Another Bursting Bubble?

Ted Nordhaus and Michael Shellenbergers say Democrats "must break once and for all from green orthodoxy":

The green bubble bursts, by Ted Nordhaus and Michael Shellenberger, Commentary, LA Times: ...Democrats and their environmental allies face a political challenge they could hardly have imagined just a few months ago. America's growing dependence on fossil fuels, once viewed as a Democratic trump card held alongside the Iraq war and the deflating economy, has become a lodestone instead. Republicans stole the energy issue from Democrats by proposing expanded drilling ... to bring down gasoline prices. ...

Democrats and greens ended up in this predicament because they believed their own press clippings -- or, perhaps more accurately, Al Gore's. After the release of ... "An Inconvenient Truth," greens convinced themselves that U.S. public opinion on climate change had shifted dramatically, despite having no empirical evidence that was the case. In fact, public concern about global warming was about the same before the movie..., hovering near the bottom of the Pew Center for People and the Press' top 20 priorities.

By contrast, public concern about gasoline and energy prices has shifted dramatically..., gas prices became the second-highest concern after the economy, according to Gallup.

This summer, elite opinion ran headlong into American popular opinion. The train wreck ... went by the name of the Climate Security Act. That bill to cap U.S. greenhouse gas emissions would have, by all accounts..., increased gasoline and energy prices. ...Democrats brought the bill to the Senate floor in June when gas prices were well over $4 a gallon in most of the country. Republicans were all too happy to join that fight.

Indeed, they ... relished the opportunity to accuse Democrats of raising gasoline prices in the midst of an energy crisis... Democratic leaders finally killed the debate to avert an embarrassing defeat... Republicans have been bludgeoning Democrats with it ever since. ...

In following greens, Democrats allowed McCain and Republicans to cast them as the party out of touch with the pocketbook concerns of middle-class Americans and captive to special interests that prioritize remote wilderness over economic prosperity. ...

The most influential environmental groups in Washington -- the Natural Resources Defense Council and the Environmental Defense Fund -- are continuing to bet the farm on ... making fossil fuels more expensive in order to encourage conservation, efficiency and renewable energy. But with an economic recession likely, and energy prices sure to remain high for years to come..., any strategy predicated centrally on making fossil fuels more expensive is doomed to failure.

A better approach is to make clean energy cheap through technology innovation funded directly by the federal government. In contrast to raising energy prices, investing somewhere between $30 billion and $50 billion annually in technology R&D, infrastructure and transmission lines to bring power from windy and sunny places to cities is overwhelmingly popular with voters. Instead of embracing this big investment, greens and Democrats push instead for tiny tax credits for renewable energy -- nothing approaching the national commitment that's needed.

With just six weeks before the election, the bursting of the green bubble is a wake-up call for Democrats. Environmental groups, perpetually certain that a new ecological age is about to dawn in America, have serially overestimated their strength and misread public opinion. Democrats must break once and for all from green orthodoxy that focuses primarily on making dirty energy more expensive and instead embrace a strategy to make clean energy cheap. ...

Comments

[reason]

I can't say how angry this makes me! It is typically narrow thinking. Let's toss the world out the window because joe six-pack doesn't like to hear unconfortable truths. That is why America is such deep financial shit now. You can combat global warming AND raise energy taxes - you give a rebate! Think whole systems, not single policies! America must find a cure for its sound-byte culture, the whole country has ADHS (or acts as if it does).

[Yikes!]

better approach is to make clean energy cheap through technology innovation funded directly by the federal government. In contrast to raising energy prices, investing somewhere between $30 billion and $50 billion annually in technology R&D, infrastructure and transmission lines to bring power from windy and sunny places to cities is overwhelmingly popular with voters.

Another one of these people that can't grasp anything about the laws on entropy? Are they so impractical as to be looney or just plain dumb?

[One Salient Oversight]

Typical claptrap.

Go back 2-3 years and all the sceptics were saying "We have a booming economy! If we do what these awful greenies want then it will get ruined". Now they're saying "Our economy is in tatters! We can't afford to help the environment!".

[Valter]

I haven't read the paper, but the excerpt is puzzling. Basically it is saying that people like the government to give them services, but not to raise taxes.

Yeah, sure, let's change the relative prices of green/not-green energy by heavily subsidizing green energy instead of taxing non-green energy. But where would that money come from? Ultimately, from other taxes.

So all the paper is saying is: politicians would do better (for their election prospects) by not raising taxes on gasoline, but raising (probably more) taxes in some less transparent and less politically sensitive manner.

How surprising!

says...

I sure hope we're not relying on the Dept of Energy to come up with a solution. IMO,this agency has political problems that prevents innovation.

What about taxing imported petroleum fuel to subsidize domestic energy production. Keep the price high to encourage conservation, innovation, and efficiency while incubating radical, innovation and investment through price certainty. Price is the only real way to get, and keep, our attention.

One caveat. Keep the radical greenies at bay. A fascist in any form is still a fascist.We need solutions, not more narcissism.

[bakho]

Republicans have pursued "drill drill drill" policies that have not worked. They are blocking legislation that would increase investment in oil alternatives and have done so since 1995. With Bush holding the veto pen, fuel efficiency and alternative transportation fuels have not been funded because it would cut into Big Oil profits.

The Greens could go on the offensive and blame Republicans for high gas prices. They should have been warning for years that failure to enact new CAFE standards would eventually result in high gas prices. The data is on the side of fuel efficiency.

[bakho]

Yikes is wrong. Not only is it practical. It is being built and expanded:

http://www.earlparkindiana.com/windfarm.html

Windy locations with good grid access can produce cheap electric power. Making these generators at home instead of overseas will help the economy. However, the steel for the towers is made here. The maintenance jobs are here. The installation jobs are here. This is a win-win.

[BJ Feng]

Valter, it's only shocking to people who think logically. To others, what the government gives is free, that's why there's hardly any discussion over if a new program is worth its cost. Will spending $50 billion a year make solar and wind viable sources of energy? Only if that goes directly to a small plant as a subsidy, otherwise clean coal is still cheaper, not to mention nuclear. That is if anyone is allowed to build such a plant.

Still, if oil prices continue to remain high, the private sector will invest its own money in R&D. I've noticed quite a high number of new IPOs in the alternative energy sector before the crisis hit.

[Jennifer]

I live in the suburbs. We work in the suburbs. I have no choice but to DRIVE!! It's too far and too treacherous for me to bike. Birmingham is not a very green place to live. I would LOVE to not drive everywhere, but someone's gonna have to make that feasible for me. I'm all about green, but give me some options for heaven's sake!! Our infrastructure needs a major overhaul.
I have thought about getting a team of oxen and a wagon, but we've got these stupid covenants in my subdivision that prohibit keeping livestock!

[ken melvin]

Cheap means that the costs of replacement and those for environmental damage aren't included. They're from Berkeley, but contrary the grand traditiion, they pander to ignorance.

[Mark]

One reason that nuclear appears so economically competitive is that their liability is legislatively capped:

The 1957 Price-Anderson Nuclear Industries Indemnity Act was designed to ensure that adequate funds would be available to satisfy liability claims of members of the public for personal injury and property damage in the event of a catastrophic nuclear accident. The legislation helped encourage private investment in commercial nuclear power by placing a cap, or ceiling on the total amount of liability each holder of a nuclear power plant license faced in the event of a catastrophic accident. Over the years, the "limit of liability" for a catastrophic nuclear accident has increased the insurance pool to over $10 billion. The Energy Policy Act of 2005 extended the Price-Anderson Act to December 31, 2025.

I suspect that some of the enthusiasm for nuclear will wane as experience in decommissioning plants in the EU ramps up. Modern plants have an operating life of 40-60 years, so few large commercial plants have been decommissioned to date. The EC currently estimates the cost of decommissioning at 10-15% of the initial investment, but this seems likely to prove optimistic. Of the 150 odd plants in the EU, about one third are scheduled for decommissioning by 2025. The EC is currently wringing its hands about the lack of decommissioning funds that have been set aside, as well as the decommissioning strategy to implement. The problem of long term storage has still not been resolved.

[Carrot]

"A better approach is to make clean energy cheap through technology innovation..."

Yes, this is the one. Enough with the stick, use the carrot already. Don't waste the research on silliness by pandering to influential lobby groups. Do real research.

[Real Person from the Real World]

In the course of my work, in the predominently Republican suburbs, of a large city, during periods of excessively cool or cold weather, I have heard the business (relative well paid) types sneeringly refer to Gore and "global" warming, as if pointing to the weather as counter intuitive proof it is wrong. Mean while the increasingly paranoid true believers (usually fairly well off financailly) with their SUVs who have to cut back on their trips to Whole Foods to buy *nutritious* organic foods, and patiently wait in line for emissions testing in their expensive vehicles rant about various environmental initiatives. I am underpaid, I have to drive a junker with over 130k miles, and can barely make ends meet. I am fed up with BOTH these groups of people!

[btg]

Even here in supposedly "lefty" Canada, green policies are not doing all that well - the Green Party is polling in the 10% range - which is high, and when you add in the other parties that are "greenish" - they make up more than 50% of the vote - but with our system, the conservatives are likely to retain power with 40% of the popular vote.

The Liberals main policy plank was a "green shift" - carbon taxes with offsetting tax cuts - but the policy has gained little traction as it is seen as being to complex for many voters, and the conservatives emphasize it as a tax grab and make other distortions about it. in BC, they have already implmeneted a carbon tax - and it is unpopular.

the danger for the US and Canada will be if other industrialised countries wise up and form a green trading block - and penalise those countries that do nothing about the issue... doubtful.

well, at least i live in an area (southern ontario) where the local effects of global warming will not be catastrophic.

[demisod]

I'm not sure I agree with the premise. Most people I know that support more drilling also support developing alternative energy sources. Given the growing energy demands of the burgeoning human population, it probably isn't feasible to make a clean break with fossil fuels anytime soon. We need to figure out how to use that energy with less damage to the environment while alternative technologies develop. To be sure, many of the pro-drilling people probably vastly overestimate how much oil will be obtained that way, but clearly it will increase the world's oil supply somewhat. As far as the environmental cost, there is a lot of offshore drilling in various places in the world, and I am not aware of many serious accidents involving offshore platforms, though, to be sure, I don't follow it closely It seems most of the terrible oil spills involve tankers. Compromising on off-shore drilling seems defensible given current supply and demand.

[bakho]

More drilling is being sold as a measure to lower gas prices. Much of the public supports more drilling because they believe it will lower costs at the pump. Partly it is how the question is asked. Typically more drilling is not linked to risk to the environment.

July CNN poll- "The poll also shows Americans are divided when it comes to the effect of offshore drilling. Just over 50 percent think it will reduce gas prices while 49 percent say it will not." This is huge. over 50% believe something that is NOT true.

Americans are being sold truthiness by the oil lobby.

[Winslow R.]

"Democrats must break once and for all from green orthodoxy that focuses primarily on making dirty energy more expensive and instead embrace a strategy to make clean energy cheap."

A stategy to shift government resources from carbon/nuclear energy based subsidies to renewable energy subsidies seems to be an obvious carrot based approach and should greatly increase the number of carrots available.

You'd think the left with their 'balanced' approach to life would realize carrots often work better than sticks.

Do we still promote spanking our kids?

[anne]

http://angryarab.blogspot.com/2008/05/i-was-visiting-my-local-toyota-dealer.html

May 28, 2008

"I was visiting my local Toyota dealer in Bethesda, Md., last week to trade in one hybrid car for another." * Oh, really? So what do you want from me? A blender? You need a reward because you are driving a hybrid? Do you want poor people to buy hybrids too even if they can't afford it? And how did that pie-in-your-face taste? Was it creamy enough for you? When I read Thomas Friedman writing about energy and conservation I get a strong urge to waste energy. I get a strong urge to cut down trees and to turn on all lights in the house, and to operate my blender on gasoline. Some people are most annoying when they do this public service shtick; when they act all righteous.

* http://www.nytimes.com/2008/05/28/opinion/28friedman.html

-- As'ad AbuKhalil

[Mark]

Last spring, NASA climate scientist Jim Hansen (wearing his Columbia professor hat) was making the rounds in DC touting his plan to phase out coal by 2030. His rationale for targeting coal appeared to be largely pragmatic.

"CO2 from oil is going to get into the atmosphere," he said, because "you're not going to be able to tell Saudi Arabia and Russia, the countries that have oil, not to sell their oil." Hansen's solution: "Phase out coal as promptly as is practical." (http://www.washingtonpost.com/wp-dyn/content/story/2008/06/24/ST2008062400580.html)

Of course, while the U.S. accounts for about 27% of estimated total recoverable coal, Hansen's policy prescription conveniently overlooks the fact that Russia, China, and India account for 40%. (http://www.eia.doe.gov/international/) So all that remains is to convince Russia, China, and India not to use or sell their coal?

[howard]

i don't know who these people are, but their writing reveals them as idiots. why did you bother to print this, mark?

[Alex Tolley]

Just remember this article was written by the guys whose book was a deliberate poke in the eye for environmentalists. They have a particular axe to grind.

Having said that, the US is somewhat dysfunctional over environmental policy. A case in point. California has a $19bn high speed rail prop. on the ballot, pitched as an energy saving measure over cars and planes. Yet we still have next to no buses or other public transport in the towns which would be useful for everyone, kids included. We really could do with fewer grand projects of dubious value and more of the practical things that we either know would work or could be piloted at low cost.

As regards the offshore oil drilling, any public sentiment that approves of it just shows how easily ignorance is disseminated in our political discourse.

[btg]

demisod:

with every pound of carbon taken from the ground, something like 50% or more will end up in the atmosphere (the rest being turned into plastics, asphalt, etc.) - so it stands to reason that until carbon storage becomes widespread and cheap to do, the more fossil fuels we take out of the ground, the worse the c02 level will be, while at the same time, that faster we take the stuff out of the ground,t he cheaper the price will be and the alternative techbologies will be less viable by comparison.

the only solution is to slow down fossil fuel extraction - leave it for future generations to exploit without doing so much damage. prices have to rise in order for the alternatives to gain wider acceptance and to become cheaper through economies of scale/the learning curve/etc.

the issue of energy security is a joke - it is a world marker, and even if venezuela or iran or suadi arabia were to stop selling to the US, it just means that a change in where oil goes (and supply and demand gets displaced and shifted) and the only effect would be that transportation costs increased - short of russian subs torpedoing oil tankers, energy supply is not a real issue.

the only real benefit of offshore drilling will be the economic activity it creates, and the decrease in imports, improving the balance of trade. hardly worth destrying the planet for.

[Organic George]

The author must be related to a House Republican.

[Lee A. Arnold]

The article must be observing insider politics on legislative strategy -- because, "with an economic recession likely, and energy prices sure to remain high for years to come..., any strategy predicated centrally on making fossil fuels more expensive" is NOT "doomed to failure" but rather sees its premise now secured.

The next step is to subsidize alternative energy, both directly and indirectly, to the same dollar amounts that nuclear and oil are now subsidized both directly and indirectly. That comes to a few tens of billions of dollars annually. Add to the subsidies that go to alternative energies the additional projected health and environmental costs of oil and nuclear which will be paid for over the coming years by the consumers -- a subsidy to oil and nukes not yet paid.

Level the playing field, and the economy will end up Green. Quite soon.

[Patrick]

The good news is that we aren't going to break the Earth. Life has endured much worse than humanity can dish-up (except possibly nuclear armageddon). We might make quite the mess and destroy some unique and beautiful things, but life will go on. The point to undestand is that it is our own species that will suffer most. Billions will be displaced, millions will starve. The problem is that the suffering will be a slow, grinding process over decades or even centuries. Because of this, I am absolutely certain that nothing meaningful will be done to stop it.

Just like the the lead-up to the current financial crisis smart people are warning us that the soothing light at the end of the tunnel is a freight train coming our way. We aren't going to be able to stop it. The next best thing to do is to step off the tracks.

[anne]

http://www.nytimes.com/2008/01/13/books/review/Yglesias-t.html?ref=review&pagewanted=print

January 13, 2008

Beyond Mother Nature
By MATTHEW YGLESIAS

BREAK THROUGH
From the Death of Environmentalism to the Politics of Possibility.
By Ted Nordhaus and Michael Shellenberger.

Ted Nordhaus and Michael Shellenberger's 2004 essay "The Death of Environmentalism" sparked passionate debate and earned them a reputation as the bad boys of the environmental movement. Judging from their new book, "Break Through," which expands their argument in favor of a new approach to the urgent problem of global warming while continuing to go after former allies with gusto, it's a status they clearly relish.

Nordhaus and Shellenberger hold less that environmentalism is dead than that it ought to die. The political strategies that worked against acid rain and smog, they argue, simply will not mobilize support to combat global warming. The problem begins with the very way environmentalists talk about nature. "Environmentalists imagine that Nature, like God, is outside of us and all-powerful," they write in a typical passage. Like church authorities claiming to speak for God, environmentalists claim authority by speaking for nature and translating what the Earth is "telling" us.

Throughout the book, Nordhaus and Shellenberger refer to environmentalists in the third person, as if the term doesn't apply to them. In fact, both authors have substantial histories in the movement, for example as advocates for proposals like the New Apollo Project, an ambitious alternative energy plan that has been embraced by the Sierra Club and other mainstream environmental organizations.

"Break Through" goes far beyond arguments about the feasibility of hydrogen or wind power, touring such subjects as Thomas Kuhn's revisionist ideas about scientific truth, Richard Rorty's "liberal ironism" and Francis Fukuyama's neo-Hegelian theory of history. Even if one shares the authors' enthusiasm for these subjects, as I do, it seems like a serious mistake to ground a political agenda in ideas like this: "There is no single, glorious and transcendent Science. There are only sciences creating contingent truths, toiling away to reveal, create and organize facts and theories until the next revolutionary paradigm comes along to reorganize entire worlds."

Unfortunately, such pretentiousness obscures the book's very real strengths. Nordhaus and Shellenberger have worked in the environmental movement not as grand theorists but as public opinion researchers, and their work in this realm is enormously valuable. Polls often cited as evidence of broad support for environmental goals, they note, also show that support to be extremely shallow, making it difficult to persuade people to give up things they enjoy or need — cheap gasoline, jobs in industries like coal mining or logging — in order to advance environmental ends. In response, environmentalists tend to emphasize the dire consequences of inaction and, when that doesn't work, to ratchet up the doomsday narratives that Nordhaus and Shellenberger justifiably compare to religious tales of sin and damnation.

"We know from extensive psychological research," they write, "that presenting frightening disaster scenarios provokes fatalism, paralysis and ... individualistic thoughts of adaptation, not empowerment, hope, creativity and collective action." Insecurity, they argue, is an emotional pillar of reactionary politics, not a building block for the sort of farsighted, progressive thinking that is required to prevent ecological disaster.

Instead of sticking with this crucial point, however, "Break Through" tries to use postmodern philosophy to transmute an insight about public opinion into one about public policy. The authors conflate conventional environmentalist rhetoric and conventional policy prescriptions (mandatory curbs on carbon emissions) to create a supposed "politics of limits" that must be transcended through a "politics of possibility."

But whatever the shortcomings of their rhetoric, environmentalists have a very good reason to push for some limits, however much of a downer that message might be. Global warming is caused by carbon emissions and can be contained only by reducing them. Nordhaus and Shellenberger's preferred alternative — huge investment in alternative energy — doesn't really stand up to scrutiny. For one thing, without mandatory curbs on emissions, it might not work. For another thing, emissions caps would effectively provide a subsidy to less polluting alternatives, one that would be harder for lobbyists to manipulate and that wouldn't require lawmakers to pick winners among various possible technologies. Finally, even as a matter of crass politics, Nordhaus and Shellenberger neglect a basic point: the hard part about gaining support for a new initiative isn't convincing people of its value but finding the money to pay for it. The conventional solutions to global warming posed by the "politics of limits" — taxing carbon emissions, or issuing tradeable emissions to carbon-producing firms — conveniently raises revenue that could be used to pay for the very projects the authors wish to see.

In truth, few if any environmentalists oppose the sort of alternative-energy projects Nordhaus and Shellenberger favor. "Break Through" is more convincing in its case for a change in rhetoric....

[Winslow R.]

Mark you mislead?

Mark T. wrote: Democrats "must break once and for all from green orthodoxy"

Not what the authors are saying. Democrats must break from a small portion of the green orthodoxy and create a new green orthodoxy.

"Democrats must break once and for all from green orthodoxy that focuses primarily on making dirty energy more expensive and instead embrace a strategy to make clean energy cheap."

[ken]

Nuclear powered electical generating plants are the answer.

Build them using a single proven design and the cost is dramatically reduced. We can elimate coal burning power plants in the entirety. We can significantly reduce oil burning plants freeing up oil for gasoline and other uses. We can reduce natural gas consumption for business and household use.

Wind, solar, geothermal etc all sound nice but they are not reliable enough to waste our time or tax money trying to develop. Go with the tried and true solution. Go nuclear.

[Steven Earl Salmony]

Why are only the American taxpayers bailing out the whole global economy?

A billion members of the human family exist on resources valued at less than one dollar per day. Africa is suffering from "slow drip" problems. Europe is getting warmer fast. Arctic ice is retreating and the arctic coast of Alaska is eroding.

Where are the new ideas, the financial backing, and the innovations needed to address these problems? There are tens of trillions of dollars in the global human economy. Where has all that money gone?

The front page of the NYTimes tells the family of humanity that we are on the verge of a global economic catastrophe. Are the taxpayers of the American family, acting alone, to become responsible for the problems now presented to the human community by the greed of a small group of rich and powerful people worldwide?

Why are an astonishingly small number of greedy people, holding hundreds of billions of dollars of ill-gotten gains from what are now recognizable as failed business models and Ponzi-like financial schemes, not taking responsibility for their avarice?

Who are the people behind the mess we see splashed across the front pages of newspapers around the world this morning? Perhaps they need to be named, shamed and held to account.

Some greedy people are easy to identify. They are ones who have proclaimed themselves "Masters of the Universe" or Bohemians or the Greedy Boys of Greenwich or the Bilderbergers or members of The Trilateral Commission or the many too many outrageously enriched 'experts' and politicians who say and do anything to enhance wealth and power of themselves and their benefactors.

At least to me, it appears the problems in the global economy we are seeing today are the results of greed having reached its limits or, to put it another way, having "hit the wall" of unsustainability. That is to say, greediness of self-proclaimed Masters of the Universe and their minions has reached the point of greed's unsustainability. The global economy can no longer support the conspicuous, patently unsustainable behavior of a small segment of the family of humanity.

Yes, definitely yes, something new and different needs to be done. Bold action is needed; but, more of the same, old business-as-usual behavior appears insufficient. Limits need to be placed on patently unsustainable behavior. People who are responsible for the mess need to account for their behavior.

The American family is not responsible for the world's economic mess; but at the moment American taxpayers are being held solely accountable. There is something not quite right about such unfair and inequitable circumstances.

Steven Earl Salmony
AWAREness Campaign on The Human Population,
established 2001
http://sustainabilitysoutheast.org/index.php

[anne]

http://www.earthpolicy.org/Updates/2008/Update70_data.htm#table4

June 27, 2007

U.S. Installed Electricity Generating Capacity by Source, 2006

(Gigawatts - Percent of Total)

Coal 314.1 31.8%
Oil 58.3 5.9
Gas 389.8 39.4
Nuclear 100.1 10.1
Hydro 99.0 10.0
Bio 10.0 1.0
Wind 11.1 1.1
Solar 0.4 0.0
Geo 2.3 0.2

Total 988.1

Compound Annual Growth Rate, 2000-2006

Coal -0.1%
Oil -1.0
Gas 10.0
Nuclear 0.4
Hydro 0.0
Bio -0.1
Wind 29.3
Solar 1.0
Geo -3.1

Total 3.3

Notes: Installed capacity is from electric utilities, independent power producers, commercial plants, and industrial plants. Residential installations are not included.

[anne]

"Nuclear powered electrical generating plants are the answer.

"Build them using a single proven design and the cost is dramatically reduced. We can eliminate coal burning power plants in the entirety."

Good grief, but nuclear power may be partial, smallish answer.

[Marc]

Um, Democrats and environmentalists have always held an unpopular position on energy. They have always asked the American people and industry to diverge from the status quo and alter their lifestyles to protect the world for future generations. It is not an easy position, but it is the right position. This leads us to another truism, while Republican a good at getting elected, Democrats are good at governing.

[Robert Edele]

Considering how huge the budget deficit is, right now I am in favour of heavily taxing dirty energy (including ethanol) and putting no subsidies (but no taxes either) on clean energy. Energy demand is highly inelastic and is a perfect place to put the kind of enormous taxes needed to close the deficit. I'd certainly rather have $8/gallon gasoline and $.50/kwH electricity than raise all tax brackets by 10 percentage points.

[Josh]

Not talked about on either the right or left, at least not nearly enough, is the fact that oil companies have artificially created a bottle neck in the gasoline supply chain. In the 90s they planned to reduce the refining capacity to raise their margins (means profits) in refining. That means when a mishap happens that takes production off line, then we get a spike in prices (see Hurricane Ike and the southeast US today). Remember what happened in California with electricity in 2001?

Now they will blame the environmentalists for this, but internal memos and a report from the Senate back up the fact that the oil companies colluded on this. You can read about it at my blog.

http://endtheecho.wordpress.com/2008/04/04/republicans-are-often-so-wrong/

[Walter]

There are a number of problems with this post. (1) The first is a political one. Any traction re: energy policy was lost during the GOP convention with the idiotic "drill, baby, drill" chant. The party ceded being taken seriously on energy policy.
(2) It is also clear that energy policy in either direction is not the most significant of issues facing voters. Now that gas prices have fallen about .90 to 1.00 from the July peak, the political pressure to do something NOW has disipated. Cooler heads can now prevail and address the policy issues.
(3) and this is my personal peeve. Why do pundits, including Thoma above, and politicians continuously conflate fossil fuels for transportation with fuel for electricity generation? The latter has nothing to do with imports as only a tiny percentage of electricity production depends on oil. Policy decisions over fuel for electricity is almost entirely one of environmental policy, be it nuclear waste or greenhouse emissions.

The question of fuel for transportation and manufacturing is intertwined with import issues, but other than plug-in hybrids, is entirely independent of coal, nuclear, wind or solar energy questions. One should strive to maintain one's intellectual honesty and have a conversation about off-shore drilling and subsidies of oil companies and still have a separate discussion about investment in alternative electricy production and an upgraded power grid.

[anne]

"Energy demand is highly inelastic and is a perfect place to put the kind of enormous taxes needed to close the deficit."

Let's really, really smash and bash middle and lower income America. Let's just pound these folks to pieces. Let's really show the disdain we have for them.

[anne]

"Why do pundits...and politicians continuously conflate fossil fuels for transportation with fuel for electricity generation? The latter has nothing to do with imports as only a tiny percentage of electricity production depends on oil."

Well, actually, 45.3% of electricity generation is from fossil fuels though most of this is from natural gas. Natural gas accounts for 39.4% of electricity generation and oil 5.9%. I am conflating though.

[anne]

Which reminds foolish me, that coal is a fossil fuel also. All those coal plants that died to keep me warm and stuff. Coal accounts for another 31.8% of electricity generation. So, add 45.3 and 31.8 and there we have the percent of electricity from fossil fuels, which is a lot of percents.

[bakho]

At least Google the authors before you start making accusations.

http://www.thebreakthrough.org/about.shtml

Some Greens moralize the issues as self-sacrifice. This is not good marketing. There are some win-win features that are an easier sell. There are a lot of conservative, rural farmers that are happy to support wind power because they have lucrative leases for their windy farms that are more profitable than succotash (corn or beans).

Does anyone disagree that we need a "breakthrough" on the path to sustainable energy? We need to break the very powerful oil lobby that has feasted on portraying green energy as bearded hippie naturalists and little old ladies in sweaters and tennis shoes.

[david]

Thank goodness for the internet, we now know what to call N+S. They are concern trolls, and we shouldn't feed them.

I say, carbon tax to pay for the bailout, upped enough for direct payments to anybody in the lower four deciles more or less to ensure the measure is progressive. Smooth as pie. What's not to like?

Anne, I think Tom Friedman is a dumb as a doorknob, but what really is the point of that weird Prius quote you keep putting up? They're not even all that expensive as cars. It's the sort of thing one hears on sports radio.

[a different chris]

"Democrats must break once and for all from green orthodoxy that focuses primarily on making dirty energy more expensive and instead embrace a strategy to make clean energy cheap."

"Green orthodoxy"!!!???!!! Bull-f'ing-crap.

That is "Washington Consensus" orthodoxy. It says that people are above all, maybe only, price-sensitive. So make something expensive and The Godlike Market will bring them a cheaper substitute.

"Green Orthodoxy" is basically that pollution is bad and people just need to be informed and they will "behave better".

Actually, for once, it is probably the only Washington Consensus thing I agree with. Cheap gas, vehicles got bigger and suburbs sprawled. Gas got expensive, now look at American's buying priorities.

As far as "technology", didn't they (gov't and automakers) make a Taurus-sized vehicle that got 80mpg, which seems to be the exact sort of program these dudes are shilling for? Finished it when gas was historically as cheap as maybe ever. So how did that go? About like you'd expect.

[donna]

There are lots of people who enjoy thinking the world is simple with simple solutions.

Unfortunately, many of them vote, too.

So? Do we really need to pander to that? Should we continue to let them be proud of their ignorance?

My solution is just to educate enough people to outvote them.

[Alan Harvey]

This is typically dumb, short-sighted and sure to end with "We should have seen it coming."

[anne]

"I think Tom Friedman is a dumb as a doorknob, but what really is the point of that weird Prius quote you keep putting up?"

There is a strain, a fairly significant strain of analysts, who would find no sacrifice for others too much for what is actually a private, or even pretend, environmental concern. A Thomas Friedman could not push hard enough on having us invade and occupy Iraq, no matter the environmental cost, but could only wish ever since to force us all to drive a Prius or walk. Friedman is not a singular case, and when I learn of such duplicitous preaching I too wish to be chopping down trees.

[Roger Chittum]

High oil prices are too clumsy a tool to manage the associated environmental problems.

High oil prices reduce demand for highway fuels, but the effect is not large enough to achieve the necesary reductions in consumption at any imaginable price level. Furthermore and very importantly, even moderately high oil prices have also added massive amounts to the current account deficit, increased geopolitical problems by enriching oil producing nations, dragged the whole economy into long and deep recessions, pushed inflation, cut into real middle class incomes, and inequitably burden regions that rely on home heating oil.

A big part of a better solution is more regulatory demand management. CAFE standards were very effective in the 1980s and 1990s when crude oil was cheap, and even higher CAFE standards can be even more effective going forward. On other fronts, federal efficiency standards for buildings, appliances, and lighting have been very effective in limiting demand for electricity and natural gas. California has been even more aggressive, with the result that per capita use of energy in California has not risen in 35 years and is now less than half what it is in Texas. (New York, Arizona, and several other states also have per capita consumption less than half of Texas, per EIA.)

Purists who argue that high retail prices are the only way, or the best way, to limit demand for crude oil and energy generally should look at what has been accomplished in other ways and consider all effects on all societal interests.

[devin]

Jennifer (and others who say they have no choice but to drive),
I live in Kansas City. I just found got offered a great job in Portland. Now, does that mean I have no choice but to take a commuter flight every day to that job in Portland? No, I can turn down the job and find another one. I can move. Nobody held a gun to your head and told your where to live or work. You made those choices. And like a typical American, you want somebody else to pay for your decisions. I'm about to take a job that will require a long commute a couple days a week. That's my choice. If gas goes to $25/gallon and I can't afford it, I'm the one who made the decision to be dependent on a car and cheap fuel (it's still cheap, by the way) to get to work. If it turns out to be a poor one, I am the one responsible for dealing with the consequences. I'm sorry you have to pay more to get to work than you thought you would. That's life. Nobody guaranteed you oil would always be available to you in whatever quantity you want for whatever price you want.

Finally, you state that somebody is going to have to make not driving everywhere "feasible for me". Again, why should somebody else do it for you? There are thousands of bike-friendly, pedestrian-friendly neighborhoods, developments, and entire towns all over the country. If you, and the millions like you, chose to live in these places, rather than your suburban version of the American dream, your situation would be much different, and our national energy situation would be much different. Non-car options are minimal in many places in this country because you, and millions like you, CHOSE not to consider non-car transportation when you chose where to live.

[anne]

The mad rush to grow food for fuel, the ethanol rush, has left wild increases in food prices in the wake for those who are least able to afford any food price increases. There is more destruction of forest land in the wake of the artificial valuing of crops for fuel from ethanol subsidizing, but the stake in ethanol has made continual increases in production all but beyond question.

[anne]

http://www.earthpolicy.org/Updates/2007/Update63_data2.htm#table5

December 13, 2006

U.S. Fuel Ethanol Use, Corn Production, 2000-2007

(Million Metric Tons - Percent)

2000 16 of 252 6.3%
2001 18 of 241 7.4
2002 25 of 228 11.1
2003 30 of 256 11.6
2004 34 of 300 11.2

2005 41 of 282 14.4
2006 54 of 273 19.8
2007 81 of 336 24.1

2008 114 of 325 35.1 *

http://www.earthpolicy.org/Updates/2008/Update72_data.htm#table14

January 23, 2008

U.S. Fuel Ethanol Use, Grain Production, 2000-2007

(Million Metric Tons - Percent)

2000 16 of 340 4.7%
2001 18 of 321 5.6
2002 25 of 294 8.5
2003 30 of 345 8.7
2004 34 of 386 8.8

2005 41 of 363 11.3
2006 54 of 336 16.1
2007 81 of 414 19.6

2008 114 of 400 28.5 *

* Grain for fuel ethanol assumes 80 percent of ethanol distilleries currently under construction will be completed to draw from the 2008 harvest projection.

Note: Values are for crop years which begin in September of the calendar year.

[anne]

"I live in Kansas City. I just got offered a great job in Portland. Now, does that mean I have no choice but to take a commuter flight every day to that job in Portland? No, I can turn down the job and find another one. I can move."

I am like all, "hooray." Remind me to start drinking fasoline with my orange juice, just for spite.

[anne]

"Gasoline" just for spite, and I am ever so spiteful.

[Bruce Wilder]

Roger: "Purists who argue that high retail prices are the only way, or the best way, to limit demand for crude oil and energy generally should look at what has been accomplished in other ways and consider all effects on all societal interests."

I don't know if I am a purist, but I have, in the past, studied automotive fuel economy in detail and extensively. The price of gasoline drives everything else that can be done. If the goal is to reduce consumption, a higher price is what makes all the technological innovation actually work to reduce consumption. Otherwise, if the price remains low, people take the technology and use it to get other benefits: bigger SUVs, hybrids with lousy mileage but great acceleration, a house in a still further ex-urb, and driving habits that waste trips and waste gas.

All by itself a high gas price can get consumption reductions of 5 to 15%, just from pressuring people to change driving habits -- less acceleration, lower speeds. When people go out and buy cars, which are geared for lower acceleration and better mileage, they just compound the effect. When they carpool and consolidate shopping trips, etc., there's still more reduction.

If the idea is to reduce the consumption of fossil fuels, we absolutely need to do everything we can, in terms of infrastructure and technology, to give people choices. And, then, the price of fossil fuels has to go up relative to those other, better choices. And, to get all those other choices, the relative price of fossil fuels has to go up. That's how it works.

This country needs to get over its infantile habits of mind.

[Alex Tolley]

Bruce Wilder: "...a house in a still further ex-urb..."

Building patterns will be with us for centuries. Once the ex-urbs are built, it will be very difficult to abandon them, although they may fragment into new communities. We have had at least a century of building that assumes cheap transport, whether by private or public transit, so the resulting patterns we have will be with us. For this reason I am very much against the idea that we should make these decisions very costly for the current distribution of inhabitants. By all means make fossil fuels expensive, but ensure that good alternatives are available, whether CO2 neutral private vehicles and/or good public transit.

[kthomas]

For the most part, this article is BS.

[Marc in Kansas City]

I am not an economist. I am simple environmental engineer, but I like to think I pay attention.

The next bubble to burst is the farm bubble created by the green bubble and the blind love of biofuels. Land prices in Iowa have more than doubled and there are overleveraged farmers as a result of buying expensive land or renting more than they might be able to afford because of the price of corn and soybeans.

Ethanol=bad idea. Every ethanol plant requires a 1 million gallon per day (mgd) water plant. Where does the water come from - our drinking water aquifers. Ethanol is not as efficient an energy as gasoline so your fuel mileage drops when you use it. The "green" biofuels are not as environmentally friendly as you may think when you consider that farmers are turning to marginal lands to maximize profits thereby contributing to soil erosion. Not to mention the herbicides and pesticides used on the crops.

Thank god the green bubble is bursting. The globe is warming, so what? The climate has changed over millennia and will continue to change no matter what we do. CO2 makes up less than 0.035 percent of the atmosphere. The greens want us to spend trillions of dollars that we don't have fighting a colorless, odorless gas that humans emit and plants use. Those trillions of dollars spent may result in the decrease of maybe a tenth of a degree. What a waste of money right next to cap-and-trade of CO2 and bailing out Wall Street and having the government eat the toxic loans.

If you want real change then we need to change the approach. Focus on getting us out of the Middle East and becoming energy independent. By changing the approach (and message) you will get Joe six-pack on board and we will likely have more impact on greenhouse gas emissions than by going down the road Al Gore and his doomsday-preaching, Birkenstock-wearing, tree-hugging comrades would like us to travel.

I was in Iowa this weekend and I saw the change already occurring. A wind farm was being built near the town I was staying in. Now the thing to keep in mind is that wind is not a panacea. Wind does not work everywhere and often I see wind turbines in the Midwest not turning at all because it is not windy enough.

We need a diverse energy plan that supports R&D and helps America to be a leader. The problem is that you have folks on the right and left who skew the debate and also shut folks with common sense out of the debate. There is no perfect solution that will meet the needs of the 21st century and will make the greens happy. I don't think the greens would be happy unless we go back to living like they did in the 1700s anyway.

[Ted Power]

Whoever wrote that article is way out of touch. The drill, drill, drill debate is ancient history in this election cycle. People are used to the new prices for gas and don't care about it anymore. All they care about is their mortgages.

And it is exactly 5 weeks to the election, not 6.

[anne]

"The globe is warming, so what? The climate has changed over millennia and will continue to change no matter what we do. CO2 makes up less than 0.035 percent of the atmosphere. The greens want us to spend trillions of dollars that we don't have fighting a colorless, odorless gas that humans emit and plants use."

The other idiocy, sort of like the other white meat only not.

[anne]

Birkenstock-wearing? What does this mean? I like to understand insults because they tell me so much about the insulter, but this insult is too arcane for foolish me to understand.

[Julio]

"I don't think the greens would be happy unless we go back to living like they did in the 1700s anyway."

There were no Birkenstocks then. Count me out.

[Roger Chittum]

Bruce Wilder:

The price of gasoline does not drive everything that can be done. According to the National Research Council in 2002, highway fuel demand was restrained for 25 years by CAFE standards even when gasoline prices were historically low in the 1990s. The data are here.

I agree consumption reduction of 5-15% is achievable with high gasoline prices, maybe more. But we need 50% reduction or 80% reduction, and you can’t get there with price signals—or at least not soon and only with price signals.

And you did not deal with the potentially disastrous economic and geopolitical effects of ultra-high oil prices. These cannot be ignored in a serious policy debate.

(BTW, this retired energy industry executive has as much confidence in his data, analysis and experience as you do in yours.)

[Patrick]

Marc In Kansas City : "the globe is warming, so what?"

If you really don't know 'what', then you're not that informed. If you don't care 'what' ... well, you figure it out.

[anne]

Roger Chittum:

"The price of gasoline does not drive everything that can be done. According to the National Research Council in 2002, highway fuel demand was restrained for 25 years by CAFE standards even when gasoline prices were historically low in the 1990s."

Thank you.

[anne]

Roger, please set down the reference since the link does not work. I have the same data on gasoline usage in my notes, but where?

[kthomas]

Teva's are much better than Birkenstocks. If you like leather, then Birkenstocks are your sandal.

[Patricia Shannon]

devin says...

Jennifer (and others who say they have no choice but to drive),
I live in Kansas City. I just found got offered a great job in Portland. Now, does that mean I have no choice but to take a commuter flight every day to that job in Portland? No, I can turn down the job and find another one. I can move. Nobody held a gun to your head and told your where to live or work. You made those choices. And like a typical American, you want somebody else to pay for your decisions. I'm about to take a job that will require a long commute a couple days a week. That's my choice. If gas goes to $25/gallon and I can't afford it, I'm the one who made the decision to be dependent on a car and cheap fuel (it's still cheap, by the way) to get to work. If it turns out to be a poor one, I am the one responsible for dealing with the consequences. I'm sorry you have to pay more to get to work than you thought you would. That's life. Nobody guaranteed you oil would always be available to you in whatever quantity you want for whatever price you want.

Finally, you state that somebody is going to have to make not driving everywhere "feasible for me". Again, why should somebody else do it for you? There are thousands of bike-friendly, pedestrian-friendly neighborhoods, developments, and entire towns all over the country. If you, and the millions like you, chose to live in these places, rather than your suburban version of the American dream, your situation would be much different, and our national energy situation would be much different. Non-car options are minimal in many places in this country because you, and millions like you, CHOSE not to consider non-car transportation when you chose where to live.

Devin, some of what you say is valid, but you know little about Jennifer's circumstances. You don't know what kind of work she does, how stable it is, how much it pays, how much housing costs that is closer to where she works, if she has elderly parents that need her help, etc. Putting her down like you did just encourages people to listen to evil idiots like Ted Nordhaus and Michael Shellenbergers.

If you think most people can just pick and choose where to get a job, and can afford to move continually you are out of touch with reality.

[Roger Chittum]

Anne:

My blog post with extracts from the NPC report and graph of gasoline prices, as well as discussion is here. http://www.realitybase.org/journal/2008/4/23/cafe-standards-are-much-better-than-high-gasoline-prices.html NPC study is linked there, but you can go directly. http://www.nhtsa.dot.gov/CARS/rules/CAFE/docs/162944_web.pdf It’s a big PDF. Sorry one or both links did not work.

[anne]

Roger, thanks. I will read the report. CAFE standards were remarkably effective even as they were being circumvented, and the circumvention could easily have been stopped. There came to be however an argument among conservative economists that only price matters in efficiency efforts and many liberal economists have gone along with the argument. Proper attention to CAFE standards would have left us with a now vibrant car industry, rather than an industry that needed and just quietly received $25 billion in support from Congress.

[devin]

Patricia, no I don't know Jennifer's circumstances, but I know what she's asking for. It's what nearly everybody seems to be asking for: Why can't the world accommodate the way I want to live? It doesn't work that way. Because of a family emergency, I'm about to pick up and move across the country, find a new job, housing, all that stuff. Does that mean government should guarantee that fuel and plane tickets and moving trucks etc. should all be cheap because that would make my situation easier? I don't think so. It's going to be expensive, put a major strain on our finances, create major stress in locating the jobs needed to support us once we're out there, etc. Nonetheless, I made the choice that this family issue is more important than financial stability, and I'll live with the consequences. If Jennifer lives and works where she does to take care of "elderly parents", well that's very noble and I wish her the best. But sometimes taking care of family involves a financial hit and that's just life. But that obviously puts me in a tiny minority.

As a nation, we have chosen to assume that "somebody" would always supply as much cheap and abundant energy as we wanted. We have chosen to spend countless billions every year on roads to accommodate our car-based culture (an amount that, in nearly every state, far surpasses what is collected in fuel taxes). If people refuse to see the short-sightedness of this and haven't started looking for ways they can reduce their own dependency on "somebody" to make their chosen lifestyle affordable, well, I'm sorry, but I don't feel like I should be forced to subsidize their irresponsibility.

[Roger Chittum]

Anne:

I completely agree with your last post about how conventional wisdom blocks consideration of good options.

Re: energy inputs to electricity generation, I had different percentages from EIA. Coal 49.0, NG 20.0, petroleum 1.6, subtotal 70.6, nuclear 19.4, hydro 7.0, other 2.7, rounding error 0.3. Other EIA sites have actual data for multiple years in spreadsheet form, by state, etc.

[BJ Feng]

"Finally, even as a matter of crass politics, Nordhaus and Shellenberger neglect a basic point: the hard part about gaining support for a new initiative isn't convincing people of its value but finding the money to pay for it."

Wrong! Maybe liberals don't care if the money they spend produces any value, but most people want to get their money's worth. Most people don't want to overpay. Sure I could use a 22 inch LCD monitor, but if it costs $600, I don't want it, I can live without. This is what frustrates me about the left, value just isn't considered, the only thing considered is if the proposal will do some good. Well since most proposals will help someone, there really isn't a bar or filter, that's why they love every proposal. When the bill comes, it's time to raise taxes again, it really doesn't matter if those taxes are being spent wisely. So Headstart, a program that costs billions yet provides only a few years of benefits at best, can't be cut because that'll "harm" our children. The real question is if it is worth the money.

Bruce and some others understand that you can change behavior best through prices. If alternative energy were cheaper, then I would switch without question. I don't have to be an environmentalist or know anything about global warming either, this is a very powerful signal. So environmentalists have to understand that the goal should be to make alternative energies cost competitive with traditional. You can do that by either making traditional more expensive or making alternatives cheaper (which currently is hard to do thanks to technological restraints).

Higher energy costs are real, in that they will reduce the standard of living of people. So Jennifer who drives will have less to spend. Of course Jennifer, you can't get around that, and you will likely have to suffer even more for alternatives to become viable (just truth, not a critique of alternatives). Maybe the costs will be so high that you will decide to live closer to where you work, or be willing to spend 2 hours switching between 2 or 3 buses, regardless your standard of living has to decrease.

Environmentalists have to bite the bullet as we all do. You can't get something for nothing, becoming "energy independent" will COST you something so if you want it, stop whining. Imaging how annoying it would be for you to be around someone who just bought a Rolex complaining constantly on how he has to skimp on food and how he can't afford the things he used to now that he has his Rolex.

[Robert Edele]

"Let's really, really smash and bash middle and lower income America. Let's just pound these folks to pieces. Let's really show the disdain we have for them." - Anne

I am in favour of having free mass transit, basic housing, basic food, and health care. I'm sure the poor would benefit more than any losses to higher fuel prices (which would be partially offset by lower usage).

It would also be cheaper than the hundreds of billions a year that the fuel tax would raise, so long as the free housing and food is quite basic (meaning the middle and upper classes will opt out and what is provided is relatively cheap to supply) and the health care nationalized.

[anne]

Roger,

The category I am using in looking to electricity production is installed generating capacity and not production as such. The difference is important:

http://www.earthpolicy.org/Updates/2008/Update70_data.htm#table4

June 27, 2007

U.S. Installed Electricity Generating Capacity by Source, 2006

(Gigawatts - Percent of Total)

Coal -- 314.1 / 31.8%
Oil -- 58.3 / 5.9
Gas -- 389.8 / 39.4
Nuclear -- 100.1 / 10.1
Hydro -- 99.0 / 10.0
Bio -- 10.0 / 1.0
Wind -- 11.1 / 1.1
Solar -- 0.4 / 0.0
Geo -- 2.3 / 0.2

[anne]

http://www.earthpolicy.org/Updates/2008/Update70_data.htm#table4

June 27, 2007

U.S. Installed Electricity Generating Capacity by Source, 2006

Compound Annual Growth Rate, 2000-2006

Coal -0.1%
Oil -1.0
Gas 10.0
Nuclear 0.4
Hydro 0.0
Bio -0.1
Wind 29.3
Solar 1.0
Geo -3.1

Total 3.3

[reader X]

Thank you Mr Chittum, that was a very insightful remark. Please elaborate for the posters here.

While an immediate spike in petroleum prices is unrealistic and probably damaging, I agree with Mr. Wilder: Price signals, PLEASE!! Every minute of every day we are surrounded by the complete absurdities of cost that are introduced by these distortions. The cost of cleanup and downstream effects of all our 'cheap' petroleum are breaking everything.

The only reason to use less petroleum right now, from a short-term rational perspective, is altruism. The externalities are killing us. Markets CAN work, if they are structured correctly and the costs reflect reality.

[anne]

Robert, talking in terms of a trade-off changes the entire conversation. Universal health care insurance is worth a whole lot. Relatively inexpensive mass transport is worth a lot.

[reader X]

I made a personal goal in the last year to cut my (already probably below average) CO2 emissions/petroleum usage by half. Because I am not poor, I was able to purchase a significantly more efficient car, and because of my job situation and living in a metropolitan area in a mild climate, I was able to work closer to home and commute by bicycle more often. Others do not have these options, or have long since made choices that remove those options from the table. (Interestingly, those investments, especially in self-powered transport, make my commuting costs far lower than they are for many individuals of more limited means. This is truly unfortunate.)

In the absence of accurate, reality-based pricing of energy and pollution costs, and in the presence of *insane* subsidies that wreck any possibility of individuals making informed environmental decisions, there's no reason for anyone else to make these adjustments, unless it is a personal hobby. All we can do is change our own habits. Waiting around for wind farms and modern transit systems to come to north america is a sucker's game. There are too many parties interested in killing these ideas, and it will take much time for investors to come around en masse.

I don't expect anyone else, especially someone located in an underdeveloped region of the country or of limited means, to make the same choices I am.

[Robert Edele]

Generally cheap cars are more fuel efficient because they're smaller and less powerful. Subcompacts, which are the cheapest class of cars, are also the most energy efficient.

When you move from a medium car to a small car, you save money, fuel, and resources in the fabrication in the car (the benefit is even bigger if that small car is used).

When you move from a medium conventional car to a medium hybrid car, you spend extra money and mineral resources but save energy resources.

Subcompacts get in the 35-40 mpg range on conventional gasoline engines. Considering the much lower manufacturing and maintenance costs, a 35 mpg subcompact might very well be less environmentally harmful than a 45 mpg hybrid.

[Roger Chittum]

My principle disagreement with some of the comments here is their assumption that markets are ALWAYS the best solution. I observe that none of the proponents try to persuade anybody with evidence, but if challenged, they merely assert their belief more ardently and more absolutely. I regard markets as one of our very good policy tools, but not our only tool, and certainly not an ultimate objective.

Although market fundamentalism originated (I think) with economists, the current generation of economists has demonstrated numerous flaws and exceptions—even including work for which the Bank of Sweden Prize was awarded. So, at a high professional level—even at the University of Chicago (nudge, nudge), the modern game is to identify and name circumstances that cause markets to fail or yield distorted results.

One such circumstance relevant to energy policy is the “agency problem” when people who make the decisions are not the people who pay the bills. For example, a builder of spec houses prefers to put in the cheapest possible HVAC and appliances because the operating costs will be paid by a buyer who has many other things on his mind than future electricity bills (as to which he can’t readily get good comparative information anyway). Markets will not work to reduce energy consumption in this situation, but mandatory efficiency regulations have worked brilliantly.

Market fundamentalism is “energy efficient” in the sense that no energy is expended in thinking about alternatives, but it very often it leads to decisions that are sub-optimal—and sometimes even monumentally bad. On important matters we should be willing to work harder than that.

[anne]

Roger:

So, at a high professional level—even at the University of Chicago (nudge, nudge), the modern game is to identify and name circumstances that cause markets to fail or yield distorted results.

One such circumstance relevant to energy policy is the “agency problem” when people who make the decisions are not the people who pay the bills. For example, a builder of spec houses prefers to put in the cheapest possible HVAC and appliances because the operating costs will be paid by a buyer who has many other things on his mind than future electricity bills (as to which he can’t readily get good comparative information anyway). Markets will not work to reduce energy consumption in this situation, but mandatory efficiency regulations have worked brilliantly.

[Nice, nice.]

[anne]

Roger, then explains why CAFE (Corporate Average Fuel Economy) standards worked well and could have worked far better with continued legislative-administrative support:

"So, at a high professional level—even at the University of Chicago (nudge, nudge), the modern game is to identify and name circumstances that cause markets to fail or yield distorted results.

"One such circumstance relevant to energy policy is the 'agency problem' when people who make the decisions are not the people who pay the bills."

[Patricia Shannon]

Devin, Everything you say is true, but it still doesn't justify the viciousness of the personal attack. She can't change the world by herself. I can vote for Marta to come to my county every time I get a chance, but I can't force other people to vote the same way. (With the panic-caused gas station in Atlanta, maybe some of those people are having 2nd thoughts?)

You might be able to afford to move. That doesn't mean everybody can. And how are you moving? I assume you are using the highways, trains, or planes whose routes, speed limits, etc. were decided by other people. Or maybe you are going by bicycle or walking?

And many families have to have more than one wage earner, which complicates things.

[JeffF]

Small cars also have large safety advantages, unfortunately these advantages are of the "your car doesn't kill the other guy" variety, which our market and regulatory systems do not care about much.

[Patricia Shannon]

Vans and SUVs are more prone to roll over than cars, and so are no safer.

[Roger Chittum]

Another problem with relying only on energy prices to achieve an environmental result is that it is likely to be much more expensive than proponents imagine.

For example, Norway adopted in about 1990 carbon taxes that range from $16 to $65 per ton, and gasoline costs $9-10 per gallon (including a carbon tax of about $0.60). The $65 tax did induce gas producers to inject CO2 under the seabed instead of venting it to the atmosphere, but the lower tax rate on paper mills did not substantially affect how they operate. Significant reductions in the metals industry were achieved by “voluntary” agreements, not taxes. Despite these efforts, CO2 emissions have risen substantially in Norway.

This information comes from this Wall Street Journal blog post and the linked WSJ article. The article does not make clear whether the tax rates are per ton or tonne or of C or CO2.

[Bruce Wilder]

Roger Chittum: "The price of gasoline does not drive everything that can be done. According to the National Research Council in 2002, highway fuel demand was restrained for 25 years by CAFE standards even when gasoline prices were historically low in the 1990s."

That anne quotes you approvingly pretty much condemns everything you wrote.

I am not sure which NRC document you are referring to, but it hardly takes a genius to recognize that the principle product of the combination of CAFE and low gas prices in the 1990's was the absurd popularity of the SUV, particularly in its most gargantuan forms.

Are you going to tell me that substituting SUVs for passenger cars as a mode of personal transport reduced gas consumption?

[Bruce Wilder]

CAFE, which I worked on as a civil servant, would have worked very well, if they had been followed by a substantial tax on imported oil, or on oil in general, or on automotive fuels. Failing to do that just threw away all that had been accomplished in the early 1980's.

Price is not the only thing. But, it is essential, and people, who deny it, are being foolish.

[Roger Chittum]

Bruce Wilder:

“. . . [P]eople who deny it are being foolish.”

No. We’re being driven by the data. For data about what CAFE accomplished after you worked on it, you could go here. Also, this EIA chart shows that US petroleum consumption is only a little bit higher now than it was in 1980 despite many more vehicles and increased miles driven per vehicle. This was achieved despite about 17 years of low and declining oil prices.

says...

Read the first paragraph and if it had been written in a local rag of a newspaper I would have package the fish I purchased at the local market. What a bunch of Republican crap. I am sick of these people--like that idiot McCain--try not to be partisan.

[aardvark]

Bruce Wilder,

CAFE created the SUV. Congratulations for a job done.

[Samantha]

The Climate Security Act is the baby of sometime-Democratic Party Member, McCain-supporter Joe "It's My Own Party" Lieberman and Republican John Warner - hardly the Democrat power structure.

Nordhaus and Schellenberger pretend to suggest novel ideas that haven't already been put forth by environmentalists and others. They trade in shock to gullible right wingers who are ignorant about what is going on in green business and the environment.

[BJ Feng]

Roger, the CAFE standards impose a cost, just as a direct tax on gasoline does, but just not as visible. Better fuel mileage is a good, there is no reason why automakers would deliberately keep fuel mileage low, there must be a tradeoff. Perhaps more fuel efficient engines are costlier to produce. The auto maker then looks to see if people are willing to pay more for the more fuel efficient car. If not, then they go with the less efficient, but cheaper engine. Now introduce CAFE which sets a floor. The automaker is forced to make more fuel efficient cars, and it might seem that this imposes no cost to the consumer, but that's not true. The consumer has to pay more for the more fuel efficient engine, CAFE is just another tax, but less visible and PERHAPS less efficient than a gasoline tax. I would need to do more research before I could make that statement.

CAFE could have other even harder to spot costs. A friend of mine and I were talking about cars with an older gentleman, and he told us the cars today are just big pieces of plastic, not like the solid metal cars in his day. The result is that a modern car could be severely damaged by just a 5 mph collision. This is true, I damaged my bumper pretty badly one day when I was in a hurry parking. I wasn't moving faster than 5mph.

If auto makers are sacrificing collision protection to reduce weight so that they can meet CAFE standards, then that's another cost. I'm not necessarily talking about bodily harm, crumple zones and such are effective, but were built around the need to keep cars lightweight. The result is that people have to pay more to fix their cars as they are more fragile.

[BJ Feng]

And without the SUV, we would not have had the soccer mom and hockey mom phenomenon. No hockey mom, no Sarah Palin. No Sarah Palin and McCain is unable to generate excitement, the election is essentially decided by August. With the presidency assured, Democrats are able to focus their resources on Congressional campaigns, gaining a filibuster proof 60 seats in the Senate. With total power, the Democrats are able to foster in an era of total government control and nirvana for the masses.

See what CAFE has really cost us?

[anne]

http://www.realitybase.org/journal/2008/4/23/cafe-standards-are-much-better-than-high-gasoline-prices.html

April 23, 2008

CAFE standards are much better than high gasoline prices.

The question came up at lunch two weeks ago and again today in Paul Krugman's blog. * Has the increase in average fuel economy of automobiles and light trucks been driven by higher fuel prices or the federal CAFE (Corporate Average Fuel Economy) standards? Here's the answer and the evidence.

In 2002 the National Research Council in Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards published these conclusions: **

"Figure 2.2 suggests that the CAFE standards were not generally a constraint for imported vehicles, at least until 1995, if then. Domestic manufacturers, on the other hand, made substantial fuel economy gains in line with what was required by the CAFE standards. The fuel economy numbers for new domestic passenger cars and light trucks over the past 25 years closely follow the standards. For foreign manufacturers, the standards appear to have served more as a floor toward which their fuel economy descended in the 1990s."

When in 1980-81 inflation-adjusted motor fuel prices were in the same high range they are now, new vehicles purchased were on average more fuel efficient--even getting ahead of the CAFE standards by about a year. Then gasoline prices went down about as fast as they went up, and by early 1986, real pump prices were below where they had been in 1978. We continued to have cheap gas for 17 years until 2003.

Yet new domestic vehicle fleet economy did not go down because the CAFE standards were providing a floor.

I agree that at some high level fuel prices will drive people to buying more efficient vehicles, but we don't know what price level is required to achieve which level of fuel demand reduction. And, as we saw in 1980-81--and are seeing again now--prices high enough to have a substantial effect on new car preferences also have a ruinous effect on businesses and people's lives by crowding other goods and services out of people's budgets. This is why I cringe when I hear it said that high petroleum product prices are the only way to decrease our use of petroleum, or even that manipulating prices is the best way to achieve that goal.

For at least 20 years, we consumed much less petroleum than we would have without the CAFE standards, and we did it without ruinously high prices and giant transfers of American wealth to oil-producing nations. We can have less consumption and low prices at the same time. We've done it already. CAFE standards were a brilliantly successful energy policy. We should do more energy demand regulation like this and stop throwing federal cash and tax incentives at the supply side.

* http://krugman.blogs.nytimes.com/2008/04/22/energy-futures-of-the-past/#comment-37876

** http://www.nhtsa.dot.gov/CARS/rules/CAFE/docs/162944_web.pdf

[reason]

Roger,
you are perfectly correct, but we can walk and chew gum at the same time. The problem, and these authors are part of the problem, is the semi-deliberate infantilization of the voting public. It is time we started to damand that we be treated as grown-ups.

[reason]

And Roger,
I think it is high time we demythologized the word "efficiency". There are different sorts of efficiency and they often conflict. And only one of those is discovered through the price mechanism.

[ken melvin]

Conservation has allowed capitalism as we know it to continue to exist. Paradoxically, conservation allows for continued high, even increasing consumption. If reducing consumption is the goal, then 'tis overall consumption that needs be limited.

[Steven Earl Salmony]

Real issues, and straight talk for a change, about a $700 billion dollar bail-out as well as abject failures of one generation to accept responsibility for its own patently unsustainable behavior.

Have the self-proclaimed Masters of the Universe among us adopted a behavioral repertoire characterized by unconscionable super-human greediness, the likes of which this world we are blessed to inhabit has never before endured and cannot much longer sustain?

What is to become of our children, whose future is being mortgaged once again this week and threatened more seriously with every passing day?

When is my not-so-great generation of rapaciously consuming and relentlessly hoarding elders going to stop its disturbing behavior of dropping problems of our own making into the laps of our children?

The financial engineers who manufactured the spurious business models and Ponzi-like schemes that are undermining the functioning of the global economy today need to take some responsibility for their greedy behavior rather than pass along the colossal debt derived from their subterfuge for our children to repay.

Steven Earl Salmony
AWAREness Campaign on The Human Population, established 2001
http://sustainabilitysoutheast.org/index.php

[Roger Chittum]

BJ Feng:

I agree CAFE was not without costs, including some that are not easily identified, but also some collateral benefits. In other words, CAFE caused market "distortions." Paul Samuelson said, "Any worthwhile social program is worth a little distortion." CAFE was adopted as a national security program and is now needed also as a save-the-planet program. Well worth a little distortion.

[Adam]

A little late to the party, but....

High carbon prices is what those who care about reducing greenhouse gases are looking for. It happens that we have high prices now without regulation. And the American economy is becoming more efficient with regards to carbon. Once the bite of carbon prices has reduced, the prices must be raised again.

If putting all the remaining recoverable carbon into the atmosphere wasn't going to cause any problems there'd be no need for government intervention. Unfortunately we've got a ways to go and there's some real work that needs to be done. So lets establish a target pace at which we reduce emissions (linear or non-linear) and lets build transit and lets incentivize efficiency and punish inefficiency.

With enough PR and economic and lifestyle benefits, the public should embrace this change to how we do business and maybe appreciate where we are going.

[James]

even every politics has the same ending so as well the same thing goes on here

[David]

I completely agree with your last post about how conventional wisdom blocks consideration of good options.

Re: energy inputs to electricity generation, I had different percentages from EIA. Coal 49.0, NG 20.0, petroleum 1.6, subtotal 70.6, nuclear 19.4, hydro 7.0, other 2.7, rounding error 0.3. Other EIA sites have actual data for multiple years in spreadsheet form, by state, etc.