Chris Steiner: Priming For $20/Gallon Gas

July 10, 2009


Crigger: Do you think developed markets like the U.S. will remain the leaders in renewable energy development? Or will it fall to the emerging markets, which have this incredible new middle class demand?

Steiner: I think that remains to be seen. I certainly hope the United States takes the lead, but I think China now looks like they're putting their leg out first, as far as getting electric cars out and as a major part of their infrastructure. They're able to effect mass change slightly easier than we are, partly because of the structure of their government. But I don't know who's going to take the lead.

Crigger: As gas prices rise, you argue that the huge big-box retailers, like Wal-Mart, will die off. Why?

Steiner: Right now, Wal-Mart's model is strictly untenable in a future with gas over $10 per gallon. They really depend on globalization; Wal-Mart has 6,000 suppliers, 80% of whom are in China. More than anyone else, Wal-Mart milks this globalized world and giant container ships; that's how they're able to offer so many things at so cheap a price. But when your economies get too localized, Wal-Mart really loses their advantage.

Crigger: So it's not that demand for cheap goods will dry up. It's that the cost of getting goods to consumers will shoot through the roof.

Steiner: Right. Wal-Mart is built on gasoline. Even after they bring in the goods from China, they have 7,000 trucks in the United States to crank these things to 150 different distribution centers, and then the trucks take them from these distribution centers to the different Wal-Marts. As the price of gas rises, they're going to lose their advantage.

Plus, most of these Wal-Marts are built not in walkable neighborhoods, but in the fringes of places. That's where Wal-Mart got cheap land, and that's where their clients are. But as the price of gas rises, we're going to live in smaller homes; we're going to live in walkable communities. Certainly some people will have giant houses; that's never going to go away. But most of us are not going to have McMansions anymore; we're not going to have room for lots of junk. What Wal-Mart sells is a lot of junk, and we won't need it.

Crigger: All this being said, in the book, you take an optimistic - even hopeful - tone, suggesting that rising gas prices could actually be a good thing in the long run.

Steiner: That's exactly the point of the book. Certainly there will be some changes that not everybody's going to like, but overall you're going to see a healthier America. We're going to use fewer resources because we'll be forced to, but that's going to result in a bevy of positive changes: more local food, less pollution, better mass transit, less obesity. It's amazing how many changes filter out from the price of gas. And that's not just me rubbing my chin and thinking that might happen; there's been a lot of academic work linking the price of gas to other effects in society. Higher gas prices will affect everything from the way people go out to eat, where they live, how much they walk, how much they use mass transport - everything.


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