Prius Time

Yesterday morning driving to work I passed my regular Chevron station, which is near the campus. Premium was $3.09.9.

At lunch, I came back to fill up. Premium was $3.15.9. I drive a Mercedes SUV and I love it. It burns premium. I slid in my Chevron card, spun off the filler cap, took the nozzle, selected Premium, started to fuel, and made a decision.

My next car is going to be a Prius.

The price of gasoline is going to keep going up. The consumer, who is totally captive to the industry, is going to keep paying the price, whatever it is. The industry is going to keep raising the price of gasoline, without regard to supply and demand. The industry will insist to the media that price is set by supply and demand, and added factors like converting from winter to summer “mix.”

Conversion from winter to summer mix is the industry’s explanation for the current spiking prices, which in San Diego have driven the price up 14 cents a gallon in the past week. I don’t believe that explanation. I don’t believe it because the United States lives on an ocean of gasoline. No external force is powerful enough to raise or lower the level of an ocean by 14 cents in one week. I believe gasoline prices will continue to go up, year by year, according to a formula agreed upon by accounting and marketing, that will always leave the lowest price per gallon a few cents higher than it was a year ago. You see the same formula at work in supermarkets.

I believe the formula is based on how long it takes to condition the consumer to paying the new, higher, base price. Consumers will be pleased to see gas prices drop in April or May and may not even notice that the base price is a penny or two a gallon more than it was in November. It may take three or four years of this steady ratcheting to get the price up to $4 a gallon. But it will get there.

I decided, standing there at the Chevron pump yesterday, as a driver, who must drive, to be as small a part of the ratcheting as possible. It is the consumer’s only weapon against industry greed, and government indifference to such greed. I love that truck, and I would much rather drive it than a Prius. But not in the oil industry and governmental environment of the near and intermediate future.

New York Times columnist Thomas Friedman has been writing about cutting back the nation’s oil dependence for years. Many times he has argued for smaller engines using new technology. I appreciated the argument but laughed at it at the same time, because it was never going to happen. Certainly not the Bush administration, but no doubt no other presidential administration, is going to author and enforce new engine technology mandates that would negatively impact the oil industry. Auto makers might eventually be voluntarily agreeable to it, but only when such an engine became a good business deal, and gas may hit $7 a gallon before that starts to happen.

For me, the last straw was Chevron premium at $3.15.9 a gallon on March 1, 2006. I am the only one who can do anything about this, and I can’t wait to see the beloved Mercedes go. Anybody want to pick up the last 11 months of a lease?