10959CIBC World Markets report projecting trend to abandonment of private cars
- Jun 27, 2008A June 26 report by Jeff Rubin of CIBC Wolrd Markets predicts a trend
to North Americans abandoning cars in favour of public transit in
large numbers, via Treehugger and the Wall Street Journal.
The original report in PDF version:
The online Wall Street Journal article:
June 26, 2008, 11:12 am
Oil Shock: Analyst Predicts $7 Gas, Mass Exodus of U.S. Cars
Posted by Keith Johnson
Oil at $135? That was just the opening skirmish in the peak oil
wars. The latest smart money? $200 oil in 2010, with gasoline at $7 a
gallon. And that is going to turn Americans into car-shunning
Europeans once and for allpoor Americans, at least.
Thats the latest gloomy forecast from Jeff Rubin at Canadian
brokerage CIBC World Markets, who just afew months ago figured $200
oil would be a thing of the distant futurelike 2012.
Mr. Rubin laughs off recent attempts to take the steam out of global
oil markets. Saudi production promises of 200,000 barrels a day
doesnt dent the 4 million barrel-per-day decline from aging fields
every year, for starters. And it will just be gobbled up by
increasing domestic consumption in Saudi Arabia, like other oil-
producing countries that subsidize fuel.
So what about Chinas flirtation with market reality by unwinding some
fuel subsidies? No luck in curbing demand or prices, either. Not only
does Chinas recent move translate into $3.25 a gallon gasstill a
steal, relatively speakingits given fresh legs to beleaguered
Chinese refiners whove been operating in the red, thanks to Chinese
price controls. So now they are producing even more gasoline and
fueling even more cars than they were before. The upshot?
Over the next four years, we are likely to witness the greatest mass
exodus of vehicles off Americas highways in history. By 2012, there
should be some 10 million fewer vehicles on American roadways than
there are todaya decline that dwarfs all previous adjustments
including those during the two OPEC oil shocks.
And who will be parking their cars? The 57 million American households
that have both cars and access to something resembling public transit.
Gasoline at $7 begins to approach prices Europeans have paid for
years, meaning that chunk of America will start to act more and more
like Europeans, Mr. Rubin says. Not soccer moms in a minivansoccer
fans, searching for tokens:
Our analysis suggests that about half of the number of cars coming off
the road in the next four years will be from low income households who
have access to public transit. At their current driving habits,
filling up the tank will have risen from about 7% of their income to
20%, an increase that will see many start taking the bus.
Gas prices already appear to be reshaping suburbia. But what Mr. Rubin
is predicting is a far bigger shock to the American system. Europe has
had decades to develop a society based on expensive energy. What will
happen if Americans suddenly are forced to shoulder European-style
energy prices but without the European-style society to cope with
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Montreal QC Canada
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