A Man in the Street

PEOPLE MAY COMPLAIN about the rising price of gasoline, but there was no lack of drivers or gasoline-fueled automobiles in downtown Pittsburgh yesterday. The place was jammed and every parking lot had the “Full — Leases Only” sign at the entrance. And here begins the tale.

Take the Streetcar

On most workdays, I take an electric streetcar into town, courtesy of the Allegheny County Port Authority Transit System. The South Hills line is the remnant of a once-great, even vast, system of street railways that served western Pennsylvania and its many former industrial towns. By the early 1960s, there were only two rail transit systems in North America with more miles of track than the system in and around Allegheny County. The largest street rail system on the continent was that of Chicago, and the second largest was that of Toronto. The Pittsburgh metropolitan rail system was larger than that of Boston or New York. But time and fortune were not kind to the old street railways of Pittsburgh, and today we live with but a shadow of the past.

As for my commute, there is a streetcar stop not quite three blocks from where I live. The streetcar runs every few minutes and travels on its own right of way. The streetcar drops me off all of about two blocks from my office, and there is no issue of parking a car in some crowded, damp garage. I have been riding the streetcars of Pittsburgh since I was about 6 years old (when my fare was all of 15 cents), so riding the streetcar is kind of a no-brainer for me. The streetcar is almost always faster and more convenient than driving a car into town. But the good news is not over. Pittsburgh’s streetcars are clean, and I can usually get a seat from which I can observe as the world passes by outside the window. Or I can put my head down and focus on reading my newspaper while someone else is driving the train. The price is right, a mere $2.25 each way at rush hour. And I can maintain my credibility as a Peak Oil guy and not have to put up with it when somebody gets into my face to talk smack and say things like “Well, you drive a car too, don’t you?”

Yes, I drive a car — just not very often. But every now and then, I need a car during the daytime. And on those occasions, I drive into town, wait at stoplights, fight traffic, pay to park, and put up with all the other stuff that comes with living in our automotive culture. And yesterday was one of those days.

Hi, Can You Do an Interview?

So I drove into town and parked. And there I was, walking out of the Mellon Garage, minding my own business, when some guy walked up to me and said, “Hi, can you do an interview?”

“What do you want to talk about?” I asked.

“The price of gasoline,” he replied.

“The price of gasoline?” I said. “How interesting. Whom do you work for?” I asked.

The man replied that he works as a stringer for a national press outlet, meaning that he writes articles and gets paid by his wire service if an article gets picked up. He wanted to talk, as he put it, “with a man in the street.” Little did this fellow know or suspect that he had picked “Peak Oil Man.”

“Well, OK,” I said. “What would you like to know?”

The Hardship of Paying More

“Gasoline is up to $3 and more per gallon. What do you think about the hardship of people paying more for gas?” he asked.

“Hardship?” I said. “I think that at $3 per gallon, gasoline is still pretty cheap, compared with its true value.”

I do not think that mine was the answer that the reporter was expecting to hear. “What do you mean? What is the true value of gasoline?” he asked.

“Do the math,” I replied. “$3 per gallon of gasoline is less than 19 cents per cup. What would you pay for a cup of coffee at McDonald’s or Starbucks? What do you pay for a gallon of Coca-Cola?”

“But that’s different,” said the reporter. “You don’t need Coca-Cola or coffee from Starbucks. People need gasoline,” he opined.

“Oh, really?” I commented. “I usually take the streetcar into town and don’t burn any gas. Today is different, and I need a car later on. So I am driving and paying for it. And notice that the Mellon Garage is full. People sure do not seem to be driving any less just because the price of gas has gone up.”

“Well,” said the reporter, “that’s because 85% of the driving that people do is essential driving. They can’t just cut back and drive less.”

Now it was my turn to ask a question. “What do you mean, that 85% of driving is ‘essential driving’?”

“You know,” he said. “People have to drive to work, drive to go to the store, or to medical appointments. A lot of people have to drive as part of their job. That kind of driving. It’s essential.”

Energy, Culture, and Transport

That comment launched us into a discussion of the choices people make about lifestyle, living arrangements, and occupational choices. “People can live where they want to live,” said the reporter. “But high gas prices penalize them for living one place and working somewhere else.”

My reply was that “People ought to pay for what they use, and if they are using scarce energy resources like gasoline simply to commute from home to work, they ought to have to pay for it and pay the world price to boot. If you live in the suburbs where a house may be less expensive, you might just have to pay for it at the gas pump.”

I further noted that “Quite a bit of what passes for the culture of the nation is really a reflection of the price and availability of energy. Cheap energy has given rise to a culture of physical dispersion, if not sprawl, coupled with a sense of personal entitlement to private and energy-intensive forms of transportation, housing, and many other things.”

It was rapidly becoming clear that the reporter was having trouble processing what I was telling him. “Why shouldn’t people be able to go where they want to go, when they want to go there, and in their own private car?” he asked.

“It depends on how you look at the issue of personal transportation,” I said. “For the past 100 years, while oil was cheap and available, there has been a trend toward more and more personalized transportation for relatively short hauls. With the rise of the automobile (the roots of the word mean ‘self-moving’), people have become accustomed to driving in their own cars close to home, to work, and for short and medium distances. But during World War II, when there was hardly any gasoline available for anything but the war effort, people adjusted to living with little or no gas.”

I continued, “But think about moving long distances, especially if you want to move rapidly. Few people really have any expectation of privacy or private conveyance when, for example, they get on a commercial airplane to fly across the country. Then, you are shoulder to shoulder with the next passenger, and before they let you board the plane you have to deal with getting X-rayed at the airport screening station. So for short hauls, people are conditioned to hop into their personal cars and drive. For long hauls, they are willing to be herded into an airplane and treated like cargo.”

I followed up on that last point. “In terms of passenger-seat miles per gallon, a transcontinental airplane flight is actually more fuel-efficient than a single passenger commuting to work in a standard-sized automobile. You would need four people commuting and carpooling in an automobile to achieve the same fuel-efficiency as a Boeing 747 carrying a 75% passenger load.”

The reporter asked for the source of that statistic, and I told him that it came from Boeing, although I did do some math at one point to confirm the number. Getting back to the discussion about the price of gasoline, I noted that “People used to live in or near the urban cores and take streetcars everywhere they needed to go. Just beyond the end of the streetcar lines, it was farmland. But in the past 50 or 60 years, we have built roads everywhere and filled them with automobiles. So the current demographic of Pittsburgh, for example, now sprawls all over Allegheny County and into five adjacent counties. It is not that most of the commuting culture is what you call ‘essential’ transportation. It is just that this is the energy-intensive existence we have created for ourselves. It was great when oil was cheap, although not sustainable. And now that oil is expensive, we have to ask if we have to change our cultural expectations. If not, we are about to have some very big problems.”

What About the Oil Companies?

My questioner was not finished with his “Man in the Street” interview. He asked, “Well, don’t you think that the price of gas is going up just because the oil companies are hoarding supplies?”

“There is no evidence of that,” I replied. “In fact, U.S. refinery output is at its highest level in history. There has never been a time, since John D. Rockefeller first started buying up refineries in Cleveland back in the 1860s, when the U.S. refining industry made more product than in the past couple of months. Plus, the U.S. is importing unprecedented levels of refined product into the country, something over 10% of total demand. So the refiners are running flat out, we are importing tanker loads of fuel, and the demand trends are still rising. So there is where you get your rising price.”

“But,” said the reporter, “everybody talks about how the U.S. oil industry has not built a new refinery in 30 years. Aren’t the oil companies just letting the old refineries run down, so there are shortages and they can raise the prices?”

This is one of those “when did you stop beating your wife?” kind of questions. The oil industry cannot get any credit in the public mind for anything, no matter how far it goes or how deep it drills. First, the political process makes it all but impossible to build new refineries, and then the entire industry gets beat up for not building them. Still, the question deserved an answer. And I gave it to the reporter, with both barrels.

“Not at all,” replied one of the few Peak Oil correspondents on the face of this or any other planet. “In fact, the overall trend in the U.S. refinery business in the past 30 years has been to expand existing refineries, as opposed to building new ones. For many reasons, it is just too hard to build a new plant in this country, so the refiners have been overhauling and expanding the existing production base. There are fewer environmental hurdles, the local communities tend to be more in favor of expansion, and the refiners are dealing with fewer political unknowns. So the net effect is that in the past decade, refinery upgrades and expansions in the U.S. have added the equivalent of 10 ‘new’ refineries to the total base, and there is something like the equivalent of eight more refineries being ‘built’ via upgrades to existing facilities. This is why U.S. refinery output is at a record high.”

So Why Is the Price Rising?

The reporter knew by now that he was talking about oil and refined product with someone who knows something about the business. He paused and thought for a moment. Then he asked, “So why is the price of gas rising?”

“The price of gas is rising,” said the Peak Oil correspondent, “because there are more people buying it than there are selling it. And there will be, for the rest of your life.”

Thus ended a random interview with a man in the street.

Until we meet again…
Byron W. King

May 22, 2007

The Daily Reckoning