Monday, September 05, 2005

Hurricane Katrina, and the Aftermath

Part of living in the world of peak oil means that any disaster, revolution, war, any event that can even briefly affect the price of oil, if it occurs, the price will skyrocket and in the short term dramatically hurt the American economy.

The New Orleans disaster could not have come at a worse time. With a significant percentage of our oil being drilled and refined in the Gulf area, the hurricane has directly caused a significant change in gas prices.

And yet some analysts insist that nothing is wrong:

The consensus among analysts of fuel prices is that a gallon will drift back to the mid-$2 range and settle in. Even if it stays north of $3, Schnorbus contends the super-sized vehicles will not go the way of dinosaurs and horse-drawn wagons.

"After a couple of fill-ups, as painful as it might be, people will get on with it," he said. "As much as we hate paying those prices, we're not ready to give it up."

Said Bill Morie, president of the Georgia Automobile Dealers Association: "A lot of people like the fact that they feel safe in them with their kids. There is still a big market for them."

Umm, no there isn't. I don't understand how these analysts can make statements not based on any statistics. To be able to make broad generalizations about an industry based on gut instinct is insanity. Most Americans simply cannot afford to continue to use their SUVs. IF they are in leases, they will trade in their vehicles for smaller ones. If they are ready to buy another vehicle, it will not be a new SUV.

The American marketplace is being dragged to a European model of car consumption whether it likes it or not. There will be some differences. For instance, because America does not have the comprehensive public transportation and short distances that Europe has, Americans will be much more dependent on ride sharing then busses and trains. But cars will become smaller, diesels and hybrids more prevalent, and SUVs will go the way of the dinosaur.

Why won't gas prices go back down? Quite simply because consumption will not go down, nor will new sources of crude be found in the world. America is no longer the only nation that consumes a great deal of gasoline. Europe's economy grows daily, as well as China's and India's. As the material lives of millions improve across the globe, so does their consumption of oil related products go up. Changes in the American economy have become less relevant in an economically diverse world, with more than one economic superpower.

The smartest thing Americans can do now, is reduce their consumption. This isn't a political statement, it is a survival statement! Downsize your vehicle as soon as possible. Look for employment that is close by, find a carpool, or move closer to your work. Use public transportation if possible. You can no longer be dependent on your government's ability to protect, nor hope for the best and pray that a disaster does not strike somewhere in the world where the tenuous supply of oil is threatened. If you can reduce your consumption to the point that there is more breathing room in your budget, then if an oil catastrophe strikes again as it has in New Orleans, it will not affect you so much.

Remember, if the price of oil goes up, literally everything else will too. To be able to have a more efficient household means being able to protect yourself against ever more hostile winds of change.

Just a little advice: Arguments on the internet (or in the real world for that matter) that begin with "Umm" are bullshit more often than not.
Just a little advice, you aren't as smart as you think you are.
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