API Report: Gasoline Consumption Going UP With Higher Prices Highlights The Economic Requirement For Sustainable Solutions To Oil.

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The American Petroleum Institute (API) reports a SURGE in gasoline deliveries at the very time gasoline prices are also surging.

Can there be any better example that the United States must invest in sustainability to break its addiction to oil?

According to the API the delivery of gasoline jumped up 7.3% the first quarter of 2011. This represents 20.5 million barrels per day!

During this same time period the price at the pump was surging toward $4 per gallon.

Why this increase in gasoline consumption at the same time prices are going up?

In economics this is called the “Income Effect.” Two things influence consumption. One is price. The other is income. Basically, the Income Effect is a situation where if you have enough money you will pay a higher price for something you feel you must have.

The good news for the United States is our economy is recovering from the dark recessionary days of 2008. As a country, we have more money to spend.  In fact, more of us have jobs. To get to work we still drive gasoline fueled cars. The net result is that even though we are paying more for gasoline the income effect of employment overwhelms economics of paying more at the pump.

But this is not sustainable. The United States is approaching the point of paying $500 BILLION annually for imported oil! This payment is like a tax upon our economy that impairs our growth. In effect, our addiction to oil places a lid or cap upon our economy’s economic growth potential. We cannot SUSTAIN economic growth based upon ever higher payments for foreign oil.

The alternative is sustainability. The alternative is to adopt new technologies and alternative consumer behavior that offers sustained economic benefit.

Here’s the good news. The higher the pump price the more likely we are to adopt sustainability. The United States has the most experienced free market consumers in the world. IF the American consumer truly believes that this time the price of gasoline will stay above $4 per gallon and is likely to move toward $5-6 per gallon then as fast as you can say “SAVE MONEY” they will begin shifting toward alternative technologies and behaviors.

And when this occurs there will be an ACCELERATION of benefits. Here’s three examples:

  1. Increased Economic Growth. More money will stay in the U.S. because less will go overseas to pay for oil. More money in the economy means more economic growth, more jobs, a return to economic sustainability.
  2. Lower Health Care Costs. Most alternatives to using gasoline are healthier. Lower emissions means lower health care costs. More walkable and transit accessible housing means a healthier lifestyle that can create lower health care costs. It can also mean more organic food consumption because today’s agriculture is addicted to oil also. At some point the higher price of oil will make organic food price competitive!
  3. Jobs. The alternative to buying someone else’s oil is using smart technologies that can be made competitively in the United States. Less oil means more manufacturing jobs in the United States producing the technology alternatives to gasoline.

Bill Roth is the founder of Earth 2017 that focused upon the emerging smart, healthy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.

About Bill Roth

Bill Roth is the founder of Earth 2017, author of The Secret Green Sauce and a nationally-followed contributor to Entrepreneur.com, Triple Pundit, The Green Economy Post and Media Post on best business practices emerging from the smart, healthy and green global economy. He coaches entrepreneurs, business and community leaders on how to grow revenues, profits and jobs by going smart and green.
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