Dan--the US really is dependent on middle eastern oil. Canada and Mexico would be perfectly happy to ship to Europe instead of the US, if the price were right.

And since they already have very high gasoline prices, the impact of somewhat higher prices still is less, relatively, than a similar spike here. They aren't driving any Hummers in Germany.

If GWB were really serious, he'd say we need another $.50 tax on gasoline. So, for that matter, would the Democrats.

Here's my problem -- in what way is the provision massive government subsidies of alternative fuels not another example of import substitution and industrialization? Isn't trying to reduce Middle Eastern oil imports an example of how to "shut ourselves off from trade and opportunity"???

The US military and US support for illiberal governments in the middle east both act as short term subidies for the price of oil. What would the price oil be without the US military and the House of Saud? Sobering thought! Both of those entities may not always be as they are now. Maybe some subsidy diversivacation might be in order. I deplore the isolation/protection wings of the respective parties and am no fan of the president but the policy in question should be thought of as an insurance policy "ineffecient but reducing risk. Important condsidering the shape of the energy demand curve.

Tax on gasoline. Increasing $0.05/month for 3 years, then reassess. What to do with the proceeds? Well, I would prefer that they be spent on public transit projects, particularly those that try to link what is left of mainline suburbs to areas of reasonable population density (IMHO the far exurbs are doomed in the 30 year timeframe no matter what we do). Buying the engineering documents for the SmartCar and giving copies to Chrysler and Honda (the only companies that seem to be able to do anything innovative) might be another idea.

Cranky

This sounds vaguely like Jimmy Carter circa 1978 (many of you are too young to remember).

And why is taxation always the policy alternative of first choice?

I don't like the idea of politicians making promises about the practical feasibility of technologies not yet proven to be practically feasible.

It may be a pipe dream but if our bread basket is converted to an energy basket, I imagine that we could become an exporter of energy instead of an importer of energy.

According to professor David Bransby at Auburn in an interview with NPR today, switch-grass can produce 1000 gallons of ethanol per acre. The grass can grow in almost any climate in the US and is cheap to grow.

Will switch-grass allow us to become an exporting energy giant? Probably not, but at least the technology is out there for us to take an leading role.

BTW, would it not be ironic if the US through alternative energy technology actually becomes the fist county to acheive Kyoto benchmarks even though we are no longer a signatory of Kyoto?

> And why is taxation always the policy
> alternative of first choice?

In this case, a gasoline tax is the only market-driven alternative. Sooner or later (and I say sooner - less than 5 years) oil is going to hit $100/bbl, then go to $150. Gas WILL go to $3-$4 and the disruption WILL occur.

Now, note what happened in the month after Katrina when gas was $3+. SUV sales plunged and Prius sales soared. Today? Gas at $2.25; SUV sales back up.

The big price disruption IS coming. We can either prepare for it now, or wait until the last minute and get slammed. Possibly an unrecoverable slam. The only market-driven way to get people to start preparing now rather than when it is too late is to make gas somewhat more expensive now.

BTW, I assume you consider "Jimmy Carter" an insult. Since with hindsight we see that Carter was right on about 80% of his policies (compare to, say GWB's record) I don't think that phrase means what you think it means.

Cranky

Now, note what happened in the month after Katrina when gas was $3+. SUV sales plunged and Prius sales soared. Today? Gas at $2.25; SUV sales back up.

I don't think that is quite true. This Detroit Free Press article notes that for the domestic automakers, January sales showed an increase of 1.5% for trucks (including SUVs), and 14.8% for cars. So, while truck and SUV sales are up slightly, car sales are up a lot.

The Detroit Free Press article I noted is at
http://www.freep.com/apps/pbcs.dll/article?AID=/20060202/BUSINESS01/602020601

The link isn't marked as such in the comment for some reason.

Unfortunately, I fear that a hike in gas prices wouldn't cause the people that could actually afford to buy a new energy efficiant car to buy one, I think it would just put the low-paying manual labor force walking to work.

Cranky, Jimmy Carter was "right" about pretty much everything.

But he was abysmal at dumbing down his ideas to get support. He was no good at spin and simple talking points, and the republicans ran circles around him. They presented stupid plans. But they got elected. "If it's stupid, but it works -- then it isn't stupid." And here we are after a 25-year drunk, heading toward the hangover.

If we hadn't stopped preparing for oil shortages in 1980, how much better off would we be now?

But Reagan campaigned on tax cuts. And he settled the oil crisis by supporting iraq in a war against iran. Both needed money, so both broke their OPEC quotas and sold as much oil as they could -- driving the price down. Iran lost something like a million casualties and they reasonably enough called us the Great Satan.

So we got more oil faster, and we had good times, and there's that much less oil left now. Reagan had a good run, he's still very popular. Lots of people had a good time while he was mortgaging the future. And Carter came out looking like a loser. He looked at what we needed to do and he tried to get us to do it. And we voted to have a party instead.

Now that we're close to broke and the party is mostly over, *now* Bush is drunkenly saying we can start cleaning up and start working hard and getting productive and all. But the hangover hasn't really started yet.

The Bush administration and GOP Congress wasted no time in backtracking on both SOTU education and energy chatter, not surprising given a President who can barely pronounce economics. Obviously Minister of Propaganda Rove has something else in mind.

Cranky, if Katrina caused market changes then perhaps taxation isn't the only market solution. Just a thought.

Whether Jimmy Carter was right or not, he couldn't lead anybody to do anything. Mailaise I guess.

> Cranky, if Katrina caused market changes then
> perhaps taxation isn't the only market solution.
> Just a thought.

This reminds me of nothing so much as those pundits who in February 2000 announced that all the money spent of fixing Y2K problems had been "wasted". Since I had personally seen real Y2K problems with my own eyes (not the overhyped conman fear-mongering, but the real deal), as had other nutballs such as Alan Greenspan, I was sickened. The first large-scale problem facing the human race that was identified in advance and FIXED in advance, now being called a "waste" because the _problem didn't occur_.

But, quite honestly, it would have if action hadn't been taken. And it would have come on suddenly and unstoppably.

Please - tell me exactly what is going to happen to the exurban way of life if gasoline goes up to $5.00 in 2008 and everyone is still driving Hummeer H3s? Eh? 2,000,000 SmartCars going to appear out of thin air? Toyota is having trouble making more than 100k Prius'/year with a 4-year head start.

Sheesh.

Cranky

J Thomas,
I agree with everything in your post, but I do not think it invalidates my response to s_t_r. Facts are stubborn things, as a certain person likes to say, and the poor leadership skills of Jimmy do not change the stubborn fact that he was right on energy and many other issues as well. Would I vote for him? No. Do I consider being called a "Jimmy Carter" an insult? No. I admit it gets a lot of traction on Big Pharma Radio though, so I guess I am a minority in that respect.

sPh

BREAKING NEWS:
The pres has already backed away from the most strident alternative energy statements...under pressure from opec. End of thread!

Once you hold hands with a Prince, it is impossible to let go.

Cranky

Isn't trying to reduce Middle Eastern oil imports an example of how to "shut ourselves off from trade and opportunity?

Hardly. Rather it is a realization that peak oil will have come and gone by that time and our imports will be down regardless. It is only shortsightedness to think that there is no limit to what we can import and pay for it.

Surely a tax on gasoline to pay for the costs of the Iraq war would be less economically distorting than paying for it from other taxes, or with more debt and inflation?

Please - tell me exactly what is going to happen to the exurban way of life if gasoline goes up to $5.00 in 2008 and everyone is still driving Hummeer H3s? Eh? 2,000,000 SmartCars going to appear out of thin air? Toyota is having trouble making more than 100k Prius'/year with a 4-year head start.

Who cares about the Prius? One person switching from driving a Durango to a 4-banger Camry (driving the same mileage) saves 2.5 times as much gas as a person changing from a Camry to the Prius.

There's no shortage of capacity for producing small cars, quite the opposite. Katrina kicked off a large change in the mix of vehicles sold, which is still continuing, even with gas prices holding relatively constant.

Cranky, if Carter ran again with a solid modern PR team behind him, I'd vote for him.

It's certainly in insult to Bush to compare him to Carter. All Bush has going for him is his PR team, and if he comes out *looking* like Carter, then he's got very very little.

We don't need a gasoline tax. When (if) it becomes clear that high oil prices will continue, two things will happen. First, people will start buying the more fuel efficient cars as they did with the last oil shock. Second, investors will risk their money on oil shale and tar sands which cost about $30 per barrell to produce. Why haven't they done that yet? Investors suspect that oil prices will plummet again and that could devastate their huge investments in alternatives.

Things like hydrogen and ethanol are pipe dreams, they cost more to produce than they are worth.

Markets will sort these things out much better than tax policy. Meanwhile we will defend our interests with our military which is inexpensive compared to the vast energy market.

Bush needs to read this:

Study: Ethanol Production Consumes Six Units Of Energy To Produce Just One

> When (if) it becomes clear that high oil
> prices will continue, two things will happen.

The first big oil shock hit the US in 1973, more or less. The first Detroit models actually designed for (somewhat) better fuel economy actually hit the market in 1979, 6 years later (compare the 1978 Old Cutless with the 1979 model). Improvement in total fleet fuel economy started to be measurable around 1985, 12 years after the shock, and peaked around 1988, 15 years after the shock.

Oil shale was first exploited during WWII, and is still not commercally viable after 60 years.

You are assuming that when the effects of "downslope oil" (post peak) arrive we will have 15-60 years for 'the market' to develop new technologies and new buying habits, and for vehicles with better fuel economy to work their way through the system. I strongly suspect we will not, and that the effects of high oil prices will hit fast and very hard. Why not start preparing now?

Cranky

As I understand it, it takes more energy to make a gallon of ethanol (out of corn) than you get out of a gallon of ethanol. This may be wrong, but it sort of sounds like another Archer Daniels Midland boondoggle. Maybe switchgrass is different, but I don't think so: distilling in order to extract the ethanol is the energy-intensive part.

All the same, I think our fearless leader should be encouraged in this effort, even if it is a leaf out of the Jimmy Carter book. Just rather strange that he should suddenly be advocating dollars for education right after he took $12bn (or $14bn, or whatever it was) out of the Federal higher education budget. Look, there's that hobgoblin again!

It's not really that tough to reconcile the two statements. President Bush is a pathological liar and nothing he says can be counted on as truthful. See how easy that is.

As I understand it, it takes more energy to make a gallon of ethanol (out of corn) than you get out of a gallon of ethanol. This may be wrong, but it sort of sounds like another Archer Daniels Midland boondoggle. Maybe switchgrass is different, but I don't think so: distilling in order to extract the ethanol is the energy-intensive part.

At some point, in consideration of the long time horizon involved in replacing the transportation fleet, it may be necessary to manufacture liquid hydrocarbons using an energy inefficient process. That is, it doesn't matter how much cheap fusion electricity there is if the transportation fleet can't use it. The issue should be whether manufacturing ethanol from corn or switchgrass is more or less efficient than, say, manufacturing octane from coal and water using Fischer-Tropsch. The form of the energy that you put in may be more important than the amount -- if highly-centralized ethanol production consumes 60% of the liquid transportation fuel produced in raising, harvesting, and transporting the distributed biomass, a less "efficient" Fischer-Tropsch plant built on top of the coal mine that only consumes 20% of its own output may be a better deal.

The technology for ethanol manufacture is subject to improvement. There are a number of interesting developments in membrane technology going on that may replace distillation and reduce the amount of energy required to separate and purify the ethanol.

> The issue should be whether manufacturing
> ethanol from corn or switchgrass is more or
> less efficient than, say, manufacturing
> octane from coal and water using
> Fischer-Tropsch

Agreed, if you define what you mean by short term. Damage to the Midwest's topsoil layer from the last 75 years of modern farming technique is already quite severe; while a short burst of corn production might be an acceptable risk it can't go on for very long. Else we will have no groceries to pick up in our ethanol-fueled vehicles.

Cranky

"BREAKING NEWS:
The pres has already backed away from the most strident alternative energy statements...under pressure from opec. End of thread!"

Posted by centrist

Centrist, you obviously Hate America, and War Against God. The Glorious Presidentness has not 'backed away' from anything; his way is to stand firm, just like he did in the TANG.

What has actually happened is that his staff has informed us that some of his statements were not to be taken literally. Which they wouldn't have to do if we could just have more understanding of the Innermost Truth of his Glourious Words.

It's all our fault, due to the MSM and leftist teachers....we are unworthy.

You are probably thinking about this study, http://www.sciencedaily.com/releases/2005/03/050329132436.htm. Another study on ethanol, http://www.sciencedaily.com/releases/2005/07/050704110527.htm,
projected a 1.1:1 energy balance here and a 3.7:1 in Brazil, but it is very dependent on technology used and costs calculated. A 1.1:1 balance, while positive, is really too low for mass production.

What are the main costs associated with the distilling process? I've heard elsewhere that providing heat is a big part of it, and that you could therefore save money by combining a distillery with a power plant, since most power plants produce lots of extra heat as a byproduct.

The only people with opinions about energy worth considering are those willing to risk their own money. If switch grass, or hydrogen, had any realistic potential, capitalists would savagely compete to risk their money. They are holding on to their wallets. When you spend your own money your mind becomes remarkably focused.

Cranky, are you prepared to sell your house and cash out your assets to bet it all on switch grass. If you are right you will be a wealthy man.

> The only people with opinions about energy
> worth considering are those willing to risk their
> own money. If switch grass, or hydrogen, had any
> realistic potential,

Well, that leaves out George W. Bush and Richard Cheney, I guess, since neither of them ever risked a penny of their own money in the energy business, and Mr. Bush had all his losses made good by third parties.

Cranky

Yes, So we got more oil faster, and we had good times, and there's that much less oil left now. Reagan had a good run, he's still very popular. Lots of people had a good time while he was mortgaging the future. And Carter came out looking like a loser. He looked at what we needed to do and he tried to get us to do it. And we voted to have a party instead.

There is a surplus of petroleum in the world. Maybe our grandchildren will have to face limited supplies. Maybe not. In the 1970s it was said there was a 5 year supply. Now it would be insane to say there is less than 50 years supply, including the vast amounts needed by India and China, if they continue to grow.

There are those who say the world will heat up to intolerable temperatures because of oil use. If so, we are supposedly doomed. Let's commit suicide. You first.