Today, the average price of gas in the USA is $3.29 per gallon. It sounds expensive, but it’s actually quite cheap compared to prices in the rest of the world. In Japan and Korea, gas costs around $5.50 per gallon. In Hong Kong, Germany, and Denmark, gas can cost as much as $7.50 per gallon. Filling up a 16-gallon tank in a mid-sized car can easily cost over $110 in Norway. To put that in perspective, $110 can pay for two weeks worth of groceries.
At $3.29/gallon, you could be spending $2000 each year in gas prices alone if you commute 30 miles each day to work (1). If two people commute separately, that’s $4000 each year. And there’s more awful news to come: the price of oil will only continue to increase. It’s a matter of basic economics: demand is increasing, but supply is running out.
Petroleum is a limited, non-renewable resource. This means that oil production follows a curve: it starts slow, hits a peak, and then begins to trail. Oil engineers predicted this phenomenon in the early 1950s—and this may be the decade we may finally reach peak oil. Soon thereafter, global oil production will taper off. Already, most easy-to-reach oil supplies have been exhausted. Oil companies are now increasingly resorting to offshore and tar sands oil extraction, which are both expensive and harmful to the environment. Yet while supply is decreasing, demand for oil is exploding. In particular, the burgeoning middle classes of China and India are acquiring a taste for motor vehicles. With a billion cars worldwide today, and tens of millions more added each year, the price of fuel will skyrocket.
Oil production peak by country. (from US Department of Energy)
Our current era of cheap, unlimited energy is quickly coming to an end. By the end of this decade, the average household could be spending $8000+ on gasoline each year just to commute to work. Our society’s driving habits will change—if not for environmental reasons, then at least because of the price.
The best strategy for dealing with the upcoming energy crisis is to wean yourself off of petroleum. Live with less gasoline so that rising fuel prices won’t affect your standard of living. Not only will you help reduce pollution, you’ll be saving thousands of dollars, too.
Switch over to mass transit whenever you can. They conserve fuel and ultimately conserve you money. A $65 monthly bus pass could save you $100 each month in fuel costs alone, or $1200 each year (2). If you can live without a car, you can save another $4000 each year in auto insurance, car payments, and parking fees. You’ll also save time; instead of fighting traffic, you can read, rest, or relax.
If you’re willing to totally unplug from the oil economy, you can start bicycle commuting . By cycling, you can save $6000+ each year. You don’t even need a specialized bicycle; just use what you have. In fact, if you live close enough, you can just walk. Both tactics will save you money while providing exercise.
For decades, we’ve been willfully ignorant about the fact that oil is a limited resource. We pretended that gas pumps had a supply that could never end. But within a decade, many of us may be forced to live car-free out of economic necessity. We didn’t pay attention to conservation in the past; but today, we can’t afford not to.
- Assumptions: $3.29/gallon, 30 miles 1-way implies 60 miles round-trip, 5 days per week, 50 weeks per year, average mileage is 25 miles/gallon: $3.29/gallon × 30 miles × 2 (round-trip) × 5 days/wk × 50 wks/yr ÷ 25 miles/gallon = $1974/yr. Per month, it’s $1974÷12 = $164.5. For two commuters, it’s $1974 &multiply; 2 = $3948/yr. If gas rises to $6.59/gallon (doubling in price), the cost of fuel for two commuters is $7896/yr.
- A Los Angeles monthly bus pass is $75, and Orange County’s is $55. If the average bus pass is $65/mo., the difference between gasoline price and bus fare is $164.5 – $65 = $99.5. If we roughly estimate the cost of auto insurance ($1550), parking ($500), and car payments ($200/mo. &multiply 12mo. = $2400), the additional cost of car ownership is $4450/yr., not including the cost of maintenance and vehicle registration fees.
Have you by any chance read the book “$20 Per Gallon” by Christopher Steiner? He has a compelling argument that as gas prices rise higher and higher and we finally wean ourselves from dependence on oil (just as you said: if it hurts our wallets, we will finally do what we should have done years ago), that life will actually get better! He believes we’ll live in greener cities that cultivate community, that suburbs will become obsolete, and that mass transit will be available everywhere and in many forms. It’s an inspiring book.
Hey Karen T.,
Thanks for the recommendation, sounds like an interesting book. Steiner is absolutely correct about the inevitable rise of oil prices, but it might not make life better. In fact, it could cause a catastrophic collapse of our modern economy.
Right now, our economy in America based entirely on oil. A sudden rise in oil prices could result in the collapse of the auto industry, the oil industry, the shipping/transportation industry, the chemicals industry, the manufacturing industry, and ultimately our banking system. That, in turn, would devastate even businesses that don’t directly depend on oil.
We might be living in greener cities, but half of us may also be unemployed.
If we’re not creating new industries and jobs for a sustainable economy, when the oil economy collapses, it could make us all extremely poor in the decades to come.
You’re absolutely right. Minimalism will become the default mode for nearly everyone — good thing we’re practicing it now, and by our own choice.
There are people talking about “peak oil,” but it seems that we are so hard of hearing. Our choices now will determine how big (or not so big) the catastrophe becomes later. There’s a reason God gave us brains — I wonder if we will use them.
I’ve done 50 mile round trip commutes (for years on end) in the past. I am so grateful that I’m now working from home. Not just because of the money savings, but because I’m having less impact on the environment as well.
Sometimes the only thing that will affect mainstream people is something that hits them in their wallet. As a hopeless optimist I feel like when gas prices get high enough that will be a positive, because people will start to reconsider the travel based society we’ve created. I’m not against travel but I would love to see communities start to develop more alternative transit (like bike trails, rental bike stations, etc) and more public transportation as well. The town I’m living in doesn’t even have a bus route. Not one!
Not enough people were using it so they dismantled their public transit system.
Hey Tanja,
Public transit in America can be slightly unreliable at times. When I was a college freshman, I used to go to church by bus on Sundays. Because it was a weekend, it was incredibly unreliable–sometimes I arrived an hour behind schedule.
Public transit in Taiwan (and Japan, and most of Europe) is a lot better. Trains, buses, and subways arrive much more frequently and promptly. I guess we Americans love our cars too much. It’s a real pity. We could probably solve our energy crisis today extremely cheaply with mass transit, but we’re investing in electric cars instead.
Ooh, I’m so glad I don’t have to pay that $85 to fill up my small Ford Escort tank anymore ;)
Even though train tickets aren’t cheap over here, it’s been saving us lots of money!
Best wishes from the Netherlands.
Hey Jurino,
The amazing thing about our high oil prices is that they don’t even fully reflect the true cost of oil production. Oil production has many externalities (costs paid by the public). The price of oil is heavily subsidized by the government when it sends military troops to intervene in foreign politics (like in the Middle East and South America). The cost is also borne by the public when oil companies ruin the environment (like the Gulf Oil spill). So actually, $100/tank is relatively cheap, considering how much harm is required in oil extraction.