For those of you already worrying about $200 barrels of oil, you may want to stop reading now. The New Scientist recently released an interactive graphic of the world’s oil flows and chokepoints that highlights just how vulnerable the world’s oil supply is to conflict, terrorism, natural disasters, and other factors beyond our control.
In a related article in the NYTimes, Clifford Krauss focuses on the effects of high gasoline prices on rural areas in the U.S., where people are reeling under the triple strike of low incomes, fuel-inefficient vehicles, and long commutes to work. Here are a few highlights:
People are giving up meat so they can buy fuel. Gasoline theft is rising. And drivers are running out of gas more often, leaving their cars by the side of the road until they can scrape together gas money. . .
The extra dollars spent at the pump mean electric bills are going unpaid and macaroni is replacing meat at supper. Donations to church are being put off, and video rentals are now unaffordable. . .
Local fried chicken restaurants are closing because people are eating out less. At the hardware store here, sales have plummeted to $30 a day from $250 a day a month ago.
Local governments are leaving grass high along the roads and doing fewer road repairs to save on fuel costs. . . Politicians are even considering replacing sanitation workers with prison inmates on some shifts to conserve money for fuel
This article also comes with it’s own graphics — this one illustrating the varying effects of gasoline prices across the country.
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So decades of market distortion via subsidies and low taxes have finally caught up with reality in rural areas.
Comment by Vincent Clement - July 4, 2008 9:56 pm
[...] (Via Anthony Williams) [...]
Pingback by Bloggoversikten » Blog Arkiv » Oljeflyt og -forbruk - July 6, 2008 6:28 am
This is definitely the way to think. Far too many folks assume that higher gasoline prices simply diffuse through the economy and show up as increased general inflation with some asymmetries. Beyond a point, those gradualist dynamics simply don’t apply, and Mad Max dynamics take over.
The History Channel, in its Mega Disasters series episode on oil apocalypse showcased a nicely calibrated set of what-ifs around structural oil-shock thinking, ranging from Mad Max scenarios to more benign ones. One of the talking heads put it succinctly — it may no longer be possible to produce a soft landing.
Structural shock dynamics are notoriously hard to model, as the Club of Rome found with its system dynamics ‘Limits to Growth’ approach decades ago. I don’t believe mathematical models can be tractable here. Narrative what-if strategic simulations are one way you can prepare and anticipate. Another might be a crowdsourced prediction through a carefully-designed prediction market.
That might actually be a great experiment for you Wikinomics guys to design.
Comment by Venkat - July 6, 2008 11:46 am