Monday, May 01, 2006

The Price of Gas

"The Price of Gas" is actually a great song by Bloc Party, but that's not what I'm writing about. Nope, this is about what everybody else in America is talking about, $3.00+ per gallon gas. People are upset about paying that much. They see oil companies announce record profits and they think something is going on. Maybe price fixing is why the price of gas is so high.

It's amazing to me that people even say that. To understand the price of gas, just look at the price of oil. It's also at a record high. If oil costs more, then gas will cost more. As for the oil companies, of course they are making more money. They are not spending more money to produce oil. So if the price of oil goes up, but their costs stay the same, then of course their profits go up. Way up.

So the question people should really be asking, is why is the price of oil so high? That's a complex question, but clearly a big part of it is that their perceived instability in the area that producues a huge amount of the world's oil: the middle east. In case you didn't notice, one of the biggest producers of oil (Iraq) was recently invaded. The same country that invaded Iraq is now threatening action against Iraq's immediate neighbor and fellow oil-producer, Iran. Maybe, just maybe, that has something to do with the price of oil and thus the price of gas.

It's also funny that Democrats want to attack Republicans on this issue. Now this would make sense if they did it from "we need to stop making war" perspective. Instead they are entertaining the oil company/price gouging angle, mostly because of The President's close ties to the oil industry. That's just sad. You would think that a supposedly "green" party would see things differently. They would point out that the price of gas is not really that high. It was artificially low for a long time, on an inflation adjusted scale. That low price spurred the auto industry into producing gas guzzling SUVs and Americans bought them up. Higher gas prices could mean less gas being bought and thus less pollution.

Of course that's theoretical, and there's been very little real evidence for this. I must admit that it has made me re-consider public transportation. We have light rail in Silicon Valley. There's a station very close to my house. To get work, I could take it through San Jose and make one transfer to one of the other light rail lines. It would cost me $1.75 each way, or $3.50 for the round trip. It's 15 miles to my office, or 30 miles roundtrip. My car gets 31 miles/gallon highway and 22 city. For my commute, it averages around 25 miles/gallon. Thus I use 1.24 gallons of gas. Gas needs to cost $2.83 for it to be cheaper for me to take the train, and clearly it's way over that these days. Actually, you can get monthly passes for the train, for $61.25. If you figure 20 commute days per month and do the above math, you get the break even point is $2.47.

So I should take the train, right? Maybe, but maybe not. There are two problems. The biggest problem is that while there is a station close to my house, the nearest station to my office is 1.9 miles from it. That's a long walk. There is a bus I could transfer to that would get me a little closer, and of course I could take my bike. That all leads to the other problem, the time. It takes 1 hour and 16 minutes for the route described above. That's just train time, assuming everything is running on schedule. That doesn't include the time for that last 1.9 miles. By car, it takes me about 25 minutes to get to work. If traffic is horrible, it takes 45 minutes. It's tough to justify losing 1-2 hours of my day just to save $1 on gas.

So I'll probably keep generating green house gasses and sending my money to big oil companies. Maybe that's why the green-er parties aren't celebrating $3/gallon gas. It takes more than high gas prices to save the environment.


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