The First Piece of the Solution as I See It (or, What Can We Actually Do?)

(Edited to note: This is not the post EB was supposed to be referring to. That post is actually linked here. This post is the first post I did with the monthly data...the other post linked above has more valid data and assertions...)

The chart below, from, presents data on the inflation-adjusted price of oil going back to 1946.

Oil Prices Inflation Adjusted
Originally uploaded by profgoose.

You will note that the peak price in the 1979 oil crisis was equivalent to around $95/bbl in 2005 dollars.

Last I checked the price of oil today was hovering at around $57.5/bbl. With this piece that's circulating today (hat tip:, the price will probably hit $60/bbl by the end of the week. $60/bbl, after the refinery time gap, should translate to about $2.60/gal. $95/bbl would roughly be equivalent to $4.50/gal. (of course that's a rough estimate, the market could push that higher).

A quote or two from that piece:

"Global oil producers will fail to meet rising oil demand in the fourth quarter, sparking oil price rises of up to around $60 a barrel, an Iranian oil analyst said Wednesday.

Mohammad-Ali Khatibi, director of the Tehran-based International Center for Energy Studies' OPEC research office, told the Pars news agency that OPEC and non-OPEC producers wouldn't be able to meet demand in the fourth quarter."

That means that the price, when it gets to $60/bbl of oil, will be 63% of what it was in 1979, adjusted for inflation. We don't know how good we've had it, eh?

So, there's a big difference between $60/bbl and $95/bbl. What we do with that difference and when we do it is going to be one of the crucial public policy decisions of the coming generation.

And the time to make that decision is not far in the future.

Now, granted, I was but a mere pup in 1979...but I do remember President Carter in his sweater. I remember my parents bitching profusely about gas prices (what were they, 50c a gallon?). I remember the lines of cars on television every night. It wasn't pretty. People were losing jobs left and right.

The real conundrum, in my opinion, is how to destroy demand so as to come in for a soft landing, even if we are heading towards a 1979 to the googol (ed: not google the search engine, and googol is the correct spelling as I just learned in the comments) power. (no pun intended, I assure you.)

I advocate taxing gasoline now. Abruptly. Quickly. Severely. Better to bend the shit out of the economy now than completely break it later.

If we were to somehow organize and convince Congress that a $1/gal tax on gas now would make their political futures brighter than the alternative. I maintain that's the first rational course of action as I've said in many posts on this blog.

Of course, our government as HO said below, can't even decide (as per today's New York Times) to set a goal in a bill to cut oil imports by 40 percent within 20 years! "Why?" you ask.

The first step to convincing anyone in elected office is demonstrating that there is a problem that, if not solved by them, will hurt them politically. If politicians can ignore something, they will, because it is politically expedient for them to do so.

The second step is finding politicians that actually think oil policy is in their purview (it is, from the conversations I have had thus far considered a "private and corporate" matter, not one for the public sector to regulate...and THIS is going to be a real problem if that mindset does not change...).

Remember, politicians, if they are anything, they are the ultimate in rational actors. That's why I have spent so much time talking about the tragedy of the commons and the governing of the commons.

As I said in the comments a few posts back...that's why politicians will wait to build the wolf trap until the wolf is at the door. The problem is that the stuff to make the wolf trap is out in the workshed.

We all know admitting that there is a problem is step one of twelve, the first step on a journey, yadda yadda.

This may be more difficult than it seems, especially for politicians (and that's from both parties...), as I'll illustrate when I discuss my (mis)adventures with my elected officials over the next week.

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Ah, yes, demand destruction. What we all need.

But doesn't this depend on whose ox is getting gored? The other guy needs to have his demand destroyed--for me, it is my livliehood, my family, my way of life. Oh, great. Is your next suggestion to get going on Matt Simmons idea to switch to railroads? That's demand destruction too for thousands of truckers and their families and the all the jobs the trucking industry supports.

PG, I'm not arguing against you. You of course are correct. But your idea and any idea that might cause the loss of jobs in any congressman's district is a non-starter. DOA! Look at the stink over closing a few military bases.

Gore the other guys ox. I need mine.


this is a horrible situation for the human condition. almost custom made for failure, unless we change our norms.

I guess that's my point, it is rational for all of us to react exactly that way, and even more rational for those who are elected by us to react that way...

but in the end, unless we all give up half of our ox to be gored, we're going to lose the whole damned thing, aren't we?

DOA indeed.

I seriously doubt that any substantial policy actions will be taken until the feces hits the fan. There simply isn't political support for such drastic action, and this will not change as long as the American people are clueless about the looming crisis. I suppose if Bush used his bully pulpit to educate Americans about peak oil, and started traveling via Amtrak One versus Air Force One to make a point (har har), the issue might actually get some traction with lawmakers and public. But that is not going to happen. This administration is committed to more oil use, not less.

I just hope that when this administration is over, the next president and congress will chart a course more along the lines of the strategy Lovins lays out in Winning the Oil Endgame, rather than an endgame of foreign resource wars and increased coal usage.

I'm hopeful, but not optimistic.

My response?

Keep growing food.

I've got my huge garden about 3/4 in, in spite of the hideous weather here in the Northeast.

If all goes well, I'll have enough onions, potatoes, squash, carrots and cabbage (sauerkraut) to last through the winter. Not to mention canned tomatoes and tomato sauce, canned corn, beans, peas, etc.


PG: It's true that we're in a serious conundrum with the idea of a gas tax. Certainly it hurts the lower levels of society MUCH more than the elite. What do they care about $4/gal for gas? But the single mother who has to drive from her one job across town to the other job is going to have to give up her car because she can't afford to fill it. And then she can't have 2 jobs. So now we have a situation that no politician, Repub or Dem, will support. The Repubs for obvious reasons, and the dems because it's too damaging to the lower class.

What we need to do is figure out a way to make all of the suburban parents stop driving their cars to accomplish all of those activities that they think are absolutely crucial to their child's development. Here's a great example of what I'm talking about (please forgive me for using this as an example, timna...) OK, obviously that isn't the only crucial group, but it's an example of the kind of non-essential oil use that we need to curb. So if we don't tax them, what do we do?

Well, nothing short of a cultural revolution, I guess. What if we really did have more buses and subways? First we'd have to build them, and then people would have to use them. Neither of those changes are as effective as an immediate gas tax. It's too bad, then, that we're going to be reduced to implementing the only measure that doesn't take forethought, and that even further widens the gap between the rich and the poor.

Personally, I think rationing is a better idea than a gas tax, since that hurts everyone "more equally". (Of course the super rich will still be able to get what they want.)

I hope that those of you who are talking about taking on your city governments never, ever forget why you wanted to do it in the first place.

The crisis is radicalizing,, not just that writer. Catton, whose book I'm currently reading, calls what we face a "predicament" because from an ecological pov what we face was predictable. Liu now sees this,, as he returns to topics he's better at.

To use the current metaphors, "we" (the uninformed masses and elites) will surely eat the seed for next years crop before "we" gore ourselves. Peak oil is only one facet of a multifaceted crisis. Those able to create powered down communities in viable bioregions before the severity of the crisis reaches its apex will survive because they learned and adapted--they will have gored themselves.

A valid question is, why do we want the federal government to take action when that whole power structure is a large part of the problem to begin with?

I'm reminded of the recent Yale poll that says 92% of Americans are worried about dependence on foreign oil and 93% want government to develop new energy technologies and require the auto industry to build cars and trucks that get better mileage. But only 15% thought increasing the gasoline tax was a good idea. So what's a politician to do who only looks down the road as far as the next election? And who's hoping for a large campaign contribution from Exxon or GM? Until we get a new administration and Congress, perhaps our best (only) hope is local.

Nov, Dec and Jan (06) hit 60 before coming back down to mid-59.

btw, feedburner RSS feed is not coming down to my aggregator, nor has it since Monday, 6/13 - I thought you had gone on an extended break - just now, I checked on the link, and seems to be blank - have you changed (but that url still sits behind your XML button), or is it something else?

Oh, now I see - just tried again and got this error message

Aw, shoot. There was some trouble retrieving the feed you requested.

HTTP Error Code: 500

Detail: There was a problem retrieving the feed: Error getting URL: 502 - Source feed is too large

What to do?
You may contact us to report the problem. Please include the feed address error code and message detail displayed above in your message to us, if possible.

You may also try your original request or action again in case the error was just a momentary blip.

Seems you need to do something about the size of the source.

I'd offer to help, but this stuff is totally beyond my knowledge base.

verrry strange. I will investigate. I think I may just have to trim what's on the front page.

yep. that's it. took the front page down to the last 12 days and it seems to be working now. thanks for the heads up.

There is zero chance of a raise in the gas tax. Indeed, as the price goes up there will be a move to decrease the gas tax. The only thing that will make folks of average or better means seriously think about changing their lifestyle is physical shortages. Otherwise, that is what the credit card is for. Fortunately, physical shortages are exactly what we will be looking at next year.

Zoowie - my aggregator lit up like an Xmas tree - thanks

Nov - 60.00
Dec - 60.40
Jan - 60.20

a/o 14:29

settle info will come through later

Every time I try to work dollar figures backward, to get a so called inflation correction, I never come up with the same numbers listed in posts pointing out the difference. Just wondering what kind of formula people are using to get this data.

The idea that high gas prices hurt the poor more than the rich is commonly held, but not exactly true. High gas prices hurt the upper-middle-class the most, proportionally, since they both drive the most AND drive the least fuel-efficient vehicles. Poor people (in aggregate) drive very little and drive 1980s and 1990s passenger cars (not Priuses, but not SUVs either).

Homophonic spelling note:
... googol = number = 10^100
... Google = search engine

M1EK--OK, point taken. Fewer lower-middle class people will be affected than middle-class people in that a smaller percentage of them own cars. BUT, I think it's still an important point that the lower (middle) class who are affected have much more at stake than the upper (middle) class. An upper middle class person faced with a gas tax may not decide to take frivolous trips to Target, the mall, the grocery store, and the bank just 'cuz, but the lower middle class person who can't afford the increase in gas prices may very well lose their jobs because they won't be able to get there anymore. Just because this is a smaller percentage of the population, does that make it fair?

I still think rationing is the way to go.

me: I've seen it both ways, haven't you? (plus, that's what my 7th grade math teacher taught us...)

I guess you're right! I stand corrected. It is googol. I will make the change and note it.

settle NYMEX

Jul - 58.47
Aug - 59.18
Sep - 59.73
Oct - 60.04
Nov - 60.27
Dec - 60.43
Jan - 60.40
Feb - 60.29
Mar - 60.17

all the way out - Dec 2010 (2011 settled early) - 55.10

I wonder if anyone has ever really been able to predict, plan for, and successfully weather a catastrophic crisis solely because they had such a darn good plan. Natural selection isn't based on organisms coming up with a jim dandy solution to some future environment. It is more based on chance, they happen to already have something handy that allows them to do better than some of their bretheren, have more babies, and change allele frequencies in the gene pool in favore of their own genotype. I suspect cultural evolution works in similar ways. Some people, most who don't even know it, already have the solution in the everyday cultural toolkit, and when oil is past peak, they will find that they and their own are doing pretty good, relative to others in the global village. Will these be those with large gardens, or with easy access to trains and good mass transit? How about some of the Pacific Islanders I know who still know how to build canoes, navigate by starlight, and plant taro... (though living on higher volcanic islands will be important there...)? Will urbanites be around at all in 100 or 150 years? How about gardeners in the Northeast? I think there is no way to predict, though it might make people feel better to try...

People can press for this or that policy change, but who is to say it will be the "right" policy? It may sound good looking forward, but until you are forced to cope with new environmental conditions, you cannot not know if the jim dandy solutions you happen to have are the ones that aid your survival or hasten your demise (bummer that!)

btw, I think the chart needs one note - according to inflationdata, it's only current through end of last year, and the final value is ~$43/bbl - in other words, it has already in 2005 climbed about one-third of the difference between the final chart value and the inflation adjusted peak - that red line on the right would be two black index lines higher if the chart were calc'd today, leaving only 3 index lines to go

I'm not good enough at graphs, but it seems to me there's an interesting story if this were graphed on a log scale - anybody out there good enough to do?

and here's the inflationdata crude oil prices table for anyone caring to do the log graph - yearly avg values - in the chart they used monthly, but they say

The above chart has changed from our previous chart. We have switched to monthly data from average annual data so you will get a bit more detail. In some ways I prefer the average because the monthly exaggerates the spikes.

A gas tax does not necessarily have to hurt consumers. The Carter gas tax proposals were designed to be revenue nuetral. My understanding is that a tax is levied on gas that is exqual to a cost of x dollars per consumer. Then x dollars is returned to each individual through a rebate or similar. This way, consumers don't pay any any more, but a price signal is created. Ths way if a consumer still uses the same amount of gas, they break even. If they use less gas, they pay less than x dolars in tax and earn an x dollar rebate and gain.

I believe it could be structured so that people lose out marginally at existing consumption levels but gain at 5% reductions and so forth. I am not an economist and don't recall all the details, but it can be done. Hopefully some other reader knows more than i do.


Jack your proposal has the disadvantage of applying logic to what will be an entirely emotion driven debate. The point is that the dynamic still exists that less than half of the population is prepared to except the fact that we are dealing with geologically imposed limits. The majority political party is bent on exploiting the sense in the population that there is no physical shortage or limits. That if there isn't enough of this stuff or if the price is too high, someone, some damn foreigners or environmentalists are screwing them. Human nature being what it is, it is always more attractive to blame someone else than to blame yourself. Than it is to blame your own life-style. That is why the deck is stacked in favor of those who argue, that it is the fault of those damn "government owned oil companies" in the Middle East and South and Central America. You know, the ones that are run by all those little brown people.


"I guess that's my point, it is rational for all of us to react exactly that way, and even more rational for those who are elected by us to react that way...
but in the end, unless we all give up half of our ox to be gored, we're going to lose the whole damned thing, aren't we?"


I hope you keep posting the rest of your 12-step program. Good idea for a world addicted to oil.

And don't let the nattering nabobs of negativism like me stop you.

Kill everyone now! Condone first-degree murder! Advocate cannibalism!

If the WCS or something like it unfolds, don't be too surprised to see at least a few people in the most distressed areas following Divine's advice.

What fatbear's linked average annual data shows is that we are already at 1980 to 1985 price levels. Now we are much more supply constrained than we were in 1980 to 1985. So my prediction -- the next year is going to be very interesting indeed. We have had an average price of over $48 for a quarter. that compares to 1980, 1983, 1984,1985. Only 1981 and 1982 were higher.

The average price for the first 6 months of 2005 is $51

Simple solution to the "regressive" gas tax:  rebate it as a deductible on Social Security taxes.

The average vehicle is driven something like 22,000 miles a year according to a figure I saw recently (could be bogus but it's within 50%).  At 25 MPG, that's 880 gallons of fuel per year.  If we added a $2/gallon gas tax at 25 cents/quarter over the next 2 years and raised the deductible on employment taxes to $1760/year over the same period, the average driver would be tax-neutral but everyone (except the rich, who aren't numerous enough to matter) would have a strong incentive to save fuel by whatever means.

Yeah, I know I'm fighting emotions with facts too.  It's a character flaw.

We could accomplish some amazing economies with plug-in hybrids and cogeneration, to the point of making the "shortage" look like a glut.  (Yes, I'm serious.)  But our policy-makers are dead-set against the regulatory and other changes which would let it happen, so we're going to suffer needlessly.

Engineer-Poet -

If we could convert the entire automobile and trucking fleet to plug-in hybrids tomorrow, yes we could avert the Peak Oil problem (for at least a while). However, physical reality says we can't do that; even with maximal government intervention and subsidies, it would takes months or years to retool the automobile industry to produce exclusively high-fuel economy vehicles, and even then it would be years before enough of these new vehicles were on the road and old ones retired to really make a difference in oil consumption. And that scenario ignores the inevitable economic disruption that would ensue as the automobile industry was administered in a command economy mode for a while.

If we had a decade until Peak Oil actually occurs to accomplish this, it might be feasible (given sufficient political will, which I haven't even touched on). However, if peak occurs this year or in 2006 (which may very well happen), there is very little to be done except to prepare (sensibly) for societal disruption and downsize expectations for the near- to mid-term future.

I was arguing that we should have been trying to produce plug-in hybrids instead of the pure ZEV's demanded by CARB.  That was in 1992; Detroit could have been putting out a few lines of such vehicles by 1998.  Had we started production as late as 2002 or even kept the PNGV on track instead of letting Bush cancel it, we'd be ready for this.

If we really needed to save fuel muy pronto, there are lots of people who own more than one vehicle who could park their gas-guzzler four days a week.  Throttle restrictor plates or travel limiters to minimize the economy impact of a lead foot would get maybe 10%, but could be put out there in maybe a month for cheap.  People could pump up their tires, sacrificing tread for fuel savings.  And of course they could cancel some of the lessons and stuff which they have to rush their kids to every weekday afternoon.

There are some people, perhaps 5%, whose driving only needs a range of 30 miles or so.  These people could go with electric retrofits of gasoline cars; if we got serious about it, a conversion industry could make it fairly cheap and standard.

Personal transport doesn't always need a car.  There's an invasion of sub-$2000 Chinese mopeds and 125cc scooters.  I'm told they get about 80 MPG; they'd save a lot of fuel in fair weather.

Grabbing the big benefits does require time, but I think there are a few measures we could take in the short term which would take the edge off; they'd work especially well if we had a president who'd look upon them and pronounce them good.

I can dream, can't I?

I won't disagree that there are a lot of ways to save fuel in a hurry; but (even given political will to do so), I don't see how any of them will be accomplished without:
1) Heavy government intervention
2) Large amounts of economic disruption
3) Emergence of black markets to get around whatever restrictions are put in place
4) And probably all sorts of other fun unintended consequences that I don't have the foresight to predict right now.

And all of the above will probably lead to massive popular discontent and social upheaval, which (depending on who is in charge) may lead to some level of political repression or worse.

As far as I can tell, the only real questions remaining are "who is going to get screwed for who's benefit?" and "what level of foreign military aggression will the U.S. engage in as the situation at home deteriorates?" With the present gang in charge in D.C. I am not optimistic about the answers to either of those two questions.

There's at least one other way, and that's to impose import duties or limits on Chinese goods.

It might be illegal under WTO rules, but the verdict would take time.  Meanwhile, Chinese exports would collapse, bringing the Chinese central bank's problem with non-performing loans to a head.  A collapse of China into depression would eliminate a lot of oil demand; end of the short-term problem.

yanqui, it's fine to refer to my site and my frustrations with the unending suburban driving. I was literally not expecting this lifestyle. In Israel, kids ride the bus - to school, after school to activities, home again, to the mall. Or there are shared taxis (sherut). Here, in the suburban midwest -- nothing. no taxi will take a child under 16. no bus. I really don't understand how this developed.

by the way, taxes on gas in Israel were much much higher. We were paying about $1/liter - more like European standards of gas costs, I think. In any case, cars are smaller (and taxed heavily) and far more people use and expect to have access to public transportation.

OK - I read them all....and nobody said a word about it.

In Oregon they are busy with a MILEAGE TAX trial. I mentioned it when this blog first got going.

Watch politicians to shoot for this, exempting commercial and possibly farm vehicles because of corporate interests, but not until it is too late.

This will thus only impact those people who are driving a lot of miles.

It will target the main source of federal revenue - middle class America. They have all but excused corporations from real taxation - we are all they can tax anymore.

Result? Rapid slowdown of the economy by virtue of reduced spending as gas takes precedence over typical Chinese consumer crap. No more buying a new car every other year, because that discretionary income cushion is now gone. "Hunker down" mode ensues, just as it did in the early 1980's.

There is little the average consumer-driven American can do but shut down drastically, because most are over-extended on the mortgage side or upside down on the auto loan side, the two biggest monthly payments. The domino effect will run through this sham economy like spit through a goose - many in the stock market are actually waiting for "something" to correct its basic overshoot that is too big for the crash protection accounts. Once the DOW falls below 7500 - there may be no floor.


(this is a big but...), I think the government will avoid doing anything and blame the other party or divert the public with some kind of crap like Iran invasion. MSM will play along - ANYTHING to keep people from understanding how fundamentally they have failed America. Anything to keep from acknowledging their failure and to prevent Americans from understanding that we are headed for a Second Great Depression, longer lasting and more severe than the first. This buys them time to figure out how to secure their money, get their exit plan together, and run for the hills. Washington KNOWS their policies are doomed, but they are trapped by the past - they must keep the debt bubble going or else.

I remember a Schwarznegger movie where Richard Dawson was a game show host. It was reminescent of Rome and gladiators - people, we are THERE TODAY! Think about all the "reality" TV and the over-the-top game shows.... Survivor, Real World, all the rest. The public is being actively diverted by these parodies of real life, just as the Roman emperors used the gladiators to amuse the Romans while their empire crumbled around them.

At the same time, news is being ignored, actively censored or misled by lazy reporters, and especially by allowing ratings to control what is reported. Nobody wants to hear bad news, so the ratings, reinforced by our own opinions, determine what we get to know about the world around us.

Only those of us active on the web have any idea of how bad it is. If you don't believe me, just ask a few people. I think you will be amazed at the real ignorance out there, as I was a few years ago.

If you arent' ready for Depression II, you have about 6 - 9 months. I hope I am wrong - this is crow I would love to eat. But we have waited too late, and been unaware of what government was doing for too long. Many factors outside the US can topple the applecart, and the government and Federal Reserve have extremely limited options. Status quo cannot be maintained much longer. It's not just Peak Oil, but PO is the big apple in the rickety economic cart. I have no idea if it will be an overnight thing or just a continuing slide, but we are at the lip of the precipice.

And if you think I am nuts - read the link karlof provided so graciously in his post. It outlines a lot of what us "Urban Survivalists" have been fretting over for the last decade. Liu makes no predictions, but the dots are simply not that far apart.

karlof - great link - Liu, in his element, is a joy, eh?

I don't remember any of the gas crisis problems of 1979 (lines, prices,etc) as being that inconveniencing. Not that we didn't know what lied in store 20-30 years down the road.

I find it very interesting that many decry the federal government, but then call for the same to impose solutions. At some point a realization must occur that the federal government cannot be relied upon to help the general public because its interest lies in helping the corporations that have usurped it. However, people power still exists at the local and state levels, which is where policies having an immediate impact can be swiftly implemented.

As for class-based economic impact, the service jobs performed by lower and lower-middle class folks are going to decline as discresionary spending drops. GM has already announced a 25% reduction in its production workforce. Corporations are shedding their pension plans in the hopes of remaining competitive. During the 90's, I observed "Clintonvilles," which are now called "Bushvilles." But almost all studies on the subject I've seen show the overextended parts of the middle and uppermiddle classes as having the most to lose--almost 30 million, a sizeable slice of the populace. Some may recall that I stated the fact that more people are now unemployed and in poverty than at the height of the Depression, when that amounted to "One-Third of the nation, ill-clothed, ill-housed, and ill-fed." They only axccount for one-sixth today, so they are easy to ignore, unless you're one.

In the end, the federal government could make a difference, but it would have to have a very different complexion--about-face-different--than the mess ensconced in Washington DC today.

karlof -

you asked in your earlier post if we wanted the FedGov to take action since they are the problem. You answered yourself nicely, btw, and I agree.

But would you agree, based on the world situation in general (not just PO), that it is basically too late for them to do anything other than postpone the inevitable?

The reason I ask is that I think discussing what comes next might be a good direction for FFB&B to go, provided you answer the above affirmatively...*grin*

Here is a very simple summation of the trap the government has gotten us into with respect to trade, credit and the dollar:

And here is one that is more detailed in historical explanation:

The "Inevitable." It's hard for Yoda to see the future clearly. As a selfappointed Dr. of Gaea, the prognosis is Overshoot, and humans are too weak to impact the Gaean forces unleashed to re-establish planetary balance. However, in some cases in some areas, overfishing the West Coast Salmon is one good example, regional solutions are solving regional problems by boosting natural recovery rates. The big problem in my view is the cities, especially the megacities of 10M+. For example, can the state of New York sustainably support itself and NY City in its current condition? Or Las Vegas, Phoenix, Los Angeles, can they be supported by their local bioregions? Etc.

I see the "Grapes of Wrath" visiting us by 2020 at a magnitude several times larger than the 1930s, but with no New Deal, as a so-called soft-landing. Some industrial areas related to what remains of O&G contain essential assets and will be saved somehow, until climate change floods them. A very good example of what is likely is Russia's experience under Yeltsin and Clinton. I don't expect any tech wizardry to bail us out. But I do expect current tech expertise to be used in designing various types of sustainable electrical generators and related transportation systems. My biggest question is, how will the people react? Part of the answer will relate to how well they're prepared.

We are the Ants; they are the Grasshoppers. Will humanity immunize itself against the curse of Cassandra? Will Odysseus save more of his crew this time around?

j--Since I don't know much about it--how do you enforce a mileage tax?

Mileage taxes are just a way for SUV drivers to push the costs of their environmental and pavement damage onto drivers of lighter and more economical vehicles.

Oregonians should be outraged.

There is no certainty about the future. Even in the Peak Oil camp many experts (for example Caltech physicist David Goodstein) predict that the peak will not hit until 2010 or later. Desperate actions now may be counterproductive.

In principle the markets can solve this problem. As they anticipate future shortages, oil producers will take steps to move oil production from the present into the future, when it will be worth more. This causes the price to go up now and cushions the blow in the future. It also motivates increased investment in alternative fuels, which we are certainly seeing in Canada at least with the nonconventional oil. This is the point I made the other day in comments here, that oil speculators seeking to get rich actually help the situation.

The big problem is government, but it's not a failure to tax us enough! The problem is when government works to keep the markets from functioning properly. If governments are hiding information that the markets need, then we can have problems. Maybe the Saudis are lying about being able to keep producing. If they were a private business, unconcerned with government regulation or coercion (either locally or from the U.S.) they would have an incentive to tell the truth. If their oil were about to run out, they would say so, the price would rise, and they would put more money in their pockets.

The best thing the government can do is not to raise taxes, it is to provide high quality information in areas where the markets don't have it. Use government resources like the CIA to report on the true situation with regard to Arab oil. Likewise for Russia and other countries where oil production is nationalized and not exposed to the visibility we have in the West.

Right now there is tremendous uncertainty. Nobody really knows when a peak will happen. We see widely varied estimates from respected experts. Some say this year, some say 20 years from now. Much of this confusion is due to governments keeping secrets. We should work to get the information out, then the markets can respond and we will have an efficient solution. Raising taxes is at least inefficient and potentially counterproductive.

You don't have a monopoly on truth. God didn't grant you omniscience. You could be wrong! Peak Oil could be much farther out than you think. The kind of crash program you are calling for could be exactly the opposite of what should be done if we had all the facts. The best approach at this point is to try to improve the quality of the information available, not make wild-ass guesses about what will happen and respond in a fit of panic to a worst case scenario.

Well H, you couldn't be more wrong. There was a recent study done by for the DOE that pointed out that because of the long lead time required to implement any effective response to this problem we had better hope that peak oil is at least twenty years off. If it is and we institute a crash program to deal with it today, we may be able to make a transition that is relatively effective. If the peak is ten years off and we start today, we will still be in for over a decade of severe economic dislocation. And if the peak is less than ten years away regardless of what we do, hold onto your ankles. So, the idea that we have the time to sit back and see how this thing pans out is flat stupid. What we are talking about doing are things that are logical and prudent in light of the fact that oil is a finite resource. Things like greater fuel efficiency. An awareness that we should design our growth so that we aren't as dependent on long commutes. A reinvigoration of rail transport. A focus on alternatives. All of these things make sense regardless of the timing of the peak. If you insist on sitting around and waiting for the market signal for the fact that the peak is upon us it will literally be too late to avoid the sort of doomsday scenario that seems so extreme when people like Kuntzler spell it out.

I posted the log-scaled inflation adjusted data out front, if anyone's interested.

Fatbear and Rajiv are right, it does have an even better story to's worse than we thought.

Engineer-Poet -

The idea of collapsing the Chinese economy would work just fine - if China wasn't the major buyer of U.S. debt (treasury bonds and such). Unfortunately, due to profligate spending beyond our means by both the American consumers and the Bush administration, we are now in a position where we are pretty much obligated to keep the Chinese economy afloat so that they may keep the U.S. Dollar afloat.

I don't personally think this absurd situation can be sustained for very much longer, but one never knows. I am fairly convinced that the U.S. will do nothing to shoot itself in the foot economically like your suggestion would.

If China stopped exporting to the US, there wouldn't be any need for the US to issue debt to cover the imports.  (Also, the WalMart juggernaut would suddenly get a lot smaller.)

The only downside of that is that the ChiCom leadership might start a war to divert public attention from their economic problems,  (These were created by the ChiComs themselves, corrupting the banking system by issuing more and more loans to money-losing state-owned enterprises; these loans will never be repaid and if the banking system fails to grow fast enough to cover them... POOF!)

Roy & E-P

We are joined at the hip with China, for better or worse. What happens to one happens to the other. It doesn't matter which symbiot blinks first, both go down in flames. The Chinese cannot afford a war - and we are spending 50% of our GDP on the two we have going.

When the US economy croaks, nations will liikely move to end dollar hegemony. That will be the straw that breaks the camels back, because the dollar will become paper in earnest. No way out as we do not have enough gold reserves to make a dent in our debt - we default again.

you guys got it backwards on the oregon "mileage tax proposal"....

since so many people in that state have adopted high mileage vehicles, hybrids, etc. - the state's transportation tax revenues have fallen off....

the state suggested the mileage tax as a way of maintaining the tax revenues...

every vehicle in the state would have a gps transponder that would report all the miles driven to some central data collection point....

this method also opens the door to constant monitoring of the state of where and when you drive...

you're exactly right russ...thankis for reminding me.

And you're VERY right on the monitoring issue. You would need to walk or bike to attend a meeting when you didn't want it to be known. How nice...

Outside of elected officials you have career civil servants charged with the development of policy options, scenarios and plans. My repeated dealings with these types have been equally as fruitful as encounters with politicians.

The planning department for which I work for was a clear example of this. They asked me to research what challanges or shortages the county would face over the next 20 years. I dutifully carried out the request and was met with:


No one had an interest in pursuing the matter and my marching orders were to more or less ignore the subject (it wasn't going to happen or affect us much or possibly be solved by someone elese) and plan to deal with more managable shortfalls, such as construction grade aggregate.

Any addressing of energy issues would only occur when there was a "real energy crisis out there."

A record of such a conversation was posted on my blog more than a month ago (old post)

Now I am being asked to present a new version of my presentation that focuses more on the managable energy concerns such as electrical or natural gas infrastructure pipelines and distribution networks. Discussion of the ultimate source of the electrons or methane molecules will not be permitted.

Most people are idiots, regardless of their position. No action is frequently taken until it is too late.

But as we know, planning during an emergency isn't planning.
Its called reacting.

By the looks of it we are even doing a terrible job of that.