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By Robert Rapier on May 25, 2008 with 1 response

Coping with Gas at $100 a Gallon

I am fond of thought experiments. I like to ask “What If?” This can help me frame a problem. For instance, if I wonder how much land it would take to generate enough electricity to supply the U.S., that’s a thought experiment. But it is one that may tell me whether the idea is daft from conception, or whether there is a nugget of hope embedded within.

Lately I have been thinking of another thought experiment. What would I, personally, do if gasoline was $100 a gallon? Now that may seem silly. Nobody thinks we are going to have to deal with gasoline at $100 a gallon. But that misses the point of the thought experiment. When I ask people at what point gas prices are going to have a major impact on their lifestyle, that seems to be a moving target. When gas was $2, they said $4. Now that gas is $4, many have realized they won’t make big changes at $10. A friend who drives a Suburban recently told me that he doesn’t care about gas prices; that he is going to keep driving at the same rate regardless.

So the point is to jump so far out there – $100/gal – that there is no question that 99% of us would have to make some serious changes. The thought experiment is mainly designed to flesh out how people might cope as gasoline becomes more expensive. This is already reality for some, as your $100/gal dilemma is someone else’s dilemma at $4/gal.

What I would like is to hear how you would cope with $100 a gallon gasoline. I will post some of the answers later in the week. Let’s presume that gasoline prices increase to $100 at a steady rate over the next 5 years. Because many of our energy sources are interchangeable, let’s assume that other fossil fuel sources (coal, gas, etc.) follow suit. Alternative (non-fossil fuel) energy sources, such as solar and nuclear, would also follow this trend, but not at the same rate since they are less dependent on fossil fuel inputs. So the idea is really, with respect to fossil fuels, “How low can you realistically go?” I don’t want to make any assumptions on what would be happening in the economy as a whole, because in reality the economy would have collapsed under those prices. So my assumption is that life goes on, albeit with very steep fossil fuel prices.

Here is how I think it would affect me. Looking at my own situation, I just bought a house 23.5 miles from my office. However, I did this with my eyes wide open. The fact is, I don’t spend much time in the office. Since I started with my new company on March 1st, I have spent just 4 days in the office. So, a long daily commute is not something I have to deal with. In fact, I have never actually made the commute, as the 4 days I spent in the office preceded the purchase of my house. (Presently I am on site at our factory in the Netherlands, and I ride a bike to work).

But, even when I do have to travel to the office, at $100 a gallon, that 47 mile round trip will add up. Even the most fuel efficient cars in the U.S. are going to cost me around $100 for the trip. If I have to make that trip twice a month – and so far I am averaging less than that – it’s going to cost me $2400 a year – and that’s presuming I have a car that can get 47 miles a gallon.

Clearly, something like an SUV is out of the question. This could cost me $400 every time I had to go to the office. So SUVs, even now in their death throes, will be transportation only for the truly rich. What I really want – unless the cost is prohibitive – is the most fuel efficient car I can find. Today, I think that’s a Toyota Prius, but I am really hoping that an electric car rides to the rescue. (I would definitely choose the public transportation option if available, but right now it isn’t available from my home location to my office).

Even then, $100 to drive in to the office is pretty steep. I want to find a way around that. I am going to lobby my employer for permission to telecommute. At those prices, he is going to get a lot of those requests. When I think about what I do during a typical day, almost everything could be done via telephone, teleconference, webconference, or webcam. And when I do have to go to work, I am going to search for a car pool. At those fuel prices, a lot of people are going to be willing to share rides. I would imagine that new, creative ways of organizing car pools will pop up.

I would completely stop using an auto for short trips, and likely buy a small motorcycle for quick trips within 5 miles. If time is not a factor, I will ride a bike for those short trips. We would have to do a much better job of planning out our groceries, as it won’t be economical to run to the store to pick up a few items. Entertainment options like Netflix will start to look a lot more attractive.

In my home, I would also need to make changes. My wife and I currently fight over the thermostat. When I am alone, I will set it as high as 85. [Edit for clarification: That's the air conditioning, not the heat setting in the winter]. With the family at home, I will drop it to 78. The wife and kids like it at 75. With gas at $100 a gallon and electricity sharply higher, we are going to have to get used to being less comfortable. 82 degrees inside is a lot better than 105 degrees outside. But even so, I am probably facing $1,500 a month electric bills.

I am going to install (lots of) solar panels, because at these prices the payback period should be very short. Ditto for a solar hot water heater, which keeps beckoning to me, but remains just out of reach. (I have a brand new hot water heater in my new house, and I can’t justify replacing it already). Ground source heat pumps are going to look much more attractive. I will need to identify and track all sorts of transient electricity drains in the house by installing something like the Kill-O-Watt electricity usage monitors.

My business travel would not be sustainable at those rates. For the next 12 months, I am probably looking at 12 trips just to the Netherlands. If those trips are 20 times as expensive, I am going to have to get webcams for everyone on the team, and our “face to face” meetings will happen that way. To me, being on site right now is important, because I get to know people, and they get to know me. I can understand who does what. But after that, I can conduct business remotely. Ultra-expensive fossil fuel prices will force me to see just how effective I can be at doing that.

Other things would obviously be impacted, such as where we decide to vacation, or where I am going to invest any money I have left over. But I think that covers the major items. Have I overlooked anything major?

I am greatly interested in your thoughts.

  1. By Brian of Nazareth on March 30, 2012 at 11:13 pm

    Shit, if gas were $100 a gallon, people would bitch but nobody would really  bat an eye. My wife and I would be millionaires. No, LITERALLY, we’d be raking in over a million bucks a year between us! I know that Stephen King published a book called “Everything’s Eventual”. If Einstein were alive today, he’d take the pun by the horns and publish a book on economics called “Everything’s Relative”.

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