3 Poor ideas to lower rising fuel prices...

Today’s post: Weds, 7-9-2008

When a commodity is rising in price, you can stop the rise by increasing the supply or lowering the demand.

Here are 3 current ideas to do that to lower gasoline & diesel prices in the United States.

1. Increase oil drilling in environmentally & now prohibited areas.

2. Reinstate the 55 mph national speed limit.

3. Take oil from the national oil reserve.

We now have two huge & deadly serious problems in addition to the rise in fuel prices.

A. We have that price rise precisely because we now are massively over-dependent on petroleum for fueling transport -- & at a time when the cheap & easy growth in petroleum supply is over AND a time when the supply itself may begin shrinking. At the same time economic growth & population growth have increased demand.

Producing vehicles that are much more energy-efficient or which run in whole or in part on electricity or on biofuels produced in an energy efficient way from nonfood sources, unlike the 3 ideas above, will solve this problem.

We have the rise in fuel prices because we haven’t already done these things. Increases in drilling for oil, help continue the problem & distract time & money from accelerating the real solutions.

Taking oil from our national oil reserve also does nothing to solve this real problem. Worse, it’s like spending savings needed for much more serious emergencies on continuing to go to the movies twice a week. If we use it now for something that would be nice but is not that serious, it won’t be there when it’s desperately needed.

A revival of the 55 mph speed limit also does nothing to solve the real problem. And, by slowing the delivery of goods & services it will brake the economy & tend to increase inflation in a different way.

Lastly, each of these ideas might create some price reductions in fuel prices or temporarily slow their increase. Unfortunately, they will tend to SLOW DOWN the solutions which can prevent MUCH worse price increases later.

At current levels, fuel prices are producing elimination of waste & improving the market & profit incentive for the development of long term solutions we so desperately need. So, as long as we can accelerate the development & deployment of the needed long term solutions soon, some increase in fuel prices now may actually save us from even worse problems as soon as 10 years from now & dreadfully worse problems 20 years from now.

B. It looks like we are already more than 5 years too late in reducing the global increase in CO2 emissions. We cannot afford to slow converting our energy sources to renewable ones or nuclear sources or both.

Increasing the supply of fuels based on oil by drilling in new places for oil & using our national oil reserve, will make this part of the problem worse. They will result in more oil being turned into CO2 than if we do not do them.

Producing vehicles that are much more energy-efficient or which run in whole or in part on electricity or on biofuels produced in an energy efficient way from nonfood sources unlike the 3 ideas above will solve this problem. This is particularly true if we begin to switch totally to electricity produced by solar or other renewable sources or nuclear & to dramatically speed up this process.

Each of these 3 ideas will distract from solving these two really serious problems, the now frightening overdependence on oil & the equally frightening overproduction of CO2.

They are like taking an aspirin to bring down a fever when we have just contracted bubonic plague.

At these levels, we are more likely to survive if we leave the fever alone since fevers short of the harmful level act to warn us of the problem & boost our immune response.

And, we are MUCH more likely to survive if we focus only on finding out & using what will get rid of the bubonic plague.

None of these 3 ideas pass this test in my view.

I think we will be much better off if we do not do any of them. We should be entirely focused nationally on speeding the real solutions into place.

That being said, politically we may need to compromise with the people who think these 3 ideas are a worth doing.

One possible compromise might be to set the national posted speed limit at 65 mph with extra fines for exceeding 70 in more populated areas & for exceeding 75 on highways.
Another compromise might be to pass that law with a national posted limit of 60 mph. We may need one day to go to 55 mph again. But I’m not sure we are at that point now.

That would reduce fuel consumption from current levels without slowing the economy too much.

We could also drill for oil in all or most parts of Alaska. The oil companies have developed technologies to minimize the environmental impact of doing this. If it were only allowed when oil companies produced plans that also found solutions to the worst of the remaining impacts that environmentalists say is lacking now, it might be doable without causing excessive harm. Oil prices as they are now would support spending the extra money to do the drilling this way.

But I think the trade that must be made for these two compromises should be that we spend at least 10 percent annually of the money we have been spending on the wars in the Middle East to help ensure our oil supply be spent to put the real solutions into place & to get that done quickly.