More Thoughts On $5 Gasoline

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The only conversation that I am hearing lately is about gas prices and what fuel efficient car we should buy. Don't people remember that we are at war and that an historic election is imminent?

It's just one month ago that I released my blog entry called "The Silver Lining to $5.00 Gasoline." That blog post received hundreds of returned emails, comments, posts and references on other websites. It was very exciting and I was very flattered, primarily because most readers found the message uplifting.

It's an unpleasant fact that we are going to have $5 gasoline, (revise that to $6) but the fact that something good will come out of it is even better.

On, June 8, 2008, I received the following email notice from www.CNN.com: "The AAA's national gas price average has reached $4 a gallon for the first time in history."

Well today (June 11, 2008) in Los Angeles, regular gas is over $4.50 in most places with premium gasoline as high as $5.25.

I shared many of the thoughts that were contained in that article (http://is.gd/uRv) with many of the finance professionals who I circulate with. Some felt that the government has so much control over the nature of automobile manufacturing conditions in the United States that nothing can really be done to address the problem. Others absolutely felt that the capitalist instinct of the United States will take over and prevail when it comes to solving the gasoline crisis that is gripping our country.

When I wrote the article last month, gasoline was in the mid three dollars in California. Now in Los Angeles, gasoline has already exceeded $4.50, and $5 gasoline is probably just a couple weeks away especially considering last week's falling dollar, declining Dow and rising unemployment.

Look around. The behavior of Americans is changing at an escalating pace. First take a look at the airlines. They are looking for new ways to create revenue in every way possible, eliminating peanuts, charging for the first bag instead of just the second one. Soon they will be weighing people and charging them by the pound — which would not work to my advantage.

Take a look at the transportation companies such as FedEx and UPS. Surcharges are running rampant.

Last night I went with my wife and my kids to a car dealership to consider our alternatives since my car lease comes up next month. People are flocking to the dealerships where they sell small fuel efficient cars. Volkswagen, Toyota, Honda, Hyundai, the hybrids, the smart cars - these dealerships show some life. Others are begging prospects to come in. Sometimes the dealerships have to take larger vehicles in trade. The salesman we spoke to last night said that they would sell the "boats" that are on their lot for any price, including much below wholesale.

This is no longer a time to be mad at Detroit. For the first time, I am actually worried about Motor City. If Detroit doesn't have cars that people want to buy, then Chrysler, Ford and General Motors will suffer terribly. But so will their dealers, and their service centers, and their parts suppliers and their other vendors. Just remember that each layer in the supply chain has people who own homes and buy goods and services from the rest of us. I'd like to know why Kirk Kerkorian and his Tracinda Corp. are so bullish on Ford. The rest of us need to know.

It doesn't matter what the government says is a good minimum MPG (miles per gallon) if consumers demand a higher amount. Money will move to the best deal - which means the most fuel efficient cars.

These are difficult times in the United States and in other parts of the world. So, we have to band together and work towards solving the problem. The quickest solution is going to come from changing our behavior, and it's clear that behaviors are changing rapidly. Carpooling used to be an inconvenience — but now it is a stroke of luck to find a willing and able companion.

It is amazing how people are planning their errands around driving patterns. It's Economics 101 at work. We are trying to preserve what we now perceive as a precious resource. I promise you that although it will be painful for a while, we will be better off in the end.

Maybe the idea of a solar powered train that moves your car along on the freeway isn't something to laugh at anymore. Take a look at the AVT, Advanced Vehicle Transport www.avt-train.com. We need all of the creative ideas that we can muster — even if they sound far fetched at first. Yankee ingenuity will certainly prevail.

Please continue to send your comments. I'm anxious to see what kinds of behaviors people are changing. I'll continue to report on this because this topic is so critical and since $5 gasoline is probably just a week or two away, I'll have to change the concept of my column to "The Silver Lining to $6.00 Gasoline."

About Joel G. Block

Well known in the business community, Joel Block is a best selling author, speaker, and business strategist. Frequently a principal in his transactions, Joel has raised tens of millions of equity dollars for his ventures, which have included real estate syndications and privately held businesses.

Joel’s career is highlighted by the launch of a financial publishing company which he grew nationwide and later sold to the Los Angeles Times. More recently, Joel works with scientists, engineers, technologists and others to help them optimize their entrepreneurial opportunities. Would you like to get a private phone consultation with Joel? Visit www.joelblock.com/capital for details.

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