A 1979 GAO Energy Report - A Template for the Future?
Posted by nate hagens on October 17, 2008 - 10:47am
With the dramatic increase in oil prices over the last decade, and even more dramatic dive since July, the perception for urgency regarding long term energy change is on a roller coaster ride of its own. As former Sec. of Energy James Schlesinger sums up "Americans have only two modes when it comes to energy - complacency and panic". Unfortunately, as financial deleveraging grabs center stage, we have shifted to full complacency mode, while simultaneously our long term energy situation is deteriorating rapidly. Changing our energy mix and more importantly, how we use it, has been relegated to the sidestage, as concerns about credit, jobs, and 401ks override. After all, crude oil is under $70 per barrel, and gasoline is cheap and plentiful. What's there to worry?
Below is an energy report from the General Accounting Office presented to Congress in 1979, (hat tip energymaven), followed by my own conclusion. After reading the GAO report (pdf warning), it becomes clear, almost painfully so, that we have missed a generation of opportunity.
This is the front of the 1979 GAO report. Click for larger image.
U.S. GENERAL ACCOUNTING OFFICE
WASHINGTON, D.C. 20548FOR RELEASE ON DELIVERY
Expected at 9:30 a.m.
Monday, March 26, 1979STATEMENT OF
J. DEXTER PEACH
DIRECTOR, ENERGY AND MINERALS DIVISION
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE
ON STANDBY ENERGY CONSERVATION AND RATIONING PLANSMr. Chairman and Members of the Subcommittee:
We welcome the opportunity to be here today. Our testimony today is based on
--the results of GAO work over the last two to three years in the energy conservation area as summarized in our recent report to Congressional Committee and Subcommittee Chairmen having responsibilities over energy programs (EMD-79-34),
--some observations included in our recent report on the energy and economic effects of' the Iranian oil shortfall (EMD-79-38) and,
--the results of our initial analysis of the energy conservation contingency plans and gasoline rationing plan submitted to the Congress on March 1 by the Department of Energy (DOE).
LACK OF NATIONAL ENERGY CONSERVATION PROGRAM
Before discussing the conservation contingency and gasoline rationing plans, let me spend a few moments addressing the Nation's continuing reluctance to develop an effective energy conservation strategy. Our reliance on crude oil imports has increased substantially in recent years and could reach 12 or 13 million barrels per day (B/D) by 1985. The current Iranian oil situation, which once again has jarred our complacency, is still only one of a series of events which underscores the importance of moving forward in the energy conservation area.
The world is likely to continue to experience periods of tight supply and upward pressure on prices in the next few years. The time is approaching when crude oil production capabilities will peak. While we now are faced with the need for quick actions to meet the problems created by the Iranian oil shortfall, we also must face up to the reality that we cannot continue to rely on short-term crisis management in the energy area and that now is the time to get our energy conservation act together.
We believe a strong, coordinated national energy conservation program cannot only mitigate the adverse impacts of future Iranian-type situations, but more importantly it would reduce the likelihood of oil embargoes being used as a weapon against the United States. Further, a strong conservation program is also needed to allow an orderly transition to renewable resources. Our February 13, 1979, letter to the Chairmen of Energy-Related Committees and Subcommittees highlighted the following three overriding problems which, in our opinion, must be solved before the Nation will achieve any significant level of energy conservation:
--A lack of specific planning and direction from the Government in the energy conservation area. In our June 30, 1978 report (EMD-78-38), we concluded that the Federal Government had not developed an overall energy conservation strategy for the Nation. While DOE generally agreed with our position, no strategy has been forthcoming.
--The absence of an aggressive, coordinated effort by the Government to conserve energy in its own operations and facilities. We have issued a series of reports on various Federal in-house conservation programs which show the lack of commitment by the Administration to aggressively pursue energy conservation within the Federal Government.
--The failure to develop, and have approved by the Congress, emergency energy conservation and gasoline rationing plans. While the Administration submitted such plans earlier this month, it took over 3 years to develop them.
We are concerned with the Administration's apparent failure to place any level of priority on the development of the contingency plans. As we pointed out in our earlier Iranian report, while we may be able to manage with the loss of Iranian oil production, there is virtually no more slack left in the system. The loss of any other major oil supplies could be devastating, particularly in view of the state of our preparedness to deal with supply interruptions. Recent events regarding the Iranian situation illustrates this point.
The U.S. has commited itself to reduce oil consumption this year by five percent, or about one million barrels of oil per day, as part of the International Energy Agency's response to the Iranian oil situation. But, there was no plan in place to achieve such a reduction. At this point, a wide range of possible actions are being considered. We were not able to obtain, from DOE, information on the specific proposals being considered because they are under consideration by the White House. Thus, we cannot respond to your specific request to comment on how DOE will manage the five percent cutback.
In our earlier report, however, we did comment on a number of possible actions which may be implemented including voluntary energy conservation measures as well as a number of actions designed to substitute coal, natural gas, and nuclear power for crude oil. Based on the information which has been available, we have reservations about the likelihood of achieving the energy savings which DOE has estimated for voluntary energy conservation. In addition, the possible fuel substitution measures being considered will require that many institutional and administrative barriers be overcome, which likely would limit this contribution for the next 6 to 9 months. (Attachment I contains a more detailed discussion.)
While we certainly would not play down the efforts needed to meet this current contingency, the fact remains that there are no DOE plans which could be implemented quickly if this country or our allies should suffer further supply interruptions. While we must deal with the current crisis, over the longer term emergency planning efforts should be focusing on the question of "What actions could be undertaken to deal with various levels of supply shortfall such as a loss of Saudi Arabian oil, or a loss of all OPEC oil?" The Nation cannot afford to be ill-prepared in the face of these potential threats.
STANDBY ENERGY CONSERVATION AND RATIONING PLANS
The Energy Policy and Conservation Act (EPCA) required DOE to prepare, for the Congress' approval by June 1976, standby energy conservation plans and a standby gasoline rationing plan. Once approved by the Congress, these plans would be available for implementation during a severe energy supply disruption or to fulfill U.S. obligations under the International Energy Program whereby member nations have agreed to share the burden of a future embargo or shortage situation.
The standby conservation plans finally submitted by DOE to Congress on March 1 consist of the following three measures:
--Weekend gasoline sales restrictions.
--Building temperature restrictions.
--Advertising lighting restrictions.
DOE estimates the total oil savings from these three measures to be 610,000 B/D. To implement and enforce these measures for a 9-month period would cost the Government about $16.4 million.
Our analysis of these three proposed measures indicates that while the plans have the potential for helping manage a future petroleum shortage, the extent to which the plans are enforceable or will achieve the level of savings DOE predicts is unclear. Also, implementation of the plans likely would impact adversely on certain industries. (Detailed comments on these plans are included as Attachment II.)
Regarding the proposed gasoline rationing plan, DOE recognizes, and we concur, that rationing is a very expensive measure to be used only in an extreme gasoline shortage. There is no such thing as a "perfect" rationing plan, as tradeoffs must be made to balance off (1) equity and (2) administrative workability and costs of implementation. In essence, rationing would be a $2 billion program designed to reduce long waiting lines at gasoline stations. It would not result in any gasoline savings, but would simply allocate available supplies among end users.
In its development of the plan, DOE has, in several instances, decided on provisions which are easier and less costly to administer over alternatives which might result in more equitable distribution of ration allotments. DOE is relying on the "white market" to correct any imbalances that may occur. Two instances which stimulated a number of adverse comments during the public comment period pertain to
--making gasoline available for commercial use, and
--matching up ration allotments and physical supplies of gasoline in all States.
Changes DOE made from an earlier version of the plan will result in commercial firms as a whole receiving fewer ration allotments than under the previous version. Public comments received on the provision strongly opposed the change, and DOE recognizes that firms will end up purchasing over $12 billion of additional ration allotments on the "white market." However, DOE believes the plan will be significantly easier and cheaper to administer.
DOE is aiso relying on the "white market" to match up the physical supplies of gasoline with ration allotments in all States. Because DOE plans to issue ration allotments based on a nationwide average, but will initially distribute supplies of gasoline based on historical State usage, nine States will initially receive ration allotments 10 percent or more higher than their supplies of gasoline, while 10 States will receive initial supplies of gasoline 10 percent or more higher than their ration allotments.
The "white market", however, will be a costly program for drivers in certain States. Drivers in States with historically higher than average gasoline consumption will purchase excess ration allotments at $1.22 per gallon from drivers in States with lower than average consumption rates.
Questions of equity are raised here, since 11 States would each have to pay out $10 million a month or more to maintain their gasoline usage at 20 percent less than normal, while 10 States could cut their consumption by 20 percent and still be recipients of over $10 million a month from sales of excess allotments. DOE recognizes these potential imbalances, but believes that trying to correct them would place a much greater administrative burden on DOE and make the rationing plan more complicated and expensive.
Another provision in the plan pertains to the manner in which DOE will distribute ration coupons to the public. Earlier work by us revealed problems with DOE's plan to primarily rely on financial institutions for issuing coupons to the public. The current plan has little discussion of this very important aspect of the plan. (Detailed comments are included in Attachment III.)
Overall, we are concerned with the lack of priority DOE has attached to the completion of the standby conservation and rationing plans. While changes have been made in the rationing plan DOE inherited in January 1977 from the previous Administration, we question whether over 2 years were needed to accomplish the changes. The conservation plans have remained essentially unchanged since 1977, except for some additional energy and economic analyses accompanying the plans.
Once the rationing plan is approved by the Congress, at least 6 - 8 months more work will be needed for further development. DOE's past record of slippage does not speak well for the degree of priority we can expect to be awarded completion of work on the rationing plan if the Iranian situation should ease.
Mr. Chairman, this concludes our statement. We will be happy to answer any questions the Subcommittee miqht have.
Attachments I, II, and III are omitted, but can be reviewed on a PDF in the original document, found here.
One part of Attachment of III is of particular note. It is called
Alternatives to Rationing
DOE, in a section on alternatives to rationing in its regulatory analysis of the plan, briefly discussed the concept of a gasoline excise tax. The excise tax would raise the price of gasoline to the market-clearing level, thus balancing supply and demand. The proceeds from the tax would be rebated to consumers to offset the burden of the tax. According to DOE the excise tax could be achieved with much less administrative complexity than a rationing plan. As a result, an excise tax would be implemented more quickly, would cost less, and would require fewer personnel to administer.
DOE has not pursued the idea of an excise tax further because the EPCA explicitly precluded any plan from imposing a tax. (emphasis mine)
Since the writing of this government report, the USA has burned 193 billion barrels of oil, and the world over 750 billion. Irrespective of how much is left, it is certain that what remains is 750 billion barrels less than it was in 1979, and that the oil that is gone was incredibly cheap.
It's a good thing we used the oil wisely.
Our current economic goal is growth, conventionally measured by Gross Domestic Product. As has been oft written here (and many other places), GDP is a poor measure of actual 'growth' as it includes items such as crime and pollution as 'positive' and does not account for negatives such as loss of ecosystems, and declining human well being. A more holistic measure of 'growth' is the Genuine Progress Indicator (GPI), shown in contrast to conventional GDP in the above graphic. Note that it peaked in 1979, the exact year of this report, while conventional GDP has nearly doubled.
It is time that Wall St, Main St and our government come together in the current crisis to address something deeper and longer lasting than this quarters earnings or how our 401ks are faring. This (temporary) price drop in oil is perhaps one of our last opportunities to invest low cost fossil fuels into building appropriate renewable energy that will create jobs now, and put in place infrastructure for basic goods (heat, electricity, and food) for decades into the future. Perhaps more importantly, it is time Americans became accountable for our ends, instead of focusing on the means - this will require the tough but necessary choice of using less throughput, especially energy. Though it may 'seem' unimportant given the current world situation, I cannot forsee a better time to follow some of the GAO recommendations from what was the energy crisis dress rehearsal of 30 years ago. We were warned.
Why didn't we heed the warnings? The easy answer is that gas became more available and prices went down. But bigger picture, there are numerous psychological tendencies operating that interfere with immediate 'good' long term reduction in energy usage: (steep discount rates, biased belief systems, relative vs. absolute progress, and habituation/addiction)
Though these are inter-related, here are some oildrum posts giving separate basic overviews of these phenomena:
Living for the Moment While Devaluing the Future (steep discount rates, impulsivity)
I'm Human, I'm American, and I'm Addicted to Oil (relative fitness and addiction/habituation)
Peak Oil - Believe it or Not (belief systems and biases)
A fifth, self-deception, is in progress. There is also the impact of technology on our brains
What COULD have happened differently in 1979-1980 or before, to circumvent the situation we find ourselves in with respect to energy? If you pinpoint that answer, would it apply today?
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A nice bit of history Nate. And couldn’t be brought up at a more appropriate time IMO. Many would say the US has not had a serious energy plan. Unfortunately, I would argue we have had a very deliberate plan which has never varied from its goals or application. All efforts have been made to maximize the use of FF to drive the economy forward. And the time frame has always been short term. And not surprisingly, in a time frame parallel to the election cycles.
I'll throw out the most obvious example to start the discussion: gasoline prices. Dramatic price reduction in just the last few weeks. Within a month we'll have a new President. What would be more appropriate to begin to mend the lost opportunities over the last 30 years but for him to announce his first act after being sworn in will be to institute a long term schedule increasing motor fuel taxes? What better time to do so as many Americans prepare to return to their usual consumption patterns. Perhaps we should start preparing a big online party to celebrate that coming day. Nate...you got enough party hats to go around?
Ummm... good luck with that... have you been around long enough, or read enough history, to recall what happened to Bill Clinton? He tried a little itty bitty 7¢ motor fuel tax, and (along with other things) it became a huge gotcha issue that helped propel Newt Gingrich & Co. into office and reshape the political landscape.
If Social Security is the third rail of politics, gasoline is the other third rail. And you're going to need a hell of a lot more than 7¢ to change anything materially. Will the new president really desire to electrocute himself?
Just sayin'
Hell Paul....I go all the way back to Carter when he was ridiculed for making the same suggestion. I can even go back to a time when one particular oil cartel limited production in order to keep prices up. Their goal wasn't to inspire conservation but to just maximize the value of oil. But, it did put pressure on conservation anyway. They effective set the amount (the "allowable") of oil any company could produce. If a company had a well capable of producing 1000 bopd and the allowable was set that month at 30% they could average no more than 300 bopd for that month. If they produced more they would be subject to both civil and criminal charges. This cartel effective controlled the price of oil well into the 1960's.
BTW, the cartel was the Texas Rail Road Commission. They're the state regulator of oil/NG production. And the "allowable" system is still in place and is still the law. Since the development of petropower in the Middle East the allowable in Texas has been set every month at 100%. The TRRC could, in theory, reduce the allowable any time they choose. We’ll hold our breath for that move also.
More, we have had a policy of assuring that the largest oil producer feels comfortable, with lots of fighter airplanes and such. They then cooperate to make it difficult for a single other actor to produce the same effects as what we once faced. We have looked to geopolitical manipulation to deal with oil. We have not done as much as we should to deal with a geological rather than political energy crisis. But, we are seeing pretty astounding fruits of the research efforts started in the seventies. Fusion is not ready but wind and solar are really taking off. Are they in time? In some ways the answer has to be yes because these are the things that can scale. In some ways the answer has to be no because we are going to see rationing in response to fossil fuel supply constrains that a more dilligently followed energy program would have avoided.
With a bit of leadership right now, we can respond to the falling oil price to keep pushing it down, not to party, but to ease the cost of our transition off of oil. We need to reduce consumption. We can do it the cheap way or the expensive way but it is going to happen. http://mdsolar.blogspot.com/2008/06/oil-is-too-expensive.html
Chris
Are they in time? This is an interesting question. Before we answer we need to ask are they in time for what?
I think we should strive to understand what the goal should be. There is a pervasive expectation that any new energy source should replace FF at their current level of usage. If we fail to to that, the expectation is we will revert into some third world economy or worse.
But on the other hand there is an equally pervasive frustration at the inability to get the normal North American to reduce his energy usage. There is a limit to growth and one one them is the limitations on renewable cheap energy sources.
These two pervasive ideas appears to be inconsistent. How can you maintain the current energy usage level, get the North American to conserve and build a sustainable economy all at the same time?
I am tempted to think that the goal should be to implement sustainable energy sources that meet what society needs, not what society wants. This means we figure how much energy is required after wasteful activities are optimized away and set this as the target. Then once we descend the terminal decline, society has to adapt to whatever energy remains available. If the production is sufficient we end up with an industrial economy that has been optimized to a sustainable energy usage level.
This approach would help with a lot of hairy issues:
- How to get the normal North-American to conserve.
- How to scale down the peak oil mitigation problem to a more achievable target
- How to build a society with sustainable energy usage
- How to make sure the post-peak world avoids descending into the MadMax hell
I also think it is so hard to implement sustainable energy sources at the current FF scale, a reduced level is going to be what will be achieved anyway. The question is whether there will be enough new energy production to sustain an industrial economy.
Very well stated that, for whatever reason, it seems that the average North-American doesn't want to conserve. My understanding is that in the late 70s (I was just a wee lad back then) there was an enormous conservation effort and that it was successful. So, it can be done. We just need to get back to that mindset.
I think that a large part of the problem is that the average person has no idea how electricity is made - that for most electrical generation (coal, natural gas, oil, and nuclear) fuel is used to boil water and the resulting steam spins the turbine of a generator. If they knew this, I think that they would be more likely to conserve (electricty at least), because they can imagine, picturing in their minds, the fuel being used/burned and the polution being created to boil water.
If you don't believe me, try this. Go around your office, your group on non-T.O.D friends, your church functions, asking folks, "How is electricity made?" You'll be shocked by how many people can't answer it. Another fun question is, "Can electricty be created or destroyed?" A lot of folks answer "No," confusing the basic concepts of electricty and energy.
Man, we need a serious eductional-upgrade of the average person, IMHO, before conservation will be done out of principle. Of course, prices of electricty will eventually get high enough that there will be conservation anyway.
I was speaking in the context of how people were thinking at the time. They were aware that fossil fuels are finite and started research into alternatives. The research was supported at a level that would provide the alternative at the time it would be needed. Fusion was considered the main thing. It is just that we are running out a little sooner than planned at that time.
Chris
- How to get the normal North-American to conserve.
It appears that they respond well to lies and/or fear, so maybe that's worth a shot!
By coincidence we had our weekly company luncheon today and the general mood was cheerful and upbeat. People were all commenting that the worst was over! The number one thing that everyone seemed to be heaving a collective sigh of relief over, was the fact the price of oil and more importantly the price of gas was plummeting with no bottom in sight! Party on dudes...
As a person reads through this report, one can't help but thinking the devil is in the details. Gasoline usage varies greatly by state, largely because of distances people need to travel. One of the questions is how one adjusts for this.
The part I quote below from Appendix III (not included above) indicates that Wyoming is the state with highest per capita use, but would receive ration coupons at just the average rate for all states. Wyoming is also where a lot of our coal and natural gas comes from. If the allocation scheme doesn't give workers enough oil (or businesses enough oil), we could see the shortage in oil spill over to shortages in coal and natural gas. Ouch!
One aspect of a rationing plan that could truly generate a state's right battle is royalty oil belonging to the various oil producing states. I don't have the details in front of me, but the state of Texas owns a considerable amount of oil producing mineral rights especially in those old fields out in west Texas. The revenues from these royalties fund a significant portion of the state's high education system. But more to the point: typically royalty owners have their share of the production sold by the operator acting as their agent. But that royalty may also be taken in kind. Thus Texas (and I assume La, OK, MS, Al, WY, Cal et al) could take a significant portion of US oil production and direct its use as they so desired. For instance, perhaps Texas would deliver their royalty oil only to refiners (many of whom operate in Texas) if the refiner pledges to only market the products within the state.
Now wouldn't that ignite a blood mess?
It sounds like you are talking about states circumventing the rationing system.
Since states have the right to tax production (in money or in a % of produced amount), it sounds like it might be possible. Depends on how strong the US is in overseeing any rationing. I'd think you would need a pretty strong top-down approach.
Gail -- I'm not talking about a state working a tax angle in the rationing scheme. The oil I'm talking about actually belongs to the state. They purchased those mineral rights long ago. The status of those rights is no different than the royalty rights the Feds own in the OCS. The state can take physical possession of all that oil and do as it wishes with it. Somewhat similar to the Colorado River water right Cal purchased years ago. I doubt Cal would accept the Feds coming in and giving that water to AZ, for instance, regardless of how "fair" such a rationing plan would be.
On the one hand, I don't think such actions are guaranteed. But I've been in Texas for almost 30 years and have a good handle on state politics and general public sentiment towards the Feds. In a truly catastrophic long term shortage situation (a true nightmare scenario) I can honestly envision an armed conflict if it came to it and neither side back off. That may sound absurd to some but come on down and spend some time here...might change that thought. I’m really not being a doomer. I just really know the folks down here. It’s not just an old joke: many here think of themselves as citizens of Texas before they consider themselves US citizens.
Rock
do you remember in the energy crises in the 1970s some Texas and Louisiana politicians saying something to the effect 'well we don't HAVE to sell our gasoline to other states. it is ours after all.."
I remember reading about that buy can't find link...
Nate -- I'm sure it was said numerous times back in the days of "Let Them Yankees Freeze in the Dark" bumper stickers. And here’s a link with a bunch of Texas political tongue wagers:
http://www.barrypopik.com/index.php/texas/entry/let_the_bastards_freeze_...
The thought wouldn't be so disturbing if I didn't really see the potential for such a conflict. Until the recent economic meltdown and the prospect of OPEC becoming (MAYBE???) an effective cartel I couldn't imagine a scenario where it might come to that sort of conflict. Are you in TX? If so you may understand that long standing and somewhat buried resentment towards DC that many here harbor. The conditions that Texas required the Feds (both factual and urban legend variety) to accept before voluntarily joining the Union is well known by most native borns. I've been here for 30 years and am still considered as a TBC...Texan By Choice.
Folks...I do kid around here a lot...just my nature. But I really am concerned about such a prospect if the SHTF really hard.
Actually the most popular bumper sticker was, "Let the bastards freeze in the dark." This was in reference to most of the natural gas produced in the state being obligated to be sent out of the state to the midwest. They were everywhere including one on each of my tankwagons and employees' cars.
Now that I think of it, this may be the reason Matt Simmons puts together maps of energy resources by states, and figures out which states are importers. Georgia and Florida do pretty badly. Florida, Louisiana, Wyoming, and Kentucky do pretty well (from memory). I am sure there are others too.
If there is ever a cheese shortage, I'm in good shape...
You live in Tillamook?
Kidding
I always hate this argument and I want to call BS on it. The "I can't get to work because I don't have my car!" cry is really pathetic. A truck or SUV or even a reasonably sized (by today's standards, although not actually reasonable - still WAY too big) sedan is the only way to work? My blood is boiling just thinking about it. People will get to work, because they need the money to survive.
No car? What, they can't walk? Ride a bicycle? Get a high-milage vehicle? Car pool? Use public transit? Move closer to work? What a bunch of nonsense.
I know, I know. You'll counter, but this is Wyoming! We have wide open spaces with many miles to cover. Again, I argue that car pooling, getting a high-mileage vehicle, or cycling are workable solutions. I can even imagine scenarios once fuel is really scarce where you comute to-and-from work just once a week. Go to work on Monday, live in a campground at the coal and gas mines/worksite, and go home on Friday.
In short, my point is that the nation will never be held hostage by a shortage of workers because those workers can't get to work. When put between a rock and a hard place, people will do what they need to do to survive. A lot of people don't think that they'll never garden, but they will. People don't think that they would ever take public transportation, but they will. People think, oh I couldn't possibly ride a bike 20 or 30 or 40 miles, but they will.
When I visited Wamsutter, Wyoming, where the BP tight gas facility is, I could not believe how empty it was out there. It is in the Red Desert. The vegetation is mostly sage brush. The nearest grocery store was 30 miles away. A trip to the doctor or to a Walmart was 70 miles away. Some workers commuted 70 miles to work each day, for this reason.
BP put up a dormitory where workers could stay, because it is so hard to get to. I stayed in one of the rooms there. It provides everything including a bed, a bath (down the hall), cafeteria food, laundry service, internet connection, and recreation for workers. OK for singe folks, or those staying a short time, but not great for those with families.
Johnathan wrote
"When put between a rock and a hard place, people will do what they need to do to survive."
Here here... commuters should stop whingeing and buy a scooter. It's what I did. If you live in a cold climate buy a custom made waterproof blanket which attaches to the trailing edge of the front fairing - keeps the weather & splash off the legs and lower body. As widely used in Northern Europe. (not sure if these are available in USA yet)
Based on what I get from my Honda SH125i, a modern 125cc 4 stroke scooter should give about 100mpg (Imperial) or up to 125mpg if driven gently.
There is a whole group of workers and professionals in the energy sector, public transport, rail, hospitals, vet services, pharmacies, water & sewer, security and many other public services and utilities where shift work is common and where preferential fuel allocations are necessary to maintain the current level of service and maintenance.
Well, except that we were almost immediately unwarned. The crisis ended and nothing much happened for the "next few years". Indeed, for not just a "few years", but for the next 20-some, there was an ongoing oil-price crash during which a good bit of the supply chain 'rusted', as Simmons puts it. Frivolous travel, and much else, became ultra-dirt-cheap.
As we can see with the unwillingness to spend even the most utterly trivial sums on attempts at fusion power, political time frames are very short in democracies. There is no long-term feedback: politicians come and go like mayflies. I suppose that in principle, we could lengthen the time frames by going back to hereditary monarchy, but even that's quite unreliable as it depends on the mind-set and even genetics of just one individual. Oh, well, que sera sera...
PaulS is exactly right, the next few years changed after 1982, when energy prices dropped, inflation adjusted, back to the lowest levels seen since WWII for the next two decades.
This points to the problem of being too shrill too soon in your warnings. It absolutely undercuts the message, which may be essentially correct in fact but wrong in timing.
Interestingly, somewhere around my house I have a very large report done at about the same time by the Department of Transportation on the future of energy use and technology in transportation. It was not nearly as hysterical as many other reports of the time and therefore has been much more accurate. It predicted, much to the disappointment of fans of electric cars and "hydrogen cars" that we would continue for the next several decades with gasoline cars, some Diesel but not a lot, but a lot of refinement such as overdrive transmissions, more advanced fuel injection, and all around detail improvements. It went on to predict that the really advanced stuff such as hybrid drivetrains, and advanced battery electric cars would not occur until after the turn of the century (2000). In the long view, so far we are running about on schedule.
RC
I notice that the report points out that an excise tax would be easier to administer than the rationing plan. You can read a little bit about the rationing plan here: http://www.osti.gov/energycitations/product.biblio.jsp?osti_id=6307185
One thing the report does not consider it the amount of revenue the government would need to handle if an excise tax were used. If we want to see a reduction in gasoline use that assures significant spare production capacity, we may need to cut US consumption by 20%. This assumes we are the only ones trying to cut consumption. A tax that can cause that level of cut might be $15/gallon. That makes a revenue stream of $1.7 trillion annually. This is so large that one might be tempted to replace some other revenue source with this money. However, one would want to keep cutting consumption do deal with further depletion of the resource so this revenue source is transient. Programs that require a steady stream of obligated moneys could thus be destablized and destroyed.
While the adminstrative costs of the rationing plan might be higher, the revenue transfer is kept between private parties and is held to the area of energy use. Once consumption reductions are completed, the program ends gracefully.
More thoughts and discussion here: http://mdsolar.blogspot.com/2008/06/oil-is-too-expensive.html
Chris
Thanks,but I don't think it was THE Energy Maven!
Now that you have changed the credit,which comment do I take a bow for?
sorry - there are 2 energy mavens. one in CA and one in Ca...;-)
The one in California alerted me to this GAO report - but we value your contributions as well...
Gosh,don't reveal any more.I'll lose my mystique!
One way that we have shown complacency is in failing to fill the position of the Adminstrator of the Economic Regulatory Adminstration. This is a position that is appointed by the president and confirmed by the senate according to law: http://www.law.cornell.edu/uscode/42/usc_sec_42_00007136----000-.html
This is the section of the government that would put a rationing plan into action. Given the limited rate at which the SPR can be tapped, not having the position filled is a great dereliction of duty on the part of the president and a huge failure of oversight on the part of the congress. With the position not even filled, there is not even a person you can say is doing a heckuva job.
Chris
It seems to me that setting up a rationing scheme would require a huge amount of advance planning. It would be extremely difficult to do right. Some of the details that would need to be worked out include the following:
1. If a system is set up to allocate gasoline, who gets the gasoline? Is it decided by who is a licensed driver, or who owns a car. If it is based on who is licensed, people would hurry to get their 16 year olds licensed, and make sure that great grandma in a nursing home keeps her license. If it is all car owners, is the allocation the same, as long as a person owns at least one car? If this is the case, any person with multiple cars would sell excess cars to family members to even things out. Joint ownership of cars would add another wrinkle.
2. Assuming one figures out who is going to get the gasoline, the next issue is how one actually takes care of the physical allocation scheme. If one uses coupon books, the coupon books will be pretty easy to counterfeit. They will also be easy to steal. An electronic card reader would be neater, but it would require a whole set of software and hardware to be distributed to dealers. Electronic card readers wouldn't do away with fraud wither--all one would need to do is reprogram the cards, or reprogram the machines. Think about the problems with the electronic voting machines, and this would be much more complex.
3. Is everyone allocated the same amount, from the 16 year old who rarely drives, and could walk to school, to the natural gas worker in Wyoming, who must drive 30 miles to the nearest grocery store. If everyone gets the same amount, the allocation per person will be very low. There will need to be a way to get the 16 year old to sell his/her allocation to a person who really needs it. The 16 year old may become rich in this process. If the price is just say, $2.00 a gallon, the teenager may choose to keep his allocation, rather than sell it to someone else.
4. How do you get the allocation booklets or cards to everyone? This proposal was talking about using banks. To do this, the government would need to set up contracts with banks and pay them for their services. The government would also need to supply banks with lists of eligible recipients, and somehow people would have to be notified as to which bank they were expected to drive to to get the booklets.
Banks strike me as very strange intermediary. US mail might work, but there might be a problem with theft. Another possibility is something worked out through state motor vehicle licensing departments. But would recipients be expected to drive 100 miles to get their booklets, in states with low population density?
5. If people are expected to trade allocations through a "white market", how would all of this work? Would there be an e-Bay equivalent, where one looked to see who one could trade with? What would people without computers do?
6. How would one deal with all of the gasoline used for commercial purposes (sales people, people using cars for work) and emergency equipment (ambulances, police) be handled?
7. Quite a few cars use diesel. Would they be completely exempt from the scheme? How would one divide up diesel?
As I think through the problems and the amount of effort required to develop a plan that would work even moderately well, I doubt that rationing will ever happen. There is just too much time and effort and cost that would have to go into the plan. The government would never take the necessary steps in advance.
who gets the gasoline?
IEA guidelines for member countries (of which USA is one but opted out of this guideline), if there is oil shortfall (I believe 5 million barrels globally) from peak, then there are odd even driving days depending on your license plate, etc. (mandatory curfetws)
I used to have this document but now can't find it - not sure if they changed the rules, or if it's just not public anymore.
No problem Gail. Since it would be an emergency situation they would just let FEMA handle it all.
Gail, you are most emphatically correct about the difficulties of rationing gasoline. The late economist John Kenneth Galbraith was involved with price controls and gasoline rationing during World War Two. According to him, at least half the gasoline consumed in the U.S. evaded the rationing system during the final years of the war. Black markets were rampant. Farmers and others who had large allotments "gamed the system" by selling their excess gasoline to those who wanted more than their basic ration entitled them to.
Haven't seen you for a while. Good to see you back!
Thanks, Gail. Your articles and comments are among my favorites. Maybe someday you could do an article on how we might deal with the chronic, severe, and worsening unemployment that will be caused by delining net oil exports.
Traditionally, we have looked to economic growth in real GDP of about three percent per year to provide enough jobs to keep the unemployment rate down. No growth means increasing unemployment. Decline in GDP (as during the Great Depression) means massive unemployment.
I think most of the worst pain from peak oil will result from rising unemployment. What do you think?
"I think most of the worst pain from peak oil will result from rising unemployment."
Amen and I second the motion for a feature post on the subject.
P.S. Don I taught beginning sailing in el toro prams on the Monterey bay for many years. IMO its the best way to teach people the subtle difference between going where ever the wind blows you, and using the wind to help you get where you wish to be.
I mean both literally and metaphorically.
Cheers!
Can you provide a link or reference for Galbraith saying 1/2 the gasoline evaded the ration system.
That looks wrong.
Here's a link that say the government admitted to 5% of domestic gasoline in WW2 was blackmarket and some observers think it was 15%.
http://www.celsias.com/article/global-warming-hitler-wwii-rationing/
It was on television, a series of programs about World War II some some dozen or fifteen years ago on PBS. They had several minutes of Galbraith speaking because of his high position (at a young age) in the part of the government dealing with price controls and rationing.
I don't think it was "The World at War" series, but it might have been.
Of course the official line during the War was that gasoline rationing was fair, efficient, and working quite well. The reality was quite different. Black markets in gasoline thrived by 1944. From the 1970s I remember some black markets too--friend of gas-station owners coming at midnight for special fillups even when the station was supposedly out of gas.
I will try to find a link or a more specific reference to the Galbraith comment.
The TV series was "The Age of Uncertainty," based on a book of the same title by John Kenneth Galbraith and first aired in 1977. Probably this series is available on videotape--perhaps available at some libraries. Or the quote may also be in JKG's book "The Age of Uncertainty," though I don't know about that.
I trust JKG's anecdotal evidence over the official government estimates, because he was in a place to know just how well rationing was or was not working. Apparently gasoline rationing worked fairly well in 1942 and into 1943, but as the war went on people kept finding more ways to circumvent the system.
"I trust JKG's anecdotal evidence over the official government estimates, because he was in a place to know just how well rationing was or was not working."
Don, there is another anecdotal source, but the number of them are dwindling rapidly, that being the folks who lived through WWII. They are fascinating folks to listen to!
I knew several old men in my home town who would still name names about who had gamed the rationing system in WWII, and many of them were among the wealthiest and most well connected families in town!
What many folks didn't know at the time of WWII was that the U.S. never suffered from any real critical shortage of gasoline, but the gasoline was rationed to conserve tires because the rubber plantations in the far east were in Japanese hands. I have heard old guys say the excess gasoline was hauled out to sea and dumped. I don't know if these stories were true or not, but when these stories made the rounds after WWII, many people were furious, and held it against the Democrats. I knew a number of local Republicans who young in the WWII period made up their mind and joined the Republican party in that period, despite FDR's percieved great leadership during the war. Some of them rose to high levels in state politics.
Rationing can be made to work IF the authorities policing the rationing are willing to use brute force to stop black marketing and the use of connections to get around the rationing, i.e., willing to open fire without mercy on those who break the embargo.
RC
Aside from the logistics, I think the social aspect should not be overlooked. People simply will not accept rationing unless there is some kind of external force causing a shortage. I think people will endure a great deal of hardship if the government can point to a reason: war, hurricane, whatever. But it is naive to think that the populace would accept rationing in the absence of an external cause. "Peak oil" isn't an external cause sufficient to explain the need for rationing to most people -- to most everyone, it's a just crackpot theory -- same with global warming.
There is absolutely no way that rationing prior to crisis will be accepted. It might be accepted post-crisis, but no chance before. At best, a rationing plan would instigate a huge "vote the bums out" campaign. At worst, widespread disorder.
I agree with everything you said - I wish it were otherwise.
Rationing in WWII was much easier than it would be now -- there were only 31 million registered cars and 131 people in 1940, now there are over 200 million cars and 300+ million people. Sprawl in 1940 was virtually non-existent. Public transit, trains, ferries, street cars, and buses were far more abundant.
Below is a summary of the "Standby Gasoline Rationing Plan", June 1980 U.S. Department of Energy Economic Regulatory Administration Office of Regulations and Emergency Planning
http://ntl.bts.gov/lib/12000/12200/12291/12291.pdf
This report details how gasoline would be rationed, the way allotments will be distributed, how to allocate rations to private individuals, what share motorcycles/mopeds will get, hardship needs, etc. Agriculture will receive what it needs from the outset, what remains afterward will be divided on a state-by-state basis. "Ration coupons that have not been redeemed will be freely transferable.
Supplemental allotments will be issued for certain priority activities, such as national security, agriculture, law enforcement, fire fighting, United States Postal Service, emergency medical services, public passenger transportation, sanitation services, search and rescue, snow removal, telecommunications services, gas and electric utilities service, newspaper distribution, energy production activities, vehicle rentals and firms engaged in for hire mail and small parcel transportation and delivery.
Here's the section on how to allocate coupons to individuals:
570. 24 Limitation on Distribution of Ration Rights. One of the recurring comments on the issue of whether ration coupons should be allotted to licensed drivers or registered vehicles was that the per vehicle system disproportionately favors persons who already own more cars or who can afford to purchase additional cars. Another popular comment was that people will buy several "junkers" in order to receive extra ration rights.
In response to these comments, DOE has incorporated a new § 570.24 in the final regulations which provides authority to limit the number of allotments distributed to any person or household. As a matter of policy, it is desirable to impose a reasonable limit on the total number of allotments given to persons or households that have several registered vehicles, not all of which are used intensively. DOE has not yet arrived at a practical mechanism that would accomplish that objective, so the plan does not provide for any specific limitation. During pre-implementation, however, an equitable and enforceable means of imposing a limitation on allotments will be developed.
Many commenters urged that motorcycles and mopeds be provided with the same allotments as passenger cars to reward use of the more fuel efficient two-wheeled vehicles. We have not been persuaded by this argument. First, many people may be tempted by such a proposal to buy a relatively inexpensive moped to receive an extra allotment of coupons for their car. Second, owners of motorcycles and mopeds would not benefit by being able to drive more because of their increased allotments. Our analysis shows that allotments for motorcycles and mopeds which are in amounts less then allotments for automobiles still would allow the more fuel efficient motorcycles and mopeds to be driven significantly more than the average mileage for such vehicles. Therefore, full allotments more likely would result in only a monetary windfall since the excess coupons would be sold on the exchange market. Motorcycles and mopeds therefore will receive an allotment index less than 1.0.
Comments were invited, you'll see that people representing groups such as marinas, telecommunications, rental car companies, Alaskan residents, and so on, asked for special allotments. Businesses argued they should get more coupons, since individuals can cut back their discretionary driving.
I wonder if this statement will remain true during the next major shortage: Diesel-powered vehicles also will not receive an allotment index, as diesel fuel will not be subject to rationing under this plan".
Standby Gasoline Rationing Plan June 1980 U.S. Department of Energy Economic Regulatory Administration Office of Regulations and Emergency Planning
The plan provides that eligibility for ration allotments will be determined primarily on the basis of motor vehicle registrations, taking into account historical differences in the use of gasoline among States. The regulations also provide authority for supplemental allotments to firms so that their allotment will equal a specified percentage of gasoline use during a base period. A priority classification, including, for example, national security, newspaper distribution, rental vehicles, agriculture and for hire mail and small parcel transportation and delivery, is established to assure adequate gasoline supplies for designated essential services.
Ration rights are required by the regulations to be provided by end-users to their suppliers for each gallon sold, and suppliers must provide "redeemed" (cancelled) ration rights to their suppliers on a gallon-for-gallon basis in order to be re-supplied. Ration rights are freely transferable. A ration banking system is created to facilitate transfers of ration rights and redeemed ration rights. Each State will be provided with a reserve of ration rights to provide for hardship needs and to alleviate inequities. A small national reserve also is established to meet emergency needs and other national purposes.
Development of any end-user gasoline rationing plan necessitates difficult tradeoffs between equitably meeting the diverse needs of millions of gasoline users and creating a program capable of rapid implementation with limited administrative complexity. Although the rationing plan, if fully implemented, would be costly and administratively complex, options have been incorporated into the plan to provide, to the maximum extent practical, equity among gasoline users though out the Nation and to provide flexibility to minimize disparities within States.
Any gasoline rationing plan will inconvenience large numbers of gasoline users and will cause hardships to many persons. But in times of serious shortage, gasoline rationing would assure access to some gasoline by all motorists (particularly priority users) and would also help to eliminate waiting lines, stabilize the market for gasoline, and mitigate the economic dislocations caused by a severe petroleum shortage.
The hostage situation in Tehran and the recent Soviet invasion of Afghanistan have continued to provoke further turmoil and unrest in the Middle East, an area which supplies over 60 percent of the petroleum consumed by the Western industrial nations. The beginning of the 1980's, therefore, is characterized by insecure foreign sources of petroleum and a potential threat of gasoline shortages, underscoring the need for the government to have in place a Standby Gasoline Rationing Plan as soon as possible so as to be prepared to manage a severe gasoline shortfall.
EPCA sec. 201(d) defines a severe energy supply interruption as a national energy supply shortage which the President determines has resulted or is likely to result in a 20 percent shortfall, with respect to projected normal demand, of gasoline and middle distillate fuels for a period of at least 30 days. The shortfall must be one which is not manageable under other energy emergency authorities, is expected to persist for a substantial period of time and is expected to have a major adverse impact on national health or safety or the national economy. An international energy program obligation must have comparable impacts. The President must notify the Congress of his finding together with a request to implement rationing.
For each ration period, DOE will project the national total available supply of gasoline. This amount will determine the total number of ration rights that will be made available. These ration rights will be distributed generally as follows:
(1) A small percentage of these rights will be reserved for distribution for a National Ration Reserve. (2) The total number of ration rights to be distributed to classes of end-users within each State will be determined on a State-by-State basis that takes into account historical use of gasoline by those classes in that State. With the exception of agriculture, allotments for firms and priority activities in each State will be taken from that State's share of total allotments. Agriculture priority allotments will be distributed before distributions are made to individual States to avoid distortions that might otherwise be caused to other classes of end-users because of the size of this priority category. Under this procedure, each class of end-user in one State would share any shortfall equally (as measured against historical use) with the corresponding class of end-user in other States. (3) A percentage of each State's ration rights will be reserved for a State Ration Reserve, from which the State will make distribution to meet hardship needs. (4) DOE will provide allotments to firms and priority class activities on the basis of their historical use of gasoline. (5) In each State, the remaining ration allotments will be distributed to all other registrants, eligible individuals and other persons entitled to allotments on a per vehicle basis.
Entitlements for Ration Allotments
1. Eligibility for ration allotments will be primarily on the basis of motor vehicle registration. However, DOE will implement a system by which such allotments will be supplemented for all business firms and priority users based upon their historical use of gasoline. Persons (whether individuals or firms) with the most recent valid vehicle registration for an eligible vehicle will receive ration allotments. Authority is provided for a limit to be imposed on the number of ration rights distributed to any person or household. Provisions will be made for the expeditious transfer of eligibility for ration allotments when a vehicle is transferred. Provisions also will be made to enable purchasers of new cars to obtain ration rights on an expedited basis.
2. All vehicles, except motorcycles and mopeds, will receive the same allotment. Motorcycles will receive one-fourth of the allotment for other vehicles, and mopeds will receive one-tenth of an allotment. Firms will receive the same per vehicle allotments but will be able to supplement them with additional allotments to reflect their historical usage of gasoline.
3. DOE will issue supplemental allotments for certain priority activities, such as national security, agriculture, law enforcement, fire fighting, United States Postal Service, emergency medical services, public passenger transportation, sanitation services, search and rescue, snow removal, telecommunications services, gas and electric utilities service, newspaper distribution, energy production activities, vehicle rentals and firms engaged in for hire mail and small parcel transportation and delivery.
G. The Ration Rights Market
1. Ration coupons that have not been redeemed will be freely transferable. DOE does not intend to regulate the ration rights market directly, but the final plan reserves the right to do so, if in DOE's judgment such regulation becomes necessary to prevent abuses.
2. In order to facilitate the establishment of a market for ration coupons, DOE has the authority under the regulations to sell some ration rights to the public, provided such sale does not cause the total number of issued ration rights to exceed the total amount of gasoline available. In addition DOE can authorize the States to sell ration rights from the State Ration Reserves (see below). DOE also is authorized, to the extent appropriations are available, to buy and sell coupons whenever necessary to equilibrate the number of issued ration rights with the actual supply of gasoline.
H. National Ration Reserve A percentage of the total ration rights issued will be reserved for the establishment of a National Ration Reserve. The National Ration Reserve will be used to meet national disaster relief needs and other national emergencies, to provide allotments to Canadian and Mexican firms that drive vehicles across the border for the purpose of conducting business in the United States, and for such other purposes as DOE finds necessary.
I. States' Role in Gasoline Rationing 1. A percentage of the ration rights to be issued within each State will be reserved for distribution to that State as a State Ration Reserve, to be used by the State primarily for the relief of hardship. The States will have broad discretion and flexibility in the administration of the State Ration Reserves but will be required to submit to DOE a plan describing how the State Ration Reserve will be administered before receiving the ration rights. DOE can authorize the States to sell to the public a portion of the State Ration Reserve in order to facilitate the establishment of a market for ration coupons.
The definition of "emergency services" has been expanded to include search and rescue activities and utilities services. These activities too will be entitled to receive supplemental allotments of ration rights as priority class firms.
It should be noted that this plan deals only with the rationing of gasoline. Gasohol, which typically is a blend of 90 percent unleaded gasoline and 10 percent ethyl alcohol, will be subject to rationing only to the extent of its gasoline content. Therefore, the purchase of a 90/10 blend of gasohol will require only nine-tenths as many ration rights as the purchase of the same volume of pure gasoline.
The focus of this issue is gasoline use for agriculture, a priority activity, which constitutes a significant portion of gasoline use in some States. By way of illustration, during certain calendar quarters gasoline consumption for farming in several farm States ranges from 15 to 50 percent of total consumption. Additional amounts of gasoline are used in these States for distribution and processing of agricultural products. In other jurisdictions, gasoline use for agriculture is much less significant. If, as proposed in the notice of proposed rulemaking, the supplemental allotments for agriculture were deducted from each State's distribution of the total available ration rights, and assuming that the agriculture priority class is provided 90 percent of its base period gasoline use, then in a 20 percent shortfall the average non-farm motorist in a State with 50 percent base period agricultural use would receive about 68 percent of his base period use. This is to be compared with 78 percent of base period use for the average motorist in a State where agriculture consumed only 10 percent of the base period supply of gasoline.
In order to cure this disparity and assure that the average motorist class of end-user in a State with substantial gasoline use for agriculture does not suffer a disproportionate burden of the shortfall, we have made an adjustment to the calculation formula. Under this adjustment, supplemental allotments for the agriculture priority are taken from the national supply of ration rights before calculating each State's allotment, rather than being taken from each State's allotment. The effect is that agriculture receives exactly the same amount as it would have had its ration rights been taken from the State's allotment, but the ordinary motorist class of end-user will not suffer a disproportionate burden in a highly agricultural State. Such an adjustment is not necessary with respect to other priorities because there is no evidence that gasoline usage by any other priority class of end-user will dis-proportionately affect in any material way the gasoline available to the ordinary motorist class of end-user. Thus, under the plan, each class of end-user within a State will share the shortfall equally (as measured against historical use) with the corresponding class of end-user in other States.
Many commenters urged that motorcycles and mopeds be provided with the same allotments as passenger cars to reward use of the more fuel efficient two-wheeled vehicles. We have not been persuaded by this argument. First, many people may be tempted by such a proposal to buy a relatively inexpensive moped to receive an extra allotment of coupons for their car. Second, owners of motorcycles and mopeds would not benefit by being able to drive more because of their increased allotments. Our analysis shows that allotments for motorcycles and mopeds which are in amounts less then allotments for automobiles still would allow the more fuel efficient motorcycles and mopeds to be driven significantly more than the average mileage for such vehicles. Therefore, full allotments more likely would result in only a monetary windfall since the excess coupons would be sold on the exchange market. Motorcycles and mopeds therefore will receive an allotment index less than 1.0.
All vehicles (except motorcycles and mopeds) will have the same index number and therefore will receive the same ration allotment (in a given State), regardless of fuel efficiency. This will give a significant advantage to fuel efficient vehicles.
Diesel-powered vehicles also will not receive an allotment index, as diesel fuel will not be subject to rationing under this plan.
570. 24 Limitation on Distribution of Ration Rights. One of the recurring comments on the issue of whether ration coupons should be allotted to licensed drivers or registered vehicles was that the per vehicle system disproportionately favors persons who already own more cars or who can afford to purchase additional cars. Another popular comment was that people will buy several "junkers" in order to receive extra ration rights.
In response to these comments, DOE has incorporated a new § 570.24 in the final regulations which provides authority to limit the number of allotments distributed to any person or household. As a matter of policy, it is desirable to impose a reasonable limit on the total number of allotments given to persons or households that have several registered vehicles, not all of which are used intensively. DOE has not yet arrived at a practical mechanism that would accomplish that objective, so the plan does not provide for any specific limitation. During pre-implementation, however, an equitable and enforceable means of imposing a limitation on allotments will be developed.
The allotment limitation would not be intended to preclude the distribution to a person or members of a household of additional ration rights granted from the State Ration Reserve. Thus a person or household with a bona fide need for more than the prescribed limit of allotments would have the opportunity to recoup lost allotments from the State Ration Reserve. Section 570.24(b) provides that ration rights that would be distributed to a person or members of a household but for the limitation in subsection (a) will go to the State Ration Reserve so that the State would not in any way lose ration rights as a result of the limitation.
For purposes of this section, household is defined in § 570.24(c) as persons related by blood or marriage who live together in a single residence.
We specifically asked for comments on the question of whether business should receive a higher ration level than individuals. Most businesses which commented supported this concept, agreeing that individuals can conserve by eliminating discretionary driving.
Section 570.43(b) of the regulations provides that unredeemed ration rights are freely transferable. This provision constitutes the authority for a ration rights exchange market, which should promote a more efficient use of available gasoline. We do not anticipate regulating the ration rights market through price controls or any other mechanism. However, in order to prevent abuses in the market that might arise, § 570.43(b) gives DOE authority to regulate the market if necessary. Furthermore, as noted in earlier sections, DOE will be authorized by the proposed regulations to buy and sell coupons.
other rationing articles:
Mar 23, 2005 Energy body wants brakes on fuel consumption by Adam Porter http://www.energybulletin.net/node/4864
July 14, 2005 The Peak Oil Crisis: Rationing By Tom Whipple
www.fcnp.com/519/peakoil.htm
That is a good summary. It is worth noting that this is THE plan. The president can invoke it either in response to a shortage or to meet international energy program obligations.
It is also worth noting that it is a little dated since it relies of coupons rather than accounts. To update the plan, the president would need to nominate an administrator of the Economic Regulatory Administration, something that has not happened for some time now. As I said above, not having this plan up-to-date is very irresponsible since the SPR can only draw down at a slow rate.
Chris
2. All vehicles, except motorcycles and mopeds, will receive the same allotment. Motorcycles will receive one-fourth of the allotment for other vehicles, and mopeds will receive one-tenth of an allotment. ...
This isn't a smart provision because it would serve to increase fuel usage by favoring cars. Most motorcycles get 35-50 mpg. Most cars get something like 25-30 mpg. 50cc scooters get around 80-90 mpg, 125cc scooters in the 70-80 mpg range.
If I have a car that gets 30 mpg, and a motorcycle that gets 50 mpg, and am allotted 20 gallons for my car and 5 gallons for my motorcycle, I can drive 600 miles in my car and 250 miles on my motorcycle. Clearly, I'm going to favor the car. It's even worse with a scooter -- figure 90 mpg -- I'd get 2 gallons which would take me 180 miles.
Today, without rationing, I favor my motorcycle (which actually gets 70 mpg) over my car (which actually gets 33). The market price of fuel encouraged me to get an efficient commuter (*). The rationing scheme would encourage me to use my car more and thus use MORE gas.
* My other motorcycle only gets 33 mpg -- but it's a cool old BMW so I'm keeping it for occasional use and commuting on the efficient one.
ALSO: I don't encourage people who aren't already motorcycle riders to get a motorcycle. It's a great option for those who are already committed riders -- but it isn't for everyone.
But most people with mopeds don't actually do 180 miles/month on them, where as most car drivers drive more than 600 miles/month... Yes, they should encourage higher mileage vehicles (be that mopeds or hybrids or whatever,) and maybe the ration scheme should be changed so that if you only have a motocycle you get the same ration as someone that owns a motorcycle and a car, but the point is they didn't want to give extra rations to people that had extra vehicles...
The rationing system is simply based on registration, and motorcycles get 25% of a car's allotment, and mopeds 10%. If a person wanted to cut fuel usage by using a motorized cycle a lot, he would be discouraged from doing that, and incentivized to use more fuel by driving a car.
I did pretty good this year with nothing but the pump price to encourage me. There were two months this summer I drove my car 0 miles, and the remainder only one day a week (grocery run). This fall has been about 50/50, but I have better rain gear on order so I hope to improve that (I live in NW WA and it rains a lot here). The rationing system as it exists would make my goals for a personal fuel consumption decrease impossible.
Yes, the law could be changed to account for the disincentive to use motorcycles, but I guess the point I was trying to make was that when the government gets knee deep in attempting to fix a problem, it will make mistakes that defeat its intent. I don't want to sound completely laissez-faire, but it seems that high gas prices were doing a fine job of modifying consumption. When prices return to high levels, they will continue to do their job. It isn't a perfect system, but anything that comes out of Washington (not the state, I'm talking about that Dark Tower in the East) will be worse.
Black_Dog objects to this aspect of the rationing plan. Not, I think, that is discriminates between motorcycles and cars, but that the allocation is per vehicle at all. A per person allocation makes more sense. I think that would take care of your worries though. There is more discussion in this thread: http://www.theoildrum.com/node/4642#comment-421304
Chris
Why can't the post office cut consumption? I mean, I understand that they probably can't cut down on the number of semi trucks going from state to state, because they are probably full, but they can do what UPS does and put those semis on trains, (and maybe they already do,) and that wouldn't add much to their schedule. But diesel isn't in the rationing scheme, so that is pretty moot in the first place. However, every day delivery isn't actually necessary, especially into residential areas or most rural areas, they could easily save gas by just not delivering any mail one or more days a week. And in suburban and urban areas, most of the year, the mini vans they use aren't actually full, they could send two postmen out from the office with one van, and then park on the corner like they do now, and go door to door on foot, like they do now, and hit just as many houses/businesses with less gasoline. Or no vans in the first place. Sure, they are costs to switching to that, but it is very very doable, my post office is 15 minutes from my house, by bicycle, already, and it is completely flat between my house and the post office.
If we are going to ration gasoline, we should make everyone ration.
We could probably completely end our reliance on foreign oil if the energy and resources that went into generating, delivering, and shredding credit card offers was eliminated.
(a little hyperbole, but jeez, that's all I ever get in the mail except for my bank statement and power bill).
One of my sustainability colleagues for a Fortune 500 company was examining which delivery service had the lowest carbon footprint and thus used the least fossil fuels.
According to her research, per delivered pound, the USPS was lower than any of the private companies like UPS, etc.
There is no way around rationing. It has to be done, for equity reasons. If price determines allocation, you will have high income earners still being able to do fun trips while others can't even get to work. I lived through an oil crisis in an African country in 1980. First priority was supply to main companies, most of which had their own fuel depots. They submitted lists of their requirements to Government. The rest - whatever was left over - was distributed per private car, which turned out to be 20 litres per filling. Multiple fillings were practically impossible as the petrol lines were too long and tankers would come only every 3 days. So filling stations were always empty, except for a couple of hours after arrival of a tanker truck.
Rations would have to be tradable to avoid a black market.
Yes, many problems, but this has to be organised as with declining oil production the situation will get and worse and worse.
It's interesting to watch Carter talk about energy in '77 and then again in '79. In '79 he sounds agitated, and actually started us on a solution.
Carter energy speech from 1977
http://www.youtube.com/watch?v=-tPePpMxJaA
A "clear and present danger"...
Carter energy speech from 1979 (terrible audio on this one)
http://www.youtube.com/watch?v=1IlRVy7oZ58
Or, we could just Build One of These at every landfill in America.
Maybe, since most of these landfills are surrounded by "marginal" land we could plant a four mile, or five mile square area around each plant with switchgrass, or miscanthus, or somesuch.
An HONEST economic *only* GDP -- would be closer to the GPI:
See fourth chart down:
http://www.shadowstats.com/alternate_data
Even the above -- grim as it may be -- is still not a measure of "output" -- and includes a lot of borrowing and consumption...
I became interested in the concept of limited oil during the 50's. I recall noting when the Texas Railway Commission allowed 100% production. There were "Burn America First" and "Strength Through Exhaustion" controversies. Was watching the news in 73 and 79 with interest. One winter there was a prohibition against Christmas lighting. Automobiles downsized. The 5000+ pound Lincoln became a 4000+ pound Lincoln. There was a move to front wheel drive, not altogether a good thing. This was long before the SUV craze. Many of us adopted Jimmy Carter sweaters. Many others hated Jimmy Carter. The expression "peak oil" had not become standard but I was expecting something of that nature during my lifetime, possibly but not definitely as early as the year 2000. James Schlesinger was around a lot. I actually saw him in person at an energy meeting during the 70's. He set on the front row. A lot of good it did.
The goal of rationing is to reduce consumption in a fair manner. The solution is technology.
Gas purchasing can be authorized by a bio-metric card. A thumb print solves the problem of card theft and counterfeiting. All cards will be activated by coupling them to the owner's thumb print at motor vehicle licensing location. Card holder's will have their identity confirmed at the same time.
Gasoline pumps will require these new gas cards. Without a valid card and the correct thumb printer at the pump reader, the pump will not dispense gasoline.
Vehicles registered to a card owner will have a transponder installed which is linked to the owner's card. Gasoline pumps will not work unless there is a match between the card and the vehicle transponder it is linked to. The transponder will be located adjacent to the vehicle's gas filler tube. A sensor on the pump hose handle will confirm the nozzle is only dispensing fuel into the correct vehicle, not another vehicle adjacent to authorized vehicle.
Transponders will be installed at government authorized vehicle repair stations and linked to the owner's card at the time of installation.
We now have a method to control gasoline purchases by both the vehicle and its card owner.
Now for the fairness question. There are two types of gasoline use; voluntary and involuntary. By involuntary I mean there are substantial consequences if the vehicle owner does not have enough gasoline each week. Emergency vehicles, postal vehicles, etc. Those vehicles will have their monthly fuel use controlled by the the political jurisdiction, federal, state, county, city, the vehicle is owned by. Voluntary use includes commuting from home to work, shopping, etc.
Voluntary use is controlled by the price of gasoline. The only way this can be done is by gas taxes. But increased gas taxes are a much higher burden for the poor so the tax will have to be graduated just like the federal income tax is. The more money you make each year, the higher the gasoline tax. Your gas card will be programed, based on your previous year's 1040 tax form, to set the tax portion of the price of gas you pay at the pump. I'm not sure of the mechanism to program the card's tax level based on tax returns.
Increased gas taxes have been discussed earlier as the equivalent of the third rail politically. A graduated tax will reduce the voltage somewhat:)
Determining fuel tax based on income is an imperfect system, but it is likely best possible method to insure there is fairness in the amount paid for gas and it's a strong incentive to reduce consumption. If the graduate gasoline tax does not reduce consumption enough you can control the amount purchased based on the fuel card and vehicle it is linked to.
The issue of fairness relating to the distance a worker must drive to work each day is not a deal breaker. Higher gas prices force individuals to change the amount of gas they consume. Ways to reduces fuel consumption include car pooling, public transportation, and replacing current vehicles with more fuel efficient models. Sure, there are some people who chose to live an hour or more from their place of work and have no choices in reducing the amount of fuel needed for their commute. There is a line between fairness and personal choice.
By no means is this a well thought out system. I'm throwing it out as a stimulus to the discussion:)
Lets use Bio-metrics, a wonderful new technology that will further accelerate our dependence upon complex systems. I cant wait to see mugging in bad along your gas card so they can get enough gas to finish the rest of their drug run, which may be increasingly common in desperate economic times. It gives a whole new meaning to identity theft. People are creative, and when they are desperate, they get even more creative, even if its in vain.
And cutting off your thumb, lol.
Wow, that's what i meant to include, cutting off your thumb, lol, half a sentence got deleted.
"We now have a method to control gasoline purchases by both the vehicle and its card owner."
And who's going to pay for this universal biometry system on every gas pump in America? I doubt the Oil Co's and retailers will be keen. Taxpayer? America is already up to her eyeballs in debt and surviving off the kindness of strangers who have an interest in not seeing her go down. Fix your bridges so they don't fall down first.
There are several issues with the proposed authentication system.
1) Biometrics can be cheated. Thumbprints have been faked with gummy bears successfully.
2) Initial registration is open to cheating as they don't have anything but paperwork to verify your identity. I imagine there would be a lot of old people in nursing homes who suddenly started driving again. :)
3) There is no way to ensure that the transponder at the fill tube will stay at the fill tube. The need to retrofit existing cars would prevent any general solution that would be inside the car shell. Even new cars with something placed inside the shell would be taken apart.
This system would be extremely expensive to deploy. At least an order of magnitude greater than the current credit card fraud problem. The credit card companies haven't deployed a better authentication system than the horribly weak system they use now because the cost would be more than the ongoing fraud. In security terms, credit cards currently operate by issuing the user a secret and having the user give the secret to every merchant they want to do business with. It works well enough because of the way risk and consequence are spread in the system. A gas rationing system would have different risks (the merchant cheating in collusion with the customer) and thus have to be much more secure.
It is also very likely that the system would end up having implementation holes in it beyond the system architectural issues noted. That is the nature of security in complex systems. In the end I think the cost of a technology fix would be prohibitive versus just tolerating the cheating.
I suppose this topic requires my email signature for those who might not believe a hacker's comments on security.
Eric Hacker, CISSP (Certified Information Systems Security Professional)
aptronym (AP-troh-NIM) noun
A name that is especially suited to the profession of its owner
Anybody care to estimate this number based on current consumption?
Oil has a reduced share in heating and a nearly eliminated share in electricity generation (we have made some progress) so as a fraction of consumption the last two would have much less effect. Vehicle ranges have increased a little so the first restriction might have a smaller relative effect as well.
Chris
This article caught my eye http://www.latimes.com/news/printedition/asection/la-fg-shah17-2008oct17...
and more specifically this quote
"There is unanimity among my advisors that the world economy health is not good," Ford told Iranian Ambassador Ardeshir Zahedi in December 1976, according to the archives. "Any increase in the price of oil would have a serious impact on the world financial structure."
That sounds familiar:)
Except a random sample of 1,000 americans forced to read this post, would conclude that Mr. Peach and Pres. Ford were dead wrong - there WAS not further gasoline shortage, and there were no serious impacts on world financial structure. Well until now anyways - and 30 years is a long time to accumulate wealth (societally defined) and party.
Bloody brilliant articles Nate :-) Took me a while to get through all 3 of your previous lengthy and enlightening posts. I'm afraid this qoute of yours describes me perfectly.
Sad but true.
Thanks.
Right now we have a crisis. And its reasonably widespread. Which means that people are accessing their emotional machinery more and their rational minds less, on average. Which means it's an opportunity for eduction - for awareness beyond novelty. When times are tough people are willing to believe the earth may not be flat, but finite. They may even be willing to make sacrifices that were unthinkable just months before...Keep spreading the word, especially locally...;-)
The thing I find most interesting about discussions such as these is the relative lack of ecological insight and systems thinking. All discussions of resources and their exploitation should be seen in the context of the maximum eMpower principle as articulated by H. T. Odum. It forms the basis for what became known as the relative "fitness" of species as proposed by Darwin.
In a nutshell, species that maximize their eMpower will always outcompete a species with less relative eMpower, and that includes resource utilization. There simply is no reward for reducing consumption because the simple, brutal fact is any resources that you don't use will be gobbled up by someone else.
Even more remarkable is Odum's insight that the regular "pulsing" of resource accumulation followed by frenzied consumption is observed at all scales of self-organized systems, both living and non-living. This regular pulsing actually serves to maximize the eMpower of the entire system over the long term.
Our frenzied consumption of large carbon reserves in the form of fossil fuels is exactly what we are DESIGNED to do!
Throw geopolitics into the picture and you have an even more interesting situation. If nation states are like species, then our current obsession with "energy independence" is exactly the OPPOSITE of what we should be doing. Our eMpower would be maximized by using up every one else's energy reserves first.
Imagine that, an immediate ban on ALL domestic energy production with all consumption met by 100% imports. Not likely, I know, which means that an already difficult energy situation will probably only get worse.
Cheers,
Jerry
Jerry
We've tried starting those discussions. It can only go so far before people tune out. It's what they were designed to do....
How to trick our wiring and shift the trajectory is the 64,000 barrel of oil question...
Ah! But that's the whole point. The idea that we need to "trick our wiring" carries with it the implicit assumption that our trajectory is wrong. The more I get my head into Odum's work the more I understand that we are NOT on the wrong trajectory, in fact, it is the same trajectory that is universally observed in self-organizing systems of all scales, both living and non-living.
I am not saying "give up, there's nothing we can do", as that also implies the trajectory is wrong, but that we are helpless to do anything about it.
Nor am I saying "it serves us right", because that also implies the trajectory is wrong and we somehow deserve to be punished for it.
What I am saying is "challenge your assumptions".
Believe me, it took me several years after learning about overshoot and collapse bofore I finally got to a place where I understood that it is just as much of a mistake to believe humans to be exceptionally bad as it is to believe us to be exceptionally good.
I recommend Odum's book The Prosperous Way Down. In the first part of the book he makes a brilliant case that it's not about tricking our wiring, or changing our trajectory, it's about understanding the trajectory for what it is, neither good nor bad, but simply a fundamental ecological principle of complex systems.
In the second part he details the task before us now, which is doing what we can to prepare ourselves for the downslope, hopefully in ways that aren't wasteful, or tragic, but instead soundly based on those same ecological principles.
As for people tuning out, I'm actually getting a big kick out of all the places I'm seeing the word MEGO (My Eyes Glaze Over) popping up recently. Not that this site would ever fit that description...
Cheers,
Jerry
I just read a Prosperous Way Down, and it was good, though dense. Odum couldn't have known about our 'wiring' because all the neuroscience research has just come out in the last few years. I am writing a paper applying Maximum Power Principle to the way human brains operate, both internally with energy usage, and (subtely) externally -NOT applied to energy/power in the ecological sense but in the political/social sense (our brains maximize 'percieved' power - we are unique in that because most other animals don't have a formalized verbal way of moving up and down hieararchy)
In any case, I understand your point. But the problem is that PART of understanding our situation as a natural occuring system, is that most people won't recognize it as such. What does a lemming say as it is about 10 feet from the cliff? Odum is one of my idols, but he didn't understand the brain, which at least IMO, is integral to knowing where we are going.
We need to trick the human brain's wiring because the neurotypical does not respond with action to abstract reasoning very well. We need to reach the average person's emotions to get them to respond. Yet reaching emotions (in the absence of pain) is difficult and will require stages of transition for most folks.
There is a new book out by Jeff Wilson called The Manhattan Project of 2009 Energy Independence Now...it is really an interesting read!