Yesterday CIBC released a sober energy report. CBS News did a brief segment on it:
A few highlights:
Gas prices will soon hit $7 per gallon and that will make driving a car too expensive for millions of Americans, taking an unprecedented 10 million vehicles off U.S. roads over the next four years and dealing another body blow to the reeling auto sector, finds a new energy report from CIBC World Markets.
The report forecasts that continued growing global demand combined with ongoing supply challenges will see oil prices continue to rise and hit $200 per barrel in 2010. This will translate into further pain at the pump for motorists and businesses as the national average price for gasoline will approach $7 per gallon two summers from now.
That’s bad news for most people, but particularly for low-income motorists.
“By 2012, there should be some 10 million fewer vehicles on American roadways than there are today – a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks,” says Jeff Rubin, chief economist and chief strategist at CIBC World Markets. “Many of those in the exit lane will be low income Americans from households earning less than $25,000 per year. At their current driving habits, filling up the tank will have risen from about seven per cent of their income to 20 per cent, an increase that will see many start taking the bus.”
People will stop driving and begin looking for public transportation. Does our public policy reflect this? I see little evidence at the local level. To the contrary, we continue to spend millions on road expansion projects, while threatening to cut basic public transit service. Why will we need more highway lanes if there are going to be fewer cars on the roads? Why are we not spending money on transportation alternatives instead?
Something is wrong with this picture.