$20 a Gallon Gas Not so Bad, Says New Book

Last Updated Jul 23, 2009 5:02 PM EDT

Let's face it, shock value sells, and if you're trying to sell a book in these straitened times, a title like $20 Per Gallon will definitely get people's attention. Christopher Steiner, a staff writer at Forbes, has a new book by that title (#180 on Amazon), and he's firmly convinced not only that gas prices are going up, but that also we'll live better lives because of it. The subtitle of the book is: "How the Inevitable Rise in the Price of Gasoline will Change Our Lives for the Better."

The peak oil arguments are familiar. Although the economic slowdown caused oil prices to decline dramatically, the basic scenario of increasing demand hitting peaking supply will inevitably lead to much higher prices once the recession is over. We've used up half the world's oil, and what's left is harder to find and more expensive to extract. What's more, India and China are motorizing rapidly, and world population is increasing--sure scenarios for higher long-term pricing.

"Any future economic expansion in the near term will mean further increases in oil demand," Steiner writes. "Oil demand has risen--and will keep rising--in tandem with a burgeoning worldwide middle class, the fastest-growing segment of global population." If China gets to even half the U.S. auto density (750 cars per 1,000 people) that means another 400 million cars on the road. And that's clearly not possible given both dwindling oil supplies and the rising climate change chorus demanding that we stop pumping record amounts of carbon dioxide into the atmosphere.

Steiner quotes economist Jeffrey Rubin of CBIC world markets as predicting $7 a gallon gas by 2010, leading to a mass exodus of vehicles from American roads--some 10 million less by 2012. The author traces the average day of "Bill," whose every move puts him in touch with a petroleum product, from his plastic clock radio to his polyethylene shower curtain, oil-based shaving cream and his gas-guzzling Ford Explorer. Cheap oil makes it all possible, and its absence raises the cost of more than just transportation.

So where's the bright spot in all this? Steiner sees several:

· A high-speed rail renaissance, with European-style fast trains in corridors around the country; · Nationwide energy conservation efforts, replacing a century of gluttonous high indulgence. The U.S., with just four percent of the world's population, consumes 25 percent of its oil. Steiner also sees a resurgence of green energy, especially wind, geothermal and (assuming whether or not you consider it green) nuclear power; · U.S.-based manufacturing will have a renaissance, spurred on by the high cost of moving goods around the world, and small towns will enjoy a rebirth; · We'll have fewer cars, and the ones we will have will be electric. He likes Shai Agassi's Better Place model for setting up charging networks (as do I), but he has far more faith than I do in Agassi's concept of battery swapping (I think the prospect of 15-minute fast charging may make that idea moot.

The "Bill" of the future has never owned a car, hardly ever flies, takes trains everywhere, and lives in a Brooklyn apartment with solar panels, a rooftop garden and fuel cells. He lives in efficient urban housing (as do most Americans) and goes to work on a trolley. Is he happy? Is his life easy as it was when petroleum was his unseen assistant? Steiner seems to think so, and I do too.