Should dKos lobby for a gasoline tax?

Update [2005-4-8 11:53:17 by Jerome a Paris]: I changed the title from "Today's gloom and doomers: the IMF and the US gvt" to reflect the focus of the debate in the comments, which should be of interest to many Kossacks[END UPDATE].

IMF warns on risk of `permanent oil shock' (FT)
The world faces "a permanent oil shock" and will have to adjust to sustained high prices in the next two decades, the International Monetary Fund said on Thursday in the starkest official warning yet about the long-term outlook for energy supplies.

Predicting surging demand from emerging countries and limited new supplies from outside the Organisation of the Petroleum Exporting Countries after 2010, Raghuram Rajan, IMF chief economist, said: "We should expect to live with high oil prices."

"Oil prices will continue to present a serious risk to the global economy," he added.

Well, one could say that he is an optimist, if the risk is only to the global economy...

To start with, just a quick postscript about yesterday's post on optimism:

• the Saudi news, as was commented, is an obvious piece of "feelgood" bull. They have yet to confirm to outside geologists that the touted 261 billion of current reserves are actually there... It is true, as discussed in the post, that "reserves" is a variable concept, as it includes a price hypothesis - it designates "economically recoverable reserves", and these obviously will vary with the price you're willing to put. There are nevertheless absolute physical limits to what can be recovered in any field, and we are no longer so far away from these in many fields with all the sophisticated technology we have developped. (For an example of how spurious the Sausi claims are, go read the other articles I link to below: one says that Saudi Arabia has "increased its production to 9.4 mb/d [I though it was already 9.5mb/d], well short of its 11mb/d capacity", while the other says the the US government considers that the whole world has only 1 mb/d of spare capacity...)

• the Israeli news was, as I hope was obvious, a funny story

• the "Slow crisis" was an fascinating article the first time I read it, but I started to critique it, a lot of flaws or errors came across, and I ended up taking it less seriously overall. Nevertheless, the way to approach the issue is interesting, and the main insight (that there will not be a big crash, but a progressive degradation of some major items of infrasturcture/comfort, to which we will adapt at a more or less tolerable cost) is fundamentally right. It is still possible that the optimists are right, and that new technology will finally allow to reach a better kind of civilisation, with a lot more effective use of energy and resources. Sadly, it seems that the only way to get there is to face scarcity and high prices that force us to change our behavior. I really appreciated the insight of drewthaler that energy is simply one of these things (like broadband capacity) that we use up as much of as is available, regardless of the real underlying need. The only way to change this is to make the resource either rare or expensive (rare will make it expensive, but it's not the only way).

Which brings us back nicely to the IMF predictions:

IMF warns on risk of `permanent oil shock'
The IMF forecast in its World Economic Outlook that crude would cost $34 a barrel in 2010 in today's money and would rise to $39-$56 a barrel in 2030. The predicted prices are well above market and oil industry expectations. They are also much higher than the latest long-term forecast from the International Energy Agency, the oil watchdog, of real oil prices of $27 a barrel in 2010 and $34 a barrel in 2030.

(Note: That's in today's money, i.e. reduced from nominal prices to take inflation into account. In nominal prices (i.e. the actual price on these dates), it would be a lot higher, i.e. 67-96$, as stated in this BBC article which has additional info on the IMF report, as quoted below. See how this article gets it wrong)

FT article continued
"The shock we see is a permanent shock that is going to continue... and countries need to adjust to that," said David Robinson, deputy IMF chief economist.

The IMF called on emerging countries in Asia, which this year would account for 40 per cent of the increase in oil demand, to curb their fuel subsidies. Several countries in the region, including China, Indonesia and Malaysia, have recently increased petrol prices in an attempt to reduce consumption.

The IMF based its forecast on a sharp rise in global oil demand, particularly from increased vehicle ownership in China, and non-Opec production reaching a plateau around 2010.

BBC
China could need 18.7 million barrels a day by 2030, up from the current 6.4 million, the IMF said.

World demand was likely to grow to 138.5 million barrels from 82.4 million, with demand for oil from producers' cartel Opec set to more than double.

It expects oil demand to grow at a yearly rate of 2.1m barrels a day above the 1.5m b/d the market considers sustainable to reach 138.5m b/d in 2030.

Some analysts are sceptical about the IMF's demand and projections, pointing out that no other international energy body shares its view.

But the IMF's report paints a gloomy picture for energy consumers: "With global dependence on oil production from Opec countries rising, much would depend on Opec supply response; most likely however, there would be growing upside risk to prices." It estimates that the cartel, which controls 40 per cent of global oil production, would need to invest about $350bn to 2030 in new installations.

The IMF warning came as the US Department of Energy on Thursday raised its oil price forecast in 2005 and 2006 to about $55 a barrel, up more than $6 from last month.

US warns of need for more Opec production (FT, same day, other article)
The Organisation of the Petroleum Exporting Countries will need to increase production further to balance the oil market in the second half of the year,the US government said on Thursday.

The warning, from Gay Caruso, head of the Energy Information Administration, the statistical arm of the US Department of Energy, is one of the most vocal since George W. Bush was elected president in 2000.

(...)

He also warned that the world's spare output capacity would fall further next year from the current 1m b/d equivalent to 1 per cent of global demand. Traditionally, a cushion of less than 5 per cent is seen as risky.

So we will get higher prices, and we will end up having to adapt our behavior to such new circumstances.

What is so depressing is not that it will happen, it is that we know that it will happen and yet do none of the easy steps that would make the transition less painful. We pay for schools to have educated, productive, civil future generations (spending good money that could be otherwise be used to buy bigger cars and TVs), why can't we pay for energy awareness and savings - to have more accessible energy later - instead of spending it on - or rather in - big cars and the big military that makes it possible??

If we cannot increase gasoline taxes - the single, easiest, most effective way to improve the condition of man on ths planet - we might as well cheer it when reality brings us that much closer to better behavior via scarcity. (And anything that brings senses to the cheerleaders on Wall Street and in the media who seem to be unable, for the vast majority of them, to graps what is at stake here, despite warnings now from the International Agency, the US Department of Energy and the IMF).

It's just that the risk of a really disruptive and painful transition is so much bigger (and if we taxed gasoline, some of the money used to enforce new behavior would be ours to spend or invest, not the Saudis' or the Russians')...

Pity us, not just for what will befall us, but for our shortsightedness.