Musings on Transportation

Try Making Gas From This!While I do not expect an economic apocalypse anytime soon, or at all, the price of transportation has to go up in the long run. The new oil and energy sources like shale oil, tar sands, and so on, will fill in the gaps of the decline in traditional oil sources. So no oil apocalypse either. But these new sources are a lot more expensive as the law of diminishing returns kicks in. Are you preparing for this?

A personal example is my daughter's ballet classes. It is quite a journey to get there and the cost of the transportation exceeds the cost if the lessons--as does the cost of eating out that day. To reduce the cost we "multitask" and do our grocery shopping at the same time. But what does this trip cost us?

The current mileage rate for business is 56 cents a mile. This includes things like insurance, fuel, potential repair expenses, and depreciation of the vehicle. Our trip to the dance studio is roughly 112 miles. That is a cost of $63 a trip. We make 4 trips a month. We have no plans to change our custom, but as the price of fuel rises .... But until then we may "double down" and actually increase the lesson time.

The business model of Amazon is based on cheap transportation. As the cost rises Amazon will have more and more problems with their margins. Amazon used to be substantially cheaper than their retail competition. As a retailer this was and is cause for concern. But gradually this advantage is eroding. Already most of my Amazon purchases include sales taxes. In California this is 9%. This reduces a large portion of Amazon's price advantage. To get the free shipping on smaller orders one must buy something called Amazon Prime for $79 a year. The rumor is that they hope to raise this to $99. If you want to explore Amazon Prime as an option for your household, click the link below.

I personally have this but have recently removed myself from the automatic renewal of this product. While I am deep in the Amazon "ecosphere," it does not make sense for me anymore. I use the "subscribe and save" option and get monthly deliveries from Amazon. It is slightly cheaper than retail. Mostly I use this option because of the large variety of products not available otherwise.

As the cost of transportation increases, Amazon is going to find it more and more difficult to make money. Delivery to my front door is nice, but will I pay a premium for it? Probably not. As long as it is the same or cheaper I will continue.

Are you preparing yourself for the inevitable fuel price increases? I think that prices may actually drop first as the recession starts and demand drops, but in the long run prices will go up. I would be happy if I believed in the Disneyfied version of the world where future technology makes us all richer in the carousel of technology. Instead we will be like that Disney employee who was unfortunately crushed by the carousel.

We should all consider buying a slightly smaller car, moving closer to our place of employment, or buying a house on bus lines with a garden spot. Yes, I understand that these last two can be mutually exclusive goals. I probably made a mistake in my own housing choices. This is a difficult choice to unravel.

You know your situation best. Thinking about these issues is good. But thinking and not acting may end up being bad. Are you ready?