The Oil Drum

Bingo, JD.

I would add to your comments that any talk of the price elasticity of oil demand has to be extremely specific in terms of three things, two of which are very hard, if not impossible, to model:

The easy one is the size of the price increase.  The demand response will be non-linear with respect to the price change (hence the fact that they're demand curves and not straight lines).  Over a pretty broad range, the larger the increase the ever larger the non-linear demand response.

The timing of the price increase and the demand response.  If price creeps up over several months, people will adjust much more slowly and less in absolute terms than if the same percentage price increase happens in a week.  

Market psychology.  After the hurricanes we had a lot of very spooked drivers in the US.  People were scared that they wouldn't have gasoline to get to work or the food market.  Just as people started to get serious about minimizing their fuel use, prices came back down.

I'd also toss in a reminder that we simply don't know how people will react to truly high prices in the US.  The price level in 1981 and 2005 were, adjusted for inflation, almost identical.  But we still haven't seen what the US consumers will do when faced with months of gasoline prices above $5/gallon.  (That price, in 2006 dollars, is my personal, seat-of-the-pants level for the lower bound of genuinely high gasoline prices.)  IMO, at that price level we're deep into unchartered waters, and we could very well see a level of commitment to conservation rivaling or even surpassing anything the US did in WW II.

With all due respect JD, can you imagine the backlash that would occur in this country if the government MANDATED carpooling. I can think of fewer things that would make the wags at Fox News and radio call in shows go absolutely ballistic than the government telling citizens that they have to "give up the soveriegnty of their sacred SUV." Unfotunately, as much as I think your proposal has a significant degree of merit, I don't think the current way of thinking for Joe and Jackie Sixpack out in the burbs is going to jump for something like that. The problems this country (and the world, for that matter) face regarding the coming (perhaps even it's already started) energy crisis is going to cause a lot of folks significant hardship, but I think the worse things get, the worse will be our response as a society, not to find a better way of living together, but in the pursuit of keeping things just as they are. I believe the term "Business As Usual" is the phrase most appropriate. When the Vice President of the United States declares unconditionally that the American way of life is non-negotitable, I think he's speaking for millions of our fellow citizens who would rather engage in military misadventures and other foolhardy pursuits (tar sands, shale deposits...Is there a snake oil salesman close by?) than face up to the fact that we live in an interdepent planet with finite resources. Sorry to be such a buzzkill, and perhaps I am completely wrong, but past experience is shown this to be the case.
 

I could be wrong, but I don't think mandatory carpooling changes demand. It artificially changes supply, kind of like an embargo. Price reacts to the supply change, which in turn effects the demand.

JD, with all due respect, let's look at the practical consequences of your proposed mandate. Remember, most places are not Manhattan. Remember too, the transit strike only lasted three days. Let's see:

Sleep on friend's couch to be within walking or biking distance - OK for three day strike, gets old and intolerable really fast.

Bus - slower than molasses even when it deigns to show up. In most places, a ten minute drive becomes an endless ninety minute ordeal. One's time must be utterly worthless (but why, then would one be commuting?), or else gas must exceed maybe $15/gallon.

Scooter - generally incredibly dangerous. Useless in winter.

Bicycle - generally too dangerous. Often useless because banned from U.S. bridges and tunnels. Useless in winter snow and ice. Socially useless in summer, few places have any showers, much less enough showers.

Van pool - very practical in densely populated Manhattan. Elsewhere, endless ordeal like bus.

Telecommute - can be practical, but it's not our decision, it's our boss's decision.

Car pool - OK short term, but bosses will not tolerate the scheduling constraints for long. Only the tiny unionized sector still has any rigid 7:30 to 4:30 jobs.

These alternatives are generally impractical without forceful legislation. That would many businesses, taxpayers, and transit providers very, very unhappy. Employers told to install showers, to allow telecommuting, or to allow European-style uniform working hours (I once witnessed Belgian labor police swarming a small business at 6PM to make sure all the employees were out of the building), will yowl to the heavens. So will shiftless bus agencies asked to become actually useful by doing better than "just show up when you happen to feel like it".

Without making the alternatives practical, just stranding everyone who doesn't have a child or two to plop into the car to meet a police-enforced minimum headcount is not the most workable or equitable long-term plan.