This concept would deal a severe blow to OPEC, be a death warrant for the oil companies and force a redistribution of their economic and political power to the electric utilities and the American people as businesses, families and individuals. The conversion of the American economy away from oil was stifled in the 1980's; this proposal would jump-start and then supercharge this long-overdue change.
The bare essentials of the 9-point program (verbatim from SSB):
These individual points need more explanation than SinceSlicedBread's length limit allows, so I'm elucidating them here:
It may seem silly to tax fuel when it's already shot up so much in the last year, but today's prices are severely hurting the working poor while the rich barely notice. 65% of all oil revenue flows out of the country, so it makes sense to raise prices enough to get even wealthier people to change their buying decisions. This also yields money for offsets to ease the pain at the bottom.
It will also make change in the auto industry. Detroit isn't going to build lots of partly-electric SUV's unless people would buy them. $4/gallon fuel would probably be enough to make that happen. If they guzzle wind power while schlepping the kids to soccer, they stop being noisy, polluting and beneficial to Al Qaeda.
Chemical producers sell to a world market, and should not be put at a disadvantage. They should be exempted from the taxes on oil and gas; if any taxes are levied, they should be on the products (foreign or domestic) when sold in the USA and not on their raw materials. (link)
If you burn 500 gallons of gasoline a year, a $1/gallon gasoline tax will cost you $500. A tax of $5 per million BTU of gas will cost the average gas-heated household roughly $250. Giving every wage-earner a FICA exemption on the first $10,000/year would pay them $1530, or more than enough to pay the extra taxes. The bonus is, they could use it to buy more efficient vehicles, insulate the house, install CF bulbs or move closer to work too. Anything they do that cuts the need for imported fuel will save money, and that money will tend to stay in the USA and make jobs. (link)
Rural areas and cold climates will have higher added costs from the taxes. There need to be offsets until new vehicles and upgraded structures have worked their way through. (link)
For at least 20 years we've known how to make ultra-efficient furnaces, furnaces which cogenerate electricity, buildings which need next to no heat, and other advances over today's typical practices. It's time to fix existing buildings (if they can be made affordable), and update building codes so that sloppy, leaky buildings are no longer considered acceptable. We've got a lot of ground to cover, and we've run out of time; a lot of builders will spend the next few years tightening up structures instead of building new ones, but that keeps builders employed even if the housing market tanks. These high energy prices are hurting the economy; we'll need some recession-proof jobs, I think. (link)
Electricity is already so cheap compared to gasoline that it would take over if people could only get it everywhere they park. Tax breaks are barely needed, if at all. The promotion of plug-ins will come in other forms, which make it easier to use and manage. I am specifically thinking of:
Getting electricity at home should just mean plugging in a cord, whether home is a mansion or an apartment. Buying electricity anywhere else should be as easy, and anonymous, as getting a calling card at the 7-11.
Running cars on electricity means that they can get energy from something other than oil. That something could be coal, nuclear, wind, solar panels on the roof, cogenerating furnaces... literally anything that makes electricity would provide "fuel". Just about every cent spent on it would stay in the USA, making jobs and investment. The potential savings are enormous: some calculate up to 85% reduction in gasoline requirements. That would be 7.7 million barrels per day at 2004 rates, or most of the output of Saudi Arabia. Most of the Gulf Coast refineries would be excess capacity, so we'd be hurricane-proofed again without moving a thing. (link)
Rail is more efficient than rubber tires on pavement, so if we want to save energy we should move everything we can to rail. Not necessarily out of trucks, mind you, but the trucks themselves should be able to get onto rails. Rails could be laid down highway medians to get the big semis and cars out of the same lanes, which would also prevent the semis from slowing traffic and reduce the number and severity of accidents. Old rail rights-of-way in and out of cities could be revived, creating new and uncongested truck routes.
Most or all rail, both truck-bypass and freight, should be electrified. Overhead wires would supply power to run trucks and trains. Diesel fuel accounts for nearly a third of US motor fuel consumption and about 20% of all petroleum products supplied, so taking a big chunk out of that would slice imports a lot. It would slice import costs even more, due to depression of the world price. If diesel demand could be cut by 75%, the total savings (diesel plus gasoline) would just about equal Saudi Arabia's output. If trucks become all-electric and use batteries for their runs between deliveries and the rails (where they recharge while driving), on-road savings could approach 100%. Pollution and noise would plummet. (link)
Reference for semis-that-run-on-rails: Blade Runner Update (read this, seriously)
If all of this stuff is going to run on electricity instead of petroleum, the electricity has to come from somewhere. The total energy of electricity required is going to be a lot smaller than the oil displaced (even truck diesels are only about 40% efficient at best, while electric motors are around 90%) but it's considerable.
It will pay to get lots of this electricity via cogeneration. Just about any process which burns fuel to make heat and doesn't need an open flame (grills, stoves) is a candidate for conversion to cogeneration. Steam boilers, gas and oil furnaces, water heaters, and many industrial processes could make electricity as part and parcel of their other operations. The effective efficiency (extra fuel burned per unit of electricity) can be over 80%. Some of the oil not burned in vehicles will be needed to make up the difference, but the overall savings will be huge.
Despite lots of cogenerators, wind turbines and everything else, there are bound to be times when electric generation falls short. We can burn oil for these occasions if we have nothing else. GE gas turbines are as much as 40% efficient and combined-cycle plants hit well over 50%; burning oil in stationary turbines would be at least twice (maybe three times) as efficient as burning it in gasoline engines, even in hybrids. If you only need them when the wind is calm and the sun isn't shining, you won't need them all that much anyway.
If all else fails and there really is no electricity to spare for charging, the plug-in hybrids can fall back to being like regular hybrids. (link)
One thing that is absent from this proposal is subsidies for alternative energy. This is deliberate; if petroleum fuel costs an extra dollar per gallon, this gives the alternatives a cost advantage of the same amount for everything above the fuel involved in making them. This rewards real energy production and eliminates differential tax subsidy, e.g. taxing the diesel used as road fuel but not the diesel used to cultivate corn for ethanol.
This appears likely to promote biodiesel from waste grease (large cost advantage), not be so good for biodiesel from virgin oil, and kill ethanol from corn (1.34:1 EROEI cuts its cost advantage from 52¢/gallon with current subsidies down to about 25¢/gallon after the fuel for cultivation and distillation are taken out). Taxes on natural gas will make wind power pay all the better ($5/million BTU costs an extra 3.5¢/kWh to a generator using 7000 BTU/kWh, more than twice the wind production tax credit), and also prompt generators to get the most out of coal, nuclear and everything else domestic. All projects with good rate of energy return would be promoted, and that's good for both the country and the environment. (link)
My little 173-word blurb for SinceSlicedBread has grown to over 1900 words here. I suppose I shouldn't be surprised; it was a very abbreviated synopsis of a much bigger concept (or set of concepts). I could go on further, but I think this is enough for a broad overview and real detailed analysis should go in separate posts. If I do this, I'll add hyperlinks both out of this and back to the individual sections.
Analytical readers, tell you what: if you want to expand on these things in your own blogs, I'll link to solid analyses that aren't my own. And if I win anything from SinceSlicedBread, the beer and pizza are on me when I come to town.
Visits since 2006/05/11: