Gasoline prices are out of control. Here in the Chicago area the price of unleaded has gone up about 12 cents in the past week to around $2.89 per gallon. If this were a momentary summer demand squeeze, we could all grin and bear it. But it's not. This spike in gas prices is just the beginning as a convergence of only worsening events in the Middle East and with energy resources in general bring us to our knees.
What is causing the escalating trajectory of gas prices? A few things, none of which look like they will improve soon, or ever:
- Conflict in the Middle East. The war in Iraq has made the region unstable and somewhat unreliable on the supply end. This has improved of late, but the continuing uncertainty of events in the region push the price of a barrel consistently upward.
- Greater energy demands from China. If we think we use a lot of gasoline, just wait until a few billion Chinese trade in their bikes for cars. China is emerging as a behemoth on the world economic stage and is quickly grabbing market demand away from the U.S. This is a problem that will only get worse.
- Peak oil. On top of all this, the world is now probably on the decline in terms of oil supplies (I wrote about this topic previously here). The U.S. reached its domestic "peak" for oil sometime in the 1970s, other areas such as the North Sea peaked within the past decade, and the Saudis, while secretive, are probably within a few years of their peak. All this means that it is becoming increasingly difficult to find new sources of oil and we are finding less and less as we go on. This is the overriding problem and like Chinese demand, isn't going away.
So what are we doing about this present and impending energy crisis? Um, nothing.
DETROIT, Aug. 15 - The Bush administration is expected to abandon a
proposal to extend fuel economy regulations to include Hummer H2's and
other huge sport utility vehicles, auto industry and other officials
say.
The proposal was among a number of potential strategies outlined by
the administration in 2003 to overhaul mileage requirements for light
trucks - sport utility vehicles, pickup trucks and minivans. It had
been seen by industry officials as likely to be adopted.
But the
impact of the tougher requirements would have been borne almost solely
by the increasingly troubled domestic auto industry, a concern for the
administration.
First off, let me note that fuel efficiency standards have not been altered in years. This is why huge SUVs are not covered by MPG regulations - because they didn't exist when the regulations were created. As a result, we have H2's roaming the streets getting 8/mpg.
Second, are we really doing all this just because it wouldn't play well in Detroit? That's a losing argument. If Detroit can't get in the game to be the leader in new energy technologies for vehicles for the future, it really doesn't deserve to have special treatment for its old school gas-guzzling vehicles. Call me cold-hearted, but we should not be married to gas-powered Ford SUVs just to save some jobs. If the White House wants to save jobs, it should be pushing Ford and GM to be the world leaders in renewable energy vehicle production. Innovate or die out. I know the White House is no fan of evolution, but in the case of car and energy companies, it is the only applicable theory that helps us escape this energy crisis.
What we need right now is for the Bush administration to make real efforts to make hybrid cars the rule, not the exception. The White House should be pushing for every energy source that frees the U.S. of an oil industry headed for certain collapse. This is smart domestic policy (it keeps people happy if they don't have to pay $3.00 for a gallon of gas), smart foreign policy (it prevents a basic necessity, energy demand, from handcuffing our foreign policy), and smart national security policy (it can help us wash our hands of nasty oil autocrats worldwide: Saudis, Chavez, etc.). Pushing for a major change of direction in energy policy would be a much more lasting and benefitial policy move for the U.S. than any military action in the Middle East. It is good policy all around.
But what has the Bush administration done instead? It has given handouts to the least-forward thinking oil companies out there. While Americans suffer at the pump, there is no respite in store. What is the White House response to $3.00 per gallon gasoline? From the press gaggle the other day:
Q When President Bush signed the energy bill last week he said
it was going to do nothing to immediately impact gas prices. But now
you've got the prices up to $3 a gallon in some places. Is there
nothing that the federal government can do to help Americans who are
feeling it at the pump?
MS. PERINO: You're right, the energy bill was signed a week ago,
on Monday. The President has long said that this is a problem that took
decades to develop, it's not going to be solved overnight. The energy
bill gives us an opportunity to get at the root causes of high energy
prices. The energy bill he signed last week will help us diversify
supply, so we'll be able to look for more supply here in America, as
well as diversify supply, which is important, as we look for alternative
and renewable fuels that will provide different types of fuel, as well
as cleaner burning types of fuel, which will have a better impact on the
environment.
The Department of Energy and EPA have a joint web site called,
Fueleconomy.gov. This is a place where people can learn about gas
mileage tips. One of the things that they have there are taken together
some of the efficiencies that they lay out in terms of keeping your car
in good shape, and other types of -- bundling trips so that you're only
going one way in your car and you don't have to make several different
trips. Taken together, you can achieve efficiencies that save up to a
dollar of savings per gallon.
But there is no doubt that high gas prices have an impact on the
economy, they're a drag on the economy. ... there's no doubt it has a high impact, but again,
it's a problem that's developed over decades and it's not going to be
resolved overnight.
So let's review: we have an oil crisis which has a definative ending at some point not too distant in the future. We know oil will run out, so what do we do? We look harder? Seriously, this is what the latest energy bill suggests as a solution to the problem. What else are we doing? Pushing "cleaner burning types of fuel." That's code for coal which some people who don't want to face reality seem to think is now some sort of boon to the environment. Oh, and the best part: faced with $3.00 per gallon prices for gas, the Department of Energy has put together a website with tips on how to limit aerodynamic drag on your car. If this weren't actually our energy policy it would be a hilarious joke.
Look, none of this is helping. Burning more things and looking for more things to burn are not the solutions that will get us out of this certain trap. We need an actual energy policy, not one that just hands out billions of dollars to status quo oil companies which pocket all the profits of a $3.00 per gallon energy crisis.
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