 25¢ per mile, while a new large late model SUV probably costs about $1.00 per mile (total driving costs). So, I would put your monthly commuting costs in a range of about $500 to $2,000 per month.

Question: what if you reduced your current living space square footage by 50% and applied an additional $500 to $2,000 toward your rent/house payment. Could you then afford something within a short distance of your job? You should also consider the time involved in your commute--I assume about two to three hours per day. You could spend this time working--and making money--instead of spending time and money commuting.

When faced with seems like an insurmountable problem, it's useful to assume that you have solved the problem and then work backwards to "figure out" how you you solved the problem. What if you were paying $8 per gallon for gasoline. What changes would you make in your lifestyle?

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CarCulture on May 16, 2006 - 3:15pm

In my case, and I feel I am not exceptional, the only option is to find another region of the country to live in (I am currently in NJ).

To answer your questions, my typical commute is 2.5 hrs a day if I speed. I drive a 2 liter 4-cylinder manual. My commuting cost is about $325 a month at average current mpg figures and 3$/gallon.

I already pay low rent: the other tenants are also young professionals, blue-collar couples, and recent immigrant families. My living space is modest, and to move near the central Jersey/NY metro area would raise my rent by about 25% for an apartment that is half the size of my current one (which would be something like a basic small studio). Being that I don't drive much outside of my commute because I live near the places I use for recreation (Mt. Bike trails, fishing ponds/lakes, parks, etc.) it wouldn't be cost effective to move because what i saved by moving near work would be offset by what i spent getting back out to recreational areas on the weekends. Here I have to admit that it IS a standard of living issue, however, being rural 'born and raised' means I would have to sacrifice my ENTIRE way of life to move to an urban area. As it stands, I dont use much gas or energy or even money in my free time!

My major qualm with the attitude on the site is that it tends to advocate only one real sustainable solution, which is urban living. At the current trend of rising inflation alongside reduced real wages, my young-professional paycheck does not allow me to live in a safe urban area in NY/NJ. I live in a rural area! That's what I can afford! Also, outside of my commute, the rural way of life is far more sustainable and uses far less energy than that of the urban way of life. My entertainment is outside, in the woods and around the lakes.

Getting back to the real issue:

There are plenty of major businesses within 20 miles, however, NJ is densely populated even where I live and the competition is fierce. Most jobs that I am offered are in NYC or in the area I currently work because thats where the majority of businesses are. There are no express lines to the city, and the train to NYC is 2.5 hours, one way. In what I consider to be the ultimate insult, there are no trains/buses running south/north, which would greatly ease my problems.

Only east/west.

The competition, and the ever-accelerating race to the bottom dictates that I must stay extremely mobile just to stay afloat. I could do this, and be more energy efficient, if there was better public transportation. Just one north/south line in western NJ would do the trick. Given the population density, it is not an unreasonable solution for hundreds of thousands of people!

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Leanan on May 16, 2006 - 3:22pm

I think rural areas are going to be hit hardest by peak oil, at least at first. Maybe not NJ, but the "red states." People tend to be poorer, and drive farther (because they have to). And if there are actual shortages, it will be cities - areas of higher population density - that get supplied.

Many peak oilers are preparing for the crisis via homesteads in the country, but that's not what most rural Americans have. They are not anything close to self-sufficient.

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phineas gage on May 16, 2006 - 4:52pm

Leanan,
in some ways I agree with your predictions regarding rural areas but in other ways I have to disagree. If by "rural" you mean two counties removed from D.C. or Chicago, and you're really referring to the spread of exurbia into formerly rural areas, I completely agree. If you mean truly rural areas, I'm not sure that I do. I live in a county of only 60k people, less than half of whom live in a town or village. We still have lots of farm land (and un-farmed farmable land) to go around. we have a fantastic farmer's market. We have way more fresh water than we could ever need. There are tens of thousands of acres of forest. We have wild turkeys, deer and other game plus nut trees, wild berries, mushrooms just growing naturally throughout our county. Our rivers and lakes have lots of fish. Many people here still have their own "gentelman's farm", raise their own chickens for eggs or keep a dozen head of dairy cattle to carry on their families farming tradition. So unlike cities, those of us in rural areas at least won't have other natural resource and food scarcities to cope with as peak oil unfolds. Furthermore, as diesel fuel and pesticides/ fertilizer become more precious, crops yields will likely decline and we may see a reversal in the long decline of acreage devoted to farming in America and the number of persons employed in farming which will benefit rural areas.
The jobs we have here are farming, timber, gas/oil/coal and industrial. I don't see why those type of jobs will evaporate with peak oil. If I lived in a large city based on the banking, investing, service and insurance industries, I'd be more worried about my local economy.

Now, I'll grant that some people here do drive 100+ miles for work and they'll be hit hard. Also many rural areas have been wal-martized, by which I mean the small downtowns evaporated and there is literally no where else to shop for many essentials bc/ everything else went out of business bc/ they couldn't compete with walmart. That will definitely be a problem.

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mojo man on May 16, 2006 - 5:01pm

WOW! Tell me where you are, I'll buy some land and move there... most of the great plains (a whole lot of people live and farm here) are only inhabitable because of oil. NG pumps the water out of the wells, diesel farms the land and delivers needed goods, and you can only grow a very limited number of things. This of course doesn't take into account the waning supply of water from the aquifer... In Colorado the state just told 200 farmers to shut off their wells because of shortages to the cities, I think Leanan has a point.

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phineas gage on May 16, 2006 - 5:12pm

Mojo man,
You've got a good point, I need to amend my above comment about rural areas doing better than some believe. Not all rural areas are created equal. I live in SE Ohio along the Ohio River. I guess the difference is that unlike the plains we get 40 inches of rain a year so crops grow without irrigation and if land is left untended forest, rather than grass plains, is the natural result. I guess I should say rural areas in the midwest/ east may do better after the peak. Another rural area that will probably do well is the northwest. Oregon gets tons of rain and crops/ timber grow very well there also.

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Kalpa on May 16, 2006 - 9:54pm

As a midwestern raised person myself, I do know some good "towns" that might be good places after PO. One thing that has bothered me, is seeing what our government did after hurricane Katrina, I have to wonder if when food supplies start running short, the government will start bussing people out of the largest cities into the "survivable" locations for them to relocate, be cared for, and work the fields, perhaps as a "work program". Has anyone else ever thought of this?

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ET on May 17, 2006 - 1:18am

Correction, Western Oregon gets tons of rain (~40"/yr) but has very hot, dry summers (July-Sept). I like the climate here a lot. Eastern Oregon is high desert and beautiful, if you like living in a water-starved area.

Moved here from Asheville, NC. Similar amount of annual rain here but almost all in winter & spring months and much lower humidity (ahhhhh!).

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Substrate on May 17, 2006 - 2:05am

Asheville's climate is pretty moderate, never getting too cold in the winter nor too hot in the summer and gets a good amount of rain. The topsoil is thin as paper though. Propensity for afternoon showers basically every day in the summer. Something's always blooming so the allergies are problematic. Too many hills to make a decent longer-distance bicycle commuting area. Also currently falling victim to overdevelopment and ballooning house prices. But there are plenty of great places to go hiking and biking.

Why'd you move?

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Yankee on May 16, 2006 - 3:27pm

I sympathize with your situation, and I agree that sometimes it's easier said than done.

However, please don't spread fallacies!

Also, outside of my commute, the rural way of life is far more sustainable and uses far less energy than that of the urban way of life.

In 2004 the New Yorker published an article called "Green Manhattan: Why New York is the greenest city in the U.S." which convincingly presents arguments showing that your statement is off the mark. There may be advantages to living in rural areas, but amount of energy use is probably not one of them.

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CarCulture on May 16, 2006 - 3:43pm

I appreciate your POV, but in no way does it prove that my statement is a fallacy. The article you provide does much in the way of proclaiming the virtues of living in NYC.....but this does not, on its own, create a logical case against my claim.

NW NJ is completely water-independant. The vast majority of homes use well-water and are within walking distance of lakes and rivers.
NW NJ was originally a river/mining economy with extensive canals and raw material reserves.
NW NJ has an astounding amount of arable land. Many farms are spread out over the landscape. Before the suburban sprawl the area was food independant.
My area provides NYC with most of its water and food. The NY Orange Cty black soil region is immediately north of me, and the Delaware valley is immediately to the west. The entire western half of NJ maintains major agricultural resources.
Most people native to the area do things like hunting, fishing and hiking for recreation. These activities are not energy intensive.
Most towns in the area still have main streets and a variety of markets, are are not McMall venues.

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CarCulture on May 16, 2006 - 3:58pm

I just find it hard to believe that living on a crowded island is more energy efficient than living in the area that produces most of what the city dwellers have trucked in on a massive scale, on a daily basis.

is your commuting more efficient? of course.

is your space management more efficient? is your electric bill lower? yes and yes.

is this because you live in an economic black hole?
YES. it is artificially supported. it has a lot of gravity and sucks everything in, but ultimately, cannot sustain itself.

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The Interloafer on May 16, 2006 - 4:37pm

I think the important thing is to separate out the points about being "far more sustainable" and "using far less energy." Yes, cities are dependent on rural areas for food and water. So your statement about problematic sustainability I'd say may hold. But urban residents use less energy per capita than those of rural or suburban areas, as you alluded to with the commuting and space management points. So the sustainability and the energy use are separate matters.

The crowdedness is a virtue that makes energy efficiency possible. Yes, stuff is trucked it, but imagine if the 1.5 million people who live on Manhattan were spread out evenly over Northwest New Jersey. You'd have no space for the farms and you'd be trucking things all over every different direction, which is less efficient than going all to the same overall destination. Anyway, we should be using rail for freight, not trucks. Rail being less spread out than highways concentrates shipments into urban cores.

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CarCulture on May 16, 2006 - 6:12pm

Interloafer, thanks for the well-timed interjection. The key is to put things in perspective and try and find solutions rather than tell people their way of living is at fault and needs to fall in line with someone else's way. I'm certainly guilty of being attached to one way of life and it shows in my bias. I'm just over-reacting to what I thought was the prevalent, urban POV on the sight.
If anything, I'm glad we got to see people chime in and give their 2 cents on the whole urban/suburban/rural issue in regards to the coming energy crunch. Its good to see people with different ideas jump in the fray and try and understand things the way I think people have just done here, because all ways of life need to change, and people have to understand the give and take of how its going to have to be done.
The way I am doing it is clearly going to become impossible soon, and thanks to this site I have begun to actively try and find another way to live.

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Glenn on May 16, 2006 - 8:35pm

I love seeing threads end like this!

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Yankee on May 16, 2006 - 11:44pm

I'm not sure that the overwhelming bias on TOD is for urban areas. If anything, I'd think that more people are in favor of the Kunstler-esque small town model where the size is manageable, there's farm land ringing the "urban" center, and people can get around more or less without cars.

Along these lines, I think that towns (not suburbs, but towns with a center and mixed residential/commercial usage) probably have the best hope since they might be more or less self-sufficient. Rural areas aren't going to work, because individual houses on 5 acre plots that are 5-10 miles from the nearest amenity are going to be too isolated. Yes, it's true that one can put up solar panels or a wind turbine (as Eric Blair criticizes me below), but that's not going to be enough for existence. One will still need goods and services from other community members, which will necessitate a somewhat denser living arrangement. This is my opinion.

For the record, I don't think that mega-cities like New York could survive a total energy blow out, if that's what ends up happening, but I might point out that there have been cities all over the world way before there was an industrial revolution or a green revolution. So a place like New York--like most other places--will suffer a big decline in population, but it won't be obliterated from existence altogether.

Which leaves this as a remaining question: if and when the population of New York City suffers a major contraction, will I be one of the survivors should I choose to stay here? Unfortunately, I can't know the answer to that right now.

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Beantown Pedestrian on May 16, 2006 - 5:59pm

Keep in mind that in urban centers, everything can be used closer to maximum capacity. An air conditioned theaters serves more in a day in NYC than it does in some exurb in the South. In an urban center each liter of water in your water system is pumped, on average a shorter distance, space is tighter AND the ratior of living volume to living area is higher, so energy expended on environmental control is lower, etc. etc. Oh and I'd imagine sewerage is dramatically more efficient than in so called "rural" areas. I'm sure you don't use a septic tank or composting of your fecal matter. That's getting helped out the door, so to speak. I'm from Louisiana and the infrastructure is remarkably similar in many parts of that backwards state to large urban areas, except all the service lines bringing natural gas, electricity, water, etc are longer and serve fewer, except for the very few places that are off the main grid. I think "rural" is Alaska or Montana, not many places east of the Mississippi. Oh, and don't forget school buses, patrol cars, etc etc etc etc. And POORLY those services are provided because they are spread so thin.

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eric blair on May 16, 2006 - 11:09pm

However, please don't spread fallacies!

Then you are going to debunk? Cool!

In 2004 the New Yorker published an article called

So you have opted to use a source that is all about talking about New York to show how New York is a fine idea?

Wow. that's like asking the Saudi oil ministry what they think about Saudi oil.

5 rural acres can feed a family with what is grown on it.
40 acres can provide enough trees in rotation to heat a rural home VS exactly HOW sustainable a New York apartment dweller is?

but amount of energy use is probably not one of them.

Ever tried putting up solar panels or, better yet a wind turbine in New York city? In a rural location you can do that. The wind turbine is why I want a rural location. (im my ideal world the wind turbine would have so much excessive power I would not be able to do the 20kw grid intertie, and I'd have to shunt power to big outdoowr water tanks.....)

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BrianT on May 16, 2006 - 3:31pm

What is your plan for when your commute cost goes to $975 a month (gas at $9)?

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CarCulture on May 16, 2006 - 3:47pm

see below. when gas costs $9 a gallon, interest rates rise, spending decreases, and companies scale back, i will out of a job and on the streets.

where will you be?

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BrianT on May 16, 2006 - 3:57pm

Costa Rica. My money in the Caymans. Currently I am in Toronto. Not a bad place- very easy to get around with little use of a car.

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ryvr on May 17, 2006 - 1:32am

"On the streets" you call it?

I call it blissful liberation from the capitalists when my tribe and I will grow wonderful food and celebrate our humanity and rejoice that there is no more oil to make things as bad as they were in the first 6 years of the 21st century.

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westexas on May 16, 2006 - 4:23pm

"To answer your questions, my typical commute is 2.5 hrs a day if I speed. I drive a 2 liter 4-cylinder manual. My commuting cost is about $325 a month at average current mpg figures and 3$/gallon"

I suspect that you are underestimating the true cost of your 2,000 mile per month commute. You need to include depreciation, maintenance, insurance and fuel. An average new sedan is about 50 cents per mile. Very large SUV's are in the 75 cents to one dollar pre mile range. IMO, your true cost is probably at least 25 cents per mile, or $500/month. I assume that there may be some parking costs also.

You also need to consider the time. 2.5 hours times 20 days = 50 hours. At $20/hour, this would be $1,000.

So, using the above assumptions, I would put your true commuting cost in the range of at least $1,500 per month ($18,000 per year). The more expensive your car (and the higher that gas prices are) and the greater your income earning potential, the greater the commuting cost.

In regard to your weekend leisure pursuits, why not move close to your job and then take the mass transit that is available to leisure activity areas. Or, if you have to, drive there on weekends.

There is one other factor. By driving 2,000 miles per month, you significantly increase your chances of dying (or becoming disabled) in an auto accident.

My #1 recommendation continues to be to try to reduce the distance between work and home to as close to zero as possible.

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CarCulture on May 16, 2006 - 6:46pm

WestTexas:
I want to be clear with you and make sure you know I understand and agree with what you are saying. I am very well aware of the true cost of my commute, because although I own my car outright as I bought it very used, I have had issues with maintenance that cost a lot of money.

I also have come to the same conclusion that you are suggesting, although, with a different kind of connotation. I need to find another area to live in, one that isn't so metropolitan that the distances between the city centers and the rural areas aren't quite so large. I don't think I have been clear enough in pointing out that as time goes on, and students become more and more financially responsible for their own education finances and all the peripheral costs college entails, we are going to see a larger class of professionals who start out with the kind of debt loads usually associated with car or home ownership, but with no assets to speak of save for a degree. Therefore, these people will be forced to live where it is cheap, and work where they can make more money than they are worth (read: corporations, urban centers).

In NJ, you either put up with urban living, or you drive a lot. Just ask anyone from the area; the amount of people living in PA and commuting to NY or NJ has increased to ridiculous levels. Around here, a 100 mile or so commute isn't all that uncommon. This is not going to be possible anymore when we are forced to reckon with the true cost of gasoline.

It is the perfect example of unsustainable suburbia/ rural-urban commuting.

You mentioned that the only wise course of action is to move closer to work, and I agree, although I would never sacrifice my way of life to the degree necessary to live in the NY/NJ urban area (and most of you who live elsewhere wouldn't either if you knew what it entails!).

I think the key is to move away from the older metropolitan areas and towards the more flexible populated regions that offer a better living/working dynamic in a smaller relative area. Major urban centers such as NYC tend to negate the possibility of a balance and I am currently trying to find a smaller city that offers working opportunities and public transportation that hasn't pushed the rural periphery as far away as NYC has. The whole NYC/Philadelphia corridor is an urban/suburban sprawl that I refuse to live in/can't afford to live in. I know many people who are in the same boat as me, and I see my friends scattering to the wind in order to find a place they can afford to live in. As oil prices go up, and the economy goes down, it becomes crucial to get out of the `in-between' way of life I currently live.

From what I have heard, Portland is a good choice, offering jobs, excellent public trransportation and easy/near access to nature.

Anyone hiring?

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eric blair on May 17, 2006 - 11:29am

You also need to consider the time. 2.5 hours times 20 days = 50 hours. At $20/hour, this would be $1,000.

Right. Because reading TOD is worth your bill rate, as is making your own food for you to eat, and reading the joke e-mails and.....

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Mad Maxout on May 16, 2006 - 10:33pm

An awful lot of people are in that long range commute trap. The housing market went haywire to cause the problem. A small segment of the population makes nearly infinite money compared to workers. They merely bid up housing to orbital levels. Developers know that this top earner group are the only ones with money to sell houses to, so they build sport utility homes and crowd everyone else out. The result? Sprawl and commutes that are so long that the only appropriate vehicle is a Harrier jet if you want to find an affordable house. Otherwise, the "housing" you can afford is barely the size of a CLOSET in one of those sport utility homes!

I live in a studio apartment becuse rents for anything bigger are prohibitive - and I make $45,000/year! To find a house at my income, I could do like a coworker and drive 80 miles each way, and that's 80 miles as the crow (or a Harrier) flies. Even if gas was a dime a gallon like Caracas, a 2-hour commute is a deterrent par excellence. Any farther, and you'd need a plane to commute with. Good thing I work at an airport. But don't laugh...

Jokes aside, someone working by Microsoft apparently lived far from work and wanted a ranch. One foggy day in 1999, he got his Cessna tangled in high voltage lines. He was "driving" to work!

Once, a radio station had a contest to see who had the longest commute. The winner drove (a car) 3 hours each way! Of course, affordable housing was the motive.

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CarCulture on May 16, 2006 - 3:21pm

Also, if gas goes up to $8 per gallon, and I cannot find a more amenable region of the country to live/work in, I have a simple option.

Bankruptcy. Assuming the best, of course: assuming that I am still employed.

That's the reality for many recent college grads. If and when the US loses its gasoline price advantage, and the economy loses much of its steam, its people like me that are going to play the role of the canaries.

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Everett on May 16, 2006 - 6:34pm

Keep in mind that those student loans are bankruptcy proof. Of course, the easy credit lifestyle will be going away for everyone anyway, so it probably doesn't matter. Hyperinflation is the borrower's pal.

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fallout on May 17, 2006 - 8:24am

There is an old southern saying that seems applicable here,"You can't get blood from a turnip." When our present arrangements are falling apart at the seams, trying to collect on those defaulted students loans will be an exercise in futility. I liken it to trying to locate a particular person in New Orleans during the week following Katrina, only imagine that on a nationwide/worldwide scale, and continuing indefinitely. Good luck!

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clifman on May 16, 2006 - 1:25pm

Here's a crazy idea I've had for awhile... Mary lives in city A, and commutes to her job as an administrative aide in suburb B every day. Jane lives in suburb B, but commutes to her job as an office manager in city A daily. Joe lives on the west side, and commutes cross-town to his job as a shipping clerk on the east side. Bob lives on the east side, but commutes to his job as warehouseman on the west-side every day.

What if there was an outfit to match such folks (like the many dating services out there) who could then, upon assessment of specifics, perhaps some negotiation, and approval of the employers - switch jobs. I wonder how much of an impact such a system might be able to have on our need to commute? Just a thought.

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The Interloafer on May 16, 2006 - 1:38pm

A great idea from an energy use perspective. But from a psychological perspective, it might make people feel that they're just cogs in a wheel. This may be true, but it is nice to preserve that illusion of uniqueness that we all have.

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clifman on May 16, 2006 - 2:03pm

Well, I feel pretty much like a cog. I wonder how many others do?

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step back on May 16, 2006 - 3:50pm

What if some cogs are more equal than others?

What if the Mary cog finds out that the Joe cog was paid more for a simlar cog job than she was because of her gender or race? That could make some manager cogs uneasy. Don't want the lower cogs to know too much.

Cog swapping can lead to information swapping.
We don't want that to happen do we?
In a "free trade" society one is not allowed to trade information. That is a big managerial no no. Must keep all cogs in their place.

Be forewarned Clifman cog, even thinking is un-cog-like behavior. Please don't do it anymore. ;-)

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fallout on May 17, 2006 - 8:26am

We are not actually people, we are just "human resources", remember?
A faceless, transferable, disposable unit of labor.....

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clifman on May 17, 2006 - 8:57am

I shall cease and desist forthright!

(Thx Step Back, that evoked a good laugh - pretty rare for me these days...)

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westexas on May 16, 2006 - 1:58pm

"What if there was an outfit to match such folks (like the many dating services out there) who could then, upon assessment of specifics, perhaps some negotiation, and approval of the employers - switch jobs"

A variation on this idea is to switch houses/apartments.

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Substrate on May 17, 2006 - 12:04am

That's my take on it...swap houses. Have a system to match people who'd want to swap and set up some means to settle the monetary differences. It'd be better than the process of selling the house, then re-buying.

That was like a perfect idea that went bannannas at the end by suggesting a carreer swap.

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clifman on May 17, 2006 - 9:11am

Re: bananas - I guess my own bias/proclivities leads me in that direction. My job means nothing to me. (Its only benefit beyond the bucks being that I can spend mucho time reading TOD.) My house, on the other hand, does. Even though I have no real roots there (how many of us do, anymore?), I've modified it to be partial passive solar, we have two acres, which provides wood for aux. heat, and space for our large (2k+ sq ft) garden, backs up to state parkland, and yet is just an 8 mile commute to work. So it's highly unlikely that we'd find anything suitable to swap for. Y'all may be on to something when it comes to cookie cutter houses or apts. But for me, the job could go way before the homesite. But I appreciate all the comments. My thought got far more mileage ;-) than I ever expected. And re: the above part of this thread, my other half and I commute together in our Prius, 17 miles roundtrip, so about a buck a day for two of us. If/when we can go to a plug-in hybrid, we'd be able to do the whole thing sans gas, and even on days that include errands, we'd be 75-90% electric. Bring on the plug-ins!

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Glenn on May 16, 2006 - 2:30pm

Like a real estate agent, but without the friction costs?

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MUDLOGGER on May 16, 2006 - 3:17pm

Spot on!

We have exactly this situation in Aberdeenshire where Teachers, Teaching assistants and others commute to other towns and villages.

If anyone could start to look at this, it is likely that (IMO), the local government workers such as above could enact this sooner than the private sector.

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Mad Maxout on May 16, 2006 - 10:48pm

Switching jobs wouldn't work - but switching housing could in theory. Wait. Isn't that what a housing market supposed to do? Were it not for zoning laws and municipal corruption and increasingly creative mortgages (most of which are fiscal bombs) the market would work that way, though with friction. Worse, the gross disparity of incomes worsens matters greatly.

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Substrate on May 17, 2006 - 12:16am

A system that would allow you to look for someone to "trade" houses with would solve some pretty hefty issues such as: the annoyance of having to sell your house to have the money to buy another house, and having someplace to live while waiting for another house to come on the market. You can imagine how much easier it would make it to have a house already lined up and the move could be decided on any given day the two parties decided to actually swap. Everything could be planned in advance and there's no uncertainty in having to find someplace to live in the meantime, and no putting your house on the market and having to go through the trouble of selling it. Any price difference in the houses could be settled in some means, and in the more perfect situations the houses being swapped would be of near equal value.

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AlphaMaleProphetOfDoom on May 16, 2006 - 5:55pm

CarCulture,

On the one hand I completely sympathize with your situation. I live car free but that is going to end if I want to take some organic ag. classes at the local junior college. It would be absolutely impossible for me to run my usual errands plus get out to the jc a couple times per week on the piss-poor public transit we have here.

The only reason I can live car-free now is because I work from home, have no kids, and no outside obligations. If any of those variables were to change, I'd have to not only get a car but use it considerably unless I wanted to move.

On the other hand it sounds that between your commute and how much your paying for gas, I'm thinking you aren't much more than your own car's personal bitch.

Best,

Matt

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Glenn on May 16, 2006 - 8:44pm

You need to get a girlfriend with a car to drive you around.

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eric blair on May 16, 2006 - 11:21pm

You need to get a girlfriend

Perhaps he wants a boyfriend or a young ward?

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john milton on May 17, 2006 - 12:37am

"Young ward"?
Na, Batman never let Robin drive the Batmobile ;)

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TrueKaiser on May 17, 2006 - 2:16am

speaking of the batmobile, i wonder how good or bad it's miles per gallon rating is.

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fallout on May 17, 2006 - 8:42am

Considering that it was actually a Ghia-built 1955 Lincoln Futura concept car under a George Barris cosmetic makeover, with a 330HP 1954 Lincoln y-block V8 under the hood, I'd guess about 7 mpg.
http://www.1966batmobile.com/background.htm

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fallout on May 17, 2006 - 8:47am

Scratch that....apparently Barris replaced the original motor with a more modern 390ci V8.
http://www.1966batmobile.com/spec.htm
http://www.1966batmobile.com/engine.jpg
Call it 8 mpg.

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DelusionaL on May 17, 2006 - 9:23am

In our enlightened Portland Oregon area we have light rail and on high smog days you can ride the train for free if you "drive" to the closest safeway and get a free voucher. You wonder why we have a problem...

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enviro attny on May 16, 2006 - 12:47pm

In a lot of ways, it is easier for the business world to adjust to PO, as opposed to the stay at home mom in todays America. Your kids have preschool, dance lessons, baseball, play dates, etc., etc., etc. There is no mass transit in the world that will allow that to happen.

Hell, in my town, we don't have school buses. They eliminated busing in the 60's (IMO, to ensure that they never had to bus undesirables into the school system). The thought at the time was that most kids would walk to school. Of course, what you have are massive traffic jams every day as moms drop off their kids and pick them up. I actually love the idea of no school buses, I just hope that more kids will be forced to walk soon.

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fmuniz on May 16, 2006 - 1:17pm

We do have all of that here in South America, and they do in Europe as well, and I'm sure it's the same thing in Japan. A lot of people do it every day, on mass transit. I think the greatest difference is the "popsicle index". Those mums are afraid of letting their kids do those things on their own, sadly. I was commuting 3 hours a day and doing all those things when I was 13.

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tochigi on May 17, 2006 - 3:33am

In Japanese cities and suburbs, people move between home and places nearby by foot, bicycle or bus. For longer distances they use the train. A small number of mothers use cars to ferry their kids on weekdays, but it is a tiny minority.

Most public primary schools make it compulsory for pupils to walk to school in groups. Retired people are recruited to act as voluneer traffic wardens for half and hour in the morning and afternoon to make sure the kids get across busy roads safely.

Even in the rural area I live now, all the kids have to walk to school, which is about 2 km or half an hour.

In the city, when it's not raining it is normal to see mothers on bicycles with one kid on the front and one on the back, and male and female office workers in full suits (heels and makeup for the ladies) going to and from the railway station on a bicycle.

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Berkeley on May 16, 2006 - 9:25am

I know that where I work the Navajo workers who commute hundreds of miles up from the reservation to their weekly jobs building a dam in Colorado have started showing up in old compact cars, rather than the trucks they used to drive.

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earthspaceteacher on May 16, 2006 - 9:51am

No most americans aren't likely to make big cuts overnight because they simply can't rearrange their lives that quickly or quit the job with a 40 minute commute. To be honest the homemaker with an SUV is only filling up twice a month and a $5-10 increase per fill-up isn't painfull enough to trade in. Add to that the cost of switching vehicles and sometimes you are better off keeping what you have got.

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BrentCrude on May 16, 2006 - 9:55am

Its worth remembering that here in in the UK we already pay nearly $7 for a US gallon of gasoline.

Also due to the dampening effect of high taxes, the pump price has risen less than 20% in the last 5/6 years. In other words high gasoline prices are the norm for us.

Anybody taking a drive on a UK motorway can testify that high prices have unfortunately done little to stem the growth in traffic. Yes we drive smaller cars and on average fewer miles but we still live increasingly car-centric lives and so far $7 gasoline hasn't dissuaded us.

Most of the EU pays comparable prices to the UK, so if 450 million Europeans can afford these prices then I think the ability of Americans to adapt to $3,$4 or even $7 gasoline may yet surprise.

Less Hummers and shrinking exurbs perhaps but prices may have to go alot higher before the lifestyles of the middle-class majority are seriously impacted.

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mshortridge on May 16, 2006 - 10:18am

I would add that the higher fuel has a bigger impact here because the transportation of junk from Long Beach CA to the malls is much more costly in fuel. If the trucking and air freight biz goes to 7$ a gallon, what will happen to the wal-mart economy?
So the cost we pay at the pump is just the start of it. We will pay for the lettuce from CA, the apples from NZ, the Chinese office furniture in our office buildings, etc...
So where is the breaking point when these supply lines become unprofitable and begin disappearing?
Who will we blame then?
Who will pry the credit cards from the wallets on our cold, dead asses?

-Matt DC

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Twilight on May 16, 2006 - 10:44am

I make regular trips to the UK, and I think of this often. Can we absorb fuel costs in the same way, or are there differences between our societies that will prevent this?

Most of you cost is tax - doesn't it make sense that this money comes back to the citizens in ways that mitigate the burden?

Does the US debt and financial situation make it harder for us to absorb these costs?

The US has very poor public transportation in most places, so we don't have much of a viable "Plan B".

We're farther along in the complete subjugation of everything in society to the automobile than the UK, so does that mean it will affect us more?

I'd like to hear more about what people think in regard to the ability of the US to absorb higher fuel prices, like that of the UK.

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BrentCrude on May 16, 2006 - 11:21am

What I find interesting is that car use in the UK just keeps increasing, and public transport use keeps decreasing.

I wouldn't overestimate our public transport infrastructure, its in decline - outside of London an increasing majority of Britains never use it. In London they had to introduce a daily $15 charge to drive a car into central London to try to "encourage" more people to use public transport. It seems $7 gasoline isn't enough to persuade people to leave the car at home.

As for the Walmart economy - its arrived big-time over here. We have new shopping malls and Tesco (like Walmart) superstores springing up all over the country - with acres of car parking to go with them - no public transport to these. All created with gasoline prices double what you have been used to paying.

As for debt levels - we have record levels of debt and a major house price boom that started back in 97 with prices doubling or trebling since then. So I don't believe that Americans are more stretched trying to pay for their mortgage.

So bottom line is that once you get past the psychological shock, if we can afford $7 gasoline then most of America can too.

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LevinK on May 16, 2006 - 1:58pm

Americans are structurally bound to travelling much longer distances than people in Britain. And in Britain you have the choice - if you can not afford the gas you can take the mass transit. In most places here this is not an option at all. As a result the poor and the middle class here are and will be much worse off than in UK.

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BrianT on May 16, 2006 - 2:09pm

They are going to get the Katrina treatment.

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Mike Hearn on May 16, 2006 - 5:50pm

I've been reading the opposite; that public transit (esp train) usage is increasing. The congestion charge cut traffic but didn't seem to rise tube usage much. Curious, no?

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phineas gage on May 16, 2006 - 5:02pm

Twilight,
One of my fears is that America will chose to buy smaller more fuel efficient cars, re-enact the 55 mph speed limit, vacation closer to home and basically do everything in their power to maintain suburbia and the car culture. If the decline rates are slow (say 2-3%/ years) America can probably slowly accomodate the decline for a decade or two rather than really face reality and address the issue with real solutions. The real pain in this scenario may be delayed for a decade or two but it will still come and the end result will be even more devastating than if we had faced reality in the first place.

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odograph on May 16, 2006 - 5:15pm

how can you skip efficiency as a first step?

i still see this as a population response, with early adopters, a broad middle group, and laggarts. the early adopters are powering down now. they have a variety of plans and techniques. the middle group will follow their model(s) when they must. and of course the laggarts will gnash their teeth in bankrupcy court.

an amazing number of things are being tested, right now.

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BrianT on May 16, 2006 - 5:32pm

This is exactly what will happen. Every suburbanite I have talked to is psychologically prepared to move to a much smaller, slower vehicle but they are not using public transit and they do not want to move into the city. It looks very bullish for high MPG car sales.

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ryvr on May 17, 2006 - 1:41am

EXCELLENT point!
My lost wages and health care costs due to illness as a healthy young adult are astronomical in the U.S. due a privitized very high cost system of charging for medical care. Only the very, very wealthy can get basic medical services in the U.S. today.
That the British can pay more for gas surprises me little because if I could get antibiotics a couple of times a year when I needed them, I could stay healthier, work more and better, and save money.
I would GLADLY pay what the British pay for gas if I could have their healthcare!

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Triffin on May 16, 2006 - 11:12am

Its worth remembering that here in in the UK we already pay nearly $7 for a US gallon of gasoline.

As a resident of the USA I hear the above
comment all the time .. The 'nominal' dollar
cost is not the issue .. a more appropriate way
to evaluate the 'relative' cost of fuel in Europe
vs the US or elsewhere would be the percent of
average wage that fuel costs represents .. I suspect
that your $7.00 per gallon vs the cost in Pounds
or Euros is more a reflection of the decline in
value of the US dollar vs your local currency than
the cost of the fuel .. To put this in context,
@ $3.00 per gallon we're paying about 50% of
minimum hourly wage .. How does that ratio
compare to the UK ??

Triff

Triff ..

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BrentCrude on May 16, 2006 - 11:39am

At current exchange rate of about 1.88, minimum UK wage is $9.40 per hour.

So UK gasoline at $6.97 would mean we currently pay 75% of minimum wage - that would suggest $4.50 gasoline should be manageable in the US

However I'm sure there will be some horror headlines when gas hits $4.50 !

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Consume More on May 16, 2006 - 2:06pm

It comes back to the "American entitlement" thing. For generations we Americans have built our lifestyles around cheap gasoline to the point that we don't even think about it until it's "expensive," and then it's a lifestyle threat because we have to skip an evening out, or bike to the store rather than drive, or etc. etc.

And then we yell loudly about it and bomb small countries. Quiet desperation ain't the American way.

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fallout on May 16, 2006 - 1:05pm

Ah yes, the US consumer has become the proverbial frog in the pot of slowly warming water.
How much longer before it is cooked?

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odograph on May 16, 2006 - 1:41pm

it would be interesting to know what the general public thinks about future energy prices. i'm sure it is a distribution, with a hybrid buyer having a different expectation than a hemi buyer.

but without that data, we don't know. maybe the hemi driver things gas will get cheaper. maybe the hemi driver thinks this is a once in a lifetime shot, before fuel costs rise ...

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BrianT on May 16, 2006 - 1:52pm

Most members of the general public I have talked to think: 1. high oil/gas prices are temporary 2.anyone who thinks there is a oil depletion problem is a nut 3. even if there is a oil depletion problem, alternatives which are probably superior are "right around the corner". They are getting this directly from the MSM. Most people I know distrust all info from the Net unless it is endorsed by the MSM. This is why I like you guys.

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odograph on May 16, 2006 - 1:59pm

i would just think, having lived through ... say 5 years of gas price increases ... they'd "feel" a trend?

if anybody from the dreaded (kidding) MSM is listening ... add that to your gas price articles. ask the man on the street what next year's price (May '07) will be.

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BrianT on May 16, 2006 - 2:16pm

They are still selling houses in neighbourhoods where most of the residents drive more than 40 miles to work for middle/working class wages. Obviously if gas goes to $8 gallon as mentioned above these houses will take a severe hit. Most people just don't buy into oil depletion (the MSM hasn't told them to buy it).

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tate423 on May 16, 2006 - 1:33pm

Does anyone know exactly where I can find YTD info for CPI? I've been over at bls.gov/cpi and can't find real inflation cumulative for the year. I know tomorrow the new #'s come out but I'm under the real assumption that the FED is creating massive amounts of money in the form of electroniclly craeted bank deposits.

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odograph on May 16, 2006 - 2:03pm

http://www.bls.gov/news.release/cpi.toc.htm

most sections show changes from various "months back" including Jan '06:

http://www.bls.gov/news.release/cpi.nr0.htm

the problem is that it takes a while to compile. the april report is there, which has march data.

(just to amuse myself i put away a supermarket tape from my typical trader joe's run, so i can look at it again and a year and compute my personal food cpi)

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tate423 on May 16, 2006 - 2:52pm

I'm looking for the YTD figures. Do I need to simply subtract the dec 2005 price level from the most recent increase (apr 05) to determine the real inflation number? In that case it's Pdec05=196.8 & Pmar06=199.8 so simply math would peg it @ ((199.8-196.8)/196.8)*100=1.016% or projected anual inflation would be roughly 4.04%.

Yet if you look at inflation that we have faced since one year ago it looks like 3.36%. So are we starting to see a trend in higher inflation?

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odograph on May 16, 2006 - 4:31pm

at that second link there is a "Table A" with a column "Compound annual rate 3-mos. ended Mar. '06" which shows "all items" up 4.3% (transportation up 10%).

there is also "unadjusted 12 months ended Mar. '06" which shows "all items" up 3.4%

those seem to match your numbers

(i think i misread the other part of table A earlier. they are month to month changes.)

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crazypat on May 16, 2006 - 2:57pm

I came across a private financial advising firm that calculated its own CPI a few weeks ago. They sell their services to large (Fortune 500) companies who require the "most accurate" information to run their businesses. I have been been desperately trying to find the site for 45 mins, but I've lost it <sigh>.

Point being, this firm calculates a very different CPI than the "official" one. They find that the current realistic consumer price index is around 7% per year. Based on my experiences, I have to agree with them. Purchasing power is declining much faster than TPTB would have us believe.

Don't forget that the fed has recently stopped publishing M3, the amount of paper money that's being printed.

In a sign of pending inflation, the Federal Reserve last month stopped telling us what the M3 money supply was in a surefire indication that inflation is on the way. This came conveniently after further inflationary indicators were hidden by removing the cost of gasoline and food from the Consumer Price Index.
"The State of the Peak Oil Movement at the Cusp of Collapse"
- Mike Ruppert, From the Wilderness

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BrianT on May 16, 2006 - 3:08pm

Not only the CPI. If unemployment was calculated the same way it was 20 years ago, the present rate would be 12% in the USA. 12% unemployment and 7% CPI. I don't think the MSM would like to discuss that one.

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tate423 on May 16, 2006 - 3:15pm

Are you talking about the discouraged workers? How do you justify a nearly 3 fold increase? Where can I look into this?

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tate423 on May 16, 2006 - 3:19pm

Found it...in case anyone wants it....

http://moneycentral.msn.com/content/P146055.asp?Rating=10&PageID=146055

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tate423 on May 16, 2006 - 3:11pm

I wholly agree, but it's far easier to conceal in this digital age. It's being created through bank deposits that are simply electronic credits, thus new money is "printed." I wonder if the Fed pays the .36 or so cents per "deposit." If not then they are completely creating money and it's at 100% profits for this private bank. Amazing.

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rototillerman on May 16, 2006 - 5:13pm

Perhaps you mean John Williams' "Shadow Government Statistics?"

http://www.gillespieresearch.com/cgi-bin/bgn/

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crazypat on May 16, 2006 - 5:55pm

YES! THANK YOU!

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jdeely on May 17, 2006 - 12:13am

Just curious...

If things really cost so much more , unemployment is really higher and wages are stagnant.... how come it seems that almost everyone has a nice car/suv, spends $10/day in Starbucks, has a maid to clean their house, has a gardener to mow their lawn, pays $100's/month for activities for their kids, pays $80/month for cable TV, just bought a new large screen TV, eats out for lunch and dinner 1/2 the time and the other half buys pre-cooked meals.... etc. Can anyone add a few more items to this list?

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Substrate on May 17, 2006 - 1:48am

Mainly...a leveraged future. People aren't saving for retirement (or rainy day, etc), they're spending every cent they have. They're actually spending more than every cent they have and going into debt (negative savings rate).

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fallout on May 17, 2006 - 8:51am

In the case of Americans, they are also using their homes as an ATM machine, via re-fi's (2nd and/or 3rd mortgages, reverse mortgages, 125% consolidation loans, etc), maxing out credit cards (the average american family now has over $8000 of credit card debt), and borrowing heavily from the savings of everyone else on the planet (to the tune of 2 billion $USD per day).

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jdeely on May 17, 2006 - 1:48pm

Sorry Fallout...
Your credit card stats don't hold water... at least not according to the federal reserve. Using "average credit card debt" doesn't make sense. see - http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

"In reality, most Americans owe nothing to credit card companies.
Most households that carry balances owe $2,000 or less.
Only about 1 in 20 American households owes $8,000 or more on credit cards.
These figures are from the Federal Reserve's 2001 Survey of Consumer Finances, one of the most comprehensive assessments of what Americans own and owe. "

As far as mortages go.. I agree that some Americans are doing as you say taking out 2nd, 3rd etc... but according to the latest Fed survey the median net worth of Americans has increased by 11.8% between 1998 - 2004. Thats pretty good considering we had a huge stock market drop in 2001. Also, mortgage delinquencies are actually down. So, I think your argument only explains a small portion of the large rise in "luxury consumption".

I think the reality is that Americans have more money and are using it to buy cheaper goods. The middle-class American of today is living like the wealthy American 30 years ago. That is why these huge gas price increases have not had much of an effect yet.

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tate423 on May 17, 2006 - 3:14pm

Credit Card debt doesn't matter...aggregate all of it and take a look at the bigger picture. It's not good and we can all agree on that.

We financed our consumption today by takign out equity loans against our ATM's, I mean houses.

30 years ago we were in the midst of oil shocks and the like. You perceive people living the lap of 1976 luxury when in fact they are borrowing as much as possible from anyone in lock step with spending whatever income they bring home.

It looks great that so many people are living in the lap of luxury, but keep in mind that the "roarin' 20's", preceded the great depression.

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fallout on May 17, 2006 - 3:26pm

Behold, and learn!
"Credit card debt carried by the average American: $8,562."
http://ask.yahoo.com/20040209.html
And that was in 2004.

While I will buy that "net worth" of the average American has 'increased' by a net 12% or so since 1998, most of that is in real estate appreciation (i.e. non-liquidatable equity), and real inflation since 1998 actually makes that supposed 'increase' a 'decrease', once factored in.

Do not put a lot of stock in anything the Fed says. Their job is to make American's feel good, and keep on keeping on with the existing paradigm, for as long as possible.

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jdeely on May 17, 2006 - 3:56pm

Fallout,
"Behold, and learn!" - give me a break.

You obviously didn't read the link I provided. If you did and you understood what it was saying then you would realize that your statement should say

The credit card debt by the average American who carries a BALANCE is $8,562.

Other items you would have learned:
Less than 50% of all American households carry a credit card balance.
Less than 29% of households owe more than $1,000. !!

Below are some more stats from the article that show that Americans - in general- are not overextended , as far as credit cards are concerned.

"Bill Whitt at the VIP Forum, a Washington D.C. research firm, helped me dig even deeper. By analyzing the credit card debts of all the households the Fed surveyed, Whitt discovered:
Only 29% of households owe $1,000 or more on their cards.
21% owe $2,000 or more.
6% owe $8,000 or more.
4% owe $10,500 or more.
1% owe $21,400 or more.
The Fed statistics pretty much gibe with what Fair Isaac, the creator of the FICO credit score, discovered when it reviewed millions of credit reports."

What about Fair Isaac, should we listen to them? or are they in on this conspiracy as well?

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odograph on May 17, 2006 - 6:41pm

i started reading "credit card nation" ... and got a ways with it before i got bored. it was a pretty good book, though i realize i say that after saying i got bored.

the author makes points similar to above. about half of all credit card holders are "convenience users" who pay off their debt every month. the rest carry some debt and risk getting saddled with more (and much higher rates). getting people hooked is where the game is, and i'd say 6% folks owing $8,000 or more shows some good potential profit margin.

the companies try to extract profit two ways - by rasing rates on old debt, and by increasing non-interest 'fees.' actually the fees are designed to snag convenience users as well.

so in one sense it is good news. we are not all out there with $8,562 debts, but on the other hand, there is $1.7 trillion rolling over every month. a good interest revenue stream when it pays ... a lot of money to go away in some kind of default on debt tipping-point.

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fallout on May 18, 2006 - 8:54am

Okay, say for the sake of arguement that most have no credit card debt. I do. Most of the 216 average working stiffs (our employees) outside my office doors do.
But skipping that for a minute....

You either did not address or agree with the other points, the negative savings rates, the home-as-ATM, the stagnant or declining purchasing power in absolute (inflation-adjusted) dollars, the higher prices for all but electronic commodities (and there only due to Moore's Law), the huge and increasing daily national, federal, and consumer debt load, and the non-liquid nature of most of any noted increase in median net worth (ie primary residencial equity).

I could also argue (and prove) that many static-value goods have become more expensive, not cheaper (a haircut, a postage stamp, an ice cream cone, a gallon of gasoline, an average dinner at an average restaurant, the price of an average new home, in dollars per sqft).
Even cheaper goods also come at a cost, mainly in outsourced jobs, environmental degredation, increased transportation costs, etc.

Americans are not living significantly more luxuriously than they were 10, 20, or even 30 years ago. If anything, their quality of life has degenerated during this time. Less free time, more stress, less job security, more post-employment (retirement) concerns, lower happiness index.

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Leanan on May 17, 2006 - 9:03am

how come it seems that almost everyone has a nice car/suv, spends $10/day in Starbucks, has a maid to clean their house, has a gardener to mow their lawn, pays $100's/month for activities for their kids, pays $80/month for cable TV, just bought a new large screen TV, eats out for lunch and dinner 1/2 the time and the other half buys pre-cooked meals.... etc.

"Seems" is the key word. Not everyone lives like this. Far from it. I don't.

The gap between the haves and the have-nots has widened into a chasm over the past 30 years or so. The days when an accountant and a factory worker lived in the same neighborhood and sent their kids to the same schools are gone.

We've gone wealth-crazy. On TV, we see suburban families who never seem to worry about money. We see supposedly struggling young people, living in Manhattan apartments that no one who isn't a movie star or profressional athlete could afford in real life. Everyone's rich on TV.

That affluent lifestyle is more illusion than reality for most of us.

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jdeely on May 17, 2006 - 1:55pm

Leanan,

I agree that we have gone "wealth crazy". That's part of my point.

However, I totally disagree when you say "seems" is the key word. There are plenty of hard statistics to show the huge rise in kids with cellphones & IPODs. .. the huge rise in eating out, the increase in people with expensive cars/SIV etc...

I don't know where you live, but near me, I can go to any mall or even a school in the "poorest" areas to see this huge rise in "luxury consumption". Its not just TV and its certainly not an illusion.

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Mad Maxout on May 17, 2006 - 9:54pm

Cell phones got real cheap. Ipods also. But the housing is completely another story. If I could have made $45,000/yr a decade ago I could have been a homeowner, or at least a condo owner. Now? Unless I were to do a 2-hour commute 3 gallons from work, forgeddaboutit. If the wealth gap isn't as wide as the Grand Canyon it's wider.

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ryvr on May 17, 2006 - 1:50am

It is clear to me that all current measurements of "inflation" or standard of living are playing with numbers.
Everyone I know has been facing hugely higher costs and significant reductions of wages and benefits.
The are cancelling already accrued vacation time for my friends. The cost of health insurance premiums for me would be higher than my total paycheck, forcing me to pay my company each week rather than receive pay if I wanted any basic medical care.

We are clearly in a full-blown depression, and it is the government lies and a cheery technicolor MSM that hides this.

They are in full cover-up mode to the fact that this economy has already completely failed and each individual thinks it is only their particular life that is messed up. The truth is the ship is already at the bottom of the ocean.

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Oilrig medic on May 17, 2006 - 6:21am

Ryvr,
What industry are you in? I have 0 copay on Dr. visits and meds for 120 a month. I have basic coverage available for 90 a month. If you make 10 dollars an hour (I made that when I worked in college) that is one 12 hour shift. How can your benefit cost be more than your income? Are you part time or a waitress and not including tips as income? Please explain....

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