Thursday, August 25, 2005
CNN/Money has a fluff piece on gas prices and their effects. What caught my eye was the fact that people are not necessarily changing their vehicles, they are changing their lives instead. That is disastrous for an economy. One of the big indicators at the health of an economy, especially America's, is how retailers are doing. As the behemoth WalMart absorbs every shop in America, the fact that it is not doing well is very bad news. WalMart has sort of become what GM was in the 1950s, THE company to look at in America for better or for worse.
One of the reasons I moved to Europe was for high gas prices. I figured that in Europe where distances are shorter, populations are denser, and public transportation is more ample, these countries would be able to weather any significant rise in the price of gasoline much better than the United States. Public transportation in much of America is a joke, an is regularly lampooned as a way for poor people to get around. But if you view it as a government subsidy of the commerical economy, you see it as incredibly important. Carpools are commonplace in America, but they tend to go only to a person's place of work and their home. They don't go to a restaurant, Walmart, whatever, so they don't help the surrounding economy as much as a good trolley system.
Eventually high oil prices will effect everyone, even Europeans. The goal is to buy time. Many countries that do not have decent public transportation systems are going to suffer because of heavy oil prices. America is not alone. A South African couple lived in my flat for a while and told me of how dependent they were on cars. White South Africans tended to buy the same type of vehicles as Americans. Big engines for big roads that are flat and go on forever.
Governments need to spend money on two things: one building public transportation alternatives, and two finding a replacement for cheap oil. The world isn't running out of oil necessarily, it is running out of easy to drill oil. If a government were willing to force automakers to make all their cars electric, and only heavy trucks that carry goods use diesel, that may help things. Governments over on this continent are forcing people onto public transportation by making it more and more expensive to drive cars in cities through taxes. The British government is a leader in this movement, however, they are not upgrading their public transit system at a fast enough level to be an adequate replacement for people.
As populations condense, it will also be up to governments to upgrade inner cities. As suburban people find it necessary to move closer to their jobs in order to save money, they will not want to raise their children in bad areas. For America, a giant population fluctuation is likely to occur. Suburban people who have only driven past bad areas most of their lives will be reintroduced to them, in an intimate fashion. We might see dramatic change at the voting polls, with more and more voters demanding of their governments to make changes in policing, employment, and opportunities.
It will be all at once interesting and horrific to view. But it is necessary. And it might also lead to a solution to one of the great problems of our time: overpopulation. People in urban areas tend to have less children.
Tuesday, August 23, 2005
The US government has decided to ease CAFE onto the auto industry according to this article, no doubt due to some crafty lobbying by the manufacturers. The market itself will probably have some say about that as well, and might even force automakers to all be well above the average because of high oil prices and consumers' inability to afford to fill up their cars.
What's interesting is that in light of the Federal Government's attempts to deal with higher fuel prices, not only are consumers reacting, but so are state governments. California has its own CARB or California Air Resources Board, which allows it to mandate emission restrictions onto vehicles above and beyond anything set forth by the federal government. From a legal perspective I'm not sure how this organization ever survived a commerce clause lawsuit by the automakers, but essentially it is an additional restriction on manufacturers, and it is a restriction that is also being considered by Oregon and Washington. Much of New England has already restricted their emission levels as well. It's obviously a Blue State movement.
So we have local government and the market wielding incredible forces upon the auto industry to essentially change what they make. Can they do it? I think so. If you look at the EPA mileage of a Honda Civic over the course of the last 10 years you find that it has stayed constant. But its horsepower and size have increased. Automakers face a very crucial challenge: Do they keep the cars they make the same size and reduce horsepower and engine size, or do they decrease the size of the vehicles and keep the engine size the same? Auto enthusiasts will no doubt hope for the latter, but I think since humans are visual creatures the smart (i.e. profitable) route would be to offer cars that are the same size with less power. Americans have shown very different tastes from their European brethren. They don't necessarily need more finely crafted vehicles, but they do want size. Regardless of where you stand on this debate one thing is for certain. Cars are going to change dramatically in the very near future.