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Originally Posted by raveneye
I think it's worth considering an increase in our ridiculously low gas tax, with the revenues redirected to income tax relief.
The value of increasing the gas tax would be to create more incentive to perfecting the hydrogen fuel cell, which is the only practical alternative to our current love affair with the internal combustion engine. Hydrogen, unlike oil, is unlimited, has no geography, and can't be held hostage by terrorists.
Bush could call it the Patriot Tax or something to that effect.
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I doubt that there is time for this technology to attract enough investment interest, let alone mature, to appreciably lessen the impact of peak oil. Here is the government's info on it's investment in hydrogen energy technology:
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http://www.hydrogen.energy.gov/presi...nitiative.html
President Bush's Budget Provides Strong Support for the President's Hydrogen Fuel Initiative:
* The FY 2004 appropriation for hydrogen and fuel cell research and development through the Hydrogen Fuel Initiative is $159 million.
* The President's FY 2005 budget request for hydrogen and fuel cell activities in support of the Hydrogen Fuel Initiative is $227 million.
Why Hydrogen and Fuel Cells?
America's Energy Security Is Threatened by Our Dependence on Foreign Oil:
* America currently imports 55 percent of the oil it consumes; that is expected to grow to 68 percent by 2025..............
http://www.hydrogen.energy.gov/presi...nitiative.html
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There are no reliable figures regarding the current, proven reserves of the world's largest oil exporting country:
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http://www.iags.org/n0331043.htm
March 31, 2004
New study raises doubts about Saudi oil reserves
With over 260 billion barrels of proven oil reserves, a quarter of the world's total, Saudi Arabia is not only the top foreign supplier to the United States - the world's largest energy consumer - but also essentially the sole source of liquidity in the oil market. According to the Department of Energy's Energy Information Administration (EIA), the world will become more dependent on Arabian oil in the next two decades. To meet global demand for oil, Saudi Arabia will need to produce 13.6 million barrels a day (mbd) by 2010 and 19.5 mbd by 2020. Both the International Energy Agency and EIA assume Saudi oil output will double over the next 15 to 20 years. In a new study soon to be released, Matthew R. Simmons, president of Simmons and Company International, a specialized energy investment banking firm, contends that this is not likely to happen. He argues that Saudi Arabia's oil fields now are in decline, that the country will not be able to satisfy the world's thirst for oil in coming years and that its capacity will not climb much higher than its current capacity of 10mbd. Considering the growth in demand, this could easily spark a global energy crisis.
http://www.nytimes.com/2004/02/24/business/24OIL.html
February 24, 2004, Tuesday
Forecast of Rising Oil Demand Challenges Tired Saudi Fields
By JEFF GERTH (NYT) 2105 words
Late Edition - Final , Section A , Page 1 , Column 3
ABSTRACT - Saudi Arabia's vast oil fields, pumped for more than half-century, are in decline, raising serious questions about whether kingdom will be able to satisfy world's thirst for oil in coming years; energy forecasts call for almost doubling Saudi output in next decade and after, but capacity will likely stall near current levels, potentially creating significant gap in global energy supply; outsiders have not had access to Saudi Aramco data for more than 20 years but Saudi experts suggest looming problems; map; charts; Saudi Arabia is not running out oil, but it is becoming more difficult or expensive to extract; country now produces about eight million barrels daily, about one-tenth of world's needs, and is top supplier to US; average decline rate in mature fields is about eight percent a year.......
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And there is this interesting forecast of the possible consequences of more expensive gasoline in the U.S. We have built a way of life that makes a policy that mirrors the one Norway lives by, nearly impossible to implement:
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http://www.austinchronicle.com/issue...s_ventura.html
HOME: APRIL 29, 2005: COLUMNS AND FEATURES: LETTERS AT 3AM
$4 a gallon
BY MICHAEL VENTURA
America is over. America is like Wile E. Coyote after he's run out a few paces past the edge of the cliff – he'll take a few more steps in midair before he looks down. Then, when he sees that there's nothing under him, he'll fall. Many Americans suspect that they're running on thin air, but they haven't looked down yet. When they do ...
Former Federal Reserve Board Chairman Paul Volcker, a pillar of the Establishment with access to economic information beyond our reach, wrote recently: "Circumstances seem to me as dangerous and intractable as any I can remember. ... What really concerns me is that there seems to be so little willingness or capacity to do anything about it" (quoted in The Economist, April 16, p.12). Volcker chooses words carefully: "dangerous and intractable," "willingness or capacity." He's saying: The situation is probably beyond our powers to remedy.
Gas prices can only go up. Oil production is at or near peak capacity. The U.S. must compete for oil with China, the fastest-growing colossus in history. But the U.S. also must borrow $2 billion a day to remain solvent, nearly half of that from China and her neighbors, while they supply most of our manufacturing ("Benson's Economic and Market Trends," quoted in Asia Times Online) – so we have no cards to play with China, even militarily. (You can't war with the bankers who finance your army and the factories that supply your stores.) China now determines oil demand, and the U.S. has no long-term way to influence prices. That means $4 a gallon by next spring, and rising – $5, then $6, probably $10 by 2010 or thereabouts. Their economy can afford it; ours can't. We may hobble along with more or less the same way of life for the next dollar or so of hikes, but at around $4 America changes. Drastically.
The "exburbs" and the rural poor will feel it first and hardest. Exburbians moved to the farthest reaches of suburbia for cheap real estate, willing to drive at least an hour each way to work. Many live marginally now. What happens when their commute becomes prohibitively expensive, just as interest rates and inflation rise, while their property values plummet? Urban real estate will go up, so they won't be able to live near their jobs – and there's nowhere else to go. In addition, thanks to Congress' recent shameless activity, bankruptcy is no longer an option for many. What happens to these people? Exburb refugees. A modern Dust Bowl.
For the rural poor it's even worse. They are the poorest among us, with no assets and few skills; they earn the lowest nonimmigrant wages in America, and they must drive. When gas hits $4, their already below-the-margin life will be unsustainable. They'll have no choice but to be refugees and join in the modern Dust Bowl migration. So, too, will people who live where people were never intended to live in such numbers – places like Phoenix and Vegas, unlivable without air conditioning and water transport (energy prices will rise across the board, regular brownouts, blackouts, and faucet-drips will be "the new normal" everywhere). In the desert cities, real estate will plunge, thousands will be ruined, most will leave – while all over the country folks will have to get used to "hot" and "cold" again.
But where will the new refugees go, and what will they do when they get there? They will migrate to the more livable cities, where rents are already unreasonable and social services are already strained, and where the new refugees will compete with immigrants for the lowest-level housing and jobs. Immigration issues will intensify to hysteria. Native-born Americans will clamor for work that only legal and illegal aliens do now. In a culture as prone to violence as ours, that will probably get ugly.
Meanwhile, suburbs and cities will be in various states of chaos, depending on their infrastructure. As inflation and interest rates rise, and the real estate bubble bursts, millions will see their assets plunge precipitously. In five years, many who are now well-off will live as the marginal live today, while the marginal will sink into poverty. With gas at $4-plus a gallon, real estate values will depend on nearness to working centers and access to transportation. As has already happened in Manhattan, the well-off will head for what are now slums, and the slum-dwellers will go God-knows-where. Places with decent rail service will be prime. Places without rail service will be in deep trouble......
.........Railroads are key, but the question is: how to finance them?
There's only one section of our economy that has that kind of money: the military budget. The U.S. now spends more on its military than all other nations combined. A sane transit to a post-automobile America will require a massive shift from military to infrastructure spending. That shift would be supported by our bankers in China and Europe (that is, they would continue to finance our debt) because it's in their interests that we regain economic viability. What's not in their interests is that we remain a military superpower.
And that's where things get really interesting. The question becomes:
Can America face reality? If the government responds to the coming changes by attempting to remain a superpower no matter what, there is no way to underestimate the harm. The numbers speak for themselves. Soon we'll no longer have the resources to remain a military superpower and sustain a livable society that is anything like what we know today. It happened to England; it happened to Russia; it's about to happen to us. England sustained the transformation more or less gracefully; it lost its dominance while retaining its essential character. Russia is still in a period of transformation, but has remained a player thanks to its oil reserves. Europe in general – France, Germany, Italy, and Spain (all world powers in the fairly recent past) – is creating a post-national society, the most experimental form of governance since America's revolution. We have no appreciable oil, and we no longer have a manufacturing base. So what will the United States do? Sanely recognize its declining status and act accordingly, or make one last ignoble stab to retain its position by force?.............
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