Imagine that tomorrow in America the price of gas went up to $5 per gallon. How would people respond? Would they carpool? Maintain the same vehicular patterns? Move to smaller cars? Would there be an increase in mass transit?
As this is an entirely hypothetical situation and I’m mostly interested in what other people’s thoughts regarding consumer response are, I’m going to put some assumptions on the situation. Assume that governmental action is ineffective to lower the prices. Assume that there is no reason to think gas prices will go down in the future. Assume that there is not a gas shortage (ie if people continue to buy at the same pace they have they will still be able to). I don’t really want this to be a political debate but given how inexorably politics are linked to American life I don’t want to put a blanket restriction on any mention of politics.
My own thought is that people would likely move toward smaller cars and probably begin carpooling. I personally don’t forsee mass transit as being an option that people would choose too much more prevelantly than they do today. People really like their cars and in many places (such as my location of Fargo) mass transit is fairly ineffective; the roads and the city are set up for passenger vehicles.
Oh, absolutely. There would be immediate calls for the Government to “do something”, similar to the post-9/11 airlines bailout.
And the government would do it, too, because all of America’s trade goods move by petroleum-powered transportation (planes, trains, trucks), and suddenly bumping gas prices like that would bring the entire economy to a standstill, at least temporarily.
So I’d predict an immediate price freeze at some lower level, with aid packages for industries hardest hit (trucking, most notably).
Basic economics predicts that many consumers would use less gas. In the short term, by driving less; In the long term, by switching to more fuel efficient cars.
The real question is how many people, and how much.
The thing is, it’s so expensive to operate a car that $5/gallon gas may have much less of an impact than you think.
For example, here are my monthly car expenses (roughly speaking):
Car payment: $300
Insurance: $75
Parking: $200
Tolls: $100
Gas, at $1.25/gal: $75
Total: $750.
Now, if gas went up to $5/gal, that would add about $225 a month, for a total of $975.
This is an increase of about 30%. A sizeable “bite,” yes, but not enough for me to radically change my habits.
I believe that the demand for gas is, to a large extent, inelastic. People would certainly bitch about the price, but would for the most part continue using roughly the same amount of gas. They would be rather unlikely to change their mode of commuting to and from work, for instance.
Now, if the price was to stay high for a long period of time–i. e., over a month or so–there would start to be some changes. I doubt that people would sell their cars in order to buy more fuel efficient models, but those who would be buying new vehicles anyway would probably tend to shift back towards smaller cars. Those at lower income levels (well, low-to-middle, and even some upper-middle) would probably start carpooling. Some people though–such as my dad–would never do that, because they’re stubborn and will waste money at the drop of the hat.
There would, of course, be a huge fuss on Capitol Hill. I’m sure that the issue would factor into whatever election was coming up.
Sorry, I can’t quite picture an American society in which government action is ineffective to lower prices. I’m old enough to remember Nixon’s 1971 90-day wage and price freezes. And of course agricultural price supports have been a way of life since the 1930s.
So I guess this is a science fiction thread, huh? “On the planet Ooogamonious, prices for clyptomax rose 200% overnight, there was widespread consumer panic, with neuropod battles at every interdimensional intersection…”
In the short term you would probably see an INCREASE in fuel use and purchase. This isn’t just an educated guess, I saw this firsthand. The day of the attacks, gas prices shot up to 4, 5, 6 dollars a gallon. I personally saw $5.42. All this on the speculation that gas prices were going to go up.
People were lined up around the block, 30-50 to a station, at every station, everywhere. It was insane.
But, notice now that gas prices are at the lowest they’ve been in close to 10 years. Why? Some business, airlines in particular, aren’t using as much fuel anymore, and so there’s a gas surplus. This naturally decreases the price as supply tries to hit demand.
So, in the end, my prediction is that if gas prices were that high and if the government couldn’t do anything about it, it would still even itself out. In the short run, it would be mass hysteria. In the long run, WE would regulate ourselves and our gas consumption, creating a surplus and naturally lowering prices back down to normal.
If it went on for a long time then some smart dude would start running more bus services and there would be more train services.
People who work in places where you need a car would demand a rise or move.
In general though people would just get more efficient cars or go to work on a scooter ( sooooo efficient ).
The petrol is going to run out - its a finite resource.
One thing you can count on is the journalists whipping the thing up into a frenzy. The last time gasoline reached $2.00 a gallon here in KC (excepting on 9/11) the news was using gas prices as its lead story EVERY SINGLE NIGHT. It was disgusting - “Nuclear terror in Asia, but first tonight on KMBC News - what are gas prices doing? We have team-by-team reporters on the situation!”
Gas at $5.00 a gallon would not change my habits one bit. For one thing, I make a lot of money. For the other, I only fill my tank once every 3-4 weeks or so on my own dollar - I live only 5 minutes from work, and everytime I go anywhere further it is normally for business.
Of course, everything from plane tickets to the mail to package deliveries would go up. Would it be disasterous to our economy? It would be a hard blow, and would reduce our standard of living somewhat, but the UK has prices that are close to this range, and they aren’t doing so badly overall.
I’m already carpooling and driving smaller cars; I don’t know what else I can do. Other than b*tch at all the idiots driving petroleum-guzzling SUVs the size of elephants, but I do that now anyway.
“On the planet Ooogamonious, prices for clyptomax rose 200% overnight, there was widespread consumer panic, with neuropod battles at every interdimensional intersection…”