Green Update: What to Do About Energy? Part 2

Refinery oil

We need an energy revolution in this country, and it doesn’t look like we’ll get it any time soon. Not to mention an energy policy from the government. The world is desperate for clean energy sources, and real, workable solutions seem far off. Meanwhile, big oil price spikes are not only possible but likely. Their effects could be shocking, and the auto industry is on the front line.

In the last Green Update we talked about some ways the energy problem was affecting the car industry. Let’s continue and then finish with a short discussion of what seems to lie ahead.

Aren’t the car producers taking all these supply-and-demand problems into account?
Well, yes, they are, and that’s one reason they went for the much stricter CAFE regs that were recently passed. They also know there’s a limit to the extent that many people in the U.S. can cut back on the miles they drive. Carmakers are working to improve the efficiency of internal combustion engines, but that takes you only so far.

High battery and development costs are keeping EVs out of the hands of all but a few committed buyers. Cars today are chock-full of “improvements” designed to attract buyers in a highly competitive global market. McKinsey says (see automotive sector sidebar—requires registration, but it’s free) that the industry

has responded in the past by pushing design improvements and productivity gains that make room for costly new content, including technology required for meeting regulatory standards. Here’s one example: if you adjust for inflation the cost of a 2001 Toyota Camry, you see that by 2010, the price of the car to US consumers had actually dropped by $2,500 in real terms—although the 2010 Camry was better equipped and 10 percent more fuel efficient.

Well, yes, but after ten years one would hope to see a much better than 10 percent fuel efficiency gain!

If oil prices rise dramatically—say, to $150 a barrel, as they may well do—you will see equally dramatic changes in the auto industry and in driver behavior. We’ve seen these in the past, but this time there will likely be no turning back to conspicuous, devil-may-care consumption.

The International Energy Agency has been sounding the alarm. The interview below with Fatih Birol, its chief economist, was done last May, and the situation hasn’t changed.

Why are prices destined to rise so much?
Weak inflation and high unemployment force the Federal Reserve to keep money cheap and the dollar depreciating—and this creates higher oil prices. Add in the following:

  • tremendous increases coming in global demand (increasing by 40 percent by 2035, says Bloomberg)
  • Middle East disruptions likely to continue
  • the Fukushima setback to nuclear power
  • the climate-change fears (including problems with coal and fracking for natural gas), and
  • OPEC’s unwillingness to release any more oil.

Once the oil spike does occur, you’ll hear the outraged outcries from Main Street to Capitol Hill. Such a price hike may be the only way we can get carmakers and consumers to draw down on demand and finally get a serious, workable energy policy that includes all resources and all transportation.

Is it possible, given the total dysfunction of our political system, to get a real, workable energy policy? Even with price hikes?

—jgoods

Find Used Cars in Your Area at CarGurus

4 Comments

  1. If America were truly looking for Green Energy to replace big oil it would have happened already. For example, big oil argues that solar panels aren’t good because there is no sunlight at night to get electricity from, but the truth is that solar panels can split water into hydrogen and oxygen tanks for power generation at night.

  2. One thing that should be chilling to any American is the continuing, somewhat subtle propaganda campaign against Iran. This is exactly the same thing that happened before both of the wars in Iraq and Afghanistan, and what it means is that the US military-energy-banking triad (which actually runs our government and economy) is gearing up for a war in Iran. Of course, ultimately the goal is to eliminate Iran’s anti-USA government and install one friendly to our interests, just as we did in Iraq. The irony, of course, is that Iran is anti-American because we supplied the weapons and military hardware to murder and oppress Iranian citizens for decades under the Shah, and then did the same to help Saddam Hussein kill close to 1,000,000 Iranians and his own citizens in the Iraq-Iran war. And of course we’ve done the same with dozens of murderous dictators and terrorists around the globe, including our old favorite, Osama bin Laden. Seems we’re our own worst enemy but when none of our policy makes sense, remember that it’s a policy developed by a few very rich and powereful people to make them (and their cronies) even richer, and since money trumps everything, a few thousand dead Americans doesn’t enter into the equation. (Since rich people don’t send their kids to die in hellholes like Vietnam and Afghanistan, it’s not their problem anyway.)
    The other problem is that generally, Americans are spoiled pigs who will consume everything they can get their hands on and they simply don’t care about their own future, their kids or grandkids future, or anything else other than what’s on cable TV or who has a bigger shinier gas hog on the block. It’s a real shame, but the end is coming for this country because it will be consumed from outside by the Chinese hordes and from inside by the illegal Mexican hordes, all while Amercans sit around running up their credit cards and complaining about the price of gas while supporting fascist politicians like Newt “gangreen” Gingrich.

  3. Great question Senor! I think you already answered your own question when you referred to our dysfunctional political system. You could have also referred to our rigged economic system which promotes State run monopolies, our reactionary Federal Reserve system which promotes inflation and free money, media bias in reporting, dysfunctional domestic and international agencies with no real power to regulate anyone, and a largely ignorant and apathetic public obsessed with just trying to make ends meet. I could add dozens of other reasons why we don’t have any rational policies with regard to energy, but this space is not the proper forum for that discussion.

    It is my belief that we are reactive rather than being proactive. Hard questions like energy policy are not easily answered because of the multitude of constituencies involved. Because of the problems addressed above it is difficult to get real answers to questions that must be answered in order to come up with a rational energy policy. All these constituencies have axes to grind or ideological hurdles to overcome the larger issue of our perceived national interests. Hell, we can’t even balance our own budget, agree on a payroll tax holiday or unemployment insurance because of our rigid ideological philosophies.

    Even building a pipeline to the USA from Canada, which is in our national interest and would help our energy needs here is stymied because of ideological conflict on an environmental issue which the Canadian government has already solved by offering to move the pipeline.
    We have a recalcitrant President who so fears the political power of the environmental lobby that he is single handedly stopping or delaying projects that would liberate millions of barrels of oil produced here domestically as well as from Canada. These are projects that had already been approved by the Coast Guard, Corps of Engineers, the EPA, and the State Department. All this because of the fear of a group who has gained political power from an unproven science. These same folks are now espousing policies that make it even harder to propagate a rational energy policy because their policy stance is to make fossil fuels a thing of the past by making them so expensive that we must use alternative fuels to supplant them. This is where we are today and why, in my opinion, we can’t formulate a rational, workable energy policy.

    So Senor, to have a workable solution to energy policy we should first have honest discussions about the questions that must be answered to achieve said workable energy policy. Unless we have honest answers to these questions, we can’t realistically offer solutions based on misinformation, personal and political biases or agendas, and perhaps, the most important and overlooked ingredient, an educated and informed citizenry. You have provided the forum here for the start of some honest discussion and lets hope that your citizen readers are willing to offer up their solutions.

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
Website