22 April, 2006

The law applies, but...

Some interesting news items on gasoline prices.

Everyone here in the States is aware that the price of gasoline has gone up. After all, we Americans have a not-very-realistic approach to transportation; the lack of public transportation means we have to rely on others. Yesterday's Washington Post Online had an article (free registration required) explaining that refining capacity is down 5% from this time last year, thanks to longer-than-expected rebuilding after Hurricane Katrina, and maintenance on some refineries that had been delayed in order to avoid an even worse spike in prices. A nice graphic accompanied the article. In addition, government regulation banning a gasoline additive means the refineries have to empty their stocks before switching to a new formulation. Basic economics at work; diminishing supply increases the price.

The front page of yesterday's News and Observer contains an article titled Gas price misery sets in. An accompanying figure shows that gasoline usage went down after hurricane Katrina. Consumption had increased steadily from 10.49 million gallons in January 2005 to somewhere above 12 million gallons in August 2005. After that, it was downhill to about 11 millions gallons for several months; consumption rose slowly until January 2006, when rising prices prompted a tumble 10.53 million gallons. Again, we see the elementary economics at work; rising prices lower demand for a product.

...Or so you'd think. Either North Carolina is unusual, or there is a tradeoff going on. NPR reported yesterday that sales of gas-guzzling Hummers have more than doubled since last year. I myself have noticed that higher gas prices haven't prompted highway drivers to observe the speed limit; supposedly, every mile per hour faster than 55 contributes to a 15% loss in efficiency. I look at these SUVs flying past me at 75 or 80mph and ask myself if they aren't the ones complaining the most about gas prices.

I confess that I bought a new car last week, a 2006 Saturn ION. Its highway performance so far has been 35mpg, not too bad. It's almost as good as my old car, a 1996 Saturn SL which somehow manages around 42mpg. I'm still driving the SL, but after 10 years I feel as if I should have a backup. The ION is a nice little car, too; the interior is something I really like.

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