A colleague called it a psychological barrier. A hundred dollars for a barrel of oil. For me, it is not psychological, but real. Oil prices have to be paid for in real dollars. If at all it is a psychological barrier, it is one that puts fear and uncertainty into people, investors included.
But high oil prices are not really a bad thing for humanity. Actually, such prices do a world of good for the environment and automotive technologies. They force people to think of things that otherwise get lost in the profligate luxuries of the car. All this may not sound very encouraging to those who have a vested interest in the status quo, but research shows that people will drive less if the price of oil rises even by a few cents per gallon at the pump (in the US).
The good thing about high oil prices is that they will force our governments to spend more time and money on coming up with alternatives. We can thus expect greater attention to better trains and buses, and perhaps, with some good perspective, newer technologies in transportation.
It will probably make more of us walk on some everyday trips. Think of all the benefits from just that outcome: we can potentially achieve the daily prescribed exercise level (30 minutes of walking to take a bus or train. See “Walking to Public Transit“, Besser et al), more attention to problems of pedestrians particularly safety, and pressure on governments to create more walking spaces.
Strangely though, it is the Communist parties in India that are missing the real story. They have taken the somewhat illogical position that raising oil prices will affect the poor. This may be partly true in the case of the vehicle-dependent commuting middle class which now lives far away from workspots due to urban sprawl. (This is the result of exorbitant real estate prices, again, a glaring failure of the communist parties to campaign for affordable housing). But high prices at the pump don’t hurt the poor, who do not have motorised mobility in any case. They also don’t consume much, so inflation affecting non-essential consumption is not their worry.
Our comrades should actually be pleading for higher taxes on fuel, which can then go into improving the systems that I have identified above – trains, buses, trams, walking paths plus cycling paths. In any case, that was the traditional wisdom among the adherents to the philosophy, although decadent capitalist interests are spoiling even those countries by pumping up the car market.
The best example of green taxation, to my mind, is London. The Mayor, “Red” Ken or Ken Livingstone is prising the pounds out of car users’ purses to be used for spanking new and very affordable buses and trains. I doubt if our friends in the Indian communist parties have stronger credentials than does Mayor Ken Livingstone.