Friday, March 07, 2008

Uh Oh...

If oil gets anywhere near $200 per barrel as predicted by Goldman Sachs, our current oil-driven lifestyle will be impossible - not inconvenienced, not "more difficult," but as a matter of practical economics, impossible.

$200-a-barrel oil means gasoline will cost around 8 bucks a gallon. Suburb dwellers with 30-mile-each-way commutes will have 20 dollar-a-day gasoline bills, and that's assuming they drive an economy car. If they drive an SUV, more like 50 bucks a day.

"Well, they can take public transit," you counter?

What public transit? Again, consider this as a practical matter: you would have to - instantly - build light rail out to all those low-density 'burbs, and/or increase bus capacity by several hundred percent - and if it's buses, fares would go up regardless (diesel won't be any cheaper than gas, remember.)

Yeah, good luck with that.

There will be all sorts of other chaos. Wal-Mart, for example, would very quickly fail on a massive scale in a world of really expensive fuels. Rather than deliver from a network of distribution warehouses supplied by local production, Wal-Mart uses the concept of a "warehouse on wheels", i.e., fleets of diesel powered semi trucks going straight from the port-of-entry to the local Wal-Mart super center. Suddenly-expensive diesel powering those trucks (not to mention the fuel oil powering the container ships bringing all the produced-by-Chinese-slaves crap they sell) would mean big price increases on the store shelves, erasing Wal-Mart's predatory pricing advantage, and meaning that local stores suddenly would be competitively priced, and thus would bleed enough business from Walmart that they would no longer be economical to run.

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