I exchanged e-mail with a friend yesterday, in which she related a story that I think is all too common right now in the US, with far-reaching ramifications: Driving upside down.
My friend, whom I’ll call R, is extremely knowledgeable about environmental issues, particularly global warming. And I do mean extremely knowledgeable. The problem is that she’s also one of the many people I’ve met who have fallen into orbit around one of the Big, Scary Problems we’re facing, global warming, and tend to dismiss the other, peak oil, as being insignificant by comparison. (Yes, we’re once again about to delve into the “PO > GW?” issue. Don’t worry, it won’t hurt.) I know people who fall on the other side of that coin, as well, but not as many.
About a year ago, R and her husband wanted to replace one of their cars, and she asked me for advice. I gave her my standard line about buying the most fuel efficient vehicle that could possibly meet their needs, and suggested a Honda Civic. For reasons I’m not aware of, they bought a Hyundai Santa Fe, a smallish SUV.
Most of you can guess where this story is going, but let me lay it out for the newbies wandering into the lecture hall for the first time today.
I e-mailed R links to some oil-related stories, and when she replied she told me that she and her husband wanted to trade in the 2007 Santa Fe, so they looked at a Civic Hybrid, which they liked. When they tried to strike a deal they found out that the trade-in value on their 2007 Santa Fe, which cost $23,000 new, was only $13,000. That’s right–a $10,000 drop in roughly one year, or $200/week.
R and her husband decided that $10,000 in depreciation was too high a price to partially escape the clutches of $4 gasoline, and that they would find ways to drive fewer miles and otherwise economize.
The point of this anecdote is not to brag about being right in my advice (for which, read: guess), but to use it as an opening to talk about some aspects of this general phenomenon.
First of all, I have to wonder how many consumers across the US are in a similar situation. They have a vehicle they would love to trade in on something more efficient, but it’s either worth far less than they’re willing to take on a trade, or it’s worth less than they owe on their loan–a situation some of the more colorful people in the cur business refer to as “buried alive, face down”. So, they keep the vehicle, keep driving it while “upside down”, and keep using more gasoline per mile, and likely more in total, than is good for them or the rest of us.
And notice that R’s vehicle is a Santa Fe, hardly one of the block-out-the-sun behemoths like an Expedition or Yukon or Escalade. Selling one of those dinosaur-size dinosaurs-in-waiting would be a nightmare. I’ve seen references in the mainstream press to some dealers not even accepting some SUV’s as trade-ins, and I find it very easy to believe in light of current gasoline prices plus the growing plethora of predictions for $150 to $200 oil in the next few years. If you were a car dealer, how eager would you be to have a very large pile of money tied up in a row of SUV’s under those circumstances?
Also, consider how long those shiny new SUV’s and pickup trucks people are buying today, even as I type this, will be on the road and consuming all that extra gasoline, often to fill no genuine need other than the desire of the owner to tool around in something big. Given the high proportion of those vehicles on US roads right now, that effect puts a serious delay into how quickly we can make the rolling stock part of our infrastructure more efficient.
But we shouldn’t get carried away with this “tyranny of the installed base” effect. The well known Hirsch report famously talks about it taking 20 years to completely replace the vehicles on the road, but that’s a simplistic view of the situation. It’s true that we can’t turn all the vehicles over much quicker than that (barring some hideously expensive and complicated “buy to crush” program where the federal government buys the vehicles and then scraps them), but we don’t have to. The supply of oil isn’t going to hit a brick wall and end, so our adaptations to the end of cheap oil similarly don’t have to happen in an eye blink, either. We can ride the curve of oil depletion, using less oil over time and keeping truly horrific human and economic consequences (at least within the US) at bay.
I can’t help but come back to the basic issue of consumers’ perceptions and which vehicles they buy. Specifically, I’m shocked by the number of people I know who literally don’t think of things like what the price of gasoline will be during the time they own the vehicle they’re about to buy, even when they have someone like me virtually screaming in their ear about higher gasoline prices and peak oil.
How do we get the message across to people that there is more than one dragon chasing us? Yes, global warming is a very serious problem, and yes, because of the time factors involved it’s something we need to get serious about right away, as in 20 years ago. But that doesn’t mean it’s the dragon that will catch us first. I’ve long been convinced that even though global warming has terrifying consequences unless we head it off, peak oil was the threat that would sink its teeth into us first. (In the short run, PO > GW, but several decades out, GW > PO, assuming we don’t do enough about GW now.) Worst of all, the arrival of peak oil’s horrors will make dealing with global warming all the tougher–people stuck upside down in an SUV won’t have a lot of money to pay for things like solar panels or better home insulation or more efficient space heating and cooling systems, etc.
Finally, let me stress that I’m not blaming R and all the other people who bought (and are still buying) such vehicles, even though I desperately wish I could have convinced them otherwise. I do think it’s fair, however, to recognize that while they’re paying a price for those decisions now, we’ll all pay for them in the coming years in the form of more gasoline consumption and more CO2 emissions.
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May 18th, 2008 at 8:01 pm
I think this points to the disconnect people have in their understanding of PO and GW Lou. I agree with your general thoughts but the connection between burning less fuel and emitting less CO2 is not being made on the microeconomic level of car purchasing, it seems to me. As you have stated in other ways PO and GW are part and parsel of the same problem. Too many people consuming fundamentally limited resources and consequences be damned, especially if they fall on anyone beside me and my short term future plans. This is why I agree with you that prices are still not high enough. I think (and am hoping) the GW skeptics will matter just an increment less for each incremental rise in energy prices. I am sure your friend is a nice person but how could they not get that buying an SUV of any size was an unreasonable decision if they are GW believers and knew every extra gallon of gasoline they burned was app. 20 additional pounds of CO2 emissions. How can we expect GW non-believers to change their behavior if GW believers don’t? The implications are staggering and I am, to steal a phrase, crawling under my bed now.
May 18th, 2008 at 8:35 pm
abowles said: How can we expect GW non-believers to change their behavior if GW believers don’t? The implications are staggering.
You are right there, the implications ARE staggering! I have a good friend who is a GW AND PO believer and he still bought the fuel sucking vehicle. Part of me thinks we are really screwed. Given the impications of GW and the lack of a serious effort that the world is really throwing at it, partly because of the HORRIBLE situation that PO could produce and also because recovery actions to PO will obliterate any small changes we do start to make for GW. On the other hand, this vision of this new green economy that churns out wind turbines, concentrated solar PV, thin film PV, wads of solar thermal, geothermal, etc., and a switch to an economy that makes you pay for carbon and gives you a break on income taxes sounds pretty impressive. I just really wish I knew right now how things were going to turn out!
I guess I think that PO scares me more, which is a somewhat selfish thing. I work in the aerospace industry and my wife is a stay at home mom and I worry about the future. PO has much more potential to be a really bad thing in the next few years. This thing is that people will react and do something about PO whereas GW is the next generations problems and it’s too easy to do nothing about it. GW may have a bigger impact on humanity.
abowles said: …crawling under my bed now.
nicely said.
Paul
May 19th, 2008 at 8:57 am
I think the basic problem we’re seeing with people making these counter-productive buying decisions is that they fall back on the old notion of, “it’s a really big world, so what any one person does won’t matter–let’s buy an SUV!”
I you make a strictly fact-based interpretation of the situation, they’re right. I could live like a hermit or buy a fleet of SUV’s and a cigarette boat for tooling around on Lake Ontario, etc., and the world won’t care.
Of course, unless you get a lot of individuals to make better choices, even if only rooted in enlightened self-interest, then we don’t get enough change at the consumer level. Personally, I try very hard to do the right thing for several reasons. First, I don’t want to be a hypocrite (or leave myself open to being labeled one). Second, I feel good knowing that I’m doing at least a little to push the numbers (oil consumption, CO2 emissions) in the right direction. Third, it’s good research and experience, and it sometimes produces surprises, like the bigger than expected benefit from insulating my water heater and pipes. Fourth, I like to have lots of talking points ready about simple steps and the savings they deliver when people (like my pickup-driving neighbor) make fun of my little car.
May 19th, 2008 at 4:32 pm
I have very little sympathy for someone who finds themselves “driving upside down” after they have been warned/aware of peak oil and GW…which should include almost everyone on the planet right now. That said Lou makes a good point that one’s sympathy level doesn’t solve either problem.
There is a saying “bad business practice drives out good” which is basically what led to the sloppy lending which created the housing crisis we are in the midst of. I wonder as Lou and others do here if this same concept applies to energy and efficiency issues. Will short-term-itis or the myopia of the markets (or plain old ignorance) prevent us from making the adjustments necessary?
After all greater market interest in efficiency will only lead to cheaper SUVs in the future…only once detroit realizes that they can no longer give them away (at a substantial loss) will detroit change–unfortunately the SUVs they do sell are still profitable.
May 19th, 2008 at 5:07 pm
I’ve given this general subject a lot of thought over the years, and I’ve very reluctantly come to a conclusion that I personally find distasteful because of what it says about humanity: In the short to mid-term, we will make significant change on the scale needed only in response to a sufficiently strong push from perceived costs.
Yes, there will be exceptions–like most of us here and many people I know in the real world–those who conserve and do the right thing even before we’re forced to by the market. But we’re a tiny minority, and we will be until there’s a generational change across the entire population. I.e. all the blockheads die and are replaced by today’s kids who are growing up in a very different world than we did.
And notice that I specifically said it would take a “push” from incentives. I’m convinced that a “pull”, as in “do X and you’ll painlessly save yourself real money, starting right now” won’t do the trick all by itself. To use everyone’s favorite example, CFL’s are becoming more popular in the US, but they still hold a minority market share compared to plain old incandescent bulbs, even though they save people real money on their electricity bill. We’ll see near-universal use of CFL’s only if [1] less efficient bulbs are outlawed (giving them a virtually infinite price, in effect), [2] electricity prices rise enough to push people into using them, or [3] such a social stigma about using incandescents forms that people are pushed into using CFL’s by the non-monetary cost of using the older bulbs.
The longer someone has to live with a purchase, and the more that purchase is connected to “lifestyle”, the more of a push it will take to make them change. I think this, plus varying income levels, explains why so many people are still buying trucks in the US. Some people don’t believe that gasoline prices will stay high or that GW is real, and some people have enough money that they just don’t care what it costs, in dollars or any other measure.
May 19th, 2008 at 7:56 pm
This is one of the reasons why I think that taxes on petrol may not be terribly effective. The average new car buyer gets a new car, keeps it for what, 3 or 4 years say, and then trades up to a newer car. However the car is still consuming fuel for maybe as long as another 15 or so years.
This means that new car buyers are effectively determining the car buying decisions of another 2 or 3 owners. The correlation between fuel price and consumption is very weak (approx 1% reduction for every 1% increase is commonly quoted). It would be far better to replace fuel taxes (in the UK and Europe at least, where they are high) with a tax levied on new cars depending on fuel economy, since this would influence the mix of new cars entering the fleet. This would also mean that inefficient cars still have sensible resale prices, which would enable current owners to trade in for more economic models.
May 19th, 2008 at 9:55 pm
rtuck99: I’m not a big fan of dramatically raising gasoline taxes, but more for a social justice reason–it would hurt a lot of people just barely getting by in the US who drive long distances to job and school. If we were to raise taxes, I think we’d have to be very careful about lowering other taxes (such as weekly payroll deductions) to offset them on average. People would still have a big incentive to use less gasoline, of course, as they would want to keep the tax reduction and spend less on gasoline.
I’ve long preferred the idea of a feebate system on new cars, where low efficiency vehicles have a relative high, and progressive, tax assessed at purchase time, and the more efficient vehicles get an instant rebate, funded by the tax on the gas guzzlers. This could be a self-funding, very effective, and easily adjusted system.
May 20th, 2008 at 11:30 pm
I needed a bigger truck than my Dakota for hauling farm stuff and a bigger cab for family things (usually combined with farm trips). I spent the extra money for a used diesel truck (better mileage than the smaller dakota), but then diesel prices went haywire. There are more things I can do with a diesel, though, and it will last longer than a gas truck, so I minimize my trips (which I already tried to do anyway), and keep it tuned and adjusted. That’s about all we can hope for now. (other than alternative fuels and electric cars and zero point energy….;-)
May 20th, 2008 at 11:36 pm
Oops, hit return by mistake.
I also wanted to weigh in on the taxing issue: ALL dollars are now PETROdollars. The costs of war and government and other things come directly from how we spend ALL of our money, not just gas money. Every hour we work is to obtain petrodollars to buy petrofood, petroclothes, and petropizza. Even if we buy all organic food, we still work for a petro-powered company someplace or sell things to petropeople.
Specialized taxes are only tiny measures. ALL taxes should be consumption taxes, so that every purchase reflects the cost of the money we make, the government to protect our ’stuff’, the wars to get the oil to run the stuff, and the drugs to forget we own too much stuff.
The income tax system itself is a spend-friendly system which discourages savings and encourages petroflow.
We ultimately pay around 50% of our income to taxes and fees. Most of those are hidden or taken before we see the cash. I think people should get to hold all of their hard-earned cash in their hands and watch it get taken right at the cash register so they understand what it costs to have a ‘high’ standard of ‘living’ where everyone has the liquid oil-slave do their bidding at the flick of a switch or the press of a pedal.