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Rising price of gasoline.

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The UPSIDE of Unintended Consequences – Rising Gasoline Prices
- by E. A. Zimmerman
Also See Unintended Consequences, Part I, Part II, and Part III

Decisions we make and actions we take often have unintended consequences.  Complex systems with poorly understood connections can be affected in ways we can not imagine at the time we make our choices or changes.  The ripple effects can be serious, and in some cases, irreversible.  This is especially true when it comes to the environment.  For example, once we introduce an aggressive non-native species into the environment, it may be impossible to put things back the way they were.

Price of gas over time.  Source: EIA
Unleaded Regular Gasoline Prices (nominal price paid at the time) in the U.S., from 1978-2008, data source: EIA

However, on occasion, there is an upside to unintended consequences.  An example is the rising cost of gasoline.  Even when adjusted for inflation, gasoline has never been more expensive than it is today.  In 1980, gasoline topped $1.00 a gallon for the first time.  In 2008, we get excited if the price of regular unleaded gas drops below $4.00.  

Our society depends heavily on gasoline to fuel automobiles, tractors, lawn mowers, chain saws, generators and more.  In 2007, we consumed about 142,000,000,000 (that’s billions) of gallons of gasoline (Source: Energy Information Administration).   We are all experiencing the pain associated with a 106% increase in the cost of gasoline in just the past 12 months. 

The economic impacts are obvious.  Food and firewood cost more.  Low income families may have to choose between food and fuel.  It is more expensive to commute to school or work.  Small businesses, especially in the farming and construction sectors, are hurt.  Cabbies, realtors, sales, newspaper delivery people and others who spend a lot of time on the road are hit especially hard.  Debt is paid off more slowly, recreational activities are cut back, and people even visit distant family and friends less. 

While not minimizing the impact of these negatives, there have also been some positive consequences for both the environment and the economy.  Interest in more efficient vehicles and alternative fuels is higher.  The price of gasoline is spurring investments and advances in innovative technologies.  Hypermiling has become a hobby where drivers use a variety of techniques to improve their vehicle’s fuel economy.

People are more motivated to carpool or use public transportation.  Savvy employers are more willing to consider four day, alternating 4/5 day work weeks or telecommuting if production remains high and customer service does not decline.  Suddenly it's not so lonely in the slow lane, as speeding has become too expensive. Fewer, slower cars on the road means less traffic congestion, accidents and air pollution

Lifestyles are changing.  People are more inclined to walk or bike on short trips.  Trips are combined or scheduled more efficiently to save on gasoline use.  It becomes more attractive to shop and dine locally, which helps small businesses in the community.  The price of locally grown food becomes more competitive, which helps keep farms in business.  Families are rediscovering hiking and camping at local parks.  Butterfly gardens and unmowed grasslands become more cost effective than a manicured lawn. Development pressure in suburban and rural areas is reduced, as people take the economic implications of a longer commute into account. 

By the way, the cost of gasoline depends on the cost of crude oil (48% of the price), excise taxes (this depends on the State, but averages 24% of the price), and refining costs and profits (17%), with the rest (10%) for distribution, marketing and retail dealer costs and profits.  I realize that only adds up to 99%, but I guess that’s good enough for government math.

Originally published in the Villager newspapers on August 15, 2008

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