Fuel costs and the cost of inaction

I read a provocative article on Slate entitled 'Four-dollar-per-gallon gas is cheap!'. The key argument is that the price of gas at the pump today is not exceedingly high compared to where it was on a inflation-adjusted basis decades ago, when it fact a finite supply and ever increasing demand should have pushed it higher already.

I think the argument that inflation-adjusted price should have gone up is overlooking the fact that many things we buy today have benefited from improvements in technology, productivity, distribution, etc... But I do find his comparison of fuel cost as a declining % of total cost of car ownership a good one.

Ross Perot many years ago had argued for a $0.50 per gallon gas tax. Unfortunately I am afraid not enough people in Washington would have the courage to see something like this through. But imagine if such a measure earmarked all its funds to modernize public transport systems and infrastructures nationwide: Urban light-rail, high-speed intercity trains, electric bus fleets...

It is often said that Americans are addicted to cheap oil. Very much like many Europeans are addicted to overly generous - and costly - social entitlements. In both cases, the question is who bears more responsibility: The addict, or the 'dealers' who created and are since feeding the addiction?

These 'dealers' oversaw decades of lack of urban planning, resulting in suburban sprawl, with no viable public transit options in most cases. Decades of subsidizing cheap gas while failing to challenge automakers to higher fuel efficiency (A Land-Rover Discovery in the US has a 4.4L V8 engine, the same car in Europe has a 2.7L V6 -- why not offer that in US?). And so on...

Whatever way forward is not simple or short-term. We need leaders with the integrity, conviction and resolve not to settle for less. And in the meantime many working class families, pushed to the outer edges of suburbia by high real-estate costs (we see this in Dublin as well), will bear the most pain as they see their disposable income significantly impacted by rising prices at the pump...