[fitzy7]

Hi everyone, I just posted an article on my blog that might be of some interest to readers. I work in urban planning and retail development and its struck me that every time there is a spike in gas prices we see a huge media flurry about the impact on consumers and retailers. As prices go back down the attention disappears... until the next inevitable spike in prices. Oddly, there seems to be little public discussion about what long term increases in oil prices will do to the retail industry. Retail developments often attract pension and insurance funds as investors because they, supposedly, provide stable long term cash flow with low risks. These investors have very long investment time frames and are happy to hold assets for decades. Yet the same investors continue to buy into into sprawling big box centres on the outer edges of cities. Perhaps this has slowed in the US, but it certainly is still happening in a big way in Canada. Given a lack of public discourse on this issue, I wrote an article exploring what the potential impacts might be for the retail industry, and options property owners could consider as mitigating strategies. In my mind opinion, oil prices will have significant long term impacts on the form and urban structure of our cities and it is important we start planning for this in advance.
The Long Term Impact of Rising Oil Prices on the Retail Industry: http://reurbanist.com/2012/06/long-term ... -industry/

[fitzy7]

Well I'm not convinced that local ownership and production are going to emerge as a major driving force for energy-price reasons, at least not in the next decade. I actually started doing research expecting to find evidence supporting trends towards increased local production, but that wasn't what I saw in the numbers. Increased energy costs need to be really significant to offset the labour cost difference. If anything, increasing labour costs in Asia and changing consumer preferences for more "buy local" will be the driving force for local production. Would be happy to see evidence showing otherwise though because I'm a huge fan of some of the local production movements.

[Pops]

Thanks fitzy, good article, thanks for posting.

On your point about public perception, media influence, etc I'm not sure most people give oil prices more than a passing frown. They don't understand how the oil industry works, what "40 years of reserves" means for example or really care that much. But, in most of the old "first" world, I think there is a growing perception that the easy pickens are gone, energy-wise and in lots of other ways as well– regular press releases from the frontiers of Giant Oil Discovery-dom notwithstanding.

Back in the '80s I designed and built jewelry stores in malls (tenant finishes actually) and they were the hot item, malls that is, for the young demographics. But I'm thinking more and more I'm staring at the shopping venue of the future right now, at least for a good part of the population. We live a little way out in the country, 5mi from any store, 20-30 mi from a big-box and much of our shopping is done online.

I don't think it's transportation of goods that is the key, as you point out and we've investigated on this site in the past, container shipping is amazingly efficient. And throwing a 2lb package on a postal service vehicle that is driving past my house anyway is about as efficient as you could ask for - much more efficient than me driving a 3,000# vehicle 60 miles round trip to "deliver" that same package to my house myself.

So the "efficiency" (read:"profit") in using 3rd or 4th world children to produce my chachkas won't be offset by increasing cost of container and rail shipping for quite some time yet. OTOH, personal transportation is being impacted already – miles per capita is down 8% in the US these last 5 years.

My WAG for the future of retail can be summed up as lots and lots of hyper-efficient mini-walmarts with self-checkout, robotic stock boys and maybe even routine home delivery.


Write again, fitzy, we are in dire need of good posters with fresh ideas.

[Pops]

Why would they deliver gasoline? That doesn't make sense, Pete. The cost for the mailman to stop at my house is 50¢, the cost for me to drive to Wally's in my 4x4 is about $7 ($3 if I had a 50mpg car) see the point?

And of course people will continue to buy flip flops, do you think we're all gonna be running around barefoot and neked by next Wednesday? Trade has been around since Lucy gave Magilla a grub in return for a gourd, it ain't going away just because I can't drive my 4x4 to the Quick Sac for a bottled water.

Here is the story in your version,

We're dead.

One thing that can be said for insisting on impending armageddon is that at least you are pleasantly surprised each morning that Mad Max hasn't eaten you for breakfast. You are pleasantly surprised aren't you?


Because there is no one silver bullet solution doesn't mean there are NO solutions.
Because there is no set of solutions to keep everything the same doesn't mean all things end.

[Pops]

To reiterate: it makes no sense to deliver gasoline so folks must continue to drive their automobiles to the gas station .

If people are commuting, of course they are shopping along the commute, in fact, because gas has been so cheap they've killed off the little stores and now must shop at the big store. But I don't commute, do you? Lots of people don't commute or they use transit, so a small local store with a wide/shallow selection, very high turnover, low overhead (and of course a location other than back of a 20 acre asphalt desert) is a great solution to high gasoline price. Dollar General is sorta the idea - their profit is way up btw..

To repeat myself pete, the gas station is 5 miles away, the big box store is 30. Obviously I live "out" but non-commuters in the suburbs 20 miles from the mall are in exactly the same situation.

While it makes sense to home deliver low-weight/high-value items like gold coins and Ipad's, lettuce and gasoline not so much.

I bought some drip line parts and screen print supplies and DW bought some party favors just this week online. Not expensive items but easier/cheaper to find the selection online than drive to and all around the big town.

Oh, and did I mention I didn't say anything about gasoline delivery? That's your strawman. So, not surprisingly, you win that argument hands down. The home gasoline delivery idea is a real stinker!

I don't see Armageddon, but I also don't see 'solutions.' Seven years here at PO.com, and a decade of escalating petroleum prices have yet to reveal evidence for meaningful implementation of any thing remotely like a 'solution'. No trends for electrification of transport, no large-scale conversion to alt. fuels (corn is an additive, not primary fuel).

You're talking about solutions as in substitutes for oil-fired BAU - there is no substitute for cheap oil but there are lots of replacements.

US miles per capita is down 8% since '06. Whatever those capitas are doing they haven't died off by driving 8% less.

Montequest used to rail about what he called 'solutions in isolation.'

And he meant the same thing as you, substitutions in isolation. There is no substitute but that doesn't meant there is no alternative. Walking is a replacement for driving, though not a substitute, it is an replacement, an alternative. It achieves the roughly the same basic goal although obviously falls short in many side benefits but such is the situation.

Without an abundant supply of inexpensive, accessible, free-flowing, light, sweet crude the United States of Suburbia is in for a dilly of ride. down.

Yes, I agree. BAU won't continue beyond expensive oil, any attempt to substitute will fall short.

We have a 'whole-systems' predicament. There are no solutions because there are no problems. Mankind has developed its our own ecology around petroleum.

I understand that is your current talking point and to the extent that there is no equivalent substitute for cheap oil I agree. But again:
It's only a predicament if its predicated on BAU.

Walking to the local dollar store for a head of lettuce to eat in front of the work-screen at home is not a substitute for cheap oil, it's a replacement.

[rockdoc123]

POP
I am pretty much in agreement with you here. I've said all along that no one item whether it be shale oil, wind, nuclear, natural gas, GTL is a replacement and hence not a solution in isolation (as you put it). However when you start to meld all of those things together along with a bit of "back to days of our youths approach to consumption" I think there could be light at the end of the tunnel. Unfortunately most people are more willing to complain and whine about what they view as a coming apocalypse rather than start the intelligent discussions that can eventually pressure gov't in an effective manner. This does not have to be a Greens against Corporate America discussion but can be something in which all parties benefit. The idea that in this day and age big oil would fiercely protect it's turf is ludicrous...they are all publicly traded and will do precisely what their shareholders require and if that is diversification then any board of directors not bent on personal destruction will make that happen.
We should look at the boom in shale gas and shale oil not as a savior (which it isn't) but rather as a respite for a period that will allow us collectively to get our shit together. It does require that we look at everything realistically and with intelligence....claims that "that can't work" without fully understanding how it might work merely stops our ability to save ourselves.

[ralfy]

Currently, the U.S. has less than 5 pct of the world's population but has to consume up to 25 pct of world oil production. If it can decrease oil consumption by up to 80 pct, and if the global middle class in general can do similar (i.e., if it makes up 15 pct of the world's population but is responsible for 70 to 80 pct of personal consumption), then we might see some level of basic needs made available to most people.

The catch is that the per capita global ave. consumption level is now at around 2.7 global hectares, higher than the per capita global biocapacity of around 2 global hectares. And the latter will drop given increasing population and ecological destruction.

[Antonio]

Hello! Did you notice that over the past two years, the price of Brent Crude has floated between $50 and $150 dollars a barrel? Every time we edge closer to the upper end of this spectrum, the media issues a stream of “pain at the pump” headlines. This media attention is understandable; after all, fuel prices are among the most dynamic, visible, and impactful consumer expenditures.

[Antonio]

What will happen to retailers link deleted over the long term if oil prices continue to steadily increase?