Whether or not there is a “creeping, belated awareness of peak oil” among US mainstream consumers and voters, as I wrote last Friday, there’s the more pragmatic issues of how consumers are reacting to the recent run-up in gasoline prices. Put another way, are we learning anything from this encounter with “high” oil prices, or are we just setting ourselves up to prove yet again that we can’t learn anything from a second mule kick, as the old saying goes?

This thought leapt to mind recently when I read the article, GM wakes up and plugs in. Now comes the hard part, which includes the following passage:

Going green is going to take more than a change in mindset. That, in itself, was monumental for GM, but it will likely end up being the easy part. Going green can save the Detroit Three only if they can quickly change their business model to one that generates profits from the sale of cars, instead of trucks and SUVs. And even then, only if they can develop the right environmental technologies that drivers - and North American governments - are demanding in an era of expensive gasoline.

Of course, even if they do all that right, they’ll still face Toyota and Honda on the other side, ready to steal even more market share. In fact, their Japanese rivals have already pulled ahead in the race to go green.

Unfortunately, the Detroit Three seem to take decisive action only when a gun is pointed at their heads.

“Sometimes the gun is at their temple and it takes three or four homicidal events for them to move,” a former GM executive quips.

Gasoline at $4 (U.S.) a gallon looks like the gun that is prompting them to try to save themselves. Whether they will won’t be known for several years.

I yield to no one in my criticism of the US car companies and how their management stuck their heads in the sand after the oil crises of the 1970’s/80’s, but they’re just part of the problem. If US consumers had demanded higher MPG cars, the Big Three would have found that all the testosterone-soaked ads for pickup trucks and SUV’s in the world wouldn’t have let them become as insanely over dependent on them as they are now. The car companies certainly had more than a little to do with the oily mess they and the entire US and even the world is in right now, but they just as clearly had some help from their customers who were all too willing to believe, even if only implicitly, that oil would be forever cheap.

Surely with gasoline at $4/gallon and the mainstream media outlets running a barrage of stories about how uncertain the future supply of oil is, they Get It this time, and they’ll finally do the energy equivalent of sitting up straight, eating their veggies, and flossing regularly, even if the price of gasoline dips for 6 or 12 or 18 months, right? All this pain they’re complaining about endlessly has taught them a fundamental lesson, hasn’t it?

I think the most accurate thing anyone can say is, “I hope so, but the evidence has yet to be seen.”

A lot of people are indeed making changes right now. The news sites are full of stories about people driving less and relying more on public transportation. (Even in the US?! The horror of it all!) In fact, a recent Ipsos/American Access poll asked people how they were responding to higher gasoline prices:

A new telephone survey of 1,000 Americans, conducted by Ipsos Public Affairs on behalf of Access America Travel Insurance and Assistance, has found that 67% have already changed their driving habits because of gas price increases.

…

As the price at the pump continues to rise, more and more Americans will be changing their driving habits: at $3.00 per gallon, 35% of Americans had changed their habits; by $4.00 per gallon — a reality in many parts of the U.S. already —, it will be 74%; and by $5.00 per gallon, 85% of all Americans will have changed their driving habits. However, one in ten Americans (9%) say they will never change their driving habits, regardless of the how high the price climbs.

…

In an effort to save on gas, Americans first tend to reduce non-essential driving. More than a quarter (26%) say that cutting back on travel or recreational driving is the first substantial change they made or will make due to rising gas prices. One in five (21%) say the first thing they did or will do is to consolidate or reduce errands (21%). Fewer Americans first look to alternate forms of transportation such as carpooling (7%), walking or biking when possible (6%), or using public transportation more often (4%). Only 3% say that the first thing they did or will do is buy a more fuel-economic car or a hybrid.

(Notice that using more public transportation is a measly 4%, which tells you how little we used it pre-price run-up when we have all those articles now talking about increases in ridership of 10, 20 or more percent.)

When I read those results, I wondered if the survey didn’t ask about hypermiling, or if they did and no one was doing it. When I e-mailed Ipsos, Aaron Amic, Vice President at Ipsos, responded:

The question was open ended so the respondents were free to give any response they liked. The responses were then grouped together to form response categories.

There were no direct mentions of hypermiling but a small percentage pointed to “driving slower” and a smaller (to small to code) percentage (<1%) said "not letting the car idle".

In a later e-mail he said, “I agree that if gas prices continue to increase, we may see more people use the techniques of hypermiling. However, the data suggests it is still a nascent activity among general population drivers on the roads today.”

This shouldn’t be a surprise; people will make adjustments according to how much of an impact they perceive those changes will have on their lives. In economics-geek terms, each person or family or organization has their own utility function, which defines the tradeoffs they’re willing to make. Right now, they’re doing the obvious things, as described above. If gasoline prices continue to inflict higher levels of pain, I expect that they’ll look for additional ways to reduce their fuel consumption. That will lead more people to learn about hypermiling and give it a try. And once they find out from personal experience that it won’t make their private parts stop working or fall off, they might decide it’s not nearly as bad as they feared. I like to tell people that for the average American driver (read: lead foot) it’s almost like a free conversion of their car to a hybrid.

(For an article about a similar survey, albeit with some very different results, see: Fearing $5 gas, Americans cut back)

But the big unknown is what will happen if gasoline prices retreat to, say, $3/gallon. That’s where I worry, because every vehicle put on the road now is one we’ll have to live with for at least a dozen years, normally longer, on average.

A small but very pessimistic sign is the number of people I know personally or have heard from who are blaming the faceless, all-powerful “They” for the current problems. And I’m not talking about just the people who think “there’s plenty of oil–the oil companies are screwing us again”[1], although that’s a sizable contingent. No, I mean the people who insist that “They” could make a car that gets 100MPG if “They” wanted to.

Even more disturbing is a note I got from an extremely well educated friend who said, “Honestly, I can’t believe in this day and age that we can have people living in space for months at a time but we can’t figure out a technology that doesn’t depend upon oil. (Although I have to say, I think the technology exists and that the government and car companies are keeping it hush hush).”

This is the kind of stuff that makes me nuts. I would love to know what incentive the government and the car companies would have to do something like that. As I pointed out to my friend, if I ran a car company and had this wonderful technology that was price competitive, I would use it and make billions.

I know from experience that when you press people on these kinds of comments, they inevitably fall back on how “They” want to control us or make more money from us (even though They would be better off doing something different) or who knows what absurdity. That’s as far as the conversations usually go, because I have to excuse myself, run outside, and scream at the sky for a minute or two.

(I’ve also never figured out why the heck They would want “total control” over us, anyway. I wouldn’t want any control at all over the “nice” people I know and associate with, let alone some of my, shall we say, more colorful fellow Americans.)

The point is that the level of reality denial among consumers, and the effect it can have on their real-world decisions, should not be underestimated. People who buy much larger and less fuel efficient vehicles than they need, or build a new home in a location that requires a hellishly long commute simply don’t want to admit that a lot of the financial pain they’re feeling right now is of their own making. Perhaps they didn’t pay enough attention to energy issues when they made those decisions to see that the rules of the game as they knew them their entire lives were about to change dramatically. Or perhaps they did know (or had a friend who gave them no choice but to know), and they wished it away as just another loopy Internet thing. Whatever the case, it would be in everyone’s best interest for those living inside their own, personal Reality Distortion Field to realize that they can do something to insulate themselves from future mule kicks, especially since the next one could well be the worldwide peak in oil production and far worse than anything we’ve seen to date.

[1] If you have the patience and the blood pressure points to spare, ask one of the “there’s plenty of oil” people for some hard stats–how much oil is in the ground, how quickly are we using it, which of the world’s major oil fields are in decline, which new fields are coming online, etc. When they just stare at you because they have no facts, ask them how they know that “we have plenty of oil”. That’s when you’re perilously close to ending a friendship, so tread carefully.