Jul 02, 2008
SUV factories closing, bicycle sales and train use rocketing, commuter belts becoming "ghostburbs" as residents flock to the inner cities . . . welcome to 2008 America, where soaring oil and petrol prices have triggered a sudden revolution in travel behaviour and a seismic upheaval in the automobile industry.
Four dollars (PS2) for a gallon of petrol may seem like peanuts on this side of the pond, but in the shellshocked US, where pump prices have doubled since 2004, it is proving to be the breaking point for millions of recession-hit households. In March 2008, according to the US department of transportation, Americans drove 11bn fewer miles than in March 2007 - a 4.3% drop, and the first downward trend in 30 years.
As environmentalists quietly applaud from the sidelines, consumers are either abandoning their beloved SUVs for smaller, more fuel-efficient vehicles or turning in droves to alternative forms of transport.
From Denver to Dallas, from Seattle to Salt Lake City, bus and train use is up by 10%-15% on 2007. In cities that have invested in new light rail services, passenger growth is phenomenal - up 35% in Charlotte, North Carolina, and 28% on a commuter rail link between Miami, Fort Lauderdale and West Palm Beach in Florida. Traditionally, the poor, under-resourced relation in the US travel system, public transport is suddenly riding high. "In almost every transit system . . . we're seeing very high rates of growth the last few months," reports William Millar, president of the American Public Transportation Association.
Sales of bicycles and of fuel-efficient motor scooters are also soaring. The latter up by 24% between spring 2007 and 2008. But perhaps the most significant behaviour shift is in consumers' choice of vehicles. After two decades as the American car of choice, the sports utility vehicle has been knocked dramatically from its perch. Sales of these gas-guzzlers, which do 12-15 miles per gallon, have been falling steadily for two years as petrol prices have risen. In spring 2008, they reached a new low, plummeting 35% on the previous year and triggering a seminal shift by the "big three" carmakers in the US.
In May, the chief executive of Ford, Alan Mulally, announced that the company was cutting overall production by 15% and would make fewer SUVs and more hybrids and compact vehicles, such as the Focus, Fusion and Edge. In June, the General Motors' chief executive, Rick Wagoner, announced the closure, between 2008 and 2010, of four SUV and small truck plants and a review of the Hummer - a consumer version of an army tank, reviled by environmentalists. In equally good news for the green lobby, Wagoner announced that production of a plug-in electric vehicle, the Chevrolet Volt, will begin in 2011, with the company aiming to sell 100,000 a year.
Mulally and Wagoner both declared that the shift in consumer preferences to smaller, more efficient cars was "structural, not cyclical". And Ford, GM and Chrysler are now openly engaged in a race to produce the best range of fuel-efficient vehicles. All are designing a variety of hybrid cars, SUVs and light trucks, as well as plug-in electric vehicles and models equipped with advanced petrol and diesel engines. GM, for example, is developing a method of applying the compression-ignition efficiency of diesel engineering to petrol engines, which will improve their fuel efficiency by 15%.
Once these vehicles reach the mass market, the impact on US carbon emissions will be significant. In 2007, most new vehicles sold in the US achieved a mere 15mpg-25mpg, and only 2.2% were hybrids (mostly the Toyota Prius), according to Michael Renner, of the Worldwatch Institute in Washington. But by 2015, hybrids alone are expected to make up one in 10 vehicles on American roads.
While the impact of high oil prices on US consumers is reflected most dramatically in travel and car-buying habits, it is also having a knock-on effect in other areas of life. With pump prices rising almost weekly, polls report that Americans are resigned to living with high fuel costs for the indefinite future. This, combined with the depressed US housing market, is making households rethink another cherished American institution - the white picket-fenced suburban dream home.
For many Americans commuting two or more hours a day to jobs in the city, petrol costs are now matching or outweighing the savings they made by buying a home in the suburbs - prompting a trend back to city centres well served by public transport. As a result, house prices in commuter belts such as southern California have dropped steeply, prompting the media to coin the term "ghostburbs", but are holding up well in inner suburbs and city neighbourhoods. There has even been a mini-boom reported in housing developments around train stations. "The housing crisis and the energy crisis are yielding a re-urbanisation," housing consultant Todd Zimmerman recently told ABC News.
High oil and gas prices are also having a big impact on the presidential election campaign, now in full swing. Energy policy has moved to centre stage - alongside the Iraq war and the economic recession - to reflect voter concerns. Barack Obama and John McCain are battling for the hearts and minds of voters increasingly concerned about the short-term impact of petrol prices on their wallets and the long-term impact of climate change on their children's futures.
Both candidates represent a vast improvement over George Bush, in that they have pledged urgently to implement a federal greenhouse gas cap and trade legislation, and to re-engage effectively in international climate talks. But in recent weeks, the Republican candidate, McCain, has turned rightward on energy policy, calling for a summer suspension of the federal petrol tax and committing to lifting the decades-old ban on states exploring for oil in US coastal waters.
In a Washington Post/ABC poll published on June 17, half those surveyed described high petrol prices as a "serious burden". And environmentalists have accused McCain of playing short-term, vote-getting politics with the future of the planet.
"Some voters will be looking for short-term gas price relief ahead of sensible, long-term policies on global warming, and McCain is clearly making the bet that they will vote for him," says David Sandretti, communications director at the League of Conservation Voters. "But I don't think it will work. There's a good deal of evidence that people see the gas tax holiday as a gimmick, and that they are looking for real, long-term solutions to the energy and climate crisis."
Eileen Claussen, president of the influential Pew Centre on Global Climate Change, and a climate change negotiator during the Clinton administration, says that either candidate would boost international climate negotiations as president because both would work with Congress to pass a cap and trade bill. "Getting the 60 Senate votes required during a recession will be very challenging and will require leadership from the White House," she says, adding that such legislation is needed to show the rest of the world, especially China, that the US is prepared to address its own greenhouse gas emissions.
Getting congressional approval for a post-Kyoto climate treaty would be even trickier, requiring 67 senate votes. But, says Claussen, "with presidential leadership and a good treaty, that would be possible. The differences on global warming between the two candidates will play out on the campaign trail. But the key point is that they both understand the issue, and understand that we absolutely have to deal with it."
(c) 2008 The Guardian
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