re: The current incentives contribute to more oil being produced (and thus more oil being used, because the larger supply helps keep costs from rising as much) but the effect is only at the margin. They are not the primary determinant of the price and usage patterns of oil. They are not enough to stop the long run changes as oil becomes more scarce (at least relative to demand, and eventually in absolute terms) and expensive.
Even today's prices are probably enough of an incentive to cut oil use (or reduce the growth in oil use in the places where it is growing fastest). Similar prices (in real terms, much lower in nominal terms) in the past have resulted in slower usage growth or even reduced oil use.
Again, good on paper. But the current energy bill, if enacted, would give even more subsidies to the energy companies, and encourage consumption over conservation. Digging the whole deeper.
re: But there is a lag before prices can stimulate production, and also a lag before people can change things to use less oil (invest in new more efficient machinery, buy smaller cars, or change their commuting patterns, ect.) There would be a similar lag if your plan was implemented.
Not much of one. Look at auto sales in the last month because of automaker incentive; very impressive. If people could buy a brand new Dodge Neon with a $4-$5K tax credit, I imagine you would sell a lot of those efficient cars and retire a lot of old clunkers.
John |
