Wednesday, June 25, 2008


The Dark Side of Reduced Fuel Demand

Everyone says it’s a great thing that high oil prices are starting to put a dent in demand. Of course, if we are going to have any chance of a soft landing at all, we need to quickly cut our fossil fuel consumption. But we also need to keep this in mind: Modern economies are structurally dependent on high fuel consumption. In other words, by reducing our consumption of fossil fuels, we are helping ourselves, but hurting others who depend on us to consume for their benefit. In previous posts I have made this point, and have used the tourism industry as a case in point. And indeed, just as I said, the tourism industry is now hurting ( Because tourism is basically about moving people, the high cost of fuel is starting to kill off the whole industry. One of the things airlines are doing to survive is cut unprofitable routes. But a route that is unprofitable to an airline may be a lifeline for the tourist destination it serves. As it stands now, the industry will be dying a slow death unless fuel suddenly becomes a lot cheaper.

But directly or indirectly, expensive fuel is going to batter nearly every business you can think of. And people are going to suffer because of that. All the more reason to start restructuring the socioeconomic system as soon as possible.

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