Arbor Update

Gas prices rise, Michiganders miss the point?

23. March 2005 • Murph
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Tuesday’s Detroit News had a nice trio of articles on gas prices, including tales of irrational action on the part of both the “average driver” and at least one Michigan legislator.

Michigan gas prices his record high; no relief in sight notes that the statewide gas price average hit $2.136/gallon on Monday, a (non-inflation adjusted?) record high. High gas prices curtail spending discusses the reaction to this,

Record gas prices are siphoning money out of Metro Detroiters’ wallets that could be spent at restaurants, grocery stores or other businesses.

Michigan drivers are paying about 40 cents a gallon more than a year ago. Most people can’t easily cut back on driving, leaving them little choice but to trim other spending.

“Higher oil prices act like a tax on consumers,” said East Lansing economist Patrick Anderson. “They have less money after they pay their fuel bills to spend on other things.”

The article comments that consumers have “no choice” but to keep buying the same amount of gas, dismissing discussion of alternatives,

Families on tight budgets have no choice but to cut back on other spending when they pay more to gas up their cars. But, in contrast with the oil shortages and price spikes of the 1970s, most people are able to get by without changing their lifestyle, said Central Michigan University economics professor Phil Thompson.

According to Troy legislator supports limit on gasoline sales tax, Michigan Representative Gosselin (R-Troy) has a plan for helping consumers out. Not by supporting mass transit, compact development, or better fuel efficiency, of course, but by capping the amount of sales tax collected on gasoline:

Under the proposal, the sales tax could only be collected on gasoline that costs up to $2.30 a gallon. If the price moves higher, the 6 percent sales tax would not be collected on the excess.

“We as lawmakers cannot control OPEC or the price of crude oil. But we can control the sales tax on gasoline,” said Gosselin, a Troy Republican who paid $46 the last time he filled up his sport utility vehicle.

How would Gosselin feel about more long-term fixes, like mass transit and changes to land use? The DetNews voter guide from last fall notest that he’s against them:

“Michigan needs to spend its road tax dollars more wisely. We need to stop stealing 10 percent of gas tax and license fee revenue and giving it to wasteful mass transit systems, which are often corrupt as well!”

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1. (Gosselin is also the Rep. who brought a resolution recently to display the Ten Commandments at the State Capitol, and who, in 2001, sponsored a bill to require that textbooks sold in Michigan that discuss evolution also discuss intelligent design as an equal and competing theory. But those aren’t relevant in this situation.)
      —Murph    Mar. 23 '05 - 10:37PM    #
   
2. Murph, A year ago this past Nov. I saw this high gas prices coming so I bought a VW that burns diesel fuel. I had found a place on M-52 and Pleasent Lake Rd that sells Bio-diesel, which I have been burning ever since. It’s mixed with 20% soy oil. It’s much cleaner burning then regular diesel and I get from 45-50 MPG with it. I really wanted to buy an american made car with a small diesel like I’ve heard about in England, but you can’t get them here yet. Fords make them and they have great milage too. I guess the american people will have to wake up soon or continue to pay more to drive. If the prices continue to go up which they will, even if the government lowers the taxes, it will force people to do something about the consumption of oil products. Fuel cost many more dollars in Europe as they have much tax built in and I hear they build the roads there with better materials so they last much longer then here. Every time I go to a store to buy something they always try to put the stuff I buy in a plastic bag, but I won’t take them as they are made from petroleum. I won’t even buy milk in plastic any more either. It’s getting harder to buy food stuff that’s not in plastic. This country wastes so much natural recourses it makes me sick some times just thinking about it. Looking forward to reading what others have to say. Thanks for posting this story.
      —Bob Dascola    Mar. 24 '05 - 03:59AM    #
   
3. Bring on $4 per gallon! The sooner the better.
   
   World oil production may have already peaked and we are in for challenging times (understatement of the millenium.) The sooner we see the urgency of this situation, the more likely we’ll be to come out the other side of it. Period. The question of survival is going to eventually creep very close to those of us who haven’t had to face it up to this point.
   
   In spite of all the other challenges that we face (local, state, and federal budget deficits, for example), I think this community has the potential to make the necessary changes to give ourselves a shot at holding off the coming strife.
   
   Google ‘world peak oil’ and start reading up on it. You’ll see the dire predictions and the list of cascading effects as well as thoughts on topics like dieoff and the prospects for endless war. Don’t let yourself dismiss it all reflexively! We all need to face up to this new world we’re about to enter so we can take positive action immediately, not deny and debate while our last opportunities pass us by.
   
   And get used to hearing this kind of stuff from me. Before long I’ll have you convinced that Kermit Schlansker is Nostradamus.
      —Steve Bean    Mar. 24 '05 - 01:25PM    #
   
4. Bob, is the bio-diesel at 52 and Pleasant Lake the only place in Washtenaw? Seems unfortunate to have to drive 20 miles each way to fill up. I’m curious as to how long gas prices will have to hold up at a stretch to induce real behavioral change – if they stay high all summer and then dip back below $2 in the fall (as the DetNews articles suggest they will), will people see it as a temporary thing? With oil prices high at the same time that interest rates are going up and Michigan has the highest unemployment in the US, do people have the ability to move closer to jobs?
   
   Sure seems like an excellent time for AATA to, say, start running commuter service to all the towns within 20 miles of here, and a line to DTW. I remember hearing (a year and a half ago?) that AATA wanted to run direct lines to Plymouth, Milan, Chelsea, and that it would be self-sustaining at $100/month passes for 40 people on each line, or something like that. 40 miles round-trip * 20 work-days/month means folks would break even just on gas cost at 8 miles/$, meaning that we’re almost to the point where somebody getting 20 mpg would be better with this service than buying gas, let alone insurance/maintenance/depreciation . . .
   
   Last I pinged them to ask, though, AATA said they were stalled trying to acquire highway coaches to start the service.
      —Murph    Mar. 24 '05 - 02:41PM    #
   
5. ...I hope that’s one of the Dascola brothers, responsible for the best haircuts in town…
   
   I have a stick shift Tercel that gets about 30mpg (probably a little less since the front end is now, shall we say, accidently less aerodynamic), and I’ll say that the increase in gas prices hurts me. I have to drive to Ypsi and back four times a week, which does suck down the gas. My other option is, including the necessary transfers, two hours on a bus each way. It’s just not feasible. I’m willing to take the bus (or ride my bike) for inside Ann Arbor transit, but when people have commutes, it’s hell on ‘em. And sure, this’ll motivate others to make better life decisions about where they live and what kinds of cars they have, but it’s also a pain in the ass for all of us living on a mixture of student loans and whatever we can scrape together. And it is money that won’t be spent on restaurants or beer or shows… Just wish there was a way to impact those with more money more, and leave us poor folk out of it…
      —js    Mar. 24 '05 - 03:40PM    #
   
6. That’s something I’ve been wondering about. Would it be feasible (politically, logistically, whatever) to ratchet up the gas tax, but then have a refund for folks earning below a certain threshold? Anybody know of any initiatives like this?
      —Joy    Mar. 24 '05 - 05:27PM    #
   
7. js, I’d definitely be happy to see express AATA service to Ypsi as well. Just Blake -> Ypsi transit centers with no stops in between. That would ease things at least a little.
   
   From inside a two grad-student-tuition-paying household, I can definitely say that I feel your pain. (My other browser windows right now are displaying student loan info and credit card statement. Fun.) To some degree, though, I’m convinced that the long-run consequences of high gas prices (and the land use they encourage) are better than the long-run consequences of low gas prices (and the land use they encourage). Assuming, that is, that those of us struggling now don’t wipe out before beneficial change is experienced.
   
   I’d say that long-term high gas prices (I’d say staying about $2 for at least a year) will make people in the outlying communities more interest in commuter transit to A2, people in A2 more interested in commuter transit to Detroit and more interested in transit within A2, companies more willing to look at office space downtown than in Scio or Pittsfield (trading higher rents for lower transportation costs), and homebuilders less eager to throw up houses in greenfields (since construction anywhere suffers from increased material costs and construction in greenfields suffers again from homebuyers eyeing the commute cost).
   
   Of course, if demand for non-car-dependant housing is not met by increased provision in appropriate places, then the shift in demand causes additional problems…But, at that point, I suppose I’ll just have to rely on my self-righteous fervor to keep me warm.
      —Murph    Mar. 24 '05 - 05:58PM    #
   
8. Joy, I don’t know of any such program, and I don’t think I’d support it, either. I think a better way to accomplish the same thing would be to ratchet up the gas tax, but then provide tax relief on other things that are regressive so that, in general, the tax burden on the least-able-to-pay remains the same, but you’re mitigating the tax burden while still providing the incentive to change behavior.
      —Murph    Mar. 24 '05 - 06:04PM    #
   
9. Murph- long-term, I agree with you. Short-term, I think that low-income people might not be able to change their behaviors, even if incentivized with high gas prices. They’ve got the sunk costs of the vehicle they already own, or they don’t have viable transit options.
      —Joy    Mar. 24 '05 - 07:13PM    #
   
10. True. So how do we move from here to there? Hope GM and Ford go the rest of the way under, opening market share for used cars so that these folks can sell their vehicles? Massive spending on transit?
       —Murph    Mar. 24 '05 - 08:39PM    #
    
11. Murph,
    
    I realize your questions are probably rhetorical and possibly facetious … but anyway. If GM & Ford go under, Toyota will pick up the slack. According to the auto execs, a big part of the problem for their supposed inability to compete is legacy costs (pensions, health care). So if those costs push them over the edge, someone will by them and continue to meet the demand for new cars… Unless some element or elements of new auto production becomes insanely expensive (energy, steel, petroleum, aluminum, etc.) ... making older cars more attractive investments.
       —Scott    Mar. 24 '05 - 08:43PM    #
    
12. Yes I’m one of the Dascola Barbers, in fact I’m the last one still practicing. So who are you js? I’m not up to speed with nicknames here. Thanks.
    As for the Bio-diesel, yes, right now it’s the only place to get it, but I heard that Meijers was suppose to be selling it soon and I’m not sure which one, but it would come from Wacker that’s on 52. I just happen to drive by there once a week on my way to church in Manchester, so it’s no problem to fill up. I drive about 500 miles a week as I live out in the green space in Grass Lake township in an 150 year old house we fixed up. That’s why I got the diesel burner in the first place. I agree about gas going up to $4.00 a gal. Lets get it started. People need to see that the oil is running out and if the demand from the buyers for better milage car is there then the suppliers will make them. The city gets all it’s bio-diesel from Wackers as they are the only ones in this part of the state that is mixing it. I think in the summer I’ll be able to get 50% soy. It’s very tricky with cold temps to keep from jelling. I also could burn re-fry oil like some UM students set up for the U. They take all the used re-fry oil from the dorms, filter it and the U burns it in there tractors and diesel lawn equipment. They say it smells like french frys. Very clean burning too. When push comes to shove some thing has to chance and the sooner the better as far as I’m concerned.
    Things are a mess in the world of high finance anyway. I think the dollar value has fallen because the Government has borrowed so much money to keep things running, that some day soon the S___ is going to hit the fan. Everything has gotten out of line and this Social Security thing is going to make a real mess if the Pres. gets his way. Don’t stop writing e-mail to your elected officals in Washington, they need to hear from all of us.
       —Bob Dascola    Mar. 24 '05 - 09:34PM    #
    
13. Bob- My name’s Josh, and I come into Dascola’s maybe once or twice a year. Partly because I’m too poor for haircuts, and partly because, well, I look all right in long hair. Usually Don (is that his name? Looks kind of like Dom DeLouise) cuts my hair. A longish Princeton, to be exact.
    I can still remember Ernie, though, and my friends and I used to chuckle over getting our hair cut by someone smoking a cigarette…
    Murph- I was looking for, and can’t find, the Consumer Reports that talked about emissions and cars segmented for demographics. Poor people tend to drive the oldest, most polluting cars. In a time when GM is trashing their electric cars, it’s kinda a shame that no one can get more efficient cars to people who need ‘em most… But hey, that’s a free market for you…
       —js    Mar. 24 '05 - 09:50PM    #
    
14. Scott, yes, facetious. I know, though, that steel costs are going up fast, largely due to Chinese demand – construction costs are ticking upwards at a visible pace, and developers who figured their numbers out a year ago are having to revisit and sweat over them. I don’t know how much the price of cars is affected by the price of steel relative to the amount that the price of condos is affected, but that might start to push America towards lighter cars even if fuel-efficiency concerns don’t? Maybe we need to take a cue from the German manufacturers and start reclaiming, disassembling, and recycling old cars.
    
    Bob, you’re not far from where I grew up – Sylvan Township, by the entrance to the Proving Grounds, also in a 150-yo farmhouse. (My parents are now on the second complete round of mostly DIY remodeling since I moved in. They now mostly advise against buying “fixer-uppers.”)
       —Murph    Mar. 24 '05 - 10:19PM    #
    
15. I covet your biodiesel VW, Bob. I looked into getting one, but was not in an area with a filling station. When using fryer oil, does the oil have to be processed with lye?
    
    I met a guy who runs his ‘84 Rabbit on fryer oil once. He gets his oil from a donut place and claims the exhaust smells like fresh donuts.
       —Hillary    Mar. 24 '05 - 10:43PM    #
    
16. Hey…Bob – good to see that the link I sent you to this site paid off! :)
    
    I’m constantly amazing how much people don’t consider the price of gas in where they choose to live. I have friends who will choose to live in an apartment a half hour out of town because it is $100 cheaper, and it will never occur to them to factor in car costs. Even if you just factor in gas costs at $2 a gallon you don’t save anything… but if you add in car buying and fixing it is significantly more expensive. Ah, the kind of math I WISH they taught in high school.
       —Lisa    Mar. 25 '05 - 05:53AM    #
    
17. Lisa, Home Location Economics?
    
    There is also the problem of the two+ job household. Even if you can find a home close to your job, you’re almost guaranteed that your partner will have to commute. In NJ, we lived in two places, picked so that, at the time, Cara could walk where she needed to go except for maybe once a week. At the first of those locations, though, I had a 30-mile commute to my internship, and, at the 2nd, I had 15 and 25 mile commutes to my jobs. (Though managed to arrange carpools for 3-4 days/week.)
    
    With fifty years of job suburbanization, I don’t know if that’s something that’s going to be fixable very soon. Both the jobs and the housing needs to move back into closer proximity to everything, and pedestrian and transit amenities improved wildly . . .
    
    And now I’m thinking off on a tangent about the Big Bang and the expansion of Detroit.
       —Murph    Mar. 25 '05 - 01:51PM    #
    
18. Ok Josh. Glad to meet you here.Stop by some time to say hi and then I’ll know who you are. The guy that works for me is Ron. He’s been with me for 17years now. He say’s it’s the longest he’s ever work for anybody. Guess he likes it. I know Lisa as she was the one that put me onto this web site, thanks Lisa. About the re-fry oil, I know that it has to be filtered really well and because it makes it hard to start the diesel you have to have two tanks, one for Refry and the other for regular diesel. When you first start up, your on the diesel, then switch over to the refry oil, and when you get close to where your going before shut off you switch back. Plus the refry tank needs to be heated as well as the fuel lines. On mine the fuel filter is heated which makes it start easier with very little smoke. Without the turbo charger it would be a slug, but it runs so well I don’t know why I didn’t get one sooner. This high cost fuel problem isn’t go to leave any time soon. There are many factors involved, but the USA is using more then anyone and China is catching up to us fast, which means the price will continue to go up. Maybe someday we can get a car to run on garbage like the “Back to the Future Car”. Only a dream though.
       —Bob Dascola    Mar. 26 '05 - 03:40AM    #