The impact of lower gas prices on transportation? We’ll see …

The dramatic drop in oil prices has widespread implications for everything from geopolitical relationships to the world economy to our domestic economy to whether a vacation may end up being feasible after all.

Not long ago, many experts were telling us that the price of oil — and therefore the price of gas at the pump — had reached a new normal and wasn’t likely to sniff $2 a gallon again. Now many experts are telling us that lower oil prices are likely here to stay for the foreseeable future.

The U.S. has played a significant role in these developments, with increased deep-water drilling and the so-called “shale revolution.” Wisconsin has also been a player due to a unique type of sand in the western and northern part of the state that makes hydraulic fracking economically feasible. The U.S., as a result, has transformed from a major importer of oil to a rising exporter.

On the demand side, the International Energy Agency (IEA) estimates that consumption in the IEA countries is 60% lower today because of improvements in energy efficiency over the past four decades.

And for the first time since 1973, when President Nixon declared the U.S. would be energy independent within 10 years, that goal seems very attainable.

So what does this all mean for international affairs, the environment, the economy, and transportation?

In one of my favorite movie scenes, from Charlie Wilson’s War, Philip Seymour Hoffman’s character, a CIA officer, warns Congressman Charlie Wilson (played by Tom Hanks) not to be too sure of the implications of what they had achieved in helping drive the Soviets out of Afghanistan. To make the point, the CIA agent tells the story of the Zen master and the little boy:

There was a little boy, and on his 14th birthday he gets a horse. And everybody in the village says: “How wonderful, the boy got a horse.” And the Zen master says: “We’ll see.” Two years later, the boy falls and breaks his leg. And everybody in the village says: “How terrible!” And the Zen master says: “We’ll see.” Then a war breaks out and all the young men have to go out and fight, except the boy can’t because his leg is all messed up. And everybody in the village says: “How wonderful!” And the Zen master says: “We’ll see.”

You can check out the clip here. (This was Hoffman’s best role ever, by the way. If you haven’t seen the movie, you should.)

(Continued)

 

The implications of this dramatic shift in energy production and efficiency are more complicated and wide-ranging than any of us can probably imagine.

As far as transportation goes, these lower prices have not yet had much of an impact on airfares. Stay tuned on that front, and keep checking Orbitz or Priceline. It is reasonable to assume that people are going to be driving more when it costs $33 to fill up the car as opposed to $58. In fact, this is already happening, as you can see in this article in the Sacramento Bee: “California highways seeing record traffic, bucking years of decline.”

Does this represent a hard trend moving forward? Are we going to see significant, year-over-year increases in the total distances Americans drive, like we did in the ’80s and ’90s?

We’ll see.

In the meantime, the most we can ask of our planners and policymakers is to base decisions on the best data we have available; to weigh safety, the economy, the environment, and quality of life into all our decision-making models; and not to fall victim to the histrionics from both sides proclaiming record growth in travel forever on one hand or the end of the automobile on the other.

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