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A few humble ideas for kicking America's oil addiction.
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It's time to declare war…
…On oil.
Here's why.
1) EVERY COUNTRY THAT HAS IT IS NUTS. -- Iran has about 4 million barrels of production capacity a day (equal to the total slack between supply and demand in world markets, by the way) and in their most recent democratic elections, voted for a government and president even more likely to wreak havoc on stability in the Middle east. Iraq has supplies that are likely to go underdeveloped as they attempt to avoid a civil war and cope with other domestic problems we made worse via our invasion. Venezuela is run by Hugo Chavez, noted anti-American nutjob.
Even our OPEC "allies" Saudi Arabia, Kuwait and the United Arab Emirates have threatened a flood of cheap oil if we make serious progress on development of alternative energy sources such as bio-fuels that would drastically curtail our demand for petroleum. They know investor capital for such research will dry up if oil prices drop to $30 barrel. How stupid is that? Think about it. You have corrupt regimes sitting on hundreds of HUNDREDS of BILLIONS of American petro-dollars while they are surrounded by Islamic extremists who would like to destroy them and all that wealth and take them back to a 7th century draconian Utopia. Literally, the only thing keeping them from being toppled and killed by internal rebellion is the United States AND THEY ARE THREATENING US if we try to take the tea kettle off "BOIL" by reducing demand. I wonder what the Arabic word for "chutzpah" is...
2) PEAK OIL ISN'T A THEORY, IT'S HERE. -- The United States consumes roughly 19 million barrels of oil per day out of total world use of about 80 million per day. (#1) Stated another way, 298 million Americans constitute 4.6 percent of the world population yet we USE 25 percent of the world's oil. (#2) Except for those few militant Islamic extremists dreaming of a 7th century Utopia, most of the world aspires to the same level of economic "success" we have. That success means cars, air conditioning, washers and dryers, home computers, and ownership of a big screen, hi-definition, THX-certified, 100 watt 5.1 surround sound home theater system that I'm sure will soon become a federal entitlement program. American energy consumption grows by 5% per year. China accounted for 9.8% of world energy demand in 2001 and their economy is growing by 8-10 percent annually. (#3) China has 4 times the population of the US. Do the math. It isn't pretty.
If you still don't think that we're at the peak of possible oil production, consider the fact that American oil companies, with all the billions they spend on research and exploration for new oil resources, have not built a single new oil refinery in the United States for about 25 years. Sure, they will publicly blame environmental regulations, etc., for pricing a new plant out of practicality, but come on... If the refineries built 25 years ago assuming gas prices in the $1.00 to $1.75 range are profitable under current regulations, why wouldn't a new plant be profitable with gas at $3.00? The reason new refineries have not been built is that there is no point building an asset with a 30-40 year life if you expect supplies of your major raw material (crude oil) to remain flat or go down.
3) WE DON'T HAVE A "RIGHT" TO FOREIGN OIL. -- Put the shoe on the other foot for a minute. Suppose some bug infestation arises from nowhere and wipes out 20 percent of the world wheat or corn crop. If Russia or Iran or some other competitor of the United States could not afford the spiked price, do they have a "right" to ours at the old price if their people are starving? A "right" that would justify them invading the United States to get it at a price they thought was "fair"? Of course not. So why does the United States continue pursuing political and military policies that assume the same is true for oil? If oil fields in Saudi Arabia start drying up, can we justify invading Saudi Arabia when oil hits $120/barrel to protect "our barrels" that we need? THEY'RE NOT OUR BARRELS!
4) YOU CAN'T EAT OIL. -- In the larger scheme of things, the United States really should be in the driver's seat on this issue. Most of the countries we are most dependent on for oil have virtually nothing else to sustain their economy. If we find alternatives to cut demand 20-30 percent, what are THEY going to do to replace that 20-30 percent reduction in income and continue doling out to their citizens to placate them? You can't eat oil. If demand for oil falls drastically, these countries won't HAVE any money to spend on building nuclear weapons programs or funding fundamentalist jihad groups, etc. If you know someone is trying to build a gun to hold to your head, STOP BUYING STUFF FROM HIM that gives him the money to build the gun! It's as simple as that.
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So what would the war on oil look like?
NEW VEHICLE GUZZLER SURCHARGE -- Increase the gas guzzler surcharge on large trucks and SUVs to more accurately reflect the true cost to the United States of the energy consumed (wasted) by those vehicles. This new vehicle surcharge will instantly alter decision making by consumers looking for new vehicles, reducing demand for gas guzzlers, thereby decreasing incentives to automakers to continue making them. You still have the right to drive whatever you want but if you choose to commute 40 miles to work in a vehicle getting 12mpg, the cost of putting troops in middle east countries to protect the oil supplies fed to your tank needs to be paid for NOW, not by future generations via deficit spending.
This new guzzler fee truly needs to be a shocker to discourage new purchases of traditional V8 guzzlers. If only $1000 to $2000, those that can afford $40k + vehicles might not be discouraged. For the dis-incentive to be effective, it really needs to drastically outweigh the cost of putting a hybrid engine in the vehicle. I'm guessing some of the new trucks and SUVs being fitted with hybrid engines will probably be $3000 to $5000 extra so this new guzzler surcharge should be at least $6000. SUVs and trucks account for about 51 percent of all new vehicle sales (about 16.8 million total sales expected for 2006). Assuming half of the SUVs and trucks (about 4.3 million vehicles) qualify as guzzlers, if behavior didn't change, this surcharge would raise $25.7 billion yearly.
NOTE --- This surcharge might very well bankrupt GM, which only makes money on the giant SUVs. However, it is more than a small possibility GM will go bankrupt in 2-3 years anyway.
EXISTING VEHICLE GUZZLER SURCHARGE -- The problems with our energy consumption are serious enough where attacking the problem at the margins (new car purchase behavior) is not enough. Existing owners of gas guzzling vehicles must have an incentive to reduce the number of miles driven in those vehicles. A flat surcharge across all existing gas guzzlers regardless of miles driven would be too onerous and costly for individuals. Mere ownership of a guzzler or use of it to pick up stuff at the local home improvement center or drive the team to soccer practice is not the target. A surcharge collected yearly at the state level as part of annual vehicle inspections could provide all the data needed to impose a fee on all miles above 5000 miles per year (which would allow for a daily commute of about 19 miles --- still high for a low MPG behemoth) by vehicles rated by the EPA as getting less than 15 mpg city / 20 mpg highway.
A surcharge of $0.21 per mile above 5000 would roughly equate to a $2.50/gallon surcharge on a vehicle getting 12mpg. Per the US Census bureau in 2002, there were about 24 million SUVs and 38 million trucks on the road in the US. Assuming half (31 million) are the giant behemoths that would incur the guzzler charge and assuming they would average 7500 miles per year (probably low), this would raise $525 per vehicle or $16.3 billion yearly. (I'd like to include an exemption from this if the owner can prove the vehicle was used for car-pooling with at least 2 other passengers but that exemption would be too easy to defraud.)
UPDATE CAFE REQUIREMENTS -- The ludicrous MPG exemption for "trucks" that resulted in the SUV explosion needs to be eliminated. Any vehicle driven more than 7500 miles per year for anything other than construction or bulk delivery should get at least 30mpg highway / 20 mpg city.
IMPLEMENT A FRAUD-PROOF HYBRID AUTO TECHNOLOGY TAX CREDIT -- (A WatchingTheHerd oldie but goodie...). This would give auto makers positive incentives to make IMMEDIATE progress on reducing fuel consumption in a large number of vehicles on the street. The program would implement the following rules:
- you must sell 300,000 vehicles or 30% of your year's sales (whichever is higher)
- you have to hit this target for three straight years
- the vehicles involved must exceed 50 MPG highway / 35 MPG city
- the vehicles must meet all safety standards in effect as of 2006
- any money spent on R&D on this technology within the US counts towards the tax credit
- the tax credit is spread over 5 years beginning AFTER #2 is satisfied
- only the first two manufacturers to hit the target get the credit
- the benefit only kicks in if you have income and positive tax bills
Here's why the program would help. #1 and #2 ensure the technology has reached mass-market scale and appeal and wasn't just a one time fleet sale. #3 ensures a material improvement in fuel efficiency is produced. #4 ensures fuel economy doesn't cause safety to be sacrificed in the short term to win the credit. #5 gives an incentive to develop the technology HERE and produce new engineering / technology jobs. #6 ensures we begin benefiting from the program before the government starts paying for it. #7 ensures enough incentive is provided for two major manufacturers to develop the technology and have incentive to be a runner up instead of giving up that only Toyota (for example) would win, why try? #8 ensures the program doesn't encourage competitors to bet the farm and incur losses and wind up with tax REFUNDS. The money collected by the guzzler surcharges would in part cover the cost of this program.
WORK HOUR RESTRUCTURING FOR FORTUNE 100 COMPANIES -- The Federal government should mandate 20% telecommuting or 4-day/10-hour work weeks for Fortune 100 companies. I'm guessing the average non-factory worker in a typical Fortune 100 company spends at least 20 to 30 percent of their time weekly in meetings and conference calls. I'm also guessing that the vast majority of these workers are provided laptop computers so they can take work home (part of a separate, insidious plot by corporate America to get even more work out of us...). Finally, I'm guessing at least 70 percent of that demographic have decent broadband Internet service at home. Put these together and there is no reason why the average worker cannot work from home at least one day per week. This might actually boost American corporate productivity by reducing the number of time-wasting meetings and forcing people to actually WORK instead of meeting to TALK about working. Even if you can't guarantee everyone would stay put on their telecommute day, chances are they'll drive less than than their normal commute and do so outside of rush-hour, reducing overall congestion and fuel consumption.
TIGHTER ENERGY EFFICIENCY REQUIREMENTS FOR NEW RESIDENTIAL / COMMERCIAL CONSTRUCTION -- We already know we are going to waste billions trying to rebuild areas destroyed by Katrina. Given that entire cities of home stock are going to be repurchased, given that the areas require air conditioning at least 7 months of the year, and given that taxpayer dollars are funding much of the work, we should at least take advantage of the opportunity to make these areas a test bed for new building codes and more energy efficient homes and office space. Artificially increasing the demand for energy efficient furnaces, air-conditioners, appliances, etc. in this area might produce enough critical mass to drive nationwide trends for both builders and consumers.
RESTRICT PRIVATE CARS AT HIGH SCHOOLS -- Except for teenagers with jobs that begin IMMEDIATELY after work, there is no excuse for a high school with 900 students to have 300 cars sitting in the parking lot and compounding gaz-guzzling traffic jams for full-time workers from 7am to 8am every day. RIDE THE BUS. Period.
ALTER TRADE POLICIES TO SUPPORT ENERGY EFFICIENT TECHNOLOGIES -- Reducing American demand for oil won't do anything to starve the mid-east of cash for terrorism and nuclear programs if China absorbs all the slack by continuing to modernize their economy with mid 20th century industrial technologies. This is perhaps the toughest issue to resolve because anything we do to help China leapfrog to the latest energy technology helps them compete even more effectively with us for jobs than they already are. However, the sheer scale of Chinese demand for such technology may help accelerate pay-back periods for entrepreneurs who develop new technologies for lighting, engines, electrical generation, etc.
WTH
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#1) United States / World Oil Consumption: http://energy.cr.usgs.gov/energy/stats_ctry/Stat1.html
#2) United States / World Population: http://www.census.gov/main/www/popclock.html
#3) Energy Consumption in China: http://www.eia.doe.gov/emeu/cabs/chinaenv.html
#4) US Vehicle Inventory & Use for 2002: http://www.census.gov/svsd/www/vius/2002.html
