>>China retrenches, commodity prices fall
November 26, 2008, 8:56 pm
Filed under: Events

Last month China’s electricity production fell, for the first time in years. Because American and European consumers have stopped buying imported manufactures, China’s industrial production is off sharply, with shut-downs in steel plants and other metal-smelting operations. To replace the foreign orders, China will pump almost $600 billion into their domestic consumer economy. They can do this more easily than we can because they actually have the cash. When we do a big stimulus package, we have to borrow it. Most of it from China.

One bright spot in all of this is that the cost of important commodities has plunged, and is likely to drop further. Copper and aluminum for electrical wiring, steel for powerline towers, even lead and lithium for whopping big batteries, are all going to be much cheaper for a few years. Now is the time to start building out that new smart grid and ramping up electric vehicle production.

On my way to work this morning I passed a gas station selling unleaded regular for $1.74. This makes me worry that folks are going to climb back into their SUVs. The polls say otherwise: Consumers are saving money everywhere they can now. The AAA forecasts that Thanksgiving travel will be down this weekend: air travel down 7.2%, road travel down 1.4%. If Americans drive over the river and through the woods in the smaller car, maybe gasoline purchases will drop 2% or 3% relative to Thanksgiving 2007.

My advice: Stay home. Watch football. Eat more turkey, and walk it off.


3 Comments so far
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There is only one way to change consumer behaviour in respect to gasoline. That is tax. In countries with significant gasoline taxes, average MPGs are far better.

The other advantage of a gasoline tax is that it is an effective transfer of money from oil producing countries to oil consuming countries. If politicians used this line, along with making such a tax revenue neutral, it should be possible to sell it.

Now is the time to strike however, with $3 plus gas still fresh in everyone’s minds.

Comment by CFE

Agree in principle. It would be impossible to pass a direct gasoline tax in the U.S. A cap-and-auction system for carbon emission permits, vigorously enforced at the point of entry, ought to have an equivalent effect in moving consumers to carbon-neutral or and carbon-reduced fuels.

Comment by Seth Masia

Effective Dec. 9, 2008, the SOLAR TODAY blog has moved to

Comment by Seth Masia

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