A barrel of crude oil was trading at around $48 at the end of last week. For a generous segment of the population, this is good news. Commuters will spend less on gas and have more to spend on, say, the things that Amazon Prime can deliver to their front doors. And, of course, Jeff Bezos will be spending less to make that delivery so good news for him, too, though he probably wouldn’t know how to spend the money.
The relatively low price of oil is a function of increased production in the U.S. This has been achieved through new finds and new methods of extraction. The drilling business is booming, and the United States is now an oil-exporting nation. This means profits and jobs and good news, in general, for the economy.
Environmentalists, however, are not happy about the low price of oil, and the increased extraction of it by a robust industry. For all the obvious reasons. More drilling, more driving, more pollution. Transportation, after all, accounts for about a third of greenhouse gas emissions, and a big part of that will be coming from the tailpipes of vehicles with internal combustion engines.
And then there is the effect of low gas prices on the choices made by American consumers of automobiles.
The undying Puritan impulse in American life has always seen the automobile as an unpleasant necessity. Sort of like the belief that sex must be strictly about procreation. A car should be designed to provide efficient and safe transportation, free of frills and certainly not meant to provide pleasure. High mileage and low fun.
Americans will buy into fuel efficiency when they dread pulling up to the pump they way they do going to the dentist. But when a gallon of gas costs just a little more than a bottle of designer water, they start thinking about something that has some personality and power.
And this seems to be happening now. As Justin Fox writes at Bloomberg:
Furthermore, lower gas prices make vehicles powered by the internal combustion engine—which Volvo recently declared obsolete—more competitive with electrics and hybrids which are, of course, the second choice, behind public transportation, of committed environmentalists. As Greg Ip writes in the Wall Street Journal:
The turn to SUVs and pickups is good news for the traditional manufacturers. Ford, for example turns 80 percent of its profits on pickup sales.
For now, then, it appears that another old American impulse—the desire for bigger and more powerful vehicles—is prevailing over the Puritan insistence on efficiency, safety, and environmental friendliness.
Expect to see a push for high gasoline taxes. And a carbon tax.
Geoffrey Norman, a writer in Vermont, is a frequent contributor to The Weekly Standard.
