Friday, June 04, 2004

Kevin and Me

Most days, I’m pretty much on the same
wavelength as Kevin Drum (Washington Monthly’s Political Animal) when it comes to political discourse. Any disagreements I might have with Kevin's opinions are usually more semantic in nature than anything else, even though Kevin certainly tacks a wee bit to the right of me.

Today, though, we depart in opinion.

Kevin has compiled a short and fairly accurate analysis of the current issues with oil supplies. He specifically looks at the situation from the demand side (where any such discussion should start), and compares historic demand for oil with capacity to produce it. What was a bit of an eye opener for me was his demand / capacity graph. Looking at the graph from a historic perspective, it's clear as a bell that the West is heading for some rough waters. In Kevin's analysis, you should enjoy your $2.25 gas, because it looks like prices will (long term) be headed increasingly upward. He even takes a pretty good swing at why demand has become so skewed - and it isn't all the fault of the West.

On these issues we agree. And I'll give Kevin this - he tries to look at all sides of the Rubik's cube. Our departure in opinion is on solutions.

There are two ways to stabilize the situation: suck more oil out of the ground, and/or decrease demand.

Kevin posits that there are five key actions that could positively impact the demand/capacity imbalance:

  1. Produce more oil (drill wells, build pipelines).
  2. Switch to other, more plentiful hydrocarbons (gas, coal).
  3. Increase use of renewable power sources (wind, solar).
  4. Increase energy efficiency (higher CAFE standards, energy-friendly building codes).
  5. More conservation (less driving, air conditioners set to 80 degrees).
The five key actions that Kevin lists are basically the same actions that the energy lobby supports, in one manner or another. What these actions, as a group, fail to do is bring what every consumer and business person everywhere needs more than lower prices: price predictability. I believe that it's not so much the high price that drives us nuts (although when I filled up this morning, watching the wheels spin on the gas pump meter was certainly on my mind), but the unpredictability of gasoline prices for our vehicles and natural gas / fuel oil to heat our homes in the winter.

The bottom line is that there is a finite supply of oil at present and predicted consumption rates (20 years? 50? 100?). At some point in time, as a species, we're going to have to decide to bite the bullet. I know that there's no political will to bite any friggin’ bullet, but I'd like to offer a reasonable start at a long term solution that at least brings predictability to the consumer, doesn't mortgage our energy future, doesn't rape the environment in our collective last gasp for more oil, eliminates a major flash point in world politics, and positions us, as a species, for the future.

The quickest and most reasonable way to solve energy problems in the long run is to adopt a sensible application of consumer energy taxes and tax credits - a carrot and stick approach to solving the energy problems once and for all. One (a tax) won't work without the other (tax credits). Here's my "non-economist" view of how it works:

  1. Raise the tax on consumer energy products (gasoline, natural gas, fuel oil, etc.), and make the tax a variable tax - in other words, as the market price for oil increases, the tax rate decreases. Vice-versa, as the market price for oil decreases, the tax rate increases. Effectively, then, the price of finished oil products to the consumer is stabilized, regardless of market or seasonal fluctuations. A portion of the tax could be utilized for R&D on alternative energy sources - for example, fuel cell technology that is actually, and economically, scalable.

  2. Offer significant tax credits for use / purchase of non-fossil fuel alternative energy sources.

  3. Offer credits for purchase of hybrid / alternative energy vehicles.

  4. Offer significant tax credits for fuel conservation purchases - I'll give you an example - let's say I have a 15 year old central air system in my house. Now, I know inherently that if I replaced the system with current technology, I'd probably save a significant amount of energy dollars over the course of a year. But the initial outlay is so high that I'm willing to limp along with the old unit until it gives up the ghost. Now, if I had the ability to write off say, an amount equal to the differential in energy costs for a year, now that would be some incentive to change out my old power hog, and to buy the most energy efficient unit possible.
That's a starting point, anyway. It's fair, reasonably equitable, reduces demand, and rewards both efficiency and development of alternative energy sources. (Sidebar: Can you imagine what kind of impact the investment of $200 billion in alternative energy research would have in actually bringing some of these technologies to market. $200 billion is what we've expended in Iraq, to date.)

But, but, but. The above isn't my biggest point of departure with Kevin Drum. The following paragraph at the end of his posting is what tweaked me:

Liberals can help too. How about a deal that trades ANWR drilling for higher CAFE standards, for example? Sounds horrible, doesn't it? But it might be a politically feasible trade, and in the end the benefit from higher mileage cars probably vastly outweighs the negatives of another pipeline in Alaska. Consider it food for thought.
What Kevin views as a "trade", I view as abject capitulation. CAFE (auto fuel efficiency standards) for ANWR is not a tradeoff -- it's an environmental Faustian bargain.

I'm no longer willing to concede the need for raping ANWR or any other scrap of the planet in our increasingly urgent quest for the last drop of oil. We long ago reached a point of diminishing returns in what we get for both money invested in oil exploration / drilling -- and the vulnerability this quest brings to the environment around us has become unacceptable. Again, it's way past time to quit whistling past the energy graveyard. We've reached a critical convergence of world politics, energy politics, and environmental politics, and someone in a powerful position needs to stand up at a podium and say so.

I believe President Gore would have done just that. George Bush would drink a gallon of Texas Light crude before he would admit there's a big problem that needs more than a bandaid solution. And I don't think John Kerry will take any significant steps in that direction, either, at least not without a clear mandate to do so and at least one (cough, cough...Democratic Party) house of congress behind him.

Yeah, I know, I'm a goddam pollyanna. Perhaps Kevin is more of a realist than myself, and that's OK, too. What I do know is that even if we, as a species, decided to make the commitment to change today, the upside of being forced into the future probably wouldn't be realized in my lifetime.

But we've gotta start somewhere. The discussion has to start somewhere, sometime, and and that sometime needs to be sooner than later.

Why not now?