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285 comments on The US Offshore Drilling Argument: The Debate Between "Starting Now" and "Waiting a While"
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285 comments on The US Offshore Drilling Argument: The Debate Between "Starting Now" and "Waiting a While"
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The raw data is from memory. I ran this model with more details and actual data before, but I've lost track of it and don't want to replicate the effort.
Real current data is available from the department of transportation online.
The present:
Passenger cars owned: 100 Million
Existing average MPG: 20
Existing miles per year: 12,000
Expected Lifespan: 15 years
Replacements per year at normal rate: 7 Million
New "high efficiency":
MPG: 40
If each and every vehicle scheduled for replacement is replaced with the high efficiency type, then US MPG looks like this.
Year 1: 20.0
Year 2: 20.7
Year 3: 21.5
Year 4: 22.3
Year 5: 23.3
Year 6: 24.2
Year 7: 25.3
Year 8: 26.5
Year 9: 27.8
Year 10: 29.2
Year 11: 30.8
Year 12: 32.5
Year 13: 34.5
Year 14: 36.7
Year 15: 39.2
Please accept these estimates, and understand this about CAFE standards:
They are very slow to take effect. The better model I had took into account things like the expected lag between government mandate and manufacturer achievement.
The idea that a fuel efficiency standard is fast relative to drilling does not hold up to analysis. They are two slow nethods for failing to achieve overlapping goals.
It is worth including that cars get driven more early in their lives so that you should see a closer approach to 40 mpg near Year 10.
CAFE can help, but there is much more to be done including driving less, shifting freight to rail, and starting to use PEVs and gas powered cars which don't even have mpg ratings.
In terms of costs, these necessary changes cost the same if we do them now or later because we replace cars and trucks anyway. But, for fuel, waiting until fuel is mainly supplied from expensive sources means that we can not take advantage of our market leverage to cut the price of oil and make our transformation using cheap oil. So, delay is expensive.
At this point, just about any new source of oil transforms our energy gathering system from efficeint to inefficient and this is the basic reason why conservation of our efficient sources makes much more sense than trying to suppliment with new supplies.
Chris
Chris,
True about milage on old vs new cars. If you want to include it, you need to grow the model in other ways. The short form above assumed 100% replacement with a 40mpgf vehicle.
Does a reasonable law mandate 40mpg from day one? There is only one mass produced automobile for sale in the US that meets that goal today. How long would it take Toyota to gear up for the volume? ow long would it take for competition to react?
Does a reasonable law force older vehicles to be retired? e.g. Can you force a 1995 Ford Taurus with 100k miles off of the road? What happens to the value of that vehicle if equivalents (size, comfort, ability to pull small trailer, style) are legal to own but no longer legal to produce?
There are quite a few cars for sale outside the US which do well on fuel efficiency so one might be able to phase in the standard fairly quickly.
Where I live, older vehicles that can no longer pass their emissions tests and are too expensive to fix get junked though there are some exceptions. In some sense, that forces older cars off the road.
Again, CAFE can help, but our basic problem is a fuel shortage and we need to address that with imediate conservation since it is quite clear that market forces cannot alleviate the shortage, only ration by price. The considered drill won't do anything really to help considering general depletion. In shortage situations, we use our rationing plan and that is what will drive our conservation effort. It also assures us that we will have the money available to buy efficient cars that can re-exend our range of mobility.
Chris
Hi Name,
This is an important issue, as improving vehicle mpg is going to be one of the major drivers of reducing oil consumption. The article posted by Stuart Staniford at TOD on 11th Feb, 2007 examines this in detail.
You are correct that we cannot immediately improve the CAFE standards, but last year as well as the 7million passenger vehicles(average 27mpg) there were 7million light trucks and SUV's sold in US, having an average of 22mpg. Fuel efficiency for ALL new vehicles could be raised by phasing out the lowest fuel economy vehicles, AND raising CAFE standards for ALL vehicles in a progressive, but more aggressive manner than currently proposed . The US has one of the poorest fuel economy fleets. High fuel prices cause people to use low mpg vehicles less (since the average household has 2.2 vehicles some options are available for many households).
New vehicles 6 years old or less, are responsible for 50% all ALL VMT, so a rapid improvement in fleet average mpg will give much bigger savings than you projected above.
The argument that if there is a recession, less vehicles will be sold,so can't have much effect on efficiency doesn't hold up, since in the 1978-82 recession US average fuel consumption for VMT decreased, due partly to a very big increase( for the next decade) in new vehicle efficiency.
If only that were true. In the real world there are serious delays caused by the fact that (for the most part) the research and development, followed by large scale investment in manufacturing capability, and the creation of a support network for repairs, has not been made. If we assume we are already in a PO predicament, the fact that meaningful preparations were not made ahead of time precludes a timely response. Rushing of (nearly) untested products into production at a very high scale, is associated with some serious costs. I'm not saying we shouldn't try to do that, just that a lot of costly technical glitches should be expected.
I would agree except that the timescale given is 15 years so nothing needs to be rushed. Introduce PEHVs in 2010 as planned and off we go. I don't know if you remember the MVP prizes for the World Series last year. A couple of hybrids. There is much that is already on the road getting miles logged and final kinks worked out. All we really need is the leadership to say that we won't stand for high gas prices and we'll stop using oil before we'll ruin our economy following that blind alley.
Fifteen years is a short time for Exxon to switch to only selling lubricants in the US, so there will be some resistance. The current drill everywhere stuff is a sign of desperation though. If we leave open the option to export some oil, there may be an accomodation that will be partly satisfactory.
Chris
You will remember the Hirsch report back in 2005 pretty much said this. When you add in the lag between the time the legislation takes place and the standards really are implements, plus the fact that people will be less afford to buy new cars, it really moves the effect out unacceptably far.
I don't think it makes all that much difference if the standards are passed -- auto makers are in huge financial difficulty as it is, so they don't have the resources to start great new programs. Also, they can see that it is the high mileage cars that are selling, even without the legislation.
Perhaps we've gone a little far afield. I'm arguing that we should invoke our standby gas rationing plan to achieve sufficient conservation so that the price of oil drops to $20/barrel. With or without CAFE, this is reduced consumption. Reduced availability of gas will spur the transformation of transportation even if Detroit tries to market M3 Bradley's as commuter cars. We just get that reduced availablity cheap rather than expensive.
Chris
mdsolar,
You propose rationing a use that accounts for about 40% of consumption in a country that absorbs about 25% of global consumption?
Better be very inelastic.
The world is looking for about 5 million barrels a day of spare capacity. I'm suggesting that we provide that through conservation, reducing our consumption by about that much. That would be about 25% of our use. Carpooling is enough to make that happen. After that we need to look at technological change to eliminate oil use from transportation. We want to keep ahead of any increase in world demand so that the price of oil stays low. Once we are no longer using oil, we might want to revisit drilling off of Florida for export since without similar dicipline in other countries, the price of oil will rise again once we are completely out. At this moment, the US is the only country that can unilaterally affect price in this way. I think we should.
Chris
If we were to do this by reducing out auto and personal truck use, we would have to reduce driving by more than 50% (since these categories make up a little less than 50% of our petroleum use. I don't see that happening.
It is pretty clear that using oil for home heating does not make sense anymore, electric space heaters are cheaper. http://mdsolar.blogspot.com/2007/12/jet-fuel.html
That gives you about 10% for free. Trucking is the other big use, but trains and ships can be used instead giving substantial fuel savings. No, you don't have to cut car transportation as much as that to bring the price of oil down below $20/barrel. The tricky part is keeping it down with serious technological transformation. That means relying on the "white markets" in our standby gasoline rationing plan to free up appropriate resources to push things forward. http://www.osti.gov/energycitations/product.biblio.jsp?osti_id=6307185 Supporting these markets through steady cuts in rations down to zero makes the whole thing very exciting.
Chris
How do you get millions of owners of cars, SUVs and trucks to accept rationing if oil is only $20 a barrel?
And how do you expect the new middle classes of China and India to resist SUVs if oil is $20 a barrel. It is an international commodity.
Prisoner's dilema.
There is no dilemma if our intention is to end our use of oil. There is a limit at which others can take up SUVs since they cost money. Thus, demand growth cannot outpace our cuts in use if they are sufficiently rapid. Once we are out of the oil market as consumers, we won't have as much leverage on price since we are only the third largest producer. But, we might tighten supply at that point and force conservation elsewhere. We've done a simlar thing with tobacco, forcing open foreign markets while reducing our own consumption. Some Asian currency readjustments back in the eighties were mainly about selling US tobacco.
Chris
We ration oil use in the US to reduce demand and lower the international price to $20/barrel.
Emerging markets could not replace our demand because they could not add cars in sufficient quantity or size as fast as we can retire them.
If foreigners react to the reduced price with increased demand, we could decrease US oil exports to punish them later.
Argument assumes:
1) We have enough control over demand to lower the price 700% without increasing supply.
2) Change in our saturated auto market (population 300M) with a decade of roughly constant vehicle count, can be faster than change in emerging economies (population >3B)including the world's third largest auto market, which has exhibited roughly 20% compound annual growth in vehicle count since 2004.
3) We would then have enough control over supply (having bacome net exporters without increasing production) to increase the price dramatically.
...
"In 2006, China overtook Japan to become the world's second largest car market, trailing only the United States, with sales of 7.2 million units, up 25.13 percent from a year earlier. The country was also the world's third largest vehicle producer, after Japan and the United States.
Vehicle ownership in China was 44 for every 1,000 people. This compares with the world average of 120. The United States had 750 vehicles for every 1,000 people.
Dong said the domestic car market had huge potential as the country had 57 million motor vehicles by the end of last year. Among them were 21.5 million privately owned cars, according to latest government figures. "
http://www.autoobserver.com/2008/01/china-car-sales-production-to-hit-re...
"The automobile industry in India is the tenth largest in the world with an annual production of approximately 2 million units. India is expected to overtake China as the world's fastest growing car market in terms of the number of units sold and the automotive industry is one of the fastest growing manufacturing sectors in India. Because of its large market (India has a population of 1.1 billion; the second largest in the world), a low base of car ownership (25 per 1,000 people) and a surging economy, India has become a huge attraction for car manufacturers around the world." -Wikipedia
Forcing conservation is not punishment. It helps reduce global warming. If we succeed in making our transition off of oil using cheap oil, then it is true that the price rise if demand goes up again could be even steeper since there will be much less of the cheap-to-produce oil left. But, this is no secret so those who want to continue to increase their use of oil should expect to pay more and more and more. It is just that the US has the ability to choose to make its transition at low cost, a choice that is not available to others aside from inside OPEC where some are moving quickly on renewables.
And yes, it takes a while to get the income to afford an SUV so SUV adoption will not be all that rapid even with cheap fuel.
Chris
Virtually no oil available; everyone nearly broke.
Your model shows a reduction in fleet fuel consumption of about 3 percent year on year. What new US oil find will add 300,000 barrels per day in new supply year on year for 15 years? Increased fuel efficiency provides relief nearly immediately (within one year) and continues over time. Drilling takes years to come on line.
If you add to CAFE standards a small but growing mandate for PHEVs and EVs, then you erase a small but growing portion of the fossil fuel demand base over time.
I do think we should drill the OCS and ANWR, but we should do it as part of a raft of solutions. What's ridiculous the panacea it's being made out to be. Republicans would get more traction telling the truth and then promoting a raft of options. Instead they block some reasonable mitigations and only promote the one that results in more oil dependence.
Democrats haven't helped matters by demonizing 'speculators.' So on one side of the isle you have scapegoating on the other side drilling is the silver bullet.