Max S. Dunn

Book: $20 Per Gallon

Posted by: Max Dunn on August 9, 2009 16:11:38

$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better by Christopher Steiner

What would the world be like if gasoline was $20 per gallon? When that little car trip from San Jose to SF and back costs $80 in gas? When the cheapest roundtrip flight to the East Coast costs over $4,000? That will be a different world than the cheap-energy world we live in today!

And that world is closer than many may think. My own prediction is that before the end of 2012 we are going to see $200 oil and occasions when gas stations won't have any gas to sell. But regardless of whether peak oil is in 3 years or 30 years, there is no doubt that most of us will see it, and our kids won't enjoy the benefits we enjoyed of cheap oil.

So the book $20 Per Gallon which speculates about what changes will occur in our world with increasing oil prices is a great exercises we should spend more time on. And the ultimate message of this book is a hopeful one; that while increasing oil prices will cause many short-term problems, in the long-term reducing our dependence on oil will change our lives for the better.

However, no predictions of the future have ever gotten exactly right, otherwise we would all be wearing silver jumpsuits and driving flying cars! And $20 Per Gallon certainly hasn't gotten everything right either.

When Steiner is at his best, he does the math. For instance, he quotes that for every $10 a barrel oil price increase, United loses $500 to $600 million and when gas hits $12 per gallon, the Midwest home that used to cost $300 a month to heat in the winter will now cost over $2,000 a month. From these numbers he makes reasonable conclusions about many of the air lines failing and people building smaller, more energy efficient homes.

Sometimes though, he throws out the numbers but then doesn't follow through with them. For instance, he quotes how many tons a truck can haul per gallon per mile, but doesn't realize that even at $20 per gallon, this would only add $0.15 per pound.

Where he falls the furthest from the likely future though, is where he relies on prejudice not facts. The best example of this is his condemnation of WalMart. He posits that WalMart is successful ony because they buy cheap stuff overseas and use cheap oil to get it here and sell it for almost nothing. Certainly if this were WalMart's only trick, then his prediction of their demise would probably be accurate. But in reality, WalMart has many different tricks and one of them is mastery of the supply change. And in a world of rising gas prices, with a little ingenuity and flexibility, WalMart might be best positioned to minimize transportation costs and stay ahead of competitors.

Even with some reliance on bias rather than facts and math, this is still a very important book and brings up great points that we should all consider deeply.