Tag Archives: cars

$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline will Change Our Lives for the Better — Christopher Steiner

August 21, 2009 By in Books, Essays, Reviews Tags: , , , , , , , , , , , 3 Comments

One major problem of $20 Per Gallon isn’t just the book itself, but its ancestors. Christopher Steiner argues that a) oil prices will rise like an Atlas rocket and b) that such a rise will result in people flocking to dense, urban cities, the return of manufacturing to the United States, and a host of cultural changes. But neither proposition is as certain as he implies, and Steiner comes from a long line of environmental doom-sayers. Books like Paul R. Ehrlich’s The Population Bomb—a best-seller in the 1970s—make Malthusian arguments that have proven wrong over the last 40 years. They predicted catastrophe, not iPods and the Internet.

Still, just because someone was incorrect about a past prediction doesn’t mean that a current prediction will be wrong; there’s probably a name for this kind of bias beyond “boy-who-cried-wolf-syndrome.” But the argument that $20 Per Gallon might be wrong goes deeper, as shown in Tad Friend’s “Plugged In: Is the electric car the future?” from this week’s New Yorker. Friend’s answer is “maybe,” which isn’t much of a surprise given the technological, infrastructure, and economic challenges surrounding electric vehicles. But if oil prices spike high enough, the switch might be painful and rapid—which could drive oil prices back down as demand drops. We saw something similar happen in the summer of 2008, when oil usage plummeted in response to higher prices. And judging by the amount of investment going into electric and hybrid vehicles, it’s not impossible imagine that climbing oil prices will lead people beyond those who want to show their environmental conscientiousness to buy them, resulting in exurban sprawl and a lifestyle not so different for most people, rather than the wholesale urban changes Steiner predicts.

Predictions about the end of the world or drastic changes to it have been so popular that Simon Pearson even wrote A Brief History of the End of the World: Apocalyptic Beliefs from Revelation to UFO Cults, which covers the history of people who predict the end of the world, or at least civilization (so far, their track record isn’t so hot, but many post-apocalyptic novels are fun to read). Steiner is more upbeat, seeing higher gas prices improving the world, and that part is refreshing and makes his work different from someone like Ehrlich’s.

Still, oil prices might not climb all that high in the immediate future. Although Steiner says “We have hit what’s popularly known as peak oil, meaning that global production of crude is at a zenith that will never again be realized,” Friend says, “It troubles [Elon] Musk [founder of Tesla Motors] that while few people know that the world’s oil supply could plateau by 2020 and run out as early as 2050, nearly everyone knows that electric cars suck.” Given the two sources, I would tend to trust the New Yorker’s famously fastidious fact-checkers over Steiner. Still, the Wall Street Journal reports today that Oil Prices Hit 2009 High. Based on this flurry of recent news, is Steiner more right or wrong? It depends on what happens to the market. People who think they know what will happen and bet accordingly will win or lose big. Some will presumably end up demonstrably wrong, like Ehrlich. Steiner cites an airline consultant who says “oil […] is bound to reach [eight dollars per gallon] within three or four years.” I wonder if someone will remember to call him on it then.

So the obviousness that Steiner argues just isn’t there. I’ve come to that conclusion in part because the book doesn’t break new ground or bring enough existing information together to make a compelling and new argument. If you’re familiar with the work of economist Edward Glaeser or writer Richard Florida, both of whom have often been cited in The Atlantic, you know where Steiner’s coming from. Florida even writes for the magazine, while Glaeser contributes to the New York Times’ Economix blog. Too much of $20 Per Gallon is going to be redundant or superfluous for anyone familiar with Glaeser and Florida’s work. To be worthwhile, a book needs to have such depth and such a strong animating idea that it must have hundreds of pages to flesh out its major ideas. Lately I’ve criticized a number of nonfiction books for that failing that test, including Rapt, America’s War on Sex, and The Secret Currency of Love.

In $20 Per Gallon, there’s also a troublesome undercurrent of snobbery that runs through, and a sense that Steiner looks down on the proles who like kitsch and SUVs for reasons other than economics, but those views are cloaked in economic arguments. In an aesthetic sense I’m more or less with Steiner, but he makes poorly supported arguments like this one:

According to some of American automakers’ own market researchers, the type of people who tend to buy SUVs are insecure and vain. They’re people who frequently are nervous about their marriages and uncomfortable about having become parents. They have little confidence in their skills as drivers.

The source for this? Two writers who also have a strong enough point of view to make me doubt their own research: Brian Hicks and Chris Nelder, who wrote Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. As I tell freshmen: you have to go back and find the primary research material if you’re going to cite extravagant or unusual claims. I want to believe Steiner’s argument about people who drive SUVs in part because I don’t, and his argument flatters my own prejudices, which is nice. But the analytic side of my mind doesn’t buy it. He also says that the vast McMansions that were in vogue until February 2009 “will be an entrapment, an entrapment to giant utility bills and the attachment to a dwelling unit that will, with time, become a kind of pariah.” His financial argument is probably sound: spending vast quantities of money on a signaling device like a distant house isn’t playing smart financial defense. I don’t want to live in one. But because of the hybrid and electric car argument above, Steiner might be wrong on the basic affordability of McMansions, even if he remains right in his unstated view that they’re gaudy, ugly, and likely to fall apart.

The basic problem with $20 Per Gallon is that if you’ve read this post and followed most of the links, you now know more about the issue that the book describes than the book itself tells you. Someone would probably be better off subscribing to The Atlantic and The New Yorker than they would reading $20 Per Gallon, since those magazines do a better job of dealing with issues surrounding oil prices and their consequences than Steiner does here. A lot of that work is online. Go find it there. Once you have a map to finding it, you don’t Steiner to do the work for you.

The Reckoning — David Halberstam

March 25, 2009 By in Books, Reviews Tags: , , , , , , , , 2 Comments

David Halberstam’s The Reckoning is too long by at least a third and maybe a half: my copy is a fat mass-market paperback that should probably go on a diet, like the American companies it describes. Learning about the machinations of 1950s Japanese auto unions is both tedious after a time and yet simultaneously lacks the depth it should have. Nonetheless, the book is fascinating mostly because you could take the problems it describes, change some names and dates, republish it today, and find that its issues remain essentially the same. American car companies overproduce giant, gas-guzzling cars and then face problems when competition and market conditions turn against their profit centers. Unions and dealerships make it difficult for such companies to compete. If the major American car companies survive this round of major problems, you can expect the same set of stories in another ten to twenty years.

The book’s many portraits of the intertwining of society and business fascinate. A section on residents of Grosse Pointe, Detroit’s once ritzy suburb, says:

The people who lived in Grosse Pointe were not bored with it, for they knew of nothing else and wanted nothing else. They could not conceive of life being different or better. Billy Chapin—grandson of Roy, the first sales manager of the pioneer Old Motor Company, and son of Roy, president of American Motors—said that the trouble with the awful creamed spinach at the Grosse Pointe’s club was that just about the moment you became influential enough to have it taken off the menu, you found that you liked it.

This piece of writing is brilliant and effective: a generalization rings true in the surrounding context and the anecdote about Chapin shows the community’s wealth and insularity through the microcosm of spinach. Meritocracy hasn’t arrived in Grosse Pointe, or if it once lived there, it has since died and moved out West to Silicon Valley or back East to Boston, where startups congregate Maybe it moved offshore with factories. Wherever it went, it certainly doesn’t live somewhere whose nepotism is as smothered as its spinach.

Others anecdotes and descriptions are less successful. Forty pages later, we learn entirely too much about a manager named Don Lennox, who “[…] simply liked manufacturing, enjoyed making something more than dealing with numbers and paper.” That’s nice in small doses, but the cumulative weight of such observations makes the paperback edition stack up to more than 750 pages including the bibliography. Much of it isn’t directly sourced, but rather narrated like something from a Leon Uris novel.

The sense of heroes and villains could also come from a Uris novel, with the Japanese usually heroes and the bumbling Americans usually not. One American, W. Edwards Deming, is presented in the heroic mode, but the American companies ignore him because they’re too pleased with themselves to listen to his production improvements (contrast that with, say, Wal-Mart, which is so hard to beat because it tries ceaselessly to to lower prices regardless of what its competition is doing). According to The Reckoning, many American companies believed managers to be interchangeable, and

On that subject [Deming] was an angry man. He acknowledged that many important American business educators thought men like him were old fashioned, but he was sure he was right and equally sure there would eventually be a severe punishment for companies that failed to stress quality.

He was right, of course, but that’s much easier to say after the fact when he’s been proven right. How many would-be Cassandras sing their song and turn out just to be naysayers?

The Reckoning could just as easily be called Success is Never Final, since its major theme is that, since World War II, American car companies believed that only broad, flat, and straight highways awaited them. Their attitude and union agreements struck while the good times rolled haunted them and continue to haunt them. The only way to operate at virtually any level, whether as an individual, family, region, or society, is to ceaselessly work toward being the best. But as one achieves that success, the culture underlying it erodes, decadence grows, and soon one’s fatally stricken platform totters.

The bizarre thing about the three American-headquartered companies is that their current problems, as I write this at the dawn of 2009, have been ongoing for 30 years. And they still either haven’t ameliorated their majors problems or are restricted from doing so by their dealer networks and unions. Whichever of those two to three hypotheses is correct, it’s still incredible to consider that such a ridiculous saga continues.

Evidently I’m not the only one who finds The Reckoning depressingly fresh: searching for it and “Halberstam” on Google brings a load of hits relating it to modern problems, like Why David Halberstam’s “The Reckoning” Should Be Mandatory Business School Reading and Halberstam’s “The Reckoning” Still a Must-Read. See a pattern? More generally, Slate’s The Big Money just ran an article called RIP, MBA: The economic crisis has exposed the myth of business-school expertise, the MBA being a symbol of problems with car companies and others, while The Atlantic ran The Management Myth in 2005. The titles of those posts overstate the book’s importance and understate its length—how many must-reads about formerly contemporary issues should really be 750 pages?—but it’s certainly a useful book to skim.

“Halberstam’s ‘The Reckoning’ Still a Must-Read” says that “[Halberstam is widely] recognized for his groundbreaking work, The Reckoning…” Maybe the book broke new ground in 1986, but that it’s still relevant indicates in many ways how far we haven’t come.