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Ian Lind • Online daily from Kaaawa, Hawaii

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When gas is $6.70 per gallon…

December 5th, 2012 · 18 Comments · Consumer issues, Economics, Politics

Ever wonder what will happen when the price of gasoline gets close to $7 a gallon?

MiniWell, take a lesson from Auckland, New Zealand. Gas was at about $2.15 per liter when we were there. At approximately 3.8 liters per gallon, and at current exchange rates, that translates into a price of about $6.70 per gallon in U.S. dollars.

And at that price, small cars are the norm, including lots of tiny ones like this. We saw few full size cars, and virtually no pick-up trucks, not even small trucks. There were some small vans, and a few SUVs, but we didn’t see any of the big, gas guzzling models.

Auckland also has what appears to be a pretty robust transit system, including regular ferry service used by some commuters, in addition to lots of buses and trains. All this transit is necessary, since the city seems to sprawl out across a very wide area.

And a lot of people walk. A former student of Meda’s who now teaches in Auckland commented on that right away. Everyone walks. And it shows. We had only a limited sample, but we saw far fewer obese people as we walked around downtown Auckland than we would see on a typical street here in Hawaii. I’m probably assuming too much, but walking appears to make a difference. [Note: I don't know if the data supports this conclusion….]

So life doesn’t stop when the price of gas soars, but buying choices and lifestyles certainly do change.

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  • ohiaforest3400

    Looks like a mini-Cooper before it became a BMW.

    I didn’t wait for $7/gallon gas to park my cars. For the past several years, my health, my wallet, and the environment have been better for it.the

  • t

    When gas is $6.70 per gallon…

    People who live paycheck-to-paycheck will panic, complain and endure the consequence of failing to plan ahead … for the buzzillionth time.
    And, most importantly, they will learn nothing from the experience. Ignorance is bliss, except when living in the moment is not an option. Merry Christmas!

  • Norm

    That is a Mini Cooper. Several years ago I downsized from a Toyota Van to a Mini Cooper since my needs had changed. Now I’m enjoying MPG in the low 40′s and having more fun when I drive!

    • richard gozinya

      Quite the accomplishment, Norm, The Cooper web site says mileage is 27/35 (manual), 26/34 (automatic).

  • Hugh Clark

    Gas was in excess of $7 a gallon when we visited Singapore in April 2011. They have few private cars with buses and underground trains the main transportation.

  • Lopaka43

    The State Department of Health is currently sponsoring discussions about how to create more walkable and bikable environments as part of the update of the Hawaii Physical Activity and Nutrition Plan.

    • Natalie

      Yes, this is good news. There are a number of groups that have been working toward this same goal, and it seems to me the time is right. Let’s hope that the new mayor is supportive of these efforts.

    • rferdun

      Let me throw a little cold water here. The C&C of Honolulu has had at least three bike plans beginning about fifteen years ago and the last being submitted now. And you know what? The city has done NOTHING. As a bicyclist I know that Honolulu is no more bike friendly now than it was then. These plans will continue to sit on the shelf with no action because accommodating bicycles will involve inconveniencing cars to some extent. Most of the general public does not see bicycles as a viable mode of transportation for them personally and will continue to oppose that trade-off. Just look at the uproar caused by the proposal to make Waialae avenue more bike friendly. Until that mindset changes and/or gas starts pushing $10 a gallon (or we get a transportation department with some backbone) it ain’t going to happen.

      • Natalie

        “The city has done NOTHING.” While I agree there is MUCH work to be done, it’s not true that nothing has been done. Off the top of my head, I recall that bike lanes and sharrows were added around UH and bike lanes were put in on Keolu Drive in Kailua and Kalakaua. The Waialae Avenue project is also proceeding.

        The city will be doing more connectivity projects in the next couple of years, as well as piggy-backing bike facilities with repaving projects, but if you see things stalling out, I would encourage you inform your city councilmember and state legislators about your concerns. In fact you might want to do so now, to support funding in the county CIP budget coming up for next fiscal year.

        As far as my comment above, the activities of these other groups is taking place outside of the regular city planning. For example, a hui of organizations and interested individuals recently started planning a bike sharing program for Honolulu.

        There are other activities which have city support but do not rely on the city to implement. For example, Hawaii had its first cyclovia in August, and another is being planned for Kakaako in May.

        We did not get to this place in a few years, and it will take many years to make it better. If you are not already actively involved in making change happen, I encourage you to get involved.

        • lol

          “We did not get to this place in a few years, and it will take many years to make it better.”

          – Hawaii’s real State Motto.

          (The “life of the land is perpetuated in righteousness” Hawaii motto has at least one major flaw: so-called “righteousness” has many varying definitions in Hawaii and on planet earth, and always will.)

        • rferdun

          Sorry Natalie, I may have been overstating the case for effect, but not by much. Most of those bike lanes around the UH and in Kailua have been in existence for more than ten years so it is hard for me to accept those as “progress”.

          As for sharrows, it is my opinion that they don’t give bike riders anything they didn’t already have. It has always been legal for a bike to ride on the right side of the right lane. I don’t think that most drivers know what a sharrow is or what to do with it. They will still grind their teeth and honk if they encounter a bike in the right lane, sharrow or not.

          Maybe I am being overly critical. But at the current rate of progress I don’t see Honolulu becoming a bike friendly city before I am too old to ride one. I would love to be proven wrong. So, tell me how many miles of bike lanes have been added in metro Honolulu per year in the last ten years? How many are projected for the next five years?

          • Natalie

            As I mentioned, the bike lanes I noted were off the top of my head. I am pretty sure the bike lanes on Keolu Drive (Kailua) were completed in 2010. The lane going up St. Louis Drive (to Dole?) was installed in the past few years.

            As for sharrows, I agree more education is needed. But the one thing they do is remind motorists and bicyclists that bicyclists should be IN the lane, not off to the side.

            I don’t know how many miles of bike lanes have been put in over the past 10 years, but it’s not as much as was funded. (The city auditor is also going to start an audit of the bike fund to determine why funding for several years lapsed.) If you look at the current bike plan, you’ll get an idea of what is planned based on the priorities noted.

            I think it’s important to remember that bike facilities alone will not make Honolulu bike friendly. As you mentioned, it takes a change in the mind-set of all roadway users, and that requires a whole lot of education combined with enforcement of our laws.

  • aikea808

    I remember the gas being high when I was there over a decade ago…

    In other news – looks like you left Auckland just in time… a rare tornado hit the city today:

    http://www.khon2.com/news/world/story/Three-dead-as-tornado-hits-New-Zealands-largest/beYBpFZxPk2zRX9-JBW_Cw.cspx

  • Natalie

    Bring on the bikes!

  • compare and decide

    Here’s an article from a New Zealand newspaper from January, 2012 entitled “Oz & NZ govts suppress official peak oil warnings”.

    http://thestandard.org.nz/oz-nz-govts-suppress-official-peak-oil-warnings/

    In 2008, the Australian government commissioned a report that concluded that peak oil production had begun in 2006, and will drop off dramatically in 2016.

    This was hushed up by the Australian government.

    Dennis Tegg has a good piece on the release of a secret Australian government report that warns peak oil is upon us:

    The Daily Telegraph has revealed how the Australian government has attempted to suppress its own report on peak oil. The response from the New Zealand government had been equally secretive and obfuscating.

    The Report by the Australian Bureau of Infrastructure Transport and Regional Economics (BITRE) is called “Transport Energy Futures; long-term oil supply trends and predictions” and can be downloaded as a pdf here

    The 470 page report concludes that world oil production will peak in approximately 2016 and then begin to decline for the rest of the century and beyond.

    The following is from the report itself:

    “Given the growth in deep and non-conventional oil balancing the shallow decline in conventional production, it is predicted that we have entered about 2006 onto a slightly upward slanting plateau in potential oil production that will last only to about 2016-eight years from now (2008). [note: conventional oil production peaked in 2006, this report is talking about conventional+unconventional production]

    After that, the modelling is forecasting what can be termed ‘the 2017 drop-off’. The outlook under a base case scenario is for a long decline in oil production to begin in 2017, which will stretch to the end of the century and beyond. Projected increases in deep water and non-conventional oil, which are ‘rate-constrained’ in ways that conventional oil is not, will not change this pattern.”

    While the Australian government has apparently tried to keep this report under wraps, for whatever reasons the New Zealand government is making no inquiries or seeking advice on how to deal with peak oil. The author suggests that the subject is too controversial with the public, so the government is avoiding it all together.

    The report has never been published on an Australian Government website (unlike all other BITRE reports), but has now mysteriously appeared on a French website (leaked?) and from there has now gone mainstream.

    The New Zealand government approach to peak oil has been equally secretive but much more cunning.

    Although the National government received very strong advice from officials in 2009 confirming New Zealand’s high vulnerability to oil shocks, it has decided that the peak oil issue is altogether too sensitive to risk obtaining further advice on. NZ Report here

    Better not to ask any questions when you don’t have any answers.

    This ostrich approach was confirmed from my official information request in late 2001. The response I received was that no specific advice on the risks and impacts to New Zealand of a potential decline in world oil production had been requested or received since 2008.

    What I would now like to know now is, given the high degree of co-operation between officials trans-Tasman, whether New Zealand officials or Ministers received copies of the BITRE report, and if so what was their response to it?

    What this article (and its many comments) failed to mention is that the global economic slowdown that began in 2008, and which could get much worse, has pushed the arrival of post-peak oil off into the future by several years.

    However….

    If you recall, Royal Dutch Shell oil company claimed in 2008 that post-peak oil production crisis would hit at around 2015.

    Here is an internal memo from Shell from that time:

    http://www.theoildrum.com/node/3548#more

    So if one takes into account the slowdown in the global economy since 2008, if Shell had been otherwise correct in its assertion that oil production should collapse in 2015, then the post-peak oil crisis can be expected to strike instead around 2018. And that’s not so different a conclusion as the Australian report’s contention that it will collapse in 2017.

    Now, looking at this from another angle….

    I’ve heard and read all sorts of lamentations by homeowners stating “If only I had sold my house in 2005!”

    I’ve often wondered about the ethics of making a killing in the real estate bubble, only to destroy some other family financially.

    However, it occurs to me that it is essentially the year 2001-2003 all over again.

    Time to sell that house and buy a condo in Auckland?

    At least New Zealand has an agriculture sector, because the price of food in Hawaii is going to explode in five years.

  • compare and decide

    “Everyone walks. And it shows. We had only a limited sample, but we saw far fewer obese people as we walked around downtown Auckland than we would see on a typical street here in Hawaii.”

    It was mentioned in comments on this blog in earlier posts that the obesity epidemic in the US has been attributed by some researchers solely to the cheapness of food in the US.

    Food is cheap in the US because of agricultural subsidies.

    http://www.americanscientist.org/science/pub/a-mathematical-challenge-to-obesity

    It was also mentioned that this policy of pushing for cheap food goes back to the Nixon administration (and those members of it who had personally experienced poverty), which sought economies of scale to make food cheaper. Their slogan was, “Get big or get out.” That meant the decline of the family farm and the rise of industrial farming. It also means that farm subsidies go almost exclusively to corporations. (In 2003, the Bush administration increased farm subsidies by 80 percent, continuing the trend of Republican subsidization of the food industry.)

    By the standards of attaining cheap food, it is a highly successful policy. Americans used to spend around one-third of their family income on food (as the French still do), but today Americans spend only about one-tenth of their income on food.

    This food policy of heavy subsidization stands in stark contrast to New Zealand’s agricultural policy.

    http://en.wikipedia.org/wiki/Agricultural_subsidy#New_Zealand

    New Zealand

    New Zealand is reputed to have the most open agricultural markets in the world after radical reforms started in 1984 by the Fourth Labour Government stopped all subsidies.

    “In 1984 New Zealand’s Labor government took the dramatic step of ending all farm subsidies, which then consisted of 30 separate production payments and export incentives. This was a truly striking policy action, because New Zealand’s economy is roughly five times more dependent on farming than is the U.S. economy, measured by either output or employment. Subsidies in New Zealand accounted for more than 30 percent of the value of production before reform, somewhat higher than U.S. subsidies today. And New Zealand farming was marred by the same problems caused by U.S. subsidies, including overproduction, environmental degradation and inflated land prices.”

    As the country is a large agricultural exporter, continued subsidies by other countries are a long-standing bone of contention, with New Zealand being a founding member of the 19-member Cairns Group fighting to improve market access for exported agricultural goods.

    Note that it was essentially a socialist (Labor) government that brought into being the open-market agriculture policy in New Zealand.

    How to embrace a free-market orientation in agriculture that would help bring an end to the obesity epidemic in the US?

    Vote socialist.

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