Proof the US has an energy policy and is moving in the right direction:
Fueling The Debate
Jerry Flint 05.13.08, 6:00 AM ET
It is clear now that the climb in oil prices is not over. We are already close to $125 a barrel, and $150 may not be that far away.
First, understand the United States does have an energy policy. The policy may have problems, but it is ambitious and moves the country in the right direction.
Let's start with conservation: The new fuel-economy standards being set by the U.S. Department of Transportation--35.7 miles per gallon for cars and 28.6 for trucks by 2015--must be the most ambitious targets ever set by anyone. I doubt they can be met, but you can be sure we'll make huge gains over current economy standards.
The country also has a target to produce 36 billion gallons of biofuels a year by 2022. That quantity would replace nearly a quarter of our projected gasoline consumption. Biofuels, particularly corn-based ethanol, are controversial now, but there are encouraging signs that we will be able to produce sizable quantities of biofuels from plant waste and other non-food materials.
The government is also encouraging the building of nuclear power plants to reduce the need for burning oil. Private industry is jumping in, particularly our auto industry, which is pushing hard to develop fuel-saving engines. Venture capitalists, sensing the "next big thing," are also pouring hundreds of millions of dollars into fledging energy-saving technologies.
That is the start of an energy plan. We should make sure that some nuclear plants get built, and as fast as possible. There is also no doubt we should push oil exploration, to the reasonable limit, on our own soil. I love the reindeer and polar bears as much as anyone, but I love my country more. And I find it hard to believe we think we can ask others to drill more on their soil when we won't drill in part of our own frozen tundra.
We should also rethink our tariff policy. We put a duty of 54 cents per gallon on ethanol to protect our get-rich-quick farmers (corn prices have more than tripled in two years). Let's get that duty removed so we can import ethanol from Brazil, where they make most of their ethanol from sugar cane, not corn. We will need all we can get.
John: this doesn't qualify as an ethanol posting!
And while we're at it, Raul Castro's Cuba is making some positive signs of opening up its economy. I was in Cuba long ago for The New York Times, and met Fidel Castro there in his heyday. I think there's a change coming, and we should encourage it.
Remember the "ping-pong diplomacy,"--the start of our rapprochement with China? I remember it well; I was the Times bureau chief in Detroit where the Chinese ping-pong team first arrived on its historic visit. Why don't we do try something like that with Cuba?
The Cubans love baseball. Let our New York Yankees offer to play an exhibition game in Havana. I'm not thinking politics; I'm thinking ethanol. Imagine all that Cuban sugar. We pay some baseball there; they release some political prisoners. We open Cuba to travel, and then we negotiate a deal--an ethanol refinery for their sugar. Again, it is something to think about as Cuba opens to new ideas and oil pushes past $125 a barrel.
All these things could help in the future, but I think it bears repeating that I do not think there is a shortage of oil today, or that we should blame today's problems on China's small but rapidly growing auto market.
Personally, I believe the weak dollar and speculation from hedge funds, pension funds and others, are pushing up petroleum prices. Let's find out for sure. I think there should be a thorough investigation of the petroleum market.
Strengthening the dollar means making our economy work. That means responsible budgeting, balancing the budget, and selling as much abroad as we buy. As for speculation in oil futures, there are ways to reduce this frenzy, just as there are ways to tamper down speculation in the equities market. If today's prices are largely due to excess speculation--and not to supply/demand forces--there is always a chance that oil prices will collapse at the end of the bubble.
What about gasoline taxes? The federal gasoline tax is 18.4 cents per gallon. Barack Obama is against the idea of a tax holiday, whereas Hillary Clinton and John McCain support chopping it down this summer to give us a break.
I am not in favor of the idea. We use that tax to build roads. I suspect that much of that tax break would not reduce prices at the pump, but end up in the pockets of gasoline retailers. In fact, I do not see the gas tax as a key issue, because it does not deal with the heart of the problem.
If anything, I think the government should raise gasoline taxes by five cents a gallon. Here's why: A penny tax brings in $1.5 billion or so. Five cents is $7.5 billion. Would anyone really be bothered by five cents more on $3.89 per gallon?
The money should be earmarked to build nuclear plants, because they would reduce consumption of oil, and we are going to need more generation capacity if plug-in hybrids and electric cars are ever to gain traction. |
