Monday, May 19, 2008

Oil Prices: Observations of A Daily Biker

Everyone by now is wondering what is going on with oil prices. Cheaper dollar, nasty futures speculators, conspiring oil producers... yup, they are all true to a certain extent. But... how about the simplest explanation of them all: there's still way too much demand, particularly in developed countries.

I bicycle at least 10 miles everyday, sometimes more depending on my schedule. My timing (rush hour) and route (next to a major commuter avenue) allows me to observe this very simple fact: 95% of the cars on the road carry one single person, the driver. And there are a lot of them, usually gridlocked. Meanwhile, the buses and the trams that go along the same route are never more than half full. (Just to be clear, I do not live in Venezuela where gas prices are 12 cents per gallon.)

Data: BP, Nationmaster

What this simple observation tells me is this: while everyone may grumble about gas prices, they are still going on with their lives as if nothing has changed. All talk, no action. There are some serious attitude adjustments still ahead for all of us because China, at the very least, is on a one way street to westernisation.

At least that's the view from The Daily Biker.


  1. Hell:
    Relax. As prices rise, American oil consumption will fall. People will buy smaller cars when their SUVs reach 150,000 miles. They will insulate their homes better.

  2. Rising oil prices result in a FOREIGN tax, i.e. a transference of wealth due to our massive oil import bill. We need to raise consumer prices via a DOMESTIC tax.

  3. Hel,
    See Teri's comment on the "Your Votes at Work" thread Apr30 (May6@2:12AM)

  4. re: teri's comment

    The post is not about those that have to drive but those that choose to do so. AND those that sit idly by wringing their hands because "there is nothing we can do"...


  5. Driving alone has one big advantage.

    Statistics show that people who drive alone have fewer acidents than people who drive with companions.

    The more people in the car the greater the chance the driver will be distracted and make a mistake.

    So look for more accidents and injuries if fewer people drive alone.

  6. CGS,
    Perhaps more accidents per trip but many fewer trips so the net should be fewer accidents especially if the roads are less congested and road etiquette less aggressive.

  7. I can't cycle to work everyday as I live in a hot and humid country where it is summer all year round ... unless my workplace provides more shower facilities :)

  8. Yep. Choose to drive versus have to drive. An editorial to the Atlanta Constitution entititled last week, "I want my commuter rail now!", was from a woman from north of Atlanta complaining about the drive. I wrote a letter to the editor that within 5 minutes I was able to find 5 bus routes that went right thru her town. I said if you don't have what you really want, use the next best thing. I use a bus, train, bus and generally walk the 2 miles from the MARTA station home for exercise (bus does come 4 blocks from home, but I don't feel guilty lazing around when I get home).

    Brant, Atlanta, GA

  9. People grumble about gas prices because its "in your face", the prices are displayed in one foot high numbers. What percentage of your budget is spent on gas as compared to insurance, particularly health insurance?

    If you drive more than 15k per year commuting in a gas guzzler, then you deserve the hurt. Jim Kuntsler has a good sentence today on this topic:

    "What makes matters truly eerie is that the "bubble" in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life -- oil -- has entered its scarcity stage."
    Now Jim has an agenda--he hates suburbia--but the timing of the oil crises with the housing bubble is eerie.

    The great productive capacity of this country has been traded in for fantasy get-rich -quick-scams, and the waste product is debt.

    I posted these figures two Hell postings ago but in case you missed them:

    The national debt in 2001
    $5.7 trillion

    The national debt in Jan. 2008 $9.2 trillion

    Increase: $3.5 trillion

    Total consumer credit debt in 2001
    $7.65 trillion

    Total consumer credit debt in 2008
    $12.8 trillion

    Increase: $5.15 trilliom

    Total increase in debt 2001-2008 (1st Quarter):
    $8.65 trillion

    2008 estimated GDP (nominal) $14.18 trillion

    2001 GDP
    $10.02 trillion
    Increase: $4.16 trillion

  10. Driving alone is going to be the last thing a lot of people will give up. It's just so deeply ingrained in our culture that the initial cuts will come elsewhere for people who have other options.

    I know of call centers that employ thousands of people at rather low wages that have gone to offering alternative schedules of four 10 hour days. The worker bees flock to it because it's a 20% cut in commute. I wouldn't be surprised to find big box retailers doing the same thing to some extent.

    Eventually tricks like that will run out.

  11. The fascinating thing is that we likely cannot expect a real reduction in oil consumption in the foreseeable future as India's and China's usage is bound to increase.

    Even a reasonably sized reduction from the U.S. is unlikely to result in lower oil prices. China and India are replacing productive capacity from the G7, therefore unless that capacity RETURNS to the G7 (very unlikely), oil consumption is bound to stay steady even in the face of a slowing economy and bound to increase in the case of a stagnating or growing economy.

  12. "My timing (rush hour) and route (next to a major commuter avenue) allows me to observe this very simple fact: 95% of the cars on the road carry one single person, the driver."

    Hell, Don't you see that if people start to share rides in two instead of one, peak oil will be delayed by 50 years?

    I guess you don't, because you got an agenda.

  13. Greenie, after reading this blog you believe that I WANT to see Peak Oil?

    Like I said b4, I have two young children and my only agenda is their future.

  14. I like to park at the far end of the Wal-Mart parkeking lot and then walk the 1.5 miles to the stores to get my king bag of nachos and 2 gallons of cheese dip.

    Sometimes I am too tired and take a taxi back to my car.

  15. Attitude change, has to be a personal choice, and takes about 2 years to accomplish. Presumably the individual who embarks on a attitude altering process has sensed a need to change their behaviour in some way.

    Now, a behavioural change on it's own does not need to be voluntary, it can be imposed; no attitude change is involved. This is what the 'oil shock' will accomplish - a dictated, forced change in behaviour. Very unpleasant, and borne dis-proportionately by the poorer sections of society. The duration; two to three decades (a generation). If it occurs in a shorter time-scale the social disruption could be severe, absent martial law.

    Carpe diem.

    ps. H. You could have been describing the morning and afternoon scene outside my home. There are 5 primary/secondary schools in the immediate vicinity and the line-up of heavy metal delivery/collection vehicles each schoolday is facinating! And this is only the mothers! Dads have their own heavy metals as well!!

    I ride a Honda NT650.

    Brian P

  16. No car here in SF, bike in hall, we use car-share cooperative, very good and cheap and avoids parking issues. SF has excellent cheap PUBLIC TRANSPORTATION...why is this never mentioned.

  17. Anon@12:59
    Because we can't fit 300,000,000 people in SF.

  18. Since we dont know where you are, we dont know the status of public transport there. We'll just have to trust you.

    In the US, gas will have to reach $5/gal to cause enough pain to force a real change.

    We consumed oil like yeast consume sugar in a vat of wort.

    Jason B

  19. I didn't congratulate you on your Blogs success-- Congratulations!

    Marcus, you are of course right about health insurance --
    Hell, why do never comment on healthcare?

  20. Re: why never comment on healthcare?

    Because I know little about it.


  21. "No car here in SF, bike in hall, we use car-share cooperative, very good and cheap and avoids parking issues. SF has excellent cheap PUBLIC TRANSPORTATION...why is this never mentioned."

    I do not like to live in SF. It is a beautiful city occupied by bad people hell-bent to push our country 500 years behind.

  22. I keep very strict track of my gasoline and other "fixed" expenses and I only use (give or take a few) 60 gallons of gas in a month. I can absorb some serious price increases before it is going to change my driving habbits. I mean my car is an old 318is BMW and gets 30mpg and I have a Suzuki SV650 that I ride to work on occation that gets 60ish mpg. Looking at the increase in gasoline prices alone doesn't really tell the story.

    The rise in oil costs is raising prices on everything...that is what hurts. I could absorb $10/gallon gas. I really could. But if it trippled my electric bill and doubled my food costs at the same time, I would have a problem.

  23. Oh... and I am a competitive road cyclist as well. I would use my pedal bike to commute if they had better showers in my workplace and condoned the use of them. I could bring my clothes for the week in on Monday (in a car) and store them in a locker, and bike in the rest of the week. But my workplace does not support that for some reason (financial analyst for an engineering company). I need a somewhat professional appearance and can't arrive a sweaty mess...

    I live in Phoenix, it was 110 degrees yesterday, biking to work, produces some perspiration :)

  24. I bike to work in LA. Work is four miles away.
    I shower before I leave home and I take it easy on the way there, but still end up sweaty.
    There's no shower, so I go into one of the stalls with wet paper towels and sponge bathe. Less than ideal, but works.
    I couldn't do it if it was 110˚, that's too hot to walk to my car.

  25. By my runes, we have a dollar or two more to go before our fellow gas guzzling 'mericans noticeably change their habits. In the meantime I'm glad I have (what passes for) a high mileage car.

  26. Folks
    Todd Litman at Victoria Transport Policy Institute has done a comprehensive cost assessment of all transport modes (including motorcycles, bicycles, telecommuting, car pooling, public transportation, etc). You might be surprised by some of the findings: car pooling is one of the low cost options because of minimal fixed capital cost ; motorcycles have very high medical costs, making them one of the high cost options. Bicycling's main cost is the time involved. Please check out this work as well as the rest of Litman's research on transportation economics.

    Happy Trails,
    Green Marketeer

  27. I live in Los Angeles. We have local buses that cost $.25 and run around local areas. I looked out my window this morning and noticed that the local bus was flashing a sign that said "At Capacity" -- and sure enough -- there were people standing squashed like sardines right up to the door well.

    We are also noticing that rush hour (which also happens outside our window) isn't lasting nearly as long as it used to last. A lot of the cars still have only one person, but there are a lot fewer cars.

    We're fortunate, really, because in our part of town we can get a convenient bus and choose to not drive. If push came to shove, we probably could make a tank of gas last a month -- and maybe more if we got a P.O. Box near our house instead of having one 7 miles away. (We don't check it everyday.)

    I'm afraid that big changes are a coming...