First the good news: The cost of oil won't be skyrocketing any time soon. Now the bad news: The price of oil won't be skyrocketing any time soon.
According to Automotive News, despite the recent surge in crude pricing toward the magical US$100-a-barrel mark that caused consumers such consternation just three short years ago, we are not in for another dramatic spike in oil prices.
Citing all manner of market conditions -- increased refinery capacity, larger reserve inventories and even a number of idle wells among OPEC countries -- oil industry experts seem to agree that, though demand will increase by 1.5 million barrels in 2011 (possibly surpassing 2007's previous peak usage), any rise of pump pricing will be slow and steady.
That's good news for motorists, especially here in North America. It means we can continue motoring along in our trucks, SUVs and land yachts, blithely ignoring the fact we're still slurping fuel like drunken sailors on shore leave in Bangkok. Sales of trucks, by the way, soared in the United States in 2010, while the predicted increase in small-car growth slowed and hybrid sales all but stopped. We North Americans are well and truly back to our profligate ways, driving more, conserving less and buying a lot more large vehicles.
Of course, this has all manner of beneficial aspects as well, not the least of which is that the survival of at least two out of the three major U.S. automakers is all but guaranteed, an outcome that not even the most rose-tinted optimist would have ventured but two short years ago. Ford is quite literally the industry darling, having both engineered phenomenal new products and avoided a government bailout. General Motors, meanwhile, has already started paying back said bailout money and, if its stock does indeed reach the US$50 predicted by analysts, governments will actually recoup a profit for their largesse. Car dealerships are booming, the travel industry is once again back on its feet and, should fuel price increases remain tepid, it will make a mockery of analyst/author Jeff Rubin's contention that globalization is in retreat because we can no longer afford to import our goods and produce from afar.
It's all good news, right?
Well, not quite. The dual edge of this (relatively) cheap fuel sword is that, as evidenced above, we are not changing our driving habits. We are not slowing down, we are not driving less and we are most certainly not embracing green cars despite the media's contention that the case is otherwise. This year's Detroit auto show was chockablock with alternatively fuelled automobiles -- hybrids, plug-ins and EVs -- and all command enough of a premium over conventionally fuelled automobiles that they will require a significant increase in fuel prices to be made viable.
And not just any fuel price increase, but a true kick-us-in-the-pants, damn-it-was-only-a-buck-twenty-yesterday hike that quite literally grabs our attention. The untold part of this story is that the increased sales of these gas guzzlers come among fuel prices that would have left us apoplectic just three short years ago. We Canadians started screaming as soon as gas hit $1 a litre and the last time I filled up, my gas receipt indicated I spent $1.24 for every litre of high-test, not far off the $1.40 that was once deemed Armageddon. South of the border, Californians pay as much as US$3.60 a gallon, again not far off the US$4 mark that was then determined to be the end of motoring as we know it. Yet, unlike in 2007, when these benchmarks led to massive protests and a surge in Prius sales, there's been barely a peep in the papers, and this time we've responded by buying more pickups.
The lesson gleaned, then, is that increased fuel pricing alone will not curb our spendthrift ways. Should this gradual increase in fuel pricing continue ad nauseam, I suspect we may bitch and moan a little as each milestone -- $1.50 a litre, $2 a litre, etc. -- is passed, but we will adapt, as Darwin always preached, to our gradually changing circumstances.
If the oil crises of 1973, 1979 and 2007 have taught us anything, it is that we, the mindless consumers, only react to dramatic price shocks. If we really want to have a green future with the increase in alternatively fuelled automobiles we've been promised is right around the corner, we'll need gasoline pricing to increase dramatically. And, yes, that means government intervention and taxes.
As a free-market capitalist, I am ambivalent about such intervention. On the one hand, I see the benefit of a price-fuelled uptick in emissions-reduced automobile sales. On the other, I really do believe people have the inalienable right to be as stupid as they please, even if that means buying a fuel-chugging pickup they may not really need.
The only thing that is certain is that a gradual rise in fuel prices will not lead to the green revolution that we're all told is looming.
dbooth@nationalpost.com
According to Automotive News, despite the recent surge in crude pricing toward the magical US$100-a-barrel mark that caused consumers such consternation just three short years ago, we are not in for another dramatic spike in oil prices.
Citing all manner of market conditions -- increased refinery capacity, larger reserve inventories and even a number of idle wells among OPEC countries -- oil industry experts seem to agree that, though demand will increase by 1.5 million barrels in 2011 (possibly surpassing 2007's previous peak usage), any rise of pump pricing will be slow and steady.
That's good news for motorists, especially here in North America. It means we can continue motoring along in our trucks, SUVs and land yachts, blithely ignoring the fact we're still slurping fuel like drunken sailors on shore leave in Bangkok. Sales of trucks, by the way, soared in the United States in 2010, while the predicted increase in small-car growth slowed and hybrid sales all but stopped. We North Americans are well and truly back to our profligate ways, driving more, conserving less and buying a lot more large vehicles.
Of course, this has all manner of beneficial aspects as well, not the least of which is that the survival of at least two out of the three major U.S. automakers is all but guaranteed, an outcome that not even the most rose-tinted optimist would have ventured but two short years ago. Ford is quite literally the industry darling, having both engineered phenomenal new products and avoided a government bailout. General Motors, meanwhile, has already started paying back said bailout money and, if its stock does indeed reach the US$50 predicted by analysts, governments will actually recoup a profit for their largesse. Car dealerships are booming, the travel industry is once again back on its feet and, should fuel price increases remain tepid, it will make a mockery of analyst/author Jeff Rubin's contention that globalization is in retreat because we can no longer afford to import our goods and produce from afar.
It's all good news, right?
Well, not quite. The dual edge of this (relatively) cheap fuel sword is that, as evidenced above, we are not changing our driving habits. We are not slowing down, we are not driving less and we are most certainly not embracing green cars despite the media's contention that the case is otherwise. This year's Detroit auto show was chockablock with alternatively fuelled automobiles -- hybrids, plug-ins and EVs -- and all command enough of a premium over conventionally fuelled automobiles that they will require a significant increase in fuel prices to be made viable.
And not just any fuel price increase, but a true kick-us-in-the-pants, damn-it-was-only-a-buck-twenty-yesterday hike that quite literally grabs our attention. The untold part of this story is that the increased sales of these gas guzzlers come among fuel prices that would have left us apoplectic just three short years ago. We Canadians started screaming as soon as gas hit $1 a litre and the last time I filled up, my gas receipt indicated I spent $1.24 for every litre of high-test, not far off the $1.40 that was once deemed Armageddon. South of the border, Californians pay as much as US$3.60 a gallon, again not far off the US$4 mark that was then determined to be the end of motoring as we know it. Yet, unlike in 2007, when these benchmarks led to massive protests and a surge in Prius sales, there's been barely a peep in the papers, and this time we've responded by buying more pickups.
The lesson gleaned, then, is that increased fuel pricing alone will not curb our spendthrift ways. Should this gradual increase in fuel pricing continue ad nauseam, I suspect we may bitch and moan a little as each milestone -- $1.50 a litre, $2 a litre, etc. -- is passed, but we will adapt, as Darwin always preached, to our gradually changing circumstances.
If the oil crises of 1973, 1979 and 2007 have taught us anything, it is that we, the mindless consumers, only react to dramatic price shocks. If we really want to have a green future with the increase in alternatively fuelled automobiles we've been promised is right around the corner, we'll need gasoline pricing to increase dramatically. And, yes, that means government intervention and taxes.
As a free-market capitalist, I am ambivalent about such intervention. On the one hand, I see the benefit of a price-fuelled uptick in emissions-reduced automobile sales. On the other, I really do believe people have the inalienable right to be as stupid as they please, even if that means buying a fuel-chugging pickup they may not really need.
The only thing that is certain is that a gradual rise in fuel prices will not lead to the green revolution that we're all told is looming.
dbooth@nationalpost.com
