An Odd Week for a Futurist
April 25th, 2006
I wrote the last post, “Remember When Gas Was Cheap?” a week ago. I based my predictions on both looking ahead and on research regarding the history of gasoline prices in the United States. In that post I predicted that gas would be $7.33 in April of 2009 and that oil would be at $137 a barrel. More immediately I predicted that when the July 4th weekend came around, the traditional start to summer driving vacation season in this automobile centric country, that the average price of gas would be $3.60.
As almost any futurist will tell you, making specific predictions that are far in the future is much more tenuous than predicting trends, as there are just too many variables that come into play at the micro level. I based the $7.33/gallon on some arithmetic projections made from gasoline price history. The same methodology was used for the July 4th $3.60 price prediction.
When the post was published last week, the first wave of response was that I was nuts to think that gas would be $3.60 in two and a half months. Others stated that they hoped I was wrong. Then all the ‘pain at the pump’ stories crowded the airwaves. By the end of the weekend it felt as though the Future had raced into the Present. Gas had gone up close to 10% nationwide since I had written “Remember”. So, a prediction that days ago startled people was now fast becoming a reality. A futurist struggling to stay ahead of the news cycle? Odd indeed.
As a professional futurist I advise companies, and give speeches on what is ahead, usually in the time frame of years or decades. I usually have to wait long periods of time before there is validation of my predictions. To be just weeks and days ahead is a truly odd sensation. A kind of ‘instant prediction gratification’ if you will. In the very short life of this blog, there has now been two posts that were validated in weeks or days.
Well, let’s see what the price of gasoline actually is on July 4th. More interestingly, let’s see if my prediction of the price of gasoline and its effect on the November 2006 elections proves to be accurate. That would be much more significant than correctly estimating the price of our addiction a few weeks out.
April 25th, 2006 at 7:26 am
David – I guess it’s time to start seriously considering that Hybrid-powered car? I wonder what the data is on increased demand and consideration for such alternatives, especially in recent weeks.
April 25th, 2006 at 10:05 am
Hybrids are great, as they lower consumption. Ultimately we need new technologies and sources of energy as petroleum use is harsh on the enviroment and is a finite resource.
April 27th, 2006 at 10:22 am
hi, just saw the comment about your recommendation from freakonomics. I like their site, and I like yours, just subscribed to both.
April 27th, 2006 at 1:12 pm
Thank you. To be included in the same sentence with Freakonomics is an honor.
April 28th, 2006 at 4:55 am
Excellent blog
April 29th, 2006 at 2:47 pm
David:
Not sure, but it sounds as though your projections might have been some form of linear extrapolation. In the forty years since I graduated high school, I have concluded that life moves in a generally non-linear way. It only seems to move in a linear way for periods and then change abruptly. I have only seen this idea hinted at slightly a couple of places (though I do not normally make a habit of reading a wide range of futurists).
Therefore, I am probably less surprised than you seem to be about the rapid change in the price of energy, i.e. a barrel of oil.
I have really heard very little about what is moving the price of oil on the commodity markets. I suspect it has a lot to do with demand created by the 9-10% annual economic growth in China. Also, demand created by economic growth elsewhere in Asia, United States (and not sure about the rest of the world).
On the supply side, the riskiness of oil supplies is probably also contributing to the current increase in the price of oil.
Who knows how long it will take to increase both production capacity and refining capacity? We need both to increase the supply of gasoline.
April 29th, 2006 at 3:49 pm
Panic and speculation are definitely a factor in the run-up in barrel price. You are most certainly right with your ‘non-linear’ comments. Thank you for your comments.
I disagree with your last statement. If the price of a drug goes up because the supply is less than the demand from addicts, does it help the addicts to increase the supply? Only a slightly harsh metaphor.
April 30th, 2006 at 9:13 pm
here’s a pair of questions about consumption and inelastic demand…
if gasoline was free, how much more would you use?
if gasoline was $75/gallon, how much less would you travel?
not sure there’s a right answer – i just haven’t had the opportunity to ask anyone who’s actually thought about such things…
many thanks,
jim
May 1st, 2006 at 2:21 pm
Jim-
Great questions! My answers: since I live in the city, if it were free I probably wouldn’t use much more. I only drive 250 miles a month. At $75 a gallon I would most certainly drive less.
This leads to the very real and significant question: “At what price would your dramatically cut driving?” I’d bet that the ‘low’ answer for most people would be between $5 and 10$ a gallon.