Some hope higher gas prices will drive down auto use
read more Posted on Mon, Mar. 24, 2003 BY TOM AVRIL Knight Ridder Newspapers
PHILADELPHIA - KRT NEWSFEATURES (KRT) - Your car's gas tank is thirsty. Your wallet hurts. Two things to consider:
- Prices aren't really as high as they seem.
- A little pocketbook pain, according to some, is not entirely a bad thing.
Not that anyone wants economic hardship, much less a war, but some clean-air advocates hope the recent rapid increase in gasoline prices will cause motorists to think about alternatives to the almighty automobile.
"It definitely forces people out of their cars," said Ronda R. Urkowitz, program director of Cross County Connection, a New Jersey nonprofit that promotes transportation alternatives. "We hope that people who do try alternatives like carpooling like it, so that once gas prices do come down, they'll keep doing it."
Joseph O. Minott, executive director of the Philadelphia-based Clean Air Council, holds a common view among environmentalists when he says gasoline prices are not high enough.
The price does not reflect the true societal cost of byproducts such as air pollution, Minott said. Yet he wishes the current high prices were happening for a different reason.
"Ideally, they shouldn't be high because oil companies and Middle Eastern countries are making a lot of money off it," Minott said. "I'd rather see them high because they're taxed so highly, and then the government can invest in ... alternatives to the car."
The run-up in fuel prices is already being cited by interest groups in Washington in promoting initiatives for energy efficiency.
On Thursday, the nonprofit coalition Alliance to Save Energy applauded the introduction of a bipartisan Senate bill that calls for a wide range of energy-efficiency tax credits.
"With energy costs reaching record levels in recent days, lawmakers are right to get behind energy efficiency that will help consumers and the environment with longer-term benefits for the economy and national security," said David M. Nemtzow, alliance president.
Energy experts agree that current gasoline prices - said to be higher because of a possible war with Iraq and labor unrest in Venezuela - are not high enough to significantly reduce consumption. Indeed, after accounting for inflation, gas prices are as low as they were in the 1960s.
And even if the current hikes continue, gasoline prices are what economists call "inelastic," meaning that higher prices have little effect on demand, at least in the short term.
That's because people still have to get to work or school, and in many parts of the country there aren't many options besides the car.
Still, Honda dealers credit high gas prices with recent record sales of the company's fuel-efficient "hybrid" cars. And in big cities such as Philadelphia, commuters will readily forsake their cars when pushed. Witness the packed mass-transit trains when the weather is bad.
Urkowitz said her organization had seen an increase recently in inquiries about ride-sharing and mass transit, but could not say whether it had been prompted by higher gas prices or by bad weather.
How high would gas prices have to go before people start taking the train, buying fuel-efficient cars, or living closer to where they work and play?
"What's the pain threshhold?" said Bill Veno, a director of Cambridge Energy Research Associates and co-author of a 2000 study titled Gasoline and the American People. "Gasoline doesn't cost enough to really have a significant impact on the average person's income."
Veno said a good model is Europe, where gasoline prices are triple what they are here - a difference due mostly to higher taxes.
Greater use of mass-transit and smaller cars have long been the norm on the other side of the Atlantic, though part of the reason for small cars could be the narrow roads in older cities, Veno said.
Here in the United States, said Kert Davies, the U.S. research director for Greenpeace, the goal should be to "change behavior without nuking the economy."
Whatever their impact, current high gasoline prices may be short-lived, according to one expert.
George Gaspar, an energy analyst with the Robert W. Baird & Co. financial firm in Milwaukee, predicted that crude oil prices, now at about $37 a barrel, won't go higher than $45. That means average prices at the pump, now about $1.70 nationwide, won't go up more than 20 cents a gallon, he said.
The reasons are that a war is expected to be quick, and that the Bush administration would open the nation's strategic petroleum reserves to keep prices in check, he said. In the meantime, oil companies are building up non-OPEC supplies, Gaspar said.
All of which makes Minott, of the Clean Air Council, lament that prices won't have much of an impact.
"It takes an awfully large price hike for Americans to change their gas-consuming ways," Minott said. "Culturally, we love our cars."