Guest blogger Dennis Kornbluh continues his opinion piece on energy:
Our government has been hard at work trying to convince us that they are hard at work on the energy problem. If they spent as much time on substantive ideas as they do pandering to the public (who are presumably greedy and stupid), we might actually make some progress. The latest silly idea is the "summer gas tax holiday" proposed by John McCain and jumped on by Hillary Clinton. Thomas Friedman writes eloquently about the stupidity of this proposal in his recent opinion piece in the New York Times.
Consider for a moment what this tax holiday will be worth to the average driver. Most American's will drive about 5,000 miles between Memorial Day (May 26) and Labor Day (September 1), which is the period when the tax suspension is proposed. If your car gets 20 miles per gallon, you will enjoy an extra $46. Whoopee! Meanwhile, the government will be out $9 billion in tax revenue.
What could we do with $9 billion? We could fix our roads and bridges. We could improve our inadequate mass transit system. We could even give tax credits to the US auto makers if they'd get their heads out of the darkness and produce the high mileage vehicles that they've been capable of producing for decades (Check out the movie "Gashole", which documents how the oil companies bought and buried patents for inventions that enabled cars in the 1940's to get 100 mpg).
At a time when we should be preparing for the end of cheap oil by encouraging conservation and investment in alternative energy sources, we are, instead, encouraging consumption. A tax that makes it expensive to drive a land yacht across the country with a vehicle in tow is a good thing! The revenue raised from those taxes could displace tax credits for companies that are trying to ramp up advanced energy technologies. Instead, Congress is allowing tax credits for wind and solar to expire this December, while simultaneously giving billions of dollars in subsidies to the oil & gas companies.
Isn't our government doing something good by promoting biofuels? Unfortunately, biofuels are increasing CO2 emissions, and causing hardship around the world due to the impact on food prices. Now that so much land is being devoted to biofuel crops like corn, soybeans, and switchgrass, the remaining land for food crops has diminished, which drives up the cost. Good for farmers, bad for consumers, bad for the environment. Finally, the subsidies that our government gives to biofuel producers is the only way they are able to come close to making a profit. Farmers (who deserve a break) and biofuel producers should enjoy this phenomenon while it lasts.
Conclusion: Big changes lie ahead as oil prices continue to rise. Let's elect leaders who have a realistic energy strategy and kick the special interests out of Washington.
A reader challenges OurMontville.com ("Yippee, America is great. That's a topic? One comment so far, and it's boring") to publish his post below:
I can remember filling up a one gallon gas can for a quarter down at the old Phillips 66 in Rockaway. The year was 1969. Today, gasoline is nearly that cheap in Venezuela (38 cents per gallon), and other oil rich nations (Nigeria, Saudi Arabia, etc.) The rest of us poor saps have to pay what's starting to look like a second car payment.
At what point will the price of fuel change our habits? The average American drives 20,000 miles per year, and uses approximately 1,000 gallons of fuel @ 20 mpg. At $3 per gallon, that's $3,000 per year, or $250 per month. At $5 per gallon, the cost goes up to $417 per month. Where do those additional $167 dollars come from?
From your "disposable income", presumably. You might have preferred to go to the movies or out to dinner, but now you'll literally have to burn that money. But you won't just spend it on gasoline. The price of fuel is a significant factor in the cost of shipping, travel, food -- pretty much everything that you can buy. So when the cost of fuel goes up, it's like the rising tide, which raises all boats.
For example, FedEx just issued its second profit warning in two months on escalating fuel costs and meager demand for US freight, sending the company’s shares lower. They spend over a billion dollars each year on fuel. When the cost of overnight delivery goes up (as it has and will continue to do), watch the value equation change for catalog and Internet retailers, who must ship all of their real goods. If the current trend continues, you can expect to pay significantly more for your holiday gifts (not to mention, everything else), even if you choose to ride your bike to Wal-Mart.
Speaking of bikes, here's a quick survey question. What is the critical price per gallon that would cause you to change your behavior in any of the following ways:
Commute with a co-worker
Take the bus or train to work
Sell your SUV
Cancel a holiday road trip
Consider riding a bicycle or scooter to do your shopping
Is it:
A) $4 per gallon ($333 / month) B) $5 per gallon ($417 / month) C) $6 per gallon ($500 / month) D) $10 per gallon ($833 / month) E) Higher
What will you do differently? Perhaps we can take a lesson from the Europeans. They're already paying about $6 per gallon in the UK, and almost $7 per gallon in the Netherlands. Perhaps that's why bicycles, trains, scooters and Smart Cars are so popular over there.
One final thought: What is the true cost of oil? So far, the Iraq war has resulted in the deaths of 3,873 US soldiers, and has cost $470,376,300,000 (that's $470+ billion). It will go up $2 million while you read this article. Watch it rise at http://www.costofwar.com/.
