A blog dealing with Sarasota County and the City of Sarasota.

Tuesday, May 13, 2008

Gas Prices: Hoping the Customer Isn't Always Right

The biggest surprise of the campaign so far? The one that might have the biggest effect on shaping the County's future? Is it a stealth candidate? The resurgence of the Democratic Party? The broad spectrum support for the Urban Service Boundary consensus?  No, it is the fact that oil now costs 25% more than it did when I started campaigning in mid-January. It's been increasing at a rate of roughly $6 a barrel a month. And $3 a gallon gasoline is starting to seem as nostalgic as rotary dial phones and pennies with little heads of wheat on the reverse.

Friday's (May 9th) USA TODAY featured two apparently contradictory articles, both of which predicted our petroleum future. On the front page of Section B (MONEY), fifty-five percent of 372 petroleum industry executives said "they think the price of a barrel of crude will drop below $100 by the end of the year." That encouraging thought was tempered by a special report on the front page of the paper that included these nuggets from a USA TODAY Gallup Poll (presumably of American gas buying customers): "54% say they expect gas prices to reach $6 a gallon in the next five years" and "eight in 10 say they doubt today's high prices are temporary."

Of course, both groups could be wrong, and theoretically both could be right if the price of crude drops while oil companies perversely manage to keep raising gas prices. Ordinarily one would expect oil prices to be somehow yoked to gas prices, both falling or rising together, however out of phase. The least likely scenario, it seems to me, is that crude oil will continue to increase in price while gas prices drop. 

But other than estimating the cost of driving around the county, why does a County Commission candidate care about prices structures the County Commission has no control over? Because gas prices affect driving habits and driving habits are at the center of both sprawl and traffic congestion, two of the public's biggest concerns. 

Imagine if gasoline were free. Then the only constraint to living in Arcadia and working in Venice would be how much or little one likes to drive. Since many cars are now more comfortable than many offices, a scenic drive through Myakka Park with iPod or bluetooth cell phone might not seem like such a hardship. 

Now imagine if it cost you a dollar a mile just to put gas in the car. [That could be $6 a gallon gas in a vehicle that gets 6 miles to the gallon.] The daily commute from Arcadia to Venice and back would cost $100, or $2,000 a month. In that scenario people would be doing nearly whatever they could to live near whatever destination mattered most to them, be it work, school, church, shopping, the beach, or restaurants. That effect might drain cars from the road, minimizing the need for new lanes of asphalt and maximizing the demand for public transit.

And that's precisely why this candidate is wondering whether USA TODAY poll respondents or oil execs have a better sense of what may happen. Higher gas prices should help limit sprawl, but dramatic and sudden increases will cause severe problems because our land use patterns (and wages/income) change MUCH more slowly. That will leave many residents stranded in their homes, unable to travel as they assumed they would. And up and down yo-yoing of oil prices deprives us of the predictability needed to plan and adjust.

I don't look forward to $6 a gallon gas in 2012 (the Gallup Poll scenario), but if higher prices are coming I believe Sarasota can and will adjust priorities to adapt, continuing to move towards sustainability. 

May 15th Postscript: The New York Times reports today that oil refiners are having "a traumatic period". The reason? " The price of their raw material, oil, is rising because of strong global demand. At the same time, consumption of gasoline in the United States is falling as a result of slower economic growth and consumer efforts to conserve." And despite the fact that we are experiencing high gasoline prices, the producers haven't been able to pass along all the costs. According to the article "Oil prices doubled in the past year, while wholesale gasoline prices rose a mere 39 percent." The article goes on to say that the big companies (like Exxon Mobil) that produce their own oil are making lots of money, but smaller refiners that have to buy oil are struggling

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