Thursday, May 15, 2008

Solving the Oil Crisis

Solving the Oil Crisis

By Jerome Grossman

High oil prices and a hotly contested election have turned the energy debate into political football. Calls for a gasoline tax holiday this summer would produce miniscule savings to drivers. Cries to force OPEC to pump more oil have been futile as the cartel enjoys enormous profits and wants more. Drilling in Alaska and offshore Florida and California risks serious environmental damage. Demands to tax the multi-billion dollar profits of the oil companies lack political clout and would be opposed by corporate America coast – to – coast.

There are only two ways to reduce prices: increase supplies or reduce demand. This is basic Capitalism 101. Increasing supplies is limited by environmental concerns and cartel power. Reducing demand in the United States, the nation that consumes about a quarter of global production would have an immediate effect on oil prices, bringing them down dramatically but still several hundreds of percent over cost.

Here are some suggestions:

1. Increase the current tax on gasoline to a level that would dramatically decrease auto driving, reduce air pollution and global warming while using the money generated to repair roads and bridges and to modernize mass transportation.

2. Subsidize the auto companies in their retooling to produce cars that obtain 50 miles to a gallon. Why should we wait until 2020 when the technology is available now? Let the automakers repay over a period of years.

3. Institute a rationing system for gasoline and heating oil with special allotments for transportation to and from work.

4. Allow a tax credit or refund for people of lower income to offset the increased tax.

5. Encourage (with a tax break) work by telecommuting that would reduce pollution, traffic and unhealthy stress on workers who sit in gridlock twice a day.

6. Promote a nationally coordinated program of car pooling, ride sharing and more efficient mass transit.

Reducing U.S. addiction to foreign oil would ease the Federal Budget Deficit. Foreign oil suppliers are awash in trillions of U.S. dollars and are using some of them to buy American assets and corporations in the largest transfer of wealth in the history of humanity, without firing a shot.

Goldman Sachs says that the price of oil could reach $200 a barrel this year. Without a plan, our costs could go even higher. Enough is enough. Let's have some serious political leadership for change to stop indulging ourselves in our uncontrolled appetite for oil.


jmsjoin said...

good ideas Jerome
Especially 6. there is so much to discuss here and I believe i have in the past but I will say I heard a good idea last night and that was do what President Carter did. Gas rationing, a gas card (my own thought) and maybe for food and other things. This is all just beginning my friend!
You have to wonder too if Bush is topping off our reserve tanks in preparation for attacking Iran or just to further enrich his friends? Remember he clandestinely put making capturing our shale oil reserves and making it economical on the fast track in 2005. T Boone Pickens said $5 at the pump would do it. Where almost there as well as every facet of This created mess Bush is cheer leading for whoever is really behind the right!

DivaJood said...

Came here on recommendation of An Average Patriot. I think these are excellent ideas - and I also think that #2 is a terrific idea. We DO have the technology.

I'd also suggest that for those of us who can telecommute, let us work at home. It is crucial to the environment to get people off the roads.

Anonymous said...

This is where the phrase "Liberal Fascism" comes from. A problem is identified- high oil price. The solution invariably is to use government power to compel people to behave in certain ways to solve the problem. You would further confiscate people's earning with increased taxes, subsidize favored entities at the expense of those deemed less favored, ration petroleum, "promote" car pooling. People drive their cars the way they do because they like to. If/when it becomes truly too expensive for them to continue doing what they like (i.e., pursuing their own happiness), they are fully capable of deciding to drive less, carpool, buy smaller, more efficient vehicles. I'll believe that the gas "crisis" is a real problem for real people when I see ordinary people doing what they can to lower the cost of driving immediately, by driving slower. I haven't seen that yet.

I agree that the tax holiday will produce miniscule savings, and that would be counterproductive if you goal is for people to drive less. Drilling in CA, Alaska, and offshore need not be any more dangerous to the environment than drilling any other place, but your true goal is for people to drive less, not for them to pursue their happiness by having petroleum readily available at a reasonable price. (Most oil related disasters are due to tanker accidents, not drilling. Drill closer to home, and you need fewer tankers).

Please admit that you just want people to do what you think they should do, not what they think they should do. That would be honest.

Anonymous said...

First off, the environment: CO2 is a very small impact to global warming. In one year, china's coal plants produce more CO2 in a year than 3 billion ford cars running nonstop for a year, so please put aside any thoughts that our cars are the problem of global warming; theyre not.

I agree with the idea of increasing fuel efficiency in cars, though first the economics should be analyzed, i.e. how much money will we really save by doing this? If the answer is a lot, go for it!

Increasing tax on gasoline will not significantly drive down demand, though Americans do waste a lot of gas going needless places, a majority of driving is essential driving that needs to be done. Taxing fuel will bring up the price of everything you purchase. As far as I know, every product in stores have to be transported, often many miles. If truckers are paying more for fuel, they are forced to pass it on to their consumer(the store) and the store is forced(economically) to pass it on to you.

I come from a rural, agricultural background. Raising YOUR food takes a lot of gas, semis, combines, diggers dont run on air! My relatives are aerial applicators (crop-dusters). Because Jet-A has gone to 2.50 to 4.50 in less than a year, they have been forced to raise their prices, which are passed on to farmers, who pass it on to consumers.

To my understanding the oil crisis is about high prices, not availability, we can and will get our oil, expensive or not, its about US consumers. So making every commodity more expensive indirectly from your taxes, it is only contributing to the problem.

Telecommuting is a great idea for people who have office jobs, that is, I think, your best idea, along with carpooling. These are excelent ideas, and will help, but it is not a solution to an energy crisis. Though it is a good small-scale idea for consumers to save money


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