That's the issue no one will approach. No one will touch it.
Yet it has to be touched. And now.
According to energy experts, we need to see demand for gasoline drop 5% or else we'll be drawing down stocks at an unsustainable rate in the next few weeks. So far it's down 3.5%.
So how do we get the rest? A Republican Governor in Georgia has ordered gasoline stations not to "gouge," to keep their prices in line with costs, and he's even sent out the cops to enforce this. The result is that many stations around me are out, at any price. One grade out, two grades out -- how many grades have to be out before we have massive gas lines all over the country? (Speaking of grades out, Perdue also asked schools to take two "snow days" in September to ease a short-term diesel crunch. What happens in January, Governor?)
So what are our alternatives?
- Refineries can do what they've been doing, raising prices to force demand down. How far must they go. $4/gallon? $5/gallon? And what happens to that money?
- We could set priorities. That means rationing coupons, A cards and B cards and C cards. Think George W. Bush is going to go for that?
What we've got from everyone so far is denial, and that ain't just a river in Egypt.
And we haven't even gotten into natural gas.
You can't cut natural gas use as easily as you can gasoline use. Most natural gas is used to heat homes. And these customers are "non-interruptible" in the words of a gas company spokesman I corresponded with recently. That means they can't be shut off.
You can cut back on industrial customers, but that means cutting back on industry. And industry is where we get the money to pay for gas to heat our homes.
Cutting back industrial customers means, in part, cutting deliveries to electric utilities. Some people heat their homes with electricity.
Price? We've already raised prices 70%. They're going to double in some areas. And people are going to pay, because they don't want to freeze.
So what do you do?
Someone -- left, right, center, industry, academic -- someone tell me how we're going to get through the winter?
I'm all ears...but those ears are going to get cold soon.
Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Paul Taylor on October 6, 2005 04:58 AM writes...
Geez, you guys in the US have it made. Petrol in the UK is just under £1 a litre - thats c.$10 a gallon! You've got a little way to go yet - and there's probably many ways that the US could cut its oil consumption.
Permalink to Comment2. steve on October 6, 2005 06:58 AM writes...
As is noted oil and gas don't respond to simple supply and demand models. You have to raise the price by a huge amount and keep raising it to change behavior as it is a non-interchangeable part of other systems that are slow to change.
If you are the Bush Administration perhaps you resort to national prayer for a mild Winter.
Permalink to Comment3. Brad Hutchings on October 7, 2005 01:49 PM writes...
There will not be rationing, just like there will not be a draft. Both ideas are stupid (i.e. out of whack with reality) and unpalatable. Fortunately, pump prices have tempered demand nationally. Now, if some two-bit Republican governor of some state wants to repeal the laws the economics and try to deal with supply by demagoging price-gougers, then he's just causing a shortage problem. Vote Libertarian next time and you won't have to worry about supply shortages brought on by artifically low prices.
Also, invest in a sweater for winter. Or move to Florida or SoCal and help us drive up our property values some more.
Permalink to Comment4. John Long on October 9, 2005 01:10 AM writes...
You let the stupid prices go up! If they have to go way up, so be it. I've already adjusted some parts of my life in preparation for natural gas and in response to gas prices. People will respond at some point, and just how else are you going to get the message across? People's time in line is worth something too, as is their time, frustration and inconvenience in complying with some stupid rationing system.
Things people can do to adjust to high gas prices:
Move closer to work.
Work closer to home.
Carpool.
Public transportation.
Walk more.
Take fewer out of town trips.
Shop for more things at fewer places.
Buy a more fuel efficient car.
Things people can do to adjust to higher natural gas prices:
Wear a sweater.
Buy more blankets.
Get a roommate.
Just feel 5% colder.
Improve the insulation in their home.
Move to someplace warmer.
If the prices get higher, people will adjust!
Permalink to Comment5. Lisa Hammer on January 20, 2006 04:48 PM writes...
Unreliable oil from Iraq, Iran, Nicaragua . . . and why do we let the oil men tell us it's hopeless to try to break our oil addiction? I drive around with two "support our troops" ribbons with the "support our troops" painted out and "ration gas" and "go geothermal" painted on freehand. Same message.
I agree with the above comment that "there will never be gas rationing," "there will never be a draft." Up until two or three or four unexpected things happen in a row. Then what is now just a good idea will graduate to absolute-necessity status and it'll be a bit easier to turn the aircraft carrier that is our democracy-run-by-popular-opinion around.
Permalink to Comment6. Courtney Gidts on February 26, 2006 02:23 AM writes...
I've managed to save up roughly $21088 in my bank account, but I'm not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot?
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