I keep hearing news programs interviewing people on the street, who are saying that the US government has to do something to bring down energy prices. They come off sounding like it’s the governments fault and it better be fixed. I see politicians making promises and making token efforts, that even if they are passed, will hardly affect the price of oil.
Open up drilling in places we’ve previously decided not to allow drilling. Drop sales tax on gasoline. Encourage ethanol use. Discourage ethanol use. Topple governments (it hasn’t been proven to me, but it sure is suspected by many). Tax the oil companies. Punish the commodity speculators.
I’m getting hit by the increase in fuel costs. I drive a car. Heat a house. Buy food and othe materials moved by truck. My pay raise this year is less then stellar, at least partially due to shipping costs. I have been and will continue to be tightening the belt and cutting the waste.
Yet, I don’t believe that the US government should jump in with both feet, fists flailing, to save the population. We have a lovely convergance of war in oil producting countries, money available for the commodity speculation market, raising demand in places like China and India, and a lack of energy use reduction in the more developed/industrialized countries.
So is there an arguement as to why the US government should become involved in what is really a market issue?
Just that Americans seem to feel that for some reason they are entitled to consume at prodigous rates - higher than any of the other people with whom we share a planet.
The only caveat I would add is while higher prices may actually be in order it is a shock to the individual and the economy when it occurs. I could see an argument for trying to ease into it a bit more. Either way though things will adjust themselves.
That and of course such costs fall disproportionately on the poor. Something to keep in mind although I am unsure what, if anything, should be done about that part of it.
The only way to do this long term is to lower consumption. The government providing incentives to do this (higher MPG, tax credits for solar power, support for nuclear plants) will help in the long run. Bringing energy prices down by reducing the tax or other such things is going to hurt by increasing consumption.
I was thinking about this, and was leaning towards the government shouldn’t even be involved in that. If it makes sense to buy a new, higher MPG car, then shouldn’t the savings in fuel be enough? Should the government really be propping up either a so-so car, because with a check from Uncle Sam it makes sense, or more expensive high MPG cars, because I’ve got another $2k to spend, courtesy of the government?
If the electric company wants to offer a rebate on more efficent appliances and furnaces, then great, it makes business sense, but I’m not convinced the government should do it.
The only subsidies I currently support are mass transit and heating cost suppliments for low income households. Mass transit, like roads, should be part of the public services. There are benefits outside of less fuel used, that we the people should be willing to pay to support. Living in Minnesota, heating assistance is just one of those things that strikes me as a necessity, like food and clean water.
The idea that there is some secret plan that government could implement to lower prices if only it wanted to… makes no sense. The government could, like China, subsidize gas prices, but that would drive demand higher.
It’s theoretically possible that the government could fund some massive alternative energy program that could yield us a cheaper (and possibly less polluting) source of energy. It’s also theoretically possible that such a program could be a colossal waste of money, producing no meaningful results.
The goal of this is to get the car companies up the learning curve. For cars I’m more inclined to boost the MPG averages and let the car companies work it out. If they can figure out how to make a high MPG, high profit margin SUV, more power to them. It doesn’t have to cost anything. In California high MPG hybrids (very high) like Priuses qualified for stickers that let single drivers use the carpool lanes. That’s quite an incentive around here. They caught on, and the program ended, and we’ve cut consumption even before the price run up.
Heating assistance has nothing to do with cutting consumption, but is a form of welfare. That’s not a negative, but it might still be needed even with cheaper fuel prices. But let’s take solar cells. At the moment they are pretty expensive, and without a tax credit make sense for almost no one. They may get bought by rich people making a statement, but you and I will never see positive cash flow. With few sales, it makes no sense for innovative companies to get in the market and to do research, so the price goes down slowly. With a tax credit, more people can afford them, greater sales leads to more investment, and we come down the learning curve more quickly, to the point where they make sense without a tax credit.
The expectation of increased business from the new California carbon reduction goals has helped start a boom in solar start ups. I was just reading a blog saying that the Solar Cell exhibit was where the action was in Semicon West. A bunch of people will make a lot of money, a bunch of jobs will be created, lots of consumers will start saving money on energy, and consumption will go down. Doesn’t it make sense for the government to help jumpstart this effort?
You mean like fund research into alternative energy sources such as bio-diesel from algae? A substance that can replace all our transportation needs and use the existing distribution system to power cars already on the market. Is that what you’re saying? Because it’s not a secret and we’re already doing it.
All the government needs to do is nudge it to a higher level of visibility and continue to research refinements in the process.
It’s not the price of fuel that causes problems. It is the fluctuation and general upward spiral that hurts. If fuel prices stabalized then the economy would normalize around it.
The weird thing is: the market signals appropriate responses to high energy prices…but the government turns around and distorts the market. For example: the City of Boston spends $77 million/year bussing school children around-to achieve “racial balance”. Quite apart from the idiocy of that, the fact is, this massive waste of energy causes OTHER wastes of energy (traffic jams, cars idling, etc.). Then, the government says that we have to pay higher taxes to subsidize MORE of this idiocy! :smack:
I’ve also read about efforts to turn fast growing weeds into biofuel, instead of using food stocks.
If weeds become valuable, I’ll be rich from my lawn alone!
Why would you think it’s a good idea to deplete the Strategic Petroleum Reserve, just to save a few bucks? The reserve is there for a reason - if oil supplies were suddenly cut dramatically - say by the Straits of Hormuz being closed, or a couple of major pipelines cut in a war, the SPR ensures that the US has a supply for essential services and military movements. To start depleting it just so consumers can save some money at tthe start of what might become a crisis is foolhardy. In addition, opening the reserve to keep prices down just stimulates demand, at a time when that’s the last thing you want to do.
Changes the psychology of the market. It’s worked before to bring down temporary price surges. Why not now?
Which crisis is that, our desire to nuke Tehran, or the economic crisis in this country?
We’re always in some sort of crisis, and the strategic reserve is simply a tool that we can sometimes use to manage problems. Judging from past releases, the concept that the reserve is only to be used when there’s an imminent threat to our military capabilities is pure hogwash.
Just stimulates demand? By temporarily mitigating prices, taking the tops off peaks, it also gives economic players time to adjust their fuel squandering ways to generally higher prices, without sending the whole nation into a tailspin.
Sam, aren’t you just playing the 9/11 card? Nobody would threaten the Straits of Hormuz. It’s vitally important that, for the sake of the environment, we give our money to Saudi Arabia. Keeping tax revenue away from wasteful Big Government just makes sense. And at a time when we are loosing our architectural heritage we have the visionary benevolence of Dubai to keep the candle burning. Who knows better how to spend our money? When I see the successful sale of the Chrysler building I can safely say that we owe a historic debt to the Mid East for the future of large buildings in New York.
Terrorism isn’t the worry. The SPR pre-dates 9/11. There are all kinds of events that could cause an oil shock. Even something like a natural event which takes down refineries - the SPR is a res rve of refined gas.
So, are you suggesting permanent depletion of the SPR? Or are you willing to speculate with taxpayer money? What if gas prices continue to increase? At what point are you going to stop depleting the reserve and start filling it again? And what is that going to do to oil prices, when the outflow from the reserve changes to an inflow? What if gas is $200/bbl then?
High prices are a valuable market signal. Screw with them at your peril.
That’s all that has to be done to lower gas prices? Got a cite for that?
How much of your own money have you invested in this sure-fire program? And if it’s so sure-fire, why aren’t people like Warren Buffet throwing gobs and gobs of money at it? It only needs a “nudge”, after all.
Thank Og they stopped that nuttiness. This is right up there with the summer tax holiday that McCain and Hillary were pushing earlier in the year. The entire SOR only amounts to 58 days supply for us.
The government has a responsibility to have a sensible energy policy. Where to allow drilling, how much tax to apply, funding research into alternate energy sources, those are all valid parts of an energy policy.
OTOH, they should be working towards having a sensible energy policy, not a policy that swings back and forth depending on what’s just happened in the last month, and what will boost your approval ratings. To date, our energy policy has included:
keep gas prices as low as possible
promote ethanol, even if it only benefits ADM while spiking food prices
sit back and watch the automobile market re-create the early 70’s, only with SUV gas guzzlers instead of giant sedan gas guzzlers
Act all surprised when there’s another oil crisis.