Energy policy; we must break the cycles of transient piety
- Oil prices have bounced from very high to very low. Most Americans are pleased because they now pay less than two dollars a gallon for gas. They are also forgetting their vows to drive less. They hope that they won’t have to buy fuel-efficient cars because the price of gasoline may stay low- this is encouraged by “drill baby, drill” rhetoric. Traffic jams have gotten worse again.
- Gasoline prices are false because they don’t include the pollution, health costs, and climate effects of extensive gasoline use. They ignore the military costs of petroleum: Robert Mugabe and Saddam Hussein were terrible dictators who killed many people. We invaded Iraq and overthrew Hussein while ignoring Mugabe. There are many reasons but the main one was oil- we wanted access to Iraqi oil reserves.
- People won’t reduce driving unless they expect gasoline prices to stay high. We need a flexible gasoline tax:
Starting July 2009 add federal tax to bring the wholesale gasoline price to $2.25/gallon in each state. Each state’s tax is separate based on their local wholesale prices. There will be no tax increase in states with wholesale gasoline prices of $2.25 or higher. The tax is adjusted every 6 months: to create a floor price of 2.50/gallon January 1, 2010, 2.75 on July 1, 2010 and $3.00 on January 1, 2011, with that $3.00 floor adjusted according to the government CPI every 3 months to keep pace with inflation. Money from this tax should go only to mass transit, roads & bridge repairs (not for new roads which stimulate more driving).
- Benefits of the plan:
a. consumers will expect permanent high prices (by US standards, not by European standards). They and city planners will know that long commutes are problematic.
b. Gasoline use will be discouraged (some of it is discretionary and avoidable).
c. There will be greater use of mass transit and more money to support it. We hear about bailouts for Wall Street and carmakers, but no mass transit bailout.
d. it may help alternative fuel producers.
e. It is a consumption tax.
f. Less money goes overseas supporting petrodictators; more revenue for necessary services at home.
- Costs/Problems of the Plan
a. it is a tax increase and will be opposed by those who are ideologically opposed to all taxes
b. It increases costs for some who must drive long distances to work- we can’t tell how much because we can’t predict gasoline prices over the next few years. However, Roubini expects the financial crisis to keep commodity prices (including oil) low for several years. Petroleum is a finite resource; I believe that the only question about peak oil is “when do we reach the peak?” States may provide subsidies for people working in special capacities who drive long distances to work- I’m thinking here of schoolteachers, police and firemen who can’t afford to live in expensive cities like Santa Barbara and must commute from afar. Better to pay them more, but gas subsidies might bhelp.
Some will want to delay any gasoline tax until the good times return. This ignores climate problems that are already upon us. We’ve had too many cycles of gasoline piety, washed away once oil prices fell.
c. I’d implement the tax more slowly for diesel fuel because diesel is important in agriculture, transportation etc. Diesel particulates are even more damaging to the body than gasoline exhaust. This is most clear for asthma and lung inflammation, but there is also evidence of adverse effects of diesel particulates on the nervous system. Recent regulations have reduced but not eliminated the injurious effects of diesel particulates; California truckers seek exemption from these requirements on the grounds that they are too costly. Truckers pay more for diesel than for gasoline- over $4/gallon at times. I would phase in the flexible tax on diesel 6 months later than on gasoline, 25 cents above the gasoline floor- start with $2.75 target January 2010 and end up at 3.25/gallon with inflation adjustments.. Asthma has increased greatly in American children; it’s most common in kids who live close to highways with lots of trucks. Those children are also often also obese and do poorly in school. They can’t exercise because exercise often triggers asthma attacks, so the obesity increases. Obesity is due to the combination of bad diet and lack of exercise. Diesel use contributes to asthma and indirectly to obesity. Also, we don’t want car buyers simply switching to diesel cars. We want them to drive less.
(references asthma: - Dietert RR, Zelikoff JT. Early-life environment, developmental immunotoxicology, and the risk of pediatric allergic disease including asthma.Birth Defects Res B Dev Reprod Toxicol. 2008; 83:547-560. nervous system Hartz AM, Bauer B, Block ML, Hong JS, Miller DS, .Diesel exhaust particles induce oxidative stress, proinflammatory signaling, and P-glycoprotein up-regulation at the blood-brain barrier. FASEB J. 2008; 22:2723-33)
- Other measures: new trucks above 5 tons loaded weight should be required to have natural gas engines like the Honda GX has, starting in 2012. Federal buildings above a certain size- maybe 100,000 square feet -should be required to have on site fuel cell generation of all electricity starting in 2015. Hydrogen fuel cell cars have some reliability problems and there are few filling stations. However, hydrogen can be produced by electrolysis of water at wind turbine sites and shipped to stationary fuel cells. If there is no private source of hydrogen for these buildings, the government should enter this market.
- Health: obesity is a serious problem which causes more diabetes, cancer, heart trouble, etc.. We must attack it at the elementary school level. Dr. Ken Cooper (www.cooperaerobics.com) developed fitness tests for elementary school children years ago; he also showed that those who fail the tests do worse on academics. Every schoolchild should take the test by 4th grade. Those who fail should have to take remedial physical education. This would require some schools to hire additional instructors. Diet is of course equally important in controlling obesity. Too many schools serve only burgers and pizza at lunchtime, and promote consumption of sodas which are flavored water, which is bad. Low calorie diets don't improve brain function, while sustained exercise programs improve brain function and neurogenesis (Duman CH, Schlesinger L, Russell DS, Duman RS. Voluntary exercise produces antidepressant and anxiolytic behavioral effects in mice. Brain Res. 2008; 1199: 148-58 and Olson AK, Eadie BD, Ernst C, Christie BR. Environmental enrichment and voluntary exercise massively increase neurogenesis in the adult hippocampus via dissociable pathways. Hippocampus. 2006;16:250-60). I oppose special taxes on soda, because I'm sure that lawmakers would exempt diet sodas, which are probably the most harmful of all. Unfortunately, sustained exercise means almost every day- easy for kids, hard for the rest of us.
- Agricultural policies: Our federal government provides massive subsidies to agriculture, most of which go to huge firms and absentee owners. Agricultural subsidies should be gradually phased out. We must help small farms that raise food for local consumption. We should not ship food thousands of miles if it can be grown locally. Local food production especially fruits and vegetables which are not shipped out of state makes communities more robust and better able to deal with disasters which temporarily block air and truck transportation.
- We must promote robust self-sufficient communities. They can produce most of their electricity locally (solar roofs where there is abundant sunshine), most food comes less than 200 miles and they can produce enough drinking water locally to survive in a crisis, by wells, desalination of sea water or distillation of sewage water. Robust communities have some spare hospital beds and can handle an epidemic of bird flu. Los Angeles County has no spare hospital beds and could not handle a bird flu epidemic. A large earthquake along the San Andreas fault would cut it off from the electric grid. Foreign food imports work against resilient self-sufficient communities. Foreign luxuries are OK, but essentials should be produced locally.
I quote from Jeffrey Sachs’ Scientific American article: "The reckless gambles the world took on the recent financial bubble are dwarfed by the long-term gambles we have been taking by our failure to address the interconnected crises of water, energy, poverty, food, and climate change. The financial crisis should quickly and urgently open our eyes to these much greater systemic threats and the global cooperation needed to redress them."
The biggest problem for the global economy is the acceptance of finite resources, our insistence on growth at any price. Petroleum is finite; it is causing more and more respiratory disease, increasing climate changes etc. Oil prices don’t reflect these side effects. `
The cost of tobacco should include taxes to help with healthcare costs (we mostly use tobacco tax revenue for other purposes, which is stupid government), alcohol taxes should be doubled (alcohol causes much sickness, death and violence) and the cost of diesel fuel and gasoline should include taxes to offset their harmful effects and money to pay for the maintenance of roads and bridges. Water is finite. Developers have too much control over city planning. New homes should be built only if water supplies are identified and sewage treatment is in place. Current methods for extracting oil from tar sands consume huge amounts of water which then requires clean up.
The old ways don't work in the long term.