Gasoline at $10 Per Gallon May Prime the World Wide Web
Position Yourself on the Web for the Coming Economic Earthquake
The $10-Per-Gallon Gasoline Problem
Gas prices have tripled to $4 per gallon in a few short years. Demand from China, India, and other developing nations for oil and gas is accelerating, while EIA data shows world production has plateaued. Instability in oil-rich regions such as the Middle-East, Venezuela and Niger also pushes oil prices upward. Some countries already have gas prices above $8 per gallon. Gasoline may reach $10 per gallon here as early as next year.
ABC News reports Americans commute on average 32 miles per work-day. With 25 mpg average gas efficiency, gas at $10 per gallon turns 160 weekly miles into $3200 a year, excluding non-work trips. From Census Bureau and CBBP data, that's equivalent to an 8.4% commuting tax for the median family.
In the short term, high gas prices will likely reduce spending on other goods and services, slowing the economy. Industries especially dependent on oil -- such as airlines and chemical companies -- will suffer the most and may lay off workers to keep costs in check, increasing unemployment.
Longer term, higher energy prices make alternative sources -- such as nuclear, solar and liquefied coal -- more attractive. This can stabilize the energy market, but at a higher cost.
The impact on consumers will be felt throughout society, but especially by the poor and lower middle class. If increased transportation costs are passed on to the consumer, prices will rise for most goods and services. Poorer Americans who spend much of their income on food and gas would then be hurt most, increasing the gap between haves and have-nots.
The Web - Your $10-Per-Gallon Gasoline Safety-Net
Highly skilled and adaptable people will thrive, as usual when major changes occur. High gas prices could prod people to start Web-based home businesses. Increased telecommuting and Web meetings can help consumers reduce commuting expenses. $10-per-gallon gas prices will likely push many companies out of business, but Web-based, information-dense operations should thrive, as online traffic for business and entertainment surges.
Interactive online gaming using Wii consoles, watching movies through video-on-demand, and use of Skype video-phones replacing long-distance family visits could help reduce the bite of gas prices. Even churches could provide sermon pod-casts for remote parishioners. Overall high gas prices might shrink our physical horizons as long distance travel becomes too expensive for many, but our virtual horizons may well expand.
Published by Opher Ganel
Researcher, teacher, photographer, storyteller. Creativity is my escape from the day-to-day. View profile
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- Demand for oil and gas is accelerating as China, India and other economies grow rapidly.
- World production of oil and gas has plateaued, and some say it may have peaked.
- High gas prices could shake up the economy and society, causing an unprecedented surge in Web usage.
41 Comments
Post a CommentWell when it hits 10 dollars a gallon nobody will have jobs because we won't be to afford to get to work, so nobody will have money to even pay for internet service. Game over in my book
When I lost my job and decided to work at home, I sold my old POS car and dropped my insurance. I only lived 10 miles from work, but I figured out I was saving about $200 a month by not driving. That's $200 less that I have to make working at home.
Great article!
Good article- there is a marvelous movie that everyone should latch onto entitled "The 11th Hour" - much of what you write so well about is contained in that broad spectrum presentation. We may not realize how precarious our situation actually is. -DrD
It is possible that oil prices will stop their seemingly unstoppable upward march. However, unless additional energy reserves are made available (new large oil fields discovered and tapped and/or an alternative source of energy brought to market), the combination of plateauing resources and increasing demand from developing markets will continue to push up oil prices. The tightness of refinery capacity is also pushing up gas prices in the US. Current estimates I've read show the "real" price of oil should be ~$100/barrel and the remaining ~$35/barrel is attributed to speculation. However, the same experts said the real price of a barrel was ~$50 a year ago. Nobody knows for sure if and when gas will reach $10/gallon. However, given currently available information it is not beyond the realm of possibility.
Given that $50-60/barrel of the current price of oil is due to speculative pressure and the weak dollar, I doubt gas will reach $10/gallon. The speculative pressure could be dealt with as soon as the Fed reigns in margin requirements; the weak dollar will rebound by several cents just as soon as Bush is out of office.
congratulations!
Nicely done, Opher. It's a pleasure to rank up there with you and the rest of the finalists. Cheers!
Interesting topic, Opher. This figure is much closer to what petrol costs in the UK. It's still very cheap in America in comparison.
Sophie
right on !
Gas prices at $4 per gallon have increased my use of web shopping, etc. already! Great article, Opher!