Like Soda for Petrol

On Saturday Brad's parents came over for lunch. We make it a habit to see them at least once a month that is when they aren't out of town on a cruise. Brad's dad, Jon, is a man that has a wealth of information when it comes to the free market as he used to be a grocery store manager for many years prior to his retirement.

On this particular occasion we got on the subject of soda and how the quantity and price of the product have gone up significantly over the past twenty years. Jon recounted the days when in stores that he managed a can of Dr. Pepper at a vending machine would cost a mere five cents. Eventually the management decided to bump the price up to eight cents in an effort to turn more profit. Jon explained that many people thought that it would be a disaster and that no one would pay for their instant gratification refreshment. To his surprise, and the pleasure of executives, sales continued to be good at the new price. Apparently people were willing to pay more for their soda and as long as people were willing to pay the price kept going up. In some places these days you are are hard pressed to find a vending machine that charges fifty cents for a can of soda.

Why am I discussing this you ask? Well I believe this anecdote is a bellwether for the gas prices in this country. Even after the devastation of Katrina and Rita the oil companies in this nation have had record years for profit and yet gas prices are on the rise again. On the local news here in Dallas tonight they interviewed several a commuter and asked if they thought the prices were high enough for them to cut down on driving or consider alternate modes of transportation. All of them stated that they didn't like the prices going up but that they wouldn't alter their driving behavior.

I have no grand conclusion to this, I just thought it was an interesting parallel. In fact I want the price of gas to get higher so that hopefully these things will happen:

1. Increased demand for alternative fuels such as biodiesel.
2. The demand and production of SUVs plummets.
3. Suburban sprawl comes to a halt and urban revitalization gains more momentum and forces the market to produce more low to middle income high density living in urban cores in lieu of the current trend that is almost exclusively the high luxury market.