The longer we wait to move away from gasoline, the more high gas prices will hurt
Like Americans, Europeans are generally not fond of rising fuel costs. Unlike Americans, they’re much better at handling them. It isn’t difficult to understand why; they simply planned ahead. Geoffrey Styles writes:
A big part of our problem is that most Americans are still driving cars that were purchased when gasoline was under $1.50/gal., to commute between work and home locations that were chosen when fuel was even cheaper …
As of this week, nominal U.S. retail gasoline prices have gone up by 25 percent in the last year and by 130 percent in the last five years. How does that compare to other countries? Well, motorists in the U.K. are experiencing prices that are now 25 percent higher than the average of last year, and 42 percent higher than five years ago, but gas hasn’t been cheap in Europe for more than a generation. Buffered by the strong Euro, gasoline in Germany has increased by a smaller percentage, 19 percent vs. the 2007 average and 29 percent over five years.
Daniel Hall adds:
Hear that? Gas hasn’t been cheap in Europe for more than a generation. Europe’s development path — decisions about land use and urban planning and transit decisions — was determined in an environment with much higher gas prices. Not only are current price increases in Europe smaller in relative terms, but consumers there live within a system that makes it easier absorb the absolute increases as well.
A decade ago, oil cost about $10 per barrel, and gasoline prices were just a smidgen above $1 a gallon. Had we, at that time, increased the gasoline tax considerably and used the proceeds to fund automobile alternatives, we would have discouraged the enormous investment in gas-guzzling SUVs, we would have slowed the outward march of development, and we would have laid the groundwork for an alternative, oil-free transportation network. The net effect of such policies would have been to make the current high oil prices much less painful.
Obviously, we can’t go back and redo the last ten years. We can and should recognize, however, that demand and supply fundamentals do not bode well for future fuel prices. Moreover, we now know much more about the potential for and the cost of climate change. The future cost of energy and environmental damage is likely to be far more severe than the current pump pain. It is inexcusable that we should repeat the error of the 1990s and fail to lay the groundwork for an oil-free transportation network.