Monday, November 3, 2008

Mmmmm, Gas

A couple of months ago we took "A Long Drive" out to Timothy Lake to look for a GPS treasure for the Mt. Hood Territory geocache contest. On our way home we passed through Sandy and got caught in a big traffic backup around the Arco gas station in the middle of town. There were news vans and even a chopper flying overhead filming all of the activity. Turns out both the cars and the news people were all there because they were selling fuel for $2.99/gallon as a publicity stunt. "Gas Under $3.00" was the lead in on the 6-o-clock news.

I filled up the Jeep for less than $50 for the first time in at least a year. $2.44/gallon with my Fred Meyer Rewards card. That alone could spell a small economic recovery package, I think. That's $30 less than I was paying just a few weeks ago, which essentially $30 extra in my pocket, since I would have spent $80 were it not for the dropping prices.

Last night we drove out to see the Pypers in their new house and saw unleaded for $2.30/gallon at the Safeway in Molalla - less with your Club Card.


One of my business school professors at hyper-eco-PSU tried to convince me that it was my environmental responsibility as a human being to drive a bio-diesel. Tell me, if that one guy - you know the one with all of the bumper stickers - if that one guy is buying up all of the vats of used cooking grease to make bio-diesel for his slug bus, what are the rest of us supposed to do? Buy new vegetable oil from Costco at $7.99/gallon? For a business professor he definitely lacked a basic understanding of capitalism: the market will develop/produce products that it can sell for a profit; meaning mass-market appeal at a competitive price. The fuel savings on many hybrids doesn't even offset the higher purchase price over the average life expectancy of the vehicle. 

Now, I'm all for alternative fuel vehicles - hybrids, electrics, solar, etc. - as long as they don't cost me more at the car lot (which they currently do), more to operate, or look like a Jetson-mobile. Somebody will eventually stumble upon the right formula for mass-market success, and my guess is sooner than later. They will figure out how to produce vehicles at a competitive price and with comparable features and performance. They will figure out how to power them in an environmentally friendly and economically efficient manner. Meanwhile, over the course of the next 10-20 years while that technology is worked out and the infrastructure is built, I'd rather be paying $2.00/gallon than $4.00 for the vehicles I already own. And it's not like gasoline is going to disappear from the marketplace overnight either. It will take many years for the market to replace our dinosaur-powered rides with something better. As alternative-fuel vehicles grow their share of the market, I expect traditional fuel prices will plummet like last year's fashions.

Here's hoping the supply/demand curve continues to shift in our favor as we all change our driving habits and supplies improve.

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