Impacts of Rising Energy Prices

In many countries only the rich have cars, though this is certainly changing in some, but in North America almost everyone has a car, and even the poorest often need one in order to work.  For this reason rising energy prices, predominantly oil-related, will cause a very big adjustment in North America.  Auto companies are scrambling to put electric and hybrid vehicles into production even though battery technology doesn’t yet support the kind of range that can be achieved using internal combustion of fossil fuels.  Increasing numbers of vehicles drive below the speed limit on North American freeways, trying to maximize their fuel economy.  Sales of large vehicles always drops and small, more fuel efficient, vehicle sales increase as fuel prices rise.  So what are our choices?

Public transport could be, and some would say is now, terribly inadequate.  The middle class which now lives in bedroom communities, often 25, 50, or more miles from where they work, would be forced to move to the cities to be near to their employment.  Property values in the cities where major manufacturing and business centers are located would soar, while values in the outlying towns and country subdivisions would plummet.  A taste of this already occurred during the 2008 oil price spike, when home sales in housing developments in the country virtually stopped.  At the same time, sales of more fuel-efficient vehicles rose significantly, since the ongoing recession in the rust belt and rapidly declining real estate values left people unable to sell their homes for enough to pay off the mortgage.  People became trapped in a scenario in which they were forced to pay every higher energy prices in order to have a job.  Needless to say this will have widespread economic impact and the changes will be quite noticeable.  The question, however, is whether we will invent new technologies or just change our lifestyles to mitigate population-driven problems, or whether we will plow ahead, oblivious to the facts, until we “crash and burn”.  It is nice to realize we have a choice, but the effort we will need to make that choice meaningful will be very substantial.   So keep thinking of your younger relatives, kids, etc. and what they will be facing if we do nothing today.

As always, I welcome your comments.  — Tim


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