“The Coal Question and Climate Change”

http://www.theoildrum.com/node/2697

Not all oil in the US goes to passenger use, of which at least some is pretty elastic.
Much goes to trucking, railroads, airplanes, off-road (including farming). In that chart, the category “light trucks” is awkward, because some are used for business, some are real trucks used partly for business and partly for passenger transport, and some are misnomered passneger vehicles.

Faced with higher diesel fuel prices a farmer does not say “Well, I think I won’t harvest my wheat, I’ll defer that”, and truckers either figure out how to raise prices, or go out of business. The military looks to gets its budget raised. Airlines charge per bag, and do whatever else they can. I.e., there is some elasticity … but what really happens is:

higher fuel prices =>
people who can pass along higher prices do
those who can’t have to provide the elasticity to reduce usage

So, in practice, for a consumer, it *isn’t* just an incrased priice the pump, which everyone follows, because it’s so visible, it’s that plus the embedded price rises in:

- food [fertilizer (natural gas), off-road farm vehicles, class 8 grain trucks, railroads, other trucks)]
- transport of other non-good goods
- water (in some places, like CA, where 20% of our electricity used to pump water, and at least some of that comes from natural gas)

As per Hirsch, vehicle fleet changeovers take a long time, and yield stranded assets (like SUVs that no one will take in tradein).

Can people point to any good studies that quantify the economic impact on consumers, not of the (easy) price at the pump and VMT, but of the cost of higher fuel prices embedded everywhere else?

Me too.

E.g. regulation becomes a variable, or petrol rationing could be a variable, or outright bans of certain vehicles.

Any market can be distorted anyway you like, if a government can get it through politically

“High prices are a component in a strategy to reduce gasoline burning, but they aren’t anywhere near enough.”

There are 3 variables: supply, demand and price. Supply is fixed in the short term (and arguably “peaked”) and always equals demand. Therefore the only variable which can adjust is price.

Price will move to whatever level it needs to to ensure that supply = demand. If that means $1000 / barrel then tough. Free markets are at the core of the American culture so its a bit late to complain.

The thing is, GDP per capita is also rising steadily, bar the odd recession every now and again. We get richer, standards of living rise, disposable income goes up and up.

So the demand destruction doesn’t happen – the price of gas goes up, but disposable income also goes up. More people can afford cars each year, and people can afford to drive more miles.

High prices are a component in a strategy to reduce gasoline burning, but they aren’t anywhere near enough.

David, VMT = Vehicle Miles Traveled. VMT in the U.S. in 2006 was 2.7 trillion miles (about 10% of the way to Alpha Centuri). That was approximately 9300 vehicle miles per capita. VMT has been growing faster than population, which is not a good sign.

VMT = Vehicle Miles Traveled.

Personally, to save money, reduce CO2 and just get a chance to work out more often, I would love to see more buses and trains with bike racks.