HO v. Econbrowser: Title Fight...Round 20! (and another open thread)
Posted by Prof. Goose on April 29, 2006 - 12:57am
Topic: Policy/Politics
Tags: oil, peak oil [list all tags]
Damn, I should go into marketing...
[Editor's note] This is a brand new open thread. However, our "The Politics of Oil: The Discourse Must Change" is also under the fold of this post. Our position paper is also available as a PDF press release. Please take this .pdf and print it out/give it to others, or send this link (right click here for initial post address) to anyone you think needs the information contained therein. Politicians, media, blogs, you name it...it all helps. It is only through these small actions that the discourse can be changed. Thank you.
Leaders of both political parties are expressing concern about the high price of gasoline. President George Bush announced yesterday that he was suspending deliveries to the Strategic Petroleum Reserve in order to make more oil available to consumers as well as putting on hold the traditional regulations requiring additives to make fuel burn cleaner during the summer driving season.
Meanwhile, Democratic leaders have had their own response to rising gas prices. Senate Minority Leader Harry Reid has announced his support for the Menendez Amendment, which would "provide more than $6 billion in relief directly to the American people by eliminating the federal tax for both gas and diesel for 60 days." Senator Charles Schumer recently called for a federal investigation to determine whether oil companies are withholding gasoline production, and House Minority Leader Nancy Pelosi has blamed high gas prices on the administration's cozy relationship with the oil companies, price gouging, and royalty relief.
The editors of The Oil Drum are ideologically diverse. Over the last year, we have created a forum at www.theoildrum.com to encourage an open, rational, and fact-based discussion of energy issues. While individual editors frequently express an opinion on a subject, we have never felt it necessary to take a unified position on any specific issue. That is, until today.
We strongly feel that the leaders of both political parties are not only headed in the wrong direction with respect to gas prices, but we also worry that they fundamentally misunderstand the factors behind the current situation at gasoline stations around the US.
Public statements by political figures over the past several days would seem to suggest that oil companies and their record profits are the sole factor determining the price of gasoline. Not only is this untrue, but it is dangerous to give the American people the impression that only oil companies are to blame. The American people need to understand that the phenomenon of high gas prices cannot be attributed to a single source. They also need to understand that no one political party will be able to fix our current woes.
The major factor that determines gas prices is the price of crude oil from which gasoline is derived. When crude oil prices are high, so are gas prices. The following are just a few factors that affect the price of a barrel of oil:
- Oil companies do not single-handedly determine the price of oil. The price of oil is set on the crude oil futures market. Simply put, these prices are affected by supply and demand because, at present, oil trades in a global commodity market where increased demand or reduced supply in one place instantly translates into price shifts everywhere. A variety of publicly available information sources show that supply is relatively static at the moment, while world demand continues to grow as economies grow.
- We have provided evidence many times at The Oil Drum that the output of major oilfields is declining and that we may now have reached a peak or plateau in global oil supply. Oil companies have not been able to increase production for a number of years, and it is unclear that OPEC is accurately reporting their reserves. Even if there were significant sources of high quality oil remaining, it is getting increasingly difficult and expensive to drill. These factors, along with aging infrastructure for oil exploration and a retiring workforce are also contributing to high oil prices.
- The geopolitical situation is volatile, and an astute citizen may notice that every time there is news from Nigeria or Iran, the price of oil goes up because of the potential and real effects of these situations on world oil supply. Again, oil traders are fearful that the supply will not remain stable forever.
- Countries like China and India are industrializing at a great pace, and while we are accustomed to obtaining oil at a comfortable quantity and price, it will be impossible (and immoral) to deny similar resources to these countries. China is working furiously to secure new oil supplies, and they're content to negotiate with countries we're reluctant to deal with, like Iran and the Sudan.
These points demonstrate that disruptions in the supply of oil that affect the price of gasoline at the pump are not just a temporary glitch. For various reasons--decreased discoveries of new oilfields, geopolitical instability, international competition for oil supply--we can no longer assume that we will be able to consume as much oil as possible, or ever get it again for $1.50 a gallon.
Demagoguery and grandstanding are not strategies for addressing our energy problems. As an alternative, the editors of The Oil Drum put forth the following recommendations:
- It is nonsensical for political leaders of both parties to eliminate the gas tax temporarily or permanently as this will only worsen our dependence on oil by disincentivizing the innovation of oil alternatives and oil conservation efforts.
- Both mainstream American political parties are doing their country a disservice by accusing convenient scapegoats of price gouging or price fixing instead of educating the public about how the price of gas is actually set.
- Right now, governments should be focused on helping us cure our "addiction to oil." The answer does not lie in lowering gas prices, which will only encourage people to drive more and further waste our valuable resources. As the Department of Energy funded Hirsch Report on Peak Oil laid out, the consequences of not taking steps to transition away from oil could be dramatic to our economic system. Appropriate solutions include large-scale research, development, and implementation programs to improve the scalability of alternative sources of energy, other projects geared towards improving mass transit and carpooling programs across the country, providing incentives to buy smaller and more fuel efficient vehicles, and promoting a campaign to increase awareness about conservation.
The political discourse on this topic is simply so devoid of fact, and constructive discourse so buried and out of the mainstream, that we felt we needed to raise a voice of reason. Public officials will continue to misinform and obfuscate if we allow it.
The only solution is to educate the public about the most important problem we face as a generation. We, the citizens of the US and the world, must move our attention to this the issue of energy more than any other. We must hold our representative governments accountable for having an open and honest debate on the subject.
Simply put, we must learn more about where our energy comes from.
So, I'll listen with interest to what finer points these fine gentlemen will find to disagree about.
Sigh. I'm afraid this may be an accurate indication of public sentiment.
But of course when the world is pumping between 84 and 85/mbpd of liquids (boe), then I think that's a physical change too. That much oil has just disappeared from the ground, never to be seen ever again...
Sure there are some like Pickens and Simmons who see a steady and relentlessly higher market price for oil. However I suspect most traders actually expect oil prices to fall, if only because they are at the highest by historical experience. This goes against the myth of the evil trader who is only working to raise oil prices for his/her own benefit.
Google some of his bare-faced public pronouncements over the last couple of years to get a taste.
Any comments or suggestions appreciated.
I am trying to focus on a major, but overlooked strategyto reduce oil consumption.
Best Hopes,
Alan
Note: Formating lost in cut & paste
==================10% Reduction in US Oil Use in Ten to Twelve Years
An Overlooked, Practical and Affordable Approach using Mature Existing Technology
DRAFT 4
Step One - Electrify our Freight Rail Lines and Shift Freight to Rail
The Russians finished electrifying the Trans-Siberian Railroad, from Moscow to the Pacific, in 2002 and electrified to the Artic Ocean port of Murmansk a few months ago on Christmas Eve, 2005. Almost all of Japan and continental EU have already electrified their railroads. So there are no technical limitations. Electric railroads are cheaper to operate and can carry more freight because they accelerate and brake faster (and can generate electricity while braking, saving energy).
The US used 19.8 million barrels/day in 2002 with 2/3 for transportation. (Today, ~20.7 million b/day). Railroads carried 27.8% of the ton-miles with 220,000 b/day whilst trucks carried 32.1% of the ton-miles with 2,070,000 b/day (2002 data). Railroads are 8 times more energy efficient than heavy trucks, and also more labor efficient. In the era of cheap oil and interstate highways, US railroads cut back capacity and ceded much cargo to trucking. Today, intermodal shipments (local trucking, long distance rail via containers or roll on/roll off) are growing rapidly but this trend MUST be accelerated ! Electrifying railroads
and transferring half of the ton-miles of trucks to rail should save 6.3% of US oil consumption.
US railroads have pointed to property taxes as the reason that they did not electrify (no taxes on their diesel, property taxes on electrification). Simply exempting any rail line that electrifies from property taxes under the Interstate Commerce clause will rapidly electrify many rail lines. Expanding capacity (adding tracks) and more intermodal transfer points will be more economically attractive without the burden of property taxes.
Removing property taxes on railroads would take "the thumb off the scale" in the economic competition between rail and trucks. Local jurisdictions that lost more than certain percentage in tax revenue could have the excess compensated by the Federal Government for 25 years, each year decreasing by 4%.
Step Two - Increase Urban Rail Federal Funding
In 1970, 4% of DC commuters used city buses to get to work. Today about 40% do. The difference is the 106 miles of Washington Metro. It has been estimated that Washington Metro saves a half billion gallons of gasoline/year directly, with at least as much more from changes in development patterns.
Miami has passed a half cent sales tax to build a 103 mile system of elevated "Subway in the Sky" over 25 years. The author has been told that 90% of the population will be within 3 miles of a station and over half within 2 miles. A reasonable number will be within walking distance.
http://www.miamidade.gov/trafficrelief/RailMap.htm (Note: dark brown lines are 2016+ plans)
But why will it take 25 years to build this system that will transform Miami as Washington and San Francisco have been transformed, saving billions of gallons of gasoline ? Because FTA funding has declined from 80% for "New Starts" rail projects to 50%. Restoring that funding to 80% (or better yet 85% or 90% for the best projects and 75% for marginal projects) will speed existing plans in Miami, Denver, Dallas, St. Louis, Salt Lake City, Northern California, Northern Virginia, Portland, New Orleans, New York City, Los Angeles and many other cities. An explosion in Urban Rail, from streetcars in small cities to Light Rail in larger cities and Rapid Rail in the largest cities with commuter rail everywhere is certainly possible and probably likely with better federal funding. Budget space could come from reductions in federal highway funding or as a supplement for the SPR. Building the equivalent of twelve DC Metros would save 4% of US oil use. The entire US economy would benefit more from this than additional highways.
Step Three - Promote Electric Trolley Buses
Electric trolley buses are cheaper, lighter, last much longer, pollution free, and are quiet, smooth (much less jerky) and more attractive to passengers than fossil fuel buses. They obviously require an electrical infrastructure. Four US cities currently operate electric trolley buses and a fifth will soon.
Hybrid buses, with minor engineering changes, can operate part-time as electric trolley buses and off-wire for part of their routes. This mixed use would significantly reduce their diesel fuel consumption.
The FTA currently funds 80% of bus replacement costs on a twelve year cycle. Many experts feel that 15 years would be more appropriate. Perhaps FTA could fund fossil fuel replacement buses on a 13.5 year cycle at 75% and trolley buses (with their infrastructure) at 90%. Again, cuts in federal highway aid could easily pay for this.
Step Four - Promote More Transportation Bicycling
Simple steps, such as more bike racks in city downtowns, perhaps replacing car parking spaces or in unusable spaces, would make bicycle commuting easier. Streets with excess capacity could have one traffic lane converted to two bike lanes. This is a city by city effort, with differences in every locale. So a national program is less effective other than making it patriotic to bicycle to work, school and shopping and promoting secure bike racks at Urban Rail stops or allowing carry-ons.
Step Five - Create a Strategic Rail Reserve to Extend the Strategic Petroleum Reserve
Suppose, as one of several possible examples, that the Islamic Republic of Arabia replaces Saudi Arabia and the new Islamic Republic exports only enough oil (at elevated prices) to buy food and other essentials (no longer having to support 6,000 Princes in ultra luxury). The United State would face a severe and prolonged oil supply interruption.
The US would immediately institute a variety of oil conservation measures; 50 mph speed limit, 4 day work week, limited sports events, restricted air travel, etc. We would immediately start draining the SPR. Demand for electrified Urban Rail would swamp the capacity of every system in the country. Freight railroads and Amtrak would also likely be overwhelmed. Once the SPR is over half drained, perhaps in 3 months, even more severe oil demand restrictions would be required, such as rationing.
Every Urban Rail system, and almost every line, can handle more passengers if they had more rolling stock. Their capacity is limited in other ways as well (platform length, Park & Ride lots, bicycle racks, etc.) but rolling stock is almost always the first limiting factor. Likewise, certain types of rail cars would be the first limiting factor on our freight railroads. So a Strategic Rail Reserve would allow existing Urban Rail to carry more passengers and more railcars would allow more freight to be shifted from trucks, thus reducing US oil demand in another dimension and allowing the SPR to last a few days longer. Once the SPR is exhausted, the SRR (and all the steps above) would still be benefiting the nation.
Buying more railcars would be cheaper and better than buying more oil for the SPR. Rail cars are made in the USA, their benefit will last MUCH longer than extra barrels of oil, they can be used and not disappear in even minor oil supply interruptions and they are cheaper, per barrel saved, than $75 oil.
Every Urban Rail system should estimate their likely demand in the case of an oil supply interruption and what would be required to handle this demand at 60% of crush load. In some cases, soon to be retired cars could be mothballed, but new cars will be required for the SRR in most cases.
This policy summary is not an exhaustive list of all that can be done, nor does it cover all the policy implications of the proposed steps, but it is all that can fit on two pages !
These proposed steps will complement the widely discussed steps of more fuel efficient cars, ethanol et al. They are complementary and not mutually exclusive. And the steps outlined above can be started immediately, require no new technology and will have a significant impact in the medium term.
It should be noted that taking these steps will affect US oil supplies faster than drilling in ANWAR, produce at least twice as much oil as ANWAR and never deplete (Prudhoe Bay, Alaska is producing at ~20% of it's peak, Washington Metro hits a new peak in oil saved every year).
It is also worth noting that four American cities; Washington DC, New Orleans, Oakland and East St. Louis could benefit from more Urban Rail, mainly streetcars and Light Rail, but cannot afford even 10% matching funds. Two of these cities, Washington DC and New Orleans, are of national significance and international stature.
DC DOT has a plan for 40 miles of streetcars in the District and the author helped develop a 35 mile plan for streetcars in New Orleans. It would benefit the nation as a whole (in reduced gasoline use, international exposure and as a learning tool for other cities) to fully fund streetcar systems in these cities. One goal of such a program, which the author has worked extensively on, is reducing the cost of building streetcar lines.
The author has also written a supplement to the DoE /Hirsch Report on Planning for Peak Oil that covers a vital point that his group overlooked. It is available at:
http://www.lightrailnow.org/features/f_lrt_2005-02.htm
Sometimes good public policy is good politics. Reducing US oil consumption, reducing greenhouse gases, improving the US economy, reducing congestion, providing transportation alternatives and reducing the number of 18 wheel trucks on the highways should be both good public policy and good politics !
Best Hopes,
Alan Drake
Alan_Drake@Juno.com
1320 St. Andrew
New Orleans, LA 70130
I certainly agree with your proposals. One suggestion I would make is to address where the electricity is going to come from. From everything I've read, it sounds as though the transmissions grid is already borderline and then there is the major issue of generation itself and the fuel it will use.
Your proposal also enwakend a sore point with me about the future. This is a little OT but I may as well mention it. It seems that just about all articles/suggestions about the future are merely work-arounds to maintain the old comsumer paradigm. In other words, where are the Ecotopian writings that might lead to demonstration projects? Given the difficulty getting the sheeple to even acknowledge peak energy, it seems to me that it will be almost insurmountable to get society to change course without being able to actually see the future. Yet, this will be a necessity as resources decline and population increases.
Overall electricity use in US is close to 13 Quads (EIA #). .03 Quad goes for transportation electricity today (2004) That covers NYC subway, BART, DC Metro, every light rail in country, golf carts AND Amtrak's NorthEast Corridor.
The efficiency gain from electrification is so great that it can fit into the current system easily. The annual growth projections for electricity use can fit electrification of transportation in as well. A recession will slow growth enough, or improved conservation (my retrofit of a 5 story building provided much of the electricity needed for the Canal Streetcar Line).
I kept my steps down to 2 pages, and I tried to appeal to the "practical" side. The only mention of Peak Oil was my addendum to Hirsch's paper (very oblique way to get it accross for those that dig deeper). Also I mentioned that "more than half of DC Metro's gasoline savings came from changes in development patterns". VERY non-threatening to the "American Way of Life" (although "the other TOD" Transportation Orientated Development, is a different way of life).
This is NOT a purist paper, it is an appeal for a change in federal policy ASAP. I contradict nothing that I believe in, but I do NOT require that others believe as I do to support the policy changes.
Coalition building requires a broad tent. I welcome those that want to electrify our freight railroads and build Light Rail so that they will have to contend with fewer 18 wheelers and "others" as they drive their Hummer to work from their McMansion in the far exurbs. Their votes count to in a democracy.
I'm running around too. Our weather has suddenly changed from winter (4-5" of snow three weeks ago) to summer(77 degrees yesterday) and I'm trying to get the garden planted, the bees coming to the fruit trees and kill the weeds in the grapes. Well, back to work.
Kudos, very well done! Send it to the railroad companies, railroad equipment manufacturers, politicians, wealthy people, and the MSM. Microsoft dropped 5% friday, costing Bill Gates a few billion--He may be soon looking to postPeak invest his wealth where it has a chance to grow, and railroads and mass-transit seems like an obvious place to stem his losses.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
The NYT article was behind a paywall, but there are papers commenting on it all over the place:
http://www.kansas.com/mld/kansas/news/editorial/14445098.htm
and here:
http://www.nationalreview.com/payne200604260838.asp
and here:
http://www.djournal.com/pages/story.asp?ID=218148&pub=1&div=Opinion
Original (paywall version) is here:
http://select.nytimes.com/2006/04/28/opinion/28friedman.html?n=Top%2fOpinion%2fEditorials%20and%20Op %2dEd%2fOp%2dEd%2fColumnists%2fThomas%20L%20Friedman
But congrats on the nice new look, Super G!
Thomas Friedman editorial made it into our little newspaper locally too. Two things I took away from it. Friedman is very frustrated over the course of the Bush govt., and the inaction for the first five years of his regime. Second, the call for a new 3rd Party that would be Geo-Green in 2008.
Traditionally third parties in the USA simply do not work. I think his frustration has impacted his thinking.
Right now the majority of America can not see past the high price of gasoline. They are not ready to see the big picture of GHG/PO. The education process is very preliminary.
Friedman also appealed to economics stating that alternative fuels would take off. Most of the Financial talking heads on Bloomberg would agree. Even our controversial PACIFIC ETHANOL just got a 25% financial stake from Bill Gates.
PS CNN had a Hummer vs. Prius segment this morning in Southern California. The Hummer driver, a woman, had been egged four times. The Greens are not going to win her over with that tactic! The Prius driver who was interviewed commented that big SUVs drive up behind her and try to intimidate her, though I have never had that happen in our Prius. There was resentment too, over hybrids getting to go in the diamond lanes on the freeways. One guy complaining was spouting off on his "$60,000" Escalade as if the fact that he spent that much on his ride he should get the privledge of driving in the diamond lane.
Funny world - glad I don't live in the city.
"listen Billy and Jeffy, I have a new game for you, go get some eggs and throw them at mommy's big car"
They like to play the game of projection, you see. Claiming to be a "victim" when they are actually the perps.
jaybus, we get our mailbox baseball-batted regularly. Does that mean that the Posse Commitatus is after us for using government services?
There is a bill in California to potentially allow hybrids the ability to drive in HOV. If you were to listen to nutjobs like LA radio's Hugh "spew" Hewitt, you would think it was the end of the world to them if this were to happen.
The $60,000 Escalade guy was a pretty sad commentary on our society. Everyone needs to picture living with ever-decreasing 'energy slaves' to do our bidding.
The American auto manufacturers are missing a golden opportunity to keep their workers employed by leapfrogging the Japanese in building super-efficient transportation and bicycles. The Big Three should be lobbying the Govt to build railroad, mass-transit, and bicycle infrastructure where they will gear up for the manufacturing effort. The Big Three, in the interim, could be building scooters, motorcycles, and this super-efficient car I found on Yahoo:
http://tinyurl.com/mqjwf
http://tinyurl.com/req3c
http://www.bath.ac.uk/mech-eng/en-proj20/index.html
Most Americans, that are unfit to pedal a bicycle very far, can easily buy a small scooter to bridge the longer distances until their physical stamina levels rise. Then they can save the investment in their large vehicles for bad weather days or when the entire family needs to go someplace together.
This is a peaceful method of adaption to using fewer energy slaves in a city with poor mass-transit, like Phx. I fear postPeak gas prices will accelerate faster than local govts ability to purchase mass-transit leaving many people unable to get on overcrowded buses. We don't need people fighting for a place in a busline, or fighting for a spot in a gasline to fuel their autos [as occurred in the '70s].
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
My wife and I ran some errands today, and I think the woman tailgating me at 40MPH in a 40MPH zone must have been related to your friend in the jeep. She followed me at about half a car length for a mile, then passed me, floored it for about 50 yards, and--you guessed it--cut back into the right hand lane and made an immediate right turn.
Eventually most of them will get the message that driving more sensibly is in their own best interest. If not, they'll pay through the gas station nozzle for it.
You live in Wichita?
Small world.
What I take as important is that Friedman says gasoline should cost more, not less. He says it should be $4/gal, which is a start. I agree with Westexas that it should be >$5. But at least it's a MSM mention of the idea.
Perhaps he is getting worried about losing his $5,000 bet with Matt Simmons?
Was this covered before because it has some information I was not aware of.. Some very good question ask too..
Then there's "line at the recyling machines" measure. We have a five cent deposit on cans and bottles. Grocery stores have machines that take the empties back, read the bar code, then issue you a receipt which you can exchange for cash at the checkout. I shop early Saturday morning, to avoid crowds and traffic, and usually there are very few other customers, and no one using the recycling machines.
Lately, though, I've been seeing more and more people at the recycling machines. Not just people using them, but people waiting. Maybe two or three times a year, there are so many people waiting that I don't bother, and put my empties back in the car for next week. I've done that two weeks in a row now. This morning, the line was immense. Lots of people with shopping carts and garbage bags full of empties, some of them getting quite testy.
Early in the morning is of course when all the old folks are out and about. Lots of people on fixed incomes. Getting gas money from bottle returns, maybe?
Hold your nose and check this out if you wish: Fox 'News' on PO
http://www.foxnews.com/story/0,2933,193624,00.html
against stupidity the gods themselves contend in vain
The above-cited FOX News article was relatively good. How often are Hirsch and Hubbert referenced in the MSM?
Just the idea of my 'click' increasing Fox's web-ad revenue is what stinks.
If I took more time I could pass along the salient points and then no one would have to look at FOX.
When the neocons mouthpiece goes and has this kind of story, something big's up.
But we already knew that.
Speaking of mp3s, I am listening now to the recent joint talk by Rep. Roscoe Bartlett and Dr. Robert Hirsch, the top item on this EnergyBulletin page:
http://www.energybulletin.net/15440.html
It rocks, and blows my mind. It's been a while since a peak oil presentation did that for me, jaded TOD reader that I am ...
I am surprised by the pessimism that comes through Hirsch's verbal comments. And I am surprised by the good grounding in science that comes through Bartlett's talk.
I think I've been listening to talks by Bartlett and others which were pitched at a more general audience (congressmen), and maybe haven't heard him open up with facts and figures like he does here.
He also hits one of my old themes, one that maybe I should return to in face of PO fear ... that happiness varies around the world, and that people who burn less oil per capita can be as happy as we are now ... or even happier.
Best wishes.
It's a shame we can't see the slide set he is using for his talk.
<a href="X" target="_blank">The Title</a>
where X is the url.