Ridership on the MBTA surged 6.2 percent in the first three months of 2008 compared with the start of 2007, a spike the general manager today attributed to "scary" gas prices that could help set an annual record for trips on subways, trains, and buses.

The steep increase in customers put the Massachusetts Bay Transportation Authority ahead of other transit systems, which have seen ridership spikes of 2 to 4 percent so far this year, according to Daniel Grabauskas, the MBTA general manager.

you are the media you consume.

Americans are now paying about 0.60 €/litre for gasoline (yes, 60 euro cents per litre) even cheaper than auto-gas (LPG) here. At such a low price I don't think we can see much demand destruction yet, or that a proper assessment of demand elasticity can be made. On one side it is true that the US has ran an Urban Planing policy for 50 years that took out most of the elasticity on transport fuel demand. But I'm not certain that individuals are left without such options as car-sharing (especially among families) and moving closer to the work place.

A second important note to make is that the Federal tax on diesel is actually higher than on gasoline. This is the most inexplicable energy policy I ever witnessed, for it blatantly fosters energy inefficiency. This fact by itself back Jérôme's (and other folks') proposal of further raising taxes on transport fuel in the US. Making gasoline more expensive than diesel can be an important step towards energy efficiency and independence.


Vencit omnia veritas.

President Mubarak announced last week that civil servants would be getting a 30-percent pay raise to cope with rising food prices.  (Food prices, however, have doubled since January, so 30 percent still ain't cutting it....) Mubarak said in his May Day speech that the budget only had room for a 15 percent increase, but he had sternly instructed his cabinet to "find the resources" enough to pay for the 30 percent.  Mr. Benevolent.

Oh, did I mention that this was done three days before what was supposed to be a general strike over food prices and stagnant wages?  Yeah.

Well, the "strike" flopped on Sunday, and now (Monday) we find out how they propose to pay for it: by cutting fuel subsidies,, raising petrol and diesel prices at the pump.  Except that I'm positive that they wanted to cut the subsidies anyway, and the conveniently timed pay raise is just their excuse for doing so.  They're hoping that shrouding the subsidy cut in a pay raise will avert civil unrest.  (Egyptians don't like having their subsidies cut, and no wonder, given that 40 percent of the country lives on about $2 a day.)

But here's the thing -- the fuel subsidy is really irresponsible.  This is one of the most crowded, most terribly polluted cities on the planet, with some 18 million people and who-knows-how-many cars, probably half of them unroadworthy rattletraps that have been kicked off European roads and re-sold here.  Public transportation exists, but is a disaster.  (The buses literally terrify me.  The subway is great, but really crowded, and it doesn't go anywhere near most of the city.)

So really, Egypt should be encouraging people not to drive, but

And let's be clear what kind of fuel prices we're talking about:  this article (in Arabic) says at the new, higher prices, 95-octane will sell for 2.50 Egyptian pounds, 90 octane for 1.75 Egyptian pounds, and diesel for 1.10 Egyptian pounds.

That's 45 US cents a liter for 95 octane, 32 cents for 90, and 20 cents a liter for diesel.  (Multiply those numbers by four to get the approximate price in gallons.)  Please keep in mind that Egypt is not a major oil producer.  It has some natural gas, but not a lot of oil.  This ain't Kuwait.  (Although this time of year, in my neighborhood, you might not know that.)

This is a dilemma.  Cairo needs fewer vehicles on the streets, it just can't take any more.  Without the fuel subsidies, a lot of people won't be able to afford to drive, or at least drive as much.  But 18 million Egyptians have to get to work somehow, and the public transit system won't cut it.  (Also, the upper class people are terrible snobs, as anywhere, and won't be caught dead even taking a private black-and-white taxi, let alone a bus... and they're the ones least troubled by the fuel-price increase, so they'll still leave the driver sitting outside the coffee shop with the engine running and the A/C on while they're inside getting a latte and a biscotti... assholes.)

Sigh.

Market forces say that when demand is growing, prices will go up, which will encourage new supply to be provided, and some demand to be discouraged. But oil is a very atypical market right now

Take the wikipedia article on Supply and Demand, which sports the "representative" diagram to the right. It does include "diminishing returns" in that the price increases faster than linearly with the supply, but the diagram contains no hint that supply might be effectively bounded regardless of the price. If your mental picture of the price elasticity of supply doesn't have a limit to the supply volume, you won't be able to understand what's happening.

In one of my earliest diaries I put together the following chart (the axes are switched with respect to the WP one, unfortunately)

That supply curve displays both economies of scale and diminishing returns as well as a maximum possible rate of supply (it's a logistic curve). With a curve like that you can see that if demand gets too high, then supply becomes nearly independent of price.

Now, that may spurn new investment in production capacity but investment doesn't instantaneaously result in new production. That may be one of the reasons why the 1970's oil crunch was followed by a supply glut and a collapse of prices in the 1980's: it took about 10 years for both demand to adjust to high prices and for supply to increase.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

I'm reminded of a bumper sticker I once saw on the back of a very "Kerry-fied" car in Tallahassee during the '04 election: "Don't Pray in My School, and I Won't Think in Your Church."

Where's your motherf*%&ing flag pin?

Automotive trends traditionally don't change nearly as fast as fashions in clothing or music. But as sales of new vehicles in April dropped to their lowest level since the 1992, raw numbers also indicated US consumers were -- at warp speed -- foregoing beloved trucks and sport utility vehicles (SUVs) for mid-sized and compact cars and hybrids with better fuel economy.

• Even with gas tax, you would be far from EU levels even a few years ago, and the working poor have cars here too.

• There's always car-sharing.

• Gas prices are to rise whatever you do (due to demand growth against limited supplies, as you say above). So why give all that money to the oil majors and furriners? Why not keep some at home and build an alternative from it (e.g. public transport, at least like New York has it)?

However, you could put more emphasis on compensatory policy advice. Now everybody thinks, extra tax means extra burden, even those people who are just driving an average amount. But it is not about increasing the overall tax burden, so you could present ideas, how to give the money back to the people, so that people who drive less than average could even benefit. This might increase the acceptance among those who are skeptical up to now.

Another issue is of course, why only tax gas, why not heating oil as well?

The US could grow as fast as the Europe or more with a huge reduction in gas consumption... one just needs to change the car fleet, drive less and use/improve the transport system... it will happen...it is our cushion ..it is the only way I see we can keep the economy growing in China, India, South-America, Europe, Middle-east and some parts of Africa with a cosntant supply of oil at around 80-90 mbpd while other transport vectors are implemented.

and that's why the price must reach around 7$ per gallon in the US.

jerome I did the number five years ago but you can crack them now... the saving of a US economy with the same efficeincy that the European..(huge).. and the saving from a US car fleet like the European. Not to mention a US and Europe economy with all the car fleet using the most efficient car.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

Oil nears $123 on $200 oil prediction, supply concerns - Yahoo! Finance

Oil futures blasted to a new record near $123 a barrel Tuesday, gaining momentum as investors bought on a forecast of much higher prices and on any news hinting at supply shortages. Retail gas prices edged lower, but appear poised to rise to new records of their own in coming weeks.

A new Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years seemed to motivate much of Tuesday's buying, although a falling dollar and increasing concerns about declining crude production in Mexico and Russia contributed, analysts say.