Thursday, July 17, 2008

Energy Debate

It seems to me that the Republicans and Democrats just can't get over their petty politics, ideologies and ties to special interests long enough to put together a pragmatic energy policy that will be good for all Americans, break our costly dependence on foreign oil, improve our economic and national security and combat global warming.

The Republicans seem tied to drilling our way out of the oil crisis and continue to provide tax breaks and incentives to the oil, gas and coal companies. They can't break away from 20th century energy solutions that aren't working. Republican also seem to have no appreciation for the benefits the environment provides and hate energy efficiency and renewable energy. To most Republicans, global warming is not a problem that needs to be addressed.

The Democrats, on the other hand, love energy efficiency and renewable energy. They are big into environmental protection. They don't want to open up any new areas for more domestic drilling. Not only do the Democrats want to take away unwarranted tax breaks from oil, gas and coal companies, but also want to add a wind fall profits tax on oil companies to punish oil companies. Democrats seem to be opposed to any new fossil fuel energy development even if strict, effective and enforceable environmental safeguards are put in place. To Democrats, global warming is the biggest problem.

I think the Republicans and Democrats need to be aside their partisan, ideological and special interest dogmas and start working on a pragmatic comprise on energy policy.

The Democrats could allow offshore oil drilling if strict environmental safeguards are put in place. The Republicans should not object to these safeguards. With oil north of $130 per barrel, there is plenty of money to pay for the safeguards and provide oil companies big profits too.

Energy efficiency and renewable energy are a very important part of the energy future. The Republican should support the renewal of the investment tax credits for renewable energy. Republican need to stop protecting the oil can coal industries. Republicans should support that 20% of our energy come from renewable energy by 2020. By stifling U.S. efforts on renewable energy, the Republicans are simply letting foreign countries increase their technological lead over the U.S. They are also letting the energy hole we are in get deeper and deeper.

Both the Republicans and Democrats need to stop going after scapegoats like speculators, OPEC and environmentalist. A real energy plan would mitigate efforts by these groups and other to limit energy supplies and manipulate prices. Both the Democrats and Republicans also need to prepare for peak oil. Peak oil occurs when world oil production stops growing and eventually starts to decline as oil fields deplete. Sure we may have oil for another 100 years. But the production rates will be much lower than they are today.

Basically, we need Democratic and Republican statesmen and stateswomen to go beyond petty politics, ideologies and special interest to create pragmatic energy policies that will provide a healthy and prosperous future for America.

Hummer vs. Prius - Round 2

Several years ago there was bogus information going around the web that the Hummer was the more environmental friendly vehicle when you considered cradle-to-grave total energy costs (see my previous post here)

Well now comes round two of the Prius vs. Hummer and I think the Prius is delivering the knockout punch. GM is considering ending Hummer production and closing the Hummer plant (see here). In the mean time, Toyota can't build the Prius fast enough to meet demand. Dealers can't keep them on their lots and Toyota will be starting Prius production in the US (see here)

With gas averaging over $4 per gallon, the Hummer just couldn't keep pace with the Prius. In the end, the gasoline price is what cleared the air on the Prius vs. Hummer energy obfuscation. The Prius won hand down. The debate is over.

Wednesday, July 02, 2008

De facto Carbon Tax is Here

The most efficient way to regulate carbon dioxide emissions is to institute a tax on carbon. This is how many economists and environmentalists see it. However, creating a new tax is a non-starter since it is political suicide in the U.S. to propose any type of new tax even if it replaces an existing tax or funds are returned to the public. This is why complicated cap and trade emissions trading plans are being proposed. Cap and trade avoids the word tax and provides so called market incentives to reduce carbon.

But we now have in effect a de facto carbon tax. We have the tax due to the failure of our political leaders to enact an effective energy policy. Oil is nearing $150 per barrel and gasoline is over $4 per gallon, which is double the price of only a few years ago. The ever escalating price of oil is just like having a carbon tax except for one thing: the money is going to Saudi Arabia, Venezuela and other foreign countries instead of the U.S. treasury. So the U.S. taxpayer and consumer gets no benefit from this tax and it damages our economy.

This de facto carbon tax is having the same effect as a real carbon tax to reduce carbon dioxide emissions. People are driving less and abandoning SUVs for fuel efficient cars. Detroit is scrambling to move from SUV and pickup truck production to high gas mileage vehicles. We don’t need CAFE standards anymore since Detroit is now being forced into building fuel efficient cars due to high oil prices and market pressures. Airlines are trying every way they can to reduce their fuel consumption to save costs. You can see people worried about living in car dependent suburbs and starting to change their driving and living habits. Cities are planning mix-use zoning plans to make walking to stores and work possible again. Mass transit is making a comeback. People are talking about bike trails and riding bikes to work. Motor cycle and motor scooter sales are rising. These are the things we need to do to combat global warming. These are the things a carbon tax is suppose to put in motion. This shows that a real carbon tax would very effective at limiting carbon dioxide emissions.

Who is to blame for this de factor carbon tax. There are many bogeymen. Speculators, OPEC, Congress, President Bush, American saber rattling against Iran, oil companies, auto manufacturers, environmentalists, SUV drivers, the ambivalent American public, new demand for oil from China and India, peak oil, the falling dollar, failure for the U.S. to enact an effective oil policy, terrorism, political instability in many oil producing areas of the world. Probably all of these factors have some part in the current high price of oil. Because of all the varied forces driving up the price of oil, don't expect the price of oil and the de facto tax on carbon to come down anytime soon if ever.

Only effective energy policies can reduce this de facto tax on carbon. I don't think our politicians have the guts needed to bring about the necessary energy policy changes.