The key concept behind this recently published book by Forbes staff writer Christopher Steiner is that gasoline prices are only going to go one way: UP. Sound familiar? This central tenet of the Pickens Plan provides the basis for the author’s easy-to-read narrative, which examines the ways our lives will change as gas prices escalate.
Steiner begins with $4 per gallon gas. When prices at the pump peaked at historical highs last summer, Americans reacted by driving considerably less. How much less? Try 100 billion miles less. That’s how $4 gas changed the way we lived our lives last year.
Economist Jeffrey Rubin sees us paying more than $6 per gallon by 2010. “Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today – a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks,” says Rubin. A brisk market will emerge for smaller, fuel-efficient cars such as the Honda Civic and the Toyota Prius, while expensive and inefficient SUVs will rapidly depreciate and fall out of favor.
$8 gasoline will cripple the airline industry. Steiner points out that in 2003, jet fuel made up less than 13% of airlines’ costs. When gas reached $4 in 2008, that number jumped to 40% of carriers’ costs. At $8 per gallon gas? “The Airline Dinosaurs Meet Their Asteroid of Death: $8 Per Gallon Gasoline” is how Steiner labels this phenomenon. Vaughn Cordle, who regularly appears on CNN, Fox News, MSNBC, and CNBC as an airline industry analyst, puts it more bluntly: “It’s obvious that some of these airlines are just going to have to go out of business.”
Steiner called the chapter on $12 gasoline “Urban Revolution and Suburban Decay.” Living in the burbs will become too expensive for many Americans. The sky-high cost of gasoline means we’ll be driving much less. One of the many results is that homes farthest from city centers will lose their value. By contrast, urban residences that are close to mass transit will become increasingly popular. So will walking. And so will small-town living.
Guess what food will no longer be available at $16 gas? Sushi. “The cost of a piece of fresh tuna, already expensive now, will soar to heights not tolerable for most consumers,” writes Steiner. The increasing costs of air freight and high-powered fishing boats will put an end to $20 a pound ahi tuna at Whole Foods. Who will get to enjoy yellowtail, eel, and wild salmon? Those who live closest to their habitats (but only in season).
At $20 a gallon, Steiner sees Americans of all walks taking a closer look at the country’s energy sources. He calls clean coal “a Hail Mary pass,” wind power “the most promising avenue to increasing our use of green energy,” and the use of natural gas “likely to increase for several reasons: The plants are cheap, it can be fired up fast, and perhaps most importantly, plants that burn natural gas are the easiest to build politically. Nobody wants a coal plant near their town, with good reason. And perhaps even fewer people want a nuclear power plan in their backyard, even though nuclear plants, as built today, pose far fewer health risks than coal plants.”
READ THE NEW YORK TIMES REVIEW OF $20 PER GALLON HERE.