The price of oil is now very high, and it became very high very rapidly. Some blame "speculators," without realizing how small is the amount of money that speculators take -- see Philip K. Verleger -- while almost all of the rise in price goes to the oil-producing states. It would hardly be surprising, either, to discover that the Saudis and other Arabs were in fact behind some of these speculators, and were even employing them. After all, the speculators not only run the price up, but become the object of criticism that deflects from fury at this handful of plutocratic states.
These states, by the way, have far tinier native populations than they give out. The real populations of Qatar, with its natural gas, and the constituent parts of the U.A.E., for example, are at most a few hundred thousand, with Qatar being far less. This means the per-capita take is even greater than has been given out. If the real figure were to be known, it might increase the fury against these statelets, and people might begin thinking that all of these places could be taken over by a well-armed Western brigade or two, backed by air support. Saudi Arabia consistently exaggerates its native population, for fear that others would realize just how weak, how vulnerable, and how very very rich, its population is.
Despite the endlessly-recycled pictures of President Roosevelt meeting the Saudi king (Ibn Saud, or his father, or one of his sons, it hardly matters), which are meant to show that Saudi Arabia and the United States go way back and are still "allies" today, Saudi Arabia is not, and was not at the time of that meeting, and never has been, and never possibly can be, an "ally" of the United States. It can, very occasionally, appear to share some interests. Its manipulation of the Americans in such situations has been fascinating. The most obvious case is in Afghanistan, where the Americans appeared to believe that they and the Saudis had an interest in supporting the local muhajedin against the Soviet army, and collaborated in supplying those muhajedin. But what prompted the Saudis was not hatred for Soviet totalitarianism, but hatred for Infidels. When the Soviets left, the Saudis, along with the U.A.E. (a constant sidekick in so many ventures), supported to the hilt the Taliban. The views of the Taliban, you may recall, on what constitutes a rightly-ordered society, and on the treatment of women and of non-Muslims (the remaining Hindus were forced to put yellow identifying marks on their clothes "for their own safety"), did not correspond to the American conception -- at all.
Long ago, back in 1973, the American government should have recognized that the phrase "oil is a weapon" was false. For oil is fungible. In fact, the supposed Arab oil boycott was ineffective -- see J. B. Kelly, "Arabia, the Gulf, and the West." But it was effective in fooling and confusing the West into thinking that if it began to do the bidding of the Arabs, or at least tried not to antagonize them, that somehow this would be reflected in "price moderation." It was nonsense then, and it is nonsense now. The Saudis, as the swing producer (with a lot more to "swing" then than they do now, where their excess production capacity hardly exists, and they are blowing smoke about it just to inflate their power, like a frog blowing up its throat to impress would-be predators), always made the same calculation: what price X, at time T, will maximize the total value of Saudi reserves over time? In doing this, they kept in mind current budgetary needs, and also carefully watched what effect price rises, of various conceivable sizes, had on:
1) overall oil demand;
2) oil exploration and production elsewhere;
3) short and long-term investments in other forms of energy, including nuclear plants, solar energy, wind, and so on;
4) changes in political will to effect, including a willingness to subsidize, those alternative forms of energy, including nuclear, solar, wind;
5) the political will to subsidize mass transit systems and to rebuild train systems as a carrier of both freight and passengers; and
6) the political will to tax gasoline, and thereby encourage, much earlier, and in a more predictable manner, the use of smaller cars and less reliance on cars.
And you can add to this a half-dozen or another dozen considerations, and someone else can add a dozen more.
But then came all those who were in the pay of the Saudis -- those "public relations advisers" such as the Kennedy apparatchik Fred Dutton, or those ex-diplomats (see James Akins), or former intelligence agents (see Raymond Close), or all those corporations that went to bat for Saudi Arabia. There was the famous AWACS sale. The leader was United Technologies, ably assisted by Whitney Corp., with the first a supplier of arms to the Saudis, and the second a builder and maintainer of hospitals in Saudi Arabia. There were all those businessmen who were so eager for Saudi contracts. Then there are all those fixers, the ones who as soon as they leave "public service" decide, as they grotesquely put it, "to make some real money" -- insultingly for the rest of us, who would be delighted to have their government salaries. These include such people as the founder and participants in Kissinger Associates, selling essentially its Who-Do-You-Know expertisee, that is, its ability to contact and influence people in the government. Then there are the Carlyle boys, and all the other fixers and promoters and wheeler-dealers who have convinced themselves, because they are so eager to "recycle" Arab oil money, that Saudi Arabia is our "friend" and "ally." And they have made that nonsense our official attitude, one encouraged in the ready-to-repeat-any-platitude and largely mindless press.
So here we are today, with oil at $140 a barrel, which is no doubt right where it should be. But it should be at that price because we ourselves, beginning back in 1973, began to tax oil, and tax gasoline use, and had made a smooth transition to that price, reducing oil use and having subsidized mass transit, and train track rebuilt all over. (Try to get from Portland, Maine to Lawton, Oklahoma by train as you once could -- just try.) Long ago we should have given subsidies to solar energy companies that went under without those subsidies -- though they were bringing down the price, and doing everything right (for example, there was Becker's pioneering Luz).
The Saudi Lobby is the most powerful lobby in Washington. More generally, the Arab Oil Lobby is the most powerful lobby in all the capitals of the Western world. Powerful people everywhere have been bought up. As a consequence, there has hardly been anything like an intelligent, long-term energy policy, one that made geopolitical and environmental sense (they go, as it happens, together; they are, as it happens, almost identical).
And the results we can now see all around us, as we frantically flail, and fail, and flail again, unable to grasp the enormity of what was not done over the past 35 years, slowly and intelligently, and now must somehow be done in great haste and mental desarroi.
Hugh:
The price of oil is not "where it should be".
It is where it is because we are told as much by the 'enviros', the nay sayers, the limiters, the Democrats - who want the price to rise, who keep saying the stupidity about a non renewable resource, and who will not allow us to go and find and extract the oil.
The new 'wildcaters' are technology savvy and efficient and effective and successful.
Untie American (and British) genius and let's go get the oil - off the continental shelf, anwar, the gulf, everywhere.
And build nuclear plants.
Then listen to the seven thousand Saudi princes running Saudi Arabia bitch and moan.
Doesn't the rest of the World think we went into Iraq to 'steal' their oil?
How about we actually steal the oil instead of just spending billions bringing democracy to a populace that doesn't seem to want it?
It would tide us over while we develop our own offshore and domestic oil and nuclear supplies.
"6) the political will to tax gasoline, and thereby encourage, much earlier, and in a more predictable manner, the use of smaller cars and less reliance on cars."
An unrealistic senario, it would only work in a country without elections. Short termism is one of the disadvantages of democracies.
On the wider point, the price of oil. We can speculate on this and that, if the Yen did this etc, but the simple fact is it's running out as demand increases.
The oil we need to get will be expensive and difficult to extract.
Solar Power, Wind Power, Tidal Power, energy intensive for little reward.
Geothermal power, nobody ever seems to mention that anymore? The planet we're sitting on is very hot.
But, the simple fact is we need a technological breakthrough. What's happened to the Atomic Fusion project, shouldn't the Western world be pouring money into that, to attempt to accelerate progress.
What are the western economies going to do when the price of oil is trebled or quadrupled?
They talk (politicians) talk like its a short term problem. Short of some technological breakthrough, it's the end of the world as we know it.
Oil has been taxed at extortionate rates in Europe for decades. A litre of fuel in France costs 1.5 Euros. A US Gallon is 3.8 litres. A rough conversion put the price of fuel here at $ 8.70 a gallon.
This extra cash doesn't go on research for a fuel alternative. It goes into buying off voters.
"I summon my blue-eyed slaves anytime it pleases me. I command the Americans to send me their bravest soldiers to die for me. Anytime I clap my hands a stupid genie called the American ambassador appears to do my bidding. When the Americans die in my service their bodies are frozen in metal boxes by the US Embassy and American airplanes carry them away, as if they never existed. Truly, America is my favorite slave."
King Fahd Bin Abdul-Aziz, Jeddeh 1993
Anyone who lives in the suburbs away from Washington, DC and its Metro (I only wish NJ had something similar!) will tell you there is no way to survive without a car. Even commuting into a nearby city usually requires a vehicle to get to the pickup point.
We have been warned about $100 per barrel oil prices since the 1970s. How is it that it just happened within the last two years?
Wrong, Hugh. The only thing taxes have ever produced is poverty - and lots of it.
High oil profits, in a free economy, will encourage exploration, production, and research into new energy technologies. The great opportunity we missed - in the wake of 911 - was the opportunity to seize the Saudi oil fields and turn them to our purposes. At the same time, we could have schooled the Middle East on the costs of crossing the West.
It would have been a lesson muslims could mumble about, in their goatskin tents, for the next 2,000 years.
I remember reading somewhere that Osama bin Laden felt that the arab world was woefully underpaid for the use of their natural resources.
He felt that the world should be charged at least $100.00 per barrel. The oil producers, not wanting the wrath of bin Laden, has decided to follow lock step with with his pricing plan. And then some.
Considering bin Laden has already talked about and actively promotes how to cripple the USA, by fiancial means, we can see the arab world only too happy to help him carry out his plan for world conquest.
"Oil has been taxed at extortionate rates in Europe for decades. A litre of fuel in France costs 1.5 Euros. A US Gallon is 3.8 litres. A rough conversion put the price of fuel here at $ 8.70 a gallon.
This extra cash doesn't go on research for a fuel alternative."
-- from a posting above
The taxes on gasoline in Europe have discouraged SUVs and encouraged continued reliance on small cars. Those taxes go to governments, and those governments not only subsidize mass transit -- busses and subways and trains -- but in the case of France, have built nuclear power plants that provide 80% of the country's electricity, and in Germany subsidize domestic investments in solar collectors. Whether or not this "extra cash" does or does not go to "research for a fuel alternative" it certainly does go, in part, to finance alternatives to the car (that mass transit), to encourage smaller cars, and to promote both nuclear energy (in France) and solar energy (in Germany). High taxes on gasoline are a good thing, and they would be a good thing here, had they been instituted long ago, and steadily risen, with a guarantee to investors in other modes of transportation, and other forms of energy, that those taxes would steadily rise and never go down. In any case, the higher the taxes imposed by oil consumers on themselves, the smaller the amount of increases Muslim producers -- who must worry about permanently dampening demand for their only source of revene -- dare to impose. This is what is meant by recapturing oligopolistic rents, a notion that I have written about dozens of times at this website.
The mullahs here are telling the ummah that America is a bully because they keep their army on the holy land of islam (sowdi barbaria) and they get their oil for free. Quite a lot of muslims here including one who had actually finished college have informed me of this interesting "fact".
Wrong, Hugh. Some of us are old enough to remember the Soviet Union. If you want to ride a shoddy, state-subsidized bus, you can still do it there. (I suspect.)
It doesn't matter how many times you have written bad advice - if it is unsound, it remains unsound.
The power to tax is the power to destroy. High taxation and a command economy gut-shot economic progress in the Soviet Union for most of a century. The same prescription, practiced again, will produce the same results.
Sky high European petrol taxes have done absolutely nothing to prevent the inflow of trillions of unearned dollars into greedy Muslim coffers over the decades. American taxes would likewise do nothing. Such staggering taxes would have been used, as taxes have always been used, just as they have been in large measure in Europe used, to fund an ever growing list of cancerous socialist boondoggles. It's ludicrous on its face to suggest that the inefficient mass transit, which serves the relatively tiny land mass of Europe, would be workable in the enormous USA.
Our government can barely run Amtrak, and only keeps that insane lunacy alive through generous patronage. Now the poster above would like to see such a program expanded to the entirety of continental North America?!? Insane.
Like many on the left, the poster seems to believe that the world's woes are caused by American stupidity and greed, and the only solution is to augment the size of our government to control the behavior of Americans. Does the poster above actually buy into the ludicrous notion that it's the advent of the SUV which has caused oil prices to skyrocket? Why stop there? The rest of the leftist anti-American canard goes something like this: "America constitutes 5% of ths world's population yet it consumes 25% of the world's energy resources..." The message is clear -- It's stupid American greed and that insufferable loutish piggishness of her unwashed masses who like to drive their huge SUVs which has caused our dilemmas. Time for the government to step in to tame the American savage with some of those civilized methods which work so well in wonderful wonderful Europe!
Sure, a few prostrate satraps adore the invisible majesty of such noncompoop suggestions, but I'd prefer to see the poster above stick to the theme of Jihad. More Islam, less rewarmed socialist claptrap.
Right-on, Jsla! I've already busted the socialist running dog to our master, Mr. Spencer. No doubt, Robert will adminster a serious tongue-lashing.
Increased drilling here is only a very small step which will do precious little in either the short term or the long term. The announcement of plans to drill might put a small downward pressure on current futures trading prices, but the supply will not come on line for at least five years, and even then, as noted in a clear eyed manner by Hugh, oil is a fungible resource, which means that the new reserves can be thought of, not as adding to US supply, but rather adding to world oil supplies, of which these supplies from ANWAR and the coastal shelves will only constitute a drop in the bucket. Fuel taxes are the fairest and most simple tool at the government's disposal to dampen petroleum use, and to fund not only alternatives, but to help pay for all the external costs that are associated with our wasteful use of petroleum.
Additionally, I would like to add that maybe it is time that we take a little personal responsibility for the situation, rather than endlessly blaming speculators, Democrats, or whomever. The best thing each of us can do now, as individuals, is to reduce as much as possible, our own petroleum use. By doing so, you will become much less vulnerable to the volatility of oil prices, while at the same time you will be doing your own little part to reduce oil consumption, lower demand, all the while making some Saudi Sheik just a little less wealthy. During WWII there were government calls for and collective movements to recycle scrap metal, grow 'victory gardens' and avoid consumption of materials needed to make warplanes, parachutes, etc. I see no similar calls from leadership today asking us to each do our bit to support the troops and reduce our petroleum use. I suppose that the task, as well, to spread the word, falls on all of our shoulders.
To the naysayers - Hugh is 100% spot on, but he left out one small detail.
High energy taxes have at least three very strong advantages:
1. Elimination by user choice of trivial uses in favor high value uses
2. Stablization of end price - with high taxes, the fraction of the crude price as part of the end price is smaller, meaning that changes in the price of crude are greatly blunted by the presence of the tax portion of the price. America more than any nation would benefit from stable end prices.
3. But taxing energy (consumption) more, we can tax productivity (e.g. income) less, all things being equal. Overtaxing our own productivity and undertaxing Muslim oil is a policy only OBL could love.
Hugh - the small detail you left out is - don't just increase energy taxes; shift taxes FROM income and property TO energy consumption. IT's a revenue-neutral win-win. Except for OBL and OPEC.
No one is suggesting a wholesale rise in taxes, or using funds for unrelated social programs, much less the expansion of government bureaucracy. We are talking about a targeted increase in a use tax on one specific commodity- oil, that is central to this countries security, a tax which could and should be offset by a reduction in taxes elsewhere; income tax for example, which could actually help reduce some bureaucracy. Don't like government taxation and subsidies to public transportation? The government has used taxpayer money for years to subsidize oil companies, and your tax dollars fund the building of post roads and other automobile related infrastructure, whether you use it or not. Without this taxation and subsidy, every road would be a private toll road belonging to whomever owned that particular stretch of land. Stopping and paying tolls to each individual owner could be a bit cumbersome. The only difference between these cases is, that in the first case, this taxation and subsidy helps to reduce our dependence on petroleum, whereas the latter two only support our continued oil addiction. Maybe this blog isn't the right place for some of you. I believe Rush Limbaugh has his own site.
BunrattyBill, you beat me to it, you filthy socialist pinko!
Some of us have been taking Hugh too seriously. One learns precious little about economics ... studying islam.
Hugh, I find it depressing how some of the prior posters have embraced the idea that taxes of any kind in any situation always have a bad result. As you pointed out, Europeans (who live a very nice life style similar, if not better in some respects to Americans) consume about half the energy per capita then we do. The free market will of course do what it always does, force change (for example, GM is already talking about unloading that repulsive Hummer division), and higher energy prices will force Americans to change how they live and maybe where they live, but a higher energy price alone gives most of the windfall to our Islamic “friends” overseas and will cause a great strain on our society as people scramble to readjust to the new reality. (and it is the new reality, energy costs will never return to what we enjoyed a few years ago). A tax on energy, gradually implemented to minimize the impact, would lead not to societal disruption, but a controlled and measured move away from fossil fuels. And for the record, one thing our govetment does all the time is influence how the economy works. This is hardly socialism. Of course good luck in finding any politician, of any political stripe who would dare utter the words, “I have come to raise your gas tax!” It was very depressing to hear McCain actually suggest a gas tax holiday as a solution to high oil prices, and it was to Obama’s credit that he didn’t join Hillary in advocating the same.
Abu Allah - hmmm...doesn't that mean "The Father of God?" Pleased to meet you.
Great minds think alike. If advocating policies that make America stronger, less dependent on OPEC oil, paying less jizyah, and which marginalize Muslim terror funding, makes me a socialist, then I'm proud to be one.
What I noticed was that gas price climbed 5 cents when Bush announced abandonment of military solution for Iran nuke. Why the F Iran is not bombed yet is beyond me!
"Wrong, Hugh[about the desirability of subsidizing mass transit] -- just as the car has for sixty years been subsidized by Federal highway building, and by the continuing inability to require that external costs -- health costs, environmenal costs -- directly associated with the car be reflected in taxes paid by car companies, and thus by car owners.. Some of us are old enough to remember the Soviet Union. If you want to ride a shoddy, state-subsidized bus, you can still do it there. (I suspect.)"
-- from a poster above
I have ridden on a shoddy, state-subsidized bus, late at night in Moscow, where I was the only passenger and the driver was completely drunk. It was one of the most terrifying rides of my life. But what does the shoddiness of the bus, and the three-sheets-to-the-wind driver, prove? That all trains and busses and subways are terrible, or would necessarily become so if they were -- horribile dictu -- subsidized? That all drivers are drunkards? What?
I have noticed that the Moscow metro was, per contra, not at all "shoddy" and that all kinds of other metro systems also carry passengers quite successfully, and cut down on the only alternative -- automobile traffic. Busses and subways, if very frequent, and very cheap, and very certain, can do much to lure people away from the bother of using cars. We use the tax system all the time to encourage this, or discourage that. The most obvious way in which th tax system is used to encourage certain behavior is the favorable treatment by the Federal government of home ownership through mortgage interest deductions. The most obvious way in which the tax system is used to discourage certain behavior is the stiff tax put on cigarettes by the states. I could list hundreds of other things favored, or disfavored, and so could you. So let's not pretend that the tax system is not used -- and has been used since the earliest days of the Republic -- to both favor and disfavor. Subsidies were granted early on, to encourage the development of transporation, through bridge and road building. See the Charles River Bridge case (wasn't it Daniel Webster himself who was involved?). Let's not rewrite American history to wipe from our memories how bridges, roads, canals, and especially railroads, were built -- the latter with some of the biggest giveaways of national wealth in our history. Let's not forget the fantastic cost of the Federal highway-building that went on under Eisenhower, in essence a federal subsidy to use of the automobile. And air travel has been similarly subsidized.
Why, when we must now do everything to make mass transit much more attractive, and to do so very quickly, should it not be subsidized? Of course it should.
Supply and demand, oil drilling, China and India, environmental restrains on drilling, all have little to do with this. It’s probably hedge fund activity, which are a new spin on old fashioned (and illegal) ‘commodity pools’, working hand in hand with the group that would most benefit from such a pool, the Arab oil producers, to drive up the price of oil.
Hedge funds are international and largely unregulated, so beyond the scope of the CFTC regulators. The London ICE (Intercontinental Exchange) did not have the price and contract limits of US based commodity exchanges (this may now change) so most likely the pool operators worked that market to achieve their aims. The aim was to cause a sustainable rising trend in the price of oil, to the enrichment of both hedge fund operators and their Arab masters, to establish a new ‘normal’ price of oil substantially higher than anything experienced in history, with the greatest transfer of wealth from the West’s economies to the failed economies of Muslim oil producing states (i.e., Saudi Arabia and UAE, along with Iran, Indonesia, Nigeria, Lybia, Algeria, etc., all those powerhouses of economic failure) to stick it to us by Mohammed’s ‘best of people’. The normalization of sky high oil will benefit the spread of mosque building and Da’wa in the West, playing into the long term strategy of stealth Jihad against the democratic and liberal values of Western societies. We had been made into their ‘client states’ to pay their Jizya tax, thus further hindering our economies and sapping our political will to resist their Sharia advances against our freedoms. Throw in demographic conquest from within, and they are playing out their 'Allah's will' against us.
In the end, the greed of hedge fund pool operators, largely unregulated, is used to drive a wedge between the economies of European Union and the USA economic policies, with a very high EU dollar (while driving down the US dollar) as now the currency of choice, to further destabilize our economies, all to the enrichment of Arab oil producing states, and impoverishment of the rest of us.
There is only one possible outcome to all this: the hedge fund commodity pools are severely regulated or shut down, their ‘hedged’ positions unwound, to bring the price of oil crashing for the next decade into a long bear oil market, with oil contracts limits imposed on all futures exchanges. This will only be a temporary solution until we seriously develop alternate forms of energy generating/conserving technologies. However, the end of the hedge fund pools may buy us time to work this out, or else a decade hence the whole game will be played out again, next time with $300 oil.
There is serious need for long term policy to address this energy issue, with smart people in leadership, to develop oil independence… and don’t invite Arabs to the table.
The stratospheric price of oil relates to another reason I have such utter contempt for bush. if only he had acted with the same alacrity to head off the skyrocketing price of oil that he displayed in heading off $2 a head lettuce by letting tens of millions of illegals flood into the country on his watch. Of course, $140/barrel oil is not as serious a problem for the country as $2/head lettuce. Although bush quickly rose to the challenge of $2/head lettuce, but slow to address the problem of $140/barrel oil, from one perspective he acted with complete consistency. Just follow the money.
Tell the arabs where to go -- then kick and shove them off and prod their exodus with pitch forks goading their hind quarters!
A few thoughts on an American energy policy: first, recognize that, for the forseeable future, it must be based on petroleum, natural gas, and steam-plant (coal-fired or nuclear)electricity. The "alternatives", such as ethanol, solar, and wind are at best marginal. They have their uses, but mainly in special situations. They are economically competitive only because of special government financial incentives. If ethanol were taxed at the same rate as gasoline, nobody would sell a drop of it. Even worse, it uses about as much energy to produce as it provides.
Petroleum: the U.S. uses about 22 million bbl/day, and produces about 8 million; another 4 million or so come from NAFTA partners Canada and Mexico, and the remaining 10 million from OPEC. First, we need to greatly increase domestic production, and I believe this could be done by more exploitation of off-shore deposits in the Gulf (of Mexico, not Persia), the Pacific, and the Arctic; more production from major land deposits, such as ANWR and the Willston basin in ND, and in the Rockies. All of these could be exploited in an environmentally-acceptable fashion. They could add, say 2 million bbl/day to domestic production. Second, both Canada and Mexico could greatly expand production. Saskatchewan is said to have tar-sand resources as great as those in Alberta. let's start using those. They (Canada and Mexico) could probably expand production by another 2 million bbl/day. Third, let's put disincentives on the use of imported, OPEC, oil, by imposing a tax of, say, $5/bbl (to begin with, and with the provision that the tax would increase $1/bbl every year for the forseeable future). This would provide, initially, about $50 million/day in revenue, which would be used to provide mass transit in our cities. For over thirty years, ever since the first "oil shock", most European countries have been investing massively in rapid transit and inter-city rail, as Hugh points out, and as a result have transit systems that only a few American cities even approach. And despite the nay-saying comments of a few above, they are very pleasant and liveable. As an aside, I might note that the American city (apart from Washington, a special case) that has done the most in the last 20 or so years to improve rapid transit is Los Angeles, the great home of the freeway. Twenty years ago, L.A. had virtually no rapid transit; now they have 4 subway lines, and are building extensions, and 6 commuter lines.
Likewise, most of the European countries have invested heavily in high-speed (i.e. 150 mph+) intercity rail. France, a leader in this field, has seen domestic air travel drop to a fraction of its former levels because of the speed and convenience of high-speed rail.
The combination of higher prices for gas, and the provision of good rapid transit would lead to reduced oil consumption. I would guess that perhaps another 2 million bbl/day would be conserved. Thus: 2 million bbl/day increased domestic production, another 2 from NAFTA partners, and another 2 from reduced consumption, all adds to 6 million bbl/day less from OPEC; or about $800 million/day less being sent to our enemies. Think of the impact on our trade deficit from that! And think of the economic impact of all those dollars going to American companies, American workers, and American equipment providers!
Next, natural gas. Again, the first thing is to increase domestic production. Then use it to power fleet vehicles, like city busses, school busses, and all sorts of urban fleets, such as garbage trucks, street and sanitation dept trucks.
Finally, electricity. All the rapid transit should be electrified. Building commuter rail lines is an important step, but only a first step if diesel-powered. At present, only Philadelphia, of American cities with a commuter network, is all-electric; and New York is mostly, but far from all, electric. The other cities are all, or almost all, diesel.
(Remember, I'm speaking of commuter lines, not subways or els). Then, let's get busy building electric high-speed inter-city rail. In many cases good, straight rights-of-way already exist, and could be used to keep construction costs down. We could easily have times of NY-Buffalo in 3 1/2 hrs, Chicago-St Louis in 2 1/2, Dallas-Houston in 2.
Also, there's the possible electrification of freight railroads. As the price of diesel rises, this becomes more and more viable. And with interest rates so low, maybe now is the time for Norfolk Southern, or Union Pacific, or another to start on this. Or one of the states might use its bonding authority to finance a rail electrification, and finance it by selling the electricity to the railroad.
Where to get the electricity? Nuclear, period. It's the most environmentally-friendly source. Almost all of the potential hydro sources are already in use. The main thing is to remove the obstructive legislation that "environmentalists" use to delay construction and drive up costs. There's no need for any government-funded "Manhattan Project". Just let government get out of the way.
Finally, what about technological breakthroughs? There are only two that have a chance: one is an economical process to get oil from oil-shale. It's a good bet that the major energy companies are all putting a lot of research dollars into this. I hope one of them succeeds soon. The second is methane-hydride: the Pacific off California has vast (and I do mean VAST) deposits of methane hydride. The trick is to exploit them in an economical and environmentally-safe manner. Again, I would guess that the big energy companies are devoting a lot of research to this.
Hugh, I think that we capitalists will continue to 'take the Bently'. We'll think of you, briefly, on your way to ECON 101.
James, is that 'Bently' with an 'ly', or an 'ley'? I really do forget.
Some cracks are showing, may put big Oil on ICE:
ICE Futures in talks to limit speculatorsReuters
Published: Friday, June 13, 2008
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=dbd8c4d3-33a8-4fbb-b904-4bce6c54e652
Political blog: Speculators knock OPEC off oil-price perch
http://polzoo.com/component/option,com_fireboard/Itemid,31/func,view/id,480/catid,18
There’s also talk of raising margin requirements on oil futures from very low 5% current levels. The fissures are starting… This could be big.
But usual jitters from Nigeria et al amy keep oil pumped up for now.
Hugh, the reason we oppose subsidies of any kind is the inherent assumption that some clerk at the DMV knows where the future of transportation lies better than the marketplace. I don't suffer clerks gladly - especially when they are in positions of power. In fact,this is one of my problems with our most senior clerk, President Bush.
The bottom line is that for the last 20 years we've guzzled gas like crazed frat boys at a beer party and we're paying the price. Our military personnel have been sacrificing for years, in part, to keep the party going but now its time for all of us at the home front to pitch in.
Peace through superior gas mileage!
www.smartusa.com
The bottom line is that for the last 20 years we've guzzled gas like crazed frat boys at a beer party
Peace through superior gas mileage!
www.smartusa.com
Posted by: FodderJohn
Right on, FodderJ !
In the 60's and 70's the typical American car was a big sedan, weighing over 2 tons, that got maybe 10-15 mpg. Then came the first and second oil shocks, and Detroit went on a diet. The 80's and early 90's saw some of the best cars the U.S. has ever made, light and sensibly-sized and getting good mileage. Notably, every time that GM down-sized one of its lines, the new model, altho up to a foot shorter and a thousand pounds lighter, had more interior room and comfort, which only showed how much of the car of the 60's was pure waste.
Then prices eased up, and the American public showed that it had learned nothing, and started buying larger cars again, until by the 2000's the typical American car was an SUV weighing nearly 3 tons, and getting -- guess what! --10-15 mpg. Three of the top five selling models, year after year, were variations on the Ford full-size pick-up chassis. Wise up, my fellow Americans. You flunked the course the first time around, so now you have to repeat it.
What are you personally doing about the high cost of gasoline? I see people everyday changing their driving habits (driving slower, multi-task trips, eliminating drives) We are definitely seeing a shift in real estate sales patterns, moving closer to places of employment. In rural areas, moving closer to town. I'm seeing a shift to more efficient vehicles and it is happening quickly. Our government needs to hurry up and do something before this crisis corrects itself.
"Hugh, I think that we capitalists will continue to 'take the Bently'. We'll think of you, briefly, on your way to ECON 101.
James, is that 'Bently' with an 'ly', or an 'ley'? I really do forget."
HotAIR, you add nothing to this discussion. You are a pompous mirror version of jihadist scum like Naseem who used to post here: an ignorant know-nothing.
The failures of Western conservatives to support a REAL energy policy is as devastating as the failure of PC multiculturalists to see the flaws in unchecked muslim immigration. Both are wrong, with devastating results for all of us, including those of us who don't cling to the political dogmas of the past.
You're a dinosaur.
A propos this discussion of prices, and taxes, and oil use, here is a news story from my part of the world, Down Under.
http://www.abc.net.au/news/stories/2008/06/18/2279048.htm?section=australia
Headline - 'Oil imports fall as drivers change road behaviour'.
Seemingly, as petrol prices have rapidly risen in Australia, people have been working out ways to use less of it , and our oil imports have fallen quite remarkably.
Here is the full article (for future readers of this site, in case the link breaks):
'The rising cost of fuel is forcing [Australian] drivers to find more fuel-efficient modes of transport or go off the road altogether, according to the latest petroleum import figures.
'The fall in petroleum imports is paralleled by other trends, such as growing demand for smaller vehicles, hybrids and gas-powered engines, and growing numbers opting to catch a train or take a bus.
'The figures from the Australian Bureau of Statistics indicate that the rising cost of motoring is forcing people to drive less and use more fuel-efficient vehicles.
'Petroleum imports in May were 28 per cent lower than a year earlier, casting doubt on the long-held view that Australians are unable to kick their "addiction" to fuel-guzzling cars.
'The broad numbers include a category that breaks down petroleum imports by litres, to control for price effects.
Economist Craig James from CommSec told ABC Radio's PM program the latest falls are dramatic, even though oil imports have been slowing for six months.
"What we saw in May is that the amount of petroleum that we've imported is 28 per cent lower than what it was a year ago," he said.
"This is the biggest fall that we've seen in over four years, and it certainly shows that the higher prices are having an impact on people's behaviours."
'He said the figures disabuse people of the notion that demand for petrol was non-elastic and that people kept on demanding petrol no matter what the price.
'He said that confirms a basic rule of economics; that prices influence behaviour.
"It certainly has hit people right squarely between the eyes this time around," he said.
"Most consumers, motorists would have been used to seeing $1.40 at the petrol sign boards, but all of a sudden it becomes a $1.50 or $1.55.
"When you fill up your car it costs you maybe $110 instead of $90 or $100, and you know you have to make major changes to your behaviour or otherwise it's going to have a big impact on your lifestyle."
'He says the tipping point with petrol prices has not quite been reached.
"Certainly for now we do know that people get used to a certain price over time and it may be the case that we're just seeing the knee-jerk reaction," he said.
"But if we do see the price of petrol continuing to rise then we're going to continue to see people changing their behaviour.
"Anecdotal evidence suggests that people are looking to public transport now, that they're using their cars less to go up to the shops to buy a litre of milk, whatever it happens to be.
(Note: Australia has very high rates of obesity and diabetes and there has been a public health campaign going on, to persuade the able-bodied to walk more - so walking to the corner store has a double benefit, it saves petrol and burns off that beer gut).
"Even in terms of businesses they've clearly got to adjust their behaviours, perhaps making sure that trucks and semi-trailers are well and truly full, and may be able to reduce the number of trips they make."
Environmental benefits
He says in a world choking on fossil fuel pollution, reducing vehicle use is not necessarily a bad thing.
"The simple fact is that the world is running out of oil. We're trying to develop alternatives, whether it's bio-fuels, whether it's hybrid vehicles or the like," he said.
"Prices are going to rise over time and people have to adjust to it.
"If you have the Government providing incentives, giving money back through excise or whatever it happened to be, that might be nice in the short term but over time we are going to be paying more for our petrol and we need to be adapting to those higher prices."
Adapted from a piece by Stephen Long, first aired on ABC Radio's PM."
So there you go.
I should add that my husband throughout his entire working life has either cycled to work - over distances of at least 10 km - or taken bus or train. So it CAN be done.
Some further thoughts.
Stop all the jizya to Muslim states. Pay, say, what is now given to Egypt and Saudi Arabia, to Israel instead: on condition that the half of it that is not used to achieve darura, is used by Israeli scientists in R & D on alternative energy sources of all kinds (cleaner, safer nuclear; nuclear fusion; solar; wind; you name it, maybe things we haven't even thought of ).
The Israelis (and also, I may add, we Aussies) have been worrying away at cheaper and more efficient solar energy for ages. Solar is not practicable for transport - though have a look on the internet for the Solar Car Challenge which has been running in Australia for years now, it involves a race from Darwin to Adelaide, by solar-powered vehicle.
Solar is, however, perfectly good for heating water in much of the world (the Israelis have got solar water heaters all over the place, they are a normal feature of their urban landscape, as they are, indeed, also, in Australia). Why use oil OR coal to heat water, at least in countries like Australia that get plenty of sun?
Solar is also good for domestic lighting and basic domestic appliances so long as those devices are not too 'greedy'. The cheaper and more efficient solar becomes, the less oil or coal energy people need to use for these purposes, at least.
R & D on better building design would also reduce the amount of energy (from whatever source) needed for heating or cooling - and makes buildings more pleasant to be in.
My father, who lives on what you Americans would call a backwoods farm, where the cost of attachment to the power grid is impossibly high, has what he calls his 'power shed'. A large shed, in which he keeps vehicles and tools, in which washing is hung during rainy times; and on the roof is his solar power pack, courtesy of a helpful government subsidy. It has a backup generator which most of the time it does not use. It runs basic 'quality of life' devices: dad's power tools, lighting, a washing machine, and a TV/ dvd player.
On public transport - Australian cities such as Brisbane and Melbourne and Sydney, fifty years ago, had a quite efficient, usable, and extensive tram system. The railways, all over Britain and Australia, used to go into all sorts of odd corners. There's a lot of track, a lot of unused rail corridors, that we could dust off, for more efficient transport of people and goods. Fewer cars in city centres = less smog and particulate pollution and less noise, besides the energy savings.
Walking more, cycling more = better public health (less obesity, diabetes, heart failure, high blood pressure etc). I would never DREAM of driving my kids to school; the walk to and from is the chief exercise I take during the day.
Energy efficiency does NOT have to mean 'reduced quality of life', 'reduced freedom', 'reduced choices'.
For a marvellously satirical critique of what might be called 'economic rationalism', and an intelligent exploration of the meaning of 'public good', I recommend Terry Pratchett's fantasy novel, 'Going Postal'. Pratchett is something of a modern Dickens.
Hurrah for oil, and screw taxes and gov overregulation. The cheaper the oil the better.
Freedom and not apparachnicks spouting the party line (like Dorothy), will get us ahead and succeeding.
Clear the decks and let's have at it.
Abu Lahab -
'Abu Lahab', what does that mean? Something about a 'washbasin' or a 'Mr. Washerwoman'? Maybe, it just means 'one from the Middle East who should bathe more frequently'.
Nothing personal; it's just a guess. Several guesses, actually. Have I offended you in some way?
I don't see mass transit as an effective solution to oil problems. The initial cost of installation is astronomical if you are talking about a maglev type system. Which, if you are talking about reducing Oil imports it doesn't significantly help to take everyone out of cars and put them in buses, or even train stations that would be powered off of Oil as well.
Unless you are going to talk about nuclear power. Of course, we can't have nuclear power in the US. It isn't as if our lack of it is a result of the free market. This is purely a matter of government intervention.
Raising gas taxes, but lowering income taxes is a non-solution. It will not matter if gas prices are high if people can afford it. For a gas tax to work to 'discourage' people from using oil, they have to effectively not be able to afford that oil. Giving them more spending cash while increasing the price of a commodity is not effective. Taxation as a negative incentive has to hurt. If that wasn't the case than simple inflation would discourage people from purchasing anything because it is 'more expensive', even things that are more expensive in relation to other commodities.
Gradual increases will not work either. Look at the smoking taxes, year after year. Gradual increases did nothing. It wasn't until drastic hikes happened in the form of taxes that the Tobacco companies couldn't compensate and reduce the effect of the new taxes on the consumer. The effort to reduce smoking was simply sticker shock, and it worked. It also allowed half a trillion dollars to be collected in a short period of time and then be totally squandered on an ineffectual, bureaucratic healthcare that spends over half of every dollar deciding on how the remaining nickels should be spent.
Of course, outside of its negative impact on preventative healthcare, the Tobacco industry is fairly well self-contained in comparison to Big Oil, and how it is directly related to absolutely everything, such as the food and auto industries. We have to look at how an Oil sticker shock is going to impact everything else that is tangential.
We also have to actually put our faith in our government to actually spend the money they receive from taxation responsibly, which excuse me if I don't have all that much faith in that particular area.
There is also another issue with modelling the European taxation model. As it stands now a lot of Europe's cheaper commodities are controlled by companies that operate on both sides of the Atlantic, and they make their lion's share of profit in the US, and make meager ones, barely above cost in Europe. This, in effect, somewhat subsidizes costs for European consumers.
Until such a time that there is some kind of equilibrium in pricing controls, and we no longer pay for products at 1,000x the price of European markets following their taxing schemes isn't going to be a wise decision. Also, until we see a European market run without companies making 90% of their profits in the US but pushing five times as much product in Europe I don't think we should have a lot of faith in their system. There is too much that is impingent on the US market for Europe to run as it does (and vice versa) for us to think we can become Europe and all will be ok.
It is more likely that if we invited European taxing schemes we would be inviting premature, and artificial inflation, which would ruin the entire Oil sticker shock. It would simply reduce the production and importation of everything that 'isn't necessary'.
Now to be a totally evil Imperialist bastard; I say if you are willing to accept a coercive government that is willing to employ the hammer of taxation to impose its will on the way its own citizens choose to live their lives, in exchanging their wealth for a legal commodity then why not support government initiatives in employing the hammer of military force to impose its will on the way foreigners get to live their lives instead, or in addition to?
As it stands, we don't even need to do that. Our energy crisis isn't a failing of capitalism. If drilling were allowed, it would have been done, and nuclear power plants would have been built, and wind farms. We can't drill in the Rockies, in Anwar, off the eastern gulf coast, in the Atlantic or pacific, we can't build nuclear power plants (or hydrogen power plants, or hydroelectric), and wind farms block Ted Kennedy's ocean view. You allow drilling, the building of nuclear power and you tell the country club goers on the east coast to deal with their 'eyesore' and we will not be as bad off as we are. We have the capacity to cut the necessity of Saudi Oil without taxation. If we can't do it without taxation, I remain highly skeptical that we can do it with.
There is no real desire, no real initiative to stop funding the Saudis, which is why it hasn't. There are a lot of answers, sticker shock being but one of them. If we wanted to do it without throwing money at the Fed we could though.
Several posters refer to the need for nuclear energy -- that is, for nuclear plants to be built, and explain the failure as an example of hostility to capitalism. No, the failure to build nuclear plants has to do with several things. The most important is the hysteria that surrounds the use of that word "nuclear" and three-mile-island-chernobyl fears that are permitted to flourish and to grow, without being put to rest, at least for those willing to listen to reason.
The second is that, given that hysteria, and given the fact that when the building of nuclear plants is left up to "private enterprise," that private enterprise, that is corporations, calculate the risks as too high, and are reluctant to build. In France it was the state that pushed through nuclear plants, the state, through state-owned enterprises, that has allowed the use of cookie-cutter nuclear plants that now supply 80% of France's electricity. The failure to develop nuclear energy in this country is not because of hostility to capitalism, but rather because of hostiity and mistrust of government being responsible for such plants. But if we talk about -- and we do -- a "Manhattan Project" for non-oil sources of energy -- perhaps it would make sense to rememvber that the original Manhattan Project was a government undertaking, from first to last, and no corporation could conceivably have harnessed that kind of scientific talent, directed to that kind of end, in so short a time.
Is the development of alternative sources of energy a "war"? Yes, it is. And it requires, and justifies, intervention by a government that should see itself as being on a war footing.
On the topic of nuclear power plants, I have heard say that so-called 'pebble bed reactors' are rather safer than other designs.
We in Australia, of course, are sitting on enormous amounts of the necessary, which probably accounts for why China and Indonesia were both angling for our attention at APEC last year. We would be wise, however, to sell it to India, Japan, and the USA.
"I don't see mass transit as an effective solution to oil problems."
-- from a posting above, expressing an attitude that is widespread
The attitude in question is that there must be "a" solution, that is "a solution," to the problem of energy, or to the two great problems that are connected to the use of, and reliance on, fossil fuels.
The first problem is that which such use, and such reliance, has caused for the natural world, that is our earth, our home and only home, now undergoing change, what is called anthropogenic climate change, at a rate -- temperature changes that have taken place in the past over hundreds of thousands of years will now take place in a century -- that prevents successful adaptation by the natural world, and all of the creatures in it, because there isn't time.
The second problem is that which such use, and such reliance, has caused for the human world, where by an accident of geology a great deal of the world's oil (and some of its natural gas) is to be found in countries whose peoples are adherents of Islam, a most retrograde, aggressive, collectivist faith, one that in the more intelligent Western past had always been understood to be a permanent danger, but that understanding was lost or forgotten or suppressed, and millions of the adherents of this dangerous faith ("Islam itself is not moderate"), a faith whose adherents must ideally become "slaves of Allah" who must do what he commands, avoid what he prohibits, and who are inculcated with the notion that all of humanity is divided between Believers and Infidels, and there must be a state of permanent war between the two. When that understanding was lost, in our civilization of heedlessness and forgetfulness -- the loss of memory, the loss of history -- the Western governments heedlessly permitted the large-scale introduction of large numbers of Muslims who, no matter what countries they have gone to, present insoluble problems that are unlike anything that other, non-Muslim groups present, and do so not in one country, or a half-dozen, but in every non-Muslim land they have gone to, and will continue to, as they conduct the Stealth Jihad, some by Da'wa, some by use and further deployment of the Money Weapon that is shipped from overseas, chiefly from Saudi Arabia, some by merely reproducing and swelling the ranks, and hence the perceived power (to politicians, who trim their policies accordingly) of Muslims, in what has been explicitly recognized by Muslims themselves as an instrument of war, of conquest.
Given these two problems, is there a "solution" at this point? No, not to anthropogenic climate change, and not to the danger that Muslims pose to non-Muslims, or to the fact that already, in Western Erurope, the historic heart of the West, the large-scale presence of Muslims has created a situation that is far more unpleasant, expensive, and physically dangerous for non-Muslims than would be the case without such a large-scale Muslim presence.
To claim, or to dismiss a claim, of this or that "solution" -- as is done in the posting quoted above -- is to miss the point. In that quote, the poster denies that mass transit is "the solution." But whoever claimed it was? Nor is "solar energy the solution." Nor is "nuclear energy the solution." Nor is a return to the ways of the nineteenth century "the solution." But everything helps, and it would be silly to suggest that mass transit, in cities all over the world, if greatly expanded, and inter-urban mass transit, including the revival and expansion of a train system, for both freight and passengers, would not help.
Of course it would. Not a "solution" for there is not one key that provides a "solution" but part of the multifarious answer, or response, to what is not so much a problem susceptible of solution as a situation capable of being ameliorated.
Just to back up Hugh's point about reinvigorating public transport, how about we stop and listen to a classic 'railroad song' - the "City of New Orleans".
http://www.youtube.com/watch?v=OfxoM6trtZE
Anyone who thinks public mass transport is incapable of firing the imagination, should think again.
Here's something about the composer, and the lyrics. I love the line 'their fathers' magic carpet made of steel'.
http://www.folkblues.com/goodman/cono.htm
Here's the Wikipedia link, which is fascinating - there's even an Israeli connection.
http://en.wikipedia.org/wiki/City_of_New_Orleans_(song)