On last night’s Kudlow & Co., I discussed how absurd US energy policy is.
The United States is heavily dependent on fossil fuels (>80%), most of which come from places we would rather not send our money to. We consume 26% of the world’s energy, with only 3% of the world’s known oil reserves.
It turns out that for the past 3 decades, we’ve had a George Costanza Energy policy — every decision we have made as a country has worked to drive energy prices higher. Had we made the opposite decisions, Crude Oil prices would be much lower than they are today ($130.17 as I type this).
What follows is a list of energy-related policies of the United States. On many of these, I have no opinion — but I wanted to list as many as I could to demonstrate why Oil is where it is
US Policies with an impact on Energy:
1. Limited areas available for offshore drilling;
2. Stopped the rise of CAFE standards for automobiles;
3. Restricted nuclear power generation of Electrical;
4. Federal Reserve policies since 2001 led to a very weak US dollar (raising Oil prices);
5. Energy conservation policies? None
6. Iraq and Afghanistan wars contributing to Middle East tensions
7. No major United States funding for R&D on energy;
8. Kept CAFE standards for light trucks/SUVs much lower than autos;
9. Failed to raise efficiency standards for appliances for decades;
10. Provided no tax incentives for consumer purchases of hybrid automobiles for decades (in 2005, provided a modest, now expired tax credit);
11. Suburban Sprawl: Americans, on average, live further from where they work than Europeans do;
12. Mass transit system not a high priority;
13. Allowed tax credits for residential solar power to expire;
14. No special capital gains treatment for VC alt.energy investment
15. Ridiculous corn ethanol policy helped drive food prices higher also;
16. Amongst the lowest gasoline taxes in the developed world;
17. No special capital gains tax treatment for clean energy technology development;
18. Created a tax incentive (ADCS) that encouraged purchases of large inefficient vehicles;
19. Game changing breakthroughs over the past decades in solar, battery, or energy generation technologies? None
20. Exempted light trucks, SUVs, and pickups from gas-guzzler tax;
21. Discouraged clean coal, including gas liquification from coal;
22. Limited (or non-existent) state tax incentives for building energy efficient homes;
23. Failed to aggressively promote compact fluorescent light bulb;
24. Limited hydro-electric power generation;
25. Aggressive tax incentives for battery technology development? None
26. Failed to aggressively promote efficiency improvements for residential energy use, transmission of power, or consumption;
27. No new oil refineries built in the USA over the past 25 years.
And that’s just off the top of my head.
Some of the above is being responded to by the private sector. With Oil at $130+, there are significant price incentives for these technologies.
However, markets develop solutions only AFTER the economics of it are feasible. This means we are starting R&D with Oil at previously unthinkable levels. Imagine if we had some form of energy leadership 10 or 20 years ago when Oil was $8.
As I mentioned on the show last night, whoever is elected President in November should put together a blue ribbon panel, and develop a real energy policy. Otherwise, we will revisit this post in a few years with Oil at $200 . . .
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What other policies does the US have that has led to higher Oil prices? Use comments to add to the list . . .
Crude Oil, Cash Contract, 1986-2008 (Log)
click for larger chart
Non-Log Chart
click for larger chart
and there is Joe Kiernan this AM on CNBS still selling that oil is in a bubble…that global warming is not real…that any attempt to control global consumption should be left to the “free market”…talk about being in a bubble….CNBS is just a joke….
Add one of the most egregious which will never be fixed barring $6+ / gallon gasoline in US….
horrendous land-use/development policy at local and state level which encourages suburban sprawl and encourages the production of negative externalities (pollution and traffic).
hmmm, democracy in action….special interests have managed to protect their agendas while harming the collective good. *sigh* And sadly consumers are the last to blame themselves for the problem. Classic behaviour of an addict.
What i’m just sayin’ said.
The lack of any sort of sustainable urban planning/design, is THE problem. The horrid thing about this, is that this mistake is very difficult and painful to try and fix. It’s a very embedded issue. People have their homes, and presumably they’d like to keep living in their homes. Telling them that we’re not going to subsidize that lifestyle isn’t going to go over very well politically.
How about fighting a couple of major wars? The amount of oil used to transport all the troops and equipment, not to mention all of the jet fighter flights, is huge.
I love that we get all excited because a hybrid gets 30 MPG…..
in the early-mid 90’s there were cars getting 50mpg… and they were just regular old cars…
Barry, you missed Bush adding 150M barrels to the SPR in just 4 years, creating an almost 1M barrel a week draw in fuel and adding 5% to US “demand”.
Also, did you know our military is using over 450,000 barrels a day to fight the war, that’s over 2% added to US “demand” as well.
I recently had the need and opportunity to read some of Jimmy Carter’s Energy policy speeches, including his The President’s Proposed Energy Policy speech delivered 31 years ago last month.
Its both sad and interesting to speculate what the US would be like now if Reagan had done a 180 and trashed those ideas (while removing the solar panels from the roof of the White House).
How about margin requirements for oil at 7% vs. margin requirements for stocks at 50%.
Perhaps we should be hoping for more failure in energy policy. Higher fuel prices create the kind of emotional response from consumers that inspires innovation and political response.
I believe $4/gallon gas will bring about more psychological and emotional angst so I am hoping for $5/gallon gas as soon as possible…
Americans need to be stretched to the point of breaking before we get the kind of energy policies that will bring long-term benefit…
i am a future urban planner and it seems there is some hope. The trend has been for smart growth to end urban sprawl and more enivormental friendly sustainable planning
The man-made global warming scam. The arbitrary nature of all restrictions on production, refining, lng terminal construction, wind power and the grandaddy of ’em all the ‘china syndrome’ hoax re nuclear power.
Energy. Let’s look at the spin, and the facts.
1. There’s no new drilling in America.
Complete nonsense. More GOP talking points distributed to right wing radio. To name two examples:
http://en.wikipedia.org/wiki/Bakken_Formation
http://money.cnn.com/2008/06/06/news/economy/birger_shale.fortune/?postversion=2008060617
2. Iraq had nothing to do with today’s oil prices.
Price is supply and demand. We have demand of 85-86M blls/day and supply of 87Mblls/day
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8Roxzn8p.bI
But Iraq’s production prior to Bush’s fumbled occupation is equal to that difference,
http://www.eia.doe.gov/emeu/international/oiltrade.html
Even the guys with the numbers on their site say spinning that Iraq “isn’t the problem.” Bull. Where are their y-o-y numbers. Why are they so hard to find?
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2176rank.html
3. No new refineries have been built in thirty 30 years.
There are no new TV manufacturing plants either. Now, why’s that? Because refining is a bad business, so no NEW ones have been built but the CURRENT refiners have EXPANDED tremendously. Ask one of those FOX news spinners about the volume of refined products “as measured in daily processing capacity.”
http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/refining_text.htm#U.S.%20Refining%20Capacity
Lee Raymond Head of Exxon says refining is a bad business, there is very little profit in it. Yet they invested three and a half billion. Where? They expand current refineries.
http://www.foxnews.com/story/0,2933,172527,00.html
4. Restrictions on nuclear power cause oil prices to rise.
The US electricity grid is NOT powered by oil, but by nuclear, coal and natural gas so, anyone who says this on FOX news is spinning. Lunacy.
5. We must drill in ANWR and the environmentalists have stopped that, blame them
The “drill in ANWR” guys had total control of the White House and Congress. Why didn’t they pass the law? The same reason they never passed a gay marriage ban, any abortion bans, any flag burning bans… so that they can have some emotive boogey man to point to when their policies fail.
The GOP needs to have those same disclaimers about side effects that are reeled off at the end of a TV pharmaceutical ad.
I like a good faith-based energy policy. We know god wants us to have plenty of oil, or he wouldn’t have made all of these cars.
Except for tax credits / penalties, what you suggest is obvious. Since government is likely to screw up the tax incentives that give money to producers, I would be cautious with those. Sin taxes for oil products are asinine, in spite of the textbook-like intellectual appeal.
Having said that, I am happy to be sitting out the market at this time. I’ll jump in briefly only if the market has a good dip and will hopefully profit from the eventual rise. I made good money last year (more than BR proffered on CNBC as his return on 2007) and am up this year a few percent.
While I am only a fringe player, it seems obvious to me that the oil and energy markets are a gamed system, aided by a lack of transparency that does not appear to apply to other commodities. If Congress close the Enron Loophole and the other black holes that apply to these markets AND prices remain high then I will reconsider. If the system looks honest, I will put my savings back into it.
One of the most valuable things I learned in years past was something my barber taught me after I lost a sucker bet he conned me into … ‘Never Play Someone Else’s Game’. High energy prices are clouding the entire system. If they really are justified then realistic investment plans are possible. Right now, it looks like a crooked system that smart people have blown into a bubble.
Whether I am right or wrong will only become known when transparency eventually enters the energy markets. Anything else is a sucker bet if you are an investor and not one of the people who are probably gaming the system.
(BTW, here’s the sucker bet my barber turned into a life learning experience … Pick a baseball team and MULTIPLY all the final game scores they have. The other side ADDS scores. The ADDER will always win. Why … anything multiplied by zero is always zero. It only takes one shut out to lose. It cost me double the price of a haircut. God knows how much this lesson has saved me over the years. It is an incalculably large amount. This doesn’t even include the amounts I ‘won’ by dangling a ‘sure thing’ towards people who were too smart by half.)
Had we made the opposite decisions, Crude Oil prices would be much lower than they are today ($130.17 as I type this).
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A couple of years ago that thought crossed my mind but today I’m not so sure it holds up.
Energy is key to world growth so the more you can get or use, the better. This means that if one country uses less, other countries get to use more. And that could have only accelerated the US empire’s decline vs. other growing countries unless, of course, the US had minimized its use of energy while at the same time increasing its ownership of world oil reserves.
It’s hard to believe such a strategy could have worked because it implies too much dissonance! I don’t think a country can decrease its use of energy unless it is forced to. And obviously the US was not forced to because it did not do it… Too many players, lobbyists to convince or hold back.
There are inefficiencies everywhere, it’s too easy to say what if…
What’s the H.P. count on your car ? 200+ ? The Red Ball Express saved the 3rd Army moving stuff in 6X6’s with 175h.p. Who owns an SUV ? A large SUV ? The point of all this is that we collectively chose to be hear (go watch Syrianna who’s underlying theme is that the spice must flow at any cost). We went thru this in the ’70s (and I was there as a resource economist in a think tank). NO single thing going on now wasn’t anticipated then. Including the huge surge in prices bringing both substitutions away from energy in technology AND counter-vailing surges in new supplies. In actual point of fact there’s still plenty of inexpensive oil for the next 30-50 years. It’s just in places that are hard to get too and politically unstable.
IF we’re serious about this then we need a concerted national effort not another quick fix. Done right we re-position the economy, create new industries and ween ourselves away from our blood-spattered addictions.
Who’s willing to sign up ? The politicians do what they think will get them elected and kept there. In other words these are our choices.
What about incentives for better energy efficiency in the industry? Kyoto would have given a good reason to invest in new machines and processes. If I remember well, the US didn’t sign the Kyoto protocol because it would hurt the economy. Not signing hurts as well and you will feel the pain much longer :-)
Th red thin line between liberalism and national security.
Surely it is -easiest/fairest/or simply they get money- for us politicians to sometimes do the game for foreign companies or countries, liberalism.
when this liberalism results in a breach for national security evryone starts shouting, not before.
Our entire zoning process is wrong. It encourages large energy consuming houses a long distance from work. I live in Nice France and have not owned a car for 9 years. I walk, ride my bicycle, ride trains and buses and rent a car on rare occasions.
I am an Austrian economist at heart and beleive in choices. We do not have the choice of bicycles as transportation in America. At best bike amenities are treated like entertainmet and the paths are full of baby strollers and joggers. They are not treated as an alternative transportation choice.
Zoning is wrong from beginning to end. Get it right and 30 years from now energy use would be improved.
In California, the supposed (Hummer-driving) Green Governator is cutting mass-transit funding to help address a Hummer-sized budget deficit.
One of the big holes in the budget is due to the Governor’s refusal to reverse a 67% cut in automobile registration fees – a cut made when California was flush with internet-bubble tax revenues.
spending money for roads that support sprawl–no impact fees on developers
subsidizing oil companies via huge military in middle east
refusing to add bike paths to roads.
A few puzzlers in the list.
* Mass transit system is not a priority;
* Americans, on average, live further from where they work than Europeans do;
* various sprawl comments…
While I find the European transit and old town planning charming, I think you’re missing some key factors in play with the way they live:
27 States in the EU, 4,422,773 square km with 500 million people.
50 Stats in the US. 9,629,091 square km of land and 300 million people.
More than twice the land with 60% of the people.
Simply put, there is no reason for folks to cluster into soviet style high rise barracks just to support bus and bike lines. No reason and no turning back. People here don’t yearn for high density or communal living and we have no shortage of land.
* Amongst the lowest Gasoline Taxes in the developed world;
Adding additional cost to gasoline would help the economy and average person how? Again, you’ve missed the fact that most of the goods we use are delivered via truck, in many cases over long distances (see my previous point about being a very large country in land area.
*Failed to aggressively promote compact fluorescent light bulb;
A technology that isn’t quite up to the task of providing a quality product that *also* saves energy. Paying $6 for a dim and flickering light bulb vs. 60 cents for one that delivers warm and steady light is the problem, not a failure to promote.
Besides, local utilities have massive amounts of fixed cost in the form of infrastructure and facilities. Reduce the usage of electricity and the rates go up to make the difference. The utilities will make their money; it’s just a question of margin vs. volume.
Nice list, by the way, Barry. Could only have been made by somebody who has been paying attention for a long time.
You can add housing developments with covenants that prohibit rooftop solar systems (either thermal or electric) and don’t allow anyone to dry clothes outside.
I’d remove ‘limited hydropower generation” from the list. Nearly all of the favorable sites for hydropower in the U.S. have already been developed — and often with disastrous side effects. For example, the enormous Columbia and Snake River commercial salmon fisheries are pretty much destroyed now because of the Columbia and lower Snake River dams. These were the largest commercial salmon fisheries on Earth. But hey, being a crack addict requires trade-offs.
I believe it should read “Federal Reserve policies since 1913…”
There are a lot more failings in Mideast policy than just Iraq and Afghanistan. Iran would be an obvious addition along with the rest of the covert destabilization of moderate governments in the region. I don’t recall any of them refusing to sell the US oil. The problem is the US wants to steal it, not pay for it.
Since its inception the DOE has prolly spent over $500 billion. Proving that government is efficient at one thing – pissing away money with no results. WE DON’T NEED A GOVERNMENT ENERGY POLICY. WE’VE HAD ONE IN THE FORM OF THE DOE FOR OVER THIRTY YEARS AND IT IS A MISERABLE FAILURE.
If we had simply used taxpayer dollars to build nuclear power plants as opposed to creating the DOE to hire bureaucrats, we’d be like France where 80% of our power came from nuclear. (Guess the French system doesn’t look so stupid today.) Or funding basic research into advances in other energy sources which is a role government can constructively play. As long as research dollars aren’t used to play favorites and the market decides who gets the research grants.
The best thing government can do with energy is fund research, regulate games in the commodities markets and produce policy that encourages capital investment. Then get the out of the way.
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BR: There are so many wrong statements in this I don’t know where to begin:
Not building Nukes is an energy policy
The DOE is not an energy policy
Choices matter
Tax incentives work
Certain things are only fundable by govt’s (Manhattan Project, Moon Landing, Interstate Highway Program, Internet, etc.)
Stop buying into the nonsense that government cannot accomplish ANYTHING. For most things, the private sector is the preferred option. For certain situations — long term, national defense, etc., there is no other option — other than $135 oil . . .
Fascinating, absolutely fascinating.
I wrote a piece in dec of 2001, saying that if we were serious about dealing with terrorism, we would enact a manhattan project for energy — find a real solution to our energy needs that does not pass an existential crisis on to future generations.
It is absolutely amazing, and quite indicative, how much americans would rather go kill brown people, or bicker endlessly about things they don’t understand, prattling on about free markets and evil hordes, and the unjustness of energy efficiency standards or drilling for more oil, than do the one thing that their owners want them not to do — change the playing field.
Is it some kind of accident you think that the administration that came to power saying, in their platform, that ‘innovation was incapable (yes that is the word they used) of improving energy efficiency’, is composed of a bunch of oil men? See in order to believe that the only solution is invading arab countries, you have to believe that technology is incapable of changing the situation. And in order to preserve oil company profits, you have to maintain demand. So why would you try to innovate. Instead you focus innovation on meaningless endeavors, like a man on mars, and improving weaponry, and make sure that it does not affect established industries, like power generation and others (music, movies).
None of that is surprising. What is amazing is that we are sitting here in 2008 and the entire discussion about this issue is completely distracted from those central facts.
Here are the facts:
1) if we didn’t depend on oil, we wouldn’t prop up arab dictators, or need to invade arab countries, and hence would not be a target for the rage of oppressed arabs. (more generally if we didn’t prop up dictators all over the world, the world would be a better place, safer for everyone including us)
2) Nuclear power is a nightmare. The fact that the nuclear industry has used this looming crisis to insinuate itself into the discussion is pathetic
3) So called renewables have very low energy density, and most people who favor them are busy consuming products that depend on much higher energy density being available, such as chrome plated bikes, and synthetic materials.
4) We will run out of oil.
So? What we have needed to do, for the last 8 years, was to invest 500 Billion on a massive high intensity, single focus research project to find a new energy source. fusion power is one very good candidate, there may be others. We could have taken a true leadership position and changed the geopolitical strategic equation, as well as given mankind a real future by investing in an energy source for the future.
But we didn’t. And now we are out of money, and have a war on our hands, and the good old boys who own this country have ensured that the status quo ante was persisted — endless subsidies for the war machine, endless propping up of oil companies, endless subsidies for every damn business in america — the land of a a guaranteed right to profit.
And the concomittant social and political and economic crisis that always generates.
Anyone know any hedge funds that need bailing out?
But we didn’t,
There were a couple posts that mentioned the need for >$5/gal gasoline to make the public get behind policy change. I think that it’s too bad we think society needs a Shock Doctrine in order to think about real change. Humans are logical in the most part if you give them the opportunity for change. Give them choices, yes, but give them the correct information to make those choices. Most of the bad polices are centered around poorly understood incentives.
‘Nuclear power is a nightmare’. Nonsense. You speak about things as if you ‘know’. You don’t know, you believe based on your own personal nightmares. The problems presented today have roots in policy based on feelings and ‘nightmares’. A nation of children.
I just have to add, that the disingenousness of the ‘government is the problem’ crowd is startling in its consistency and absurdity.
Bad news for you guys: refusing to face reality is not intelligent, it is not a survival trait, in fact, it’s not even attractive.
It is a straight out fact that the mess we currently live in was created by ‘right thinking’, ‘movement’, ‘principled’ ‘conservatives’ whose stated intent was to destroy the government of the United states, and hand it over to the corporations. This IS a free market, laissez faire society, and the consequences are quite obvious.
The idea that Exxon or GE is being prevented from innovating an energy solution by the evil nefarious ‘librals’ in the ‘gubmint’ is factually false, politically innane, and morally bankrupt.
The fact that ‘free market’ ‘the government is evil’ advocates don’t know that economics does not support their position — even the limited economics that we have, much less common sense, or experience, apparently does not prevent them from waltzing around the world taking over? Why? Because they are convenient for those whose interests they do serve, not because what they say is anything other than a bunch of hot air.
Go take your prediction markets and stuff it.
Carter was 100% right on energy; Reagan was 100% wrong. Reagan was wrong, in fact, about nearly everything. He fought the wrong war – Communism was tree rotten from the inside out; energy independence is (and was) the correct war.
Combine this with Fisher’s speech last night and maybe a nationwide energy policy is possible.
B,
You seem to assume that inexpensive access to energy should be the government policy (BR: Not inexpensive; just LESS expensive). Perhaps the policy that is being executed is exactly the policy that was intended. $130/barrel oil can be absorbed by the US in the short term, but I am not so sure that Chindia can continue the policy of subsidizing fuel in the face of these rising prices. Kissinger is reported to have told OPEC in the 70’s that they could charge any damn price they pleased, but if they shut off the supply we would come get it. Maybe I’m giving the government too much credit, but this seems to be a national security based long term strategy to me. Our true strategic reserves are not being pumped into salt domes on the Gulf Coast. They are sitting off the East and West Coasts as well as the Gulf Coast areas of Florida. There also appear to be resources in deep strata in the Permian Basin of TX and OK. These were discovered in the ‘60s by Conoco, but they did not have the surface lease arrangements (oil leases go from the surface to the center of the earth, and the shallow deposits were being exploited at the time by other companies) or the technology in place at the time to exploit them. Perhaps the energy policy for the last 40 years has been to use up everyone else’s and damn the price. This is not a romper room game that the US is playing with the rest of the world. Thoughts?
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BR: You give the govt strategists too much credit; they are not that clever.
I made the same error pre-Iraq war
Change the current method of assessing property taxes to a Land Value Tax – Lowering the tax on property improvements, raising the tax on the land itself. A tax on land value penalizes land speculation and rewards development.
What we have is the opposite, a policy that encourages sprawl.
http://en.wikipedia.org/wiki/Land_tax
http://en.wikipedia.org/wiki/Henry_George
“The man-made global warming scam. The arbitrary nature of all restrictions on production, refining, lng terminal construction, wind power and the grandaddy of ’em all the ‘china syndrome’ hoax re nuclear power.”
Read a bit and expand your horizons for a change
Government policies contributing to suburban sprawl start with the massive infrastructure build-out following WWII, particularly the Interstate highway system. A self-reinforcing cycle then developed, where infrastructure spending was funneled disproportionately to wealthier suburban areas. The riots of the ’60s and the failure of Great Society programs to restore a perception of safety to the cities fed the same cycle. At the same time, the mortgage interest tax deduction has penalized renters, and many cities make housing less affordable through overly restrictive regulations and pay-to-play. I’ve probably missed a few…
“Energy is key to world growth so the more you can get or use, the better. This means that if one country uses less, other countries get to use more.”
I don’t buy this argument of more is better. OTOH, I’ll buy the argument of more efficient is better.
Which is the thing we should have done a long time ago.
Convince the tree-huggers that growth is good.
Most of the oil discovered in the United States will never be produced. About 2/3 of it is still in the ground waiting for new EOR methods. I would have added subsidies for EOR projects and oil shale – although we don’t need them today.
==
Here’s a case study from a company I’ve followed very closely:
On June 26, 2007 Wavefront Energy and Environmental Services (WEE.V) announced that Encana would be installing 3 Powerwave
tools in one of their Alberta oilfields that was under active waterflood.
• On October 7, 2007 Wavefront announced that the tools were installed.
• On January 15, 2008 Wavefront announced that Encana was seeing a direct pressure
response in the reservoir, often with increases in fluid production rates, increased casing head pressures or fluid levels in wells, and in a number of cases increased oil cuts and/or oil production rate.
• Yesterday, Wavefront announced that oil production from the three patterns increased
by 57 barrels of oil per day (bopd) (11 cubic metres per day) from 132 bopd
(21 cubic metres per day) to 189 bopd (31 cubic metres per day). The increased oil
recovery is apportioned to 15 producing wells in three production patterns where the
technology is actively deployed and further upside potential may be realized by increasing gross fluid production.
In other words production increased by OVER 40%. In addition, the injection volumes weren’t optimized. The potential exists to increase injection volumes and overall recovery.
Other missing pieces:
Decaying rail system
Stiff resistance to telework
Pushback over wind and hydro
Market-specific gas
I agree with one of the above commenters that land use policies are a HUGE resource sink: wear and tear on infrastructure, time functionally wasted en route, fuel burnt, cost of bringing public works to low-density subdivisions, etc. The only real winners are chain retailers, who can game that system to achieve economies of scale.
What scares me is the prospect of what will happen when fuel prices suck the viability out of exurbs. Where will those people wind up?
There’s gonna be a painful stretch of rebuilding the interurbans and light rail systems that GM so obligingly tore to pieces during the 1935-55 era.
I believe on faith informed by history that as a nation the USA can preserve most of its standard of living… in the long run.
And to the folks who are wondering what happened to the gas-sippers of 20 years ago, well, they’re rolling accordions next to contemporary vehicles.
Well Mr. Barry, I disagree with you terribly on your comments. First off, I don’t buy the argument all government is bad. But then I didn’t say that. Social Security is a noble cause. Common use of highway dollars is worthwhile. Protecting consumer rights is a noble cause. Government can and does do many good things.
You will never the best answers to problems by running it in a government program. The DOE was actually created so that we would have an energy policy. The DOE is responsible for energy policy. It has been an abject failure. We’ve had thirty years of government attempts at energy policy. I don’t know what you believe that $500 billion was spent on??? If the DOE isn’t responsible for an energy policy, why did we create it and what has it been doing with all of that money?
Government is not an efficient allocator of capital. Period. To believe government can best lead innovation is just about the most wrong-headed position I could think of. I see this concept of a Manhattan Project flying around and it makes zero sense. I’ll tell you why. There is no ‘cure’ or ‘bomb’ to develop. The energy solution is thousands to millions of inventions and innovations across a wide swath of business and society. It is not the silver bullet of finding a 1000 mpg car or other similar solutions. It’s home appliances that don’t pull a load when off. It’s solar powered highway lighting, its energy wrap for your house, it’s shingles that draw the sun’s energy, it’s companies investing in new and efficient equipment, it’s synthesized oil, it’s organic eating microbes and on and on and on. There is no silver bullet and there need not be one to be energy independent. Manhattan project worked because it was a specific problem.
The solution is to incent the millions of entrepreneurs, business people, engineers, scientists, venture capital firms and the sort to create market inventions.
Eliminating domestic and foreign effective family planning programs hasn’t helped.
No reason and no turning back. People here don’t yearn for high density or communal living and we have no shortage of land.
If someone wants to live 30+ miles from work, I say let them. If someone wants to live 30+ miles from work and then bitch and moan about the cost of the commute and then expect me to do something to help make it easier on him then he can bite me. I grumble all the time about my cost of renting, but I’ve chosen an expensive lifestyle and I’ll deal with it. It’s time for everyone else to start dealing with the real cost of their lifestyle too.
Please allow me to post an ignorant suggestion rather than rant on how some other guy’s ignorant political views are the source of all our problems. I have heard that GM, Honda, and Nissan are considering bringing out an electric car, T. Boone Pickens is proposing that we convert internal combustion vehicles to natural gas, and some people (e.g. Honda) are experimenting with Hydrogen fuel cells.
All these proposals sound like positive attempts to solve the problem of mobile energy. My concern is how do we safely and efficiently fill up these new vehicles on a long trip. I am wondering if it would be useful to form a commission, like ANSI to set standards for electrical, hydrogen, and natural gas delivery for future service stations. (Exxon Mobile has a few convenience stores so this is their knitting , too.) A standard, like we have with Wi-fi and Wi-max would help in this area. What we don’t need is a standards war. (Examples include the beta max-VHS wars, HD vs. Blue Ray, Edison’s DC vs. Westinghouse’s AC, RCA Corp’s. AM vs. FM radio battles.) I notice that auto parts stores have to stock a large number of batteries of different sizes and form factors. Will we have electric car wars that use different voltages and recharge systems that will greatly deter development of electric vehicle refueling? I hope not.
Scrap the farm bill. End all subsidies for energy intensive agriculture. Stop supporting facotry farming and oil-heavy food like meat and dairy.
It would do this country a world of good if we finally had to pay the fair market price for a Big Mac.
Jeff Mathews a couple of years ago pointed to the absurdly low hurdle rate oil companies were using to justify new production, and the NYT DealBook today or yesterday noted their continued refusal to invest in such projects, which was reiterated in a MarketBeat post a day or so ago quoting an analyst talking about “the lack of investment in the petroleum sector and the high concentration of suppliers” as I cited in a couple of Guambat Stew posts on May 28 and 29 (Guam side of the date line).
Basically, we’ve been socially, politically and economically engineered to live in an energy intensive auto-centric suburban sprawl.
My favorite case study is National City Lines and GM. See http://www.newday.com/films/Taken_for_a_Ride.html
China is repeating the same errors, by tearing out bike lanes, banning electric bicycles, banning motorcycles and scooters, etc.
M. Caldwell,
For Nat gas, many homes (mine included) have lines already coming into the house. With a compressor in the garage, no need for any gas station except on vacation!
T Boone talked about it in the video Barry posted a short while back…
My favorite energy idea is some kind of solar-driven catalytic cell that has water and CO2 as input and a gasoline substitute as output. While far fetched, with the right web site and a pick-up of some bankrupt public penny stock assets, someone could make a bundle! Raging Bull here I come, gonna be a GiBillionaire.
Man, I forgot, my magical technology that sucks CO2 out of the air while producing a gasoline substitute with water and sunlight as the only other input will, of course, be based on nano-tech. Probably nano-tubes that are encrusted with the secret catalytic compound, then secrete the gasoline through the tube part into a waiting nano-extractor.
It will definitely be a hit on Raging Bull.
What sense does it make to build a refinery in the country when the oil flow was less each year?
It’s conventional to think another refinery would help, but if we’re producing less of it here how much can it really affect the margin? They got built in KSA and the like, so the total fungible production is the same.
Norway’s Think to Produce, Sell Small Electric Cars in U.S.
Norway’s Think Global AS, with backing from U.S. venture capital investors, plans to produce and sell a small all-electric car in the U.S. that could go as far as 110 miles when fully charged – fresh evidence that the race to woo American consumers with electric cars is heating up and drawing interest from the same investors that helped build Silicon Valley.
he Oslo-based electric carmaker, which recently set up a U.S. office in Menlo Park, Calif., is trying to determine what geographical areas to focus its sales activities on, with an aim to launch the car – the Think City – in 2009. Think, a Ford Motor Co. unit until the U.S. auto maker sold it to a Norwegian company in 2003, is also searching for a site in the U.S. and Mexico to assemble the car.
Jan-Olaf Willums, Think Global chief executive officer, said Think plans to sell the City, to be priced less than $25,000, in densely populated cities because of the car’s limited range. The car is just hitting the market in Norway, Sweden and Denmark where a typical user drives the vehicle for a relatively short commuting distance and plugs it into an electric outlet in his garage to charge it overnight.
snip
1.) If you elect people who say that government doesn’t work they will prove themselves right 100% of the time.
2.) Much of our Nuclear weapons budget comes from the DOE instead of DOD as a means of reducing the apparent cost of our military
Also, I can’t help feeling that the world economy is a bus driving head on towards a brick wall with the US is in the driver’s seat(under the influence), ergo the only one with a seat belt. We may get banged up, but compared to everyone in the back of the bus…
Yours list reveals the heralds of laissez faire policies.
I wonder whether Al Gore would have produced different results?
“It has been said that democracy is the worst form of government except all the others that have been tried.” – Winston Churchill
Throughout history our gov’t has suffered long periods of inaction, only to take decisive steps once the crisis is at hand (e.g. WWII).
In a Democracy, inaction is oftentimes the path of least resistence, and there have been many special interests, large western states (no new gas taxes), auto mfg. states (CAFE), farm states (ethanol), environmentalists (ANWAR, nuclear), and many more who have collectively contributed to this inaction on energy policy.
We do not need to spend much time bemoaning the past. It oftentimes takes a crisis for democracies to act and today we have (at least) four: high energy prices, high food prices, a housing crisis and a potentially severe and protracted recession. All of which are inter-related.
We now understand that high oil prices are not a temporary supply/demand imbalance, but rather are a permanent feature of the new global economy. We now understand that we need to act.
I suggest the following:
1) Pass legistation to increase motor fuel taxes an additional 10 cents per gallon every year. (If people know ahead of time that the future price of gas will be going up, they will make better economic choices today on what they drive and where they live. Ditto for the auto mfgrs on what they plan to make.) – This will generate $10 billion in year 1, $20b yr 2, $30b yr 3 ….
2) Open up and sell leases for domestic oil and gas exploration on federal lands, ANWAR, and the intercontinental shelf.
3) Use the revenues from these sources to fund LONG-TERM individual and corporate energy tax credits for: wind, solar, geothermal, tidal, wave, cellulosic ethanol, hybrid cars, trucks, trains, buses, LED & CFL lighting, shale oil, nuclear, batteries & storage systems, efficient applicances, home heating nat gas conversion and energy conservation.
4) Redirect or supplement pentagon funding for: a) the military energy independence initiative, particularly gas liquification from coal and b) DARPA energy efficiency R&D grants to universities, venture firms, energy tech companies and transportation equipment companies (the not-so-big three need help converting to hybrids and efficient vehicles or they may well “creatively destruct”).
5) VC alt energy/domestic energy capital gains incentives (good one Barry)
6) Open up the H1-B Visa program for energy-related occupations to attract the best and brightest minds to help expedite the research and development of energy technologies. Goldman Sachs points out that additional H-1B immigrants will need housing as well.
7) Allow farmers to farm and trade (without penalty) up to 25% of the land they have placed into the conservation program until global grain stocks are restored.
8) Give every Afgan/Iraq veteran a $25,000 “home equity voucher” to apply towards either the purchase of a new home or the refinancing of an existing home.
Veterans are a responsible and deserving group who have suffered the most from the housing crisis.
Oil Cos. have tons of $$$ and debt capacity to invest in domestic leases, domestic oil & gas development and cap ex.
Long term tax credits will give corporations an incentive to invest profits and borrow money to spend on R&D and cap ex rather than stock buy backs.
My concern is that Congress and the Administration are fiddling with political tactics while we burn. Action is needed now!
There is ample room for efficiencies. negawatts are the new megawatts. I routinely fly red eyes across the country and the ground light is absolutely absurd. You could turn off 2 of every 3 lights in almost every community at night with minimal reduction in safety. Same goes for A/C. I often work in my (95 story) office building until midnight and it is a 62 degree ice box in here in the dead of summer. But then, if we consumed lots less electricity, prices would come down and the cycle would repeat itself. 5% of total electricity consumption is from appliances sitting there in stand-by mode (http://www.aceee.org/pubs/a981.htm).
>Energy Conservation Policies? None
Technically, not quite. We wrote off a pile of insulation and a replacement window on our taxes from a energy home improvement incentive that was in place over the last two years. A drop in the bucket, perhaps, but it motivated me to do it _now_ rather than sometime-I’ll-get-to-it.
>fair market price of a Big Mac
Here, here. Let’s get the free market into meat and watch people freak out over what it really costs. As a sparse meat-eater, I’d pay to see that. Water subsidies included, of course.
j and tom, It astounds me that it’s considered liberal to have a long-term energy plan rather than conservative. Burning every last bit of domestic energy as fast as possible is mad, insane, irresponsible, and childishly short-sighted. Stop calling yourselves conservatives, it’s a lie. Whining that the government isn’t letting corporations ruin the next generation’s chances on the world stage is just pathetic. Shouldn’t we leave them something to live off? We’ve already left them this war to pay for if not setting them up for future oil wars with inane fake conservative policy notion of “greed now” is the one and only worthy consideration.
In communist China, if the government takes someone’s house and puts a high rise there, they make sure the former occupant of the property is compensated well enough to live in it. My wife is from Shanghai so I know these things. Here in the US the developers make sure the politicians that they bribed to get the zoning changed and the property condemned are compensated well enough to live in the high rise and the poor homeowner who got his property condemned is given pennies on the dollar for his property.
Ain’t capitalism grand? /sarcasm
Jim Letourneau made a good point above and didn’t expand on it.
Telecommuting significantly reduces a person’s oil usage. The technology exists, with web-based software and intelligent PBX phone systems. All we have to do is change some attitudes and invest in IT infrastructure. There is not a thing to invent.
I’m not sure exactly how the government should incentivize this. Discounts on payroll tax for workers who work from home? But it is an easy (relative to inventing a new form of energy) way to greatly reduce our demand for oil. And we have not been focusing on it in any meaningful way.
Let’s not address the elephant in the room which is over population. (Subsidized by the government, of course!)
Hydro and other renewables can work perfectly today… with less people.
Barry you forgot hedge funds. Global hedge funds that have traded with the capital of foreign investors who have been seeking performance ever since the Greenspan interest rate lows.
He stirred up the hornets nest of cash to move elsewhere and it did. We got a mortgage crisis, a currency crisis (carry trade), and a commodity crisis.
You can counter all you want but oil prices have been artificially inflated since the Amaranth Advisors blow up in 2006 which seems to coinside with the exodus of money from the housing bubble.
A few things;
1)The rising nominal price of oil has provided work for a lot of jackass commentators on the teeveee news shows.
2)The real price of oil, corrected for Federal Reserve inflation has been nearly flat since 2001, see here; http://tinyurl.com/35udb5 (BR: Oil flat since 2001 ?!? Not even close !)
3) Assuming that eventually, due to increased demand and declining supply, the REAL price of oil rises, this will have a textbook free-market effect, i.e., people will buy smaller cars, live closer to work, use public transit, etc.
4) The collapse of the US Dollar will cause the contraction of the US military’s massive subsidy to the oil companies, which will cause the real price of oil to rise in the near term, eventually reaching a steady-state.
5) Coal-fired power’s dominance in the US will never end as long as;
a) They are permitted to pollute the bodies and property of one and all by the Federal EPA;
b) Big utilities through state PUCs are allowed to control power generation;
c) Safe nuclear energy plants are prevented by the NRC and the Price-Anderson indemnity subsidy;
d) Clean, safe reprocessing of spent fuel is prevented by the UN, and disposal is controlled by the Feds…
Are you getting the picture yet? We don’t need MORE government to solve these problems, we need much, MUCH less. Full private property rights, and economic resource prices will do much more for pollution, conservation, and anthropogenic climate change than any of the dumb big-government solutions being currently proposed. Sorry.
After thanking Reagan for giving us Greenspan, you can thank him for gutting alt energy research, and crippling the DOE. Imagine how far we’d be in alt. Energy (Look at Brazil, look at Germany, Japan) if Reagan hadn’t done that.
“The budget for the [Solar Energy Research] Institute–which President Jimmy Carter had created to spearhead solar innovation–was slashed [under Reagan] from $124 million in 1980 to $59 million in 1982.
http://www.geocities.com/thereaganyears/environment.htm
President Reagan came in and gutted President Carter’s programs for efficiency and renewables, disparaging them as government boondoggles and unnecessary interference in the marketplace.
http://climateprogress.org/2007/10/12/debunking-shellenberger-nordhaus-break-through-global-warming/
And here’s the kookie Heritage Foundation calling on Reagan to shut down the entire DOE
http://www.heritage.org/research/EnergyandEnvironment/bg258.cfm
See the Discovery Channel episode that researched the systematic purchase/dismantling/scrapping of USA’s mass transit system in the early half of the century. THAT is the reason we are addicted to our cars and Big Oil.
Those most motivated to INCREASE oil and car consumption BOUGHT UP THE MASS TRANSIT SYSTEMS of ^large cities i.e Oakland, St Louis, Detroit, Cleveland etc.
The “interested parties” who made their fortunes behind the purchases: Rockefeller(oil), Goodyear(tires), Ford (cars)etc.
>Otherwise, we will revisit this post in a few years with Oil at $200
in a few years ?
optimist!
“No new refineries…”
Come again? How is this raising the price of oil, given that our total gasoline production, even after shutting down all the inefficient, unprofitable refineries, is up about 20%? Besides, it sounds to me like you’re simultaneously arguing arguing that we should make the drug we’re dependent on more readily available (by increasing refining capacity…presumably the Supply Fairy will provide the additional oil to feed this capacity), while on the other arguing that we need to be less dependent (alt.energy research, etc.).
You don’t kill the beast by reducing the cost of feeding it.
Historically, the most effective way of fixing this set of problems is for the USA to lose a war, get invaded, have our obsolete infrastructure destroyed, and have the victors build, and pay for, new postwar infrastructure.
The neocons seem to be working towards this goal, but I don’t think it’s intentional on their part.
Any other takers? I didn’t think so.
However, markets develop solutions only AFTER the economics of it are feasible. This means we are starting R&D with Oil at previously unthinkable levels. Imagine if we had some form of energy leadership 10 or 20 years ago when Oil was $8.
This is stupid. You are assuming you can predict the future better than the market can, which is not only arrogant as hell — there are a whole lot more informed players in the oil futures market than you — but also stupid. Even a cursory reading of the literature will tell you that markets always predict future directions better than random individuals, even expert individuals.
(BR: This is a straw man argument. This isn’t about predicting prices — its about R&D that is too large or too long term for the private sector to do; Think about the internet or the moon landing, not top down Soviet central planning).
Had we invested in “energy leadership” 20 years ago, almost certainly the result would be throwing a gazillion dollars down some rathole that turned out to be a stupid idea. (Remember “synfuels” from the 1970s, for example? Lot o’ money down that idea that seemd brilliant at the time.)
And then that gazillion dollars would not have gone into other, more productive investments in the economy, and the present economy would be lots smaller, and much less able to stand the shock of high oil prices and, yes, do something about it, now that the price of oil signals that alternates are viable.
Geez, you’d think the idiocy of top-down economic planning over a 20-year-span would have died with the disastrous failure of Five Year Plans and “rational” economic planning in the late 20th century, from the USSR to China to various boondoggles in Europe and the US. I guess some people just never learn the difference between clever-sounding theories and actual facts on the ground.
Just a few facts among the hand-wringing and government-bashing comments.
1) Total energy consumption in the US is 100 Quads/yr. (Quad = quadrillion BTUs)
2) The sun deposits about 100,000 Quads/yr on the lower 48 states. (1000 times the need)
3) Most (over 50%) of the energy consumed is wasted (inadequate insulation, heat from incandescent lights and other appliances added to the solar thermal load requiring extra A/C capacity, old inefficient power supplies and transformers, inefficient production processes, etc.)
4) Almost all the solar energy provided is wasted (less than 0.5% is captured in biomass or agriculture and most of that not used in the economy. Instead we get forest fires, brush fires, grass fires and rotting plant matter).
5) In the city, braking consumes most of the gasoline used (inadequate traffic control/coordination plus no regenerative braking (as in hybrids)).
6) On the highway, most of the gasoline is consumed by wind resistance (could be significantly reduced by computerized “training/drafting” of vehicles or by solar powered tailwind assistance corridors or by more virtual commuting)
7) Solar photo voltaic energy systems can be built to provide electric energy at about $60/MBTU. Commercial electricity to the home now costs about $40/MBTU. Oil products cost about $30/MBTU. Natural gas is delivered at $15/MBTU. Coal is $8/MBTU. Which should we use most? Which do we use most? Do you really want an electric car? (MBTU = million BTUs).
For further thoughts see http://enjoygas.blogspot.com/2008/03/sunlight-insight.html.
Just one.
We need one thing …a better battery.
Even with current solar panels having a cheap,recyclable, long lasting battery will solve all our energy needs. plus, solar efficiency,cost etc are all improving.
The lack of any sort of sustainable urban planning/design, is THE problem. The horrid thing about this, is that this mistake is very difficult and painful to try and fix. It’s a very embedded issue. People have their homes, and presumably they’d like to keep living in their homes.
chris @ http://www.gofrostfire.com
Over here in Europe (Italy to be precise, though its pretty representitive) we are paying the equivalent of $8.80/gallon for gas
(1.50euro/litre). Of that about 75% goes in taxes, while over there in the US only about 20% of the pump price is tax. This has been the case for decades and as a result, here 30mpg is the norm. All those 12mpg SUV owners better pray that the new president, with 4 years (is that right?) of office ahead of him or her doesn’t do some math & work out how much money that level of taxation makes for the government. Over here all the politicos are saying “hey! look how green we are because we’re taxing people out of driving”…ker-ching!
Number 10 on the list is just factually incorrect. There have been tax incentives for consumer purchases of hybrid cars:
http://www.irs.gov/newsroom/article/0,,id=157557,00.html
~~~
BR: Fixed above
Barry, there were tax incentives for Hybrid cars for a time. I think I got 2k for my Prius. That was a few years back though, I think it is gone now.
“10. Provided no tax incentives for consumer purchases of hybrid automobiles”
Barry, I may have exaggerated a bit when I said nearly flat, but come on, you identified Fed inflation as a primary cause, if you strip out that, and the price pressure brought on by Bush’s endless warfare policy, the remaining increase is simply a modest demand one. Having said that, let’s agree that before the government implements any more ‘blue-ribbon’ energy policies, can we just make them stop doing all of the BAD things (war for oil, ethanol subsidies, pollution subsidies, strangling safe nukes, etc) first?
I don’t believe that anyone has mentioned this simple way to save much petroleum with very little pain…a mandatory decrease in speed limits to 55 mph, as were present during the Carter administration. Unfortunately, everyone hated these limits and President Carter for promoting them. But you would have an immediate savings in gas consumption. Even the airlines are throttling down a bit now to save gas.
And then that gazillion dollars would not have gone into other, more productive investments in the economy, and the present economy would be lots smaller, and much less able to stand the shock of high oil prices and, yes, do something about it, now that the price of oil signals that alternates are viable.
Like housing or dot-com startups.
Hybrid tax incentives.
http://www.fueleconomy.gov/feg/tax_hybrid.shtml
Looks like Toyota used up all theirs already and Honda is almost out, so at this point (not counting Nissan) it’s more of a domestic car subsidy.
One other thing – ‘Sprawl’, urban, suburban, whatever seems to make no sense to good liberal people, that is, until you look at the economic aspects. Manhattan real estate is simply out of reach for all but the wealthiest, but the proximity cost even affects those of us who live and work in suburbia too. I recently changed jobs, and looked for a new house closer to work. I found that in addition to a HUGE price premium in the area closer to my office ($100K or more), the taxes were outrageous, and the housing stock 40+ years old. I bought a new house 30 minutes further away for $100K less than the 40-year-old house, with taxes 30-50% lower. Gasoline and road use fees are going to have to go a lot higher before living near work would even begin to make sense.
It’s been said above, but it’s worth repeating in terms more clear that most of these items actually aren’t policy.
This is simply incorrect: there’s no de jure restriction on nuclear power generation. There probably should be, because it’s still patently unsafe and we still don’t know what we’re going to do with the generated waste. The new reactors scheduled for Tenessee (IIRC) are advanced versions of old boiler-water technology, not the safe-but-maybe-not-useful experimental pebble-bed reactors that everyone points to as the reason we should start building nuclear again.
What about the 55 mph speed limit on interstates. Not only does it force more efficient use but, also, reduces highway deaths.
What about the 55 mph speed limit on interstates. Not only does it force more efficient use but, also, reduces highway deaths.
Why is it that we have virtually no diesel powered compact trucks, SUV’s available for purchase in the USA? For example, the equivalent of a Nissan Frontier is available as a diesel in Asia, Central America, and Europe.
Sure, diesel is a bit more expensive, but the trade off for better MPG is worth it.
Inflation is one big cause of the current situation. The other is the so-called environmentalists like Al Gore who really only care about lining their pockets.
Point-by-point responses:
1. Offshore oil drilling limitations were necessary, given the damage it was inflicting on marine environments, including several infamous tar beaches in Southern California, as well as saline intrusion on the inland water table. Oil might get more money sooner than shrimpers in the Gulf, but with proper controls, shrimpers are indefinitely sustainable.
2. Yep.
3. Nuclear is a controversial electricity source. To the extent that its limitation has increased oil price, I’m doubtful. That this limitation lead to a return of King Coal and a dash for gas, these are true. Natural gas and crude oil prices are linked, but are not directly shared products.
4. The Fed’s role was fine within the boundaries that it set up for itself, and frankly the weak dollar situation is a combined result of the 90s policies of dollar reserve monetization globally as well as financial bailouts, PLUS the reality that there are too few investments with returns equal to expectations for that amount of investment capital floating around. This is why we have empty modern airports in Minsk, and a Chinese economy that was building highways to nowhere just a few years ago.
5. Not technically true. Rather no progressive energy conservation policies. Hence all the catch-up now. Also, the effect of electricity-focused conservation practices on barrel oil price is limited.
6. Yes, these wars combined with thinning supplies and explosive demand are leading to price premiums of at least $20/barrel, possibly $50. We’ll only know after we end one or both wars. Interestingly, the role of occupation in securing Iraqi oil exports has not sufficiently calmed the markets – it is not reliable enough for investor confidence.
7. Yep. Unfocused in the 90s, gutted under Bush, and then latecomer biofuels incentives which are both poorly thought-out, and jettison Republican economic philosophies.
8. Yes.
9. Not true, though the Energy Star program was certainly underfunded under Bush, leading to delays.
10. True at a federal level, not true at a state level. There were other incentives for hybrids as well, some of them (such as HOV access) are wrongheaded, in my view.
11. True. Suburbia in and of itself wouldn’t be a problem if it was properly designed, but the American reality is automotive-dependent sprawl. I have to remain optimistic about the adaptability of these spaces, since so many other American values and citizen expectations are now wrapped up with them. Where they prove unadapative, we will see significant difficulty.
12. Agreed. As mass transit ridership growth proves now, there is a need for it now, and it sure would have been nice to have more of it already deployed during the credit-rich 90s and early 00s.
13. Agreed, but I would instead argue the larger problem is failing to broaden the scope of supportive programs for residential energy improvements.
14. Agreed, but it’s also fallacious to believe Venture Capital alone can develop the whole new industries required to renovate the US energy economy – they simply can sustain the kind of capital outlays required. That requires either government, or mature industries. It seems to me the oil companies are sitting on an ocean of capital right now…
15. Yes.
16. Yes.
17. Yes.
18. Yes. But then, US-flag automotive industries have been dependent on closed market practices for decades.
19. Not true. There have been several really promising leads – few have reached market, and investment to take them to the next R&D step dried up.
20. Hmm, I don’t know that there is a specific ‘gas guzzler tax.’
21. Coal can never be clean, and liquification is not particularly efficient. We would get a lot farther keeping the coal in the ground, and investing dollars in non-fossil fuels alternatives.
22. Yes, but there are limits to what states can do without federal participation.
23. Promotion of the CFL has been late, but it has come, and from surprising corners. I’ve seen SMUD-subsidized CFLs selling for $0.50 now.
24. Well, actually most of the conventional hydro-potential in North America has already been tapped. What’s more, the trade-offs to fish stocks are significant and documented…hence the need for dismantling some of the old dams. Mind you – there is certainly non-dam hydro potential that could proceed with more R&D, and the US has fallen behind on that.
25. Yes, but battery developments with new applications have nonetheless proceeded. Moreover, what a lot of VCs have found is that some of these areas need a lot more development before they’re market-ready. What that tells me is the need for aggressive federal R&D.
26. Yes, but that these have limited direct effects on oil barrel price per se.
27. It’s worth noting that the Bush administration & Congress did issue permits for new refinery construction, which the oil industry has not fulfilled. Ultimately, as a society, we have to ask (as doubtlessly the oil companies are) – how much more money should go down a carbon-dependent hole? Would we not gain more by putting those dollars to a different package of solutions?
Note to all – we definitely do NOT have laissez faire in the US, in energy or anything else, we have an entrenched state-corporate system that in so far as practical maximizes returns for connected interests while penalizing competitors. So all of the above commentors who claim that the Bush Admin is unique in kind of evil instead of in degree is either blinded by ideology, or simply hasn’t been paying attention.
The Federal government’s charter, the Constitution, defines the powers and responsibilities of the Federal government, which are essentially three; protection of the perimeter, maintaining a voluntary union of sovereign democratic-republican states, and guaranteeing free trade between said states. In my view every other function properly belongs to state or local governments or the people, cf. Amendment 10. The massive, long-term projects Barry cites are not obviously achievable only by federal programs, look at SpaceShip 1 for one example. Sure, without NASA we couldn’t point to the Space Shuttle, but so what? What net benefit has the expenditures on it produced that could not have accrued otherwise? Why did the Federal government have to rob the taxpayers to build the Interstate Highway system when toll-paid highways had already been demonstrated? Why did the DOE waste billions of dollars on oil shale, synfuels, the SSC, the Princeton Fusion Laboratory, corn ethanol, all to achieve nothing?
The unique necessity of government in these cases has yet to be proved, the unique inefficiency and incompetence however is manifest if only one cares to look.
Again, before another dollar is invested in any kind of national energy policy, can we all agree first to terminate all of the worthless, even harmful current failed programs?
CFLs aren’t a solution. put money into LEDs. MOre light, less power. OK? Ok.
$8-a-gallon gas
Commentary: Eight reasons higher prices will do us a world of good
For one of the nastiest substances on earth, crude oil has an amazing grip on the globe. We all know the stuff’s poison, yet we’re as dependent on it as our air and water supplies — which, of course, is what oil is poisoning.
Shouldn’t we be technologically advanced enough here in the 21st Century to quit siphoning off the pus of the Earth? Regardless whether you believe global warming is threatening the planet’s future, you must admit crude is passé.
Americans should be celebrating rather than shuddering over the arrival of $4-a-gallon gasoline. We lived on cheap gas too long, failed to innovate and now face the consequences of competing for a finite resource amid fast-expanding global demand.
A further price rise as in Europe to $8 a gallon — or $200 and more to fill a large SUV’s tank — would be a catalyst for economic, political and social change of profound national and global impact. We could face an economic squeeze, but it would be the pain before the gain.
The U.S. economy absorbed a tripling in gas prices in the last six years without falling into recession, at least through March. Ravenous demand from China and India could see prices further double in the next few years — and jumpstart the overdue process of weaning ourselves off fossil fuels.
Consider the world of good that would come of pricing crude oil and gasoline at levels that would strain our finances as much as they’re straining international relations and the planet’s long-term health:
1. RIP for the internal-combustion engine
They may contain computer chips, but the power source for today’s cars is little different than that which drove the first Model T 100 years ago. That we’re still harnessed to this antiquated technology is testament to Big Oil’s influence in Washington and success in squelching advances in fuel efficiency and alternative energy.
SNIP
more at link
i see gas approaching the price of water….i bet all you people that complain about the price of oil (gas) still buy little bottles of “filtered” water for $1. 2 of them make a quart, 8 make a gallon. we have oil here, but we choose to import it from the middle east, for fear of offending a few carribou in alaska. even at todays prices, we pay 40-50% less than europeans do.
too many people in this country. remove the 12-15 million illegals, and there will be a lot less energy and water used.
sure, we can rip up the streets of los angeles, and build a highly sophisticated transit system….what a joke! get serious everybody. start conserving and stop bitching.
I don’t believe your list included making war on Iraq (a major oil producer), with the collateral damage of making everyone in the world think that the next war would be on Iran (another major oil producer).
~~~
BR: 6. Iraq and Afghanistan wars contributing to Middle East tensions
Well, since well soon be able to sue OPEC all our problems will be solved.
The stupidity (and ugliness) of suburban development patterns – separating inefficient, oversized housing from where you want to go and making the only way to get there via a car – is the biggest problem and will never be fixed unless we want to bulldoze everything and start over. so basically we’re screwed.
also everyone should eat less or even no meat. its a tremendous waste of energy and resources.
Wes: “What about the 55 mph speed limit on interstates. Not only does it force more efficient use but, also, reduces highway deaths.”
ABSOLUTELY FALSE. Please don’t perpetuate myths that have been totally debunked.
http://www.motorists.org/speedlimits/
Ron: ABSOLUTELY FALSE. Please don’t perpetuate myths that have been totally debunked.
http://www.motorists.org/speedlimits/
I don’t see anything at that site that debunks anything!
Though not directly related to energy, our lack of national universal health insurance has crippled the country in many ways, from bankrupting unemployed people to making US corporations (such as auto makers) less competitive to making people scared to leave a job with benefits.
I’m sure somebody also mentioned the extreme amounts of fuel 2 wars use. Correct me if I’m wrong, but just one of those new fancy fighter jets that fill the skies over Baghdad or Kabul burn over 1,000 gal/hour.
The greatest incentive for higher prices is the equity interest US and other western oil companies have in middle eastern (and other) oilfields. For every dollar increase in the price of a barrel of oil, these companies make an extra $0.40-0.50. In exchange for absolutely nothing.
The claim of “supply and demand due to China and India blah blah blah” is false. The timelines are completely unrelated, and there is no significant scarcity, certainly not one that justifies current prices.
Americans have a religious faith in sappy notions such as “the hidden hand of the market,” “market efficiencies,” “private companies operating freely are best,” and many others. They are concepts which often apply, but not always by any means, and they are certainly not akin to laws of chemistry ot physics. Oil companies have an enormous financial incentive to ensure that there is perceived instability in oil producing regions in order to help drive speculation, as do their business partners in the Persian Gulf and elsewhere.
Now, with the collapse of over-inflated mortgage-backed securities and their derivatives, trillions of dollars in worldwide investment capital are chasing the next bubble, and guess what it is? Petroleum! Yay! We will pay at the pump and at the supermarket so that those “investors” (what a pretty name! what positive connotations!) can gather up our money and put it in their bank accounts.
It is chilling how mainstream US capitalist ideology has come to resemble soviet communism. Sacred, unchallengeable beliefs about politics and economics; large scale invasions of privacy; restriction or suspension of legal rights; constant political propaganda and indoctrination in the public media; a profoundly corrupt military-industrial regime quickly morphing into a police state; suppression, censorship, and ridicule of any speech contrary to the regime’s interests; a willingness to kill and maim on any scale necessary to maintain the official myths and legends used by the regime to justify itself (ask anyone in Iraq, American or Iraqi); these are just a few of the traits that characterize the current regime.
Supply and demand my ass.
I was reading this article about how the Government’s energy policy pretty much effects everything in our country. It is called U.S. Energy Policy – And Getting it Right and it was very interesting. It stresses the importance of why we need an awesome energy policy. Its just very interesting and after I read this article here it instantly reminded me of this one I’m telling everybody about.
Thanks
Most of your list wrongly implies that oil is significantly impacted by alternatives to generating power for homes and businesses (nuclear is not a replacement for oil, in that the former powers our “immovable” assets while the latter our transportation). Another good chunk fails to address why the run-up in oil occurred in the last two years. Urban sprawl isn’t new, nor is our lower gas tax. I think you missed the real reasons (dollar decline, commodities pricing, unstable oil producing regions, funds looking for investment opportunities).
@Paul;
“Americans have a religious faith in sappy notions such as “the hidden hand of the market,” “market efficiencies,” “private companies operating freely are best,” and many others… they are certainly not akin to laws of chemistry ot physics.”
See my first post, your comment doesn’t apply because the reasons for all the bad things you mention are government ones;
“The greatest incentive for higher prices is the equity interest US and other western oil companies have in middle eastern (and other) oilfields.”
…advanced and sustained through US military might on behalf of the oil companies;
“the collapse of over-inflated mortgage-backed securities and their derivatives, trillions of dollars in worldwide investment capital are chasing the next bubble…”
…completely due to the central banks, fiat currency, and multiple levels of fractional collateral pyramided atop fractional reserves…
It simply makes no sense to criticize the free market for the looming energy, financial, and fiscal disasters we are facing, when from top to bottom these crises are originated and extended by government, in collusion with special interests.
, and guess what it is? Petroleum!”
…co
, you are
The best way for the US to handle the current crisis is to stop giving foreign aid to the rest of the world. About 4-5 years of isolationist policies would leave all those world welfare funds at home, where they might do some good for our own homeless, hungry, and ignorant population. Perhaps the world at large will realize just how generous the US when we turn off the charity.
The best way for the US to handle the long-term crisis (in the absence of a breeder reactor or alien technology) is Gen-IV nuclear power plants. I’m ready to install a pebble-bed reactor in my backyard, and sell the residual power to all my neighbors.
How can anyone believe that depleting our resources, as the advocates of more USA drilling propose, will increase our national security and lower the price of oil? The OPEC nations can control the amount of oil that comes on the market and, if the USA produces more, they will produce less. The result, we deplete our resources while the price stays stable. Those advocating more USA production should look back at what happened in the 1950s, when in the name of national security, Pres. IKE, and his allies in Congress put import controls on foreign oil so we could pump Texas dry. Well, Texas certainly is a lot drier, but how was our national security increased by that? Now they want to pump Alaska dry, and our coastal waters. A dangerously misguided idea. Why can’t they understand that holding an appreciating asset is better than spending it? I could add that the Law of Comparative Advantage has not be repealed, but I am afraid they wouldn’t care about that either.
The man-made global warming scam. The arbitrary nature of all restrictions on production, refining, lng terminal construction, wind power and the grandaddy of ’em all the ‘china syndrome’ hoax re nuclear power.
In 2006, for people at or under the upper middle class segment, the hybrid tax credit went to the dealers, who were charging $2k or more over list. For the mass affluent to rich, one didn’t get the tax credit at all. Meh.
“BTW, here’s the sucker bet my barber turned into a life learning experience … Pick a baseball team and MULTIPLY all the final game scores they have. The other side ADDS scores. The ADDER will always win. Why … anything multiplied by zero is always zero. It only takes one shut out to lose”
Fish! Choose the 1932 Yankees or the 2000 Reds. They didn’t get shut out once all season.