Energy Prices and Standards of Living.

by w3woody

Obama Likes High Gasoline Prices, But Won’t Admit It

But it’s not just Obama; much of the elite would prefer higher energy prices because it “solves” a number of “social problems” which the elite rail against. For example, higher gas prices reduce driver miles on highways, which in turn reduces government responsibility for creating fast and efficient highway transportation corridors. And this is important not because it reduces pollution but because it forces cities that are compact along certain transportation corridors: because at least one half of a light rail trip is typically by foot, it forces city development into a more traditional “ring” development pattern with an inner core, and concentrated development patterns around each of the rail stops, or with well-planned “park-and-ride.”

Increased fuel costs combined with an emphasis on light rail and a de-emphasis on freeway development, in other words, tends to create a much larger exurban ring which is more expensive to get to, in terms of time and fuel. It creates, in a sense, a tax on living in a sprawling suburban house while forcing property taxes on those suburban properties to subsidize light rail transit which in theory will make it harder and more expensive to live in those suburban houses.

Now some people reading this may be thinking “this is exactly what we need!”

California Zillow Home Value Index

Sure, but think of the consequence: if it is more expensive to have one particular (and demonstrably desirable) lifestyle than to have another (and demonstrably less desirable) lifestyle, basic economics will dictate that only those with money will live in that particular desirable lifestyle. If we then limit the supply of that lifestyle and subsidize the creation of the other mode or lifestyle, supply and demand will assure that the limited but desirable thing will become even more expensive.

Eventually you will see a situation where only the rich can afford to live in a suburban track, while everyone else is forced into compact urban apartments.

This is in fact the reality currently experienced in San Francisco, Los Angeles and increasingly in San Diego. In Los Angeles county median housing prices are around $383,000, which assuming a 10% down, means you need a monthly salary of around $9,000/month, or a household income of $108k/year–an amount which can only be afforded by around 16% of the population in an area where the median household income is around $48k/year.

But then, the fewer cars on the road, the better the driving will be for those who can still afford to drive. The quieter the suburban neighborhoods for those who can still afford to own a home.

I have a theory that the standard of living has increased over the past 2,000 years directly because of the decline in the price of energy. When “energy” was derived from tying a donkey to a wheel and forcing him to turn a grinding stone, assuming the donkey can output around 1 horsepower (or around 745 watts per hour the donkey runs in a circle), the total cost of power per kilowatt/hour is the cost of buying a donkey, keeping him alive, providing him shelter, and hitching him to the equipment to turn.

And I guarantee you that was a lot more expensive than the average of 8-12 cents/kilowatt hour many people pay for electricity today.

Cities in medieval times were compact because people needed to huddle together for protection behind a city wall, because transportation costs were prohibitively high for the average person: people walked because they could not afford to keep and board and maintain a horse. And given that people tended to spend an average of 5% of their day in transportation costs (source), this implies a city which can be traversed on foot in less than an hour.

Only the wealthy could afford a home outside the city wall on a sprawling estate: because the cost of applying justice across a wide expense is also limited by transportation costs, to own a sprawling estate means employing your own protection, since the constabulary would probably have to arrive on foot as well. So the cost of living in a modest home in the countryside was–well, only the kings and lords could afford it.

Today a gallon of gasoline packs 33 kilowatt/hours of energy, or around the amount of energy expended by running one horse for 44 hours. Compared to our medieval ancestors, we expend unimaginable amounts of energy just driving at unimaginable speeds to a sprawling complex of unimaginably large and wealthy homes, stopping by unimaginably well stocked food markets.

We have a much higher standard of living, in terms of square footage per person for living space, in terms of calories consumed, life expectancy, time spent on leisure, or just about any other imaginable metric than our medieval ancestors. And all because of cheap energy.

And making energy expensive rolls this all back.

Some may want to roll the clock back: some suffer from the mistaken assumption that our ancestors, even though their lives were dirty and mean and short, were somehow “better off” than we are today. Bullshit. And let me be clear: my native american ancestors (many of whom are alive in the 805 area code) did not live as “one with nature” because they were somehow superior; they were closer to the dirt because they were dirt poor. You don’t voluntarily walk around with nothing to cover yourself than an animal skin on a cold California winter because of some sort of moral superiority; you do it because you have nothing else. Just as you don’t live in a mud hut scrabbling to survive by pulling edable weeds from the ground because of respect for nature; you do it because you don’t have any other choice.

And sure this means you’re probably in better touch with nature than modern man picking up some boxes of frozen TV dinners from the grocery store, but that’s because you have to be: it’s either being very aware of your surroundings or dying; there is no third choice.

Just as if you live in a war zone, you have to be very aware of your surroundings as well–though there isn’t countless new-age books printed on the moral and ethical superiority in living in a war zone amongst violent neighbors seeking to kill each other.

My theory is that the elite want energy prices to go up. They want to roll the clock back to a time when only medieval lords could afford sprawling estates in the countryside. They want to subsidize mass transit so that the mass of people can be kept within the city walls, so as not to pollute the countryside. They want to segregate “us” from “them.”

And making it more expensive to drive; well, that’s just step one.