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An Inconvenient Economy

BY Rip EmpsonTue Jun 10, 2008 at 10:49 AM

On Friday, the price of oil jumped a record $10.75 per barrel, to more than $138, immediately sending the dollar into a freefall and causing the Dow Jones to ask for a sick-day. Meanwhile, unemployment rose at a record-setting pace in May and energy costs have continued to seek the cooler temperatures at high elevations.

All of this economic misery has Americans feeling desperately in need of some good news, but judging by a survey conducted by Ipsos Public Affairs last week on American driving habits (see the results here), it looks like Americans may be spending more time at home this summer. More than a quarter of Americans polled in the Ipsos survey said that they will be cutting back on non-essential driving over the summer, and unfortunately, for many, travel and recreational driving will be the first to go. Errands were next on the list, as one in five Americans revealed they will make fewer trips to the local bazaar.

The good news (which is not good news for most) is that—this summer—we will all be getting a little “greener.” With no end in sight for soaring oil prices, green habits are no longer simply for those who can afford to shop at Whole Foods. According to the survey, the spike in prices at the pump will have the greatest effect on households with average annual incomes under $50,000 and families with children under eighteen (which is more than 50% of the American population according to this data). In rural areas, especially across the rural South, the price of gasoline is forcing families to choose between food and transportation. On average, American households are spending 4% of their take-home income at the pumps, but in parts of the Mississippi Delta, for example, that figure can be as high as 13%.

When an economic squeeze forces Americans to become vegetarians in order to save that extra dollar for the pump, the problem is undoubtedly serious. Desperately serious. Though we may have found a short-term treatment for our national obesity, the effects of our petrocentric economy have finally touched the majority of Americans, and there’s really nothing funny about it. It is now crystal clear that we can quite literally no longer afford to tow the old party line.

At $4 per gallon, 65% of Americans have fundamentally changed their driving habits. At $5 per gallon, Ipsos speculates that 85% of Americans will have altered their daily driving routines. For a dependent economy, a continued rise in the price of oil might be for the best, forcibly bringing about renewed national energy policies. But while many remain unable to afford fuel-efficient vehicles, and as airlines raise prices and cut flights, the price of gas will continue to sting. As such, carpools and public transportation—where available—are only the first step in finding welcoming alternatives to our gasoline-induced cash-flow problem.

At the outset of his film “Addicted to Oil,” New York Times columnist Thomas Friedman warned: “this is not your parents’ energy crisis.” An inconvenient truth, to be sure, but one that Americans can no longer avoid. The necessity of developing alternative sources of energy have never been more immediate. From the bottom up, we are feeling the effects of an incoherent and deficient national energy policy. Regardless of whether or not you feel Tom Friedman deserves a green pie in the face, our transition to a more fuel-efficient economy will not (and cannot) end with conservative driving. Truly, smaller carbon footprints for man will become a giant leap for mankind.

What can the average American (and the average American business) do to become more energy efficient?

Topics:

Innovation, Technology, Leadership, Management, Ethonomics, Work/Life, Green, energy, Ipsos, economy, gas prices, oil, Tom Friedman, Ipsos Group, Trade, Gas Prices, Business, Commodity Markets


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Recent Comments | 2 Total

June 11, 2008 at 2:53am by Richard Lipscombe

The carbon economy is inconvenient now because it is simply too expensive. The good news is much of that economy is already changing and the rising cost of oil will hasten those changes. Nation-State economies are addicted to oil - through their supply chains and their distribution channels - so they have become far too expensive. Food prices are about to skyrocket because of the cost of oil - food production, packaging, and distribution has become so expensive and cost are rising. What will happen this Century? On present trends it seems there will be two economies - the global and the local. Both will be digital, 24/7, high-tech, efficient, and fast. The global networked economy is already taking shape with the likes of Amazon leading the way. The local networked economy is about to become a factor in your life as it was for my grandparents and parents. It will be labour intensive and communal. It will be based more on 'self sufficiency' models than 'economies of scale' models. Whereas the global economy will be automated and self-service the local economy will be people based and full service. The carbon-based world of our parents is about to get the boot.

June 20, 2008 at 10:17am by Jay Tatum

I regret to say that the sacrificial death of cheap gas is a price we will all have to pay to catch up with the rest of the world. Collectively, as Americans, we have witnessed our elected leaders and business people jump into bed with the oil-producing companies and countries and get rich at our expense. And they are only going to get richer and richer as we pump $5.00 a gallon gas into our SUVs and rice burners. There is no turning this around and do so is both counter intuitive and counter productive. We probably need to just graduate the price of gasoline a dollar a month until we get to the general election and ask our new President to nationalize the oil companies for national security purposes. Energy policies don't and won't do us any good as long as they are not followed and honored. So let's just take the plunge now, suck it up, and get on with it by re-fueling and re-tooling our economy for the 21st century and not the 19th!
An inconvenient economy may be an inconvenient truth and I would be remiss if I didn't say that I can't blamed our elected leaders and business leaders for selling out to the oil-producing companies and countries when I haven't relieved them of duty. So in answer to your question, what can the average American do to become more energy efficient? I think it starts by going green everywhere I can, every opportunity I can, and encouraging as many folks as I can to do so. While I don't think I am what is often characterized as a "tree-hugging environmentalist," I may need to embrace some of the arguments they've been making if I want a world my grandchildren can enjoy. The implications of the question you raise are far more important than any answer I could give in response. Perhaps we need to adopt a Cluetrain Manifesto mentality that says to the economy what the Cluetrain Manifesto says to marketing! And that would just be a start. It's cheap grace, but given the present economy, we need all the help we can get.