The Tata Nano Strikes Back--Does Jevons' Paradox Apply to Productivity, Too?
Posted by jeffvail on February 5, 2008 - 10:00am
Topic: Demand/Consumption
Tags: efficiency, jevons paradox, peak oil [list all tags]
Can improvements in energy efficiency “save” modern civilization as we face declines in world oil production? While the efficiency revolution may let us drive on half the gas, the productivity revolution may make it affordable to twice as many--or more...
One argument against the efficacy of improving energy efficiency is called Jevons’ Paradox. This suggests that, when we improve our energy efficiency, we also reduce our demand for energy from that same use. That decreased demand in relation to supply makes energy cheaper, which in turn makes us use more of it. It has been suggested that this “rebound effect” only accounts for 5-20% of efficiency gains, but I have written previously about the potential for a “shadow” rebound effect that potentially accounts for nearly the entire efficiency gain.
The Tata Nano: While the efficiency revolution may let us drive on half the gas, the productivity revolution may make it affordable to twice as many--or more.
Often, I find it difficult to apply the very theoretical Jevons’ Paradox to pragmatic thinking about our energy future. The recent launch of the Tata Nano, however, stands as an example of Jevons’ Paradox in action. Possibly of much greater importance, however, are two related issues: the feedback effect between increased economic productivity and increasing energy consumption, and the aspirations of an emerging global middle class.
On January 10th, Tata Motors introduced its new, $2500 “Nano.” The launch was well covered on this site and many others: roughly 50 miles per gallon, four doors, and one windshield wiper. And the potential for the Nano to bring millions of new drivers to a world already trying to conserve energy and reduce carbon emissions was covered as well. And if you dig deep enough, there was even one blogger who raised the nexus between Jevons’ Paradox and the Nano. What I hope to do is to raise that issue here, and to expand the analysis to cover what I consider to be the even more pressing nexus between the Nano, productivity improvement, and world oil consumption.
“But I’ve heard that today’s economy is far more productive per barrel of oil consumed than our economy was in the past—won’t a continuation of this trend decrease demand for energy?”
The Tata Nano isn’t the world’s most fuel efficient car, and therefore it doesn’t suddenly brings the automobile within reach of potentially billions of new drivers purely because of fuel efficiency. Rather, the Nano is revolutionary because it is representative of another trend in the modern economy—our ability to produce more for the same amount of energy consumed, and it’s broader corollary, our ability to produce most everything more efficiently and cheaply. If you track economic statistics with much interest, you have probably noticed that the statistics covering “productivity” show a virtually permanent increase over the past few decades. The Nano is a prime example of exactly that trend—in real dollars (and accounting for subsidies), it is probably the least expensive four-door car every built by a considerable margin. Some of that comes from economy of scale, some from the ability to leverage processes and materials developed elsewhere, and some is simply the result of designing with precisely that goal in mind. But the result is the same: a car for less money means a car that more people can afford to buy. To the extent that we are dealing with energy-consuming products, greater efficiency of production seems to affect energy consumption via a process similar to that described by Jevons for energy efficiency. The more people who can afford to consume oil in their own car, the more that will.
The larger issue is that increasing productivity—of exactly the type that led to the Nano—is a critical requirement for the growth that drives our economy. Economic growth is driven by three main factors: increasing population, increasing energy availability, and increasing productivity. It is often assumed, here and elsewhere, that a focus on productivity is the only realistic way to maintain economic growth if we are to control population and pollution while dealing with plateauing or declining energy supplies. Does the Nano throw a wrench in that analysis? Even if this unanticipated consequence of increasing productivity only serves to negate our gains in energy efficiency, this is enough to cast serious doubt in my mind over our ability to maintain economic growth going forward.
The Tata Nano is also emblematic of another trend—the rapid emergence of a massive, global middle-class. This middle class may not have the same standard of living or net worth of the “middle class” in the West, but it is significant none-the-less. Today, tens or even hundreds of millions of Chinese, Indians, South East Asians, and Latin Americans can comfortably and confidently provide for the basic necessities for themselves and their families with money left over. They’re spending—and (yes, America) saving—this surplus toward aspirational goals, one of which is to own a car. Car culture in China is thriving, and with the launch of the Nano it seems that industrialists are betting on it thriving in India as well. Can the world, its oil supply and environment, accommodate another 100 million cars? What about another two billion cars? J.D. Power & Associates expects yearly light vehicle sales in India to double to 3 million vehicles per year by 2015, and sales in China to triple to 17 million per year. Unlike the U.S., where the vast majority of our roughly 17 million in annual car sales do not represent a new person beginning to drive a car, most of the sales in India and China go to first time drivers.
The danger of an economy that seems adept at squeezing ever more productivity out of each hour of labor and barrel of oil is that this same trend that could help the West soften the impact of Peak Oil seems poised to exacerbate the global energy supply crunch by making energy consuming cars affordable to an ever greater portion of the world’s population. An expanding consumer base makes it much more difficult to achieve aggregate gains via efficiency-if the number of cars doubles, the efficiency must also; if the number of cars triples, is it realistic to triple miles per gallon across our global fleet? Quadruple? This development seems to carry with it the significant moral hazard (already a hot debate topic within the world of carbon emissions) in the possible “solution” of denying these efficiency gains, or their products, to the world’s poor. Where is the cut-off? Do we cap the “middle class” at one billion? Two billion? Three? The possibility and morality of such a move are highly suspect. We may be stuck between the rock of 2+ billion new middle class consumers over the next few decades and the possibly much harder class and geopolitical situation of those 2+ billion aspirants realizing the will never become “middle class” because of the decisions and prior consumption of the 1 billion in the “West.”
What next, will these people want air conditioning, too?
Most assuredly Jevons' Paradox can apply to PO, though it is more complicated than pre-PO. A Hirschian crash effort to reduce consumption by governments, industry, and citizens might (if hypothetically started in time) result in lower prices if demand were to be reduced below supply levels. All it would take to spoil the party would be some percentage of the population (or 1 or 2 rogue nations) to buck the trend (cavorting in oil-soaked consumption over-indulgence like most developed nations are now) to weaken the resolve of those choosing the higher path.
However, continued growth will likely be challenged in the near term by the subprime fiasco, perhaps moderating oil demand to mask the effects of PO on oil prices. Then PO critics will say, "See, peak oil nuts were all wrong; oil didn't hit $200 by 2010, it's only at $165! There's no problem with supply, it's 'above ground' difficulties..." So the Jevons aspect may be conflated with predominantly unrelated economic turmoil.
Our future lies with better land use planning, more use of mass transit, working from home, biking, etc. I'm convinced, however, that most citizens will not climb out of their cars until they are forced to, per Nate's two articles on human addiction tendencies.
For those who are ensconced in outer suburbia away from mass transit, there are a number of options to driving Nanos or other standard automobiles (though prices are diverse); of course, many suburbanites would recoil at the thought of transporting themselves or their families in something 'less' than they have now;
Electric-assist Bike, -----------------------------------Family powered quadcycle
Electric-assist velomobile (enclosed recumbent trike), ---------------------------Electric Motorcycle
Myers NmG enclosed electric motorcycle (currently fairly expensive)
VentureOne electric or hybrid enclosed motorcycle (coming soon)
Years ago, I built a shell around a small motorcycle, trying to achieve high MPG. The first time I took it on the road, I almost wrecked it as it tended to "fish tail" as speed increased. The aerodynamics were such that it was unstable, that is, it tended to deviate away from motion in a straight line as speeds increase. My solution was to add a vertical tail, which made the thing hard to handle in cross winds or when passing or being passed by trucks. Dump trucks were especially difficult to deal with.
I think it's important to point out that the VentureOne machine is likely to be a very dangerous machine to operate. This is the result of having the center of mass located toward the rear, while having a rather large area exposed to aerodynamic forces ahead of the center or mass. The result would likely be loss of control at high speeds due to cross winds, just as I experienced with my machine. The graphic sure looks cool, though.
The Myers NmG might be a little better, if the batteries are located ahead of the front wheels. They claim a speed of 75 oh for the Myers, so I assume that they have already tested these to find out whether they are stable or not.
E. Swanson
Take a look at these prototype VentureOne videos where the bike is being tested by Top Gear and the like; I believe your concerns will be addressed.
I use to ride motorcycles too and I agree, the 'Venture' would be dangerous. If someone owned a place out on the California coast near Bodega Bay, the road north from there would be perfect for that little roadster. But for any other roads, even beyond aerodynamics, my concern would be other vehicles not seeing me. When I use to ride a regular 2 wheel motorcycle I found one had to ride very defensively because other people simply do not see bikes as well as other cars. Now with all these huge SUV's the problem is compounded even more. A nice idea, but too impractical due to safey issues.
See the videos mentioned in the previous post, especially where the prototypes are driven through busy traffic. If we gauge every mitigation by how it will compare against large SUVs, we end up in a situation where we always revert back to a larger vehicle than would have been helpful. Your argument could be used to discourage even bike commuting, for example, so the fallacy of SUVs always being safer falls flat when we hit the downslope of PO.
I was told my tiny Honda Insight would be crushed by large SUVs the first year (and I live in an area with LOTS of them), but I'm in my 8th year with it with nary a scratch (granted, I've vanpooled alot when not zipping around on consulting engagements). As gas prices go higher, or as the recession deepens, we'll be seeing lighter traffic anyway.
Go watch "The World's Fastest Indian".
Putting a shell on your motorcycle is not a good idea unless you really know what you are doing.
However, those 2 vehicles looked like tricycles to me.
And then there are those efforts to create two wheel enclosed motorcycles with retractable landing gear, from the Monotrace Cabriolet of 1925
to the "ecomobile"...
http://www.detnews.com/2005/autosinsider/0501/30/autos-73731.htm
... with a number of variants in between.
I always liked the idea of a retractable wheel motorcycle, although frankly I'd be terrified to drive one.
The Eco-Mobile is interesting, but at 1200cc and $80,000, it's a bit of an overkill.
oh, I agree... it's absurd. (But cool!)
And that Montrace Cabriolet was an excellent find.
I have not been to India for seven years but I don't things have changed all that much. I had the sense that the most obnoxious pollution was coming from two stroke vehicles, two and three wheeled motorcycles, particularly in extremely congested cities like Mumbia and Pune. When I was told I should leave my hotel in Mumbia a good six to eight hours before my flight from the Mumbia airport I thought it was a joke, but it wasn't. I was glad I did. I could have walked the ten to fifteen miles faster. The traffic is completely insane. Anyway, to replace two-stroke vehicles with four-stoke vehicles would be a big improvement in terms of air quality and its difficult to calculate effect on gas milage. Replacing a 80 mpg two stroke motorcycle with a 50 mpg four stroke car is not necessarily a 37.5% reduction in energy efficiency and a 60% increase in fuel consumption. Once vehicles are stuck in traffic, efficiency goes way down, especially for overlaiden motorcycles. Also pollution goes way up, especially for slow moving motorcycles. Furthermore if a car carrying four people replaces two motorcyles carrying two people each then the car may have better gas milage and reduce pollution over the two motorcyles. If you are out in the country driving on the highway as an individual okay the milage is better but the pollution factor still is not. And driving solo without carrying a bunch of stuff is not the Indian way.
Check out this report, in particular the table on page 33.
www.theicct.org/documents/Meszler_2&3Wheelers_2007.pdf
This issue is very complex and I just not convenced that the Nano is all bad if it is replacing a swarm of old, poorly maintained, cheap oil filled, two stroke smoke pots.
I think Nano, the small car from Tata, should be successful. Bajaj Auto, one of the largest two-wheeler company, is coming up with their own version of ultra cheap car. There is huge market for first time car buyers, particularly in small cities. A car at this price should be successful.
William Stanley JEVONS.
Spelling has been fixed, thanks. I seem to be cursed with this name... last time I wrote about it, I initially put the apostrophe in the wrong place ("jevon's"), and this time I thought I was being so clever getting that fixed. Oh well... and Jewish Farmer below is right--I'm confusing the spelling with John Jeavons of "Grow Biointensive" fame. Consider this a public service announcement:)
Just FYI, Jeff, I think you are confusing the spelling of W.S. Jevon's name with John Jeavons of Biointensive Gardening Fame.
It strikes me that we need an alternative to middle class aspirations. What that would be is another issue altogether, but despite the tendency of many commentators to dismiss this possibility as impossible, the only hope seems to me to change the culture of aspiration - to show, for example, a billion rich world people aspiring to lower their standard of living.
Let's get right on figuring out how that would happen ;-).
Sharon
"Standard of living" can be a relative term that focuses primarily on goods and income; shifting the discussion to include leisure, safety, cultural resources, social life, mental health, environmental quality issues and other 'quality of life' measures can help to realign the discussion and enable the refocusing of the goals people set for themselves and their communities.
It absolutely can - but it isn't an easy reset. That is, most of the socio-cultural benefits you achieve work best if everyone in a given society is doing the same thing. So we have to lower economic standards of living with the promise of other returns later on (there are exceptions, but in general, for example, these changes work best on a societal level).
Again, I think we can do it - but while I think an articulation of quality of life benefits is important and useful, we should pretend that there's no cost involved to the people we're talking about. The simple truth, however, is that we don't have a choice.
Sharon
Go deflation!
Someone had put it as shifting from a consumption-based lifestyle to an experience-based lifestyle. Collecting good memories rather than things.
I think this is the crux of the problem. The solution seems to start with recognizing that we tend to substitute the material for want of the experiential in life. The only purpose of material goods it to achieve an experience, but often (though, admittedly, not always) that experience can be achieved with out the material, or at least doesn't require the kind of material consumption suggested by advertising. I've written about this in "Magazine Simplicity."
I don't think it's unrealistic to shift our focus from being rich because we consumer more to being rich because of the quality of our experience--it just requires a different design focus. I do, however, think it's unrealistic to think that "society" or "government" will make this change for us--we must do it for ourselves individually. The more that individuals set examples of how this is A) preferable and B) implementable, the more chance it has to spread from the ground up. I think what is needed is less a culture of "rich people trying to lower their standard of living" than rich people redefining what they consider "standard of living"--more focus on doing more with less, on the experiential, on a notion of elegance that prefers to see how much can be done with little (even social competition on that point).
Agreed. And there are organizations moving in this direction, such as New American Dream, among others (can other people provide more organization links?)
Sometimes it means taking a little longer getting somewhere, or being a little colder first thing in the morning during the winter, or warmer in the summer. If we compare how our grandparents grew up versus our lifestyle, we could recognize that there is much we can do without and still retain an equivalent (or even greater) quality of life. Both sets of my grandparents were farmers during the Great Depression, so my parents lived through some of the hardest of times, yet have endless fond memories of growing up without regard for their penniless state.
So when I'm huffing my way up the side of a ridge on a late summer's day, the heat is not the most pleasant sensation, but the physical exertion and the fresh air are remarkably mind-clearing and stress-reducing, so the benefits clearly outweigh the 'costs'. And when the dinner table is set with produce right from the garden, the understanding of where things come from brings understanding not only to our children, but to visiting friends as well.
So setting examples (as well as educating others on the impacts of resource limitations and climate disruptions) certainly is the most effective means of 'walking the talk', and doing so in a positive manner carries the greatest chance of being effective (as opposed to railing on people for driving SUVs, etc). One of my favorite examples is seeing a cyclist during rush hour with a "One Less Car" jacket on, which reminds the observer of several benefits of bike commuting in a non-indicting manner.
This subject would make for a intriguing TOD article, especially as a follow-on to Nate's addiction articles...
This rejection of goverment makes no sense. Government and human society are inseparable. Even hunter-gatherer bands and neolithic villages had government. Not in the sense of elected officials, written codes of law, etc., but in the sense of a set of conventions that governed social and economic relations between the constituent members of society. The higher the degree of specialization of labor the more complicated such conventions have to be.
If you have a preference for greater material simplicity and less centralization that is all well and good. It may well be that the current national goverments will be largely ineffective instruments for bringing about a new social order. But if you believe that some new vision of what constitutes the 'good life' can be effectively implemented without rolling up our sleeves and doing the hard political work of creating the appropiate set of conventions and institutions which will support that vision, then you should find a new substance to put into your pipe.
Your comment seems rather incoherent--I hardly know where to start:
1. Are you suggesting that my statement that "it's unrealistic to think that 'society' or 'government' will make this change for us" is a statement that "government makes no sense"? I don't think that's what I said--I think my words were pretty clear--I said that government won't do it for us. Not that we can't do it through government--the need for individual responsibility seems pretty clearly expressed in my words to me.
2. Our words seem to actually agree, not disagree. You suggest that I think we can achieve the good life "without rolling up our sleeves," when my actual words said the exact opposite--that *WE*, as individuals, must do the sleeve rolling, and not merely expect it from others (the government).
3. If what you're actually suggesting (because this is the only way I can understand your apparent disagreement with me) is that "appropriate" conventions and institutions must be hierarchal, then your anthropology is way off, and I think you're falling into the classic definition of insanity: that somehow, this time, doing the same thing won't have the same results. If this isn't what you're suggesting, then I have no Idea what you're talking about...
Let us suppose that you and I and a small group of people living relatively close together have all decided to live materially simpler lifestyles and to provide for our needs from local resources. If there is any degree of specialization of labor whatsoever then we will collectively need to make decisions about how to share the outputs of our labor. This decision making process is, by my definition, a form of government. Where in this illustration to you see a suggestion that I favor the creation of hierarchies of wealth and power? If you suggest that we should merely barter with each other and therefore avoid any more formal agreement, then a heirarchy of wealth will be created by whoever gets hold of the most valuable resources. In this case our tacit agreement is to allow 'ownership' of natural resources to determine status, and we have created bad form of government.
The point I was trying to make was that the nature of the social agreements that we reach (which we cannot do for ourselves individually) must be a central part of any discussion about how create a new, sustainable economic order.
I agree with this as a *portion* of the necessary project. But the reality is that we really do have strong reasons to do this faster than public opinion is likely to come around. That is, it isn't just the case that we can't eventually afford 8 billion rich people, but that material limits are banging up against us now, and we can't afford 1 billion rich people.
So while I agree that elegance of solution and redesign is part of the project, and essential to the creation of any larger structures to enable this, I'm not sure that I think that simply living our beautiful, deeply experiential, lower energy lives (as attractive as I find that idea) is sufficient, while there is the enormous opposition of advertising and an entrenched and institutionalized requirement for growth. That is, we're already seeing the way "simplicity" is marketed and thus the models perverted. I think modelling would be part of it - but it would also require a great deal of economic and social remodelling that would have to be done simultaneously, since 'twere best done quickly, from top down and bottom up, in both cases in a highly organized way.
Sharon
Good point--I recently flipped through a copy of "Real Simple" magazine. The whole thing was just a list of things that you could buy to live simply (the "articles," not just the ads). The whole notion of for-profit corporate enterprise, where the sole fiduciary duty is to maximize shareholder return, seems fundamentally unsustainable, to be frank. I'm open to being proven dead wrong on that point, and I recognize it's a very "extreme" position (from the context of what Americans are supposed to believe), but I haven't seen a convincing argument otherwise...
jewishfarmer -- please read my post way down below which starts with a comment about "Kill Off" and ends with the quote RE" the young man in an ad for the new Tata (IIRC) "Now There's A Man!"
I think that India and China as well as the USA are using economics to keep people busy in a mode of "intentional ignorance" while they actually serve the military machines being used to carve out more Lebensraum for the elites.
The policy of genocide or "Kill Off" is clearly preferred -- look at all of the arms bought and sold, and the stashes of WMDs folks have or want to have on "our side" -- whichever side that happens to be.
The policy of Resource War is sold like soap flakes --whatever myths, naratives, or fantasies needed are used. To sell soap flakes we use the fears of appearing to be unclean and therefore ashamed. We promise sex appeal and happiness if one uses the right soaps....drives the right car....and so forth. To sell war we appeal to other ancient prejudices and fears -- religious, cultural, mythical. We also appeal to stories of our mythical righteousness -- spreading democracy, freedom, and a magically replicable "way of life" to someday be shared with the good, compliant folks and denied to the evil-doers who claim to see things differently.
So the cars and soap flakes and most of the discussion about them end up being mostly a distraction, do they not?
The only discussions that make sense begin with: "There are too many of us competing for too few resources" and end with a new discussion of "So how can we design our lives to make a peaceful solution?"
No one -- not even Mr. Obama here in the USA -- comes close to talking about the reality: We either do "Kill Off" or "Peaceful Powerdown." Various "products" and "solutions are mostly marketplace noise -- the sound of a massive, slow collapse -- in any other context.
As I see it, there are two ways out of Jevons' Paradox.
One is that which you have identified: change our definition of "success" to one that is not proportional to resource consumption. No matter how efficient you are, if "better" requires more resources, then human competitiveness means that, in the end, you lose.
The other escape clause is the reason that there is an important difference between incremental (say, 5%-25%) efficiency and radical (50%-90%) efficiency. It is simply that radically reducing the resources required to perform a task opens up new options for supplying those few resources that are required. For example, a house that is 20% more energy efficient saves 20% on their energy bills (or is built 20% bigger, at the same energy price point). A house that is 95% energy efficient can have its energy needs trivially satisfied with a small PV system. It's also probably cheaper to build, and definitely much cheaper to maintain, because (at that level of efficiency) you have engineered out alot of the expensive, failure-prone mechanical equipment.
This effect is particularly pronounced in the context of energy, but it's also available in other realms: a radically efficient structural design may allow you to switch from steel to carbon fiber while saving money and embodied energy even though carbon fiber is expensive stuff. (However, IMO, the key to controlling the demand for non-energy resources is to design for 99% recycling through an industrial metabolism.)
There's a third way out: Radical birth control. Fewer people means fewer energy users.
"Radical birth control" starts to sound like a James-Bond-Villain scheme (Moonraker, anyone?). I've always been a bit empathetic towards the supervillain archetype, because at least they realize that drastic steps are required to fix drastic problems, but...
I know how to do that, higher oil prices for the USA and Europe because others are aspiring to raise their standards of living.
Related, but more in the global warming frame, Gwynne Dyer uses the Tata Nano as an example of the requirement for 'Contract and Converge' strategies: Lowering global middle class consumption to converge with the improvement in developing world consumption. Here are some excerpts and a link:
Of course. peak oil may take the 'gradually' out of the above equation!
It is has been estimated that the world can afford some 250 million people living 'the dream' of 'he with the most things when he dies wins'.
"We leverage our improved efficiency to produce more stuff" seems axiomatic. The solution therefore isn't free energy. As 'free energy' would deliver the death nail. Though clean energy production would seem to be the right choice.
I believe that the solution has been offered and mostly rejected, by many, remains the same and is spiritual in nature.
The adage by the 'Beatles' of "All you need is love" is close
I would admend it to "All you need is the LORD's Love" and a clean environment.
An interesting discovery of late for those who want more efficiency is suggested by a discovery made by Thane Heins of Ontario.
2 recent articles in the Toronto Star discuss his finds. Although there is reluctance amongst many to embrace his finds. He is gaining some momentum.
http://www.thestar.com/article/300042
http://www.thestar.com/article/300041
http://www.g9toengineering.com/backemf/demonstration.htm
(some have reported having problems viewing the demo)
I have seen the demo and it is impressive showing a rotor under load that should be decreasing in speed. Instead it speeds up.
If the gains in efficiency are profound how would this alter the paradox?
Let’s think about Jeavon’s “paradox” for a moment.
And the result is?
Wow! What a subtle, complex and “paradoxical” idea. How did anybody ever figure this out?
If we ever have any hope of dealing with resource depletion we have to develop rational economic goals and economic institutions capable of pursuing them without creating social havoc in the form of recession, unemployment, etc.
Jevons Paradox is Economics 101.
It is particularly visible in the airline industry. Productivity gains, particularly with fuel efficiency, have permitted an ongoing reduction in the real cost of flying ever since it became a form of mass transit. Those gains have been more than offset though by growth in the industry. The net result is an overall increase in the quantity of fuel consumed by the airlines.
That' Jevons Paradox - when increasing efficiency paradoxically leads to greater consumption. The feedback loop caused by the multiplier impact of economic growth amplifies the paradox, in the case of the airline industry, by a significant factor.
I think your economic reasoning misses some important facts.
First off, it takes time for any new technology to be deployed in the market, especially so when considering the entire world. Secondly, population growth means that the size of system of economic activity has increased. Thirdly, in the case of the airline industry, improvements in passenger seat miles per gallon of fuel may translate into more passenger miles without increasing if demand for passenger miles does not change.
Finally (and most important) your analysis assumes unlimited availability of the fossil fuels used by the airline industry. The price of oil has been low for decades, with a few exceptions, until the past few years. Our basic problem hiding behind the discussion is that oil production is at, or nearly at, peak. Thus, in the short term, once demand exceeds supply, it's a zero sum sort of situation. If one part of the world economy uses more oil, that implies that another part will have less. The airline industry is competing with other users for kerosene type fuels, so there are lots of consumers of kerosene that will be in shortage if a few more people get on the airplanes and fly anywhere. These days, there are lots of folks in Iran and China that are shivering in cold houses who would give whatever they could for a few gallons of kerosene just to keep from freezing. Kerosene is also used as a cooking fuel and can be burned in diesel engines as well. One must not consider just the airline sector in an analysis, as you apparently have done here.
Once the limits of supply are hit, improvements in airline seat miles per gallon may translate into reduced prices in the marketplace, but that will only be temporary and only obtain if the increased efficiency is deployed faster than the decline in availability, as population growth tends to ratchet up the amount of kerosene demanded by the more mundane folks who don't have electric heat pumps or natural gas supplies. I don't think we are going to see a nice, smooth, painless transition to alternative energy sources.
E. Swanson