What Happens When Gasoline Exceeds US$7.00 Per Gallon?

MSN MoneyBlog man Charley Blaine has a very scary thought. Extrapolating from a projection by Goldman Sachs analyst Arjun Murt, he details a few key implications of US gasoline prices exceeding 7 bucks, inside two years.

Though more welcome scenarios are also plausible, it's worth pondering the secondary impacts suggested for the 7-buck gas outcome. This goes way beyond "Should I ride the train instead."

Will there be any U.S.-based auto manufacturers left? The answer depends entirely on how fast they can transform their product lines. Chrysler is in deep trouble already. That probably means more stress for the Midwest.

Will there be any domestic airlines left? The so-called legacy airlines (American, United, Northwest, Delta and Continental) would either try to combine into one big carrier or simply disappear. They're having serious troubles surviving as it is. This means big troubles for cities where these airlines operate hubs that generate thousands of jobs like Atlanta, Cleveland, Newark, Houston, Chicago, Denver, Dallas, Memphis and Minneapolis-St. Paul.

How will big convention cities survive? Places like Las Vegas, New Orleans, Atlanta, Chicago, New York, San Francisco and Houston have thriving convention industries, all built around the capacity of airlines to transport conventioneers to and from the destinations relatively cheaply. Emphasis on the word "cheaply."

How will tourist destinations like Florida or Hawaii cope? Add to that places like, say, Williamstown, Mass., whose Williamstown Theater Festival is a big draw, or Ashland, Ore., home of the Oregon Shakespeare Festival. They're not close to major cities.

Here's a future puzzle. Write down the cities Charley mentions. Circle, in blue, the cities facing a water shortage; red, those at increased risk of hurricanes; black, those likely to experience severe job losses.

No away from it, is there?

That transition town idea is going to look pretty attractive in a few years, if this is indeed the future we are heading toward.

Our two cents:-

End times for snowmobiles, 100 HP power boats, and off-road vehicles. Trailering costs alone would do them in.

Regional "destination" shopping centers - RIP.

Elected officials tripping over themselves to subsidize passenger rails. Puleeeze!

Oil company executives: no fun on that job. Too many Congressional inquisitions.


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Via::MSN, Money Blog, topStocks, "A scary thought: Gasoline at $7.50 a gallon" Image credit::Keetsa Blog, "Liverpool South Parkway station"

Tags: Drought | Green Jobs