Gains from agglomeration

It comes up everywhere, the idea that groups focus on specialized products, permanently establishing a more dense trading framework. Did we agglomerate toward transportation efficiency after the 70s oil shocks? Kling, looking at a paper by Binder on the 70s oil and food shocks, takes up the issue, why did we eventually gain fuel efficiency and beat the oil shocks?

I think that the answer might be less attempts to regulate prices and profits in the domestic oil market.

He makes a point. The 70s were full of very inefficient energy price controls. Once Reagan removed the price controls, the economy became efficient in responding to oil shortages.

But the how does the economy become more efficient? Energy efficiency became the main selling point in transportation for 30 years. The transportation industry matched technology to energy efficiency, and has been beating oil ever since. The process is agglomeration, the focusing independent sectors of the economy closely to the problem.  Agglomeration effects cause great efficiency when specialized to a task.

We have arrived at the point that a significant portion of the web will extend into transportation, and permanently be devoted to the energy efficiency task.