Current Economics: Driving Season 2006/7

It is likely that during driving season and summer 2006 that oil prices will continue to rise very high. Oil has taken $75 a barrel with threats to an Iranian invasion. It is likely that peak oil's effects and political volatility will cause prices to break over $3.00 a gallon for cheap and stay there until the fall at least.

It seems to me that gas prices have a critical element. That if they rise too high A) something will happen. And B) What is that price?

A) The American economy in particular is dependent on gasoline prices being low. If gasoline prices become very high, Americans will have to change their lifestyles. Since we have no time to change technology or tactics, this will be abrupt and many Americans will treat this economically mandatory change in lifestyle as a serious social threat, and become educated about the facts behind it. I expect that the realization that the environment is finite and damagable by mankind will set in and we will realize that what we do matters and act like it, improving the world.

B) What is that price? Since inflation is so high in real terms it is difficult to determine what price is too high. $3 a gallon in summer 2006 is not the same $3 a gallon as it was in 2005. It is actually around $3.25 in 2005 dollars, depending on where you shop, live, and what kind of job you have. It depends on what kind of other possible money gasoline prices eat up, and what Americans expect from the numbers at the pump. Would $4 a gallon cause the kind of economic and social upheaval that are necessary? What affect would it have on cost of living? It could potentially increase cost of living at a faster pace than any other indicator, and it is an inelastic commodity so it will affect everyone. Yes, gas prices are affecting change and sociopolitical awareness, but is this a curve or a crease?

When would it become a crease? I would speculate that gas prices of $4 a gallon would be unpayable by a fraction of Americans large enough to create social uproar and widespread difficulty sustaining economic exuberance. Prices in the upper $3- range would be a steady curve. Prices in the upper $4- and $5 mark would create a crease where social and economic activity would become prohibitive and people would need to find other ways of performing their duties and loves.

This winch point is around the summer of 2007, possibly as late as the summer of 2008, and could begin as early as a few days into an American invasion of Iran.

Could we avoid this crease? Yes, it is technically possible. If oil prices escalated rapidly but not to lofty heights, people would feel the shock of high oil prices in a market innoculation, spurring adjustment such as switching to alternative fuel sources like biodiesel or E85, the fuel cell, compressed air, or battery sources, and reducing the load on oil resources before the speculated peak oil and its downmarket indicators.

This is a serious economic calamity on our doorstep. We need the guidance of love economics, charity, foresight, and compassion to beat it. We need God's guidance and protection.

This problem will not affect power plant operation. Power plants will operate just fine without oil. The critical element of power usage is pollution. Pollution from cars is vile, but from power plants is unacceptable. We need to conserve power so we can make less pollution. The cost of energy is fairly low already. The key meter in power is pollution.

For now, drive conservatively and look into buying alternative fuel cars and cars that receive very high gas mileages. Your attention to this subject will be cumulative and have a positive effect on our short and medium-term future.