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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (48035)	2/5/2008 5:01:50 PM
From: slacker711	Read Replies (1) \| Respond to of 541339

I'm generally against government intervention, but I suppose I don't oppose any basic research in this area. But most proposals go far beyond expanding basic research funding. I would go beyond funding basic research as well. Do you think if we reduced our use by 5.517 million barrels per day, or even 12.39 mbpd that we would import zero from OPEC? I don't. I think a reduced trade deficit would be a nice side benefit to a reduced consumption of oil, but it isnt the main point. As you say, oil is fungible and it doesnt really matter where we are actually buying it from. When I make statements like "we are funding countries hostile to us", it is more in the overall sense that our oil buying drives up the price and thus gives revenues to those countries...even if we never buy a barrel from them. My ultimate goal would be to reduce worldwide oil consumption, which would severely impact the price and thus revenues for oil exporting states. The fact is that the US is a large enough market to set both standards and trends for goods sold worldwide. The last time I looked, the cost premium for hybrids was around $3000, and much of that was due to the lack of economies of scale. The US market alone could subtantially reduce that premium....and the rest of the world would follow as the cost/benefit equation shifted towards hybrids saving money. Longer term, electric cars seem like a good solution, though we would likely need a big upgrade to our electricity generation capabilities. So what would happen with a large scale subsidy for hybrids? Well, any subsidy essentially distorts the market and transfers wealth from one group to another. In this case, American taxpayers would be paying car manufacturers, and in particular, hybrid component suppliers to ramp up volumes. The losers? Traditional engine component suppliers, oil companies and oil exporting nations. I can live with that. The underlying thesis behind my belief that this would work is the fact that oil demand doesnt change much with price. We have had a quadrupling of oil prices over these last few years and only a negligble impact on demand. If US consumption fell significantly, the rest of the world wouldnt see a commensurate rise in demand. Yes, all of the above would represent a drastic intervention into the markets, but like Kyros I dont believe that the external costs of oil are captured by the market. Slacker