Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Thursday, April 5, 2012

Thursday Thoughts: Gasoline, Cycling, and Natural Laws


It’s not news that gasoline prices are rising.  The correct questions are,  “How high will it go?”  and,  “What are we going to do about it?”  As I write this, local prices are between $3.81 and $3.98 per gallon.  Nationally the average price is above four, and climbing rapidly.  Does anyone think this is going to stop soon?

Today’s post title refers to Natural Laws.  The Natural Law I have in mind is the Law of Supply and Demand.  Make no mistake, it is a LAW!  When demand for a commodity is high, the price rises.  When the price rises high enough, the demand will fall, followed shortly thereafter by the price.  Believe it!  This is as much a Law, as Gravity.

I have spoken and written a lot about using the bicycle for transportation.  Please consider the following facts:

There are approximately 2,000,000 active cyclists in the United States.
Almost all of those cyclists are drivers too.
The average driver travels 12,000 mile per year.
The average private motor vehicle gets about 19 miles per gallon.
For the typical driver about 45% of miles are commuting to work, 45% are “utility driving,” and the remainder falls into a variety of categories.
“Utility Driving” means trips to the store, to the pharmacy, the doctor’s office, hauling the kids, or other errands.

Supposing all two million American cyclists actually managed to do about half of our “utility driving” by bike?

  1. 12,000/19 =   631.6 gallons of gas per driver.
  2. 631.6 X 0.225 = 142.1 gallons saved by using the bike instead of the car.
  3. 2,000,000 X 142.1 = 282.4 million gallons not purchased.
  4. If gas goes to $5.00 per gallon, that means we could take about $1.421 billion worth of demand off of the market.

If we further suppose that each and every one of us managed to “recruit” one more rider to do the same thing, we’d remove upwards of $2.8 billion worth of demand.  Might that not have an effect on pricing?

Let’s take it just a bit farther.  What if we could manage to change something like10% and 50% of our commuting from gasoline to pedal power, the increased savings could be huge, and the decrease in demand would be felt at the pump.

One might, reasonably ask,  “Okay.  What’s in it for me?  For a good answer, go to the second line above, and multiply it by $5.00.  The answer is $712.00 saved each year.  And that figure doesn’t include improved health and fitness, and deceased wear and tear on the car or truck.

A further advantage would be the increased presence of cyclists on the roads, with a companion decrease in automobiles and light trucks.  More cyclists means we are more visible, and that usually leads to greater acceptance and to more attention being paid to us.  Good all the way around.

This blog’s readership is relatively small.  Please point your friends to this post.  In addition, I’m going to start a series, aimed at the nuts and bolts of transforming automotive driving to “utility cycling.”  In addition, I’ll be carrying this in my weekly email newsletter, the “Tuesday Tome.”

Please do give this one some thought.  Feel free to comment.  Let’s see what we can do on this one. 

Thursday, February 4, 2010

Thursday Thoughts ~~ Now is the Time: Support Your Local Bike Shop


I’m pretty sure you’ve all noticed that things are a bit tough all over.  I’m not going to belabor that.  But I’ve seen a lot of stuff recently, and it requires comment.

Disclaimer:  I work in a retail bicycle store.  I love my work, and love my folks.  I enjoy making your bicycles run smoothly and efficiently, advising you on training issues and equipment selections, finding you routes to ride, teaching you how to use your equipment to the best advantage, and generally working with and for you on all things bicycle.

But I will not do it for free!  I do earn an income from this work.  So does everyone else who works in a shop.

And that brings us to the nub:  Bike shops are businesses.  We sell stuff.  That pays our bills.  If we don’t sell stuff, we won’t be here.  I rather suspect you would not like that.

The retail bicycle market is at a critical point.  Bicycle manufacturers, and equipment makers are also in business.  They are going to go where they can to stay in business.  That just may mean to the internet and the big box stores.

Now I ask you, do you like to ride nice, high quality bikes?  Do you enjoy having access to specific equipment that performs well for you?  Is it important to you to be able to draw on the substantial expertise of a staff?  Do you expect to need service and technical assistance at some point?  Would you like to be able to access this readily?

The really big question:  Will the internet and the big box stores provide you with any of this?  The answer is a resounding “NO.”  They are going to go for the easy dollar.  That means volume sales, and that means marketing to the least common denominator.  Have you looked at a big box store bike lately?  How about asking one of their folks for specific, bicycle related help and information.  I invite you to try this.  The results should be, at the least, entertaining.

Something you might not have thought of:  Before I go on, I’ve recently had several instances of the type I’m about to describe.  I am not singling anyone out.  If this feels like it happened to you, then trust me, you are not alone.

Scenario:  Someone comes into the store.  They are interested in exploring a new area of the sport.  They spend several hours picking my brains, asking about features, pros and cons, sizing, and specific makes.  They leave, having purchased not one thing.  Then, several days later I am informed that they bought the thing on the internet.  I wasn’t even afforded the chance to compete.  They just assumed that my time was for free and that I would charge more for the product.  Gang, that’s theft of service.  It’s unethical, and unfair.  More, it can’t continue.  The time could well come when we have to charge for a lot of services we now provide for free.

What if bike shops disappear?  Who will fix your bike?  Where will you buy the tools and parts?  Who will organize the rides?  Do you really think that “Wally World” or the internet is going to fix your flat, while you wait, and diagnose the cause?  (I’d love to hear from someone who has tried this!)

Do you seriously believe that the major makers, like Giant, Trek, Specialized, etc, will continue to make the high quality rides you love?  Imagine a sweet $1500 road bike in a big box store.

Those bikes will continue to be available, but only through a few, widely separated, highly specialized, and extremely expensive boutique retailers.  Are you really prepared to fly to New York, and spend $5000 to get the equivalent of a $1500 road or mountain bike?  That's $5000 for the bike, transportation, hotels, food, and shipping would be on you.

What can you do?  Simple.  Buy local.  This includes almost everything, not just your bicycle purchases.  Buy it from us.  It might cost a few dollars more than the wonderful-magical-internet.  But the service will be there.  The support will be there.  We will be there.

Buy your accessories here!  Want to annoy and upset your local shop wizard?  Buy a bike from them.  (Of course spend hours and hours agonizing with them over the choice of your $500 hybrid.)  Then buy it, and go out and equip it with lots of trinkets from one of the big boxes or the internet.  I’m speaking of computers, lights, bells, bags, repair kits, pumps, reflectors, mirrors, etc.  Now wheel your thing in to the shop.  Trust me on this, you have not made a happy impression.  Worse, the junk you bought would have to stretch a long long way to make it to third rate, and you paid too much for it.

Example:  A $20 computer that only lasts six months is a lot more expensive than a $30 dollar computer that lasts for years.  You get what you pay for.

Bottom line:  We need you.  We work hard to earn your business.  You need us.  Support us, or we’re going the way of the dinosaurs.

I urge you to copy this post and pass it on.  And please, think about the implications of your purchases and actions.