A Bad Sign

Hallelujia

hallelulia

allelulia

Praise God, my new iMac has just been delivered. Not a loaner from Apple, but my own hardware. It shall be covered with Wacky Packs stickers by day’s end; this, I vow.

I do have a fine relationship with my FedEx driver (thanks to the fact that loaner hardware flows into my house like nicotine into a supermodel) and his twice or thrice-weekly deliveries are nice, if necessarily brief, interactions.

Today, he handed over the 30-pound package, collected my signature, and then said, without any preamble, “You know, they’re saying gas will be six bucks a gallon by the end of summer? Can you believe that?”

“When gas gets that high, Society starts to break down,” I replied, shaking my head. “Even if it’s just a little bit.”

“It means nobody goes out to dinner any more, so restaurants close,” he continued. “People stay home instead of shopping. They don’t go out to visit friends as often. Dealerships can’t sell cars. The cost of everything goes up. People lose their jobs. People file for bankruptcy. The economy takes a giant hit…”

I nodded. There are scenarios that sound merely alarmist until they actually happen…cf the levees in New Orleans being overrun and floodwaters damned-near wiping out the entire city.

“At six bucks a gallon, civilization starts to break down,” I repeated. “The Government will step in if it breaks $4.50.”

(Just like they stepped in when Katrina became a Cat 5 and curved in towards the city with the inevitability of a bowling ball finding the pocket. Yeah, good point.)

My driver continued to talk about the cost of gas, predicting a trend towards European-style gas consumption: people stop buying trucks and even sedans, and start buying minicars and scooters and other vehicles that look as though they belong on top of a child’s birthday cake instead of an American road. In some circles, this development would be discussed approvingly. My FedEx guy couldn’t believe what was happening to his country.

It’s natural that a truck driver would be among the first to become so alarmed about the rising price of gas. He’s among the first trades to feel the heat.

But this was a significant event. Lyndon Johnson had more information about the status of the Vietnam War and the American public than any other man in the world. Even so, he didn’t truly believe that the cause had been completely lost until he turned on the CBS news on night and saw that Walter Cronkite had turned against him. Numbers are numbers and can be interpreted any which way. But when something happens to clearly demonstrate how deeply an event or crisis has penetrated, it’s tangible and resists your attempts to flip it over and look at the cleaner side of the issue.

Today, a FedEx guy who has other houses to deliver to took the time to talk to me for five minutes about how desperate the cost of fuel was becoming. Today was the day I officially started to worry.

28 thoughts on “A Bad Sign”

  1. You make it sound as if the FedEx guy pays for the gas out of his wallet.

    Now if the Domino’s pizza delivery guy talks with you about it. THEN you have the case for official worrying.

  2. Now you have me worried. I often have thoughts like this re: fuel prices, and then they leave my mind for a while. Now they are there for good. My kids will be see a different world.

    Wacky pack stickers on your iMac! The horror, the horror.

  3. Don’t underestimate the resiliency of the people. It is $6.00/gallon in the UK and people don’t drive there any less.

  4. @Matthew You know, people (me included) keep saying that. Iceland is $8/gallon. Yet I’m slowly starting to change my opinion from “Europeans can deal with it, so Americans can too” to “Americans have too much of a sense of entitlement when it comes to driving to be able to handle $4 (or $5 or $6)/gallon gas.”

  5. Did the FedEx guy leave his engine running durring the chat?

    3 days ago I bought a train pass. ( Andy, what you now read about MBTA ridership being up? Its noticeable vs this time last year. ) I can afford to keep driving. 3.70 a gallon is only $20 more a month. But I’ve grown fond of the Eurepean conservatism and increasingly regret the parts of me that contribute to American hyper-consumerism.

    I know the increased cost of gas and food is hard for many people. And to those I am truely sorry. However, I can’t help but relish the thought of my next car being electric (fuel cell or battery, I care not). I hope true change comes of all this. Less debt, more effecient cars is the hippy cry of revolution this time around.

  6. The reason gas is going up in price is that the government has mandated so many different mixes that the cost of production has gone up, on top of that, the government at all levels taxes the hell out of gas at every stage of production– over half of what you pay at the pump is taxes.

    Then, on top of that, they have been spending like crazy AND started wars in the middle east- so not only is the increased instability of the region, and the threats against Iran (Which can attack the straight most oil goes thru) driving up the price, but the high cost of these wards is being funded by inflation which is unleashing decades of pentup US dollars held abroad (world’s reserve currency, don’t ya’ know) causing the US dollar to go down in value, and thus the prices of everything to go up.

    So, from stem to stern this is a government problem.

    If the governemnt “decides to act” at $4.50, you can be assured that whatever “cure” they come up with will only make the problem worse.

  7. I have yet to see the evidence that European society is starting to break down. I do see that their economies are strong and I think they’ve even met their Kyoto targets.

    On this count North Americans just to actually believe in the free market and stop whining.

  8. And particularly galling is the attitude of the oil company execs who show up for their yearly berating by some congressional committee. They are practically drowning in a tsunami of profits yet with well-practiced testimony glibly say that they must use that extra money to keep hunting for more oil. (Oh, and please keep the tax credits coming please, senator. Thank you). I understand they are doing what they are being paid to do. What makes the situation so bad is that the legislators who oversee this industry for us choose to do nothing.
    I

  9. Joe, the only the government problem in regard to gas is their failure to better regulate the oil co’s, oversee the price of gas, and their failure to tax the windfall profits of the oil co’s. If the world was as you say, the Oil companies wouldn’t be posting record profits across the boards. Sorry. If they repealed or reduced any tax on oil, you can bet your tail consumers wouldn’t see it. The corps would suck it up in a second.

    The only cure is pure electric cars. Not this Fuel Cell pie-in-the-sky. Hydrogen? Why complicate, why give us another leash to the energy industry? Electric cars worked in the 80s, they can work a lot better now.

  10. Um… I think what’s misunderstood is that Europe is smaller. Literally.

    In the British Isles, from the far south (Penzance, Cornwall, UK) to the northernmost (Thurso, Caithness, UK) in 14 hours. I’ve driven 14 hours in a day here in the US and *still* haven’t gotten to where I wanted to — Detroit to Orlando was a 2 day trip minimum, and that’s just east coast. The *shortest* a coast-to-coast trip has been done was 30+ hours, average is around 4-5 days.

    But take this down to the average person level. The average commute in the UK is 8.5 miles (http://news.bbc.co.uk/1/hi/uk/3085647.stm) the average in the US is 29 miles (http://www.ridetowork.org/transportation-fact-sheet).

    We just live in a country that’s quite a bit spread out more, and has had relatively inexpensive gas for a long time — and have built accordingly. And because of that, we don’t have a fall-back plan if we can’t drive that 29 miles — note that most cities have poor if non-existant public transport, and are not built for walking.

    Yeah, I’m scared.

  11. @Joe:

    “Did the FedEx guy leave his engine running durring the chat?”

    He would have. FedEx trucks are diesel, and diesels can run highly lean when idling, so much so that a modern electronically controlled diesel uses less gas idling for several minutes than shutting it off and starting it up again. Diesels are remarkably frugal when used in the right applications, hence the VW Polo in Europe that can get 60 mpg easy while so called green hybrids here in the US struggle to get that.

    Well, maybe replace ‘would have’ with ‘should have’, my UPS guy shuts his truck off just to throw a clothing parcel up to the front door at my place.

  12. “Civilization breaks down” means that the American public would be utterly shocked that the price of gas has tripled within the space of one Presidential administration. Gas at six bucks a gallon would has a direct economic impact, yes, but mostly it causes many, many people to conclude that the federal government is ineffective and utterly clueless of the needs of its citizens — regardless of who’s President — and that’s usually when a Real Change in American society happens.

    Natcherly, I’m not saying that the country turns in to a 24/7 Mad Max theme park. But 48 years later, when the Adams Party elects its third President, historians will note that is was $6 a gallon gas that finally killed the two-party political system back in the oh-hundreds.

    During the Depression, when “ordinary decent people just like you and me” numbering in the millions were being utterly killed by the economy and DC was turned into a homeless encampment for war veterans and (ironically) being attacked by the National Guard…it was a time when people were seriously open to radical change. It was a time when the US could have taken an insane swerve towards Communism or national Socialism.

    Right now, if I want to visit a friend of mine who lives just an hour’s drive away, I drive over there and see him. If gas went to six bucks a gallon, I’d first do some math and realize that okay, the visit will cost me about forty bucks. And instead of an evening of dinner and conversation and some Wii, I’d stay home instead and iChat him.

    THAT is a major shift, and it’d make me re-think my views towards how the country is being run.

    I ought to mention that $6/gallon gas would not cause me to raise the red banner of revolution, and that I sincerely doubt that gas will ever become that expensive. I think it’ll crack four bucks and that’ll be the “come to Jesus” moment for the gas industry, where they realize that (holy ****) if Americans start to believe that they can’t afford to run their cars, they’ll find other fuels to burn and other ways to get to work. It’ll float back down again and stay there.

  13. A big part of the problem is the dollar has lost a lot of value in the last few years. As for the rest of it, we need to get as much transportation as possible electric powered, to reduce demand for oil. Time to dust off Jimmy Carter’s plans for fuel rod reprocessing and fast breeder reactors, to tide us over until clean fusion works (http://en.wikipedia.org/wiki/Fusor) , or space-based solar is a reality.

  14. The true cost of a gallon of gas has always been hidden by tax subsidies and drilling royalty deferrals. We pay the difference in our taxes, which go almost directly to big oil instead of to the infrastructural services our government is meant to provide us. Coal gets the same free ride when the coal industry is allowed to hand off the cost of remediation and pollution controls to us, as well.

    As the real costs of petroleum dependence hit consumers, we need to make certain that the magic bullets our government adopts aren’t more of the same useless profit opportunities, like ethanol from corn.

  15. Andy: ” I think it’ll crack four bucks and that’ll be the “come to Jesus” moment for the gas industry, where they realize that (holy ****) if Americans start to believe that they can’t afford to run their cars, they’ll find other fuels to burn and other ways to get to work. It’ll float back down again and stay there.”

    You make it sound like gas prices are arbitrarily set by US oil companies. So much of what drives the cost is out of their control.

    The “come to Jesus” moment will be on the consumer side, they’ll drive less, which will lessen the demand, which will lessen the upward push on fuel prices. In fact it’s already happening: auto manufacturers are selling more compact cars, and having a hard time selling larger vehicles over the past few months. (Hey look, markets do respond to price pressures!)

    Tim: “Time to dust off Jimmy Carter’s plans for fuel rod reprocessing and fast breeder reactors, to tide us over until clean fusion works (http://en.wikipedia.org/wiki/Fusor) , or space-based solar is a reality.”

    One thing that’s a hopeful sign: More and more environmentalists are looking towards nuclear as a cleaner source of energy, as the efficiency and safety of newer reactor designs has grown by leaps and bounds since the most reactors were built. With more environmentalist support, there will be an “Only Nixon can go to China” moment for nuclear energy in the U.S.

    Space-based solar is too science fiction at this point. Fusion energy isn’t past the theoretical point. Terrestrial solar shows greater promise in the near future for a variety of uses. And I wonder if small, home based windmills could become a practical source of supplemental power for suburban/rural homes.

  16. Actually, the FedEx guy has to look at the bright side, his job is becoming bulletproof. I no longer go “shopping”, it isn’t worth the time and trouble to physically visit a bunch of stores staffed by half-wits that never have the item I need at at the price I am willing to pay, and add the cost of gas to the equation and it becomes a no-brainer. It is actually easier and cheaper in real terms to have the boys in blue and brown show up at my door with my purchases.

    I have owned a Prius since 2002, when people would stop you on the street and ask about it, so the price of gas isn’t a big deal for me personally, and I work from home building web sites for businesses that want to extend the reach of their client base, so the switch from the inefficient habits of the past 40 years is going to have great benefits for me personally and the US as a whole. Every big change has huge opportunities, and this one is no different. Of course, there will be problems, but they will be addressed the way they always are – by people doing what they should have done years ago.

  17. It is time to start a delivery service exclusively driving electric, or gas-driven cars. Perhaps even Hydrogen.

    Would there be a market for an environmentally conscious delivery service?

  18. Just for the record:

    Average cost of a gallon of gas on W’s inauguration day 2001: $1.68.
    Three times that number: $5.04
    Cost of gas today at the market down the street: $3.99 9/10.

    We’re $1.05 away from the end of “civilization”. I can’t wait.

  19. hello Andy!
    Life’s full of parallel universes. Reading what your FedEx guy had to say about the end of civilisation as we know it as oil gets ever more expensive, there are a whole bunch of people out there (not necessarily in loonie land) who’s joy and bliss increases with each increment in the price of fuel. Yes, we hard core cyclists are watching the end of the era of the road-raged, fume belching, fatty car driver set with ever rising joy. Bit like watching a movie… Only trouble is, as with most civilisation tipping point stories, there are going to be lots of zombies, axe murdering and similar as the oil set come off their addictions. My promised land is cycling for transportation, pleasure and exercise and electric (Tesla et al) motivation for trucks, buses and the like. A fitter, cleaner and vastly nicer civilisation awaits…

    So when the oil runs out, civilisation won’t be ending; we will just be tipping into a better one.

    I rant frequently on this subject over at my own blog: http://www.bicyclism.net By the way, your Audible picks on MacBreak Weekly are terrific for nice long bike rides…

  20. Actually the FedEx (Ground) guy does pay for fuel out of pocket. Apple products are delivered via FedEx Ground, and FedEx Ground “drivers”, are actually businessmen more than drivers, basically they own their own company and are a Franchisee of sorts, and they are responsible for their vehicles, maintenance, insurance, FUEL, helpers, etc.

  21. Gas is going up because 1) Oil is harder to ‘harvest’, raising cost. 2) Oil is more scarce, raising value 3) Demand worldwide is skyrocketing. India and China are basically experiencing the ‘boom’ in lifestyle that the US had in the 50’s/60’s. Everyone got cars. Everyone bought homes. We are competing for the same supply as India and China, along with the usual other consumer nations. 6 dollar gas makes schools suffer ( buses), shipping ( FedEx), and one thing that really bothers me, food and medication. We are so used to having access to food that is shipped 1/2 way around the world. Prices are already heading up. None of this bodes well. If the wrong person ( McCain) wins the election, we are in for a very rough ride. Expensive oil= Expensive everything else. I am currently shopping for canning supplies:) iCan?

  22. The car resonates far more with the average American than it does with a European I’m sure. After all, you took a car to the moon on what, your second trip there? ;o)

    Gas costs $8.60 a (US) gallon in area, because, that’s what it costs, if you catch my drift.

  23. So andy how is the new iMac?

    I got a 2.4 24″ this winter, and I really like it. Another question: Are you still using the MBA? As a former blackbook owner, and you being a current one, would love to know your thoughts about using both. I sold my blackbook to my brother and am considering an MBA… Wish it had more mem though (VMware Fusion)

    Cheers
    -wsn

  24. Let’s look at this from an International viewpoint, shall we ?

    $8/gal in Ireland, $4/gal in the US (that’s US gal, not UK gal), and $1.65/litre in Australia… A little conversion gives us the following, using the US dollar as the base amount (such as it is worth at the moment), and the litre;

    Ireland: $8, USA:$4, Australia:$6 (All in $US)

    So the USA isn’t that badly off compared top the rest of us. Economies of scale, I guess.

    As someone who drives 200k to work and back EACH DAY, and has to fill his relatively economical Hyundai Santa Fe twice a week at $100~ a time, I’d switch to electricity tomorrow if I could. In fact, I wish I had bought the Prius a few years ago.

  25. Is the comparison between fuel prices in the US and other countries really valid when you bring taxes and public services into the mix? I think looking at overall standards of living and the effect that price changes have on the average person is a better way to approach the issue. We may pay less for fuel in the US due largely to relatively low taxes but we are taxed in other ways. Also take into account we have no national health care and very little in the way of public transit to speak of and the equation starts to look a little different.

    Finally, the US, outside of some very large metro areas, is simply build for individual transportation. It might be interesting to argue about how and why that happened but that does little to solve the problem.

    Another real piece of the puzzle is the credit crisis of 2006-2007 which as left The Fed unable or unwilling to do much to shore up the dollar. As far as I can tell, this situation was the direct result of the Federal Government failing to properly oversee the lending industry. And now we have the Enron loophole in the commodity futures trading industry.

    The Beat Goes On.

    And to lighten things up…. Andy, a site you may like if you haven’t already seen it

    http://dinerhotline.wordpress.com/

    Cheers-

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