Jul 25, 2009

Business Books: Costly gas is good for you

WASHINGTON (Reuters) - The rising price of fuel will slash school busing, nearly empty the skies of airplanes, and turn many resorts into ghost towns. But Americans will become fitter, breathe cleaner air, and eat healthier food.

That's the future Christopher Steiner paints in "$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better" (Grand Central Publishing, $24.99).

The promise of the open road, an addiction for Americans over the past 100 years, will become a thing of the past, writes Steiner, an engineer turned journalist for Forbes magazine.

Electric cars and alternative-fueled vehicles will struggle to deliver range and only a small number of people will have them, he predicts.

Only the richest will be able to afford to drive hundreds of miles on vacations and even fewer will take to the skies. "Flying the whole clan down to Disney World, ensuring that a few more American kids undergo this baptism in consumerist values and marketing genius, won't be economically possible," he writes. Flying to Europe will come once in a decade rather than once every year or two.

A fuel crunch is hard to envision now, when the recession has swollen U.S. fuel supplies and gasoline prices are relatively low at an average $2.46 a gallon. But those prices could rise as Americans return to the roads, as they did in April and May after 16 months of falling highway travel.

And as millions in China, India, Brazil and other countries buy cars on their climb up the socioeconomic ladder, oil demand and prices will march higher.

Many oil companies say they are continually finding new reserves and the world is not running out of crude. But the U.S. oil supply peaked in the 1970s and the country imports more and more petroleum. The International Energy Agency predicts global production of easily available crude will begin to level off around 2030.

Eventually, Steiner writes, gasoline prices will hit such heights that drivers will long for the days when gasoline cost $4 per gallon, the peak they hit in the United States before the recession.

That's when interesting things will happen, he predicts. People will walk and ride bicycles to schools, stores and to public transportation more often, far more than they did when prices were high last summer. That should help slim down many Americans, more than a quarter of whom are medically obese.

As cars stay in the garage, fewer people will be killed in auto accidents. Steiner quotes researchers who say when gasoline hits $10 a gallon some 20,000 lives will be saved per year.

And less tailpipe pollution will clear the air, saving thousands of lives per year from pulmonary complications, he writes.

Steiner's book is not the place, however, to read about the possible downsides from high fuel prices to human health and welfare. Those include increased chances of warfare as nations scramble to seize remaining reserves, and increased emissions from the burning of the low quality oil that's mostly been left in the ground until now. Or the possibility that less fuel tax revenue would undercut highway maintenance to dangerous levels.

Nor does he address the misery that could result in rural areas where people are even more reliant on cheap oil.

Instead, he takes a positive stance. Steiner expects food will mostly be grown in the outer circles of thriving cities and towns that millions of suburbanites will flock to once the price of oil slows the business of commuting.

"Our food will be closer, crunchier and because it will be picked closer to full ripeness and have to endure a far less arduous journey to our tables, it will be healthier, containing more of the vitamins and nutrients that our produce ... is supposed to contain."

While many businesses like airlines and the shipping of cheap goods from China will suffer, other will blossom. High oil prices should finally push the United States to catch up with Spain and Japan and develop high-speed rail lines. As Steiner puts it, "We will live differently, but we will live well."

(Reporting by Timothy Gardner, editing by Eddie Evans)

7-23-09 reuters.com


Conserv-A-Store says:

We have not read the book or done equivalent analysis, but we feel this level of gas pricing will hopefully not be reached if a coalition of 1st and 2nd world countries begin to change the way they power their lives in the next 20 years. Petrol chemistry is in many non transportation parts of our lives including plastics but there are agri-based alternatives and hopefully other synthetic chemical alternatives yet to be found. Each person must make personal consumption changes in their lives to prevent $20/gallon gas

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