Re: embracers of lunatic economics(the free market)continue to bite us long after they are dead and gone
- From: "Steve Campbell" <SteveCampbell@xxxxxxxxxxxxx>
- Date: 18 Dec 2006 12:17:20 -0800
The free-market inflation of oil prices will eventually lead to
development of alternative energy far more effectively than any
conservation efforts. In the meantime, the quantity of oil supplied
will only adjust to meet the quantity demanded, even in the presence of
individual sacrifices in comfort and lifestyle.
The problem will be fixed when the demand curve for oil shifts because
of the introduction of a new, viable fuel source (hydrogen perhaps?).
Curtailing energy consumption will slow the economy and prolong the
suffering. We should charge headlong into the supply/demand crisis for
oil that will propel the world into the next generation of energy
technology with one, short, painful jolt that will stimulate economic
activity (not curtail it). After the transition, we can all just move
on.
Steve Campbell
www.avicorcho.com
On Dec 16, 12:36 pm, Vide...@xxxxxxx wrote:
we are in the energy pickle we are in today because of lunatics who
not only embraced lunatic economics(the free market), they instituted
them.
http://www.cleveland.com/energy/index.ssf?/energy/more/11282679865338...
Was Jimmy Carter right?
Sunday, October 02, 2005
By Stephen Koff
Plain Dealer Bureau Chief
Washington- President Bush is telling Americans to go easy on energy,
use carpools and "curtail nonessential travel" - an unusual moment for
an administration that used to say it could meet growing energy demand
by expanding supply, not consuming less.
But this is not a Jimmy Carter, turn- down-the-thermostat, late-1970s
moment.
Carter wore a cardigan when asking Americans to bear a little
discomfort in a time of severe oil price increases. Last Monday, Bush
rode in a motorcade - two limousines, three utility vans, six SUVs and
a medical truck - to the climate-controlled Department of Energy, where
he appeared in a suit and tie behind a podium.
Symbols aside, the former oilman who occupies the White House today
shares a problem that plagued Carter, a former peanut farmer and naval
nuclear engineer: How to solve an energy crunch in a nation utterly
dependent on fossil fuel?
Conservation is only a tiny part of Bush's answer, although on Monday,
Energy Secretary Samuel Bodman will lay out what his office calls a
comprehensive, national conservation campaign in the face of rising
winter energy costs.
In the past, Bush focused on promoting new nuclear power plants, better
use of coal, new shipments of liquefied natural gas and further
exploration of oil and gas in Alaska.
Bush's energy problems stem largely from growing worldwide demand for
limited supplies of oil and natural gas. The situation has grown worse
because of the war in Iraq and, recently, hurricanes Katrina and Rita,
which knocked out rigs in the Gulf Coast and hampered refineries.
Carter faced a crisis from a combination of economic problems, failed
policies of his predecessors and, finally, an Iranian revolution that
cut access to some Middle Eastern oil.
Carter met the problems by starting sweeping oil-reduction reforms,
including creation of the Cabinet-level Department of Energy.
He began spending millions of dollars researching alternative sources
for electrical power, including solar power. He got utilities to cut
their use of oil for electricity and ramp up their use of natural gas
or coal.
"Up until Carter, we were getting about 20 percent of our electricity
from oil generation," said Jay Hakes, director of the Energy
Information Administration under Carter and an authority on modern
presidents and oil. "And post-Carter, it went down to about 3 percent."
Carter insisted that U.S. automakers build more fuel-efficient cars,
with a goal of 27.5 miles per gallon over the following decade - a
requirement passed under Gerald Ford but put into force by Carter.
He offered incentives for getting oil from shale, creating a boom
initially in the Rockies - and a bust when it failed to be
cost-effective. He offered deductions for using solar water heaters in
homes and commercial buildings.
"People in the upper-income bracket were always looking for tax cuts.
They were going to build a house anyhow, so they were saying, 'Well
let's look at this solar stuff and see what we can do,' " said Marc
Giaccardo, a professor at the University of Texas at San Antonio who at
the time was an Albuquerque architect.
Carter even had solar collec tors installed on the White House grounds
to heat the executive residence's water.
Then Carter lost re-election to Ronald Reagan in 1980. The so lar
panels at the White House eventually came down - and Reagan and his
aides gutted the solar research program.
"In June or July of 1981, on the bleakest day of my professional life,
they descended on the Solar Energy Research Institute, fired about half
of our staff and all of our contractors, including two people who went
on to win Nobel prizes in other fields, and reduced our $130 million
budget by $100 million," recalls Denis Hayes, the founder of Earth Day,
who had been hired by Carter to spearhead the solar initiative.
Reagan and Congress stopped aggressively pushing new auto efficiency
standards, acceding to Detroit's desire to leave them at Carter-era
levels. They let the solar tax benefit expire, and the nascent solar
industry went belly- up.
It was time to let the markets work their magic and stop all this
government tinkering, Reagan and conservatives said.
Bad stuff? A recipe for the fix we're in today?
A number of environmentalists and conservationists say so.
Although the corporate average fuel economy, or CAFE, standards already
were saving 3 million barrels a day, "they could be saving us a further
3 million or 4 million barrels a day" if they had been ramped up, says
Dan Becker, director of the Sierra Club's global-warming project.
That would be enough to compensate for Katrina or for disruptions in
supply from Venezuela and Nigeria in the last year or so, Becker says.
"We could be saving more oil than we now import from the Persian Gulf
had the government acted to raise the fuel economy."
Every president since Carter has refused or been obstructed by Congress
- which is lobbied by automakers and unions that fear losing jobs. When
Americans want sheer size, they buy American, but when they want fuel
efficiency, they tend to buy Japanese.
Meantime the nation began its love affair with sport utility vehicles,
which are classified as light trucks, not automobiles, and have a lower
standard of 20.7 miles to the gallon. That's scheduled to go up to 22.2
miles per gallon by 2007. In August, Bush announced a plan to raise it
to 23.5 miles by 2010, but critics call that inadequate - and some
moderate Republicans agree.
New York Republican Rep. Sherwood Boehlert introduced legislation in
September that would require a 33 mile-per-gallon average for cars and
SUVs in the next decade. While anything is possible, a majority in his
party has previously rejected these measures.
Meantime, the solar energy industry is hopeful - not because of
anything that occurred in the White House after Carter, but because the
2005 energy bill, signed by Bush, will give up to $2,000 in tax credits
for anyone installing solar energy in a home. The credits begin next
January, although they will be available for only two years unless
Congress extends them.
Solar-energy champions say such a boost was needed 20 years ago, as the
Carter tax credits were expiring. "The solar water heating industry
instantly went from a billion-dollar industry to an industry that now
installs, in the U.S., about 6,000 solar hot water heaters a year,"
said Noah Kaye, spokesman for the Solar Energy Industries Association.
Had Reagan not squashed it, the research that Carter started could have
triggered a substantial shift to solar, wind power and other renewable
forms of energy - possibly providing as much as 25 percent of the
nation's electricity supply, says Hayes, the Carter solar expert.
"We were all aware of what in theory could happen by the year 2000, and
it occasionally comes back and haunts us," Hayes said.
That is all hypothetical, of course, because the theories never got a
chance to run their course.
Yet solid data exist on what happened after the free market- loving
Reagan chopped Carter's programs to shreds.
Oil prices dropped and stayed relatively stabile for two decades.
Motorists were thrilled.
Oil prices plunged in the early '80s after the Iranian crisis ended;
after a worldwide recession sapped productivity (a less productive
economy uses less fuel); and - especially - after Reagan eliminated
price controls. The controls, limiting how high the cost of fossil fuel
could go, had been in place since Richard Nixon used them in an effort
to rein in inflation and dampen consumer prices during the Arab oil
embargo. Carter started to eliminate them but never finished.
While the controls kept a lid on prices, they also prevented oil
companies from earning enough to make them want to reinvest in more
exploration and production. "When there's a shortage of supply and
you put in price controls, it makes the matter worse because it
decreases incentives to produce more," Hakes said. "And it
decreases the incentives for drivers to cut back."
Reagan couldn't wait to fix that problem. "He signed the order the
day he came in," said Bob Slaughter, president of the National
Petrochemical and Refiners Association.
Soon prices began reflecting the laws of supply and demand. World
affairs, be they labor strife in Venezuela, Iraq's invasion of Kuwait
or the threat of higher prices from Middle Eastern countries, could
drive prices higher. But renewed drilling in Texas, the new pipeline
from Alaska's North Slope, good relations with foreign producers like
Saudi Arabia and occasional siphoning of the Strategic Petroleum
Reserve (a Ford administration invention created for emergencies)
tempered most crises.
In fact, the price of petroleum got so low at one point, after the
Saudis flooded the market in 1986, that some Texas oilmen went broke.
Not that drivers minded.
Home heating oil and natural gas prices followed similar patterns. And
with inexpensive and seemingly abundant energy, who needed solar? It
was cheaper and more reliable to power a home with electricity from the
local utility than to gamble that a $20,000 investment in solar panels
might eventually pay off.
"I'm not sure it's a benefit to anybody to push a technology
that's not economically viable," said Rayola Dougher, manager of
energy market issues for the American Petroleum Institute, the big oil
trade group.
But if supply interacts so closely with demand in a free market,
ultimately benefiting consumers by driving down prices, then the
opposite must also occur: High energy costs will make consumers choose
to drive less or trade in their gas guzzlers. High electricity bills
will make alternatives like solar power more appealing. Americans will
conserve, adapting to the market. Which brings us back to 2005 - and
to gasoline prices that have hovered near $3 a gallon for several
weeks.
"Price is having an effect," said William O'Keefe, chief
executive of the George C. Marshall Institute, a science policy think
tank, and a former American Petroleum Institute executive. "There is
a shift within the auto market - people are buying more crossover
vehicles, they're looking at the smaller SUVs that get higher miles
per gallon."
Higher prices are also "providing incentives to look at alternative
fuels, and we are using more alternative fuels all the time," says
Dougher. "In fact, the biggest producer of solar energy today is an
oil company, BP, in terms of solar panels."
It bears noting, some energy authorities say, that the free markets
embraced by the oil companies aren't entirely free. Billions of
federal dollars flow to the oil, gas and electric utility industries
through tax credits, depreciation rules, research grants, insurance
guarantees and even direct government expenditures. And yet, some in
those industries say that federal taxes should not have subsidized a
speculative industry such as solar power in the Carter White House.
This is not lost on Hayes, Carter's solar guru.
"For the industry that has gained by far the most subsidies and tax
advantages from the federal government ever in American history to talk
about the free market is slightly ironic," he says.
To reach this Plain Dealer reporter:
s...@xxxxxxxxxx, 216-999-4212
.
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