Category: Gas prices

Fear and loathing in the global economy.

The current rise and fall of the Global Economy is enough to make you reach for some Dramamine. With all the volatility surrounding pricing/ costs and ever-increasing leadtimes, it is enough to make many in the cycling industry wonder about their profession. But even though nearly all indicators look really bad, things might actually prove to be better than many of us have feared.

In a slumping world economy, it is certainly very easy to fear for the worst. After all, our potential consumers have less and less money to spend- if any at all. So why should we remain optimistic for even a second? Well, the economic squeeze has begun to cause a shift in the way people think of bicycles. I thought for sure that gas prices would have to climb much higher before people began to drive less and ride bikes more, but I am pleasantly being proven wrong there. I continue to hear from retailers and read about how repair business is increasing for many shops because people are pulling old bikes down from the rafters and out of tool sheds so they can drive less. Many retailers are even having a hard time finding replacement parts for older bikes because the demand has gotten so high for them, due to repairs. Those same retailers are also reporting that some of those consumers are coming back after a short while to upgrade the old clunker for something newer, lighter, better designed for their commuting needs. This is something that I personally did not expect to happen this soon. We still don’t possess the proper infrastructure to support proper commuting, but people are braving the rough streets to save a little money, improve their health or help the environment.

Consumers, who many of us feared would no longer buy bikes when the pricing increases went into effect, do not seem to be as sticker shocked as expected. Let’s face it, they are seeing prices go up on all of the things they buy and they have seen the dollar drop value against nearly every other currency, so they have come to expect the prices for everything to go up. It doesn’t mean they are happily accepting it, nor does it mean they are making the same planned purchases… but they aren’t all storming out the door without making a purchase. On top of it, many new consumers are walking in for the first time. Commuters and city cyclists are sprouting up all over the place. I’ve heard from retailers who have seen this shift taking place in their shops, seeing many new faces for the first time. Sure, some of these new or returning cyclists need a little more educating but they are walking in on their own and without us (the industry) having to drag them in kicking and screaming.

Cycling has also become much more fashionable, with plenty of celebrity bicycle sightings and an ever-growing urban hipster bike culture, it is becoming “cool” to ride a bike for the first time in decades in the US. I’m not trying to pass judgment on whether any segment or niche in the market is some sort of passing fancy or not, people riding bikes for any reason at all is a good thing in my mind (and in the minds of many of us in the industry). I mean, when you have bikes like this one showing up in the world- you know you’ve reached a certain tipping point. Many of these consumers will come in and spend a lot of money to look cool and then vanish from the market when they hop on the “next thing”, but there will be at least a small amount of retention of these new cyclists- especially if we embrace them and share our love of cycling with them and let them develop their own… even if we don’t “get it”.

As many of us have been screaming for years, cycling is also fun and enjoyable. Remember, in a bad economy, folks still need to have fun and others want/ need to escape their fears and worries. Riding a bike is incredibly good for that. Some of those new consumers might have been planning to buy a bigger car this year and might opt to save some money and buy a bike instead. Or, maybe, they want to escape the worry of their stock portfolio suddenly being worth less than a politician’s promises and riding a bike has popped into their heads. It has been seen in the gym/ health club world in the past; when things get tense, people want to work off their frustrations or fears by trying to get into better physical condition. For millennia, humankind has worked out frustrations, fears and anxieties by working up a sweat or taking the time to enjoy the outside world in some fashion. Cycling is an excellent vehicle for that.

When you take all the above into account and then toss in a growing global consciousness, things don’t look quite so bleak. Many people are thinking very much about the environment and fears of global warming, as well as the impacts of oil demand on sociopolitical issues across the globe. Cycling provides an excellent way to combat these concerns as well as local concerns about traffic congestion, etc. It’s an altruism, certainly, that many people say they believe in and don’t really- but altruism has also become fashionable… as it has been for countless decades.

So what does it all mean? Well, on the very surface it all means that things aren’t necessarily as bad as feared. More significantly though, I’m trying to point out that the bike industry sits poised to see growth that is actually sustainable and maintainable. I can not tell you how many conversations I had during Interbike this year about the hope many retailers felt about the future. Sure, there were many concerns about the economy, but overall the atmosphere was full of hope- much more so than recent years, by a huge amount. The cycling industry is paying better attention to the birth and growth of niche markets as well as the development of the commuting market. Nearly every bike manufacturer had a fixed gear bike and/ or a commuter bike in their line. And almost all of the clothing and accessory manufacturers had gear aimed at urban cyclists and commuters. I’ve never personally seen so much energy aimed at these segments of the market and the consumers who use the products. Hell, Interbike even put on the Urban Legend Fashion Show with the help of my friends in Canada at Momentum Magazine. When was the last time you saw or felt so much energy in this segment of the industry? I never have and I’ve been in the industry in one way or another for 26 years now.

It might not look or feel like it, as you watch the news and listen to the politicians painting a picture of doom and gloom, but the cycling industry stands on the precipice of fantastic potential if we just listen to our customers and friends. As long as we are aware of what is happening and what they are asking for- even if they don’t yet know what it is- we can bring them into our club and they will hopefully bring their friends along for the ride as well. I’m not advocating false hope or idiotic optimism beyond reality, but I do see great potential for cycling in general. The race scene will have its usual ebb and flow and I’ll be right there watching it, but the other categories of the cycling market and cycling culture are looking really primed for growth and expansion… and fun.

Let’s not lose hope too soon, even as worldwide money markets look very frightening. Things look better than expected. Even pricing concerns seem to be diminishing slightly as oil prices come down to match dropping demand and shrinking economies. Strap on your helmets; it’s an open road ahead.

Tim Jackson
Chief Kool-Aid Dispenser

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Feeling gassy?

In recent days, weeks and months many conversations have been had about the current state of the US economy (and the global one for that matter) and the pressures put on Joe Consumer by the high (and climbing) prices of gasoline. Here in California, gas has been over $4.00/ gallon for weeks now and some experts believe that $5.00/ gallon gas will be here by the summer driving months. For stressed out wallets and budgets, that might just mean making some serious decisions about driving habits.

Here’s the thing though: the current high gas prices are not the answer to the cycling industry’s prayers. Not yet anyway.

US consumers are far too used to driving their cars. They practically live in them. We have all kinds of luxuries built into them. Our cars have become our sense of self for many of us. $4.00+/ gallon gas isn’t going to change that any time soon. There are too many barriers to getting people out of their cars and onto a bike.

  • Lack of infrastructure- this one always raises quite a bit of debate, but in many cases people will not ride their bikes to commute- even for a very short commute- if they do not feel safe. Bike lanes are not the end-all answer, but they sure do help and address the major concerns of most people. This infrastructure applies to public/ mass transit as well- many people live far from their work (I live 40 miles away) and need to combine some form of mass/ public transit with their bike commute. Which means that we also need more commuter stations with lockers, racks, etc.
  • Lack of support- there are tax incentives for people to carpool or take public transportation, but none for cycling to work. Plus, how many of us have access to showers at our place of work? Not many, according to most studies I’ve read.
  • The dreaded retail experience- this one raises a lot of debate as well, but the majority of non-cyclists find the Bike Shop experience to be intimidating or downright unpleasant.
  • The price of gas isn’t “that bad” yet. It is going to take gas prices well over $5.00/ gallon to really make people uncomfortable pumping gas into their cars. It will take gas prices, I believe, nearing $10.00/ gallon for us to reach that critical mass needed to tip the scales in favor of more people commuting.
  • The Gub-ment. The price of gas is such a sensitive issue and politically charged enough that it is in the daily discourse of the power holders in our capitol. Even John McCain, the presumptive Republican candidate for president, is talking about putting a temporary hold on the federal fuel tax over the summer to keep gas prices down. Driving is such an important part of our nation’s economy that the politicians want to protect driving… not discourage it. The US car makers wield amazing power as well- they have successfully lobbied against legislation to improve fuel efficiency of their cars. We’ll reduce federal taxes before we force car makers to improve fuel standards? Insanity.
  • The cycling “stigma”. In the US at least, bicycle commuting is still widely viewed as something only poor people, convicted drunks with no driver’s licenses or “losers” do.

I see plenty new large vehicles like Escalades and Hummers driving on the southern California freeways every day. The economy may be hurting, gas might be expensive and “going green” may be getting more popular… but people sure do love their cars. And our government likes it that way.

Those folks who are already on the fence, already considering bicycle commuting, might now have the needed incentive to begin commuting by bike. Maybe. An increase in gas prices is not going to be enough to drag the masses out of their heated/ air conditioned, rolling office/ entertainment centers. Not nearly.

There is hope though. There are more bicycle commuters now than there have been since the gas crunch of the late 70’s. More and more manufacturers are embracing the product category. More communities are getting behind initiatives to get residents onto bikes. More companies are providing incentives to employees to ride their bikes by supplying lockers, showers and bike racks. The lobbying efforts of the industry and advocacy groups are beginning to get the attention of the check writers in DC.

All in all, things are improving. But… this continued talk about higher gas prices saving the industry from the throws of a bad economy (and rising costs) or being the catapult to move it into a post-Lance renaissance is foolish. We still have a lot of work to do and we still need to find new and better ways to reach out and pull in new consumers (non-cyclists). Otherwise, no amount of high priced fuel is going to save us.

Feeling a little gassy? I know I am…

Tim Jackson
Chief Kool-Aid Dispenser