There is an old story that if you drop a frog into boiling water it will hop out quickly and survive, while if you put one in cold water, then slowly raise the temperature, it will boil without noticing anything.
Much the same thing has been happening this year regarding energy prices.
I took this picture a year ago, at a local gas station. Gas prices had spiked due to Hurricane Katrina, and you may notice — at the right-hand corner of the picture — that traffic had nearly halted as a result.
Today the price of gas is within a few dimes of that price, yet Atlanta traffic is as bad as ever. People have gotten used to prices as they have risen, and now shrug them off.
There is a lot of money under that price. Enough to keep our enemies well-armed. Enough to keep oil company profits at record levels. In the medium-term, however, these prices are unsustainable. They are a market aberration.
My point is this moment needs to be seized. We need to make today’s prices a floor, not a ceiling. There is enough money there to provide ample incentives for production of solar energy, of wind energy, and of geothermal energy, not to mention technologies that save existing energy stores. But if we allow that money to disappear back into consumer pockets, the new supplies can’t be guaranteed a market and the money to create them today won’t be invested.
High prices create supply. We should use them for our own purposes, to replace the stranglehold oil now has over us. All we need to do in order for that to happen is get used to them, and tax away lower prices.
The United States uses 40% of the world’s oil. If we can cut our
consumption by just 10%, through simple incentives, this will have a
profound impact on world prices. Such a cut would also result in re-sellable technology. But if we then capture those lower
prices and buy new SUVs, we’ll be right back where we are today in just
a few years. (That image, by the way, is from an Iranian blog.)
That’s what happened after the 1979 oil shock. Prices were allowed to
fall, and the falling prices were not re-invested in creating new
sources of energy supply. Thousands of our bravest men and women have
now died as a result of that mistake.
Let’s not make it again.
In the UK, petrol is heavily taxed and the current price is around 98p per litre for unleaded.
UKP = 1.88 USD, 1 US gallon = 3.785 litres.
So the current UK gas price is about 0.98 x 3.785 x 1.88 = 6.97 USD per US gallon.
More than twice the US price. So why do we still have huge traffic jams in the UK?
Partly because most cars are smaller and use less petrol and diesel engines are also more popular with about 50% better fuel consumption.
Partly because the UK itself is smaller so less mileage is driven.
And partly because for many journeys there is no practical alternative.
So far it has proved almost impossible to price people out of their cars. As you recommend, the way to go is to provide alternatives to the petrol combustion engine. And the higher fuel prices go, the more likely alternatives become.
But the US still has a long way to go in the higher fuel price game.
In the UK, petrol is heavily taxed and the current price is around 98p per litre for unleaded.
UKP = 1.88 USD, 1 US gallon = 3.785 litres.
So the current UK gas price is about 0.98 x 3.785 x 1.88 = 6.97 USD per US gallon.
More than twice the US price. So why do we still have huge traffic jams in the UK?
Partly because most cars are smaller and use less petrol and diesel engines are also more popular with about 50% better fuel consumption.
Partly because the UK itself is smaller so less mileage is driven.
And partly because for many journeys there is no practical alternative.
So far it has proved almost impossible to price people out of their cars. As you recommend, the way to go is to provide alternatives to the petrol combustion engine. And the higher fuel prices go, the more likely alternatives become.
But the US still has a long way to go in the higher fuel price game.
Direct gasoline taxes to dampen demand interferes with supply/demand price signal for the production of more alternative energy on Continental North America. Perhaps the better way is a tariff establishing a price floor for all imported oil starting around $50 with steady increases over years. This allows a consistent outlook for manufacturers of energy consuming products and equipment and allows for solid confidence when investing in alternative energy. Energy companies have not forgotten huge write-offs in alternate energy investments when oil prices collapsed following the first energy crisis.
The very rapid growth and development of science and technology within the last 200 years is something entirely new in human history, and the rate of advance is rising in a parabolic curve . The more we discover and invent the more we can discover and invent. Don’t underestimate the ability of free market/free enterprise.
The results of allowing price signals to motivate production of energy will likely be surprisingly different than anticipated.
Rather than designated any specific approach, the best way would be allowed free enterprise to sort it out. The answer will likely be multifaceted rather than any specific single answer. For automotive transport fuel, think of a pluggable flex-fuel hybrid that gets much of its commuting energy from the grid, supplemented with fuel the could be a combination of gasoline, ethanol, synfuel from coal, thermal conversion process, or nuclear energy producing hydrogen from water and then combined with enough carbon to produce a liquid fuel.
Developing this new industry would mean our money stays at home for American jobs instead of petrodollars going abroad to fund unstable terrorists supporting countries.
Direct government guidance should be minimal but funding research in all directions would be appropriate. My favored approach would be to see how much American agriculture could be part of the answer. This would be a double win. Agriculture could use another economic base besides the government subsidies, and the use of renewable fuels would stop the net addition of carbon into the atmosphere. Land grant agriculture colleges should start developing renewable energy departments for research and development.
Free market/free enterprise generally has the habit of not only meeting demand with supply, but overwhelming demand with huge money losing surpluses. Been there – done that.
Direct gasoline taxes to dampen demand interferes with supply/demand price signal for the production of more alternative energy on Continental North America. Perhaps the better way is a tariff establishing a price floor for all imported oil starting around $50 with steady increases over years. This allows a consistent outlook for manufacturers of energy consuming products and equipment and allows for solid confidence when investing in alternative energy. Energy companies have not forgotten huge write-offs in alternate energy investments when oil prices collapsed following the first energy crisis.
The very rapid growth and development of science and technology within the last 200 years is something entirely new in human history, and the rate of advance is rising in a parabolic curve . The more we discover and invent the more we can discover and invent. Don’t underestimate the ability of free market/free enterprise.
The results of allowing price signals to motivate production of energy will likely be surprisingly different than anticipated.
Rather than designated any specific approach, the best way would be allowed free enterprise to sort it out. The answer will likely be multifaceted rather than any specific single answer. For automotive transport fuel, think of a pluggable flex-fuel hybrid that gets much of its commuting energy from the grid, supplemented with fuel the could be a combination of gasoline, ethanol, synfuel from coal, thermal conversion process, or nuclear energy producing hydrogen from water and then combined with enough carbon to produce a liquid fuel.
Developing this new industry would mean our money stays at home for American jobs instead of petrodollars going abroad to fund unstable terrorists supporting countries.
Direct government guidance should be minimal but funding research in all directions would be appropriate. My favored approach would be to see how much American agriculture could be part of the answer. This would be a double win. Agriculture could use another economic base besides the government subsidies, and the use of renewable fuels would stop the net addition of carbon into the atmosphere. Land grant agriculture colleges should start developing renewable energy departments for research and development.
Free market/free enterprise generally has the habit of not only meeting demand with supply, but overwhelming demand with huge money losing surpluses. Been there – done that.
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