When gas prices reach the point where lots of people seriously debate whether to drive somewhere, imagine the consequences

[This was written in 2007]

Let’s imagine a scenario where gas prices hit $4 a gallon, then $5, then $6, over the next couple of years.

UPDATE 5-2008: Gas is at about $4 here in the Midwest, and headed up.

UPDATE 4-2008: Gas is $3.50+ now and headed up, or so it seems. When I wrote this article in 2007, I think gas was $3.00. And $4.00 gas seems to be right around the corner.

A price point exists where people WILL substantially modify their driving. We are not there yet, though.

Assume that we DO reach a price point causing enough pain that substantial numbers of us revise out driving habits.

• We’re SO spread out with our suburbs, that we have to drive significant distances to buy anything or do anything. We will Stop making quick and dirty trips to grab a couple of items here and there. We’ll make fewer, but larger, shopping trips.
• The middle and lower middle class will not purchase big cars, SUVs, minivans, or trucks unless necessary, causing great upheaval in the auto industry.
• Much less recreational travel in cars, causing great upheaval in the tourism industry.
• We’ll quit our lower paying jobs that require substantial commutes. Those in the neighborhood will be willing to work there. But to keep qualified people, wages will have to be increased.
• For those who MUST commute (a great number of us), the purchase of highly priced gas will cause a reduction in available money to buy other non-essential goods. This will cause recession in the consumer goods and apparel industries. Furthermore, convenience and luxury items will suffer, like Starbucks Coffee, and fast food.
• Neighborhoods close to urban centers will experience an explosion in property values, and a building boom as businesses and entertainment centers relocate to serve the growing urbanite population.
• The market for home entertainment will expand.
• Prices of suburban homes might plunge, unless they are located close to major sources of good jobs.
• Suburban neighborhood communities that offer recreational centers will become more valuable, while suburban neighborhoods without pools and rec centers will become less valuable.
• Prices of undeveloped outlying land will plunge, as it becomes clear that the suburban housing boom is now over.
• Suburbanites will be unable to sell their houses for a profit, or get second mortgages to pay off debt. Bankruptcies will increase among the middle class.
• Prices of everything will generally increase to reflect higher transportation costs.
• With inflation naturally flows lots of other bad things.

And there you have just a few of the consequences of gas prices that reach the breaking point

Credit to This Diary about the proposed $100 tax rebate for the idea behind this article