The problem — as you pointed out — is that the market will not demand change until oil is at a premium to other possibilities. However, national security and health demand it today. We know that.

So that’s where the government needs to step in and say: We need a plan and the plan can’t be “more of the same”. We can’t drill our way out of the health part of the equation and we can’t implement a harsh tax that will immediately force a serious disruption to our current existence. Last summer’s $4.00/gal disruption was enough pain, but that’s coming again if the global economy starts to get its legs again any time soon.

Which is why I think a $0.01 per month increasing tax that funds technology research into alt fuels and energy storage technologies is in our national security interest. Slowly adjust the market in a way where people can actually plan to replace their car in the coming years with one that’s more efficient or to let a city plan to replace their aging school busses with ones that are more efficient or to add trains if that’s what’s best for them, and let the market slowly adjust to the new reality. Meanwhile, we’re funding technology that will help us lead the world in energy innovation. I’d rather lead than follow China and Korea… and they’re hard at work on the problem now.

If your solution is mass transit, that will take 10+ years too.

If your solution is more fuel efficient vehicles, well that’s coming, but it is also a 10 year solution as people get rid of their cars. Most cars on the market are too expensive for most people.

If your solution is to jack up energy costs, the people who it will hurt the most are the poor who tend to drive older, less fuel efficient vehicles. It will also hurt business who already have tight margins, especially in today’s economy. Run them out of business and the poor get poorer.

If a solution will take 10 years, then let’s try to look 20 years ahead to our needs then and aim for that in the next 10 years. John Kennedy didn’t say in 1961, ” First, I believe that this nation should commit itself to achieving the goal, before this week is out, of landing a man on the moon and returning him safely to the earth.”

He looked at the decade and it would take more than 8 years to achieve the goal…but we weren’t starting from zero either.

When it comes to energy, we’re not starting from zero, but politicizing the issue in the context of global warming and offering solutions that are based more on emotion and economic unsound economic policy then real, practical solutions only wastes time.

This race is not one that should be fought on the basis of climate change, but because no one wants to breath dirty air, drink polluted water, not be able to relax under a tree on a hot summer day.

Nor do people want to worry about having to get to work, feed their families and stay warm in the winter and cool in the summer.

Technology will get there, but it needs the market to demand it. 25 years ago, a cell phone cost $2,000. That is almost $4,000 in today’s dollars. But today a far more advanced cell phone than anything that could be dreamed of in 1985 costs less than $300.

Why? The market demanded it.

Also, ByteMe, oil is sold on the world market. Nations (or refineries in those nations) buy oil on that world market. If the world produces 10 million barrels a day and the market demand is 9.5 million a day, then supply and demand will almost be in equilibrium with slightly more supply. Once storage runs out of space, then the price will drop to try to move the excess inventory. We see oil prices fall slightly.

If the US can add an additional 5 million barrels a day, then there will be a supply greater than the demand by 5.5 million barrels. There would be a short term price drop as OPEC tries to meet to cut production to bring that price back to the higher price at equilibrium.

The problem is, when oil is cheap, there is much less of an incentive to innovate towards greater fuel efficiency.

I would probably want to make sure the taxes went to build more refineries. The threat of a hurricane makes our prices go up.

I agree that it was the flip flop that killed him and that was my point. Whomever is in the position to make this hypothetical deal work, shouldn’t have to go back on their word to do it. An extra 50 cents in gas would be huge to the average tax payer, unless we can show them that it will keep prices from going up by a dollar. There is a good chance that the market price would drop so the full 50 cents is not felt, and it may only seem like a 20 to 25 cent increase. Who knows? The price at the pump might stay close to where it is now.

I tend to think that once we started drilling, even if it’s 20 years before the oil ever gets here, the price per barrel being traded will drop because that the market will know we will not be as dependant on foreign oil in the future.

To end, my position hasn’t changed, and neither has yours. We have just discussed it enough so that we understand each other’s positions better. We didn’t have to yell or call each other names. Others should take note.

I don’t find the philosophy of the free market silly. I just find the expectation that our condition of reality is a free market to be silly. Especially when we’re dealing with the oil market. Both the countries that are the producers act as an oligopoly, and to some extent, the companies that produce do as well.

I’m going to skip trying to give you a lecture on supply and demand at this point. If you’re really interested and think it may change your mind, I’ll try to prepare the explanation behind my assumption.

As for the tax “increase”, my original proposal was that it would be revenue neutral, meaning that other taxes would need to be cut to consider it. I’d have no problem with any Republican entering into a negotiating with that as their condition to finding a solution “acceptable” to them.

I would hope that GHWB taught politicians of all stripes from making “read my lips” kinds of statements. I personally think it was his “flip flop” that killed him, not the tax increase itself.

In summary, we import about 30% of our oil from people who want to kill us. The market price of this oil does not capture negative externalities inherent in this oil. (i.e., the cost of our military in the middle east, the ability of a cartel to control our energy supply and the ability it gives them to do what happened two years ago and twice in the 70′s, each time tanking our national economy).

Drill Here, Drill Now is a nice slogan. But so long as it remains only a slogan, we remain hostage to our enemies, and volnerable to a public that will hold us accountable to not finding a real solution to this problem.

Screw global warming. For me, it’s national and economic security. For that, I’ll pay and extra $.50/gallon.

If one of us was a deciding senator and the other were the deciding congressman and we knew that the president would go along with whatever we worked out, I would consider adding the tax if it got the drills going. I would want to see how much of a tax, exactly how much it would change the price of gas per gallon in my home district or state, and I’d want to see some real projections of what we would get from drilling and when we would get it.

I am not arguing with you, but faced with this choice, then I might be arguing with myself . GHW Bush said “read my lips, no new taxes.” He then broke that pledge in an effort to strike a deal with the dems to get a balanced budget. They stabbed him in the back and because he broke his pledge of “no new taxes,” he lost reelection. (That’s the main reason, IMO)

You may think the idea of “a free a market as possible” is silly, but it’s more of a philosophy than a fact. I think your idea of taxing to get people used to the idea of paying a higher price (lowering demand) is silly.

That doesn’t mean I am not above compromise; as long as I don’t have to compromise my principals. If I had made a pledge never to raise taxes, I’d have to pass. There are very few times when a new tax might be appropriate, but the problem is spending and that’s a whole different topic. I’d have to look at the details before I agreed because that’s where the devil maybe found.

But in typical form, you reject any idea that you might have to give anything to get what you want.

Then you started spouting meaningless talking point phrases like “free market” and” no government regulation” with no apparent compreshension of how these phrases apply and don’t apply to the issue at hand.

Ask Sarah Palin how “free market” the oil industry is. Her biggest accomplishment as governor? Breaking the oil industry cartel (oligopoly) to get the trans-Canada pipeline underway.

You’re arguing against yourself here, and you don’t even realize it.

When dealing with oligopolies, or even monopolies, the rules change. In negotiations, we shouldn’t leave an economic competitor in a superior position. There is no way we should ever sign the Kyoto treaty while China and India do not have to play by the same rules.

I have a question for anyone who cares to answer, how does not drilling in ANWAR or off the coast help us? It may not be your perfect solution, but tell me how it doesn’t help?

So when you argue that if the govenement acts, it’s a violation of “free market” principles, you’re essentially stating that the government intervention that we curently must endure is optimal.

There’s nothing “free” about this current market. Changing the government’s level and method of involvement doesn’t necessarily mean we’re making it less free.

The thread may have started on cap and trade, but it looked like the conversation had turned toward gas consumption. If you want my opinion on cap and trade, I am not a fan. Is that on point enough for you?

You say that we’re using less gas but demand didn’t really go down, make a statement that the government doesn’t know everything, and finish your argument that I thought was about cap and trade alternatives with a solution that we should acknowledge that the UAW is bad and Nissan needs to build us a police car with a range of 400 miles.

I guess there was a reason that Reagan was called the great communicator. For one, he was able to say on message.

Will I do not disagree that purchases went down when prices went up, I do disagree that it was actual demand that went down. I think that people just said we can’t afford a vacation this year, or we can see grandma next year. That maybe discretionary travel, but people were starting to be concerned for their jobs, and rightfully so. Gas purchases are down this year compared to last.

http://www.eia.doe.gov/steo

Phasing in artificial prices via tax increases because the government knows was it is best just hurts everyone. The government should not be in the business of manipulating the auto industry or any other market segment. Setting safety standards are one thing, but cash for clunkers was a horrible mistake and poorly implemented. The market will determine what a prius and a suburban are really worth.

IF I were suggest a government solution other than drilling and less regulation, I might suggest a bonus to any car manufacturing plant that will meet the specifications of the average patrol car for sheriffs departments. The interceptor should be able to from 0 to 60 or 0 to 90 in X amount of time. It should be able to get X amount of MPG, or using the average cost of one years worth of gas be able to run on that many dollars or less with an available fuel source. It should have a distance of 400 miles or more. The reward for producing such a car? Any county that receives federal money for roads has to buy replacement vehicles from the company that is making the best car. This spurs innovation, competition, and is founded by greed. It’s not just for Ford, Chrysler, or GM. If Nissan, or some other company builds a better car, that’s what we need to buy. The UAW needs to wake up and realize that they have almost killed GM, and if someone is building better cars and if they are cheaper, with better fuel efficiency, they will be out of a job. I don’t think any company is too big to fail.

Don’t ever change. Seriously.

the reason I’m suggesting that the tax be phased in over a period of years is to send a strong signal to the market that gas prices are going up, so they can make long term decisions (i.e., next car purchase) using “rational expectations”.

It’s true that when we face gas price spikes, most people are unable to make drastic changes to purchase less gas. But over time, people are able to change their patterns and behavior. 18 months ago, people were re-evaluating what they could do differently, and there was a significant drop in demand.

Phasing in price increases allows people to prepare in advance, as opposed to a lot of the panic that generated a lot of bad, short-term, reactionary decisions that cost many more than they saved in efficiency. (i.e., trading in Suburbans for $5K under book to pay over sticker for a Prius.) Those Suburbans are now getting over book, and Prius’s were deeply discounted until Cash for Clunkers came along.

We’ve already forgotten about many of those good habits we were learning just a year or so ago. And when we do nothing for another couple of years except talk past the other side, we’ll all pretend to be surprised again in a couple of years (or less) during the next price spike, and be not closer to an actual solution.

I don’t think the inceased price will mean lower demand. In most cases, that is true. However, with gas, we need that to get to our jobs and other things we think we have to do. It will just mean that people will be poorer.

If you are looking to give the left something, tell them we are drilling in ANWAR to save the whales and it’s for the children. They should eat that up like cornflakes.

If they just squirm a bit and ask about the legalities, then you know you are hitting the nail on the head. The proof is: if the policies are good for the collective, they are in favor of it. If it’s about unequal distribution of wealth, or equal opportunity but not equal outcome, they are against it.

Don’t change a thing. You’re doing great.

BTW, isn’t it illegal to yell “socialism!” in a crowded theater? Or is that just something outside the south?