Conversations along the Highway: Where Gasoline Prices Hit the Hardest
Posted by Heading Out on June 12, 2008 - 9:00am
Topic: Demand/Consumption
Tags: peak oil, rural, travel, urban [list all tags]
Back when we started writing on this site, I mentioned that it was the time to take vacations that would likely soon become too expensive. In keeping with that, this summer we are taking, what will probably be our last holiday where we drive, in part, just to see the countryside. And so, on Friday, this brought us to the Arts and Crafts Show in Frankfort, KY. It was some 93 degrees, and thus attendance was a bit sparse, but I suspect that there are more reasons than that for the reducing popularity that these shows face, both from vendors and customers, and that their viability will slowly fade in the face of high oil prices. (clicking map will take it to full size...)

One of the stalls, for example, was run by a lady from Alabama, and she talked about going to a show in Springfield, MO as the range of her “territory.” But when one considers the distance, and the need for some accommodation it is already becoming difficult for her to justify the expense for the longer trips, in light of size of the potential income she anticipates. The wife of a colleague of mine, who had been working the same “circuit” has, in fact, recently stopped since it is no longer profitable. Their hope is that they can still get business, but working instead through the internet.
Which led to another conversation with a nearby stall holder, who had also just set up a web site, selling jewelry. He mentioned that this was becoming much more of a source of income, but also commented on something that I had not thought of. For much of my professional life I have bought items that I need through salesmen and local offices. But now I purchase more through the internet. The vendor was commenting that this holds true for many businesses, but that in doing so this cuts out the role of the salesman, who concurrently loses the commission that would otherwise have come with getting the order. I am not sure this is totally a good thing, since in the past the visit of a salesman brought up new technology I wasn’t aware of, and I suspect that if I looked at the records I would find I bought more than I do now, to stay current and extend our capabilities.
Well, after a quick trip through the State Capitol it was time to get back on the road, and into the 2-hour traffic mess that is the current intersection of highways 64 and 75 outside of Lexington. So much for making good mileage, as we slowly wormed our way up the 5-odd miles of stop and go traffic caused by a highway resurfacing project.
And speaking of things that will become more costly, and thus less common, Leanan noted in Drumbeat that the cost of asphalt is rising with the price of oil, and that Highway Departments are already having to trim severely the amount of repairs that they can afford each year.
Larimer County, Colo., would like to resurface 16-20 miles of its 450 miles of paved road each year. "This year, we'll be lucky to do seven miles," says road and bridge director Dale Miller.Paul Degges, chief engineer for the Tennessee Department of Transportation, will resurface 1,600 miles of state highway this year, well short of his 2,500-mile target. "Since my budget is not growing and costs are up, we're doing less paving," he says.
Unfortunately the rate of road disintegration is not similarly stalled and so, without a series of those election-winning tax increases (grin), this is going to become a spiraling problem of the next decade.
In regard to the traffic control through the construction, the Actress did wonder why the local highway department hadn’t adopted something similar to the controlled speed system (pdf) that the British had put in on the M25.
Controlled motorways prevent bunching and flow breakdown and, thus, increase safety and throughput. A controlled motorway system has been operating of the M25. Its purpose is to smooth traffic flow by imposing a mandatory speed limit, which is varied automatically in response to flow conditions. Following the successful trials on the M25 further extensions to the system will take place.
Since a significant part of the problem comes with stopping and starting large trucks, keeping the traffic moving at a slow rate would help overcome the problem (as was discussed in comments the other day). It has also received Automobile Association approval I had to explain that Highway Engineers tend to be some of the more conservative of the Engineering Bretheren.
And so we moved on, visiting two more State Capitols in the following two days and then coming to a short rest for a couple of days in Raleigh, NC. And here the conversation turned to the change in education that is starting to occur. It was interesting to note the number of entries, in an Art Exhibition at the State Museum, that had been submitted by home-schooled children. The advent of the internet would seem to make this choice a more palatable one, in terms of the availability of materials, and in much the same way as oil price encourages working at home, perhaps, particularly in rural communities, where transportation is already expensive, home education way well increase in popularity.
The nature of education is in itself changing, as the internet makes the classroom a far distant place from the little red schoolhouse, but some other older habits may return. My mother, for example, was raised in a small village in Scotland, and boarded over the week in a larger town, in order to get a better education in her more senior school years. In that same period of my own life I also went to a boarding school (traveling in a train not that dissimilar to the one seen in the Harry Potter movies – though not a dedicated train, rather that those were the carriages of the normal British Rail of the period). One wonders if the increasing costs may strengthen the appeal of such schools. I suspect it may not, although in this case the school has been around since 11xx and boarding students since at least the middle of the 13th Century. Yet it is also having to adapt to the changing demands of both student expectation and the more widespread involvement of students outside the schoolroom, that is increasingly part of education, but which also relies on inexpensive transportation as a facilitator. But one of the reasons for the long success of the school has partially been the same reason that induced my grandparents to send my Mother to board.
There was an exhibit in the North Carolina Historical Museum in Raleigh that noted how liberating the car had been for rural America, a point I have heard emphasized by other historians. The presence of good roads (requiring asphalt) and the power and speed that cars brought in moving goods and people (based on oil) opened the horizons and markets for the farming communities in ways that is hard for those of us today to understand. It is why some form of similar transport is still going to vital to the community at large.
And so it is that I think that I don’t think that Kiashu understands the rural economy. His piece, sensibly saying that, instead of Hypermiling we should stop driving, fails to understand the imperative in the rural community of the car. In many places in the United States, and I suspect in other rural parts of countries such as Canada and Australia, the population density will make it harder and more costly to provide public transport for the low numbers of folk out there. At the same time they will continue to need the services of the community in the villages and small towns and thus will increasingly be forced to drive. It was, after all, the uneconomic aspects of serving the rural community that caused Dr. Beeching to close almost a third of British Railways largely through reducing that service in the 1960’s. As the costs of rural service go up it is more likely that communities will continue to prune the public services that they provide to areas of lower public density, and then for those who live outside the urban conurbation there will be no choice but to increasingly rely on cars and trucks.
PG here; to further edify HO's point, here's a chart of "where gasoline prices hit the hardest" from the NYT (Hat tip to Tim Iacono over at The Mess that Greenspan Made; click to enlarge to full size):
“This crisis really impacts those who are at the economic margins of society, mostly in the rural areas and particularly parts of the Southeast,” said Fred Rozell, retail pricing director at the Oil Price Information Service, a fuel analysis firm. “These are people who have to decide between food and transportation.”
A survey by Mr. Rozell’s firm late last month found that the gasoline crisis is taking the highest toll, as a percentage of income, on people in rural areas of the South, New Mexico, Montana, Wyoming and North and South Dakota.
With the exception of rural Maine, the Northeast appears least affected by gasoline prices because people there make more money and drive shorter distances, or they take a bus or train to work.
But across Mississippi and the rural South, little public transit is available and people have no choice but to drive to work. Since jobs are scarce, commutes are frequently 20 miles or more. Many of the vehicles on the roads here are old rundown trucks, some getting 10 or fewer miles to the gallon.



Hi HO,
I am just in the process of sending my daughter to Australia (from UK) for her "summer" holiday - yes I know it's the wrong way round:-) but I am doing it on the basis that airfares are still relatively cheap and the planes still well maintained and flying. I have made the trip several times and want her to have the chance while she can and it is socially acceptable.
Speed limits of 50 are common for roadworks on all motorways in the UK and cameras enforce an average speed over the whole length. IMHO it certainly helps keep the traffic moving smoothly.
For roadworks can't concrete be used instead of ashphalt?
"...in doing so this cuts out the role of the salesman..." one of the advantages of buying through the internet, no pushy salesmen:-)
I don't know how the costs work out, but as you say surely concrete can be used instead of asphalt if the costs of that continue up, or even low-carbon substitutes for concrete:
http://www.abc.net.au/catalyst/stories/2244816.htm
This would also use waste industrial products.
Historically a lot of progress has been made when some inputs got expensive.
Without being hopelessly optimistic it seems that this is perhaps a soluble problem.
What do you think?
The only problem is that cement is very energy intensive to produce. It's my understanding that many cement plants run off natural gas or coal, and are less likely to have modern emission controls, although that may be more of a local observation here in Florida.
I did find this:
http://www.malvern.com/ProcessEng/industries/cement/energy.htm
"In the United States, producing the roughly 80 million tons of cement used in 1992 required about 0.5 quadrillion KJ. This is roughly 0.6% of total U.S. energy use, a remarkable amount given the fact that in dollar value, cement represents only about 0.06% of the gross national product. Thus, cement production is approximately ten times as energy intensive as our economy in general. In some Third World countries, cement production accounts for as much as two-thirds of total energy use, according to the Worldwatch Institute. "
Apparently fly-ash cement is a lot less energy-intensive than conventional concrete:
http://www.natick.army.mil/soldier/jocotas/ColPro_Papers/Anderson.pdf
Anderson.pdf
Isn't that similar to what the Egyptians used.
I didn't know about the Egyptians, but it is certainly similar to that used by the Romans:
From my original link:
Or perhaps you are referring to Egypt under Roman rule?
Yes under Roman rule. Does Anyone get a feeling time is running in reverse we keep figuring out all these old ways are better than the new?
Depending upon what process is used (wet, dry, preheater or precalciner) the energy range can be enormous. The order presented in the previous sentence represents the highest to lowest energy usage. Generally, pulverized coal is used as the heat source as the ash can be incorporated into the clinker.
Wet process kilns generally have fallen out of favor because of the energy required to evaporate the water but the blending and homogenization of the principle constituents is alot easier. If you have a wet source of calcium (as is generally the case in Florida), you would probably use this since your raw material is wet to begin with. Enrgy requirements are typically anywhere from 5-9 million BTU per ton of clinker produced. The kilns are gnerally quite long (from 400 feet up to largest I've ever evaluated at 525 feet) and range in diameter from 12.5 feet up to 19.5 feet.
Dry process kilns are similar but the materials are homogenized in a dry state and introduced dry into the kiln. generally their energy requirement is anywhere from 4-7 million BTU ton of clinker.
Preheater kilns require a shorter kiln and preheat (with some small amount of calcination in a tower composed of a series of large refractory lined cyclones. The kilns are usually quite short (~200 feet) and energy requirements are lower 3-6 MMBTU/ton clinker.
Finally the precalciners use a "flameless burning" of pulverized coal in a pre-calciner stage (in the same type of preheater tower, usually between the thrid and fourth stage. As the name implies, the calcium carbonate that makes up the largest proprtion of the raw material feed is calcined to calcium oxide in this stage and the rest of the preheat tower is used to get the raw materials up to the proper temperature for the high temperature zone of the kiln.
All cement production follows the same process: drying (whether wet or dry), calcining the carbonate to the oxide form (converting CaCO3 to CaO), and then bringing the the mixture of calcium, alumina, silica and iron up to the proper temperature for the exothermic reaction to occur that gives cement its various strength properties. The calcining temperature requires a minimum of 1500 °F to start, the exothermic "liquid phase" reaction takes place only above 2400 °F. Depending upon the cement qualities desired, the clinker temperature will reach temperatures approaching 3200 °F before being discharged from the kiln to be flash cooled in a clinker cooler whose sole purpose is to drop the temperature below 1850 °F in 10 minutes or less (ortherwise you get very hard to grind clinker AND cement properties that make it fairly worthless due to various strength and expansion properties).
In making concrete, cement and other aggregates are combined (either in a central mix unit or in what is known as truck mix) in a precise mixture of water, cement, aggregates and a few additives. Recently, flyash has been used as both a filler for certain aggreagtes and because it has certain properties that enhance the concrete's final set properties. It requires extremely residual carbon content in the flyash. Western coals that produce a highly alkaline (read calcium) ahs have been preferred in the past but other flyash has been tested and approved. Substitution of between 15-30 percent of flyash for the cement and fine aggragte is not uncommon.
Some of the metals in the flyash present some challenges in the mixing operation (e.g., arsenic) but one incorporated into the matrix, seem to be isolated and non-leaching.
Thanks for the info.
Do you feel that this is good enough and cheap enough to keep the road system in fair repair with asphalt in short supply?
Concrete, if done right, can last a very long time. There are section of I-85 along the VA/NC line that are the original concrete poured in 1965. It's getting pretty beat up now and is scheduled for replacement, but I cannot think of a single asphalt road that has held up that well. There were section of I-95 near Richmond that have recently been repaired (paved with asphalt) that were the original concrete from 45 years ago.
I will note that there are two tricky aspects to asphalt that make it less durable. First, the wide range of temperatures it has to endure and flex with. By it's nature, even though it sets with cooling, it still flexes much more than concrete. Any asphalt is a compromise over a range of temperatures. You can't take asphalt used in central NC and use it Minnesota (well, maybe you can with global warming) or visa versa. Similarly, you have some control over the degree of flex by the amount of fines you put in the asphalt paving material.
Top coat asphalt always has a certain percentage of fines but if your asphalt (binder) is properly formulated for the region and the temperature characteristics, too many fines allows the asphalt paving to flex too much. That rippling effect that you sometimes see at traffic lights is caused by too many fines, too much asphalt or improperly formulated asphalt (or some combination). It also takes much more road bed preparation.
It's also more difficult to recycle concrete compared to recycling asphalt paving materials (though the practical limit is about 35% recycle). And asphalt, as the bottoms of the distillation and cracking process is, essentially, a waste byproduct of petroleum processing. I haven't checked the price recently, but the wholesale price of aspahlt was far below the cost of oil. As more and more refiners install coker units, less and less of this material will be available and the supply and demand pressures will force the price up in addition to the underlying cost of oil.
Lafarge: Making cement with locally grown biomass energy
Current prices taken from RS Means Cost Estimate Book:
Asphalt-
8" Stone Base @ 15.90 SY
2" Binder Course (asphalt) @ 7.30 SY
1.5" Wearing Course @ 6.20 SY
or
Concrete-
7" Unreinforced @ 34.50 SY
+ welded wire reinforcement @ 4.21 SY
...
So the prices are close now (keep in mind asphalt has been much cheaper in up front costs for a very long time). This isn't perfect by any stretch either, both need some compaction for the subbase which is not included, and asphalt needs more base prep than concrete. WW is a pretty sorry excuse for steel reinforcement, but the only purpose of that is to keep pieces from seperating...it doesn't make the concrete stronger...but I digress...
We need road surface materials that last longer. What are the prospects for this?
Quarried granite setts
http://www.charcon.com/images/granite-set_product.png
They pave Felicity Street 2 blocks away from my home.
Best Hopes for Mature Technology,
Alan
This has crossed my mind too. I've never been to Australia and New Zealand, and it seems like I'd better plan my vacation soon if I ever want to see those places ever in my lifetime.
Up unitl the 1970's most people coming to Aus/NZ arrived by boat. Many refugees from Asia still arrived the same way until 2001 when the government got tough. I think this will revive in the future. Just catch an empty coal freighter coming back.
Hi Termoil,
Some relatives of mine emigrated from the Uk to Aus in the 60s under the £10 passage scheme and they were one of the first to go by air rather than by boat. This was at a time before air travel was common (in Europe anyway) and package holidays had not yet been invented, so it was a double adventure!
It's supposed to be winter here in Australia but last weekend I went for avery pleasant bike ride in shorts and T-Shirt and I actually got quite hot. Ilive at the foot of the Snowy Mountains so not the hot dry top end. Anecdotally it's scary stuff. Don't pack too many woolys for your daughter.
Strangely enough my first time skiing was in the Snowy mountains in June or July, I don't think many Europeans would be able to claim this and some find it difficult to believe that Australia even has snow. Maybe similar to Australians who think it rains more in London than Sydney!
"Don't pack too many woolys" ROTFLOL she's not a woolys person and doesn't take any advice from me, least of all on what to wear:-)
If things get really hairy, she could stay there...
It's a pretty common thing for British tourists to stay.
I find it terribly depressing when people who actually understand why flying is becoming socially unacceptable decide to maximise flights 'while they still can'. Surely our ethics shouldn't just be based on what others think?
I suppose I shouldn't get bent up about it since the airlines will be going bankrupt before long, but it does get to me..
Hi Shaunus4,
I understand what you are saying but i am certainly not maximising my flights by a very large measure. This year I am taking no flights for holidays, same as last year. I commute to work by public transport despite it taking twice as long as by car and having a dedicated parking place and drive far fewer miles than the "average Joe".
That's a good point about how public services may be withdrawn from rural areas making driving even more necessary-- until perhaps later in the decline of energy resources: if agriculture becomes more labor-intensive again, population density in rural areas MIGHT increase.
But for now, with tight public budgets and increasing costs, I think even urban service providers get stuck with more driving, paradoxically. I have worked for the last 10 years in IT services for nonprofit social services, e.g. preventing domestic violence and so on. As the government portion of our funding dries up (partly due to increased costs for other things like road paving I'm sure, but also due to anti-government attitudes) nonprofit services have been consolidating across larger and larger geographic regions to save administrative costs (read: salaries, by having one person do what two or three used to do). And the result is that even though I always select an agency very near to my home so I can bicycle commute or use transit (I live in a central city area), I have to keep my car and find myself unexpectedly driving to remote sites 20, 30, 40 miles away to support them.
Of course since I am in information technology, I have implemented extreme amounts of remote control technologies so I can do most of my work from the central office. But as companies and agencies experience higher fuel/materials costs and balance budgets through mergers, other types of workers such as building maintenance people will actually get stuck driving more, against their will, because there's no way to telecommute to fix a boiler or a toilet, and companies can either not raise their mileage reimbursement to match gas prices or, they can still accurately say that salaries for a staff person at each location are still more expensive than mileage is. Of course, in the short term, even workers like me who COULD telecommute to meetings or do remote repairs will sometimes get stuck driving because our bosses will say that "meetings are better face to face." This particular cultural expectation is fading, but slowly I think.
It's interesting: For now, the fact that even low-paid jobs like admin assistant expect "reliable transportation" (read: car) for employees to do work-related business with, is a non-issue. This is because almost everybody has a car already, so there are few people who, like me, have arranged their lives around bus and bicycle and get annoyed at employers expecting them to purchase 5-figure capital equipment for them. But in the future, I expect that the current employer expectation that employees purchase and maintain cars for use in business, and accept mileage reimbursement that may not keep pace with inflation, will become more of a bone of contention.
Change in employer expectations will probably not come until they start finding it difficult or impossible to fill vacancies with employees that can meet their expectations. Some bosses are probably pig headed enough to shut down their companies rather than to adjust their expectations to reality, but most will eventually have to change. It is going to be hard on workers, though, until the paradigm has completed its shift.
I'm not sure about the outcome of this one.
I think that for the low pay range whats going to happen is that people without cars may offer to take a lower wage in order to work. So the employer may actually accept them faster than we think. Also of course once its more prevalent a employer but will become more common going to the nearest train station.
However I don't expect any flexibility for the higher wage scales. So the above only applies to the lowest payed positions say less than twice minimum wage.
Company Boarding houses during the week?
Corporatism will move closer to feudalism, where the serfs actually live next to the lord's manor or castle, or in barracks. And the CEO (king) actually takes more responsibility for his subjects (employees) wellbeing.
Eventually, we may even be back to historical feudalism, with everyone serving a small community run by a Big Man.
a 'doomer' might predict a fast crash scenario with society rebuilt as co-housing on steroids, somewhere japanese fiefdoms and somali warlords.
first world goes third world.
I don't think so or at least not anytime soon.
The poor work force esp if it opts to take a pay cut in exchanged for transportation support should actually do ok.
Overall if they plant a garden they may come out better off than they are now.
Most poor people live to operate a car pay rent eat and drink beer and smoke pot.
Don't slam me for this broad statement my point is the lifestyle is generally pretty simple
any expenses and credit etc keeps them deep in debt. By removing the car expense in exchange for a slight wage cut
these people will probably come out with a lot better overall.
You can imagine from this graph that once oil passes 300 a barrel these poor regions simply cannot support people driving.
However its also obvious that the rest of the country can continue to use oil until its a lot higher.
A simple calculation is 16/2 = 8 so a eightfold increase in oil prices is needed to get the rest of the country even to the same percentage level.
130*8 = 1040 dollar a barrel.
I've post this many times that we won't see problems until oil is 600-800 a barrel and we don't have anything really preventing it from going to that level once supplies are more constrained. Given nothing stopping a rise to this level we could see it as early is 2009-2010. I happen to think closer to 300 a barrel for 2009 is probably realistic but we will see.
I think this post explains perfectly why I'm saying this. The bottom line is a lot of people in the world can afford it.
Until they can't the price will increase dramatically. Sure this takes out the weakest areas of the US and the effectively become third world but thats to be expected.
I can afford to pay 20 dollars a gallon for gasoline no problem and I'm not super wealthy just upper middle class.
Over ten dollars a gallon I might think about cutting my consumption some but not really. Almost everyone with a decent income can reorganize debt if need be and pay these sorts of prices its not impossible.
Look at Europe.
I don't think that the scenario you draw makes enough allowance for the knock on effects of industries and whole groups of people effectively being removed from the system.
For instance, the civil aviation industry will go down the tubes.
Sure, some if the slack will be taken up by the wind-turbine industry, but not quickly enough to prevent one heck of a depression, and it is not the only industry which will be very hard hit, long distance tourism is another example. Each of those areas which are in severe trouble will have knock-on effects reducing the market for those industries which are not so directly affected.
To take a lead example, let's look at Hawaii.
Now a lot of people in the groups that you say are not at great risk live there, people who could easily afford $20/gallon gas.
But how many of them would keep their jobs and income with oil at only $200/barrel?
This would kill the tourist industry there, and the housing market and new builds.
Any of those middle classes such as architects, builders, hotel managers etc will find themselves out of a job or with greatly reduced income.
In turn this would reduce revenues enough so that whole swathes of government employees would be at risk.
And who is going to be able to pay for expensive doctors then?
The damage to those middle classes then further reduces demand, in a cycle.
We might pay high petrol prices in Europe but most of it is tax, which is recycled within the country.
I feel that demand destruction will be a lot more powerful than you have allowed for, and so prices for oil will not shoot up so much, but relative to the new reduced income they will still be expensive.
Well I've said a few times that the American Middle class is toast. But this does not mean that people will quit working they will do whatever they have to to survive. The value of most of the stuff we have built the last 50 years housing industries etc effectively goes to zero. But you still need to eat and you still need to get to work to make money to eat. It will be a third world living for many but just like the third world you still will have a lot of people with decent incomes.
Money concentration never stops.
The difference in the two scenarios is that no-one ends up paying $20/gallon for gas, not for a while anyway.
The economy is toast way before that, and the same effect is obtained by those who used to be able to afford gas at $20/ gallon now having reduced income and getting the same hit with gas at $10/gallon.
The demand destruction is constant, save that the oil producers are also hit as the prices for their product do not go to the same level as their customers are now too impoverished.
Over a slightly longer time frame less oil would be produced as very expensive plays would not be affordable as they would if the world economy had not imploded.
I think you over estimate your own ability to earn income at the same level with continuing deepening of economic problems. There are some very, very high flyers that have come unstuck with the credit crunch and this will be seen as a minor precursor to the building oil shock. Oil is the foundations,the floors walls and roof of many industries that just didn't exist before the oil age, and they will not survive very long when the price moves way outside the assumed cost window. Look at the protests from European truckers and fisherman. They arebascially saying they are unprofitable now. If too many fisherman go out of business, there will be shortages of seafood. That trickles down to seafood restuarants and all the distribution chain which reduces the economic activity. When this is happening to every industry simultaneously, there will be a massive and rapid contraction of the economy and nobody will be spared.
http://www.princeton.edu/hubbert/current-events.html
Oil production obviously cannot consume 100 percent of the world's income. My intuitive, uninformed guess is that it cannot go above 15 percent. If we see oil at $300 per barrel, we will be looking out over the smoldering ruins of the world's economy
I'm sorry memmel,you usually have some interesting and knowledgeable posts but on this one you are off the track and that would appear to be typical of a lot of the wealthier classes.Because they personally are coping(I'm alright Jack)and anticipate,rightly or wrongly that they will continue doing so, they don't seem to be able to see the bigger picture - ie. tunnel vision.There appears to be a lack of empathy as well.
Because of the flow-on effects, $300/barrel oil will see drastic changes for everybody,rich or poor.
I think you have misinterpreted what memmel said.
I disagree with him, as I posted above, but he is far from saying that he will be OK. If you look carefully at his statements, he is arguing that oil will rise geometrically, so that it will soon be out of his reach too, after a short delay.
In fact, elsewhere he argues that the middle class will be impoverished and that only the very rich will get through.
I think he overestimates how well the economy will hold up, but the dispute is a technical one and in no way implies any lack of empathy on memmel's part.
Point taken.Thanks.