by Seth Luxemberg
Which sounds more appealing? Sitting in a car in rush hour traffic inching your way to work, or cruising to work on your bike with a gentle breeze in your face waking you up and getting you ready for the workday? Perhaps it’s an e-bike to give you a little boost as you go up hills and keep you from arriving to work sweaty.
Taking public transit, walking to work, working from home, carpooling, driving electric cars, biking, e-biking, all are all part of how we can destroy demand for oil and improve our lives, making gasoline cheaper, and reducing our carbon emissions.
In her excellent article in a recent issue of The New Republic, Reducing Our Reliance on Oil Will Increase Our Quality of Life, author Kate Aronoff makes the case that demand destruction can be fun. Biking to work instead of driving in rush hour sounds like fun to me!
Based on its analysis of the historic dynamics of oil demand/price, Skibo Energy has developed the concept of Rapid Substitution. It is a strategy of actively reducing oil consumption more rapidly than oil producers can reduce production.
Essentially a process of continuous demand destruction, Rapid Substitution would crash the price of oil, saving consumers trillions of dollars while generating revenue that the government could re-invest in supporting sustainable systems.
Demand destruction requires the right policy mix. To take one example, cycling to work will only become widespread with the right combination of protected bike lanes that makes the average person feel comfortable biking.
In her article, Aronoff draws on a report by the Climate + Community Project’s Green New Deal for Transportation, which outlines a set of actionable policies required to destroy demand. Their recommendations include measures such as improved public transportation; electrification of privately-owned, freight, and publicly owned vehicles; and funding for improved walking and cycling infrastructure. To take one example, the proposed E-BIKE Act would cover 30 percent of the cost of an e-bike, making them much more affordable for the average person.
All of these policies will contribute to making gasoline cheaper as we transition away from gasoline. The reason is simple, but often overlooked. Lower demand for a product makes that product cheaper. Every individual who bikes to work instead of driving a gasoline-powered car means that there is one less person bidding up the price of gasoline.
When enough of us stop bidding up the price of gasoline, the price will crash. Oil producers will try and decrease production, but it is not so easy to stop and start production, so most will continue to produce even as prices drop. As one oil expert observed in a 2020 analysis at the Wharton School of the University of Pennsylvania titled Oil Price Shock: What It Means for Producers and Consumers “capping an oil well is not like putting the cap back on a ketchup bottle.”
Lots of people like to drive, but almost nobody likes sitting alone in their car during rush hour. As Aronoff points out, walking, cycling and e-biking are just more fun ways to get around especially during rush hour. With the right policy mix, we can destroy demand for oil, crash the price of oil, and have fun getting around.