[arretium]

The industry will certainly look different in the long run. I actually think Southwest's business model is in trouble. In my view, the survivors will be hub and spoke not point to point air services. The hub and spoke has efficiency built into the model.

There's a lot of efficiency that can be had in air travel. Using light weight composites will cut consumption of fuel by 30%. Using propfans (which fly almost as fast as jets) will also reduce consumption by 30%. Put those two together: a composite airframe using propfans instead of jets and you could be looking at fuel consumptions that are roughly 1/2 of conventional jets. That's a huge competitive advantage and a good reason to have them.

I think you'll also see a division of costs on airfare tickets in the future. Gone will be the days when you paid a fixed price. Instead, you'll pay a surcharge at the day of departure depending on that day's cost of fuel. It's the only way the airlines can stay afloat and remain solvent. They must pass on the costs associated with fuel to the customer or they go out of business. My guess is you'll see some sort of federal bail out legislation that has a rider inside of it that mandates that air carriers tack on their fuel surcharge at the time of departure. That way the airlines can blame government for it but stay in business. Then, you'll pay when you book your ticket and then you'll pay again when you arrive at the gate.

[joeltrout]

$this->bbcode_second_pass_quote('arretium', 'T')he industry will certainly look different in the long run. I actually think Southwest's business model is in trouble.

[dunewalker]

I was talking to our local UPS driver yesterday about fuel costs. He said his truck uses around $150 worth of gas per day now to deliver maybe 50 packages. Of course that's not the entire transport cost of the packages, as they had to get to the local distribution hub before going on his ride. He also said that UPS majorly hedged their fuel costs for several years, so are not paying nearly current prices---yet. Presumably FedEx did the same--if not, then it's easy to see which one will survive longer.

[HEADER_RACK]

I think cruise lines will soon be the next to fall. Lots of cheap fuel to run those ships and all they do is provide a luxury for mostly disposable income people. Those two things are becoming in short supply

[joeltrout]

$this->bbcode_second_pass_quote('HEADER_RACK', 'I') think cruise lines will soon be the next to fall. Lots of cheap fuel to run those ships and all they do is provide a luxury for mostly disposable income people. Those two things are becoming in short supply

[HEADER_RACK]

$this->bbcode_second_pass_quote('joeltrout', '')$this->bbcode_second_pass_quote('HEADER_RACK', 'I') think cruise lines will soon be the next to fall. Lots of cheap fuel to run those ships and all they do is provide a luxury for mostly disposable income people. Those two things are becoming in short supply

[jlw61]

$this->bbcode_second_pass_quote('misterno', 'H')ow can the airlines survive with $200 oil? How can an airline sell cheapest NY-LA tickets for $1000 and still survive?
It does not make sense. Bus companies like Greyhound will thrive.

[mos6507]

$this->bbcode_second_pass_quote('misterno', 'H')ow can the airlines survive with $200 oil? How can an airline sell cheapest NY-LA tickets for $1000 and still survive?

[SchroedingersCat]

After the airlines succumb to the pressure of expensive fuel, all the industries dependent upon the airlines are next. This can be applied to any energy-reliant industry as the peak unfolds.

The industries to follow will be:
-Any industry that depends upon airlines to quickly and cheaply transport people or freight. Think Fed Ex, UPS, food shippers, tourist destinations, hotels, car rental companies, etc.
-Support and supply companies for the airlines: equipment and parts manufacturers, food and cleaning services, airports, security companies, fueling providers.
-The halo effect: restaurants, gas stations, uniform providers, newsstands, city tax revenues.

Everything is intricately connected and the effects of one industry's decline will be felt far and wide.

[Mastodon]

crude supplies abt 96% of all transportation energy. It will all be about energy efficiency (kg/km moving stuff, trade we call it!), rule of thumb a ship is about an order of magnitude more efficient than a train which is about an order of magnitude of more efficient than a truck. Less fuel means less trade, interesting thought for the economic believers...

Modern fishing vessels (abt 65mtr filleters, 3500 to 7000bhp) take around 700tonne of fuel to sea for a 6 to 7 week trip and return with 6 to 700 tonne of fillet/product (if it all goes according to plan of course!) Good coin to be made when you are paying around $.45c per ltr for diesel and getting $4 to $8 for the product. Ten yrs ago fuel was about 8% of total costs, dont think that quite applies any more....Today they are starting to tie the boats up.... once more less fooooood for the masses. Any industry that relies on fossil fuel energy is doomed...oh I guess that includes just about everything!!

And the comments as to vessel speed and energy are way too simplistic. Depends on hull type, (displacement or planing), hull speed (design, bulbous bow/stern, L/B ratio) and of course deadweight. A planing hull has all sorts of interesting relationships with energy and speed, getting over the "hump" at around 18knts takes masssive energy but once on the plane speed can be increased for little or even no increase in energy (propulsion efficiencies vary greatly depending on speed, design <propellor, jet, high cavitation prop etc> and various hull appendages start to have great effect etc)

Displacement hulls have a design speed, up to this speed the energy/knts is relationship is basically as per the previous comments, after this speed the energy needed increases dramatically until you hit the wall.

And we havent even started on the out there designs such as SWATH vessels which are very energy efficient indeedy but as expected they are really only used by the military to go faster not smarter.

Sail will return to the fore. Interesting times eh.

[TreebeardsUncle]

Trucking will be next, especially the independents. Check the news. The trucking industry has seen the greatest decline in number of vehicles within the year since sometime in the 80's or 90's. See Savinar's site. Think the contraction was on the order of 3%. The independents were and are being hit hardest. However, one of the big ones (like Hunter or something) had an increase in costs from 92% to 96% of revenue or so.

Expect commercial boating to take a hit too, especially the recreational end. With the fall-off in the salmon population leading to major restrictions in the harvest out west, combined with soaring gas prices, and tight credit, the challenges to the recreational boating industry have reached the point to where they are at least being profiled in the local papers (Sac Bee etc).

Yes, the big 3 suburban assault vehicle producers are in decline. GM's stock is at $17/share now. A betting man would place a put on it. (Hint. This is a fairly safe bet.) Gas is heading to $5/gallon. The big 3 will have a hard time in that environment but the Japs will do better. Even so their sales are down 30%.

When gas doubles again within the next several years (Oil prices have quadrupled in the last 4 years and gas prices have nearly doubled.), expect rv sales to tank along with sales of various destructive motor toys (atvs, 3-wheelers, etc).

Thus, the entire motorized transport sector will take a hit, except for trains, hybrids, and a few other subsectors.

Discretionary retail sales:

Expect to see a hollowing out of the middle. High and low end will do well, but mid-level clothing stores (Weinstocks, JC Penny, Macy's, Sears, Old Navy, Gap etc ) will continue to see declining sales as discretionary income continues to be squeezed. Furniture, other new-house-oriented goods, books, etc will also see declining sales.

Travel and tourism:
By the time gas triples in price late in the next decade, expect to see a significant fall-off in the proceeds of motels, restaurants, theme parks, souvenir shops and the like. Travel agencies, tour busses, cruise shops, rental car agencies, even insurance companies will all see declines in their business.

The 2020's
This is when I expect to see a significant shift in suburban American habits. At the start of the decade gas will be around $12/gallon but expect it to pass $16 by the middle of the decade and head to $20 to $25 gallon by the end of the decade. This is when depletion will take over any efforts to develop new oil fields, including sands, shales, deep water, artic, heavy sour, etc. Coal gasification and natural gas transport will be competive but in limited quantities and high prices. Bio-fuels will be seen to only provide small proprotions of the current market (on the order of 15% perhaps at the most). Electric drive (really coal-derivative powered) vehicles will also be competitive and likely cheaper to operate than gas-powered vehicles as they are now.
At this point, long-distance commuting to gain a few more square feet will not be so desirable. SUVs will become uncommon by the 2030s. Pick-up trucks for a personal vehicle will fall out of favor with the blue collar Ford-following working class. Gas prices will begin to have an impact on house builders.

2030's
Gas prices run in the 20s for the most part with possible spikes to around 30. Demand destruction is taking its toll. Non-recreational commercial shipping feels the strain and moves to coal, biofuels etc. Commerical aircraft travel for vacationers and many business folks becomes prohibitively expensive. Schools, local, and state government incur insurmountable budget deficits due to fuel costs. School buses are retired. Greyhound goes out of business due to its customers being unable to support its costs.
Travel agencies and rental car companies fold into large organiztions that use them as auxiliaries and cover their losses.
Rail is still cost effective and truly takes the place of the commerical trucking industry. The major trucking companies effectively merge with the rail and barge industry leading to a state of affairs more typical of the 40's and early 50's. Retail groceries and shops go out of business in increasing numbers.
New subdivisions on the edge of town become less popular.

2040's
Gas passes $30/gallon in price. Demand has now fallen ($30/$4 = 750%)/14% = 53% driving the working class and many middle-class commuters out of the driving population. Many folks stay home and collect welfare and disability payments rather than work.
Mining, rail, alternative power, dam building etc are growth industries. Suburban life becomes slum-living for the most part. How exactly is that the case. Well, functioning useful shops become fewer. Incomes are insufficent to pay for mortgages and rents. Properties revert to financial companies. Evictees live in parks and along rivers. Perhaps as many as 10% of the population is rendered homeless. Retail corporations cut back on expansions and gradually close stores. Many restaurants go out of business.
Hotel chains such as Best Western and Traveler's Inn go into decline. Motel 6 since it is so cheap and Marriot's since it is better run and has excellent service stick around longer.

2050.

Gas heads more rapidly up to $40 to $50 gallon and the frequently driving population is reduced to about 20% by the end of the decade. Bio-fuels begin to come into equilibrium with the remaining oil supply. Readjustments in housing become significant. Agri-business models are no longer feasible if dependent upon shipping more than 1000 miles in the absense of water transport.
The air-line industry has been reduced to 15 to 20% of its current size serving the wealthy, elite business travelers, a few non-wealthy vactioners, government, and military interests.

g

[mos6507]

$this->bbcode_second_pass_quote('arretium', 'T')here's a lot of efficiency that can be had in air travel. Using light weight composites will cut consumption of fuel by 30%. Using propfans (which fly almost as fast as jets) will also reduce consumption by 30%. Put those two together: a composite airframe using propfans instead of jets and you could be looking at fuel consumptions that are roughly 1/2 of conventional jets. That's a huge competitive advantage and a good reason to have them.

[MrBill]

I guess after energy gets too expensive, and petroluem runs out, that no industry will survive. No jobs, no economy. I guess then we'll just all sit on our hands and do nothing.

[arretium]

$this->bbcode_second_pass_quote('MrBill', 'I') guess after energy gets too expensive, and petroluem runs out, that no industry will survive. No jobs, no economy. I guess then we'll just all sit on our hands and do nothing.

[Fredrik]

$this->bbcode_second_pass_quote('MrBill', 'I') guess after energy gets too expensive, and petroluem runs out, that no industry will survive. No jobs, no economy.

[Denny]

$this->bbcode_second_pass_quote('misterno', 'B')us companies like Greyhound will thrive.

[Bman4k1]

$this->bbcode_second_pass_quote('Windmills', '.')....Pizza delivery........

[JJ]

everything in Hawaii.....

[Denny]

$this->bbcode_second_pass_quote('HEADER_RACK', 'I') think cruise lines will soon be the next to fall. Lots of cheap fuel to run those ships and all they do is provide a luxury for mostly disposable income people. Those two things are becoming in short supply

[MrBill]

Denny, RE: Greyhound. Even the big swinging dicks in London, UK, are often seen taking the bus every morning and each night. If they work in The City, but live down near Southhampton or out in the boondocks then they either take the train or the bus. I mean these are coaches that go from point A to point B, not hop-on and hop-off buses that stop all along a route. They could not commute by car due to the distances, long-hours and, of course, the traffic. These are well-paid businessmen and bankers as well as backoffice and support workers. I have several colleagues here that take a mini-bus to work each day rather than each drive. So this is living proof that commuters can adapt to high fuel prices and/or scarcity by pooling their resources. And that private firms will be there to fill that need when it exists and it is profitable for them.