“Every time the price of oil has risen for an obvious explanation–war in the Middle East, hurricanes in the Gulf of Mexico– liberal politicians like the ones I’m stuck with in MA start ranting about imagined “price gouging” and “collusion” by oil companies to jack up the price of oil. They start threatening Congressional hearings if the oil companies don’t shape up pronto. And eventually the price of oil comes down again. Even liberal politicians can’t force their consumers to pay more at the pump now, just to stave off some putative catastrophe in the year 2050.”

You’re correct that many times when the price of oil spikes it is due to a foreign situation that causes doubts in the ability of suppliers to maintain their current production levels. However in 2008 there was no foreign disruptions and oil spiked to $120+ for no particular reason. The only reason that oil spiked at this time is due to speculators rather than actual disruptions.

“Because those other alternatives you mentioned just don’t exist in suburban America yet, and perhaps never. How many years does it take to build high-speed rail links? And what will Americans do in the meantime besides tighten their belts some more? Can mass transit ever be practical with the low population densities in sprawling suburban communities?”

Suburban America is a huge issue for public transportation but also for society in general. Sprawl has lead to many issues that policy makers have been unable to provide answers to with regards to how can we provide necessary services (police, fire, public transportation, highways) while not increasing taxation to people who want to move to sparsely populated areas.

Regardless of this issue, public transportation has to improve in the future or we will outgrow our current road infrastructures in major metropolitan areas. Los Angeles (where I live) no longer has rush hour but rather has traffic all day long on its freeways. The inability to drive more than 40-60 miles an hour on a freeway for the majority of the day decreases the economic competitiveness of local business and can harm the profitability of business due to customers being unwilling to drive to them knowing a round trip visit takes 30 minutes longer today than it did ten years ago. Public transportation would reduce the number of cars on the road which would have the desired affect of being good for the environment and increasing productivity and economic activity.

“I was (and still am) a fan of imposing a significant gasoline tax. But I have now come to realize that American consumers can’t magically switch to alternative energy sources if those alternatives don’t exist. As I said, someone who owns a big gas-guzzling SUV can’t magically switch to something else when the price of gasoline rises. He’s trapped into paying the extra money, perhaps for years.”

While efficient alternative energy sources may not currently exist, I do think that building mass transit alternatives and taxing fuel will be the best way to change behaviors. I have zero sympathy for the person who bought a gas-guzzling SUV when there have always been more efficient alternatives and continuing to use that example as a straw man will mean that we can never increase the cost of fuel.

Balconesfault:

“Why not just start with a hard-wired phase-in of a “significant” tax over a 5 year period? And roll much of the money back into generation and transportation alternatives?”

I’m against the concept of having specific taxes on a good or service and then using those taxes to specifically fund alternatives or a certain program. In California we passed Proposition 10 years ago which taxes cigarettes at 25 cents a pack. This money would be used for anti-smoking campaigns and children health and education programs to get children zero – five ready for school. However since the adoption of this Proposition funding for these programs has continuously declined due to a decrease in the population smoking and other taxes placed on cigarettes which has reduced the number of packs bought (SCHIP was funded with a 50 cent tax on packs). Gas taxes have had the same problem with highway funding since as gasoline goes up in price, the amount of gallons purchased goes down and then the highway fund (designed to maintain highways) lacks appropriate funding.

How many years does it take to explore, build support infrastructure for, and drill in a new reserve?

Every time the price of oil has risen for an obvious explanation–war in the Middle East, hurricanes in the Gulf of Mexico– liberal politicians like the ones I’m stuck with in MA start ranting about imagined “price gouging” and “collusion” by oil companies to jack up the price of oil.

And of course never in the history of the oil industry have companies colluded to jack up the price of gasoline at the pump?

I was (and still am) a fan of imposing a significant gasoline tax. But I have now come to realize that American consumers can’t magically switch to alternative energy sources if those alternatives don’t exist.

But what is “significant”? 50 cents more? A dollar? Because we’ve seen fluctuations in the price at the pump well in excess of those sums in the last few years.

Why not just start with a hard-wired phase-in of a “significant” tax over a 5 year period? And roll much of the money back into generation and transportation alternatives?

Because those other alternatives you mentioned just don’t exist in suburban America yet, and perhaps never. How many years does it take to build high-speed rail links? And what will Americans do in the meantime besides tighten their belts some more? Can mass transit ever be practical with the low population densities in sprawling suburban communities?

Every time the price of oil has risen for an obvious explanation–war in the Middle East, hurricanes in the Gulf of Mexico– liberal politicians like the ones I’m stuck with in MA start ranting about imagined “price gouging” and “collusion” by oil companies to jack up the price of oil. They start threatening Congressional hearings if the oil companies don’t shape up pronto. And eventually the price of oil comes down again. Even liberal politicians can’t force their consumers to pay more at the pump now, just to stave off some putative catastrophe in the year 2050.

I was (and still am) a fan of imposing a significant gasoline tax. But I have now come to realize that American consumers can’t magically switch to alternative energy sources if those alternatives don’t exist. As I said, someone who owns a big gas-guzzling SUV can’t magically switch to something else when the price of gasoline rises. He’s trapped into paying the extra money, perhaps for years.

For that reason, I believe that mandating flex-fuel vehicles is going to have to come before imposing a significant gasoline tax. That way, millions of cars will be able to take alternative fuels. So when the price of gasoline goes up, the owners of those cars can seek alternatives immediately.

Short term– yes. Long term, no.
American oil use has been falling every since the price went up. It doesn’t happen over night, but it does happen. and in the case of China and India we are talking about people who do not already have cars (with the sunk costs that involves). I think it’s far from given that those people will still be buying cars if the price of gasoline is beyond their means. Might they not be demanding better public transport or non-gasoline vehicles instead? How are they getting by right now?

If you just bought a gas-guzzling SUV, and then a few months later gasoline prices start rising sharply, you’re not going to trade in the SUV you just bought for a fuel-efficient car. Depreciation of the SUV in its first year would be more than the money you saved in fuel efficiency.

It’s the same reason why many homeowners remain stuck in their homes, despite the fact that the financial crisis caused their homes to fall in price so much that they are worth less than their mortgage balance. They can’t sell their homes even if they wanted to give them up and rent an apartment, because that would mean declaring bankruptcy.

There’s got to be a middle way between the big-oil dinosaurs and the radical ecowarriors. But we need to address the problem now, while we have the luxury of time to consider and experiment with alternatives, rather than wait until the inevitable emergency is upon us.

I was saying that consumers don’t react to changes in the price of gas, they do. But they are far less elastic than say types of food. I could give plenty of reasons on this but I’m sure you have a decent enough economics background based on what you wrote and how you wrote it so I don’t need to.

Exactly! That sentence goes to the heart of Republican philosophy. Until the GOP renounces its wholehearted and singleminded support for corporate greed, the moral high ground will remain out of reach.

Oil use in the US isn’t as inelastic as it sounds. Consumers definitely react to market pricing, and the least invasive way for government to be involved here is from taxing policies that inflate the costs of forms of energy that have “bad” externalities. When pump prices hit $4 a gallon here a few summers ago, that was the threshold that began to make big changes in behavior, from people dumping larger vehicles for efficient ones, big spikes in mass transit use, real estate choices that lessened commuting distances, and so on. We could fashion a tax system that was revenue neutral to the broad economy (lessen other taxes), but the market signals would definitely drive consumers and businesses into the right direction.

For sure it’s hard to imagine things like aviation using any other fuel source but petroleum derivatives, given the BTU density needed for flight. But many other industrial uses will look for competitive alternatives, when the pricing incentive is there. For instance, a great degree of the chemical feedstock usages of petroleum can be found in different forest product based derivatives, but not at the currently low prices of oil.

To TerryF98’s comment above, indeed this has been a thoughtful and civil discussion thread, unlike others that break out here at times. But as a rule, I find FF to have a much more cerebral group of posters here than many places on the web that deal with policy. That’s a big reason I come here. When I read the kind of inane, savage, and basically moronic posts on stories at general news sites, I have SERIOUS fears for my country. There are some scary idiots out there with computers.