I suppose it will seem that much more real as more people come to consider it as a possibility. How will people react after they get past denial? Will we be told to blame Iran or Saudi Arabia first? How soon before the hoarding starts?

The NYT published a commentary by Deffeyes a few months ago, so this doesn't surprise me that much.

The Washington Post seems a bit slower to jump on the bandwagon. Believe it or not, they published a commentary on Hubbert's peak 2-3 years ago. It caught my eye sitting on the dining room table. At the time, it struck me as a very interesting, albeit obscure and probably unsubstantiated theory. (I finally started to find religion in '04). I had not seen another peep out of the WP until the recent Simmons discussion. Hopefully they'll publish the Simmons commentary.

I heard Chris Farrell (Business Week) state on NPR this morning for the first time that:

"We should institute a $0.50-1.00 gas tax. This would help reduce demand and show that markets work. The tax would allow individuals to make decisions on how best to deal with higher gas prices. This would unleash the technical innovations that the U.S. is capable of and find alternatives to high oil as well as improve efficiency. The high price caused by the tax, even after demand is reduced and oil prices moderate, would show that the economy can cope with higher energy costs."

I am quoting to the best of my memory from the radio spot. The economists are finally starting to get religion on reducing consumption and simultaneously supporting alternative energy.

Weren't some prominent Presidential candidates saying we should do the above last year? Didn't they get crucified for suggesting this? Didn't they also not get elected?

As Prof G. says I think these are important signs from the mainstream. I hope it is soon enough to moderate the peak.

More signs from the mainstream also heard today on Marketplace Morning on NPR (sorry, I don't feel like writing a whole new post on this): California had their own "Oil Shockwave" simulation yesterday.

California sounds seriously freaked. One participant suggested that the military should reduce oil consumption to set a model for the public. They also discussed "poop power" (on air!). It's also interesting to note that when they did the same simulation in Washington a few months ago when oil was around $55/barrel, one of the scenarios they discussed was oil at $70/barrel, and even that wasn't good. And lo and behold, in August, here we are.

NC said: "The economists are finally starting to get religion on reducing consumption and simultaneously supporting alternative energy."

Geez, Louise. Can we PLEASE stop with this economist bashing nonsense???

How would people here feel if the economists (including me) starting mouthing off about how "All geologists have no idea how markets or pricing or taxation work"? I suspect I'd get hammered for that, and I would deserve it.

I would venture that the large majority of economists have been pushing for a reduction in oil consumption throughout their career. I have. Just because a very few nitwits with economics degrees get attention for saying stupid things does not mean they're representative in any way of the field as a whole.

I stopped denigrating economists when I read some of Grinzos posts. I think that the same thing holds true in his field as in others - if you aren't very good at what you do (old Dubya, for example), you go to work for the government and get into the "brother-in-law" system. I think the economists working for government, think tanks and such are just propoganda parrots - all you have to do is read their stuff to realize that.

I find that remembered quote from the NPR fellow pretty amusing. He says 'we' should institute a tax on gasoline and this would show that 'markets work'. No. It would show that government intervention in the form of a tax works. Which is to say that there is a place for government regulation and perhaps even control when the commodity or service being so regulated and controlled is vital to all citizens and to the common good. Maybe we'll even start hearing serious talk about national health care soon...

Don't know if anyone picked up on it but there was a reference to Peak Oil(taking it seriously and using the term in quotation marks) in an opinion piece in the Financial Times (or should I say the London "Financial Times") on Tuesday by George Magnus, a senior economic adviser at UBS Investment Bank. His tone is quite measured but you can tell he is worried.

I think I am going to move my tax post back up to the top today. I know it would kill the economy, but that's kind of the point...

Lou Grinzo

My apologies for any slight to your area of expertise. Clearly a poor choice of words.

My problem is that I have been getting a steady diet of 'The Markets are working fine' through all other media channels. Those include newspapers, magazines, financial advisers, and websites.

These other sources of information relentlessly explain how the markets are coping well with increased energy prices. Where is this information coming from if not economists?

There have been many informative discussions on economic theory at this site that run counter to the above general message. Your statements today taken to heart about not painting everyone with a broad brush!

Continue to educate us and explain why a more rational approach is taking so long to go mainstream.

I have issues with a tax, only because it would disproportionately affect those who could least afford to change. The infrastructure of our urban/surburban areas needs to change first; spend less on developing new highways and more on commuter rails and the neighborhoods that surround them. I just moved to the center of suburban sprawl on the east coast (central New Jersey) and I've found some great new urbanist nieghborhoods that are all located, you guessed it, right next to the train stations. Of course, there's a shortage of housing there. Conversely, I'm constantly bombarded with advertisements for the latest dormitory complex off the highway.

Just throwing a dollar a gallon tax out there will change a lot of lifestyles, but it a) will hurt more than necessary and b) most definitely result in a backlash against the government, which is the one actor large enough to steward necessary nationwide changes. Market forces can be efficient, but they are often extremely uncaring.

I don't know to what extent PO crosses ideological lines, but keep in mind that gas taxes are among the most horribly regressive. The only thing more regressive would be to tax food (and not restaurants) or rent. Obviously, you need to tax the fuels that are used in order to reduce demand, but the primary goal is only to alter consumption patterns, not raise revenue. Yyou'd have to join the gas taxes to payroll tax cuts in order to have a hope of limiting regressivity, although that might also keep the tax-hike "revenue neutral" and thus assist it's passage.

The alternative is imposing out-right tax increases on those making over $60K.

Silent E--Just a heads up that you're going to be criticized for that "gas taxes are among the most horribly regressive" remark. It's happened around these parts before. Read my now-ancient post on the topic (I tend to agree with you), and the comments to it (they're there even if Haloscan is registering '0').

ianqui - Nice Post.

I thought the most straightforward way to determine regressivity was to look at the proportion of income that goes to gas. The average person making 75K does NOT spend three times as much on gas in a year as the average person making 25K. And those gas costs will be passed on in higher food and consumer goods prices to poor people - again, do those making $75K spend three times as much per month on food?

I'm astoudned that anyone thinks the contrary.

Taxes will do nothing but allow politicians to control yet another slice of our lives and our wallets.

The government is big enough that it is the largest employer in the country - let's get real about taxes and what the government actually does with our money.

Silent E: Rent *is* taxed in this country because paying down a mortgage qualifies a person for a deduction, where as paying rent does no such thing. (This has helped encourage suburban growth and urban atrophy, part of the reason we're facing peak oil problems.)

This won't apply in rural areas, but here in New York City, most poor people don't drive cars, and hence don't pay gas taxes. Gas taxes strike me as very progressive, in that sense, though again, that won't be the case in rural areas.

But taxing gasoline would decrease demand, so sending our money to Washington instead of Riyadh generally seems like a good idea to me.

Larry Elliot, the economics editor and op-ed writer for the Guardian in the UK, mentions peak oil at the end of his article today. As the Guardian aligns ideologically with New Labour, I wonder whether his "coming out" mirrors a similar awakening in the party? One can only hope.

http://www.guardian.co.uk/print/0,3858,5265064-103677,00.html

"Finally, there's the question of what rising oil prices tell us. The emergence of China and India means global demand for crude is likely to remain high at a time when many experts say production is about to top out. If supply constraints start to bite, any declines in the price are likely to be short-term cyclical affairs punctuating a long upward trend. In those circumstances it would be the height of folly to assume that there will be no economic consequences or that there will not be an intense - perhaps even bloody - struggle for the resource that more than any other has shaped the modern world."

Interloafer - I think the progressive / regressive question would vary greatly by where in the country you look.

In my town, there isn't really mass transit. There are a couple buses (subsidized by state tax revenue). But 99% of the work force - including minimum wage workers, food service, etc - drive to work.

On top of that, our area is very spread out. Not sprawl like you see in Dallas or Houston, but rural areas where many folks easily live 20 miles from work and shopping. Adding bus or rail service would be cost prohibitive.

I know many people that spend $10 or more just to drive to work and back home each day in their car; there is no other way to get there and no job closer to their home for them.

Adding a $1.00 / gallon tax or similar would just push them that much closer to "not making ends meet." They would either require a raise to keep paying for gas (so the tax basically gets passed to their employer and eventually their customers), more credit so that hopefully "some day" they can pay it off, or quit working. None of these are attractive options.

NY Times article coming out is by Peter Maass

A Big Step for the MSM. Speaking of Matt Savinar, I found En route to $75 oil linked in at his site.

Larry Elliot also mentioned peak oil about a month back as also did Will Hutton in the Observer. David Chaytor MP's EDM 199 concerned with peaking oil supplies, mentioned on the Powerswitch website, had a fairly sizeable list of Labour names attached. I wrote to Larry Elliot trying to get him to address the consequences for the financial system of PO but maybe that is to come. What is strange in Britain is the continued emphasis on expanding the airline industry as well as the amount of new housing being built for executives. New labour do not get it at all.

Spooky, Interloafer

What about a revenue-neutral gas tax? Taxes gasoline more, and couple it with an income or payroll tax of opposite progressivity/regressivity?

As for regional differences, NYC is the huge outlier for public transit in the US. Only five other cities have urban heavy rail or commuter rail that carries a significant percentage of commuter traffic (Chicago, Washington, S.F, Boston, Philly). Only two of those systems were constructed in the last 30 years. Those systems cover less than 12% of the US population - and at that, a disproportionately richer share since urban and suburban rail commuters have incomes above the national average.

Most light rail is of recent construction with much lower ridership densities - that's why it's "light" rail. Most commuter rail systems outside the big six do not carry a substantial fraction of local traffic. And nearly all municipal buses, while affording an economy of scale, still run on oil. Thus, for more than 85% of America, transit is almost entirely oil-dependent. Gas taxes must be regressive.

Silent E,

I second the suggestion for pairing a gas tax with an income tax cut: say, increase the personal exemption sufficiently to balance out the gas tax.

It would be nice to use a small portion of a new tax for beneficial purposes, like alternative energy research, or deficit reduction, but that would make it much harder to pass a gas tax. Anything other than a revenue neutral, non-regressive package would be impossible to pass.

Not that such a package would be easy. But no one has really tried - I think the american people could be educated on the value of such a thing.