My June newspaper column: Price effects of gasoline

What price will change driving?

St. Cloud (MN) Times

June 4, 2008

It’s hard to have a conversation these days without someone bringing up the price of gas.

Monday’s national average of $3.97 for a gallon of regular is up 25 percent from a year ago. AAA is reporting a 15 percent increase in “out-of-gas” service calls as drivers try to avoid another costly fill-up by running on fumes. Car rental companies can’t keep compacts in stock and are pushing free SUV upgrades on travelers who don’t want them. New auto sales have declined 10 percent the past year, and market prices for used trucks and SUVs have dropped 15 percent across the board.

As $4 gas becomes the new norm, Americans are suddenly paying attention to the cost of driving as never before. Since 1998 the early June pump price for regular gas in St. Cloud has risen from $1.10 to $3.83. Corrected for inflation that’s a hefty 275 percent bump.

Anyone paying attention during that time would have easily noted that the price of gas was rising fairly steadily, and certainly should have noted the large jumps in 2000, 2004 and 2006, each of which saw June-June increases of 30 percent or greater.

But how many conversations about carpooling, buying smaller cars or switching to ethanol do you remember from the early summers of those years?

What we saw

When local gas prices increased 42 percent between June 2005 and June 2006 there were few car ads in the paper touting “HIGH MPG!” or recent model crew cab diesel pickups parked along the highway with “make offer” signs on the windows. But we’re seeing both now.

Some analysts have suggested the $4 threshold represents a psychological barrier that consumers just weren’t prepared to deal with, particularly those of us who remember $1 gas not that long ago.

But if we go back to the energy crisis of 1979, similar behavioral patterns appear. As prices skyrocketed and stations literally ran out of gas people bought more efficient cars, drove less, carpooled more and complained a lot.

The big psychological threshold for gas prices then was $2 rather than $4. In a Gallup Poll that spring only 26 percent said they would continue to drive to work if gas hit that mark.

Twenty-eight percent of respondents in another pool had to “drive around to find a station that had gasoline available” while another 18 percent drove less because they simply could not find gas to buy.

Conservation

The pain may not have been that bad though, as other surveys found 38 percent felt it would be “not at all difficult” to reduce their miles traveled by one quarter and fully 40 percent supported a law requiring people to reduce their driving by that much as a way to conserve gas.

But when the supply of oil increased and the price of gas dropped 47 percent between 1981 and the low point in 1988 such concerns were largely forgotten.

What’s different today is that there’s much less flexibility in the world supply to create another oil glut and push prices down in the United States.

We now import more than twice as much oil as we did in 1985, but the oil reserves of many exporting nations are producing far less than they did just a decade ago.

The big gains in automotive fuel efficiency realized in the wake of the energy crises of the 1970s tapered off in the 1990s as prices stabilized, Congress failed to follow through on conservation commitments, and consumers flocked to SUVs and minivans.

More people, more cars, more driving, less crude oil — the basic economics of supply and demand should tell us that $4 gas is not a fluke, but the first step toward a more expensive future.

We often hear anecdotes about $10 per gallon gas in Europe these days, usually presented as cautionary tales or “you think things are bad here” human interest stories. But at the same rate of increase we experienced in St. Cloud the past five years — when gas rose from $1.39 to $3.83 at the pump — we can reasonably expect to see $10 gas here by 2011.

When that happens will we be shocked and pretend it came without warning? Or is it finally time we take a serious look at our driving habits and begin planning for a future without cheap gas?

May column: conservation is possible

Here's my May column from the St. Cloud (MN) Times. Props my friends in Juneau, AK for showing us all how conservation works!

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May 7, 2008

Forget shopping, conserve

By Derek Larson

Americans rank among the world’s worst energy hogs, consuming roughly double the amount per capita of residents of other nations enjoying a similar standard of living.

This is due in part to the size of our country and a relatively low population density. But it also reflects an apparent inability to invest in efficiency, control waste, or respond to shortages with anything other than demands for increased production.

However, as oil hit $120 per barrel this week, signs that Americans are changing their habits have begun to emerge. Sales of large trucks are down, while smaller, more fuel-efficient cars are hot again. People are driving less and looking to save energy at home. Polls reflect growing anxiety about energy security and household budgets.

Gas prices alone are helping Americans attempt something they haven’t done since the 1970s: seriously try to use less energy. During the 1973 oil crisis Americans responded to exploding energy costs with imagination. Gas prices high? Join a car pool and reduce the speed limit to save fuel. Electricity skyrocketing? Shut down commercial lights at night. Fuel oil too dear? Turn down the thermostats in public buildings. Many of these changes became permanent.

When a second oil crisis hit in the wake of the Iranian revolution in 1979, the price of crude oil shot to a record that was not matched until March. The easy changes had already been made, so when Jimmy Carter spoke about energy conservation he wore a sweater, sat in front of a fireplace, and told us “There is simply no way to avoid sacrifice.” But few made the sacrifices he called for and some believe that speech cost him reelection.

Not long after Ronald Reagan was elected oil prices plummeted and remained low for 20 years. We became accustomed once again to cheap energy, gorged ourselves on SUVs and McMansions, and turned our backs on those who warned it could not last. When the price of gas shot up on Sept. 12, 2001, President Bush did not tell us there was no way to avoid sacrifice; he told us to go shopping. Detroit offered interest-free loans on SUVs and soon we were rolling again. But it could not last.

Today gas prices are pushing $4 a gallon on the West Coast and may hit $5 this summer. Public faith in the Bush administration’s energy strategy, which emphasizes production increases, is low; 66.5 percent rated his performance on energy “poor” in a March Gallup Poll. The same poll found 82 percent of Americans worried about the cost of energy, and a solid majority — 61 percent — thought that conservation by consumers was the best way to address the problem.

What remains to be seen is not whether we can learn to conserve energy again, but whether we are willing to try. Recent evidence from Alaska suggests we are.

An avalanche tore out the transmission lines connecting the capitol city of Juneau to its hydroelectric energy source last month, creating an instant energy crisis as the city shifted to diesel backup generators. The cost of fuel has driven the electric rate to 54 cents per kilowatt hour, or almost seven times what most Minnesotans pay. Local stores quickly sold out of compact florescent light bulbs, clothes pins, and even lamp oil. Almost immediately consumption dropped by 35 percent and has stayed low since largely through voluntary conservation measures.

Though the lines will eventually be restored, many residents are saying their new habits are here to stay — and will save them money even after the rates return to normal.

The reality is that we are nearing the end of the era of cheap energy. Whether it’s due to growing demand, shortages in supply, or some sort of carbon tax, prices are trending upward. We can respond by wringing our hands and cursing the oil companies, or we can chose to take action by wasting less.

The residents of Juneau have shown us it can be done without major sacrifices. Those of us who remember the 1970s also know it’s possible to cut back when you have to. As the price of gas approaches $5 this summer and electric rates continue to climb, here is hoping Americans respond by doing something other than going shopping this time.

Latest Column: Environmentalists Say "NO" to Corn-based Ethanol

Ethanol, not the greenest option
By Derek Larson

St. Cloud (MN) Times

Published: April 02. 2008 12:30AM

If you listen to talk radio or read the letters to the editor for a few weeks you're bound to come across someone castigating environmentalists for embracing ethanol. "It takes more energy to make than it produces!" "It's driving up food prices!" "It's government meddling in the market!" "Those crazy environmentalists want to force us all to buy ethanol!"

The fact is, they're pretty close to the truth on all but the last point: Environmentalists have been warning us about the folly of corn-based ethanol for years.

The problem is that lawmakers didn't listen. If they had, they would know that:

Corn-based ethanol is inefficient. According to the U.S. Department of Agriculture, the fuel produced has only 30 percent more energy value than that required to produce it.

Ethanol production demands immense amounts of water, about 4 gallons for each gallon produced.

Corn monoculture involves the heavy use of petroleum products, including fertilizers, pesticides and fuel for machinery.

Ethanol production requires electricity, which is produced from dirty coal in most of the Corn Belt.

Corn's potential is limited. Converting the country's entire corn output to ethanol would only satisfy 12 percent of our demand for gasoline.

If the direct flaws in corn-based ethanol weren't enough to frighten lawmakers off, they might have listened to the environmentalists who warned of the potential impact a "corn rush" would have on food prices. We're seeing it now.

Fallout

The price of corn has doubled since 2006, which is great for struggling farmers. But that's also driven up the cost of animal feed and any food products with substantial corn inputs. Combine that with the spike in wheat prices — due largely to rising global demand — and you get the highest rate of inflation in food prices since the 1980s. Coming at a time when energy costs also have skyrocketed, it's no wonder families are struggling to make ends meet.

And yes, Virginia, this is indeed a case of the government meddling in the market.

Due primarily to the influence of the agriculture lobby the 2007 energy bill extended the subsidies that have kept the ethanol industry alive since the 1970s and established mandates that will keep it growing into the future. Tens of billions of dollars of tax money have been spent subsidizing corn production in the past decade, and now even more will go to support ethanol production directly.

Thanks, but no thanks

If corn-based ethanol was really the solution, why can't it compete without subsidies, especially in the era of $100-a-barrel oil? Possibly because consumers just aren't interested.

E85 fuel is available at less than 1 percent of all U.S. filling stations.

Ethanol contains about 15 percent less energy by volume than gas, so despite the slightly lower pump price it costs more per mile to burn than gas.

A 2007 GM study found that 70 percent of those who own ethanol burning flex-fuel vehicles didn't know it; only 10 percent of those who did actually bought E85.

Most environmentalists will agree that some government subsidies are desirable. But knowing that corn-based ethanol reduces net greenhouse gas emissions by only 13 percent over petroleum, they'd probably argue that this isn't one of them.

Other alternatives

The reality is that greens aren't gaga over ethanol. Turning a commodity food crop into an inefficient fuel crop is foolish. Instead the government should be investing in a comprehensive alternative fuels program that drives innovation across the board and lets the market settle on the most efficient technology with the greatest environmental benefits.

It may be cellulosic ethanol, as President Bush has suggested; some studies have shown it might yield as much as 35 times the energy required to produce it, a 100-fold improvement over corn. Or perhaps it's biodiesel, which is only about seven times as efficient as corn-based ethanol but can reduce total greenhouse gas emissions by 68 percent. Or maybe it's not a biofuel at all but rather electricity produced by wind or solar power that will prove to be the most efficient way to move things around.

One thing is clear: We can't grow our way to energy independence with corn. In fact, if we simply increased the average fuel efficiency of all our vehicles by 12 percent we'd save as much gas as all the corn in the country could replace. As any environmentalist can tell you, the cheapest gallon of fuel you'll ever find is the one you didn't have to buy in the first place.

Fear For (Not Of) Obama

When Jesse Jackson came to my college campus on a campaign stop in the spring of 1988, my classmates and I were awed by his speech. We cheered wildly. We sang classic protest songs, mocked Ronald Reagan, and looked toward a future closer to MLK's vision than we saw in the world around us.

I also remember the Secret Service agents that swarmed our campus that day, and later sitting a few feet away from one of them, a man wearing a suit and mirrored aviator sunglasses in a gym that had to be 90 degrees. Sweat ran down his face but he did not blink or wipe it off. Armed agents surrounded the stage and even sat among us, "undercover," posing as students. (We knew they weren't students because their clothes were all wrong-- this was Portland when grunge was simply the way we dressed and not yet a marketing tool. The female agents wore skirts without combat boots!)

But one of my most lasting impressions from Jackson's visit was fear for him-- fear that he would win the nomination and be killed before the election. A decade later, in 1998, I stood on the balcony of the Lorainne Hotel in Memphis, in the very spot where Dr. King was shot and fell into the arms of his friends, including Jesse Jackson. I thought back to that 1988 campaign stop and for a moment was glad that Jackson hadn't won, despite my voting for him; once again I feared the violent, racist past was really still with us.

Today, twenty years after that campaign rally that fear has once again raised its head. Few will talk about it, fewer still will write about it in the US. But if you read the papers from outside the country it's all over the place: people are worried that the grisly American tradition of killing our youngest, brightest leaders may not be dead. Barack Obama, they warn, will be a target.

Here's an example from an Australian newspaper that captured this concern today:

Listing the scores of assassinations and attempts that have haunted the US presidency, I suggested that now any number of racist maniacs, enraged by the prospect of a black president, must be plotting to kill the Democratic front-runner. As past assassinations (and numerous close calls) remind us, no president can be totally protected.

No country since ancient Rome has experienced the killing of so many leaders. The subject came up when I was preparing to interview the author of The New Rome?, a fine piece of political writing by Cullen Murphy, managing editor of The Atlantic Monthly for more than 20 years. He was concerned that I'd raise the issue of Obama being assassinated because every Australian interviewer had done so. In contrast, he said, no one in the US media has raised the possibility.

I copped the blame, knowing of no other Australian commentator who had raised the issue. And I knew I would have self-censored if my column appeared in a US paper rather than The Australian. As many US journalists must be doing. To discuss even the possibility of an Obama assassination in the US would be asking for trouble. Throwing accelerant on the flames of insanity in a nation with a blood-soaked history, with far more than its share of home-grown terrorists and far too many guns. [Philip Adams, The Australian, 2/26/08]

So the old fear is back. One would hope we've moved beyond this. Even though we're afraid to talk about it, I'm sure many of us are also hoping the Secret Service is doing an extra good job these days, perhaps trading in the mirrored aviators for something a bit less 80s looking but still on the job, refusing to blink. Hopefully the college students who flock to see Obama aren't thinking about MLK, RFK, or even John Hinkley or Squeeky Fromme. But it's hard for me to forget, and hard not to worry.

It's going to be a long election season. For many reasons.