Until now rising gasoline prices have been an issue in this election that has worked viscerally in the Democrats' favor. An ordinary American may not even know what FISA is, have strong feelings about Iraq or even sympathize with people burdened with variable rate mortgages, but will nonetheless be brought face to face with where our country is these days when he or she pulls into a filling station and watches the numbers on the side of the pump race towards $40 or $50.
Obviously, the McCain campaign has embarked on a gambit to reverse this, recognizing that unless they do they may face annihilation come November. Hence, the proposal to open the coasts to drilling, and with it the effort to convince Americans that if this is done all will be right with America's energy world.
Should we cave on this? For various reasons I explain below, I say no. But simultaneously, government should have more to offer working Americans suffering the effects of higher gas prices than the famous advice from the Book of Job--"Curse God and die."
First off, it needs to be noted as a qualifier that right now the energy issue is apparently working in Obama's favor, per ABC News/Washington Post (June 12-15, 2008). People trust him over McCain to handle the problems with gas prices by 50 to 30 percent, and to handle energy policy generally by 51 to 36 percent. 1.
However, I do find myself a bit worried by the numbers in play around McCain's proposal to selectively open America's coasts to oil drilling. According to a Rasmussen survey taken June 13, 67 percent of Americans support opening the coasts to drilling and only 18 are opposed. 2. (Interestingly enough, Rasmussen actually tested a notion a bit to the right of the position McCain announced. Whereas he wants to allow those states who want to pursue drilling to go ahead, the Rasmussen question is framed as whether drilling should "be allowed in offshore oil wells off the coasts of California, Florida, and other states", without discussing whether these states would give their permission for said drilling.)
Moreover, one commenter (PatriciaVa) yesterday offered evidence that as of May 2006 (when gas obviously cheaper than today) 51% of Floridians supported drilling off their coasts. 3. So, politically speaking, when it comes to the drilling issue we have a problem.
PatriciaVa thinks Obama should flip-flop, outright. Even our beloved Bonddad in a recommended diary today asserts that we should pursue new drilling offshore and in the Arctic National Wildlife Refuge, albeit his rationale is that drilling would be a revenue-generator for the federal government. 4. As it now stands, the position of the Obama campaign is quite simply that because it would take so long for oil from these new sources to get to market it's fallacious to consider them part of a short-term solution in terms of current gasoline prices. And this is actually the case.
Moreover, pursuing new oil production right now does not help the transition to a post-carbon economy in the face of ever-advancing climate change. And it only delays our reckoning with the finitude of petroleum reserves to points further down the curve of increasing petroleum prices. But perhaps worst of all, it breaks the piggy bank: accessing this petroleum when prices are under $140 per barrel and exhausting it quickly only means that we will not have these domestic reserves when matters are far more serious and petroleum (as is completely possible) is fetching twice that on the global market.
The only way moving to access these reserves now would make sense would be if this was the point we were certain to most need them, say the moment immediately before vast technological change begins cutting deeply into petroleum demand. But this is not the moment we're in, demonstrably. All the use of alternative fuels on America's highways today still only cuts our demand for petroleum by a smidgen, and mass introduction of the vehicles that would make a truly big difference are a ways off.
So the only way real beneficiary of accessing these reserves now is the oil companies, collectively. If they contract the necessary offshore leases in the economics of today, rather than the economics of ten years from now, they get access to the petroleum at a comparable bargain to what they might have to pay later. If they paying now for the lease to get access to the oil, but we're paying the gasoline prices of 2015 or 2020 to use the oil, that increases their margin immeasurably.
So what do we do? As my intro suggests, doing nothing is not an option. Neither is imitating McCain.
I am actually not terribly invested in peak oil theory, but one does not have to be to realize that there is no more petroleum being made, and we are living in a world where demand for petroleum is growing due to emergent consumer societies across the world. So my proposed solutions actually do disallow new drilling in the short term as a solution. Here's my suggestions:
1. Tiered pricing for gasoline and diesel.
I am not proposing gas rationing because we are not creating actual limits to consumption. However, I am willing to propose that every American household gets an allowance of a certain number of gallons of gas that they can purchase for a set price, perhaps $2 or $2.50. To qualify they would have to produce evidence they are currently employed. The number of gallons could be set by the average commute in miles to and from work in a given county of the United States assuming a reasonably fuel efficient vehicle, allowing for a greater allowance to people in rural areas who are disproportionately affected by higher gasoline prices.
Simultaneously, businesses that are disproportionately affected by fuel prices and which pass these higher prices on to consumers--farmers, truckers, grocers, delivery services, private school bus and ambulance services, etc--could qualify for their own allowance that would be set by some other means than ordinary consumers. One way to do this would be to peg their allowance to ninety percent of their proveable consumption of fuel in a past year by quantity, the ninety percent figure serving to encourage at least some conservation.
People would be quick to point out that this could have devastating effects to the disincentive effects of high gasoline prices on energy use, and some others would point out that this disincentive effect itself has devastating effects on the lives of ordinary people. That is why what I want to emphasize is the difference between necessary and elective driving. We make it more possible for people to get in their cars and drive to work, not to go to the mall or on cross-country vacations.
My idea doesn't squelch the disincentive effect of high gasoline prices, it focuses them like a laser on discretionary driving. Because I do not include any mechanism in my plan that prevent gas stations from passing along the cost of the allowances for required driving to the unregulated price they would charge in all other circumstances. So the price comes down for the driving people have to do in order to suppor their families, but goes up for all other driving in order to compensate for that hit.
2. Free mass transit and commuter rails
Basically, the federal government here pays to get people off the roads. Of course additional investment in mass transit needs to be made in order not just to lay down more rails, buy more railcars and buses, hire more staff, but just to lower the price to make it even more comparably attractive than driving. I think the price should be zero, so that mass transit and commuter rails remain attractive when they're in competition with driving even with the allowance system in place. And also so that the most bus-resistant person in the most anti-mass transit suburb of, say, Atlanta will have to admit to themselves the insane cost of their preferences. Also, just as the allowance system is a subsidy to rural habitants, this disproportionately helps citydwellers.
3. This is a long diary already so I'll keep this short and simple--gas guzzler buybacks!
Existing proposals on these lines have already been put forward, but what I would emphasize is a program that does not reward cardealers and recent purchasers of SUVs and luxury cars for bad economic-decisionmaking. Many poor families--especially in rural areas--are stuck with cars bought many years or decades ago in much different economies that have low or no resale value but which they need in order to get to work and live. Not a few have several, and just pass the cars down to teenagers and college students.
Buying these cars back with either credits for the purchase of hybrids and more fuel efficient options--or just with cash to reduce the number of cars on the road burning gasoline, period--is a great way to alleviate the suffering of many families who are finding their very ability to survive hurt by high gasoline prices that at the same time decreases consumption and helps the environment.
In conclusion, it's entirely possible for us to pursue the goals of populist economic policy by curbing prices on necessary driving, pursuing the goals of sensible energy and ecological policy by curbing consumption, and of course by supporting the development of a broad spectrum of alternatives, which while not the subject of this particular diary I most definitely support.
- http://www.pollingreport.com/...
- http://www.rasmussenreports.com/...
- http://www.dailykos.com/...
- http://www.dailykos.com/...