The Oil Drum

I can see one use for the NOPEC act:  informing the exporters (esp. Saudi Arabia) that they won't be able to use supply constraints to extract lots of wealth from the West and still keep it out of the hands of their restive masses.

In other words, keep pumping as fast as you can or you're toast.

Can I ask -- as politely as possible -- why you state that "35 mpg by 2020 is at the upper end of the range of what is doable." This is not in accord with anything that I hear / read that I take with a grain of salt. 35 mpg is, perhaps, only 'at the upper end' if we assume that efficiency gain priorities will focus on improved 'performance' rather than improved mpg (preferably is gpm, but will put that aside for the moment) and that American vehicles will simply continue to grow in weight and power.

Remember the gas lines of the 70s?

Is that a bad thing?

More and more, I'm coming to believe that the big changes in fuel economy in the last energy crisis were caused by gas shortages, not high prices.

The price gouging stuff
Anti-price gauging measures do indeed walk over the line of socialism for many people - but as someone who's not afraid of the word, more importantly, they're horrible policy compared to what could be - a market-based energy incentive.

As oil supply diminishes, and before that diminishes in comparison to growing demand, the price will rise drastically, and continue to rise. If the US economy sees a total supply decline rate of 5% (not difficult to imagine for such a huge importer as us, if you take into account how possessive other nations will get when they discover their reserves will vastly appreciate over time), that means that 5% of consumers and businesses are priced out of the market for fuel. Every single year.

The prices needed to do this to the US population are much higher than they are now - all of which is going to go to the oil industry. They are going to see their revenues double, triple, quadruple, or more in the end, for pumping an ever-shrinking amount. This is first-year economics combined with a knowledge of our dependence on fossil fuels.

The better option
Government intervention. Tax fossil fuel, and tax it heavily. Then, give it all back to the people, making the load on the average consumer no different than before. The average consumer sees gas go way up, but gets a big check at the end of the year which fully compensates for that, and feels entitled to it after a short while. You can fiddle with the provisions for receiving this check and use the side effects to help solve the immigration crisis as well, if you like.

There are two methods of doing this.

Strict-Supply Carbon Cap and Trade - Every US citizen at tax time gets a piece of plastic entitled "2008: 100 tons of CO2," Every major carbon emitter or supplier for minor carbon emitters needs to own enough credits for what they sold by the end of the year. The work is subcontracted out to retail and internet brokers, and the end result is you can walk into a 7-11 and come out minus a card, plus a few thousand dollars. The coal factory buys it from 7-11. Credits can only be issued by the US government, are only needed for fossil fuels, and the total amount declines by a few percent a year - that is the way it needs to be to avoid impossible-to-audit scams + shell games like 'plant a forest, burn a coal mine.' Requires a strong enforcement mechanism.

Direct Taxation and Rebate - You tax each fossil fuel by a steadily increasing amount, based on import reliance, pollution, and greenhouse gasses. At the end of the year, the total amount is split up and divided equally in a check to every taxpayer. Requires prescient prediction power, annual analysis + adjustments, and is called a 'tax.'

Simplicity is important, effectiveness is important. Both of these schemes raise the price of fuel, without harming the average consumer. That $3000 extra to buy a hybrid? That finally becomes justifiable, as a way of saving money. Insulating your house better(huge opportunity for return here)? Cheaper than not doing it. Flourescents? Cheaper than not doing it. About a billion energy-saving practices that I'm not mentioning, most of which I can't even imagine, and which Congress certainly doesn't have the power to anticipate? They become viable. The consumer has to pick between taking his RV cross-country for vacation at $10k or staying in hotels for $5k (the RV costs $3k to run at current prices).

The oil companies wouldn't make outrageously more than they make now, even with an ever-tightening supply.

The point is that the market's position on the supply/demand curve is going to shift, and it gets pretty damn steep. Either the money from the higher prices can go to the government and back to the consumer to save energy the best way he can think of, or it can go to oil companies and the military to go to ever-more-impractical lengths to secure the last drops of oil.

Biofuels get encouraged either way through natural market/price competition, which is more effective than Congressional subsidies (*cough*FarmBillPork*cough)can ever be. With the artificial increases, they just get a jump start on the actual scarcities, meaning the US gets a jump start on getting ready for a world-changing phenomena, instead of panicking at the last minute.

I'm not ruling out government assistance for energy saving measures, like free insulation to low-income households (I have a friend who does this in England). But it's merely a gesture, unlikely to be taken advantage of or repeated, unless it's hung on a framework of need: a framework you can create via high fossil fuel taxes.

Side effect: Being eligible for a rebate of some form, in credits or cash, becomes a huge deal for the lowest income residents. Confine it to citizens, and you'll see immigration shrink because they can't afford to live here with such high fuel prices. Do whatever you want with it.

Side effect: Enviro-gasm. Clean energy can compete on its own terms without subsidies, and the most successful businesses with the best practices (rather than the one with the best lobbyists) will see those practices standardize. The US CAN be the leader in the world alternative energy industry, if it wants to. And as an industry that's got several million percent of growth to do this century, you want it to.

Unintentional side effect: Manufacturing takes a big hit with this. A shift in trade policies is overdue at this point, and artificially high fuel prices need to be factored into any kind of trade policy. Europe shows that it's far from impossible, though, to square high energy prices with a successful export sector.

Sorry guys but no one at the DOE is going to take our contribution seriously should we choose to litter it with asinine postings on ethanol such as cellulosic ethanol is 'experimental' or that there isin't enough biomass to make 30% of our fuel needs.

Constructive yes. Critical yes. Uninformed no.

Peak Oil is a liquid transportation fuels crisis and ethanol -irrespective of the source or production path utilized- is part of the world mitigation strategy of said crisis.

For the U.S. specifically, 1st, 2nd and 3rd gen biofuels are right now converging into the integrated biorefinery construct envisoned by NREL and similar institutions.

The major hurdle, however, is again, prioritization - prioritization as it pertains to funding, scope and implementation.

Time is not our friend.