In a post on The Oil Drum entitled Have we passed "Peak Travel"? a commenter named WNC Observer made note of a development in how big recreational vehicles are getting used.
RR & Airdale: I'll tell you where all the RVs have gone - they have been parked at RV campgrounds. People pay the campgrounds a small fee to park their RVs there year round, then they drive up in a more fuel efficient car to vacation there. The RV becomes inexpensive "home base" lodging, and they can tour the area during the day in their car.
That's an interesting observation. It leads me to a question for all of you: What adaptations to high energy prices do you see happening around you? I see some people getting Vespas. Even former US Defense Secretary Donald Rumsfeld bought a Vespa LXV 150. I also see a few more people walking to work and more bicycling to work as well.
Watching autotrader.com I've seen big increases in the prices of compact cars and declines in the prices of SUVs. Obviously people are bidding up the prices of smaller and more fuel efficient cars.
So what changes do you see around you? What have you done to adapt to higher oil prices? What ideas have you seriously entertained and what do you plan to do in the future as a result of high oil and gasoline prices?
Update: About 20 hours after I wrote this post the comments I've gotten so far suggest that prices will have to go much higher to put a significant dent in gasoline consumption. I suspect my average reader is smarter and more affluent than the average American. So they are more able to pay the higher prices. But so far most people are doing little to adjust and planning little more to cut their liquid fuel consumption. Part of the decline in gasoline consumption is driven by the economic downturn decreasing income since lower income reduces gasoline consumption:
DOE economists estimate that a 1% decline in personal income results in a 0.5% drop in gasoline demand.
UC Davis economics historian Gregory Clark, whose name you might recognize as author of the book A Farewell to Alms: A Brief Economic History of the World, argues substitutes for fossil fuels are not so expensive that shifting to them will throw us back to a more primitive era of living standards.
Many people think mistakenly that modern prosperity was founded on this fossil energy revolution, and that when the oil and coal is gone, it is back to the Stone Age. If we had no fossil energy, then we would be forced to rely on an essentially unlimited amount of solar power, available at five times current energy costs. With energy five times as expensive as at present we would take a substantial hit to incomes. Our living standard would decline by about 11 percent. But we would still be fantastically rich compared to the pre-industrial world.
That may seem like a lot of economic hurt, but put it in context. Our income would still be above the current living standards in Canada, Sweden or England. Oh, the suffering humanity! At current rates of economic growth we would gain back the income losses from having to convert to solar power in less than six years. And then onward on our march to ever greater prosperity.
Clark paints too simple a picture by simply claiming that solar power costs 4 times more than current energy costs. Comparing energy sources by dollars (or Euros, Yen, or Pounds if you prefer) per million BTU (or currency per unit of energy) provides a useful method to look across energy sources. But such a comparison draws attention to the fact that there must be important other characteristics (e.g. portability, ease of storage, ease of burning, energy density) of each energy source that cause markets to price these forms of energy so differently. For example, heating oil costs over twice as much per million BTU as natural gas. These two forms of fossil fuel have very different market valuations.
Based on prices in the cash market, gas is valued at $11.27 per million Btu compared with $14.66 per million Btu for fuel oil, according to data compiled by Bloomberg. Heating oil at $23.88 per million Btu equivalent is more than double the price of gas.
Also, electricity contains about 3413 BTU per kwh. Well, 293 kwh equals 1 million BTU. Let us compare electricity to natural gas and heating oil in cost. This table of electricity costs on average per American state (one of my favorite web pages btw) shows Connecticut at 18.67 cents/kwh, Wyoming at 7.73 cents/kwh, Idaho at 6.35 cents/kwh, and Hawaii at 24.13 cents/kwh with the US average at 10.64 cents/kwh. Well, that ranges from $18.61 per million BTU in Idaho (so using straight electric heating in Idaho is cheaper than heating oil!) to $70.70 per million BTU in Hawaii (wow). People are willing to pay a big premium for energy in the form of electricity - at least for some uses.
All these numbers show that people are willing to pay higher prices for some forms of energy over other forms because of characteristics of those forms of energy. People are willing to pay more for liquid fuels rather than natural gas for transportation for example. Also, electricity costs more and people are willing to pay more for it because it can do things (e.g. power electronic devices) that oil can't directly power. Yet electricity is still quite unattractive for powering cars. If electricity was free the cost of batteries for a pure electric powered car would still put its cost of operation above a level most people would be willing to pay. For GM's forthcoming pluggable hybrid electric powered Chevy Volt the initial price will be $48000 or less if GM decides to sell it for a loss. Even switching to a new small car costs money since your used bigger car loses value more rapidly as gasoline prices rise and the new car costs money you wouldn't otherwise have spent.
The costs of substitutes will fall with time as advances in technologies enable easier substitution. Also, the costs of solar, wind, and other non-fossil fuels energy sources will drop. But we have limited ability to forecast the timing of those price drops. Right now the capital costs of equipment to allow us to use the substitutes (e.g. pluggable hybrids and electrification of railroads) are substantial and in many cases those capital costs add up to a higher price than the costs of the substitute energy sources as measured in price per million BTU. Additional costs include the premature obsolescence of existing capital plant and consumer products that rely in fossil fuels to operate.
If you want to get a sense of whether particular substitutes are already cost effective look at countries which have much higher energy costs than the United States. On that score what is notable about Europe is just how hybrids and electric cars get sold there in spite of gasoline prices about double the prices in the United States.
On the bright side, for some purposes you have plenty of cheap ways to reduce your fossil fuels usage right now. Depending on where you live and where you go you can ride a bicycle, electric bicycle, scooter, or a bus. You can replace incandescent bulbs with compact fluorescents. You can choose jobs closer to home and the next time you move you can choose a residence closer to your job and closer to stores. Insulation and sealants can reduce your heating and air conditioning bills.
The most clever product I've come across lately for cutting electric power usage is the American Power Conversion (APC) Power-Saving SurgeArrest power strip which detects when your PC turns off and then takes power away from peripherals whose use is tied to use of the PC. Basically, the parasitic power usage of peripherals is avoided by doing an automated switching off the power strip when the PC goes to sleep or gets turned off.