Saturday, April 02, 2005

I'm not an oil expert, so I can't get into the actual market dynamics underlying yesterday's hike to $57 per barrel. Nor can I debate the $105/bbl mark that a Goldman Sachs report recently listed as the possible threshold at which oil cost would finally reduce demand.

But what I can do is try to stimulate some frank debate about our energy policy. Despite the best efforts of some, in general that debate is lacking; it seems the oil industry is very much the proverbial 800-lb gorilla in the room that nobody wants to talk about.

So, bearing in mind that I'm relatively ignorant on the subject, here's a few thoughts.

Thought #1: The rise in oil costs is a negative consequence of what is generally a global good. Oil demand has increased because people are trading more things, and people are trading more things because there are more capitalist countries in which to trade. The next time you flinch at the gas pump, consider those extra few dollars a small price to pay for democracy's global triumph.

Thought #2: Obviously, the long-term answer to global energy demand needs to be the development of sustainable energy sources. How we go about this I have no need idea.

Thought #3: America needs to get serious about the full costs of its energy use. Currently a lot of those costs are hidden from energy consumers themselves. Off the top of my head, there are at least three ways they're hidden. First, via direct government subsidies in the form of budgetary appropriations. Second, via indirect government subsidies in the form of tax breaks. Third, via national debt. (Whether we're using the credit card for a road trip or paying larger heating bills because we've bought bigger houses with bigger mortgages at undeservedly low interest rates, a goodly portion of our energy use is being underwritten by foreigners.)

Thought #4: If we ever actually decided to stick only to the energy we can afford, there's a lot we could do to reduce that consumption itself. For starters we could try to curb suburban sprawl. Getting this done shouldn't be too difficult: directly peg the gas tax to transportation appropriations; and more importantly, institute zoning limits for minimum residential capacities in downtown areas. In other words, shift more of the costs of driving onto drivers themselves, and don't let people build 1,000 new units fifteen miles away when a new apartment tower downtown will do the trick. Each of these measures would have painful consequences for some sectors, but they'd also generate growth in others.

Thought #5: As I mentioned, there's a lot of things we can do. Let me know what the other ones are.


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