Key to energy reform: Let our oil prices soar
Key to energy reform: Let our oil prices soar
It will take tough love and market realism to spur alternatives to America's dependency on petroleum
Dennis Byrne, a Chicago-area writer and consultant
Copyright © 2006, Chicago Tribune
Published August 7, 2006
I'm rootin' for higher gas and oil prices.
And honest environmentalists would admit that they are too.
Am I insane? No more insane than folks who would wait until the oil gauge is on empty and gasoline is at $80 a gallon. Having higher oil prices now is the only way to brake oil consumption and develop other ways to fuel America. No amount of government decrees will do it. No recycling or conservation. No appeals to give up Humvees and other rolling tanks. Money being the biggest economic motivator, $5- to $10-a-gallon gasoline would be crippling now to a world economy built on oil. But it would be the only way to set off an energy revolution of the sort that changed American in the mid-1800s when we began our oil dependency.
This time, revolution will be harder. Changing the energy-consuming habits of nearly 300 million Americans producing a gross domestic product of $12 trillion will be significantly harder than it was to get 31 million Americans and their $74 billion economy to shift from horses to petroleum.
But if we wait until the oil gauge hits zero, it's not unreasonable to predict a worldwide economic meltdown and a return to an agrarian society.
Cities with horse-drawn carriages and streetcars. Suburban wastelands, with the wind blowing through abandoned big-box stores; weeds on the interstates and massive deforestation as millions of people chop wood for heat.
The project by Tribune correspondent Paul Salopek on "The Twilight of the Oil Age" in the July 30 Chicago Tribune lays it out in fearful detail.
So, better to get the economic shock over with well before then. That will happen only if we start to pay the real cost of energy. Salopek quotes one economist who believes that the true cost is $8 a gallon, and runs as high as $11 when the cost of war to protect our Middle East oil sources are thrown in. At that price, Americans might finally get serious about making fundamental changes.
Only when American consumers demand energy alternatives will the business world start providing economical and workable alternatives. The current level of demand for hybrid cars won't come close to doing it. Neither will higher government-imposed mileage standards. Clearly, $3 a gallon hasn't done it.
So, how can Americans be billed the full amount? For one, we can take the politics out of pricing. Here's a great example: Michigan's Democratic Gov. Jennifer Granholm is running for re-election on a platform of keeping gasoline prices "low," whatever low is.
She'd cap "outrageous profits" and issue the usual "call on Washington to do something, because it hasn't done enough," whatever enough is. Such gasoline populism, with its fake promises, only worsens the calamity when the tank runs empty.
In other words, politicians should stop feeding public expectations that lower prices are normal, and can be achieved by a political process. They need to restrain themselves when they're tempted to blame conspiracies for shortages and higher prices, such as those created by Hurricane Katrina.
Environmentalists and others who crab about the scourge of the suburbs should openly support higher prices. How better to end suburban creep across the countryside and encourage the resettlement of the city neighborhoods and inner suburbs? (Of course, that would increase the demand and force up prices, thereby reducing the supply of affordable housing--something that affordable housing advocates shouldn't overlook.)
This pre-1950s Utopian vision of the metropolis is, of course, naive. It doesn't take into account the computer and telecommunications revolution, which reduces the need for physical proximity and face-to-face communications in our daily affairs. Thus reducing the need for travel.
Some people, who still require close contact in their social and business lives, would gravitate back to the city, but I believe we've entered an increasingly footloose society.
Instead of the suburban blob slowly spreading and inundating the countryside, I see a different future: more Americans settling in more livable, human-scale satellite towns, spotted throughout the countryside.
Of course, while we wait for settlement patterns that more realistically reflect our technologically advancing society and as we shift toward more efficient means of energy production (yes, it has to include nuclear), pain--a lot of it--will be felt. Government's job, to the limits it can, will need to create policies that ease that pain.
"Market forces" aren't always the best way to magically eliminate what economists call "dislocations." But continued pretending that prices won't or shouldn't go still higher will bring us all to ruin.
----------
Comment at: http://dennisbyrne.blogspot.com
It will take tough love and market realism to spur alternatives to America's dependency on petroleum
Dennis Byrne, a Chicago-area writer and consultant
Copyright © 2006, Chicago Tribune
Published August 7, 2006
I'm rootin' for higher gas and oil prices.
And honest environmentalists would admit that they are too.
Am I insane? No more insane than folks who would wait until the oil gauge is on empty and gasoline is at $80 a gallon. Having higher oil prices now is the only way to brake oil consumption and develop other ways to fuel America. No amount of government decrees will do it. No recycling or conservation. No appeals to give up Humvees and other rolling tanks. Money being the biggest economic motivator, $5- to $10-a-gallon gasoline would be crippling now to a world economy built on oil. But it would be the only way to set off an energy revolution of the sort that changed American in the mid-1800s when we began our oil dependency.
This time, revolution will be harder. Changing the energy-consuming habits of nearly 300 million Americans producing a gross domestic product of $12 trillion will be significantly harder than it was to get 31 million Americans and their $74 billion economy to shift from horses to petroleum.
But if we wait until the oil gauge hits zero, it's not unreasonable to predict a worldwide economic meltdown and a return to an agrarian society.
Cities with horse-drawn carriages and streetcars. Suburban wastelands, with the wind blowing through abandoned big-box stores; weeds on the interstates and massive deforestation as millions of people chop wood for heat.
The project by Tribune correspondent Paul Salopek on "The Twilight of the Oil Age" in the July 30 Chicago Tribune lays it out in fearful detail.
So, better to get the economic shock over with well before then. That will happen only if we start to pay the real cost of energy. Salopek quotes one economist who believes that the true cost is $8 a gallon, and runs as high as $11 when the cost of war to protect our Middle East oil sources are thrown in. At that price, Americans might finally get serious about making fundamental changes.
Only when American consumers demand energy alternatives will the business world start providing economical and workable alternatives. The current level of demand for hybrid cars won't come close to doing it. Neither will higher government-imposed mileage standards. Clearly, $3 a gallon hasn't done it.
So, how can Americans be billed the full amount? For one, we can take the politics out of pricing. Here's a great example: Michigan's Democratic Gov. Jennifer Granholm is running for re-election on a platform of keeping gasoline prices "low," whatever low is.
She'd cap "outrageous profits" and issue the usual "call on Washington to do something, because it hasn't done enough," whatever enough is. Such gasoline populism, with its fake promises, only worsens the calamity when the tank runs empty.
In other words, politicians should stop feeding public expectations that lower prices are normal, and can be achieved by a political process. They need to restrain themselves when they're tempted to blame conspiracies for shortages and higher prices, such as those created by Hurricane Katrina.
Environmentalists and others who crab about the scourge of the suburbs should openly support higher prices. How better to end suburban creep across the countryside and encourage the resettlement of the city neighborhoods and inner suburbs? (Of course, that would increase the demand and force up prices, thereby reducing the supply of affordable housing--something that affordable housing advocates shouldn't overlook.)
This pre-1950s Utopian vision of the metropolis is, of course, naive. It doesn't take into account the computer and telecommunications revolution, which reduces the need for physical proximity and face-to-face communications in our daily affairs. Thus reducing the need for travel.
Some people, who still require close contact in their social and business lives, would gravitate back to the city, but I believe we've entered an increasingly footloose society.
Instead of the suburban blob slowly spreading and inundating the countryside, I see a different future: more Americans settling in more livable, human-scale satellite towns, spotted throughout the countryside.
Of course, while we wait for settlement patterns that more realistically reflect our technologically advancing society and as we shift toward more efficient means of energy production (yes, it has to include nuclear), pain--a lot of it--will be felt. Government's job, to the limits it can, will need to create policies that ease that pain.
"Market forces" aren't always the best way to magically eliminate what economists call "dislocations." But continued pretending that prices won't or shouldn't go still higher will bring us all to ruin.
----------
Comment at: http://dennisbyrne.blogspot.com
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