The Coming Fuel Crisis

In the summer of 2006, there was a mild gas price spike. It precipitated the sale of the barge-dependent Chrysler Group. Lots sat loaded with big vehicles while Honda's thrifty Civic showed only a two day supply.

But by spring of 2007 nobody was worrying about a fuel shortage. Oil prices had fallen quickly through the warmest winter ever, and struggled to stay above $50 a barrel. With a divided OPEC fuming over low prices, Americans went back to buying SUVs and pickups.

Predictably, oil prices climbed back to the upper $70's for the 2007 summer rush. I don't speak for everybody, but my summer trip to hike the Tetons got canceled.

A majority of today's drivers did not experience the 1978 fuel crisis; gas rationing, hours-long lines, and sometimes near riot conditions prevailed. In areas which had experienced rapid growth since the 1970 census, upon which federal allocation schemes were based, there was no gas to be had. Station operators used graffiti-like plywood-and-spray-can signs mounted on saw horses, crudely communicating: "out of gas."

In one typical incident, I pulled into a station behind the only car at the pumps, what luck! Then he cussed and got back in in his car, pulling out past the small "no gas" placard. I cussed and followed him. When I looked in my mirror, there were at least 20 cars lined up behind me, with more hanging hard u-turns up the street. Every car on the road on that southern California Sunday was using the whole day looking for gas.

I drove about 25 miles, to an area which had experienced net population loss since the census, and fueled with only two other cars at a station with high tank levels.

When I passed the closed station on the way back, it was still closed, but the line extended for three blocks and around a corner. Each driver slowly followed the line to the front, only to find the station closed and repeat the cuss-and-leave maneuver.

Chance favors the prepared, so it wasn't long before dealers were marking up cars based on fuel mileage and range.

Late model Cadillac Eldorados and other gas guzzlers sat unwanted on used car lots: a harbinger of the 2006 SUV/pickup glut. Economical imports sported 30% dealer markups above MSRP. This is how the "additional dealer markup" sticker was first introduced.

To me this illustrates two concepts;

1. our government is not capable of managing any kind of crisis,

2. the typical person has little understanding of his/her environment, creating herd-like behavior at socioeconomic stress points.

Evacuation Drill

At any given time in ordinary fuel markets, a certain percentage of cars are nearly out of gas. Some coast into the nearest station on fumes routinely.

This is a civil defense nightmare at best.

In the aftermath of the hurricane Katrina failure, local officials in Houston staged an evacuation ahead of hurricane Rita. A substantial percentage of cars ran out of gas, dragging outbound interstates to a stop.

This despite contraflow, all four lanes going the same direction, in effect. As hours dragged on, more cars sat idling, eventually running out of gas.

Stations along the frontage roads ran out of product and closed. At one point, almost 100 miles of interstate were dead stopped.

Entrepreneurs set up taco-wagons and porta-poties in the interstate median, ATMs were out of cash

What evacuation drill? This was more like a 100-mile long flea market.

2.5 million people spent 13 hours sitting in their cars as the storm tracked through Beaumont instead of Houston.

If the flow of commerce can be so easily disrupted under relatively normal circumstances, what about when something actually happens?

The global petroleum distribution network is rusting, vulnerable to even the smallest of disruptions. Refining capacity, especially in the US, is stretched thin.

Americans will be shocked if the coming battle for the Strait of Hormuz, a narrow channel along the coast of Iran, through which 60% of the world's oil flows, doesn't go as promised.

I am mystified by the SUV-building US car industry executives who appear not to see $100-plus barrels of oil coming. What were Chrysler brass thinking when they built the unmarketable 2006 "sales bank?"

Our entire infrastructure is designed for cheap oil, it is not necessary to run "out of oil" for a very severe crisis to occur.

This goes beyond no gas at the pump: everything we call progress has its roots in oil. Agriculture today is just a machine that turns oil into food. A vast array of commercial products, including medicines, are made from oil stocks.

The conventional wisdom says "Pickup, SUV, sport, and luxury car buyers don't care about gas money." I say they soon will. If not because of price, then availability. Sometime in the next decade, a fuel crisis will come, as it did after the Vietnam debacle, where spot shortages produce "no fuel available at any price."

Smokey and the Bandit Revisited

Long ago in a galaxy far away, the fuel gauge in a rookie trucker's 18-wheeler stuck on 3/4 full. I mashed the pedal for 1700 miles without noticing, thinking we sure was getting good mileage on this tank.

My Detroit Diesel sucked fumes and I hit the shoulder, rolling to a stop on I-84 near the Idaho-Utah border. My new resting place was 53 miles from the nearest pay phone (no satellite communications in those days), and over 100 miles from the nearest truck stop.

Two 150 gallon fuel tanks sat dry as the Mexican border in July.

My refrigerated trailer held 44,600 pounds of frozen french fries bound for McDonald's outlets in Atlanta. A reefer trailer has its own fuel tank. If that reefer tank ran dry too, my cargo would spoil.

Back then, other truckers routinely stopped to help a broke-down rig. I was lucky, an ancient cab-over Freightliner rolled up to help. The fries arrived frozen and on-time.

My incident is a metaphor for 21st century America: a flying gas tank powered by a blowtorch. One thing goes wrong, we got big trouble.

America smokes 385 million gallons of gasoline every day, just to break even.

If gas reached $6/gal, US pickup truck and SUV sales could be cut in half, from 14% to 7% market share. Detroit automakers would go bankrupt. Five year old Honda Civics would sell for MSRP, as the waiting list for fuel efficient cars reached 24 months.

What keeps this from happening has little to do with OPEC or oil supply. The US dollar is the key here: a collapse of dollar hegemony and the resulting currency devaluation would raise prices on all imports, especially oil.

Today I keep my fuel tanks 3/4 full or better when I'm in Houston.

I recommend cars with large tanks, good fuel economy, and a minimum of 325 miles range.

Chance favors the prepared.

News-Blog Updates on Fuel

10/19/07 Global Car Sales and Oil Prices Rise
Surprise! Record oil prices return.