Who’s Saving Now?

A confession: I’m one of those people who delights as the gas price numbers at the Kwik-E-Mart around the corner from my house tick up higher and higher. I know, I know, I’m a bad person. There are folks for whom that price really hurts, who don’t have the disposable cash to buy 30-year old Frank Zappa albums when the mood strikes them.

My thinking is that price increase will surely in some sense rationalize our consumption. If we don’t have the gumption to actually tax for the externalities, maybe the price runup will have a similar effect. Sadly,  not so much, as Erica Myers pointed out last week:

Despite a recent spike in domestic gas and electricity prices, demand for energy has barely moved. In fact, the more that 100% increase in oil prices in recent years may actually be leading to an increase in carbon emissions.


  1. John- I was struck by a letter to the editor in today’s abqjournal, particularly this line: “Tax increases and subsidizing windmills will not reduce gasoline prices.” How can anyone dream of declining gas prices long-term? Nuts. peace, mjh

  2. Actually, in some sense, it’s more important to focus on *diesel* prices than gas prices.

    Cars will migrate to EV for local, and PHEV-serial-hybrid for “much local, but sometimes need longer range”, and to varying degrees, people can carpool, use public transport, etc. Local delivery trucks can be EV or or PHEV as well.

    But there are a lot of uses of diesel that are *not* discretionary, at least in the short term: you either pay the higher prices or go out of business. In the longer term, there will be a lot less shipping of bulk food thousands of miles.

    But Class 8 trucks? [i.e. , big trucks, trailer trucks, grain trucks]
    Diesel-electric locomotives?

    People are doing true hybrids for the above, with batteries to recapture braking and for stop-and-go traffic … but they still need big fuel tanks for the long-distance work, i.e., the usage pattern is very different from most cars. Trains will get electrified on high-volume routes, but we have a lot of rail network that is not high-volume and it’s expensive.


    Well, some tractors can be solar-powered electrics. I haven’t yet seen a plan for replacing a 400HP combine,. with a 60-gallon tank.

    As for how far we have to go, I recommend:
    EERE’s Oil Use in Transportation:

    and Argonne’s How much Fuel DO Trucks Use?

    and then Charlie Hall’s Balloon Graph, which merits serious study:

    People are sensitive to the gas price at the pump, bec ause they pay it directly, but higher fuel costs are spread across *everything*.

  3. My college econ professor used the gas prices of the late 70’s as an example of – I forget the term, maybe inelastic? – behavior in the short term, but elastic (?) behavior in the longterm. His argument was that, over short time periods, it’s difficult to change energy consumption, but over long periods, higher prices led to changes in behavior. (And because the high prices were due to a cartel rather than to geology, the prices eventually dropped.)

    The switch to more coal is worrisome, though. (And that’s partly a personal perspective, as well as a global one – I live downwind of two coal-fired power plants, and there’s one more proposed for the same area.)

  4. Kim: yes, inelastic short-term demand, elastic long-term is the right terminology.

    The issue is that there’s more elasticity in the part of gas demand derived from personal transport, than there is in the diesel demand from big trucks. No one takes trailer trucks for fun rides.

    if you look back at that EERE graph I mentioned, most ofthe categories are clear, except for light trucks, since:

    1) There are light trucks used for buisness.
    2) There are light trucks, like pickups, that are also used for passengers some times.
    3) There are “light trucks”, i.e., SUVs.

    I don’t know offhand how much of the light truck usage is which of those.

  5. I’m wondering why the price of diesel is higher than gasoline right now, when it was the other way around for so long? Maybe it’s something obvious. We just sold our Dodge diesel 4×4 for a Prius now that the truck isn’t being used for business anymore. The diesel had been cheaper for a long time, so it seemed to make sense – but not anymore.

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