Not to be Crude, but This is Reality Speaking

by Sam on June 30, 2008

I found a link to a new report from CIBC Word Markets that really made me pause to think. In the June 2008 issue of StrategEcon, Chief Economist, Jeff Rubin raised CIBC’s target for West Texas Intermediate by $20 per barrel to an average price of $150 in 2009 and by $50 per barrel to an average price of $200 per barrel by 2010.

According to Rubin,

“Under prevailing refinery margins that should translate into a near-$7 per gallon pump price within two years, a 70% increase from today’s already record levels.â€�

Furthermore, Rubin says,

“Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today…â€�

“By 2012, there should be some 10 million fewer vehicles on American roadways than there are today—a decline that dwarfs all previous adjustments including those during the two OPEC oil crises. Many of those in the exit lane will be low income Americans from households earning less than $25,000 per year. Incredibly, over 10 million of those American households own more than one car. Soon they won’t own any.”

This last statistic might be more shocking to me than $7/gallon gas. For most, cars are indispensable assets — unlike say Starbucks addictions, cable television or clothes shopping.

What happens when people can no longer afford to get to work?

  • Straightshooter
    WHAT HAPPENS WHEN PEOPLE CAN NO LONGER AFFORD TO DRIVE THEIR GAS GUZZLERS TO WORK?

    Well, the short and immediate answer (this is the only one I am offering, by the way) is that they will turn to less-polluting alternatives, like taking collective traffic options (bus, metro, etc., even serious car-pooling (two schmucks in an SUV is car-pooling lite!)), or riding a bicycle. This will not only help to reduce pollution (but it will, all things equal (read: all things unchanged) naturally have the long-run effect of enticing some people back to the automobile, because as massive numbers of cars disappear from the roads, the pressure will ease on petrol unless governments take steps to keep petrol prices high in an effort to reduce pollution), it will also be very beneficial to the health of many Americans especially, who are now so fat that they can only waddle to their over-sized, gas-guzzling SUVs (and they can only fit into the SUV due to their swollen size, and only the massive chassis of the SUV can support the weight of their ballooned bodies!).

    In turn, reduced obesity in the US will reduce the pressure on health services, not an unimportant factor when America is poised to seriously consider universal health-care coverage (massive numbers of "Michelin-man" sized Americans will pose serious challenges to any universal health-care coverage program, even a universal-lite program). It will also improve the quality of life for those obese persons who now will be shedding pounds as they run to catch the bus, ride a bicycle to work, etc., and of course the exertion itself will focus minds on just what one props into one's mouth in future, since it comes at a price: one can no longer count on the short waddle to and from the SUV. There are of course a myriad of other beneficial side-effects to a more slender, fitter America which anyone can figure out if they have ever been in close company with the "Michelin-man" sized American.
  • jeannie
    "For most, cars are indispensable assets — unlike say Starbucks addictions, cable television or clothes shopping."

    I've been car-free for 2.5 years now. I even survived a year plus in LA. So, I have to disagree. You can live without a car. Most of just don't want to.
  • Hey Jeannie,

    I have never owned a car. However, for most people like my parents and
    siblings a car is necessary for work commuting. My folks live in a
    highly populated area of Connecticut but have no way to get to work
    unless they are willing to take a bus and then walk 2 miles plus.

    So it really depends on your situation. Even for me living in New
    York, I rely on others to drive me around. Public transportation in
    America sucks.

    Sam
  • What happens when people can no longer afford to get to work?

    Not go to work anymore. I think we'll see a sharp rise in telecommuting and work-from-home almost as a standard for jobs. I myself just switched from a job that had me driving 70 miles a day to one that primarily keeps me at home.

    Other than that? Increased use of mass transportation. DC metro ridership is at the highest levels it has ever been. For those still stuck on the roads - carpooling? Limiting trips? Compensation for mileage?
  • Wow! It's amazing to see this country's dependence on oil and autos. Whats even worse is that so many of these people are deciding between gas and food and that is unacceptable.

    I actually am part of campaign to try and send a message to Big Oil, in particular Exxon. Check it out here: https://www.thepoint.com/campaigns/send-a-message-to-the-oil-companies

    If anyone wants to make a statement and have safety in numbers join the campaign. Thanks
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