Kerry on Energy: Truly, Deeply, Stupid

Kerry is going to announce today that he would open the Strategic Petroleum Reserve to pressure OPEC to lower prices in order to lower the price of gasoline.

In the L.A. Times this morning:

Democratic presidential candidate John F. Kerry will announce a plan today in San Diego for reining in skyrocketing gas prices, saying President Bush has done nothing to stop increases that are hurting average Americans.

Kerry’s campaign said Monday night that the candidate would use a rally at UC San Diego this morning to propose increasing pressure on OPEC to produce more crude oil and to suggest that the United States should temporarily let supplies in its Strategic Petroleum Reserve be depleted, making more gasoline available for consumers.

So, let’s see. AT a time when our relations with the Arab states are as precarious as they have ever been, when Venezuela (another major source of imported oil) is in turmoil, and when domestic production is starting a long decline, Kerry wants to drain the SPI – the stock that exists to cushion shocks caused by cutoffs of imports (hence the name Strategic) so Soccer Mom and Soccer Dad can drive their H2 Hummers and Hemi Rams and not feel it in the pocketbook.

I’m hopeful that – unlike Kerry’s advisers – those who read this are smart enough to see why that might not be a good idea.

One of my major discomforts with Bush is his unwillingness to put the nation on notice that we’re at war, and that this war will require sacrifice from those of us who don’t wear uniforms as well. A gas tax or tax on oil imports would be a good start. We need to wean ourselves from dependence on easily-interrupted foreign oil, and at the same time, make the public point that our troops are not in the Middle East to steal the oil, but instead to respond to a violent threat.

Kerry could have taken that issue and run with it. But instead, he’s pandering to his suburban constituency, and doing it in a way that shows how unserious he is about our current situation.

I’m still on the fence, but Kerry’s team just gave me a hard push.

40 thoughts on “Kerry on Energy: Truly, Deeply, Stupid”

  1. The problem with Gasoline costs isn’t the price of oil- we had oil costs this high before. The issue is supply. Our Refining capabilities went into the crapper after the the new enviro regulations in the early 90’s, and the different additives have increased the price per gallon as well. Our raw refining capacity has not increased with demand. Now, we import refined petro products rather than do it ourselves.

  2. nothing to worry about, really. this is all theatre, and wouldn’t do take than about half a cent worth off the price of gas. in a real emergency, we’d be f*cked regardless.

    Actually, the folks at RFF want the U.S. to develop a real reserve to be used in times like this.

  3. Howard Dean wouldn’t have made this dumbass proposal.

    I guess Kerry wants to make the race close with an uninspiring and meretricious campaign.

  4. There is no viable 2 year or 5 year or even 10 year plan for replacing oil for transportation fuel.

    There are 3 problem points
    1. Engineering – we don’t know how to do it
    2. Economics – we don’t know how much it will cost
    3. Logistics – we don’t know how long it will take or what resources will be required

    Other than those problems Kerry knows exactly what to do.

    practike,

    There is no way to build an economic reserve. An emergency reserve is easier to figure. The emergency reserve is so we can keep our carriers at sea.

    Ray,

    The idea is to displace the refinery pollution to some where else. Which of course has a cost. Also tailored fuel is a BIG problem. It reduces the gasoline market to a bunch of independent sub-markets. Which reduces availability and competition. It also induces companies to produce a bit less than market demand because excess production can’t be shipped to distant markets.

  5. Good post, except for the obligatory swipe at SUVs.

    The real consumption in this country is made by the truckers. Drive 100 miles out and back along any major freeway. Any day of the week. Night or day. You’ll pass about 100 18-wheelers going the other way, and 25 or so going your way.

    Thise things run on diesel fuel, but they all carry 50 or 100 gallon tanks.

    The fuels used by the much-aligned Moms in SUVs is a drop in the bucket compared to what the truckers use.

    Don’t get the wrong idea: without those truckers, we’d be seeing empty shelves at the market, at Wal-Mart, at the furniture store, the hardware store.

    SUVs are not the problem, not even A problem. Our dependence on Arab oil (and Mexican and South American) is the problem.

    I remember the gas lines of the 60s or 70s. You could only buy gas on ceertain days – even or odd, depending on your license plate.

    As for Kerry, he’s just pandering to the voters, like when he shows up the other day at a Baptist Church, quoting Scripture, even though he and Mrs Kerry are practicing Catholics. (I have no problem with that. I just wish Kerry’d be more consistent and scincere. Somebody asked a local radio talk show host, “Did he cuss out the Secret Service agent on the ski slope before, or after, he attended Mass that Sunday”?)

  6. M. Simon,

    This isn’t France. We don’t need diesel powered tugs to keep our nuclear carriers at sea :).

    (Yes, I know you were referring to jet fuel – I just couldn’t help it.)

  7. Thanks to the miracle of Google, let me point you at the site of the USDOT, Federal Highway Administration.

    Where they have a table showing the total distance driven by vehicle class in the US.

    For 2000, the numbers look like this:

    Fuel consumed (liters):
    |All Motor Vehicles:|613,343,541|100.00%|
    |SINGLE-UNIT 2-AXLE 6-TIRE OR MORE AND COMBINATION TRUCKS:|133,030,927|21.69%|
    |PASSENGER CARS AND OTHER 2- AXLE 4-TIRE VEHICLES:|475,323,713|77.50%|
    |MOTORCYCLES (I had to include that):|792,212|0.13%|

    Busses and other vahicles make up the difference.

    So a 10% swing in passenger car fuel economy makes almost an 8% swing in total consumption…and 10% on the average fleet economy of cars shouldn’t be that hard to do.

    A.L.

  8. I agree with Mr. Shook that the refineries under regs have been severely limited.
    To further that idea, if you were a refiner and knew that every time prices went up the Prez would open the emergency reserve spigot, thus sending prices and profits down, would you increase your capacity? Or would you lower it, thus sending everyone back to square 1, but now with less oil for a REAL emergency.

    Refiners make $ when prices are good- I believe that their profits are up about 30% this year. The free market of price conscious consumers should keep them in check by going to the lowest cost pumps.

  9. Rick,

    I’m a Naval Nuke (Tonkin Bay Yacht Club ’66). I did my part to keep our ships at sea. :-) The guy we owe our Nuclear Program and its success to is Naval Engineeer H.G. Rickover. Maybe if the French had more Jews post WW2 their nuclear program might have worked out better. American Nuclear Programs were loaded with them. It was so bad (for some) that Hitler called it “Jewish Science”.

    Nice dig at the French.

  10. A.L.,

    A 10% increase in auto fleet mileage in 1 year would require that the current year’s production use zero fuel (given that the replacement rate is about 10% a year).

    If we phase it in over 10 years (about 1% change in economy per year). We would have to start selling only 10% more fuel efficient cars today. One trouble is they are not available in sufficient volume. The other trouble is consumers won’t buy them. It is why we have the SUV. People didn’t want the Congressional car – high fuel efficiency mandated.

    Hybrid cars are out there that will give the required boost and more but they don’t sell well. At a $4,000 price differential over conventional vehicles they don’t make economic sense unless fuel costs rise some more and stay high. The people that buy them are early adopters, people willing to pay extra for something unususal.

    Kerry of course wants to ease our short term pain and make our longer term pain worse. Higher gas prices will move us into more efficient vehicles. If prices stay high long enough. Kerry’s plan is to short circuit the price signal. What a moron.

    Any way as I said in my above post (and wrote about here as a guest blog) logistics is very important. And usually ignored. Which leads to all kinds of loopy ideas.

    The real problem is innumeracy. People don’t run the numbers – not even back of the envelope rough order of magnitude. Its like science and engineering are magic unconstrained by the real world.

  11. Actually, we Catholics hear Sacred Scripture regularly and often. It’s just that our Masses use predetermined three-year cycles on Sundays and Holy Days of Obligation, so the section quoted is not always convenient to political parties, influential donors or the Altar and Rosary (and Gossip) Sodality.

    Two words to A.L. — CAFE standards. Environmentalists love them, Bush and automakers hate them.

    M. Simon:

    You say “there are 3 problem points.”

    “1. Engineering – we don’t know how to do it”

    Wrong, we do — see http://avt.inel.gov/ The two replacements available immediately are ethanol and compressed natural gas (CNG). Of course, we could content ourselves with doubling gas mileage with hybrid vehicles. Electric motors appear to be a faraway dream, thanks to charge times and low battery capacity.

    “2. Economics – we don’t know how much it will cost”

    Ethanol is more expensive than gasoline, so it should serve to keep a cap on gas prices; it requires little engine modification. CNG requires a different engine.

    “3. Logistics – we don’t know how long it will take or what resources will be required”

    Again wrong. Gas stations in my part of the country sell CNG. They are also forced to put ethanol in their gas mix to placate agriculture.

  12. Simon – sorry, fella it’s a simple matter of choice within the existing fleets; it doesn’t require alt fuels or hypercars. My Odyssey minivan gets about 26 real-world mpg; according to the folks at COnsumer Reports, a Dodge Durango SUV gets an average if 13mpg, while a Grand Caravan (holds more) gets 17.

    Fort Taurus? 22mpg. Ford Crown Vic? 16.

    How’s that?and no, I don’t think we’ll move the fleet average 10% in a year; but I bet we could move it 2 – 3% year if we worked at it.

    A.L.

  13. A.L. I composed this during an outage. I will address your present points shortly.

    ================================================

    A.L.

    How do you plan to change things? Have Congress tell us what kind of cars we can buy? Consumers are perverse. They will find a way to get what they want no matter what the government says. That is how we got the SUV.

    To move the fleet average 1% in 1 year 20% of the car buyers would need to buy autos with double their current mileage. Based on that pray tell how we can move the increase in efficiency 3% a year short of jailing and/or fining the people that buy the “wrong” car? I doubt 1% a year is possible without higher gas prices.

    Who in Congress is going to vote for restrictions on auto purchases or higher gas taxes? Not even Kerry is stupid enough to call for either of those “solutions”.

    Then you have the second problem. As cost per mile declines due to higher fuel efficiency people travel more miles. So you don’t get all the gain. Some of the gain is translated into more miles traveled.

    We are not going to win this war by getting off the oil standard. It is a pipe dream. We will win the war by driving the Saudis to democracy.

    We will be getting off the oil standard but it is a 60 to 100 year project.

    Be patient. Let the market do its work. Over time you will get what you want without putting a (government) gun to the American people’s heads. There are fascists in the world who need the treatment first and it ought to be reserved only for them.

    What you leave out is the cyclic nature of the oil market. About every ten years we get a sustained (for two years) peak in oil prices. During the two years of the oil boom new supplies are continuously brougt to market until prices collapse to rise slowly to their next peak. Due to a number of market factors we are now at the peak portion of the cycle. Part of that is caused by underinvestment due to poor returns in the oil market. And that was helped along by the last recession.

    So called environmentalists always amuse me. A true environmentalist ought to want everything to be high priced with prices increasing – you get more conservation. OTOH a man of the people ought to want low and continuously falling prices. Now how these two confilicting desires got united on the left is beyond me. Oh, yeah, I remember. The left is going to put (government) guns to people’s heads to get falling prices and more conservation. You wind up with Stalin, Mao, Pol Pot, etc.

    I think Joe has up today a good piece on the incoherence of the left. i.e. the uniting of leftists and Islamic fascists.

    Pretty much it comes down to the fact that the fascists and the leftys are very comfortable forcing people at the point of a gun to do the “right” thing. So there is some coherence. Nothing you would want to advertise though.

    The antidote to all this is Hayek.

  14. I first heard about this several months ago, but I believe the Bush Administration’s current policy is still FILLING the Strategic Oil Reserve–and at a rate that is having a measurable impact on the price of oil. Given that a lower price of oil is better for the American economy, and Bush would probably like to generate some more economic good news, this policy seems to run counter to his political best interests. My guess is that Bush anticipates future shocks to the world oil market, and is willing to let the economy take a small, sustained hit now in order to cushion a more dramatic, sharp shock in the future–which is one of the basic justifications for the Strategic Oil Reserve in the first place.

  15. M. Simon & A.L.,
    My old car is paid for and it still goes. Maybe not as efficiently as it used to, but I get to where I’m going. I can’t imagine how high gas prices would have to go for me to shell out the dough for another vehicle. I’ll guess that’s it’s so high that it’s not going to happen. Now, if my trany dies again, that’s a different story…

    There may be a point in here somewhere… oh yeah, what’s the normal turnover of the fleet every year, e.g. what’s the percentage of NEW vechicles sold annually relative to the overall number of vehicles? These will be the only ones where you’d have ANY chance of replacing an existing vehicle with a more efficient one.

    Because… there’s no way that a new vechicle will go into service, JUST for better gas mileage. It’s not going to happen. It’s at best a reason to choose a particular car after the decision to acquire a new vehicle has already been made.

    So, you can set a national goal of a 2-3% improvement every year if you want, but I’m not even going to consider helping until my car don’t go no more.

  16. Well, turns out Kerry just came out in favor of diverting the oil headed for the SPR to the market. No big deal.

    And M. Simon, if we had a gas tax that factored in the environmental externalities of drillings and the instability of the Middle East, we wouldn’t have to hold a gun to anyone’s head. Price is a powerful signal.

  17. Simon –

    Riiight. How about if we just stopped subsidizing SUV’s through more lax safety requirements, fuel economy requirements, and *explicit tax breaks*?

    The magic number these days is 6,000 pounds. Vehicles that weigh more than that can net small business purchasers a $100,000 tax deduction — four times what it has been in the past.

    “I’ve had people come in and make sure the GVW (gross vehicle weight) allows them to take the tax write-off,” said Smith, general manager of Raytown Dodge. “They come in, and I don’t have to bring it up.”

    Smith estimated that a majority of the dealership’s sales of Durangos this year are linked to the tax benefit, which increased this year from $25,000 to $100,000.

    It’s funny how much people who believe in letting the market work don’t like to let the market work…

    A.L.

  18. A.L.,

    Well sure A.L. it is a matter of choice. Given the choice Americans are not choosing to do what you think they ought to do.

    Now what?

    Pass laws and send in the enforcers?

    Warren:

    1. Engineering. The production capacity for CNG is not there. Neither is the ethanol capacity. If we go the ethanol route there is not enough farm land. Plus the energy gains are marginal. A gallon of ethanol invested in farming will not produce two gallons of ethanol. I’ve heard that the return is about 1.25 to 1.5. Which means spending 4X the amount of energy burnt in transportation farming. Not realistic.

    2. Economics – is there something you do not understand? If ethanol costs more than gasoline it will not be bought. There for it is not competitive. It will not help. You want to put pressure on gasoline? Find a lower cost fuel. Not a higher cost one.

    3. Logistics – where are the CNG burning cars? After all the fuel supply is there. And hey I thought ethanol was an answer not a way to subsidize the farm economy. Either I am confused or you are.

    ==============================================

    All this stuff is wonderful. It can solve our problems over night.

    It comes up against one minor problem.

    How you ganna get people to buy it?

    Personally I believe the only honorable way to sell environmentalism is to make it cost less than the alternative.

  19. Wait just a dag-nab minute, Simon…the LAW builds unfair advantages into SUV engineering and sales, and I’M the one who wants to regulate people’s behavior?

    We’re handing out stacks of $100 bills to people who buy Escalades, and I’m the statist?

    I’m dying to hear you defend this position…please. I’ll make popcorn.

    A.L.

  20. So A.L. you against subsidies for small business vehicles? Light trucks are the traditional small business vehicle. SUVs are light trucks. Small businesses used to use station waggons as well but they are no longer on the market. Government regs if I’m not mistaken.

    Now personally I think all business subsidies ought to be ended but do you really think ending this subsidy is going to reduce small business demand for light trucks substantially?

    Don’t make no sense.

    In fact a lot of the non-heavy trucks on the road are small business vehicles. The 80% non-18 wheelers exagerates the private transportation market.

    So here we at least have all the choices you prefer available on the market and people are not buying them.

    Now what?

  21. C’mon, Simon you can do far better than that.

    You haven’t touched the other two subsidies to SUV’s, the CAFE exemption and the pollution/safety exemptions.

    Yup those poor, hardworking realtors, forced to drive Escalades as opposed to sedans; the nail salon owner who needs a Yukon XL to haul the box of supplies she needs once a month.

    Bullshit; it’s a scam, and all the polite spin you put on it doesn’t change that. These people aren’t plumbers.

    And we shouldn’t be subsidizing their choices. Why are you so afraid to let the market work?

    A.L.

  22. AL wrote:

    One of my major discomforts with Bush is his unwillingness to put the nation on notice that we’re at war, and that this war will require sacrifice from those of us who don’t wear uniforms as well. A gas tax or tax on oil imports would be a good start. We need to wean ourselves from dependence on easily-interrupted foreign oil, and at the same time, make the public point that our troops are not in the Middle East to steal the oil, but instead to respond to a violent threat.

    I would not necessarily be adverse to an excise tax on gasoline to pay for the cost of our military in the Middle East (much the same way that tariff revenue was used to pay for the navy which protected our merchant ships) provided that there was a corresponding decrease in the income tax. What would that come to on a per gallon basis?

  23. Lurker says:

    >you can set a national goal of a 2-3% improvement every year if you want,
    >but I’m not even going to consider helping until my car don’t go no more.

    You can help RIGHT NOW.  All you need to do to make a 10% change in your fuel consumption is to drive with a lighter foot.  If you get into the habit of consolidating trips, dropping the habit of driving kids to their entire social life and a few other things, you might be able to do a lot more.

    I’m driving a lot of my miles in a 20-year-old car, because it still gets great mileage.  When I replace it I will be getting an even more efficient car, or maybe two.  Efficient as it is, I can still eke out more than 10% by driving at 60 MPH instead of 70+ MPH.  My less-efficient car improves about 15% between 75 and 65!  I spend a lot of time in the right lane at 65, watching assholes in H2 Hummers scream by 10-15 MPH faster than me.  Traitors.

    M. Simon says:

    >The antidote to all this is Hayek.

    And Hayek incorporates the non-economic elements of the national interest how?  Warfare is sometimes conducted by means other than guns and bombs, you know.  We seriously hurt imperial Japan by refusing to sell oil and scrap metal to her; Japan was forced to go to war to try to command the resources necessary to maintain and expand that empire.  Now we are the ones with the need for imports, and our sworn enemies in Islam are fed by the dollars we pay at the gas pump.  While I have the utmost respect for Bush as a CinC, I have zero respect for him as an economist.  Wasteful vehicles expand the US balance of payments deficit, directly by increasing oil imports and indirectly by driving up the price paid for every barrel of that oil.  I’ve read that one US job is lost for every $33,000/year spent on unneeded imports; if you multiply the US’s oil imports by $34/barrel and then divide by $33,000, you get a figure of about 2 million jobs the last time I checked.  Check out this ORNL report (290K, 57 pages).

    This cost does not include the damage done abroad.  Oil money corrupts (look at Mexico and Venezuela) and that corruption costs hundreds of billions.  Some of those damages are re-exported to us as waves of desperate, ill-educated and sometimes criminal immigrants.

    Unfortunately, Warren Eckels is wrong on several points.  CNG does not require a different engine (his statement would be a huge surprise to Impco, a manufacturer of dual-fuel conversion kits).  On the other side, CNG is no solution to imported oil; the USA is already importing a huge amount of natural gas from Canada, which has nevertheless not been sufficient to avoid large price increases.  (See the Energy Information Agency, http://www.eia.doe.gov for all the data you could want about imports and consumption.)  We are beginning to import more and more LNG, and soon we will be as dependent on imports of methane as we now are of crude oil – unless we do something.  Fortunately, it is feasible to achieve energy consumption less than half of so-called Energy Star levels with available (and even cost-effective) technology and products.

    The first thing we have to do is to stop designing and buying for the conditions of 2 years ago or 5 years ago.  We have to start looking 5 years ahead for vehicles, 10 years ahead for appliances, 20 years ahead for structures.  Being ahead of the curve transfers the initiative from OPEC and other energy cartels to us.

    >There are 3 problem points
    >1. Engineering – we don’t know how to do it
    >2. Economics – we don’t know how much it will cost
    >3. Logistics – we don’t know how long it will take or what resources will be required

    False on all counts.

    1.  Engineering.  Anyone who chooses to drive a Focus instead of an Explorer has already done several times what is necessary.  Efforts as amateur as college student teams have doubled the fuel economy of even the Explorer; translating these one-offs into products reliable enough to hold up for the warranty period is another matter, but Detroit has this problem with everything.  Honda and Toyota are once again showing Detroit how it’s done, a shameful turnaround from the USA’s erstwhile position of technological leadership.

    2.  Economics.  I’ve seen figures as low at $60/metric ton for methanol synthesized from H2 and CO (assuming the syngas is a free byproduct of another operation, such as an IGCC electric plant).  At perhaps 7 lb/gallon a metric ton is about 315 gallons, or about 160 gasoline-equivalent gallons.  I make that 37.5 cents per gallon-equivalent direct cost, plus the incremental cost of coal and amortization.  Detroit already makes flex-fuel vehicles that will take anything from straight gasoline to M-85, so no issues there.

    That’s just for unimaginative schemes which leave our vehicles running entirely on liquid fuel.  The plug-in hybrid breaks out of that particular box by supplying some of the vehicle’s energy needs from electricity.  If your driving is all electric until you go beyond battery-only range and have to start an engine, you can cut fuel consumption by 57% for a 20-mile electric range and more than 90% for a 60-mile electric range.  (See this EPRI study [warning, 9 megabyte, 264-page PDF].)  Replacement of some petroleum by coal-derived methanol (a potential byproduct of the same powerplant which charges the car’s batteries) could probably halve petroleum consumption again.  Methanol can also run heavy trucks; you can catalyze MeOH to di-methyl ether for ignition, and carburete methanol into the air stream for the main fuel requirements.

    3.  Logistics.  Funny, I don’t recall logistics being discussed when it was decided to give huge tax credits to purchasers of gas-guzzlers, and the shortage of refinery capacity is a large part of our local fuel-price spikes.  We already have 95% of the electrical grid we’d need, and if we slash consumption of liquid motor fuels we will need less infrastructure there too.&bnsp; We would also need fewer gasoline tankers, which would produce less road damage requiring less repair – a virtuous cycle.

    >How you ganna get people to buy it?

    This is war.  War requires sacrifices.  People should accept that the consumption of petroleum-based products helps feed the enemy, and those products should be correspondingly taxed.  To maintain our standard of living and avoid feeding an over-consuming government, we should have the average tax rebated in some consumption-neutral way such as a deductible on FICA taxes.  Phase the tax in at a nickel a month for as long as it takes to make the desired difference.  I bet it wouldn’t take more than months to change buying patterns; do you know anyone who would buy a Dodge Ram Hemi if gas was going to cost $3.50/gallon in 2-3 years?  Not unless they really needed it, which is the point.

    I really need four times this much text and a fistful of footnotes to fully support my points with facts, but I’ve got to get my ass to bed.  There is paid engineering to do in the morning.

  24. Yikes! I agree with the interventionist.

    In specific, I agree with A.L. that this is a litmus issue. If you believe we’re in a real war, with potential to turn into a civilization level struggle, then the unearned wealth transferred to the Saudis and others is both a measure and determiner of defeat or victory. As much a weapon as a Nimitz class carrier, and more decisive in the long run.

    Kerry is shown as either a panderer or deeply clueless on this point. Bush has some good points: filling the reserve, funding fuel cell research. But he’s also missing a lot and this comment thread highlights some of the options that ought to be in play.

    CAFE is one way, but I’m not in love with it. Price signals are a lot more neutral to the ultimate solutions. Make profligacy painful and let the market work. Excise tax is a good idea, if revenue neutral. CAFE’s effectively caused manufacturers to subsidize small car prices to hit fleet mileage targets. Why not put that out in the open and tax the hogs to subsidize the efficient, on a revenue neutral basis? (Carve out an exception for proven business usage.) Move the centerpoint and tax rate on a well-known schedule.

    Yes, this only makes a big difference over a long time, due to the turnover rate in the total fleet. But it’s change at the margin, which is where pricing is set, and that’s the point: Getting back some elements of control that don’t involve parking the 3ID on a certain 50km deep strip of coastline.

    And just to be sure I’ve got something to piss off everyone, if you’re serious that it’s a war, that also means you drill ANWR, and (slant) drill the California coast. And team up with the Russians and maybe Japanese to get serious about Siberia.

    There, I’ve blown off both my libertarian and enviro pretensions in one post.

  25. Tim,

    Nice ideas. Sort of.

    Where you fail is in the belief tha a tax will be revenue neutral. No such animal in politics.

    The market is revenue neutral. Market prices are the best way to determine what kind of vehicles we ought to use.

    The idea of using the “oil weapon” is a fantasy ideology.

    We are going to beat the Islamics by putting military pressure on them and by getting their citizens to aggitate for democracy.

    A 200 Mpg car even if we could get it on the road tomorrow at 90% of current car prices will only marginally affect the conflict.

    Why?

    Because China and India are industrializing.

  26. Government impositions in markets always lead to black markets.

    The SUV is the black market alternative to the CAFE standards.

    It still amazes me that after the fall of the USSR and 80+ years of dope wars that there are still people out there who believe that government is more powerful than people’s desires (market forces).

  27. Engineer-Poet,

    So let us see. We get government to take away people’s money at the gas pump and then give it back after the returns are filed.

    And this will have other than marginal effect on gasoline useage?

    To keep people from screaming bloody murder at their elected representatives the tax will have to be instituted at a rate of probably no more than a nickel a month and probably more like two cents.

    And this is going to change things faster than the natural evolution of prices and technology?

    If you really are an engineer do something that raises fuel efficiency while lowering the cost of production. Profit is a very srong motive among both buyers and sellers. Instead of whining for another intervention by the men with guns (government) why not do something irresistable. Get the market forces working with you.

    I know, I know. Something like that is much harder than just passing a law and calling out the enforcers.

  28. Lurker makes quite well the point I was trying to emphasize. Baring actual local shortages (caused the last time it happened by government intervention in the gasoline market) no one buys a car primarily for gas mileage.

    Autos that still run will stay on the market until they die. They will be resold at a price that takes current fuel costs into account.

    For a number of reasons the hybrid is the wave of the future. It will probably be the soft hybrid to start. Minimal size battery. All engine auxilleries (valves, steering, assisted braking AC, etc.) electrically operated.

    Now the really cool thing about this is the ability to adjust valve timing on the fly. And no idle waste. And some return of braking energy for city driving. The battery will hold just enough energy for a nice zero to 80 acceleration.

    However this cannot be rushed. It must be allowed to evolve. As we speak the industry is working to convert to a 36 V (nominal battery) electrical system. But it is a long and difficult process.

    Read my article on logistics again.

    It is all very difficult. How do you add electrical energy storage and yet lower the cost of the vehicle. What is the right balance given the current state of technology.

  29. Guys, guys, guys.

    I think you are missing one very important point. For the next few years at least cash is not the terror sponsors problem.

    Their problem is keeping enough operatives in the field. The attrition rate is discouraging volunteers.

    If the problem was money why aren’t we at war with Israel say? Which is very powerful economically and a potential high tech competitor.

    Simple. We are at war with an ideology. The money is not unimportant. But it is far from the most important.

    Work is going on as we speak to improve our technology. It is a long hard slog. .5% a year is an excellent rate. Currently we are probably closer to a 1% rate with a technological discontinuity likely in our future.

    Think high temperature superconductors. The miracle of the age (they are) and yet as of today the uses are miniscule. Why? Because it takes time for technology to evolve.

  30. I suppose it all depends on if you trust people to make choices in their own best interest. I will grant that that is not always true in individual cases. It is true in the agregate.

    Instead of complaining about people’s desires wouldn’t it be more profitable to find better ways to satisfy them?

    This is a very strange country. We have whole industries devoted to punishing people for their bad choices as if the bad choice wasn’t punishment enough.

    Who do you trust?

    People in the agregate or a small group of self interested persons with gangs of enforcers.

    There are a lot of people who will go with the enforcers every time. Nice gentle souls who personally wouldn’t hurt a fly, nor do they have to. They have contracted the job out and washed their hands of it.

    And this whole game is called progressive. As if there was ever anything progressive about pushing people about at gun point. I suppose that as long as the progressives don’t have to hold the gun every thing is fine.

    Don’t get me wrong. I was “progressive” once. Then it all began to dawn on me what was going on (one too many traffic stops, I suppose). If you see every law as another excuse to send out a man with a gun to enforce your will on the unwilling it doesn’t look like near as much moral fun.

  31. M. Simon sez:

    >A 200 Mpg car even if we could get it on the road tomorrow at 90% of current
    >car prices will only marginally affect the conflict.
    >
    >Why?
    >
    >Because China and India are industrializing.

    Fill in the rest of that picture.  If we adopted such technologies (not just for cars), we would be far less vulnerable to oil-supply disruptions than much of the rest of the world.  China and India would be forced to follow suit, buying the technology from us or Japan.  We could promote this by altering our position vis-a-vis, say, Saudi Arabia to one of hostility.  Do you think that anyone is going to increase their dependence on a commodity supplied by a nation with which the most powerful military force in the world could go to war at any moment?

    >We get government to take away people’s money at the gas pump and then give it
    >back after the returns are filed.

    Actually, give it back in the paycheck by deducting less.  The effect is to make petroleum more expensive relative to other things, and over the long term petroleum is a largely discretionary expense.  Available technologies can make it MUCH more so.

    >And this will have other than marginal effect on gasoline useage?

    It’ll help eliminate the consumer bias towards gas-guzzlers, and relieve the distorting effect of cross-subsidies in the auto industry.  After the oil-price shocks of the 1970’s consumer demand tilted decisively toward models with greater economy, and the tilt reversed when oil became relatively cheap.  If we decide to place a “defense tax” on oil as matter of national policy, consumer demand WILL change again.  People act at least partly as rational actors.  They have responded to the subsidies for petroleum consumption, and they will respond to their reversal.

  32. Simon –

    Well, we know how you got Mrs. Simon; you’re a helluva dancer!

    Somehow, you’ve managed to dance around the fact that we have in place to day a wide array of regulation and law which is designed to have the state shape human behavior in the market and elsewhere. Those have been in place since the Founders decided on a form of land title which would make speculation easier (you knew Washington was a failed land speculator, right?), since the subsidized the railroads (and helped slect their paths) and so on.

    When I point out one feature of the current regulatory/incentive regieme and propose lifting it to let individuals make free choices, I’m a statist socialist who intends to send people to the gulag if they don’t fit into my Procrustean plans. That’s just wild. And, actually, it’s significant, because as many incentives and requirements have been built in by the private sector in defense of security and profit – or the public sector in defense of their exalted positions – as have been built in by idealistic liberals who have starry-eyed visions of how to make the world a better place.

    And yet somehow, it’s always the liberals who get hammered for using the heavy hand of the state. Go figure.

    And the form ofthe shaggy dog story that ends “You know, I used to believe that too, when I wrote the piece for Encyclopedia Brittanica.” seems more amusing than the dismissive “I used to be a liberal too.” Personally, when I was twelve, I thought Ayn Rand was the hell’s bells (truly), but outgrew her by the time Iwas 14 and started reading real history.

    A.L.

  33. The perverse thing about SUVs is that, as AL points out, they’re regulated as trucks, but many of them are built on a car chassis because it’s more profitable that way … it’s not the “market” who has allowed this perverse situation to develop …

  34. AL – in my view, “lifting” a feature of the regulatory regime in this case would mean eliminating CAFE. You don’t want to lift anything and give individuals free choices; you want to increase the penalty for making one choice, SUVs, relative to another choice, high mileage vehicles. Personally, I agree with getting rid of the small business subsidy for buying huge passenger vehicles; if small businesses need that subsidy, there ought to be a better way of targeting it that does not encourage SUV ownership among businesses that don’t need them.

    This has gone pretty far from your original point – that it is ridiculous to release fuel from the Reserve, even if doing so would have a significant effect on fuel prices. If his proposal is in fact to stop adding to the reserve, that needs to be judges against the strategic reasons for increasing the reserve, whatever they may be.

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