Open letter to US voters

Hi there.  It's not an easy time for those of you outside those few cities with mass transit, is it?  Gas prices are going through the roof, and you need gas to get almost anywhere.  Some of you near the bottom of the income scale are pawning your stuff to get the gas to go to work; others with somewhat better income and credit are just adding the cost of gas to your ever-increasing card balance.  I'm sure few of you have any idea how you'll get out of this mess except to hope that gas prices go down again.  Well, except for those of you who refinanced with adjustable-rate mortgages, blew the cash on toys and have been spending everything you saved from the "teaser" rate; when your rates go up, you're going to be in a world of hurt almost regardless.  But I digress.

Knotty problems attract politicians just as incurable diseases attract quack physicians.  Both of them hawk their wares, hoping you'll give them your money/votes.  None of them has a cure, mind you, but they're hoping that you'll either accept their explanation, forget what they told you after they've got your money/vote, or not be able to find them after they've left town (for Washington).  Judging from the way Harry Reid is calling for the oil industry to do something about high gas prices (so you can go back to what you were doing before), some very canny and experienced people think you'll be fooled again.  I'd like to think that you've finally learned this game and won't buy it this time, but I'm not sanguine.

If you don't already know but want to learn, read on.

There are larger forces at work, but you can probably be excused for not paying a whole lot of attention to them.  That should have been the job of your policy-makers, AKA your elected representatives.  Unfortunately, you picked a bunch who told you what you wanted to hear instead of what was true.  Now you get to pay the price.

Since you haven't been paying attention, let me tell you about what's going on and why gas prices aren't going down any time soon:

• The world supply of oil has stopped growing and appears to have levelled off.  There's no extra capacity left anywhere; all producers are pumping as fast as they can.
• Other nations (China and India) are becoming big oil consumers in a hurry.  Some of this is because they have changed policy, and some of it is because globalization (driven partly by US policy) is giving them a huge amount of business.  Wal-Mart and the Tata Group (stop sniggering, you're the boob in this joke) have shipped hundreds of billions of dollars to Asia; some of that money went to buy oil.  When there are no more taps to open to supply more oil, those dollars bid up the price of what there is.
• The price of oil is now at record highs in dollars, and is brushing its record even adjusted for inflation.  At $30/barrel (42 gallons), oil cost about 71¢/gallon; today, oil is around $74/barrel or $1.76/gallon¹.
• Because of all these exported dollars, the value of the dollar is falling; it not only buys less oil, it buys less of anything.

It's no wonder that gas has gone from $1.75/gallon up to almost three bucks.  But most important:

1. These are things that aren't going away quickly or easily.
2. The US oil companies can't do anything about them.  They make convenient scapegoats, but they don't control enough of the world's reserves to give you what you want.  Maybe you can damage their business, but that will make gasoline more expensive rather than cheaper².
3. No politician can do anything about them either.  This is all beyond Washington's immediate control.

Washington can give you more money to buy gas (either by writing you a check or paying part of the price), but any help this provides is an illusion.  Washington is already deep in debt, so anything it pays just adds to the nation's credit card.  Worse, paying more for oil just sends more dollars overseas and makes each dollar worth that much less (and everything you buy from overseas costs more, not just oil).  Washington gives you $100 this year, and the price you pay for gasoline goes up $3/week; by January you're back where you started, but gas costs more because the dollar went down.  This is how Weimar Germany wound up in hyper-inflation; believe me, you don't want to see that here.

You had your part in making this happen, and the older and more influential you are the bigger the role you played.  If you're over 45 you remember the oil shocks of the 1970's, the "energy crisis", the 55 MPH speed limit, President Carter in cardigan sweaters and solar panels on the White House.  You remember the way "muscle cars" were suddenly so undesirable, people could barely give them away.  You remember the Chevette, Pinto, Omni, Aries, X car, Pacer, Rabbit and the way the Honda Civic CVCC and the Toyota Corolla grabbed a toehold in the US market and never let go.  You remember how the US car fleet got a hell of a lot more efficient over less than a decade and front-wheel drive went from a neat feature of the Toronado to the standard.  You remember how independence from foreign oil looked like it might really happen.

And you also remember how enough people believed Ronald Reagan when he said that it was morning in America, and when the price of oil went down most of you went back to buying big vehicles that sucked almost as much gas as the Plymouth Roadrunner and Mustang Mach 1.  Lots of you stopped buying cars and bought trucks because you like big and didn't care how much gas they used.  Technology kept making engines better, but you never demanded that this let you just burn less fuel; you always wanted more size, more speed, or more impression on the Joneses (to make them get out of your way when you came up behind them).  In turn, the Joneses traded efficiency for whatever would impress you (and make you get out of their way).  This had a significant and completely predictable result:  over the past several years, the economy of the new vehicle fleet actually fell.

You had the wake-up call and looked like you got the lesson, but then you hit the snooze button and went back to sleep.

The second big wake-up occurred just 8 months into George W. Bush's first term.  Fifteen of the nineteen terrorists aboard the four hijacked airliners were citizens of Saudi Arabia.  They were members of a group that few people had ever heard of, Al Qaeda, but their basic philosophy was drawn from the state religion of the nation from which they came:  Wahhabism.  This extreme, uncompromising and even murderous creed was being preached in tens of thousands of madrassas around the world, training millions of students to hate everything associated with modernism and freedom with a hatred which raised the killing of even women and children to a sacred act.  This hate had already taken over all but a sliver of the nation of Afghanistan, was already strong in many of the oil states, and declared itself the rightful ruler of the entire world.

Most of this was paid for by the Saudi government and private patrons, financed by your spending at the gas pump.  Yet when George W. Bush declared that your post-attack role was to go out and spend to prop up the economy, you didn't demand that Detroit help you to cut that monster off at the knees.  Instead, you yawned when Congress gave huge tax breaks for any large (and thirsty) vehicle used "in a business"... and then bought plenty of Explorers and Durangos and Escalades and Avalanches yourselves, most of you just to look cool.

You had at least four years and two elections to express your displeasure to those folks you sent to Washington, four years to trade in that guzzling vehicle for something that wouldn't feed that monster in the Middle East, four years to act either collectively as voters or individually as consumers.  You blew it, sleepwalking into the crisis.

You were sleepwalking when hurricanes Katrina and Rita tore through the Gulf of Mexico, ripping up oil and gas platforms, sending killer waves through refineries and shutting down large parts of the US pipeline network.  Oil prices spiked, gasoline and diesel supplies were severely curtailed, prices shot to nearly $3/gallon.  Then, and only then, did you appear to take notice at the dealer showroom.

It's only about 8 months since that happened, and you're yelling at the oil companies for raising prices and for Washington to save you.  How can Washington save you from someone who can pay more for oil than you want to?  How can oil companies make more oil in empty fields?  Pray for it?  Declare shortages a part of "false consciousness"?  It looks like a lot of you have taken faith-based initiatives or Marxist dialectics far too seriously.

You could still fix this problem.  The course we were on thirty years ago would have had us there by now.  If you had demanded it of Washington twenty years ago, you could have fixed it slowly, with relatively little pain.  Even ten years ago you could have accomplished a lot and been in a far better position than you are today.  Instead....

Do you remember the PNGV (Partnership for a New Generation of Vehicles)?  Congress passed it under Clinton.  It was the program that was going to deliver 80 MPG full-size cars to the market right around now.  Ford, GM and Daimler-Chrysler all had prototype vehicles driving around by 2000, doing tests and demonstrations and getting at least 72 MPG.  Those would be good things to have, wouldn't they?  Except we're not going to get them; the people you elected to Congress in 2000 cancelled the PNGV in 2001.  (Detroit, seeing what Washington wanted, promptly disbanded the engineering teams.)

A majority of you stood still or applauded when all the things that might have helped were stonewalled, circumvented or cancelled.  Some of you even bought guzzlers after 9/11.  All the lead time, social changes and technical developments which might have made this easy are gone, destroyed, wasted; what you have to do now is going to hurt.

Very few of you are under the age of twenty.  If you're adults instead of a bunch of whining children, grow some balls.  Unless you weren't of voting age in 2004, your actions and inactions led to this problem getting as big as it is.  Bite the bullet and do what needs to be done.

What needs to be done?  Accept that the only way to fix this problem is to reverse the policies and attitudes which got us into it:

1. Realize that oil dependency damages the USA.  Treat it that way.  Tax the heck out of motor fuel (and anything else that doesn't just move consumption overseas).  Encourage people to cut back any way they can.  We don't have the vehicles to get around without oil, but nobody's going to build them unless people will buy them.  Nobody will buy them unless it pays.  Tax oil so that it pays to use something else!  We can use the tax money to help offset the impact and push alternatives forward, but we must think about how to use less every time we go to the pump (which is where it counts).
2. Quit whining about how high prices "hurt the poor".  You think the poor aren't hurting now?  They would be hurting a lot less if most cars got 50 MPG or took half their energy from electricity.  Why don't they?  Because oil was cheap over the last 20 years, and if you ever thought there was a problem you let it take care of itself.  We could have taxed gasoline to encourage efficiency and used the tax money to help the people who really needed it, but we wasted that time.  Now we're stuck with high fuel prices we can't fix, the money is going into the coffers of oil dictatorships (who sure aren't going to help us get off oil), AND lots of the used cars that the poor can afford are guzzlers.  That's what "don't hurt the poor!" got you.

Yes, it's ugly and painful.  So are the scars from coronary bypass surgery, but we're past the point where diet and exercise can treat our raging case of oleosclerosis.  No way are we going to fix the underlying problems without slashing our consumption of petroleum, and no way are we cutting back on that as long as it's cheap.  It's time to acknowledge that petroleum can only be cheap at the risk of our future.

Here's an element that no sensible US energy policy can be without:  Higher gasoline taxes now!

Footnotes:

1.  The markup isn't fixed, but has to rise with the cost of oil.  Some of that crude can't be made into gasoline or diesel; it winds up as low-value residual oil, asphalt or a coal-like substance called "petroleum coke".  The production of gasoline is about 83% efficient; diesel, about 88%. (back)
2.  Damage to the business may be appropriate payback for those companies which supported the Republican energy "policy" of the last 5 years or continue to lie to the public about climate science.  If history is any guide, the increased gasoline prices would finally get you to take conservation seriously.  This isn't the best way to do it, but that particular cloud has a silver lining. (back)

Labels: oleosclerosis, open letter

¶ 5/07/2006 03:53:00 PM