Wednesday, April 30, 2008

Gasoline Insanity

It is true that the price of gas these days is a bit insane. Thankfully, due to our lifestyle, Hilary and I are somewhat insulated from it. We don't drive all that much; we have reasonably efficient vehicles. In that, we consider ourselves lucky. That is not to say that a $40 tankup doesn't go unnoticed - it hurts. I can't imagine the pain of the 100-mile/day commuter driving an SUV. It is small consolation that the price of gas in Europe is a fair bit higher - between $7 and $9 per gallon, or about twice our current pain.

But what's more insane than the price of gasoline? What people propose to do about it. Heard of Senator McCain's proposal to suspend the federal gas tax, which amounts to a whopping 18.4 cents per gallon? Or Senator Clinton's rejoinder? What about our dear President?

I have been mentally composing this blog post for a few days. I felt some of my thunder stolen when I read today's piece from Thomas Friedman, opinion columnist for the NY Times, largely on economic and environmental matters and how they impact the larger picture. I suppose I shouldn't feel too bad - it's tough to compete with the organization, resources, and bite of a professional columnist. Anyway, here's his take on this current insanity. Note the name of the piece is "Dumb as We Wanna Be."

But some fuel got added to the fire of this rant when I read a piece in the local paper by the Republican candidate for our congressional district. (He's so going to get his butt kicked, but I digress.) His solution to our current energy woes? Rely more on domestic sources of oil, such as off-shore and ANWR. In his view, there's still plenty of oil lying under American soil, and drilling it would start to address the problem of rising gas prices and a stalling economy.

Well hot diggity, we're off to Beverly Hills!

At the same time, however, he acknowledges that it'll take years (perhaps a decade by most accounts) for the first drops to begin flowing - hardly a fix for our current woes. He proclaims that there's enough crude in ANWR to supply the whole US demand for ten years. It depends greatly on whose numbers you believe - it could be as little as six months. Even if it is ten years, that's less than a generation. I would expect a candidate for Congress to advocate solutions with a slightly longer time horizon to what is, essentially, a permanent problem.

Whether it's ten years or ten months is kind of moot anyway - the Alaska pipeline only has so much capacity. Throughput peaked at about 2 million barrels a day back in the late 80s. Nowadays, as the North Slope oilfields decline, the current rate is about 1 million barrels a day. So, realistically only about one million additional barrels of crude a day could be transported out of ANWR. Considering that the US uses about 21 million barrels of oil a day, an extra one million equates to less than 5% of daily demand. That assumes that it's all used domestically, of course, which isn't necessarily the case. Global demand for oil is increasing, even if US demand is slowing. ANWR is the proverbial drop in the bucket in terms of global oil production and demand.

Don't expect that extra 5% of domestic production to lower rates at the pump by 5%, either. It isn't like that oil is free, or significantly cheaper than, say, oil from Canada or Saudi Arabia. Oil is a global commodity, no matter where it comes from. $120/barrel is the going rate whether you're in Valdez or Abu Dhabi. Sure, you save a bit on transportation costs - Prince William Sound is closer than the Persian Gulf, but transportation costs are pretty small compared to the price of the oil itself or the price of refining it into gasoline and diesel.

In short, domestic oil isn't going to bring the price of gas back down to a reasonable level.

Not today.
Not in ten years.
Not ever.

We will never be able to drill our way to energy independence. Really, the only place we can get by drilling is to dig ourselves in deeper.

The candidate's position is short sighted at best, and delusional at worst. But, hey, what can you expect from an addict. He, you, I, the whole country, are all addicted to oil. Heck, even the oilman President says so. To an addict, there can never be enough. Addicts, when it comes to their next fix, aren't rational about it, where it comes from, how they'll get it, or what it'll cost. One doesn't treat an addiction by looking for the next fix; that only makes the withdrawal that much the worse when the stash runs out. The only way to treat the addiction is to reduce the dependence on the substance. Cold Turkey can be a violent upheaval and doesn't always work in the long run. Weening can work better, and replacement helps to. What's the methadone or chantix for our addiction to oil? That is what the nation and world need to be doing right now. Instead of dickering over where we can get another million barrels a day, we should be seeking out where we can find a replacement for that million barrels.

That is what political leaders ought to be putting forth. We're in a tight spot, and we're gonna get roughed up pretty bad before things ease up (and they will, eventually the factors contributing to high gas prices will diminish - just don't expect to see it quickly or dramatically). Nothing any politician can do will ease the pain of the pump in an appreciable way anytime soon.

Want to impress me as a voter? Don't pander to me about saving two bucks per tank for a couple of months. Don't make me feel like David with talk about windfall taxes for the Goliath oil companies (removing the tax rebates they enjoy would be more appreciated). Tell me how you are going to change the economic game that got us into this fix. Tell me about increasing gas mileage standards (the ones that recently passed? Please! Europe and Japan are already there). Tell me about making gasoline less palatable so that people are encouraged to use less of it (did you know the federal gas tax hasn't changed in over a decade?). Tell me about investing billions into alternative energy and conservation technology. If we don't, someone else will, and then where will the trade deficit be?

Realistically, nothing anyone can do today is going to have an appreciable effect on the price at the pump. The more important question is: what does one do for tomorrow?

1 comment:

Kate said...

OK - not that I disagree - but if you're going to *go there* with the addiction analogy: there is a way-overdue need to roll in the education, counseling, and support structure aspects of our national "treatment plan."

Taking it a step further, consider the idea of rock bottom and that it looks and feels different for every individual...