Max Gladwell

Top 10 ways that high gas prices are good for America and the World…despite being bad.

Part 1 counted down from Hummer hubris to suburban exodus. Now for the final five…

5. Local goods are more competitive: Until now, buying local was an ethical choice that came with added cost. Last week, Wal-Mart announced that it would “expand its offerings of fresh fruits and vegetables grown and shipped from local farms across the U.S.,” according to GreenBiz. “Buying 12 million pounds of peaches from farms in 18 states saves the company 100,000 gallons of diesel fuel compared to its previous practice of sourcing peaches from only two suppliers, the Associated Press reported.” In the long run, this can also be a boon for Mexico if fuel costs make it more economical to shift production from Asia. Which could address some of the immigration issues.

4. Reduced greenhous gas emissions: In the first six months of 2008, Americans drove some 20 to 30 billion fewer miles than last year, according to the US Department of Transportation. Our back-of-the-envelope calculation shows this saving approximately 15 million tons of CO2 from being released into the atmosphere (does OPEC deserve some carbon credits?). Some of this could be attributed to a sagging economy, which ends up feeding this trend. Higher fuel costs lead to more layoffs and, thus, fewer commuter miles. Which depresses demand for cars and other consumer goods, which leads to more layoffs. A major push toward a green economy from the government and private sector can break this vicious cycle.

3. Spurring a boom in cleantech: The year 2010 is shaping up as the de facto year of the electric car and plug-in hybrid. The Chevy Volt, Toyota Prius, Volkswagen L1, and many others will debut from the majors, while upstarts Tesla and Hybrid Technologies seek to shake up Big Auto like never before. According to The Economist, electric-powered cars cost about 25 cents per liter ($1/gallon) to run. If people are then able to “refuel” their cars at home, it will make solar installations and home wind turbines more viable, even if they require battery packs to store energy when drivers are at work. This should make Van Jones very happy.

2. Reduced toxic emissions: You can’t reduce global warming emissions without also reducing their toxic and cancer-causing counterparts. Petroleum diesel is the worst offender, accounting for 70% of all airborne cancer risk according to the California Air Resources Board, so we welcome the emissions reductions you get from $5.50+ per gallon. This is especially beneficial for children living near major freeways, where the rates of asthma and allergies are 50% higher according to a recent study. “[Children] living very close to a major road are likely to be exposed not only to a higher amount of traffic-derived particles and gases but also to more freshly emitted aerosols which may be more toxic,” according to the report in The Daily Green.

1. Downward pressure on gas prices: Contrary to so much scapegoating and conspiracy theory, the rise in oil prices is almost entirely a function of supply and demand. Speculators have very little impact, and multi-national oil companies are just along for the ride. (Though Bush’s war can be blamed for a good portion of the fear premium.) When you’ve got 86 million barrels per day of supply and 86.1 million barrels of demand (or more), prices go up. The green lining we’ve outlined here, though, will conspire to reduce demand considerably. It’s already looking like we’ll take 500 million barrels off the table in 2008.

“The IEA forecasts global demand will rise to 86.87 million barrels a day in 2008, down 1.4 million from the 88.27 million barrels it projected in last year’s report. It also lowered its demand forecasts for the years 2009 to 2012, citing prospects for weaker economic growth as well as the dampening effect of the sharp rise in oil prices.”

If and when prices come down, it will be up to the U.S. government to support them in an effort to (a) continue to reduce demand, (b) price in the external costs of GHG emissions, toxic emissions, and other externalities through taxes and other market mechanisms, and (c) reinvest that tax revenue in a the pursuit of a more sustainable green economy.

For additional reading, see Thomas Freidman’s plea for a green revolution and a call for a floor on gas prices: “Without a carbon tax, without a floor on gasoline or oil, you are never gonna have a market,” he continued. “Without a market you will not have scale, without scale all you have is a green hobby.”

Since posting our first five reasons, Time magazine published its “10 Things You Can Like About $4 Gas“. As they say, immitation is the sincerest form of flattery. Except that their price-sign photos only got up to $5.09, whereas we got $5.29 from the 76 station on San Vicente and 26th in Brentwood (for self-serve premium).

Related Posts

• The Gas Price Cloud Has a Green Lining, Part 1
• High Gas Prices: Good or Bad? Or Both?
• Max Gladwell Top 10 Stories
• The Heroic Ideal of Max Gladwell and Barack Obama, Part III
• Sustainability: Where the Environment and the Economy Converge